株探米国株
英語
エドガーで原本を確認する
FIRST HORIZON 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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
First Horizon Corporation.jpg
(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 LLP        Auditor Location:     Memphis, TN            Auditor Firm ID: 185

TABLE OF CONTENTS and GLOSSARY
Table of Contents
Page Page
Glossary Item 8. Financial Statements and Supplementary Data
Executive Summary of Principal Investment Risks Item 9. Changes in and Disagreements with
Forward-Looking Statements Accountants on Accounting and Financial
Part I
 Disclosure
Item 1. Business Item 9A. Controls and Procedures
Item 1A. Risk Factors Item 9B. Other Information
Item 1B. Unresolved Staff Comments Item 9C. Disclosure Regarding Foreign Jurisdictions that
Item 1C. Cybersecurity Prevent Inspections
Item 2. Properties Part III
Item 3. Legal Proceedings Item 10. Directors, Executive Officers and Corporate
Item 4. Mine Safety Disclosures Governance
Supplemental Part I Information Item 11. Executive Compensation
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
Purchases of Equity Securities Item 13. Certain Relationships and Related Transactions,
Item 6. [Reserved] and Director Independence
Item 7. Management’s Discussion and Analysis of Item 14. Principal Accountant Fees and Services
Financial Condition and Results of Part IV
Operations Item 15. Exhibits and Financial Statement Schedules
Item 7A. Quantitative and Qualitative Disclosures Item 16. Form 10-K Summary
about Market Risk Signatures
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


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  1
 2023 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS and GLOSSARY
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


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 2023 FORM 10-K ANNUAL REPORT
EXECUTIVE SUMMARY OF PRINCIPAL INVESTMENT RISKS
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


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  3
 2023 FORM 10-K ANNUAL REPORT
EXECUTIVE SUMMARY OF PRINCIPAL INVESTMENT RISKS
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.



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  4
 2023 FORM 10-K ANNUAL REPORT
FORWARD-LOOKING STATEMENTS
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.




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  5
 2023 FORM 10-K ANNUAL REPORT
ITEM 1. BUSINESS
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.


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  6
 2023 FORM 10-K ANNUAL REPORT
ITEM 1. BUSINESS
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 
1    Dollars 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  %
1    Dollars 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, beginning on


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  7
 2023 FORM 10-K ANNUAL REPORT
ITEM 1. BUSINESS
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%
1    Percentages 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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  8
 2023 FORM 10-K ANNUAL REPORT
ITEM 1. BUSINESS
•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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  9
 2023 FORM 10-K ANNUAL REPORT
ITEM 1. BUSINESS
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 begin
ning 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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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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▪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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$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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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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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 Risks of Expense Control
Traditional Strategic Risks Geographic Risks
Industry Disruption Insurance
Operational Risks Liquidity & Funding Risks
Cybersecurity Risks Credit Ratings
Risks from Economic Downturns & Changes Interest Rate & Yield Curve Risks
Risks Associated with Monetary Events Asset Inventories & Market Risks
Risks Related to Businesses We May Exit Mortgage Business Risks
Reputation Risks Pre-2009 Mortgage Business Risks
Credit Risks Accounting Risks
Service Risks Share Owning & Governance Risks
Regulatory, Legislative, and Legal Risks

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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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 recession oc


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curred 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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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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ITEM 1A. RISK FACTORS
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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ITEM 1A. RISK FACTORS
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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ITEM 1A. RISK FACTORS
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


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ITEM 1A. RISK FACTORS
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


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ITEM 1A. RISK FACTORS
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.


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ITEM 1B. UNRESOLVED STAFF COMMENTS THRU ITEM 4. MINE SAFETY DISCLOSURES
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.



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


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SUPPLEMENTAL PART I INFORMATION
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




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  51
 2023 FORM 10-K ANNUAL REPORT
ITEM 5. MARKET FOR COMMON EQUITY, STOCKHOLDER MATTERS, & EQUITY PURCHASES AND ITEM 6.
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.



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  52
 2023 FORM 10-K ANNUAL REPORT
ITEM 5. MARKET FOR COMMON EQUITY, STOCKHOLDER MATTERS, & EQUITY PURCHASES AND ITEM 6.
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.
Item 5 TSR chart thru FY 2023 w- BKX b.jpg

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]




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  53
 2023 FORM 10-K ANNUAL REPORT
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

TABLE OF ITEM 7 TOPICS


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  54
 2023 FORM 10-K ANNUAL REPORT
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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.



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


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  56
 2023 FORM 10-K ANNUAL REPORT
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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.


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  57
 2023 FORM 10-K ANNUAL REPORT
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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.



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  58
 2023 FORM 10-K ANNUAL REPORT
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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.


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  59
 2023 FORM 10-K ANNUAL REPORT
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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.


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


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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.


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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.


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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.


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Asset Quality
Loan and Lease Portfolio Composition
FHN groups its loans into portfolio segments based on internal classifications reflecting the manner in which the ALLL is established and how credit risk is measured, monitored, and reported. From time to time, and if conditions are such that certain subsegments are uniquely affected by economic or market conditions or are experiencing greater deterioration than other components of the loan portfolio, management may
determine the ALLL at a more granular level. Commercial loans are composed of C&I loans and CRE loans. Consumer loans are composed of consumer real estate loans and credit card and other loans. FHN has a concentration of residential real estate loans of 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


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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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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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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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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.


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



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


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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
•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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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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:


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


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


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


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


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


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


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ITEM 7A. QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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 pertin
ent 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).



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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
ITEM 8 TOPICS
Item 8.    Financial Statements and Supplementary Data
TABLE OF ITEM 8 TOPICS


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
ITEM 8 TOPICS


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
MANAGEMENT REPORT ON ICOFR
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
OPINION ON ICOFR
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.
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Memphis, Tennessee
February 22, 2024


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
OPINION ON CONSOLIDATED FINANCIAL STATEMENTS
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


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
OPINION ON CONSOLIDATED FINANCIAL STATEMENTS
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


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
OPINION ON CONSOLIDATED FINANCIAL STATEMENTS
•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.
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We have served as the Company’s auditor since 2002.
Memphis, Tennessee
February 22, 2024


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF INCOME
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 


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF INCOME
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.


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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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.


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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
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.


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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF CASH FLOWS
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 


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


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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 1—SIGNIFICANT ACCOUNTING POLICIES
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.


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


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


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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.


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


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 2—INVESTMENT SECURITIES
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 2—INVESTMENT SECURITIES
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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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 2—INVESTMENT SECURITIES
with unrealized losses, FHN does not intend to sell them and it is more-likely-than-not that FHN will not be required to sell them prior to recovery. Therefore, no write downs of these investments to fair value occurred during the reporting periods. 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.



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


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


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

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 



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


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


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

December 31, 2022
  Accruing Non-Accruing  
(Dollars in millions) Current 30-89
Days
Past Due		 90+
Days
Past Due		 Total
Accruing		 Current 30-89
Days
Past Due		 90+
Days
Past Due		 Total
Non-
Accruing		 Total
Loans and Leases
Commercial, financial, and industrial:
C&I (a) $ 29,309  $ 50  $ 11  $ 29,370  $ 64  $ 10  $ 79  $ 153  $ 29,523 
Loans to mortgage companies 2,258  —  —  2,258  —  —  —  —  2,258 
Total commercial, financial, and industrial 31,567  50  11  31,628  64  10  79  153  31,781 
Commercial real estate:
CRE (b) 13,208  11  —  13,219  7  —  2  9  13,228 
Consumer real estate:
HELOC (c) 1,967  12  5  1,984  32  4  8  44  2,028 
Real estate installment loans (d) 10,079  25  13  10,117  56  5  47  108  10,225 
Total consumer real estate 12,046  37  18  12,101  88  9  55  152  12,253 
Credit card and other:
Credit card 287  5  4  296  —  —  —  —  296 
Other 540  2  —  542  1  —  1  2  544 
Total credit card and other 827  7  4  838  1  —  1  2  840 
Total loans and leases $ 57,648  $ 105  $ 33  $ 57,786  $ 160  $ 19  $ 137  $ 316  $ 58,102 
(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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 3—LOANS & LEASES
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  —  %


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


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


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 4—ALLOWANCE FOR CREDIT LOSSES
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:


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


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


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 5—PREMISES, EQUIPMENT, & LEASES
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  %


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


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


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


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 7—MORTGAGE BANKING ACTIVITY
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.



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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 8—DEPOSITS
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 



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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 9—SHORT-TERM BORROWINGS
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.


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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 10—TERM BORROWINGS
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 10—TERM BORROWINGS
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.


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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 11—PREFERRED STOCK
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


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


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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 12—REGULATORY CAPITAL & RESTRICTIONS
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


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



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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 13—COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS)
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 


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



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 2023 FORM 10-K ANNUAL REPORT
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 14—INCOME TAXES
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 14—INCOME TAXES
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:


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


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


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


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


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS
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:


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS
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:


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS
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 


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 18—STOCK OPTIONS, RESTRICTED STOCK, & DIVIDEND REINVESTMENT PLANS
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:


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 18—STOCK OPTIONS, RESTRICTED STOCK, & DIVIDEND REINVESTMENT PLANS
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 18—STOCK OPTIONS, RESTRICTED STOCK, & DIVIDEND REINVESTMENT PLANS
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 19—BUSINESS SEGMENT INFORMATION
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 


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NOTE 19—BUSINESS SEGMENT INFORMATION
2022
(Dollars in millions) Regional Banking Specialty Banking Corporate Consolidated
Net interest income (expense) $ 1,954  $ 557  $ (119) $ 2,392 
Provision for credit losses 94  14  (13) 95 
Noninterest income (a) 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.



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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 19—BUSINESS SEGMENT INFORMATION
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 20—VARIABLE INTEREST ENTITIES
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


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 20—VARIABLE INTEREST ENTITIES
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:



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NOTE 20—VARIABLE INTEREST ENTITIES
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 21—DERIVATIVES
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


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NOTE 21—DERIVATIVES
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 



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NOTE 21—DERIVATIVES
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



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NOTE 21—DERIVATIVES
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


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NOTE 21—DERIVATIVES
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


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NOTE 21—DERIVATIVES
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.


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NOTE 21—DERIVATIVES
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.



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NOTE 22—MASTER NETTING & SIMILAR AGREEMENTS
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.


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NOTE 22—MASTER NETTING & SIMILAR AGREEMENTS
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 


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NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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.



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NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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 



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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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 


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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.


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NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

(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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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


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NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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


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NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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:


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
  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.


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES
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 


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 24—PARENT COMPANY FINANCIAL INFORMATION
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 


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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
NOTE 24—PARENT COMPANY FINANCIAL INFORMATION
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 



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ITEM 9. ACCOUNTANTS, ITEM 9A. CONTROLS & PROCEDURES, ITEM 9B. OTHER INFO, AND ITEM 9C. FOREIGN INSPECTIONS
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.


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ITEM 10. DIRECTORS & EXECUTIVE OFFICERS
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.



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ITEM 10. DIRECTORS & EXECUTIVE OFFICERS
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.


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ITEM 11. EXECUTIVE COMPENSATION
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.


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ITEM 12. SECURITY OWNERSHIP & RELATED STOCKHOLDER MATTERS
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.


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ITEM 13. CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS AND ITEM 14. PRINCIPAL ACCOUNTANT FEES & SERVICES
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.


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ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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
Report of Management on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Income for the years ended December 31, 2023, 2022, and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022, and 2021
Consolidated Statements of Changes in Equity for the years ended December 31, 2023, 2022, and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021
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.


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ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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 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 8-K 3.1 1/23/2024
4.1 8-K 4.1 7/2/2020
4.2 8-K 4.1 7/2/2020
4.3 8-K 4.2 7/2/2020
4.4 8-K 4.2 7/2/2020
4.5 8-K 4.3 7/2/2020
4.6 8-K 4.3 7/2/2020
4.7 8-K 4.1 5/28/2020
4.8 8-K 4.2 5/28/2020
4.9 8-K 4.1 5/28/2020
4.10 8-K 4.1 5/03/2021
4.11 8-K 4.2 5/03/2021
4.12 8-K 4.1 5/03/2021
4.13 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) X X
10.1 (b) X Proxy 2016 App. A 3/14/2016
10.1 (c) X 10-K 2020 10.1(b) 2/25/2021
10.1 (d) X 10-K 2020 10.1(c) 2/25/2021


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  211
 2023 FORM 10-K ANNUAL REPORT
ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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) X 10-Q 2Q09 10.1(e) 8/6/2009
Performance-Based Equity Award Documents
10.2 (a) X 10-Q 1Q21 10.1 5/6/2021
10.2 (b) X 10-Q 1Q22 10.1 5/6/2022
10.2 (c) X 10-K 2022 10.2(e) 3/1/2023
10.2 (d) X 8-K 10.3 8/4/2023
10.2 (e) X X
10.2 (f) X X
Stock Option Award Documents
10.3 (a) X 10-Q 1Q17 10.2 5/8/2017
10.3 (b) X 10-Q 1Q18 10.2 5/8/2018
10.3 (c) X 10-Q 1Q19 10.2 5/8/2019
10.3 (d) X 10-Q 1Q20 10.2 5/8/2020
10.3 (e) X 10-K 2020 10.3(l) 2/25/2021
Other Equity-Based Award Documents
10.4 (a) X 10-Q 1Q21 10.2 5/6/2021
10.4 (b) X 10-Q 1Q21 10.3 5/6/2021
10.4 (c) X 10-Q 1Q22 10.2 5/6/2022
10.4 (d) X 10-K 2022 10.4(e) 3/1/2023
10.4 (e) X X
10.4 (f) X X
10.4 (g) X 8-K 10.4 8/4/2023
10.4 (h) X X
10.4 (i) X X
Management Cash Incentive Plan Documents
10.5 (a) X 8-K 10.1 10/27/2021
Other Exhibits relating to Employment, Retirement, Severance, or Separation
10.6 (e) X 8-K 10.1 1/29/2021
10.6 (f) X 10-Q 3Q07 10.7(e) 11/7/2007


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  212
 2023 FORM 10-K ANNUAL REPORT
ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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) X 10-K 2009 10.7(d2) 2/26/2010
10.6 (h) X 10-Q 3Q11 10.2 11/8/2011
10.6 (i) X 8-K 10.1 7/17/2012
10.6
(j)		 X 8-K 10.2 8/4/2023
10.6 (k) X 8-K 10.1 7/2/2020
Documents Related to Other Deferral Plans and Programs
10.7 (a) X 10-Q 2Q17 10.4 8/8/2017
10.7 (b) X 10-Q 3Q07 10.1(a3) 11/7/2007
10.7 (c) X 10-Q 3Q23 10.1 11/7/2023
10.7 (d) 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) X S-8 333-
273513		 4.5 7/28/2023
10.7 (g) X 8-K 10(z) 1/3/2005
Other Exhibits related to Management or Directors
10.8 (a) X 10-Q 3Q06 10.8 11/8/2006
10.8 (b) X 10-K 2020 10.8(b) 2/25/2021
10.8 (c) X 10-Q 2Q17 10.2 8/8/2017
10.8 (d) X 10-Q 2Q17 10.3 8/8/2017
10.8 (e) X 8-K 10.4 4/28/2008
10.8 (f) X 8-K 10.5 4/28/2008
10.8 (g) X X
10.8 (h) X X
Other Exhibits
14 10-K 2022 14 3/1/2023
19.1 10-Q 2Q23 19.1 8/4/2023


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  213
 2023 FORM 10-K ANNUAL REPORT
ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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 10-Q 2Q23 19.2 8/4/2023
21 X
23 X
24 X
31(a) X
31(b) X
32(a) X X
32(b) X X
97 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.


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  214
 2023 FORM 10-K ANNUAL REPORT
SIGNATURES
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



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  215
 2023 FORM 10-K ANNUAL REPORT
EX-10.1 (A) 2 afy2023xexh10x1xax2021incp.htm EX-10.1 (A) Document

FIRST HORIZON CORPORATION
2021 INCENTIVE PLAN
As amended January 23, 2024

Section 1. Purposes

The purposes of this Plan are to promote the interests of the Company and its shareholders by (i) attracting and retaining officers, Associates, and Non-Employee Directors of the Company and its Subsidiaries, (ii) motivating such individuals by means of linking a component of compensation to the Company’s stock value and by means of performance-related incentives to achieve performance goals established by the Board or its Committee, (iii) enabling such individuals to participate in the growth and financial success of the Company, (iv) encouraging ownership of stock in the Company by such individuals, and (v) aligning significant compensation elements with the interests of the Company’s shareholders. Capitalized terms used in this Section and elsewhere in the Plan are defined in Section 18.

Section 2. Administration
(A)    Authority of the Board. The Board will administer Section 7 and other provisions related to Non-Employee Directors. The Board also retains the general authority—parallel and equivalent to that of the Committee—to grant or administer Awards under other sections of the Plan.
(B)    Authority of the Committee. Except as provided in Section 2(A) and Section 7, the Committee will administer the Plan. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Board, the Company’s Bylaws, or applicable law, the Committee has full power and authority in its discretion to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant and the names of the Awards, if different from the terminology used in the Plan; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the timing, terms, and conditions of any Award; (v) accelerate the time at which all or any part of an Award may be Vested, settled, or exercised; (vi) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards, or other property, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vii) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award will be delayed or deferred either automatically or at the election of the Participant or of the Committee; (viii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (ix) amend or modify the terms of any Award after grant; (x) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it deems appropriate for the proper administration of the Plan; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan, subject to the exclusive authority of the Board under Section 16 to amend, suspend, or terminate the Plan.
(C)    Committee Discretion Binding. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award will be within the sole discretion of the Committee, may be made at any time and will be final, conclusive,
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 2021 INCENTIVE PLAN

and binding upon all Persons, including any Employer, any Participant, any holder or beneficiary of any Award, any Associate, any Non-Employee Director and any Regional Board Member.
(D)    Action by the Committee. Except as otherwise provided in the Company’s bylaws or the Committee’s charter, if any, a majority of the Committee’s members will constitute a quorum. Any decision or determination reduced to writing and signed by all of the members of the Committee will be fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary and may make such rules and regulations for the conduct of its business as it deems advisable.
(E)    Delegation. Subject to the terms of the Plan, the Board or the Committee may, to the extent permitted by law, delegate to (i) a subcommittee of the Committee, (ii) one or more officers or managers of the Company or an Employer, or (iii) a committee of such officers or managers, the authority, subject to such terms and limitations as the Board or the Committee determines, to grant Awards to, or to cancel, modify or waive rights with respect to or to alter, discontinue, suspend, or terminate Awards held by, Participants who are not Section 16 Executives or directors of the Company or who are otherwise not subject to SEC Section 16.
(F)    Procedures. The Company may adopt or approve administrative procedures and practices (“Procedures”) applicable to the Plan and its Awards from time to time under the authority and oversight of the Committee. The Committee may cause the Company to embed substantive practices and policies in the Procedures, consistent with the Committee’s authorities under the Plan, as well as purely administrative matters.
(G)    Delayed Payment and Deferrals. The Committee may require or permit the payment or delivery of any Award to be delayed or deferred after Vesting. Any such delay or deferral must comply with Section 15 unless the Committee expressly, in a particular case, determines otherwise. Any such delay or deferral feature may be canceled or changed by the Committee at any time prior to commencement of the delay or deferral period, without the consent of the Participant. No Participant has any right to delay or defer payment or delivery. During any delay or deferral period, the Committee may, but need not, provide for interest or dividend accruals, reinvestments, or payments, as provided in Section 17(A).

Section 3. Shares Available for Awards; Other Limitations
(A)    Shares Available for Awards; Limitations.
(i)    Limits. Subject to adjustment as provided in Section 3(B):
(a)    Share Limits for the Plan.
(1)    Overall. The maximum number of Shares which may be issued with respect to Awards is: 14,000,000 Shares newly authorized for this Plan; plus any Shares underlying awards granted under the Prior Stock Plan prior to this Plan’s inception which expire or are canceled, forfeited, settled in cash, or otherwise terminated without delivery of Shares to the Prior Stock Plan participant.
(2)    Shares In Lieu. Of the total authorized in subsection (A)(i)(a)(1), the maximum number of Shares which may be issued as Awards of Shares in Lieu is 700,000 Shares.
(3)    Substitute Awards. The maximum number of Shares which may be issued as Substitute Awards is 700,000 Shares.
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 2021 INCENTIVE PLAN

(b)    Non-Employee Director Limits per year.
(1)    Full-Value. The maximum aggregate dollar value of Full-Value Awards which may be granted in any calendar year to any Non-Employee Director under Section 7 is $500,000. For this purpose, Shares underlying Full-Value Awards will be valued at 100% of Fair Market Value on the grant date, without discount of any sort, and dollar-denominated Units will be valued at 100% of face value, without discount of any sort.
(2)    Options & SARS. The maximum aggregate dollar value of Shares underlying Options and/or SARs which may be granted in any calendar year to any Non-Employee Director under Section 7 is $250,000. For this purpose, shares underlying Option and SAR Awards will be valued at 25% of Fair Market Value on the grant date, without any other discount.
(3)    Savings Clause. If a limit provided in this subsection (b) is or might be violated by the grant of a Performance Award, that Award is not invalidated. However, after all final performance determinations are made, if the Award still violates a limit, the final number of Shares, Units, or dollars, as applicable, will be reduced to the minimum extent possible consistent with the limits provided in this subsection, and the excess Shares, Units, or dollars will be cancelled and treated as if they never had been granted.
(ii)    Re-Usage if Award Shares are not Paid. If any Shares covered by an Award granted under the Plan, or to which such an Award relates, are forfeited, or if an Award denominated in Shares is settled for cash or terminates, expires unexercised, or is canceled for any reason without the delivery of Shares, then the Shares covered by such Award or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares which may be issued with respect to Awards, to the extent of any such settlement, forfeiture, termination, expiration, or cancellation, will again become Shares which may be issued with respect to Awards under Section 3(A)(i)(i)(a).
(iii)    Option & SAR Re-Usage Limited. In connection with any Option or SAR Award, none of the following will result in any Shares being added back to any of the limits in Section 3(A)(i)(i)(a): (a) the withholding of Shares by the Company for tax liabilities; (b) the delivery of Shares (actual or deemed) by the Award holder to pay an exercise price or tax liabilities; or (c) in the case of exercised SARs, the delivery of Shares to the Participant in an amount less than the nominal number of Shares covered by the SAR Award.
(iv)    No Tax Withholding Re-Usage. No shares withheld or re-acquired, pursuant to Section 15(A) or otherwise, by the Company from the Participant for tax liabilities caused by Vesting, exercise, or other taxable event relating to Awards (other than Options or SARs) will be added back to any of the limits in Section 3(A)(i)(i)(a).
(v)    Dividend Reinvestment. Shares credited or paid in connection with a dividend reinvestment feature, if in conformity with Section 17(A), will not be counted against any of the limits in Section 3(A)(i).
(B)    Adjustments. The number of Shares available for Awards, the number of Shares that may be subject to Awards granted to any one Participant in any period, the number of Shares covered by each outstanding Award, and the price per Share covered by each such outstanding Award which uses a price will be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, recapitalization, combination, or reclassification of the Shares, and may be proportionately adjusted, as determined in the sole discretion of the Board, for any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company or to reflect any distributions to holders of Shares other than regular cash dividends. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, will affect, and no adjustment by reason thereof
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 2021 INCENTIVE PLAN

will be made with respect to, the number or price of Shares subject to an Award. After any adjustment made pursuant to this paragraph, the number of Shares subject to each outstanding Award may be rounded down to the nearest whole number of shares or to the nearest fraction of a whole share specified by the Committee, all as the Committee may determine from time to time. The Committee may approve different rounding methods for different Award types and for different Award tranches or sizes within any single type. In exercising its authority hereunder, the Committee will seek to adjust Option and SAR Awards so as to avoid creating a modification of the Awards within the meaning of Section 409A. If the Committee determines to make a modification, such modification must be expressly intended by the Committee, and is subject to Participant consent and the other requirements of Section 15(C).
(C)    Adjustments of Awards Upon the Occurrence of Substantial Spin-off or Certain Other Unusual or Nonrecurring Events. The Committee is hereby authorized to make adjustments in the terms and conditions of, the securities covered by, and the criteria included in, outstanding Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 3(B)) affecting the Company, any Subsidiary, or the financial statements of the Company or any Subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee is required to make such adjustments pursuant to Section 3(B) or whenever the Committee, in its sole discretion, determines that such adjustments are necessary and appropriate in order to prevent or substantially mitigate dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. With respect to Awards intended to comply with Section 409A, no adjustment hereunder may be inconsistent with Section 409A compliance of the Plan and such Awards.
(D)    Substitute Awards. Any Shares issued by the Company as Substitute Awards will not reduce the Shares available for Awards under the Plan.
(E)    Sources of Shares. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or, to the extent permitted by applicable law, of issued Shares which have been reacquired by the Company.

Section 4. Eligibility
Any Associate (including any officer or Associate-director of an Employer), Non-Employee Director, or Regional Board Member is eligible to be designated as a Participant; provided, however, that Non-Employee Directors are only eligible to receive Awards granted pursuant to Section 7. The receipt or holding of an Award will not affect a person’s eligibility for other or future Awards; the Committee is permitted to grant more than one Award, and more than one Award type, to a Participant from time to time.

Section 5. Stock Options and Stock Appreciation Rights
(A)    Grant. Except for the Board’s reservations of authority under the Plan and otherwise, the Committee has sole and complete authority to determine the Participants to whom Options and SARs will be granted, the number of Shares subject to each Award, the exercise or base price of each Award, and the conditions and limitations applicable to the exercise of Options and SARs.
(B)    Pricing.
(i)    General Authority. The Committee, in its sole discretion, will determine the Option Price of each Option Award or the base price of each SAR Award.
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 2021 INCENTIVE PLAN

(ii)    Price Floor; no Back-Dating. Except in the case of Substitute Awards, the Option Price per Option Share and the base price of an SAR Award may not be less than 100% of the Fair Market Value of a Share on the grant date (determined in accordance with Section 17(E)).
(iii)    No Re-Pricing. Except as provided by Section 3(B), Section 3(C), and Section 14, without shareholder approval the Committee does not have the power to: (a) amend the terms of Options or SARs previously granted under the Plan to reduce the Option Price of such Options or base price of such SARs; (b) cancel Options or SARs previously granted under the Plan or under the Prior Stock Plan, and grant substitute Options or SARs with a lower Option Price or base price than the cancelled Options or SARs, respectively; or (c) if such Options or SARs (referenced in clause (b)) are out-of-the-money, cancel such Options or SARs and, in consideration of such cancellation, grant one or more other Awards, make a cash payment, or take any combination of such actions. Any such reduction, substitution, or other such action taken by the Committee in advance of shareholder approval will be subject to, and ineffective until, approved by the Company’s shareholders. For this purpose, an Award is “out-of-the-money” if the current Fair Market Value of a Share is less than the option price or base price, respectively, of the Award.
(C)    Term. Subject to the Committee’s authority under Section 2(A), each Award of Options or SARs will expire on the expiration date determined by the Committee and specified in the Award Document. However, no Option or SAR Award may be exercisable after the tenth anniversary of its grant date. In the case of a Substitute Award, for this purpose the grant date is the date granted under this Plan.
(D)    Exercise.
(i)    General. Subject to Section 9(A), each Option and SAR Award will be exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Document or thereafter. The Committee has full and complete authority to determine whether an Option or SAR Award is exercisable in full at any time or from time to time during the term of the Option or SAR Award, or to provide for the exercise thereof in such installments, upon the occurrence of such events and at such times during the term of the Option or SAR Award as the Committee may determine.
(ii)    Conditions; Legal Compliance. The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal, state or foreign securities laws or the Code, as it may deem necessary or advisable. The exercise of any Options granted hereunder will be effective only at such times as the sale of Shares to the Participant pursuant to such exercise does not violate any state or federal securities or other laws, as determined by the Committee or the Company in their sole discretion.
(iii)    Exercise Process. An Option or SAR Award may be exercised in whole or in part at any time within the period permitted thereunder for the exercise thereof. The manner of exercise must conform with the Award Document, the Procedures, and (as applicable) the processes used by the Company’s administrative vendor, if any.
(iv)    Payment of Option Price. The manner of exercise of Options must provide for commercially prompt payment of the Option Price to the Company or to the Company’s option administrator, as agent for the Company.
(a)    Cash. Payment may be made in cash (including cash equivalents). The manner of cash payment must conform to the Procedures, the Award Document, or the requirements of the Company’s option administrator, as applicable.
(b)    Cash from Simultaneous Sale. Subject to applicable securities laws and at the discretion of the Committee, cash payment may be effected by exercising the Options and
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simultaneously selling the Shares to be issued from the exercise, pursuant to a brokerage or similar arrangement or program approved or permitted by the Committee.
(c)    Payment with Shares and other Methods. The Committee, in its discretion, may allow payment of the Option Price: (1) by tendering, either by way of actual delivery of Shares or attestation, (A) Shares acquired directly from the Company that have been owned by the Option Award holder for not less than six months, or (B) Shares acquired on the open market prior to the date of exercise, in either case (C) having an aggregate Fair Market Value on the date of exercise at least equal to the Option Price, or (2) by a combination of cash and such Shares, or (3) by such other method of payment as the Committee determines to be acceptable; provided, however, that the Option Award holder is not entitled to tender or attest to Shares pursuant to successive, substantially simultaneous exercises of an Option Award or any other stock option awards granted by the Company or by any of its predecessors. Consistent with Section 15(A), the Committee also may permit Shares to be tendered or attested to cover applicable withholding taxes.
(d)    No Rights Until Shares Issued. Until the Option Award holder has been issued Shares deriving from an exercise, he or she possesses no rights as a shareholder with respect to such Shares and is not entitled to any dividend or distribution the record date of which is prior to the date of issuance of such Shares.
(v)    Payment of SARs. At the Committee's discretion, the amount payable as a result of the exercise of an SAR Award may be settled in cash, Shares, or a combination of cash and Shares.

Section 6. Restricted Stock, Restricted Stock Units, & Restricted Cash Units
(A)    Grant.
(i)    General Authority. Except for the Board’s reservations of authority under the Plan and otherwise, the Committee has sole and complete authority to determine the Participants to whom Restricted Stock, Restricted Stock Units, and Restricted Cash Units are granted, the number of shares of Restricted Stock and/or the number of Restricted Stock or Cash Units to be granted to each Participant, the dollar value per Cash Unit, the duration of the period during which, and the conditions under which, the Awards may be paid to the Participant or forfeited to the Company, and the other terms and conditions of such Awards. Restricted Stock, Restricted Stock Unit, and Restricted Cash Unit Awards will be evidenced by Award Documents in such form as the Committee from time to time approves, which documents must comply with and be subject to the terms and conditions provided hereunder and any additional terms and conditions established by the Committee that are consistent with the terms of the Plan.
(ii)    Amounts and Vesting Period. Each Restricted Stock, Restricted Stock Unit, or Restricted Cash Unit Award made under the Plan will be for such number of Shares or Units, as applicable, as will be determined by the Committee and set forth in the Award Document. Consistent with Section 9(B), the Award Document must require a period of time during which the grantee must remain in the continuous employment of one or more Employers in order for the forfeiture and transfer restrictions to lapse. If the Committee so determines, the restrictions may lapse during such restricted period in installments with respect to specified portions of the Shares or Units covered by the Award. The Award Document may also, in the discretion of the Committee, set forth performance or other conditions that, if satisfied, will result in the lapsing of any applicable forfeiture and transfer restrictions, all as provided in Section 8. The Committee may, at its discretion, waive all or any part of the restrictions applicable to any or all outstanding Restricted Stock and Restricted Stock Unit Awards.
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(B)    Issuance of and Restrictions on Restricted Stock. The Company may implement the grant of a Restricted Stock Award by (i) book-entry issuance of Shares to the Participant in an account maintained by the Company at its transfer agent, (ii) issuance of certificates for Shares in the name of the Participant with transfer and other restrictions, and/or with physical custody arrangements, acceptable to the Company, or (iii) any other means of issuing Shares permitted by applicable law. Any such certificates and any related stock powers will be held by the Company or any custodian appointed by the Company for the account of the grantee subject to the terms and conditions of the Plan, and the certificate will bear such a legend setting forth the restrictions imposed thereon as the Company, in its discretion, may determine. Unless otherwise determined by the Committee, the grantee will have all rights of a shareholder with respect to the Shares of unvested Restricted Stock, including the right to receive dividends and the right to vote such Shares, subject to the following restrictions: (i) in the case of certificated Shares, the grantee will not be entitled to delivery of the stock certificate until the expiration of the restricted period and the fulfillment of any other restrictive conditions set forth in the Award Document with respect to such Shares; (ii) transferability of the Shares will be restricted until Vesting and delivery, consistent with Section 12; and (iii) except as otherwise determined by the Committee, all of the Shares will be forfeited and all rights of the grantee to such Shares will terminate, without further obligation on the part of the Company, unless the grantee remains in the continuous employment of one or more Employers for the entire restricted period in relation to which such Shares were granted and unless any other restrictive conditions relating to the Restricted Stock Award are met. Any cash, any Shares, any other securities of the Company, and any other property distributed with respect to the Shares subject to Restricted Stock Awards will be subject to the same restrictions, terms and conditions as such Restricted Stock, provided that the Committee may provide in an Award Document for regular cash dividends to be paid prior to Vesting.
(C)    Vesting of Restricted Stock. At the end of the restricted period and provided that any other restrictive conditions of the Restricted Stock Award have been met, or at such earlier time as otherwise determined by the Committee, all restrictions set forth in the Award Document relating to the Restricted Stock Award or in the Plan will lapse as to the restricted Shares subject thereto, and, if certificated, a stock certificate for the appropriate number of Shares, free of the restrictions and restricted stock legend imposed thereon as described in the second sentence of Section 6(B), will be delivered to the Participant.
(D)    Vesting, Valuation, and Payment of Restricted Stock Units. At the end of the restricted period and provided that any other restrictive conditions of the Restricted Stock Unit Award have been met, or at such earlier time as otherwise determined by the Committee, all restrictions set forth in the Award Document relating to the Restricted Stock Unit Award or in the Plan will lapse. Each Restricted Stock Unit paid in cash will have a value equal to the Fair Market Value of a Share on the Vesting date or such other prior valuation date selected by the Committee, or equal to the Average Fair Market Value of a Share for the trading days in the valuation period selected by the Committee. Restricted Stock Units will be paid in cash, Shares, other securities or other property, as determined in the sole discretion of the Committee, following the lapse of the restrictions applicable thereto, or otherwise in accordance with the applicable Award Document.
(E)    Vesting, Valuation, and Payment of Restricted Cash Units. At the end of the restricted period and provided that any other restrictive conditions of the Restricted Cash Unit Award have been met, or at such earlier time as otherwise determined by the Committee, all restrictions set forth in the Award Document relating to the Restricted Cash Unit Award or in the Plan will lapse. Each Restricted Cash Unit will have a value equal to the dollar value per Unit selected by the Committee at grant, plus interest (if any) provided in the Award Document or otherwise by the
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Committee. Restricted Cash Units will be paid in cash following the lapse of the restrictions applicable thereto, or otherwise in accordance with the applicable Award Document.

Section 7. Non-Employee Director Awards
Subject to the limitations of Section 3(A)(i)(b) and Section 9, the Board may provide that all or a portion of a Non-Employee Director’s annual retainer and/or meeting fees, or other forms of compensation, be payable (either automatically or at the election of a Non-Employee Director) in the form of Options, SARs, Restricted Stock, Restricted Stock Units, Restricted Cash Units, or (in accordance with Section 10(F)) Shares In Lieu. The Board may determine the terms and conditions of any such Awards, including the terms and conditions which apply upon a termination of the Non-Employee Director’s service as a member of the Board, and has full power and authority in its discretion to administer such Awards, subject to the terms of the Plan and applicable law. The Board may exercise this authority episodically, periodically, by standing resolution, by policy, and in any other legal manner. Notwithstanding Section 10(A) and Section 17(E), the grant date of any Award to a Non-Employee Director will be determined by the Board or in accordance with Board policy governing director compensation.

Section 8. Performance Awards
(A)    Grant. The Committee has sole and complete authority to determine the Participants who receive a Performance Award. A Performance Award consists of a performance-based Option Award, performance-based SAR Award, performance-based Restricted Stock Award, performance-based Restricted Stock Unit Award, performance-based Restricted Cash Unit Award, or other performance-based right that is (i) denominated in cash and/or Shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such performance goals during such performance periods as the Committee will establish, and (iii) payable at such time and in such form as the Committee may determine. For this purpose, “performance-based” means requiring that one or more specified performance conditions, beyond mere continuation of service, be fulfilled prior to Vesting.
(B)    Terms and Conditions. Subject to the terms of the Plan, the Committee may determine the Performance Measures and other factors to be used to establish Performance Goals, the Performance Goals to be achieved during any Performance Period, the length of Performance Period, the Threshold, Target, and/or Maximum Amount of any Performance Award, and the amount and kind of any payment or transfer to be made pursuant to any Performance Award. The Committee may change specific provisions of a Performance Award after it is granted, provided, however, that no such change may significantly and adversely affect an already-granted Performance Award that has an already-begun Performance Period without the Participant’s consent.
(C)    Payment of Performance Awards. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with the Award Document or Procedures, on a delayed or deferred basis.
(D)    Termination of Service. (i) Unless otherwise determined by the Committee, Termination of Service prior to the end of a Performance Award’s Performance Period, or prior to the Award’s Vesting date, will result in the forfeiture of the Performance Award. (ii) Unless otherwise determined by the Committee, any partial or complete waiver of forfeiture of a Performance Award resulting from Termination of Service will not waive the performance conditions and requirements associated with the Award, and will not accelerate payment.
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Section 9. Minimum Vesting Periods
(A)    Options and SARs. No Option or SAR Award Document may provide for exercisability in whole or part sooner than the first anniversary of the Award’s grant date, except:
(i) if so provided in the Award Document or Procedures, in connection with the Participant’s death, Disability, or approved Retirement in accordance with (D);
(ii) as required by Section 14 (relating to Change in Control) or another provision of the Plan;
(iii) in the case of Substitute Awards;
(iv) Award grants that are made on the date of an annual meeting of shareholders or the date of a regular periodic Board meeting, or within five days after such meeting, may Vest fifty weeks or later after grant; and
(v) Options and SARs may be exercised in whole or part less than one year after grant, apart from clauses (i) – (iv), on a limited basis as provided in Section 9(C).
(B)    Restricted Stock and Restricted Stock Units. No Restricted Stock or Restricted Stock Unit Award Document may provide for Vesting in whole or part sooner than the first anniversary of the Award’s grant date, except:
(i) if so provided in the Award Document or Procedures, in connection with the Participant’s death, Disability, or approved Retirement in accordance with (D);
(ii) as required by Section 14 (relating to Change in Control) or another provision of the Plan;
(iii) in the case of Substitute Awards;
(iv) Award grants that are made on the date of an annual meeting of shareholders or the date of a regular periodic Board or Board committee meeting, or within five days after such meeting, may Vest fifty weeks or later after grant; and
(v) Vesting may occur less than one year after grant, apart from clauses (i) through (iv), on a limited basis as provided in Section 9(C).
(C)    5% Exception. Options and SARs may be exercised in whole or part less than one year after grant, apart from clauses (A)(i) through (iv), and Vesting of Full-Value Awards may occur less than one year after grant, apart from clauses (B)(i) through (iv), provided that, in the aggregate, such exercises and Vestings permitted by this Section 9(C) may cover no more than five percent of the available Shares authorized for issuance pursuant to Section 3(A)(i)(a).
(D)    Continued Vesting Upon Approved Retirement.
(i) Continued Vesting In General. Notwithstanding the foregoing, if management or the Committee approves the terms and conditions of Retirement of a Participant, management or the Committee may provide, as a Retirement benefit, Continued Vesting treatment for any or all Awards held by the Participant at Retirement. Under Continued Vesting treatment for Option and SAR Awards: further service conditions to Vesting may be waived in part or in full; other conditions to Vesting may be waived in part or in full; excercisability may be accelerated; and early-termination dates may be extended, but not later than the original expiration date of the Award. Under Continued Vesting treatment for Full-Value Awards: further service conditions to Vesting may be waived in part or in full; other conditions to Vesting may be waived in part or in full; and payment may be accelerated in part or in full. Without limiting the foregoing, Continued Vesting treatment may be part of one or more Retirement programs offered to groups of associates from time to time. Nothing in the Plan gives any Participant any right to
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have Retirement approved, nor any right to Continued Vesting treatment of any sort if Retirement is approved. Management approval of Continued Vesting must be in accordance with the Procedures or other instruction or authorization from the Committee.
(ii) Transition and Retroactivity. The Continued Vesting and certain related provisions were added to the Plan by the Board in January 2024. Any Full Value Award Document outstanding under the Plan at that time which provided for a Continued Vesting outcome except during the first year after the Award’s grant date may be revised by the Committee, or by management under its direction, to remove that exception. However, if a Participant has a contractual retirement or severance arrangement agreed with the Participant’s Employer which provides for some form of Continued Vesting, that arrangement may not be modified without the consent of that Participant.
(E)    Examples. (i) RSUs are granted on May 4, 2022, the date of the 2022 annual meeting of shareholders. This Section 9 would permit those RSUs to Vest on April 22, 2023, the date of the 2023 annual meeting of shareholders. (ii) RSUs are granted on February 15, 2022, at the Committee’s regular meeting held each February. This Section 9 would permit those RSUs to Vest on February 5, 2023, the date of the Committee’s regular February meeting in 2023.
(F)    Discretionary Acceleration Permitted After Grant. The provisions in this Section 9 do not limit the Committee’s authority under Section 2(B) to accelerate exercisability or Vesting of an Award after grant.
(G)    Shares In Lieu. As provided in Section 10, Shares In Lieu are Vested at grant. However, the aggregate total of all Shares in Lieu is restricted as provided in Section 3(A)(i)(a)(2).

Section 10. Shares in Lieu of Cash Earned
(A)    General Terms. The Committee is authorized to grant Awards of Shares In Lieu, subject to and in conformity with this Section 10, and subject to the Share limitations in Section 3(A)(i)(a)(2). An Award of Shares In Lieu consists of Shares, or Units denominated and payable in Shares, which have no service or other traditional Vesting requirement or period. An Award of Shares In Lieu may only be granted in settlement of an obligation of the Company to pay cash compensation which, not later than the grant date, the Participant has earned. Settlement of an earned compensation obligation with Shares In Lieu may only be dollar-for-dollar, based on: (i) 100% of the Fair Market Value of a Share on the grant date (determined in accordance with Section 17(E)); or (ii) 100% of the Average Fair Market Value of a Share over five consecutive trading days ending with the grant date; or (iii) 100% of the Average Fair Market Value of a Share over ten consecutive trading days ending with the grant date. If (A)(i) is used, the grant date may not be earlier than the date the Committee acts to approve the grant; and if (A)(ii) or (iii) is used, the Committee may act to approve the grant no later than the first trading day used to calculate the Average Fair Market Value.
(B)    Award Document. For an Award of Shares In Lieu, the Award Document may consist of a separate grant notice or agreement similar to the Award Documents used for other Awards, may be part of the Award Document for another Award (denominated in cash but payable in Shares In Lieu), or may consist of any written evidence of the terms of the Award authorized or approved by the Committee, such as (for example) minutes, resolutions, presentations, memos, and program documentation.
(C)    Timing of Payment. If an Award of Shares In Lieu consists of Shares, it will be paid or delivered promptly after grant. The Committee may require Shares In Lieu to have payment delayed, or may allow the Participant to elect delay. An Award of Shares In Lieu as to which payment is delayed consists of Units denominated in Shares, payable in Shares when the delay period ends.
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(D)    Holding Period. Although an Award of Shares In Lieu is Vested at grant, the Committee may impose a holding or waiting period on all or any portion of the Shares delivered, including on the portion remaining after withholding for taxes, consistent with Section 10(C).
(E)    Limitation on Cash Obligations to be Settled. An Award of Shares In Lieu may not be granted to a Participant in settlement of any Award under this Plan or the Prior Stock Plan.
(F)    Awards to Non-Employee Directors. Consistent with Section 7, the Board is authorized to settle any obligation of the Company for cash retainer or fee compensation earned by a Non-Employee Director with one or more Awards of Shares In Lieu. Specifically:
(i)    The Board may require settlement of earned compensation with Shares In Lieu.
(ii)    The Board may allow Non-Employee Directors to elect to receive Awards of Shares In Lieu.
(iii)    The Board may require Shares In Lieu to have payment delayed, or may allow Non-Employee Directors to elect delay.

Section 11. Annual Incentives
(A)    Coordination. The Committee may coordinate any Annual Incentive plan, program, or determination with the grant of Awards, consistent with the terms and limitations in this Plan. Without limiting the generality of the foregoing, the Committee may: (i) grant one or more Awards in lieu of all or part of an Annual Incentive; or (ii) establish an Annual Incentive which will be paid, in whole or part, in the form of one or more Awards. In the case of clause (ii), the grant date will be the date the earned amount of the Annual Incentive is finally and fully determined, or such later date as is chosen by the Committee.
(B)    No Special Treatment. An Award granted in connection with an Annual Incentive must comply with all requirements of this Plan applicable that Award type. Each Award granted in connection with an Annual Incentive is subject to, and is counted against all applicable limits in, Section 3(A).

Section 12. Transferability of Awards
(A)    General Transfer Restriction. Except as otherwise provided in this Section 12 or expressly elsewhere in the Plan, no Award (including its underlying Shares, cash, or other benefits) may be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered, hedged, or disposed of, in any manner, whether voluntarily or involuntarily, including by operation of law, other than by will or the laws of descent and distribution.
(B)    Limited Transfers Authorized. In its discretion, the Committee may permit the transfer of an Award, or any group or type of Awards, by any Participant (including a Non-Employee Director) selected by the Committee, to or for the benefit of the Participant’s Immediate Family (including, without limitation, to a trust for the benefit of the Participant’s Immediate Family or to a partnership or limited liability company for one or more members of the Participant’s Immediate Family), subject to such limits and conditions as the Committee may establish or require. If a Participant makes a transfer permitted by the Committee, the Participant will be treated by the Company as having retained a substantial economic interest in any transferred Award, and the Participant’s continued service and/or performance, as applicable, will continue to determine whether the Award Vests and how much of it, if any, is paid or delivered to the transferee. The transferee will take the Award subject to all the terms, conditions, and risks applicable to the Award prior to such transfer, including the risks of forfeiture or Clawback. Unless the Committee determines otherwise, the Participant, rather than the transferee, will
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retain the sole right to consent to amendments to the Award or its Award Document and to take all other substantive and administrative actions associated with the Award, including exercise and tax withholding. For purposes of this Section 12(B), the term “Immediate Family” means the Participant’s spouse, parents, children, stepchildren, sisters, brothers, grandchildren, and step-grandchildren, including both natural and adopted relations.
(C)    Beneficiary Designations. The Committee is authorized to permit Participants to designate one or more Beneficiaries. A “Beneficiary” is a Person to whom all or a portion of an Award will be transferred after the Participant dies. If the Committee approves a process for a Participant to designate Beneficiaries and to record those designations, the Company’s record of the most recent designation, or set of designations, made by a Participant who has died will govern which Beneficiary(ies) will be entitled to be transferee(s).
(D)    Administration. No transfer by an Award Beneficiary designation, or by will or the laws of descent and distribution, is effective to bind the Company until the Company is furnished with written notice of the Participant’s death and an authenticated copy of the will and/or such other evidence as the Company may deem necessary to establish the validity of the transfer. The Committee or the Company may impose additional administrative conditions in order to assure the Company, in good faith, that a transfer is legally valid and proper.
(E)    Personal Exigencies. In its discretion, the Committee may permit transfers of Awards, or create assistive procedural rights in lieu of transfers or otherwise, in connection with death, divorce, child support, incompetence or other Disability, and other severe personal events, and the Committee may delegate broad administrative authority to management in such situations, provided that no such action (delegated or otherwise) may: (i) enlarge the amount of any outstanding Award; (ii) extend the original term of any outstanding Award of Options or SARs; or (iii) allow any Award to be sold or otherwise transferred for value. No Participant, and no Person related to a Participant, has any right under this Section 12(E) to obtain a transfer or assistance.

Section 13. Termination of Service, Forfeiture, and Clawback
(A)    General Service Requirement. Except as otherwise determined by the Committee, each Award other than Shares In Lieu, and all rights of the Participant to the Award and any Shares, cash, or other benefits deriving therefrom, will terminate, without further obligation on the part of the Company, unless the Participant remains in continuous employment with one or more Employers for the entire period during which service is required, as specified in the Award Document or otherwise by the Committee.
(B)    Termination. Without limiting the authorities in Section 2:
(i)    The Committee has complete discretion to determine the terms and conditions that apply to any Award upon death, Disability, Retirement, or other Termination of Service. Such terms may be provided in the Award Document, in the Procedures, or otherwise in a written form available to the Participant at the time of grant.
(ii)    After grant, the Committee has the full power and authority to reduce or waive, in whole or part, conditions and requirements of an Award related to employment or a Termination of Service. The Committee may require concessions or agreements by the Participant in exchange for such waivers.
(C)    Service and Termination of Non-Employee Directors. With respect to Awards to Non-Employee Directors, the Board has complete discretion to determine the service requirements of any Award, and
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the terms and conditions that will apply to any Award upon death, Disability, Retirement, or other Termination of Service.
(D)    Plan, Awards, & Clawback Policy.
(i)    Awards are subject to forfeiture prior to Vesting or exercise, and to recovery or reimbursement of paid or delivered cash, Shares, or other benefits (“Clawback”), to the extent provided in this Plan from time to time.
(ii)    Awards are subject to forfeiture and Clawback to the extent provided in the applicable Award Document or Procedures from time to time.
(iii)    Awards are subject to forfeiture and Clawback to the extent provided in the Clawback Policy from time to time.
(iv)    An amendment to the forfeiture or Clawback provisions of the Plan, Procedures, or Clawback Policy will not apply retroactively to then-outstanding Awards unless expressly so provided in such amendment.
(v)    The Committee or the Board may amend the substance of any or all forfeiture or Clawback provisions in this Section 13 or otherwise in the Plan as the Committee or the Board determine to be appropriate. The Committee or the Board may move any or all forfeiture or Clawback provisions from this Plan to the Clawback Policy for administrative convenience or in order to facilitate compliance with regulatory or reporting requirements.
(vi)    The Plan, the Clawback Policy, or an Award may provide for forfeiture or Clawback based on, or triggered by, a restatement or other correction of financial results used to determine the amount paid for the Award. In such cases forfeiture or Clawback may be absolute, or the amount paid may be merely re-determined based on corrected information. For purposes of applying those latter provisions, the following are examples of lowering (or eliminating) an Award payment based on restated or corrected financial results: (i) the payment would have been lower or eliminated directly by application of a Performance Goal based in whole or part on a Performance Measure that incorporates or is adversely affected by the correction; and (ii) for any Award where the amount paid is subject to Committee discretion, the Committee determines in good faith that the payment would have been lower or eliminated through the exercise of discretion by the Committee if the Committee had known the correct financial results at the time the discretion was exercised.
(vii)    For the purposes of this Section 13, all amounts paid will be calculated on a gross pretax basis regardless of the net amount remitted to the Participant. For example, if a Participant’s Performance Award pays $1,000 gross and, after withholding for taxes and all other reasons, $750 net is remitted directly to the Participant in cash, then under this Section the Company may seek reimbursement of all or any portion of the $1,000 gross amount, provided that the conditions for Clawback are met.
(E)    Forfeiture and Reimbursement in the Context of Misconduct.
(i)    The Company reserves the right (and in certain cases may have the legal duty) to cause or seek the forfeiture of all or any portion of any Performance Award held by any Participant, and/or the reimbursement by any Participant to the Company of all or any portion of any Performance Award paid (as defined in paragraph (iv) below) to the Participant, for any Performance Award where the Board or the Committee concludes in good faith that the Participant engaged in fraud or other intentional, knowing, or willful misconduct in connection with the performance of his or her duties as an officer or Associate of the Company or of any of its Subsidiaries.
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(ii)    In determining whether and to what extent the Board or the Committee (as applicable) may cause the Company to exercise its rights under this Section 13(E) after finding that this Section applies, the Board or Committee may weigh all material facts and circumstances pertaining to the relevant acts and events, and may take any factors into account that it deems relevant to the determination, including, among others, the following factors: the degree or risk of harm or other consequences to the Company or its Subsidiaries, including tangible, financial, regulatory, reputational or other intangible harm; the extent to which the misconduct was intended to allow the Participant to personally gain a profit or advantage or personally avoid a loss or disadvantage; the extent to which the Participant did or did not believe his or her misconduct would further the best interests of the Company or its Subsidiaries; the extent to which the Participant’s misconduct took advantage of or otherwise betrayed a trust conferred upon that Participant; and the extent to which the misconduct involved deceit by the Participant.
(iii)    The Company’s right in this Section 13(E) with respect to an Award will expire if not asserted – by notice to the Participant, court filing, or otherwise – within three years after the Award is paid or, if the Award is paid in parts on more than one occasion, within three years after the final payment of the Award. For this purpose an assertion of rights need only reflect that the Company is commencing or has commenced a review of possible misconduct by the Participant; such an assertion may, but need not, reflect the completion of the investigation and other processes outlined in this Section or a demand for repayment. Also, for purposes of this Section 13(E) (iii), an Award is deemed paid when actually paid or, if earlier, when the Participant’s elective deferral is effectuated. Accordingly, any delay or deferral period mandated by the terms of an Award or otherwise will extend the period under this Section.
(iv)    For the purposes of this Section 13(E) a Performance Award is “paid” when, among other things, any one or more of the following occur: the Award results in a cash payment to or for the benefit of the Participant; the Award results in shares issued or delivered to the Participant; or the Award results in an increase in a deferral account of the Participant or otherwise results in any credit for the account or benefit of the Participant. “Payment” may occur, among other things, in connection with an exercise of the Award, the Vesting of the Award, the delivery of share certificates to the Participant, or the crediting of shares to a Participant’s deferral, brokerage, or other account. The amount paid is the amount of dollars or shares or both that is so paid, issued, delivered, increased, or credited. Shares and share units paid include all proceeds from those shares, including any cash, stock, or stock unit dividends related to those shares or units, as well as shares or share units from stock splits related to those shares or units. Any Performance Award earned and deferred and any Performance Award payments that are earned and deferred for any reason are subject to this Section 13(E) as having been paid, along with all dividends, dividend equivalents, interest, shares, and other amounts earned upon or that are proceeds of the amount or shares deferred. However, if the Participant elects to invest deferred amounts in a manner that results in a loss, the Participant nevertheless may be required to reimburse to the Company the full amount of the Performance Award (measured in dollars or shares, as applicable at the time originally earned) if the conditions of this Section 13 are met.
(v)    Any of the Board, the Committee, the Chairman of the Committee, the Chairman of the Board, or the Chief Executive Officer, acting singly based on any good faith suspicion that the conditions of this Section 13(E) above might be met, may halt and suspend payment of any Performance Award (including payment of any amount delayed or deferred in connection with any Performance Award and any earnings thereon or proceeds thereof) until the Board, Committee, or Committee’s delegate has investigated, considered, and acted upon the matter hereunder. Any such suspension will be without interest owed to the Participant if it is later determined that any payment should be made to the Participant.
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(vi)    No payment of any Award, whether or not following a payment-suspension, will operate to waive or diminish the Company’s right to seek reimbursement under this Section.
If the Board acts under this Section 13(E), any member of the Board whose conduct is at issue must recuse him- or herself from participating in the matter as a Board member.

Section 14. Effects of Change in Control
(A)    Lapse of Restrictions Generally. Except as otherwise provided in this Section or elsewhere in the Plan, upon a Participant’s Qualifying Termination following a Change in Control, all outstanding Awards of that Participant will Vest, become immediately exercisable or payable, and have all restrictions lifted, as the case may be. Awards may not Vest, and the Committee may not provide in an Award Document that the Vesting of an Award is accelerated, solely because a Change in Control occurs. Subject to the foregoing, an Award Document or an individual agreement between the Participant and the Company may provide for additional or substitute benefits to the Participant in connection with a Change in Control.
(B)    Performance Awards. Unless otherwise specified or provided for in the Award Document:
(i)    Upon a Qualifying Termination following a Change in Control, for each Performance Award the performance goals and any other performance-related conditions will be deemed met: at the target level, if any is specified in the Award; and, if no target is specified as such, at the nominal or 100% level specified in the Award.
(ii)    In connection with any Change in Control, as to each Performance Award held by each Participant where a Qualifying Termination does not occur upon or shortly after that event, the Committee must determine whether or not performance relative to the performance goals of outstanding Performance Awards reasonably can be measured at the end of the respective performance periods. If the Committee determines that such performance cannot reasonably be measured after the Change in Control occurs (a “Substantial Change in Control”), then for each affected Performance Award the performance goals and any other performance-related conditions will be deemed met: at the target level, if any is specified in the Award; and if no target is specified as such, at the nominal or 100% level specified in the Award. A Substantial Change in Control is deemed to have occurred, without determination by the Committee, if the Company’s Shares no longer are outstanding or listed on a national securities exchange or quotation system. Continuing-service conditions, and any other non-performance requirements, will not be affected by a Substantial Change in Control absent a Qualifying Termination.
(iii)    The provisions of this Section are not intended to limit the Committee’s authority and discretion under Section 3(B) and Section 3(C) to adjust Performance Awards following any merger or other significant corporate event, whether or not a Change in Control occurs.
(C)    Options and SARs. Unless otherwise specified or provided for in the Award Document:
(i)    The Board or Committee may require that all or specified groups of Option and SAR Awards outstanding when a Substantial Change in Control occurs be canceled at that time or as a consequence of that event. For any such Award that is canceled the Participant will be entitled to a cash payment of not less than the amount computed by subtracting the option price or base price (as applicable) per Share from the fair value of the consideration to be received per Share by the Company’s common shareholders in connection with the Substantial Change in Control transaction. In such case the Board or Committee may determine, in its discretion in good faith, the fair value of such consideration. Option and SAR Awards which have a negative value, as so measured, may be canceled without payment.
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(ii)    Participants holding Option and SAR Awards have no right to receive cancellation. If their Awards are canceled, such Participants have no right to claim or receive the potential future value of their Awards based on possible growth in value after the Substantial Change in Control event.
(D)    Retirement. Upon a Qualifying Termination following a Change in Control, unless otherwise specified or provided for in the Award Document: to the extent an Award Document or the Procedures provide that Retirement benefits or treatment apply only upon discretionary approval, such approval will be deemed given; and, to the extent that such Retirement benefits or treatment may be determined or varied in a discretionary manner, the standard or typical benefits or treatment will be deemed approved. For this purpose, standard or typical benefits or treatment will be determined by reference to the Award Document and/or Procedures or, if no such benefits or treatment is there specified, to the most recent Participant Retirement approved by the Committee or its delegate prior to the Change in Control which did not involve termination for Cause or other misconduct.
(E)    Waiver Clarification. For purposes of this Section 14 and the definitions of “Qualifying Termination” and “Good Reason” as used in connection with this Section, a Termination of Retirement Waiver which occurs with respect to a Participant upon or following a Change in Control will not constitute the Participant’s Retirement but instead will constitute an involuntary Termination of Service by the Company or Employer, as applicable.
(F)    Change in Control Transaction Agreement May Override. The terms of the merger or other agreement governing a Change in Control, once approved by the Board and the Company’s shareholders, may allow, authorize, encourage, or require acceleration, settlement (cancellation with cash payment), substitution, or other treatment of outstanding Awards supplemental to the provisions in this Section 14 or in an Award Document, and notwithstanding the limitations in this Section upon the Committee’s authority.
(G)    Section 409A Compliance. If the payment of Shares, cash, or otherwise related to an Award following a Change in Control constitutes the payment of deferred compensation subject to Section 409A, and if the timing or form of that payment is changed as a result of that Change in Control, then no such change in the timing or form of payment may occur unless the event that constitutes a Change in Control as defined in the Plan also is a “change in control event” as defined in Section 409A (including its regulations). If such Change in Control event is not a “change in control event,” then, in order to preserve as much of the benefit of this Section 14 as possible, the Committee may determine to adjust the timing or form of payment in order to avoid becoming subject to Section 409A or in order to comply with Section 409A, even if such adjustment is inconsistent with other provisions of this Section 14 or an Award Document.
(H)    Failure to Assume or Replace. If the Board or Committee in good faith expect a Change in Control transaction to occur in which a successor would not by Section 17(O)(i) or by operation of law be bound by this Plan, if the Company has been unable to comply with Section 17(O)(ii), and if any Awards are expected to remain outstanding under this Plan immediately after consummation of such transaction, then, whether or not Qualifying Terminations of the Award holders have occurred or are expected to occur:
(i)    Each such outstanding Award will be cancelled and paid in cash not later than the close of business on the second business day immediately preceding the expected consummation of the transaction.
(ii)    The cash value of Options and SARs will be their aggregate Spread measured using Fair Market Value on the second business day immediately preceding the payment date. For any Award with a negative Spread, the cash value will be zero.
(iii)    The cash value of each Restricted Cash Unit will be the nominal dollar value of each Unit.
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(iv)    The cash value of each other Full-Value Award will be the Fair Market Value of each underlying Share on the second business day immediately preceding the payment date.
(v)    For each Performance Award, the provisions of this Section 14(H) will be applied by assuming performance at the target level, if any is specified in the Award, and, if no target is specified as such, at the nominal or 100% level specified in the Award.
(vi)    For the avoidance of doubt, this Section 14(H) will not apply if no Awards are expected to remain outstanding because, for example, the successor is expected to replace all such Awards with comparable awards under the successor’s award programs. If the Board or Committee expect a successor to replace some outstanding Awards but not all of them, the provisions of this Section 14(H) will apply only to the Awards not expected to be replaced.

Section 15. Tax Matters
(A)    Withholding for Taxes.
(i)    General. A Participant may be required to pay to an Employer or the Company, and each Employer and the Company has the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan, or from any other compensation or other amount owing to a Participant, the amount (in cash, Shares, other securities, other Awards, or other property) of any Taxes associated with the Award, and to take such other action as may be necessary in the opinion of the Company to satisfy all corporate obligations for the payment of such Taxes. Moreover, the Employer and the Company may withhold from payment of an Award any Taxes related to types of compensation other than Awards.
(ii)    Withholding Tax Features. The Committee may, in its discretion, allow or require that withholding Taxes associated with an Award be paid to the Company (or its agent) from the cash or Shares to be delivered to the Participant from that Award. A withholding tax feature may cover any Taxes required or permitted to be withheld in connection with the Award. A withholding tax feature may, but need not, be limited to the minimum amount of such Taxes required to be remitted to the applicable taxing authorities, but may not exceed the Company’s estimate of Taxes associated with the Award based on the maximum marginal tax rates applicable to that Participant, or (if greater), applicable to Participants generally in the context of that type of Award. Any Shares withheld by the Company for Taxes will be valued at their Fair Market Value on the applicable tax valuation date for the Award, provided that, for this purpose only, “Fair Market Value” may be either Fair Market Value as defined in the Plan, or (if different) that fair market value determined in accordance with applicable tax law and regulations, as the Committee may choose.
(B)    No Liability for Adverse Tax Treatment. Neither the Company nor any Subsidiary, nor any director, officer, employee, or advisor of the Company or any Subsidiary, is liable to any Participant for the Taxes imposed on the Participant in connection with any Award or for the tax consequences to the Participant of any Award or of participation in the Plan.
(C)    Section 409A Compliance. In addition to other provisions in the Plan which refer to Section 409A:
(i)    Deferrals and Deferral Features. Unless expressly determined otherwise by the Board (in connection with the Plan and Awards to Non-Employee Directors) or the Committee (in connection with Plan administration and Awards), all deferral provisions, elections, and features authorized under the Plan or provided in connection with any Award are intended to, and will be
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interpreted and administered to, comply with Section 409A. As to any deferral provision, election, or feature provided in connection with any Award, the Committee may not take action that would fail to comply with Section 409A to the substantial detriment of the Participant, unless the Participant consents. For this purpose, general acceptance of the Award in question does not, by itself, constitute Participant consent to Section 409A non-compliance.
(ii)    Timing Changes Generally. Neither the Company nor any Participant may accelerate or delay payment, settlement, or exercise of any Award except to the extent compliant with Section 409A or an applicable exception, or unless Section 409A does not apply at all.
(iii)    Termination of Service. The Committee or the Company (subject to Committee oversight) may determine to accelerate or delay, or change the form of, payment of any Award or related benefit triggered by or associated with a Participant’s Termination of Service, notwithstanding general provisions of the Plan, in order to avoid the application of Section 409A or in order to comply with Section 409A. Without limiting the foregoing, the Committee or Company may consider: whether the payment will have the status of a “deferral of compensation” and whether that status could be avoided by changing the form or timing of payment, whether a Participant is a “specified employee” at any given time and whether that status might be different at an earlier or later time, and whether the Participant’s Termination of Service constitutes a “separation from service,” all within the meaning of Section 409A.

Section 16. Inception, Termination, Suspension, and Amendment
(A)    Inception. The Plan is effective the date it is approved by the Company’s shareholders, scheduled to occur at the 2021 Annual Meeting of shareholders on April 27, 2021. Awards may not be granted under the Plan prior to initial shareholder approval.
(B)    Termination of Authority for New Awards. No new Awards may be granted under the Plan after June 30, 2031. Unless otherwise expressly provided in the Plan or in an applicable Award Document, any Award granted hereunder may, and the authority of the Board or the Committee to amend, alter, modify, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under any such Award will, continue after the authority for grant of new Awards hereunder has expired or been exhausted.
(C)    Termination, Suspension, or Amendment of the Plan. The Board may amend, alter, modify, suspend, discontinue, or terminate the Plan or any portion thereof at any time, except that:
(i)    The Board may not amend the Plan in violation of law.
(ii)    The Board may not enlarge the Share or dollar limitations in subsection (i) of Section 3(A), or amend the limitations in subsections (ii), (iii), or (iv) of Section 3(A), without the approval of the Company’s common shareholders, other than making adjustments in accordance with Section 3(B).
(iii)    No amendment, alteration, modification, suspension, discontinuation or termination may materially and adversely affect any right acquired by any Participant under the terms of an Award granted before the date of such amendment, alteration, modification, suspension, discontinuation or termination, unless such Participant consents.
(iv)    No amendment of the Plan may be interpreted or administered in a manner that would fail to comply with Section 409A unless expressly determined otherwise by the Board.
(D)    Termination, Suspension, or Amendment of Awards. Subject to the limitations of Section 5(B), the Committee may waive any conditions or rights under, amend any terms of, or modify, alter,
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suspend, discontinue, cancel or terminate, any Award theretofore granted, prospectively or retroactively. No such waiver, amendment, modification, alteration, suspension, discontinuance, cancellation or termination of an outstanding Award that would materially and adversely affect the rights of the Participant will be effective without the consent of the Participant. Neither adjustments for changes in capitalization as provided in Section 3(B), nor adjustments for other material changes as provided in Section 3(C), will be treated as having materially and adversely affected any such rights.

Section 17. Technical & Miscellaneous Matters
(A)    Dividends & Interest. As used in this Section 17(A), “dividends” includes dividend equivalents or substitutes which mirror actual dividends paid to holders of Shares, and “interest” includes any additional cash accrued or paid based on a principal amount and the passage of time. Subject to the limitations enumerated below, the Committee may provide for dividends and interest, including reinvestment of dividends and compounding of interest, in respect of any Award prior to payment. Such determinations may be reflected in the Award Document, the Procedures, or other documentation related to the Award and approved by the Committee, such as meeting minutes or a written Award program.
(i)    Options/SARs Restriction. No dividends or interest may accrue or be paid with respect to Shares underlying Options or SARs prior to exercise.
(ii)    Performance Award Restriction. With respect to any Performance Award, dividends and interest may accrue and/or reinvest or compound if and to the extent the Committee so determines, but may not be paid prior to Vesting of the Award.
(iii)    Full-Value Standard Provisions and Restriction.
(a) To the extent that no specific determination is made for a particular Award, the following provisions will apply to Full-Value Awards by default: (1) for Restricted Cash Units generally, no interest may accrue or be paid; (2) for Restricted Cash Units providing for interest accrual, interest may not be compounded; and (3) for other Full-Value Awards, (X) cash dividends will accrue, (Y) dividends will accrue without interest and without reinvestment, and (Z) dividends will be paid only if and when, and only to the extent that, the underlying Award Vests and is paid.
(b) In any case, dividends and interest on Full-Value Awards may not be paid prior to Vesting of the Award.
(B)    No Rights as Shareholder. Subject to the provisions of the applicable Award, no Participant or holder or beneficiary of any Award has any rights as a shareholder with respect to any Shares to be distributed under the Plan until such Shares are issued to such Participant, holder, or beneficiary and, except in conformity with Section 17(A), will not be entitled to any dividend or distribution the record date of which is prior to the date of such issuance.
(C)    No Rights to Awards. This Plan gives no Person any right to be granted any Award on any terms. The Plan does not require uniformity of treatment of Award recipients, or of holders or beneficiaries of Awards. The terms and conditions of one Award need not be consistent or uniform in any respect whatever with any other Award. An action taken by the Committee in one instance likewise need not be consistent or uniform in any respect whatever with any other action.
(D)    Share Certificates. No Participant has any right to demand the issuance of share certificates. To the extent the Committee chooses to issue certificates, all certificates for Shares or other securities of the Company or any Subsidiary delivered under the Plan pursuant to any Award or the exercise thereof will be subject to such stop transfer orders and other restrictions as the Committee may deem advisable
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under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable federal, state or foreign laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(E)    Grant Date. Subject to Section 7 and Section 11(A), for each Award of Options or SARs, the grant date is the date the Committee acts to approve the grant, or, if so determined by the Committee, any later date selected by the Committee to be the effective date of the Award grant. For all other Awards, the grant date is the date the Committee acts to approve the grant, or, if so determined by the Committee, any other date selected by the Committee to be the effective date of the Award grant. No rights to an Award are created or effective until the grant date, and, prior to the grant date, the Committee may amend, cancel, or rescind any grant action.
(F)    Award Documents. Each Award must be evidenced by an Award Document that specifies the terms and conditions of the Award. An Award is effective only upon delivery to or acknowledgement by a Participant, either electronically or by other means, of an Award Document. Each Award is subject to, and Award Documents are deemed to include, the terms of the Plan applicable to Awards generally and applicable to that Award type, as well as Procedures applicable to that Award type, unless (subject to requirements of the Plan) the Committee expressly determines otherwise. In the event of a conflict between the terms of the Plan and any Award Document, the terms of the Plan will prevail.
(G)    Other Compensation Arrangements. Nothing in the Plan will prevent the Company or any Subsidiary from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for compensation, awards, or benefits similar to those provided for hereunder.
(H)    No Right to Employment. The grant of an Award may not be construed as giving a Participant the right to be retained in the employ of any Employer. Further, an Employer may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Document.
(I)    Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award Document will be determined in accordance with the substantive laws of the State of Tennessee, without giving effect to the conflict of law principles thereof.
(J)    Severability. To the extent applicable to a particular Award granted to a particular Pariticipant, the forfeiture and Clawback provisions of the Plan, the Clawback Policy, the Procedures, and the Award Document may be limited by the laws of another state associated with where the Participant lives or works. If a court of competent jurisdiction determines that any of those provisions is unlawful or prohibited by law as applied to that Award, then those provisions of that Award will be deemed modified, reduced, or otherwise cut back to the minimum extent possible in order to preserve the original provisions to the maximum extent possible, consistent with applicable state law as applied to that Award and that Participant.
(K)    Other Laws. The Committee or the Company may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation (including applicable non-U.S. laws or regulations) or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award will be promptly refunded to the relevant Participant, holder, or beneficiary. Without limiting the generality of the foregoing, no Award may be construed as an offer to sell securities of the Company, and no such offer may be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal or non-U.S. securities laws and any other laws to which such offer, if made, would be subject.
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(L)    No Trust or Fund Created. Neither the Plan nor any Award creates or may be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Subsidiary pursuant to an Award, such right is no greater than the right of any unsecured general creditor of the Company or such Subsidiary, as applicable.
(M)    Fractional Shares. No fractional Shares may be issued or delivered pursuant to any Award unless the Board or the Committee expressly determines otherwise. The Committee may determine whether cash, other securities, or other property will be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto will be canceled, terminated, or otherwise eliminated without payment. Fractional Shares may be used in the administration of outstanding Awards prior to payment or exercise, even if not paid.
(N)    Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings may not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
(O)    Binding Effect.
(i)    The terms of the Plan are binding upon the Company and its successors and assigns and the Participants and their beneficiaries and legal representatives, and will bind any successor of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company would be obligated under this Plan if no succession had taken place.
(ii)    In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Plan, the Company must require such successor expressly and unconditionally to assume and agree to perform the Company’s obligations hereunder, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
(P)    No Third Party Beneficiaries. Except as expressly provided herein or therein, neither the Plan, the Procedures, nor any Award Document will confer on any person other than the Company and each Participant any rights or remedies hereunder or thereunder.

Section 18. Definitions
As used in the Plan, the following terms have the meanings set forth below:
“Amount” means any Threshold Amount, Target Amount, or Maximum Amount.
“Annual Incentive” means an annual cash bonus award earned by a Participant, whether or not under a formal bonus plan. Annual Incentives may be paid using Awards instead of cash, as provided in Section 11. For this purpose, a cash bonus award is “annual” if it relates to a single fiscal year of the Company or a Subsidiary, or any portion of a single fiscal year. The Committee may treat partial-year Annual Incentives, all relating to different parts of the same year, as a single Annual Incentive.
“Associate” means an employee of any Employer.
“Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Restricted Cash Unit, Performance Award, or Shares In Lieu award granted under the Plan, whether singly or in combination, to a Participant pursuant to such terms, conditions, restrictions, and/or limitations, if any, as may be established from time to time.
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“Award Document” means, collectively, any agreement, contract, notice, plan, program, or other instrument(s) or document(s), or any combination thereof, collectively evidencing an Award or its terms. An Award Document may, but need not, be executed or acknowledged by the Participant and may be presented, delivered, executed, acknowledged, or recorded in any physical, electronic, or other medium.
“Beneficiary” has the meaning given in Section 12(C).
“Board” means the Board of Directors of the Company.
“Cause” means:
(i)    a Participant’s conviction of, or plea of guilty or nolo contendere (or similar plea) to, (A) a misdemeanor charge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting, or extortion, (B) a felony charge, or (C) an equivalent charge to those in clauses (A) and (B) in jurisdictions which do not use those designations;
(ii)    a Participant’s engagement in any conduct which constitutes, or which results in, employment or service disqualification, disbarment, or prohibition under applicable law or regulations (including under banking, financial industry, or securities laws or regulations);
(iii)    a Participant’s knowing violation of any securities or commodities laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of any securities or commodities exchange or association of which the Company or any of its Subsidiaries or affiliates is a member;
(iv)    a Participant’s substantial failure to perform his or her duties to the Company or its Subsidiaries;
(v)    a Participant’s knowing and substantial breach of any contract or agreement with the Company or its Subsidiaries;
(vi)    a Participant’s knowing violation of any policy of the Company or its Subsidiaries concerning hedging, trading, or confidential or proprietary information, or a Participant’s knowing and substantial violation of any other policy of the Company or of any of its Subsidiaries as in effect from time to time;
(vii)    a Participant’s knowing and substantial unauthorized use, taking, mis-appropriation, conversion, or disclosure of tangible or intangible property, including information, of the Company, any of its Subsidiaries, or of any Associate, director, customer, or client of the Company or any of its Subsidiaries;
(viii)    a Participant’s deliberate engagement in any act or deliberate making of any statement which substantially impairs, impugns, denigrates, disparages, or negatively reflects upon the name, reputation, or business interests of the Company or any of its Subsidiaries, or upon the name, reputation, or business interests of any Associate, director, customer, or client of the Company or any of its Subsidiaries; or
(ix)    a Participant’s deliberate engagement in any conduct substantially detrimental to the Company or its Subsidiaries.
The determination as to whether Cause has occurred in any given instance will be made in the sole discretion of: (a) for a Participant who is a Non-Employee Director, by the Board or, if so directed by the Board, by the Committee; (b) for a Participant who is a Section 16 Executive or Regional Board Member, by the Committee or, if so determined by the Board, by the Board; (c) for any other Participant, by management of the Company under the oversight of the Committee or, if so determined by the Committee, by the Committee. The Board, Committee, or management, as the case may be, also has the
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authority in its sole discretion to waive the consequences under the Plan or any Award Document of the existence or occurrence of any of the events, acts or omissions constituting Cause.
“Change in Control” means, unless otherwise defined in the applicable Award Document and except as defined in Section 14(G) for the purposes of certain tax matters, the occurrence of any one of (and will be deemed to have occurred on the date of the earliest to occur of) the following events:
(i)    individuals who, on January 26, 2021, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to that date, whose election or nomination for election was approved by a vote of at least three-fourths (3/4) of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) will be deemed to be an Incumbent Director; provided, however, that no individual elected or nominated as a director of the Company initially as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board will be deemed to be an Incumbent Director;
(ii)    any “Person” (for purposes of this definition only, as defined under Section 3(a)(9) of the Exchange Act as used in Section 13(d) or Section 14(d) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding Company Voting Securities; provided, however, that the event described in this paragraph (ii) will not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by an Associate stock ownership or Associate benefit plan or trust sponsored or maintained by the Company or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii) hereof);
(iii)    consummation of a merger, consolidation, share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s shareholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to the consummation of such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no Person (other than any Associate benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above will be deemed to be a “Non-Qualifying Transaction”);
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(iv)    consummation of a sale of all or substantially all of the Company’s assets; or
(v)    the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.
Computations required by paragraph (iii) will be made on and as of the date of shareholder approval and will be based on reasonable assumptions that will result in the lowest percentage obtainable. Notwithstanding the foregoing, a Change in Control of the Company will not be deemed to have occurred solely because any Person acquires beneficial ownership of more than twenty percent (20%) of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such Person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such Person, a Change in Control of the Company will then occur.
“Clawback” has the meaning given in Section 13(D)(i).
“Clawback Policy” means, to the extent applicable to the Participant and to his or her Awards from time to time, the Compensation Recovery Policy and the Erroreously Awarded Compensation Recovery Policy, and any successor(s) thereto, along with any written, duly authorized procedures applicable to either such Policy.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” means a committee of the Board composed solely of not less than two Non-Employee Directors, all of whom (i) satisfy the requirements of Rule 16b‑3(b)(3) of the Exchange Act as amended from time to time or any successor to such Rule, and (ii) otherwise meet any “independence” requirements promulgated by the principal stock exchange on which Shares are listed. The members of the Committee are appointed by and serve at the pleasure of the Board. The Board may determine that a standing committee of the Board, with duties beyond administering the Plan and meeting the foregoing requirements, may act as the Committee, and further may determine that a sub-committee of any such standing committee, where the sub-committee meets the foregoing requirements, may act as the Committee.
“Company” means First Horizon Corporation, a Tennessee corporation, and its successors and assigns.
“Company Voting Securities” means the outstanding securities issued by the Company ordinarily having the general right to vote at elections of the Company’s directors, including shares of the common capital stock of the Company, par value $0.625 per share. Securities which have only a limited right to vote, such as the right (as a class or series) to elect one or two directors but not to vote for directors generally, are not included within “Company Voting Securities.”
“Compensation Plans” means any compensation plan such as an incentive, stock option, restricted stock, pension restoration or deferred compensation plan or any Associate benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance plan or a relocation plan or policy or any other plan, program or policy of the Company intended to benefit Associates, including, without limitation, any such compensation plans established after this Plan was established or most recently amended.
“Deferred Compensation Award” means any Award that is not an Exempt Award.
“Disability” means, unless otherwise defined in the applicable Award Document, a disability that would qualify as a total and permanent disability under the long-term disability plan then in effect (i) at the Employer employing the Participant at the onset of such total and permanent disability, or (ii) for Non-Employee Director and Regional Board Member Participants, at First Horizon Bank, whether or not such Participant is covered by that disability plan.
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“Employer” means the Company or any Subsidiary. For Non-Employee Directors the “Employer” is the Company or First Horizon Bank, as applicable. For Regional Board Members the “Employer” is First Horizon Bank.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Fair Market Value” with respect to Shares means: (i) the closing sales price at which Shares were sold on the New York Stock Exchange, or, if the Shares are not listed on the New York Stock Exchange, on any other such exchange on which the Shares are traded, on such date, or, in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) in the event there is no public market for the Shares on such date, the fair market value as determined in good faith by the Committee in its sole discretion. “Average Fair Market Value” means the arithmetic average of the Fair Market Values of the Common Stock for the trading days falling within a specified period.
“First Horizon Bank” means the Company’s primary banking subsidiary, First Horizon Bank, or any successor from time to time.
“Full-Value Award” means any Award other than an Award of Options or SARs.
“Grant date” has the meaning given in Section 17(E).
“Good Reason” means, with respect to any Participant who is an Associate, any of the following as to which notice of Participant’s objection is given by the Participant to the Company:
(i)    an adverse change in the Participant’s status, title or position with the Company as in effect immediately prior to the Change in Control, including, without limitation, any adverse change in the Participant’s status, title or position as a result of a diminution in the Participant’s duties or responsibilities, or the assignment to the Participant of any duties or responsibilities which are inconsistent with such status, title, or position as in effect immediately prior to the Change in Control, or any removal of the Participant from, or any failure to reappoint or reelect the Participant to, such position;
(ii)    a reduction by the Company in the Participant’s cash salary or target amount of annual cash incentive opportunity (including any adverse change in the formula for such annual cash incentive) as in effect immediately prior to the Change in Control or as the same may be increased from time to time thereafter;
(iii)    the failure by the Company to provide the Participant with Compensation Plans that provide the Participant with substantially equivalent benefits in the aggregate to the Compensation Plans as in effect immediately prior to the Change in Control (at substantially equivalent cost to the Participant with respect to welfare benefit plans); and
(iv)    the Company’s requiring the Participant to be based at an office that is greater than 50 miles from where the Participant’s office is located immediately prior to the Change in Control;
provided, however, that: (a) an action taken in good faith and which is remedied by the Company within ten days after Company’s receipt of the objection notice thereof will not constitute Good Reason; (b) no action or event will constitute a Good Reason if the Participant has acknowledged to the Company in writing that a Good Reason will not arise from that action or event; and (c) no action or event will constitute a Good Reason unless (1) the Participant has given the objection notice to the Company thereof not more than 30 days after the action first was taken or the event first occurred, and (2) the Participant has resigned not less than ten business days after the objection notice has been given to the Company and not more than 90 days after the action first was taken or the event first occurred.
“Mandatory Retirement” means a Participant’s Termination of Service required by a Company or Employer Bylaw, Company or Employer policy, or action of the Company, Employer, Committee, or
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Board, due to one or more conditions having been met at least one of which is the Participant having attained a certain age. The term “Mandatory Retirement” includes Termination of Service following Termination of Retirement Waiver.
“Maximum Performance” means, for a given Performance Award, the level of attainment of applicable Performance Goals necessary for the highest level of payment of the Award (the “Maximum Amount”) in relation to the Performance Period, after making all adjustments required by the Award or the Plan but, in the case of Performance Goals, without considering the impact of the exercise of discretion.
“Non-Employee Director” means a member of the Board who is not an Associate.
“Option” means an option to purchase a Share from the Company at a fixed Option Price that is granted under Section 5 or Section 7 and is not intended to meet the requirements of Section 422 of the Code or any successor provision thereto.
“Option Price” means the purchase price payable to purchase one Share upon the exercise of an Option Award established in accordance with Section 5(B).
“Out-of-the-money” has the meaning given in Section 5(B)(iii).
“Participant” means any Associate, Non-Employee Director, or Regional Board Member who receives an Award under the Plan.
“Performance Award” means any Award granted under Section 8 of the Plan.
“Performance-based” has the meaning given in Section 8(A).
“Performance Goal” means any performance goal, based on one or more Performance Measures, which is established by the Committee for a Performance Period and the attainment of which is necessary for the payment of a Performance Award to a Participant at the completion of the Performance Period. A Performance Goal may be expressed as an absolute amount or percent, as a ratio, or per share or per Associate.
“Performance Measure” means one or more, or any combination, of the following financial performance measures: stock price, dividends, total shareholder return, earnings per share, market capitalization, book value, revenues, expenses, assets, loans, deposits, liabilities, shareholder equity, regulatory capital, noninterest income, net interest income, fee income, operating income before or after taxes, net income before or after taxes, economic profit, return on assets, return on equity, return on capital, risk-adjusted return on capital, net interest income, cash flow, credit quality, service quality, market share, customer retention, efficiency ratio, liquidity, strategic business objectives consisting of one or more objectives based on meeting business expansion or contraction goals, and other goals relating to acquisitions or divestitures or openings or closures. Any such Performance Measure may be for the Company or any Subsidiary, operating unit, division, line of business, reporting segment, department, team, or business unit, and may be for any other company or group of other companies identified by the Committee or any segment, subsidiary, or other subdivision of such other company(ies). Any such Performance Measures may provide for adjustment to include or exclude actual or hypothetical items or amounts and may provide for artificial increase or decrease by amounts or percentages selected by the Committee, and any such adjusted or altered measure will be a “Performance Measure.” The term “Performance Measure” includes any component or any combination of components of any such Measure; examples include Common Equity Tier 1 regulatory capital, tangible common equity, tax expense, non-recurring expenses, provision expense, southwest Florida pre-tax noninterest income in a particular business segment, wealth management revenue, and tangible assets. Any such Performance Measure may be used for financial reporting purposes, for internal or management purposes, or for any purpose of the Plan created or defined by the Committee. Any such Performance Measure based on balance sheet or similar data may be measured at period-end or on an average or other basis as specified by the Committee. The term “Performance Measure” also means any
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non-financial or other performance criteria established by the Committee, including any personal plan goal. Without limiting the generality of the foregoing, “non-financial” performance criteria may include measures related to environmental, social, or governance achievements. As used herein, a specific Performance Measure may be “combined” with any one or more other Performance Measures by addition, subtraction, multiplication, division, or other arithmetic means, or by any combination of such operations, as specified by the Committee, and the result of such combination will be a Performance Measure. Without limiting the generality of the previous sentence, the ratio, ranking, or other quantitative relationship of a Performance Measure of the Company with a Performance Measure of another company (or group of other companies) is itself a Performance Measure.
“Performance Period” means the period to be used in measuring the degree to which Performance Goal(s) relating to a Performance Award have been met.
“Person” (other than in connection with the definition of Change in Control) means any individual, corporation, partnership, group, association, joint-stock company, limited liability company, trust, unincorporated organization, government or political subdivision thereof, or other entity.
“Personal Plan Goal” means an individual performance goal to be achieved by a Participant in a Performance Period which is not based upon quantitative or objective corporate performance. Personal Plan Goals may be established in any manner approved by the Committee.
“Plan” means this 2021 Incentive Plan, as amended from time to time.
“Prior Stock Plan” means the Company’s Equity Compensation Plan, as amended and restated April 26, 2016 and as further amended from time to time.
“Procedures” has the meaning given in Section 2(F).
“Qualifying Termination” means the Termination of Service of a Participant with the Company and its Subsidiaries resulting from any of the following:
(i)    an involuntary Termination of Service of a Participant by the Company and its Subsidiaries within 24 months following a Change in Control, other than a termination for Cause, a termination due to Disability, or as a result of the Participant’s death; or
(ii)    a Termination of Service by a Participant for Good Reason within 24 months following a Change in Control.
Mandatory Retirement, as defined in the Plan, constitutes an involuntary termination by the Company or its Subsidiaries for purposes of clause (i). For any Participant who is a Non-Employee Director or Regional Board Member, a resignation which was requested by the Company, by First Horizon Bank, or by the Board in connection with a Change in Control will be treated as a Qualifying Termination.
“Regional Board Member” means any First Horizon Bank regional board member and any member of the board of directors of any bank subsidiary of the Company, other than First Horizon Bank, in each case excluding any Associate.
“Renomination Failure” means the failure of the Company or of the Board (including an authorized committee of the Board) to re-nominate for election any Non-Employee for any reason other than: Cause; or the normal operation of the Company’s mandatory retirement bylaw or policy applicable to Non-Employee Directors immediately prior to any Change in Control event which occurred less than 36 months prior to the nomination decisions being made.
“Restricted Cash Unit” means any unit denominated as a specific or determinable number of dollars (rather than Shares), payable in cash only, and granted under Section 6 or Section 7. An Award of Units denominated in Shares is a Restricted Stock Unit Award, not a Restricted Cash Unit Award, even if
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eventual payment is in cash. An Award of Units denominated in dollars but paid in Shares likewise is a Restricted Stock Unit Award.
“Restricted Stock” means any Share granted under Section 6 or Section 7.
“Restricted Stock Unit” means any unit denominated as a specific or determinable number of Shares and granted under Section 6 or Section 7.
For each Award, “Retirement” has the meaning provided in the applicable Award Document or in the Procedures applicable to that Award. If an Award (including the Procedures) provides no definition of retirement but provides for or alludes to retirement treatment (reduction or elimination of forfeiture) at the discretion of the Committee or its delegate, then for that Award “Retirement” means a Termination of Service as to which retirement treatment has been given.
“Retirement Waiver” means an open-ended, discretionary deferral or waiver of a Participant’s Mandatory Retirement. For this purpose “open-ended” means having no defined finite period or end date established prior to the occurrence of a Change in Control.
“SEC” means the Securities and Exchange Commission or any successor thereto.
“SEC Section 16” means Section 16 of the Exchange Act and the rules promulgated thereunder and any successor provision thereto as in effect from time to time.
“Section 16 Executive” means an executive officer of the Company required to file ownership reports by SEC Section 16.
“Section 409A” means Section 409A of the Code and the regulations promulgated thereunder or any successor provision thereto as in effect from time to time. “Compliance with Section 409A” or any similar phrase means taking such actions, refraining from such actions, or (in the case of the Plan, an Award, or other document) having such provisions, as are necessary to secure a favorable, ordinary, or expected tax outcome or to avoid a substantially adverse tax outcome, related to Section 409A, for the Company or its Subsidiaries or for a Participant.
“Share” means a share of the Company’s common stock, $0.625 par value, as adjusted from time to time for stock splits, reverse stock splits, or recapitalizations affecting such stock.
“Shares In Lieu” means an Award of Shares, or Units denominated in Shares, which settle an earned cash obligation of the Company related to compensation, as provided in Section 10.
An Award of “Stock Appreciation Rights” or “SARs” means a right granted under Section 5 or Section 7 that entitles the holder to receive, with respect to each Share encompassed by the exercise of such Award, the amount determined by the Committee, or in the case of an Award granted under Section 7, by the Board, and specified in an Award Document. In the absence of such a determination, the holder will be entitled to receive, with respect to each Share encompassed by the exercise of such Award, the excess of the Fair Market Value on the date of exercise over the base price for the Award established at grant.
“Spread” means, for each Share underlying an Option or SAR Award on any given date, the difference between Fair Market Value of a Share on that date, and the option or base price of the Award.
“Subsidiary” means any Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company.
“Substantial Change in Control” has the meaning given in Section 14(B).
“Substitute Awards” means Awards granted solely in assumption of, or in substitution for, outstanding awards previously granted by a Person acquired by the Company through merger, purchase, or otherwise, or with which the Company or one of its Subsidiaries combines.
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“Target Performance” means, for a given Performance Award, the level of attainment of applicable Performance Goals necessary for payment of the Target Amount in relation to a Performance Period, after making all adjustments required by the Award or the Plan but, in the case of Performance Goals, without considering the impact of the exercise of any discretion. The “Target Amount” means the target level of payment established by the Committee for the Award or, if no such level is identified as being “target,” the amount payable to a Participant for the achievement of 100% of the applicable Performance Goals in relation to the Performance Period. If an Award is established without specifying a target level of performance and without providing for an increase in payment for achievement above 100% performance, then the “Target Amount” is the Maximum Amount.
“Tax,” in relation to an Award or other compensation, means any income, employment, service, excise, withholding, sales, transfer, value-added, wealth, property, securities, or other tax imposed on or applicable in respect of the Award’s or compensation’s grant, existence, Vesting, exercise, payment, settlement, conversion, transfer, or other event associated with the Award or compensation. Without limiting the foregoing, such a Tax may be imposed or levied by any governmental taxing authority or agency, including local, state, federal, or national authorities and agencies within or outside the U.S.
“Termination of Service” means, for any Associate, the termination of the Associate-employer relationship between a Participant and his or her Employer for any reason, with or without Cause, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, or Retirement, but excluding (i) terminations where there is a simultaneous reemployment or continuing employment of the Participant by another Employer; (ii) at the discretion of the Committee, terminations which result in a temporary severance of the Associate-employer relationship; and (iii) at the discretion of the Committee, terminations which are followed by the simultaneous establishment of a consulting relationship by an Employer with the Participant. The Committee, in its absolute discretion, may determine the effect of all matters and questions relating to Termination of Service, including, but not by way of limitation, the question of whether a Termination of Service resulted from a discharge for Cause, and all questions of whether particular leaves of absence constitute Terminations of Service. However, notwithstanding the foregoing: (i) the Committee must interpret “Termination of Service” to be consistent with “separation from service” (or other similar phrase from time to time) as used in Section 409A and its regulations; and, (ii) an Employer has an absolute and unrestricted right to terminate an Associate’s employment at any time for any reason whatsoever, with or without Cause.
“Termination of Service” means, for any Regional Board Member or Non-Employee Director, the termination of the engagement of the Participant as a Regional Board Member or Non-Employee Director, as applicable, for any reason, with or without Cause, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, Retirement, or Re-Nomination Failure. The Committee (in the case of Regional Board Members) and the Board (in the case of Non-Employee Directors), in its absolute discretion, may determine the effect of all matters and questions relating to Termination of Service, including, but not by way of limitation, the question of whether a Termination of Service resulted from a discharge for Cause, and all questions of whether a leave of absence constitutes a Termination of Service.
“Termination of Retirement Waiver” means action by the Company, Employer, Committee, or Board which results in the termination of a Participant’s Retirement Waiver.
“Threshold Performance” means, for a given Performance Award, the level of attainment of applicable Performance Goals necessary for the minimum non-zero level of payment of the Award (the “Threshold Amount”) in relation to a Performance Period, after making all adjustments required by the Award or the Plan but, in the case of Performance Goals, without considering the impact of the exercise of any discretion.
An Award “Vests” (also known as “Vesting”) when the following occur: (i) in connection with non-performance based Options and SARs, the satisfaction or other lapse of all service and other pre-
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conditions to the recipient’s ability to exercise the Award; (ii) in connection with non-performance based Full-Value Awards, the satisfaction or other lapse of all service and other pre-conditions to the payment of the Award other than a waiting period (e.g., the mere passage of time during which no service, payment, or other thing is required of the Award recipient prior to payment); and (iii) in connection with Performance Awards and any other Awards that contain a performance condition, the satisfaction or other lapse of all service and other pre-conditions to the payment of the Award other than a waiting period and, in addition, the determination by the Committee or its delegate whether, or the degree to which, applicable performance goals have been achieved after the performance period has elapsed and after discretion applicable to the Award, if any, has been exercised. The Vesting of an Award does not mean that the Award has become non-forfeitable, non-recoverable, irreducible, immutable, or immediately payable. The application of conditions subsequent (including, for example, non-competition, non-solicitation, true-up, and misconduct covenants or conditions) which may extend for a period of time following exercisability, exercise, and/or payment will not be affected or diminished by the Vesting of the related Award. “Continued Vesting” has the meaning given in Section 9(C).

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EX-10.2 (E) 3 afy2023xexh10x2xexexecpsus.htm EX-10.2 (E) Document

GRANT NOTICE
Performance Stock Units—ROTCE/TSR Rank
[Participant Name]
Grant Date: __________ __, 2024 Governing Plan: 2021 Incentive Plan
Target Number of PSUs Granted: ROTCE Performance Period: Three-year period 2024 thru 2026
Vesting Date:
May 12, 2027
TSR Start Date: First trading day of 2024
TSR End Date: Last trading day of 2026
You have been granted Performance Stock Units (PSUs) of First Horizon Corporation (“FH”). This award of PSUs is granted under the Governing Plan specified above, and is governed by the terms and conditions of that Plan and by administrative policies, practices, and procedures (“Procedures”) of the Compensation Committee of FH’s board of directors that are in effect during the performance and service vesting periods. Also, this award is subject to the terms and restrictions of FH’s stock ownership guidelines and two policies (collectively, the “Policy”) as in effect during the vesting period: the Compensation Recovery Policy and, to the extent applicable to this award and to you, the Erroneously Awarded Compensation Recovery Policy. Amendments to any of those documents after the Grant Date may apply to this award.
No part of this award is earned until that part vests. PSUs that have not been forfeited prior to the Vesting Date will satisfy the performance requirement of this award based on the extent to which the performance goals are achieved during the ROTCE Performance Period, all as set forth in Exhibit A to this Notice. Performance for this award in Exhibit A is based on FH’s ranking of average annual return on tangible common equity (“A-ROTCE rank”), adjusted as provided in Exhibit A, relative to peers’ average annual return on tangible common equity in the ROTCE Performance Period, modified by FH’s ranking of its TSR (“TSR rank”) relative to peers’ TSR measured from the TSR Start Date to the TSR End Date. As provided in Exhibit A, FH’s TSR Start Value will be the Fair Market Value on the TSR Start Date, and FH’s ending value will be the Fair Market Value ending on the TSR End Date. The target number of PSUs granted is the number that would be paid if A-ROTCE rank and TSR rank both are achieved at the median rank. Higher rank would result in a higher amount paid; a lesser number would be paid if a lesser rank is achieved; and, all PSUs would forfeit if the minimum A-ROTCE rank in Exhibit A (the bottom of the third quartile) is not achieved. The overall performance percentage is the product of the A-ROTCE and TSR outcomes expressed as percentages. The Committee will make appropriate adjustments of FH accounting numbers so that results are comparable across periods and will make final determinations of performance achievement and any final adjustments, all as provided or permitted by Committee action and the Governing Plan.
PSUs that do not vest as a result of a failure to achieve A-ROTCE minimum performance level, as determined by the Committee, are forfeited automatically.
This award also is subject to possible reduction or forfeiture in advance of vesting in accordance with the Governing Plan, the Procedures, and the Policy. As of the Grant Date, the Procedures provide (among other things) that: (a) forfeiture generally will occur immediately upon termination of employment—you must remain continuously employed by FH or one of its subsidiaries through the close of business on the Vesting Date; but (b) if your termination of employment occurs because of your death or permanent disability, forfeiture will be avoided and service vesting will be accelerated and (c) if your termination occurs because of approved retirement, forfeiture will be avoided, and this award will receive Continued Vesting treatment, in whole or part to the extent the approval so provides. The Committee or its delegate will document death or determine whether disability or retirement status has been achieved and, as applicable, apply pro-rationing. Payment of your PSU award may be suspended pending any such determinations and approvals. Acceleration of service vesting, or waiver of further service, does not satisfy the performance requirement of this award; the performance requirement will continue in effect unless explicitly waived by the Committee in writing.
To be considered for retirement approval, you must be either (i) at least age 65 with at least 5 years of service, or (ii) at least age 55 with at least 15 years of service.
Retirement treatment must be approved by the Committee; the Committee may impose conditions to receiving such treatment; and the Committee may deviate from zero forfeiture or ordinary Continued Vesting typically being implemented at that time. The general requirements to approve retirement are described in the Procedures.
Other forfeiture provisions apply to this PSU award. Currently the Governing Plan and Policy provide for forfeiture of this award or recovery of amounts paid if you engage in certain types of misconduct or if performance data is materially false or misleading and you are substantially responsible for its accuracy. This award is subject to forfeiture or recovery to the extent required by applicable capital conservation rules or other regulatory
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requirements. Also, this award will be forfeited, or if already vested you must pay in cash to FH the gross pre-tax value of this award measured at vesting, if during the restriction period applicable to this award: (1) you are terminated for Cause as defined in the Governing Plan; or (2) you, either on your own behalf or on behalf of any other person or entity, in any manner directly or indirectly solicit, hire, or encourage any person who is then an employee or customer of FH or any and all of its subsidiaries or affiliates to leave the employment of, or to end, diminish, or move any of his, her, or its accounts or relationships with, FH or any and all of its subsidiaries or affiliates. The restrictions in (2) apply only to employees who work in, and to customers which reside in or have a place of business in, one or more of the counties and parishes that comprise the “Territory” applicable to the year in which the Grant Date falls. A list of the counties and parishes that comprise the Territory for this award has been made available to you at the time you accept this award, and is available to you at any time on request (see the final paragraph of this notice). The restriction period for this award begins on the Grant Date and ends on the second anniversary of the Vesting Date. By accepting this PSU award, you acknowledge that FH may reduce or offset other amounts owed to you, including but not limited to wages, bonuses, or commissions owed, among other things, to satisfy any repayment obligation.
The Committee reserves the right, in its sole discretion, to waive forfeiture or accelerate vesting in whole or part. You have no right to any such discretionary waiver or acceleration. If a request for a waiver were granted, only the units not covered by the waiver would forfeit.
This award is governed by the substantive laws of Tennessee, without regard to conflicts of laws principles. To the extent applicable to this award and to you, the forfeiture and recovery provisions of this award, and of the Policy and Procedures, may be limited by the laws of another state associated with where you live or work. If a court of competent jurisdiction determines that any of those provisions is unlawful or prohibited by law as applied to this particular award, then those provisions shall be deemed modified, reduced, or otherwise cut back to the minimum extent possible in order to preserve the original provision to the maximum extent possible, consistent with applicable state law as applied to this award and to you.
PSUs are not shares of stock, have no voting rights, and are not transferable. If explicitly permitted by the Committee and FH, you may make a beneficiary designation that will direct FH to treat your beneficiary as the owner of this award after you die. Any such designation, if permitted at all, will be effective only if done in compliance with the Procedures and the rules of FH’s administrative vendor for stock awards in effect at the time of designation. Also, the effectiveness of designations will be subject to all conditions and
limitations contained in the Procedures and in the rules of that vendor in effect at the time of your death.
Each PSU that vests will result in one share of FH common stock being issued to you, subject to withholding for taxes. Subject to provisions of the Governing Plan, the Committee may choose to pay all or a portion of vested PSUs in cash, based on the Fair Market Value of FH common stock on the Vesting Date.
Your PSUs will accrue cash dividend equivalents to the extent cash dividends are paid on common shares prior to vesting. From the Grant Date until the Vesting Date, dividend equivalents accumulate (without interest) as if each PSU were an outstanding share. To the extent that PSUs vest, the accumulated dividend equivalents associated with those PSUs will be paid in cash shortly after vesting. Dividend equivalents associated with forfeited PSUs likewise are forfeited.
The number of PSUs will be adjusted proportionately in the event of a stock split or a common stock dividend to avoid any enlargement or dilution of value. Subject to the Governing Plan and Procedures, in each such adjustment PSUs will be rounded down to the nearest whole unit; any fractional PSU will be disregarded.
If within two years after vesting FH discovers an error in any amount vested or paid which, had it been known, would have resulted in a change in the amount of 5% or more: if the error favored FH, FH will pay you the difference in shares, subject to applicable taxes; or, if the error favored you, FH will reduce your shares and dividend equivalents by an amount equal to the pre-tax difference or, if this award already has been paid to you, will require you to repay the pre-tax difference to FH in cash.
This award is not fully vested until the performance and service requirements both are fulfilled. Performance vesting will occur when the Committee makes a final determination of the extent (measured as a percentage of Target) to which the combined performance goals of this award are achieved, as provided above and in Exhibit A. Service vesting—fulfillment of the requirement that you remain continuously employed with FH—will occur on the Vesting Date.
If a Change in Control occurs and you experience a Qualifying Termination (all as defined in the Governing Plan), then vesting and payment will be accelerated as provided in the Plan. The amount paid will be, without pro-rationing: (a) the Target number of PSUs, if the Change in Control occurs before the end of the ROTCE Performance Period or the Committee is unable, for any other reason, to fairly determine actual performance results; or (b) the greater of the Target number of PSUs or the number determined by the Committee based partly on actual A-ROTCE performance results and partly by assuming TSR rank performance of 100%, if the Change
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in Control occurs after the end of the ROTCE Performance Period and before the Vesting Date and if the Committee determines that it can fairly determine actual performance results. In the case of (b), payment may be reasonably delayed to allow the Committee to obtain information necessary to make its determinations.
If a Change in Control occurs before the end of the Performance Period and there is no Qualifying Termination, then this award may be modified, converted, or canceled by the Committee or otherwise without your consent. The Committee is permitted to exercise discretion in a Change in Control situation in different ways for different persons, and in different ways for different awards; however, in all cases the Committee will seek in good faith to avoid any significant diminishment or enlargement of value measured at the time of the Change in Control. The following two Change in Control scenarios, (A) and (B), illustrate the Committee’s power in various situations. The scenarios illustrate possible outcomes; they do not limit the Committee’s authority. In these scenarios the “Deal Value” of an FH common share is, as applicable, the dollar value per FH share paid to FH shareholders in the Change in Control transaction or the dollar value per FH share of the consideration received by FH shareholders in the Change in Control transaction, measured at the time the Change in Control is consummated.
(A) If a Change in Control occurs before the end of the ROTCE Performance Period, the Committee may cancel this award in exchange for the pro-rated dollar value at that time of the Target number of PSUs, with pro-rationing based on the portion of the ROTCE Performance Period occurring prior to the Change in Control. If so cancelled, the performance goals would be waived with performance presumed at 100% of Target, and all vesting and payment would be accelerated. In that case the pro-rated number of FH shares would be paid or credited (subject to withholding taxes) to you shortly or immediately before consummation of the Change in Control transaction so that your award shares will be outstanding at the time of consummation or, alternatively, payment will be made to you in cash at the Deal Value of the pro-rated Target-level award shares.
(B) If a Change in Control occurs before the TSR End Date, if FH shares cease to be publicly traded as a result of the Change in Control, and if vesting of this award is not accelerated prior to cessation of public trading, then in that case FH agrees to do at least one of the following, in all cases as determined by the Committee in its discretion: (i) convert the potential FH shares covered by this award into shares of the acquiring or surviving company based on the conversion or exchange rate provided in the Change in
Control transaction, and modify the A-ROTCE performance goal so as provide you with an opportunity to achieve performance based on A-ROTCE rank of the surviving or acquiring company or some other appropriate performance measure based on ROTCE, with TSR performance conclusively assumed to be 100%; or (ii) presume satisfaction of all performance goals at 100% of Target, and convert the FH shares which would have been paid at 100% performance into either (1) a dollar amount equal to the Deal Value of those shares, which dollar amount would not accrue interest, or (2) a number of share units of the acquiring or surviving company based on the conversion or exchange rate provided in the Change in Control transaction. In either case under this scenario, this award would continue to require your service through the Vesting Date.
The discretion provided to the Committee in the foregoing provisions is subordinate to any requirement of the Governing Plan applicable to this award. If, before or after the Grant Date, you and FH enter into a written contract explicitly providing for the treatment of this award in connection with your termination or a Change in Control, the provisions of this award are subordinate to those explicit contractual provisions.
This award, if paid, will result in taxable income for you. Your withholding and other taxes will depend upon FH’s stock value on the Vesting Date and the amount of dividend equivalents paid to you. As of the Grant Date, the Procedures provide that FH will withhold shares and cash at vesting in the amount necessary to cover your withholding taxes; however, the Procedures may be changed at any time.
You are not permitted to make any election under Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in your gross income for federal income tax purposes the value of the PSUs this year. If you make a Section 83(b) election, this award will forfeit.
FH reserves the right to defer payment of PSUs if payment would be non-deductible by FH and if deferral is reasonably expected to result in deductibility..
Questions about your PSU award?
Important information concerning the Governing Plan and this PSU award is contained in a prospectus. Copies of the current prospectus (including all applicable supplements) are delivered separately, and you may request a copy of the Governing Plan or prospectus at any time. If you have questions about your award or need a copy of the Governing Plan, related prospectus, or current Procedures, please contact Fidelity Investment’s Executive Relationship Officer at ___________. For all your personal stock incentive information, you may view your award and other information on Fidelity’s website at www.NetBenefits.com.
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EX-10.2 (F) 4 afy2023xexh10x2xfxexecspsu.htm EX-10.2 (F) Document

GRANT NOTICE
Special Performance Stock Units—ROTCE/TSR Rank
[Participant Name]
Grant Date: __________ __, 2024 Governing Plan: 2021 Incentive Plan
Target Number of PSUs Granted: ROTCE Performance Period: Five-year period 2024 thru 2028
Vesting Date:
May 12, 2029
TSR Start Date: First trading day of 2024
TSR End Date: Last trading day of 2028
You have been granted special Performance Stock Units ("PSUs") of First Horizon Corporation (“FH”). This award of PSUs is granted under the Governing Plan specified above, and is governed by the terms and conditions of that Plan and by administrative policies, practices, and procedures (“Procedures”) of the Compensation Committee of FH’s board of directors that are in effect during the performance and service vesting periods. Also, this award is subject to the terms and restrictions of FH’s stock ownership guidelines and two policies (collectively, the “Policy”) as in effect during the vesting period: the Compensation Recovery Policy and, to the extent applicable to this award and to you, the Erroneously Awarded Compensation Recovery Policy. Amendments to any of those documents after the Grant Date may apply to this award.
No part of this award is earned until that part vests. PSUs that have not been forfeited prior to the Vesting Date will satisfy the performance requirement of this award based on the extent to which the performance goals are achieved during the ROTCE Performance Period, all as set forth in Exhibit A to this Notice. Performance for this award in Exhibit A is based on FH’s ranking of average annual return on tangible common equity (“A-ROTCE rank”), adjusted as provided in Exhibit A, relative to peers’ average annual return on tangible common equity in the ROTCE Performance Period, modified by FH’s ranking of its TSR (“TSR rank”) relative to peers’ TSR measured from the TSR Start Date to the TSR End Date. As provided in Exhibit A, FH’s TSR Start Value will be the Fair Market Value on the TSR Start Date, and FH’s ending value will be the Fair Market Value ending on the TSR End Date. The target number of PSUs granted is the number that would be paid if A-ROTCE rank and TSR rank both are achieved at the median rank. Higher rank would result in a higher amount paid; a lesser number would be paid if a lesser rank is achieved; and, all PSUs would forfeit if the minimum A-ROTCE rank in Exhibit A (the bottom of the third quartile) is not achieved. The overall performance percentage is the product of the A-ROTCE and TSR outcomes expressed as percentages. The Committee will make appropriate adjustments of FH accounting numbers so that results are comparable across periods and will make final determinations of performance achievement and any final adjustments, all as provided or permitted by Committee action and the Governing Plan.
PSUs that do not vest as a result of a failure to achieve A-ROTCE minimum performance level, as determined by the Committee, are forfeited automatically.
This award also is subject to possible reduction or forfeiture in advance of vesting in accordance with the Governing Plan, the Procedures, and the Policy. As of the Grant Date, the Procedures provide (among other things) that: (a) forfeiture generally will occur immediately upon termination of employment—you must remain continuously employed by FH or one of its subsidiaries through the close of business on the Vesting Date; but (b) if your termination of employment occurs because of your death or permanent disability, forfeiture will be avoided and service vesting will be accelerated and (c) if your termination occurs because of approved retirement, forfeiture will be avoided, and this award will receive Continued Vesting treatment, in whole or part to the extent the approval so provides. The Committee or its delegate will document death or determine whether disability or retirement status has been achieved and, as applicable, apply pro-rationing. Payment of your PSU award may be suspended pending any such determinations and approvals. Acceleration of service vesting, or waiver of further service, does not satisfy the performance requirement of this award; the performance requirement will continue in effect unless explicitly waived by the Committee in writing.
To be considered for retirement approval, you must be either (i) at least age 65 with at least 5 years of service, or (ii) at least age 55 with at least 15 years of service.
Retirement treatment must be approved by the Committee; the Committee may impose conditions to receiving such treatment; and the Committee may deviate from zero forfeiture or ordinary Continued Vesting typically being implemented at that time. The general requirements to approve retirement are described in the Procedures.
Other forfeiture provisions apply to this PSU award. Currently the Governing Plan and Policy provide for forfeiture of this award or recovery of amounts paid if you engage in certain types of misconduct or if performance data is materially false or misleading and you are substantially responsible for its accuracy. This award is subject to forfeiture or recovery to the extent required by applicable capital conservation rules or other regulatory requirements. Also, this award will be forfeited, or if
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already vested you must pay in cash to FH the gross pre-tax value of this award measured at vesting, if during the restriction period applicable to this award: (1) you are terminated for Cause as defined in the Governing Plan; or (2) you, either on your own behalf or on behalf of any other person or entity, in any manner directly or indirectly solicit, hire, or encourage any person who is then an employee or customer of FH or any and all of its subsidiaries or affiliates to leave the employment of, or to end, diminish, or move any of his, her, or its accounts or relationships with, FH or any and all of its subsidiaries or affiliates. The restrictions in (2) apply only to employees who work in, and to customers which reside in or have a place of business in, one or more of the counties and parishes that comprise the “Territory” applicable to the year in which the Grant Date falls. A list of the counties and parishes that comprise the Territory for this award has been made available to you at the time you accept this award, and is available to you at any time on request (see the final paragraph of this notice). The restriction period for this award begins on the Grant Date and ends on the second anniversary of the Vesting Date. By accepting this PSU award, you acknowledge that FH may reduce or offset other amounts owed to you, including but not limited to wages, bonuses, or commissions owed, among other things, to satisfy any repayment obligation.
The Committee reserves the right, in its sole discretion, to waive forfeiture or accelerate vesting in whole or part. You have no right to any such discretionary waiver or acceleration. If a request for a waiver were granted, only the units not covered by the waiver would forfeit.
This award is governed by the substantive laws of Tennessee, without regard to conflicts of laws principles. To the extent applicable to this award and to you, the forfeiture and recovery provisions of this award, and of the Policy and Procedures, may be limited by the laws of another state associated with where you live or work. If a court of competent jurisdiction determines that any of those provisions is unlawful or prohibited by law as applied to this particular award, then those provisions shall be deemed modified, reduced, or otherwise cut back to the minimum extent possible in order to preserve the original provision to the maximum extent possible, consistent with applicable state law as applied to this award and to you.
PSUs are not shares of stock, have no voting rights, and are not transferable. If explicitly permitted by the Committee and FH, you may make a beneficiary designation that will direct FH to treat your beneficiary as the owner of this award after you die. Any such designation, if permitted at all, will be effective only if done in compliance with the Procedures and the rules of FH’s administrative vendor for stock awards in effect at the time of designation. Also, the effectiveness of designations will be subject to all conditions and
limitations contained in the Procedures and in the rules of that vendor in effect at the time of your death.
Each PSU that vests will result in one share of FH common stock being issued to you, subject to withholding for taxes. Subject to provisions of the Governing Plan, the Committee may choose to pay all or a portion of vested PSUs in cash, based on the Fair Market Value of FH common stock on the Vesting Date.
Your PSUs will accrue cash dividend equivalents to the extent cash dividends are paid on common shares prior to vesting. From the Grant Date until the Vesting Date, dividend equivalents accumulate (without interest) as if each PSU were an outstanding share. To the extent that PSUs vest, the accumulated dividend equivalents associated with those PSUs will be paid in cash shortly after vesting. Dividend equivalents associated with forfeited PSUs likewise are forfeited.
The number of PSUs will be adjusted proportionately in the event of a stock split or a common stock dividend to avoid any enlargement or dilution of value. Subject to the Governing Plan and Procedures, in each such adjustment PSUs will be rounded down to the nearest whole unit; any fractional PSU will be disregarded.
If within two years after vesting FH discovers an error in any amount vested or paid which, had it been known, would have resulted in a change in the amount of 5% or more: if the error favored FH, FH will pay you the difference in shares, subject to applicable taxes; or, if the error favored you, FH will reduce your shares and dividend equivalents by an amount equal to the pre-tax difference or, if this award already has been paid to you, will require you to repay the pre-tax difference to FH in cash.
This award is not fully vested until the performance and service requirements both are fulfilled. Performance vesting will occur when the Committee makes a final determination of the extent (measured as a percentage of Target) to which the combined performance goals of this award are achieved, as provided above and in Exhibit A. Service vesting—fulfillment of the requirement that you remain continuously employed with FH—will occur on the Vesting Date.
If a Change in Control occurs and you experience a Qualifying Termination (all as defined in the Governing Plan), then vesting and payment will be accelerated as provided in the Plan. The amount paid will be, without pro-rationing: (a) the Target number of PSUs, if the Change in Control occurs before the end of the ROTCE Performance Period or the Committee is unable, for any other reason, to fairly determine actual performance results; or (b) the greater of the Target number of PSUs or the number determined by the Committee based partly on actual A-ROTCE performance results and partly by assuming TSR rank performance of 100%, if the Change
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in Control occurs after the end of the ROTCE Performance Period and before the Vesting Date and if the Committee determines that it can fairly determine actual performance results. In the case of (b), payment may be reasonably delayed to allow the Committee to obtain information necessary to make its determinations.
If a Change in Control occurs before the end of the Performance Period and there is no Qualifying Termination, then this award may be modified, converted, or canceled by the Committee or otherwise without your consent. The Committee is permitted to exercise discretion in a Change in Control situation in different ways for different persons, and in different ways for different awards; however, in all cases the Committee will seek in good faith to avoid any significant diminishment or enlargement of value measured at the time of the Change in Control. The following two Change in Control scenarios, (A) and (B), illustrate the Committee’s power in various situations. The scenarios illustrate possible outcomes; they do not limit the Committee’s authority. In these scenarios the “Deal Value” of an FH common share is, as applicable, the dollar value per FH share paid to FH shareholders in the Change in Control transaction or the dollar value per FH share of the consideration received by FH shareholders in the Change in Control transaction, measured at the time the Change in Control is consummated.
(A) If a Change in Control occurs before the end of the ROTCE Performance Period, the Committee may cancel this award in exchange for the pro-rated dollar value at that time of the Target number of PSUs, with pro-rationing based on the portion of the ROTCE Performance Period occurring prior to the Change in Control. If so cancelled, the performance goals would be waived with performance presumed at 100% of Target, and all vesting and payment would be accelerated. In that case the pro-rated number of FH shares would be paid or credited (subject to withholding taxes) to you shortly or immediately before consummation of the Change in Control transaction so that your award shares will be outstanding at the time of consummation or, alternatively, payment will be made to you in cash at the Deal Value of the pro-rated Target-level award shares.
(B) If a Change in Control occurs before the TSR End Date, if FH shares cease to be publicly traded as a result of the Change in Control, and if vesting of this award is not accelerated prior to cessation of public trading, then in that case FH agrees to do at least one of the following, in all cases as determined by the Committee in its discretion: (i) convert the potential FH shares covered by this award into shares of the acquiring or surviving company based on the conversion or exchange rate provided in the Change in
Control transaction, and modify the A-ROTCE performance goal so as provide you with an opportunity to achieve performance based on A-ROTCE rank of the surviving or acquiring company or some other appropriate performance measure based on ROTCE, with TSR performance conclusively assumed to be 100%; or (ii) presume satisfaction of all performance goals at 100% of Target, and convert the FH shares which would have been paid at 100% performance into either (1) a dollar amount equal to the Deal Value of those shares, which dollar amount would not accrue interest, or (2) a number of share units of the acquiring or surviving company based on the conversion or exchange rate provided in the Change in Control transaction. In either case under this scenario, this award would continue to require your service through the Vesting Date.
The discretion provided to the Committee in the foregoing provisions is subordinate to any requirement of the Governing Plan applicable to this award. If, before or after the Grant Date, you and FH enter into a written contract explicitly providing for the treatment of this award in connection with your termination or a Change in Control, the provisions of this award are subordinate to those explicit contractual provisions.
This award, if paid, will result in taxable income for you. Your withholding and other taxes will depend upon FH’s stock value on the Vesting Date and the amount of dividend equivalents paid to you. As of the Grant Date, the Procedures provide that FH will withhold shares and cash at vesting in the amount necessary to cover your withholding taxes; however, the Procedures may be changed at any time.
You are not permitted to make any election under Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in your gross income for federal income tax purposes the value of the PSUs this year. If you make a Section 83(b) election, this award will forfeit.
FH reserves the right to defer payment of PSUs if payment would be non-deductible by FH and if deferral is reasonably expected to result in deductibility..
Questions about your PSU award?
Important information concerning the Governing Plan and this PSU award is contained in a prospectus. Copies of the current prospectus (including all applicable supplements) are delivered separately, and you may request a copy of the Governing Plan or prospectus at any time. If you have questions about your award or need a copy of the Governing Plan, related prospectus, or current Procedures, please contact Fidelity Investment’s Executive Relationship Officer at ___________. For all your personal stock incentive information, you may view your award and other information on Fidelity’s website at www.NetBenefits.com.
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EX-10.4 (E) 5 afy2023xexh10x4xexexecrsus.htm EX-10.4 (E) Document

GRANT NOTICE
Executive RSUs
[Participant Name]
Amount of Award: ______ Restricted Stock Units Grant Date: _________ ___, 2024
Governing Plan: 2021 Incentive Plan Vesting Date: March 2, 2027
You have been granted a restricted stock unit (“RSU”) award by First Horizon Corporation (“FH”). This award of RSUs is granted under the Governing Plan specified above, and is governed by the terms and conditions of that Plan and by administrative policies, practices, and procedures (“Procedures”) of the Compensation Committee of FH’s board of directors that are in effect from time to time during the vesting period. Also, this award is subject to the terms and restrictions of FH’s stock ownership guidelines and two policies (collectively, the “Policy”) as in effect during the vesting period: the Compensation Recovery Policy and, to the extent applicable to this award and to you, the Erroneously Awarded Compensation Recovery Policy. Amendments to any of those documents after the Grant Date may apply to this award.
No part of this award is earned until that part vests. This award is subject to possible reduction or forfeiture in advance of vesting in accordance with the Governing Plan, the Procedures, and the Policy. As of the Grant Date, the Procedures provide (among other things) that: (a) forfeiture generally will occur immediately upon termination of employment—you must remain continuously employed by FH or one of its subsidiaries through the close of business on the Vesting Date; but (b) if your termination of employment occurs because of your death or permanent disability, forfeiture will be avoided and vesting will be accelerated and (c) if your termination occurs because of approved retirement, forfeiture will be avoided, and this award will receive Continued Vesting treatment, in whole or part to the extent the approval so provides. The Committee or its delegate will document death or determine whether disability or retirement status has been achieved and, as applicable, apply pro-rationing. Payment of your RSU award may be suspended pending any such determinations and approvals.
To be considered for retirement approval, you must be either (i) at least age 65 with at least 5 years of service, or (ii) at least age 55 with at least 15 years of service. Retirement treatment must be approved by the Committee; the Committee may impose conditions to receiving such treatment; and the Committee may deviate from zero forfeiture or ordinary Continued Vesting typically being implemented at that time. The general requirements to approve retirement are described in the Procedures.
Other forfeiture provisions apply to this RSU award. Currently the Governing Plan and Policy provide for forfeiture of this award or recovery of amounts paid if you engage in certain types of misconduct. This award is subject to forfeiture or recovery to the extent required by applicable capital conservation rules or other regulatory requirements. Also, this award will be forfeited, or if already vested you must pay in cash to FH the gross pre-tax value of this award measured at vesting, if during the restriction period applicable to this award: (1) you are terminated for Cause as defined in the Governing Plan; or (2) you, either on your own behalf or on behalf of any other person or entity, in any manner directly or indirectly solicit, hire, or encourage any person who is then an employee or customer of FH or any and all of its subsidiaries or affiliates to leave the employment of, or to end, diminish, or move any of his, her, or its accounts or relationships with, FH or any and all of its subsidiaries or affiliates. The restrictions in (2) apply only to employees who work in, and to customers which reside in or have a place of business in, one or more of the counties and parishes that comprise the “Territory” applicable to the year in which the Grant Date falls. A list of the counties and parishes that comprise the Territory for this award has been made available to you at the time you accept this award, and is available to you at any time on request (see the final paragraph of this notice). The restriction period for this award begins on the Grant Date and ends on the second anniversary of the Vesting Date. By accepting this RSU award, you acknowledge that FH may reduce or offset other amounts owed to you, including but not limited to wages, bonuses, or commissions owed, among other things, to satisfy any repayment obligation.
The Committee reserves the right, in its sole discretion, to waive forfeiture or accelerate vesting in whole or part. You have no right to any such discretionary waiver or acceleration. If a request for a waiver were granted, only the units not covered by the waiver would forfeit.
This award is governed by the substantive laws of Tennessee, without regard to conflicts of laws principles. To the extent applicable to this award and to you, the forfeiture and recovery provisions of this award, and of the Policy and Procedures, may be limited by the laws of another state associated with where you live or work. If a court of competent jurisdiction determines that any of those provisions is unlawful or prohibited by law as
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applied to this particular award, then those provisions shall be deemed modified, reduced, or otherwise cut back to the minimum extent possible in order to preserve the original provision to the maximum extent possible, consistent with applicable state law as applied to this award and to you.
RSUs are not shares of stock, have no voting rights, and are not transferable. If explicitly permitted by the Committee and FH, you may make a beneficiary designation that will direct FH to treat your beneficiary as the owner of this award after you die. Any such designation, if permitted at all, will be effective only if done in compliance with the Procedures and the rules of FH’s administrative vendor for stock awards in effect at the time of designation. Also, the effectiveness of designations will be subject to all conditions and limitations contained in the Procedures and in the rules of that vendor in effect at the time of your death.
Each RSU that vests will result in one share of FH common stock being issued to you, subject to withholding for taxes. Subject to provisions of the Governing Plan, FH may choose to pay all or a portion of vested RSUs in cash, based on the fair market value of FH common stock on the Vesting Date.
Your RSUs will accrue cash dividend equivalents to the extent cash dividends are paid on common shares prior to vesting. From the Grant Date until the Vesting Date, dividend equivalents accumulate (without interest) as if each RSU were an outstanding share. To the extent that RSUs vest, the accumulated dividend equivalents associated with vested RSUs will be paid in cash shortly after vesting. Dividend equivalents associated with forfeited RSUs likewise are forfeited.
The number of RSUs will be adjusted proportionately in the event of a stock split or a common stock dividend to avoid any enlargement or dilution of value. Subject to the Governing Plan and Procedures, in each such adjustment RSUs will be rounded down to the nearest whole unit; any fractional RSU will be disregarded.
This award, if paid, will result in taxable income for you. Your withholding and other taxes will depend upon FH’s stock value on the Vesting Date and the amount of dividend equivalents paid to you. As of the Grant Date, the Procedures provide that FH will withhold shares and cash at vesting in the amount necessary to cover your withholding taxes; however, the Procedures may be changed at any time.
You are not permitted to make any election under Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in your gross income for federal income tax purposes the value of this award this year. If you make a Section 83(b) election, this award will forfeit.
Questions about your RSU award?
Important information concerning the Governing Plan and this RSU award is contained in a prospectus. Copies of the current prospectus (including all applicable supplements) are delivered separately, and you may request a copy of the Governing Plan or prospectus at any time. If you have questions about your RSU award or need a copy of the Governing Plan, related prospectus, or current Procedures, please contact Fidelity Investment’s Executive Relationship Officer at 800-823-0217. For all your personal stock incentive information, you may view your award and other information on Fidelity’s website at www.NetBenefits.com.
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EX-10.4 (F) 6 afy2023xexh10x4xfxexecsrsu.htm EX-10.4 (F) Document

GRANT NOTICE
Executive Special RSUs
[Participant Name]
Amount of Award: ______ Restricted Stock Units Grant Date: _________ ___, 2024
Governing Plan: 2021 Incentive Plan Vesting Date: March 2, 2029
You have been granted a special restricted stock unit (“RSU”) award by First Horizon Corporation (“FH”). This award of RSUs is granted under the Governing Plan specified above, and is governed by the terms and conditions of that Plan and by administrative policies, practices, and procedures (“Procedures”) of the Compensation Committee of FH’s board of directors that are in effect from time to time during the vesting period. Also, this award is subject to the terms and restrictions of FH’s stock ownership guidelines and two policies (collectively, the “Policy”) as in effect during the vesting period: the Compensation Recovery Policy and, to the extent applicable to this award and to you, the Erroneously Awarded Compensation Recovery Policy. Amendments to any of those documents after the Grant Date may apply to this award.
No part of this award is earned until that part vests. This award is subject to possible reduction or forfeiture in advance of vesting in accordance with the Governing Plan, the Procedures, and the Policy. As of the Grant Date, the Procedures provide (among other things) that: (a) forfeiture generally will occur immediately upon termination of employment—you must remain continuously employed by FH or one of its subsidiaries through the close of business on the Vesting Date; but (b) if your termination of employment occurs because of your death or permanent disability, forfeiture will be avoided and vesting will be accelerated and (c) if your termination occurs because of approved retirement, forfeiture will be avoided, and this award will receive Continued Vesting treatment, in whole or part to the extent the approval so provides. The Committee or its delegate will document death or determine whether disability or retirement status has been achieved and, as applicable, apply pro-rationing. Payment of your RSU award may be suspended pending any such determinations and approvals.
To be considered for retirement approval, you must be either (i) at least age 65 with at least 5 years of service, or (ii) at least age 55 with at least 15 years of service. Retirement treatment must be approved by the Committee; the Committee may impose conditions to receiving such treatment; and the Committee may deviate from zero forfeiture or ordinary Continued Vesting typically being implemented at that time. The general requirements to approve retirement are described in the Procedures.
Other forfeiture provisions apply to this RSU award. Currently the Governing Plan and Policy provide for forfeiture of this award or recovery of amounts paid if you engage in certain types of misconduct. This award is subject to forfeiture or recovery to the extent required by applicable capital conservation rules or other regulatory requirements. Also, this award will be forfeited, or if already vested you must pay in cash to FH the gross pre-tax value of this award measured at vesting, if during the restriction period applicable to this award: (1) you are terminated for Cause as defined in the Governing Plan; or (2) you, either on your own behalf or on behalf of any other person or entity, in any manner directly or indirectly solicit, hire, or encourage any person who is then an employee or customer of FH or any and all of its subsidiaries or affiliates to leave the employment of, or to end, diminish, or move any of his, her, or its accounts or relationships with, FH or any and all of its subsidiaries or affiliates. The restrictions in (2) apply only to employees who work in, and to customers which reside in or have a place of business in, one or more of the counties and parishes that comprise the “Territory” applicable to the year in which the Grant Date falls. A list of the counties and parishes that comprise the Territory for this award has been made available to you at the time you accept this award, and is available to you at any time on request (see the final paragraph of this notice). The restriction period for this award begins on the Grant Date and ends on the second anniversary of the Vesting Date. By accepting this RSU award, you acknowledge that FH may reduce or offset other amounts owed to you, including but not limited to wages, bonuses, or commissions owed, among other things, to satisfy any repayment obligation.
The Committee reserves the right, in its sole discretion, to waive forfeiture or accelerate vesting in whole or part. You have no right to any such discretionary waiver or acceleration. If a request for a waiver were granted, only the units not covered by the waiver would forfeit.
This award is governed by the substantive laws of Tennessee, without regard to conflicts of laws principles. To the extent applicable to this award and to you, the forfeiture and recovery provisions of this award, and of the Policy and Procedures, may be limited by the laws of another state associated with where you live or work. If a court of competent jurisdiction determines that any of those provisions is unlawful or prohibited by law as
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applied to this particular award, then those provisions shall be deemed modified, reduced, or otherwise cut back to the minimum extent possible in order to preserve the original provision to the maximum extent possible, consistent with applicable state law as applied to this award and to you.
RSUs are not shares of stock, have no voting rights, and are not transferable. If explicitly permitted by the Committee and FH, you may make a beneficiary designation that will direct FH to treat your beneficiary as the owner of this award after you die. Any such designation, if permitted at all, will be effective only if done in compliance with the Procedures and the rules of FH’s administrative vendor for stock awards in effect at the time of designation. Also, the effectiveness of designations will be subject to all conditions and limitations contained in the Procedures and in the rules of that vendor in effect at the time of your death.
Each RSU that vests will result in one share of FH common stock being issued to you, subject to withholding for taxes. Subject to provisions of the Governing Plan, FH may choose to pay all or a portion of vested RSUs in cash, based on the fair market value of FH common stock on the Vesting Date.
Your RSUs will accrue cash dividend equivalents to the extent cash dividends are paid on common shares prior to vesting. From the Grant Date until the Vesting Date, dividend equivalents accumulate (without interest) as if each RSU were an outstanding share. To the extent that RSUs vest, the accumulated dividend equivalents associated with vested RSUs will be paid in cash shortly after vesting. Dividend equivalents associated with forfeited RSUs likewise are forfeited.
The number of RSUs will be adjusted proportionately in the event of a stock split or a common stock dividend to avoid any enlargement or dilution of value. Subject to the Governing Plan and Procedures, in each such adjustment RSUs will be rounded down to the nearest whole unit; any fractional RSU will be disregarded.
This award, if paid, will result in taxable income for you. Your withholding and other taxes will depend upon FH’s stock value on the Vesting Date and the amount of dividend equivalents paid to you. As of the Grant Date, the Procedures provide that FH will withhold shares and cash at vesting in the amount necessary to cover your withholding taxes; however, the Procedures may be changed at any time.
You are not permitted to make any election under Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in your gross income for federal income tax purposes the value of this award this year. If you make a Section 83(b) election, this award will forfeit.
Questions about your RSU award?
Important information concerning the Governing Plan and this RSU award is contained in a prospectus. Copies of the current prospectus (including all applicable supplements) are delivered separately, and you may request a copy of the Governing Plan or prospectus at any time. If you have questions about your RSU award or need a copy of the Governing Plan, related prospectus, or current Procedures, please contact Fidelity Investment’s Executive Relationship Officer at 800-823-0217. For all your personal stock incentive information, you may view your award and other information on Fidelity’s website at www.NetBenefits.com.
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EX-10.4 (H) 7 afy2023xexh10x4xhxexecrrcu.htm EX-10.4 (H) Document

GRANT NOTICE
Restricted Cash Units (Modified Retention Program, Cliff Vesting)
[Recipient Name]
Amount of Award: ______ RCUs ($1 per Unit) Grant Date: May 6, 2023
Governing Plan: 2021 Incentive Plan Vesting Date: May 12, 2026
Base Price: $______ / share (20-day average closing price May 4 thru June 1, 2023)(refer to “Performance Feature” on p.2)
You have been granted a restricted cash unit (“RCU”) award by First Horizon Corporation (“FH”). This award of RCUs is granted under the Governing Plan specified above, and is governed by the terms and conditions of that Plan and by policies, practices, and procedures (“Procedures”) of the Compensation Committee of FH’s board of directors that are in effect from time to time during the vesting period. Also, this award is subject to the terms and restrictions of FH’s Compensation Recovery Policy (“Policy”) as in effect during the vesting period. Amendments to any of those documents after the Grant Date may apply to this award. Lastly, your RCUs are granted as part of a modification of FH’s retention program originally related to a strategic merger, as explained in “Substitution” on page 2.
General Terms
No part of this award is earned until that part vests. This award is subject to possible reduction or forfeiture in advance of vesting in accordance with the Governing Plan, the Procedures, and the Policy. As of the Grant Date, the Procedures provide (among other things) that: (a) forfeiture generally will occur immediately upon termination of employment—you must remain continuously employed by FH or one of its subsidiaries through the close of business on the Vesting Date; but (b) if your termination of employment occurs because of your death or permanent disability, forfeiture will be avoided and vesting will be accelerated and (c) if your termination occurs because of approved retirement, forfeiture will be avoided and vesting will accelerate to the extent the approval so provides. Approved retirement with accelerated vesting before the first anniversary of grant results in full forfeiture of this award; however, in that case FH will pay to you, in cash, the grant date value of the award to the extent provided in the approval. The Committee or its delegate will document death or determine whether disability or retirement status has been achieved and apply pro-rationing. RCUs may be suspended pending any such determinations and approvals.
To be considered for retirement approval, you must be either (i) at least age 65 with at least 5 years of service, or (ii) at least age 55 with at least 15 years of service. Retirement treatment must be approved by the Committee or its delegate; the Committee or its delegate may impose conditions to receiving such treatment; and the Committee or its delegate may deviate from zero forfeiture and/or full
acceleration. The general requirements to approve retirement are described in the Procedures.
Other forfeiture provisions apply to this RCU award. Currently the Governing Plan and Policy provide for forfeiture of this award or recovery of amounts paid if you engage in certain types of misconduct. This award is subject to forfeiture or recovery to the extent required by applicable capital conservation rules or other regulatory requirements. Also, this award will be forfeited, or if already vested you must pay in cash to FH the gross pre-tax value of this award measured at vesting, if during the restriction period applicable to this award: (1) you are terminated for Cause as defined in the Governing Plan; or (2) you, either on your own behalf or on behalf of any other person or entity, in any manner directly or indirectly solicit, hire, or encourage any person who is then an employee or customer of FH or any and all of its subsidiaries or affiliates to leave the employment of, or to end, diminish, or move any of his, her, or its accounts or relationships with, FH or any and all of its subsidiaries or affiliates. The restrictions in (2) apply only to employees who work in, and to customers which reside in or have a place of business in, one or more of the counties and parishes that comprise the “Territory” applicable to the year in which the Grant Date falls. A list of the counties and parishes that comprise the Territory for this award has been made available to you at the time you accept this award, and is available to you at any time on request (see the final paragraph of this Grant Notice). The restriction period for this award begins on the Grant Date and ends on the second anniversary of the Vesting Date. By accepting this RCU award, you acknowledge that FH may reduce or offset other amounts owed to you, including but not limited to wages, bonuses, or commissions owed, among other things, to satisfy any repayment obligation.
The Committee or its delegate reserves the right, in its sole discretion, to waive forfeiture or accelerate vesting in whole or part. You have no right to any such discretionary waiver or acceleration. If a request for a waiver were granted, only the units not covered by the waiver would forfeit.
This award is governed by the substantive laws of Tennessee, without regard to conflicts of laws principles. To the extent applicable to this award and to you, the forfeiture and recovery provisions of this award, and of the Policy and Procedures, may be limited by the laws of another state associated with where you live or work. If a court of competent jurisdiction determines that any of
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1
 2023 GRANT NOTICE
RRCUs w/ Performance Feature (Cliff V.)

those provisions is unlawful or prohibited by law as applied to this particular award, then those provisions shall be deemed modified, reduced, or otherwise cut back to the minimum extent possible in order to preserve the original provision to the maximum extent possible, consistent with applicable state law as applied to this award and to you.
RCUs have no connection to FH stock, have no voting rights, and are not transferable. Your RCUs pay no interest or other income based on the passage of time.
If explicitly permitted by the Committee and FH, you may make a beneficiary designation that will direct FH to treat your beneficiary as the owner of this award after you die. Any such designation, if permitted at all, will be effective only if done in compliance with the Procedures and the rules of FH’s administrative vendor for long-term awards in effect at the time of designation. Also, the effectiveness of designations will be subject to all conditions and limitations contained in the Procedures and in the rules of that vendor in effect at the time of your death.
After vesting, FH will pay you a cash amount equal to the number of RCUs vested, multiplied by $1, without interest. As provided in “Performance Feature” below, the number of RCUs which vest will not be fewer than the number of RCUs granted as provided on the first page of this Grant Notice, but may be a higher number. The payment date may be later than the Vesting Date for the administrative convenience of FH for purposes of determining performance or otherwise; any such delay is expected to be no more than 30 days.
Vesting is a taxable event for you. As of the Grant Date, the Committee’s Procedures provide that FH will withhold cash at vesting in the amount necessary to cover your withholding taxes; however, the Procedures may be changed at any time.
You are not permitted to make any election under Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in your gross income for federal income tax purposes the value of this award this year. If you make a Section 83(b) election, this award will forfeit.
Substitution
You previously received a retention award granted in conjunction with a strategic merger transaction. That merger was terminated, without consummation, on May 4, 2023. Because that merger terminated, FH has modified the original program, replacing its awards with substitute awards. This RCU award is part of that substitution. By accepting this RCU award you acknowledge and agree that all aspects of your original retention award have been canceled and replaced.

Performance Feature
The number of RCUs that vest will be the number of RCUs granted as provided on the first page of this Grant Notice (the “nominal number”), increased at the rate of 5% for each dollar of growth in FH’s common stock value per share compared to the Base Price shown on the first page of this Grant Notice. For this purpose growth is in total, not per year. The vesting-date value of FH stock is the average of the closing prices on the twenty consecutive trading days ending with the trading day immediately prior to the Vesting Date. This performance feature cannot reduce the nominal number. Therefore, if stock value growth is negative, then this performance feature will be ignored. The maximum increase in RCUs is 25%, which would occur if growth reached or exceeded $5 per share. All average stock values will be rounded up or down to the nearest one cent.
ILLUSTRATIVE EXAMPLES: In all cases assume the Base Price is $11.00 per share and the nominal number is 1,000 RCUs. The performance formula (5%/dollar) is equivalent to 1% increase in RCUs for each 20 cents of stock value growth, so the percentage increase in any specific case is equal to the numerical increase in dollar value divided by 0.20.
(1)    If the vesting-date value is $12.36, the number of RCUs vesting will be 1,068 (1,000 + (6.800% x 1,000), with 6.800% = 1.36/.20)).
(2)    If the vesting-date value is $14.67, the number of RCUs vesting will be 1,183.50 (1,000 + (18.350% x 1,000), with 18.350% = 3.67/.20)). Fractional RCUs are permitted, rounded to the nearest cent.
(3)    If the vesting-date value is $10.90 (below the Base Price), the number of RCUs vesting will be 1,000.
(4)    If the vesting-date value is $17.23 (more than $5 above the Base Price), the number of RCUs vesting will be 1,250.
Questions about your RCU award?
Important information concerning the Governing Plan and this RCU award is contained in a prospectus. Copies of the current prospectus (including all applicable supplements) are delivered separately, and you may request a copy of the Governing Plan or prospectus at any time. If you have questions about your RCU award or need a copy of the Governing Plan, related prospectus, or current Procedures, please contact Fidelity Investment’s Executive Relationship Officer at ____________. For all your personal long-term incentive information, you may view your award and other information on Fidelity’s website at ____________________.
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 2023 GRANT NOTICE
RRCUs w/ Performance Feature (Cliff V.)
EX-10.4 (I) 8 afy2023xexh10x4xixdirector.htm EX-10.4 (I) Document

BOARD APPROVED POLICY
Director Compensation Policy

Latest revision date
4/27/21

Latest review date
7/25/23

Effective date
4/27/21

Related policies
•Director Policy

Related documents
•Bylaws (First Horizon Corporation)
•2021 Incentive Plan

I.    General Statement of Policy

Overview

This policy governs the primary aspects of the compensation of directors of First Horizon Corporation (FHN) and First Horizon Bank (the “Bank”).

II.    Implementation

Inside Directors

Inside (officer/employee) directors will receive no compensation for Board or committee membership or chair status.

Outside Directors—General

Outside (non-employee) directors on the FHN Board will receive the compensation set forth in the table below for their service as a director. (Table shown is effective starting with second quarter of 2021.)




Outside Director Compensation
(April 1 through March 31 Pay Year)
Base Retainer: $80,000 cash annually
$122,000 RSUs annually
Additional retainers: Annual cash amounts:
Lead director $50,000
Outside Chairman of the Board* $125,000
Chair of Audit Committee $32,000
Chair of Executive Committee & Risk Committee $50,000
Chair of other committees $20,000
Non-chair service on Audit $10,000
Non-chair service on Executive Committee & Risk Committee $10,000
* The Board may determine to pay this additional retainer in whole or part in RSUs. If there is an outside Chairman, the Chairman’s additional retainer is to be paid in lieu of all committee-related additional retainer amounts other than for service on the Executive Committee & Risk Committee.

No extra compensation is paid for meeting attendance, special meetings, or special committee service unless approved by the Board. Outside directors are not separately compensated for the Bank’s Board or the Bank’s committee service. The total of each director’s cash base retainer and additional retainer amounts (“total cash compensation”) will be calculated after the organization meeting of the Board following the annual meeting of shareholders based on committee assignments and lead director status established or continued at that Board meeting. Each director’s total cash compensation will be divided into four equal installments and paid quarterly in arrears during the pay year. As used in this section of this Policy, a “calendar year” consists of the twelve months January through December while a “pay year” consists of the last three quarters of a calendar year plus the first quarter of the next year.

RSU Awards

General. The dollar amount of the RSU portion of each director’s base retainer, plus any cash elected to be paid as RSUs (as provided below), will be converted into an award of restricted stock units (“RSUs”) granted under FHN’s 2021 Incentive Plan or any duly adopted successor plan (as applicable, the “Stock Plan”). An RSU represents the right to receive a share of FHN common stock at vesting as provided below. RSU awards for each pay year are to be granted annually in advance effective on the second trading day after the organization meeting of the Board following the annual meeting of shareholders. The number of RSUs to be granted for the pay year will be determined as provided below under “RSU Administration.” RSUs granted to outside directors: generally will vest on April 22 of the calendar year following grant; will earn dividend equivalents that will cumulate without interest and be paid in cash when shares are delivered; and will carry no voting or other rights associated with actual stock. At vesting, shares and cash (for dividend equivalents) will be delivered reasonably promptly (but no more than four weeks) thereafter, and may be delivered electronically, through an administrative vendor, or otherwise as is administratively convenient. Each director is responsible for any income or other taxes associated with RSUs.

Vesting Date Adjustments if there is a Change in Annual Meeting Date Practice. If the next annual meeting of shareholders following an RSU grant occurs on or before April 22, then vesting of those RSUs will be accelerated to occur immediately before the start of that next annual meeting. If an annual meeting of shareholders occurs in May of a pay year such that April 22 is too early to be permitted by the Stock Plan to be the vesting date for the RSUs granted for that pay year, then the vesting date for those RSUs will be the earliest date that is permitted by that Plan.
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RSUs and Termination of Service. If a director ceases to serve on the Board for any reason, then all unvested RSUs will be forfeited unless the departure is due to one of these exceptions: death, disability, acceptance of a Bylaw tender, normal shareholder action, or change in control. In cases involving one of those exceptions: forfeiture will be avoided and vesting of RSUs will be accelerated to the date of departure. In addition, in connection with retirement a director may request the Board to waive forfeiture caused by that departure in whole or part. For purposes of outside director equity-based awards: “disability” means total and permanent disability; and “fair market value” and “change in control” have the meanings given in the plan under which the award was granted. A “Bylaw tender” by a director is a tender of resignation required by Section 7.1(b) of FHN’s Bylaws (or any successor section) associated with the director leaving his or her principal outside position; and, an “acceptance” of a Bylaw tender means the acceptance by the Board of such a tender of resignation. A director would leave the Board by “normal shareholder action” if he or she stands for re-election at the annual or other meeting of shareholders and either is voted out of office directly or fails to receive a majority of the votes cast and as a result is required to tender his or her resignation which is accepted by the Board. “Normal shareholder action” does not include removal from the Board for misconduct or other cause. Although the Board may act as it deems appropriate, traditionally for outside directors “retirement” means any termination, not caused by death or disability, after the attainment of age 65 or ten years of service as a director of FHN.

RSU Administration. The number of RSUs granted after the annual meeting will be determined by dividing the annual dollar amount of the RSU retainer, plus any cash amount elected to be replaced with Additional RSUs, by the average accounting value of FHN’s common stock measured during the period of five consecutive trading days ending on the trading day immediately preceding the the grant date. However, that five-day period will be delayed to the minimum extent possible if any part of it precedes or includes the day first-quarter earnings are announced so that the entire five-day pricing period for the grant falls after the day of the announcement. No discount will be applied for any risk of failure to vest. The formal grant date will be determined by management for administrative necessity and expedience consistent with the provisions of this Policy. For an award of part-year RSUs to a director elected after the annual meeting, the foregoing principles will be applied using the later election date and earnings announcement date.

The RSU awards are to be implemented by management without further action by the Board. However, in a particular case or circumstance, the Board may change or make specific exceptions to any equity award otherwise called for above. The Board may waive any forfeiture in whole or part in its discretion, subject to any conditions the Board may choose to impose. Directors may receive such other awards as may be approved by the Board. Perquisites and other benefits for outside directors are to be provided or paid as approved by the Board.

In no event will the number of share-settled RSUs granted in any year exceed the share limits on outside director grants imposed by the Stock Plan as in effect at the time of the organization meeting of the Board. To the extent a grant were to exceed that limit, the excess RSUs will be granted as provided above but will be paid entirely in cash based on the average closing price of the Company’s common stock during the five consecutive trading days ending on the trading day immediately preceding the vesting date.

Election to Defer

Each outside director may elect to defer all or any part of his or her total cash compensation into an interest-accruing account of the First Horizon Corporation Non-Qualified Deferred Compensation Plan or any other duly adopted deferral plan, now existing or hereafter approved (collectively, “Deferral Plan”), subject to the terms, conditions, and limitations of the Deferral Plan. As of the regular RSU grant date near the beginning of each pay year, the portion of a director’s total cash compensation which is not subject to a deferral election pertaining to that pay year is his or her “non-deferred total cash compensation” for that pay year.
3



Election to Replace Non-Deferred Total Cash Compensation with Additional RSUs

Each year, not later than the close of business on the RSU grant date provided above, each outside director may elect to replace all or any part of his or her non-deferred total cash compensation with additional RSUs (“Additional RSUs”) granted on the same grant date, and with the same terms, as the base retainer RSUs granted for that pay year. Each year, shortly before the annual meeting of shareholders, management will ask each outside director who is nominated for election at that meeting to make a cash replacement election for the new pay year. Unless otherwise instructed by a director in writing, management will assume that: each continuing director who fails to timely make an election intends for his or her most recent prior election to apply to the new pay year; and each new nominee who fails to timely make an election intends no replacement of cash with Additional RSUs.

Effects and Limitations of Combining Deferral and RSU Elections

If an outside director makes a deferral election applicable to a pay year, and also elects to have non-deferred total cash compensation related to that same pay year replaced with Additional RSUs, then:

1)    Only non-deferred total cash compensation, as determined shortly before the RSU grant date based on deferral elections in place at that time, may be replaced with Additional RSUs. If a director chooses a percentage of his or her total cash compensation to be replaced with Additional RSUs that exceeds what is permitted, that director will be treated as having elected to replace 100% of his or her non-deferred total cash compensation for that pay year.

2)    The dollar amount of total cash compensation which is replaced with Additional RSUs is not available for deferral under the Deferral Plan. Once Additional RSUs are granted to a director, a change in the director’s deferral elections under the Deferral Plan cannot operate to defer unavailable amounts.

3)    To the extent consistent with the Deferral Plan and subject to such administrative limitations as management may impose: a director may defer a specified percentage of total cash compensation for a pay year, and may replace 100% of the remaining total cash compensation for that year; and, a director may replace a specified percentage of total cash compensation for a pay year, and may defer 100% of the remaining total cash compensation for that year.

4)    Management is authorized and directed to apply the principles articulated in this policy to other situations that might arise in order to harmonize application of the deferral and replacement programs.

Timing Matters

No director who is not standing for re-election at the next annual meeting is entitled to any compensation pertaining to the second quarter of the final calendar year he or she is in office, except that RSUs vesting in April of that quarter shall not be disturbed by this sentence.

No continuing director is entitled to any compensation pertaining to a pay year unless and until: (a) he or she has been re-elected at the annual meeting of shareholders occurring during that pay year and has not resigned pursuant to a Bylaw tender; or (b) if the regular Board meeting of the first quarter of a pay year (the second quarter of the calendar year) begins prior to the annual meeting, he or she attends and participates as a director in that regular Board meeting.

4


If a new outside director first is elected to the Board after the annual meeting of shareholders, his or her compensation will be pro-rated and generally will begin with that quarter during which he or she first attends, and participates as a director in, a regular quarterly Board meeting. For example, a new outside director who is first elected in October, who attends the regular Board meeting for the fourth calendar quarter, and who participates in that meeting as a director, would receive compensation pro-rated for the remainder of the pay year, or 50% of a full pay year. Such compensation would include total cash compensation paid quarterly and a part-year award of RSUs. Additional RSUs may be elected prior to the RSU grant date. Cash compensation for the remainder of the pay year will be determined based on the new director’s initial committee assignments. However, the vesting date for the part-year RSUs (regular or Additional) will not be April 22; in conformity with the requirements of the Stock Plan, the vesting date of part-year awards will be the first anniversary of grant.

Assignment Change

If an outside director’s committee, lead director, or chair assignments are changed after the organization board meeting in the first quarter of a pay year (in this paragraph, an “assignment change”), then the quarterly payments of total cash compensation for that director for the remainder of the pay year will be adjusted up or down as follows. Management will re-calculate the director’s total cash compensation for the pay year on a blended basis, based on the quarters during which the original assignment was effective and the quarters during which the new assignment will be effective, to arrive at a new blended total cash compensation amount for the pay year. Management then will subtract from that total the cash payments (or deferrals) made to date for that pay year. The difference will be paid to the director in equal installments over the remaining quarters of the pay year. If assignment changes are made more than once for a particular director during a pay year, management shall apply the principles of this paragraph as equitably as possible to avoid an unfair windfall or shortfall.

If a director makes a cash replacement election, it is implemented based on expectations at the time of grant and results in a fixed RSU grant. To the extent possible, Additional RSUs, and the cash amount replaced by Additional RSUs, will not be adjusted due to an assignment change. As a result, non-replaced cash will bear the adjustments called for above. Accordingly, if an outside director experiences an assignment change during a pay year for which he or she has been granted Additional RSUs, then:

1)    If the assignment change increases his or her total cash compensation for the pay year, the difference will be paid (or deferred) in cash in the normal course and will not result in additional Additional RSUs.

2)    If the assignment change decreases his or her total cash compensation for the pay year, the difference will be applied entirely to reduce his or her cash to be paid (or deferred) from and after the effectiveness of the assignment change, and generally will not result in forfeiture of outstanding RSUs (subject to #3 below).

3)    If an assignment change decreases a director’s total cash compensation for a pay year so substantially that total cash compensation for that pay year is below the dollar amount of the non-deferred total cash compensation that was replaced with Additional RSUs, then the Board may order a corresponding reduction in (partial forfeiture of) those outstanding Additional RSUs; however, absent such an order, cash paid (or deferred) will be reduced to zero for the remainder of the pay year but outstanding RSUs will not be reduced.

Regional Board Service. To improve the directors’ knowledge and understanding of FHN and the Bank and their markets, customers, and officers, and to enhance each director’s service as a director of FHN, FHN’s outside directors are encouraged to become, where practicable, members of one of the Bank’s Regional Boards.
5


A director who becomes a member of a Regional Board shall not be compensated as a member of the Regional Board but shall receive attendance fees for attendance at Regional Board meetings (at the same rate as is paid for other Regional Board members, not to exceed $500 per meeting) as part of his or her FHN director compensation. Such director shall report back to the FHN Board regarding his or her attendance at Regional Board meetings. Membership by an FHN director on a Regional Board is deemed by FHN’s Board of Directors to be part of the FHN director’s service as a director of FHN.

III.    Delegation of Authority

The Compensation Committee is delegated the authority to interpret and oversee the administration of this Policy, consistent with that Committee’s charter. Substantive exceptions are to be acted upon only by the Board.

6

EX-10.8 (G) 9 afy2023xexh10x8xgxeobenefi.htm EX-10.8 (G) Document

EXHIBIT 10.8(g)
Certain Executive Benefits
List of Certain Benefits Available
to Certain Executive Officers
(As in effect February 20, 2024)

The following benefits are available to some or all executive officers (among other persons), but not to all full-time associates of First Horizon.
1.If the Board has authorized a stock repurchase program, an executive may request the repurchase of shares of First Horizon at the day’s volume-weighted average price with no payment of any fees or commissions if the repurchase of the shares is otherwise permissible under the authorized program.
2.First Horizon’s regular disability insurance program is available to associates generally. Associates above a certain grade level, including executive officers, are offered an additional benefit. Executive officers who choose the additional coverage pay the premiums with after-tax dollars.
3.First Horizon makes available or pays for tax preparation, tax consulting, estate planning, and financial counseling services for executive officers. If a preferred provider is used, First Horizon will pay the annual counseling fee (approximately $18,000 for 2023) per person as well as general engagement fees and expenses which are not applied on a per person basis. If a non-preferred provider is used, First Horizon's payments are limited to $5,000 per year.
4.On occasion spouses of certain associates, including executive officers, are asked by First Horizon, for business reasons, to accompany the associate on a business trip or function. In those cases First Horizon may pay the travel, accommodation, and other expenses of the spouse incidental to the trip or function, some or all of which can result in taxable income for the associate. On occasion First Horizon may provide or pay for a memento, gift, or other gratuity that the associate or spouse receives in connection with the business trip or function.
5.The Chief Executive Officer is permitted to take personal flights on company aircraft. Personal usage is limited to certain aircraft, is subject to certain situational and other limitations, and may not exceed 25 flight hours per calendar year. In addition, the spouse of the Chief
Executive Officer may accompany him on business trips even if there is no business purpose for her travel.
6.First Horizon provides home security protection for executive officers, provided by third parties and overseen by First Horizon’s corporate security department. When an executive is first covered by this program, First Horizon estimates the assessment, upgrade, installation, and other similar costs to be approximately $20,000. Ongoing monitoring and system maintenance also are included.
7.First Horizon provides a relocation benefit to a wide range of associates, including executive officers, under varying circumstances and subject to certain constraints. The benefit may be in the form of an allowance or a reimbursement of actual expenses, and includes a tax gross up feature.
8.First Horizon requires the Chief Executive Officer to participate in an executive health program selected by First Horizon. The program provides substantially enhanced ongoing health screening and related services. First Horizon pays the expenses associated with attendance, including program fees and incidental expenses such as lodging, meals, and air travel. The program primarily performs screening and diagnostic functions. Accordingly, any treatments that might be recommended as a result of the program generally would be paid in the ordinary course through the health insurance plan selected by the Officer under First Horizon’s broad-based associate health benefit program.
9.First Horizon pays or reimburses the cost of an annual executive-level physical examination for executive officers, to the extent not paid through First Horizon’s broad-based associate health benefit program.
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 2023 FORM 10-K ANNUAL REPORT

EX-10.8 (H) 10 afy2023xexh10x8xhxneosalar.htm EX-10.8 (H) Document

EXHIBIT 10.8(h)
NEO Salaries 2024
Description of 2024 Salary Rates
for 2023 Named Executive Officers


Certain executive officers of First Horizon Corporation are expected to be named in the executive compensation disclosures of the First Horizon’s 2024 proxy statement in relation to fiscal year 2023 (“2023 Named Executive Officers”). The current annualized 2024 salary rates for the 2023 Named Executive Officers are shown below:

NEO 2024 Salary Rates
Officer Name Salary Rate
D. Bryan Jordan
 1,200,000 
Hope Dmuchowski 650,000 
Anthony J. Restel 725,000 
David T. Popwell 725,000 
Tammy S. LoCascio 725,000 

The annualized rates shown above are those in effect on the date this exhibit is filed with the First Horizon’s Annual Report on Form 10-K. Salary rates generally continue in effect until they are changed.



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 2023 FORM 10-K ANNUAL REPORT

EX-21 11 afy2023xexh21xsubsidiaries.htm EX-21 Document

EXHIBIT 21
Subsidiaries
Subsidiaries

The following are lists of consolidated subsidiaries of First Horizon Corporation (“First Horizon”) and of First Horizon Bank (the “Bank”) at December 31, 2023. Each consolidated subsidiary is 100% owned by First Horizon directly or indirectly, except as described below in note (1) to First Horizon’s table and note (2) to the Bank’s table, and all are included in the Consolidated Financial Statements. Entities that are “financial subsidiaries” for regulatory purposes are denoted in this exhibit with FS; FS is not part of any subsidiary’s name. Entities that are inactive (no material assets or activities) are omitted.

Consolidated Subsidiaries of First Horizon
Entity Type of Ownership Jurisdiction of Incorporation or Organization
First Horizon Bank (1) (Bank subsidiaries are scheduled separately)
 Direct Tennessee
CB Trustee, LLC Direct North Carolina
First Horizon Community Development Fund, LLC Direct Tennessee
First Horizon Ventures, Inc. Direct Tennessee
IBERIA Asset Management Inc. Direct Louisiana
IBERIA CDE, LLC Direct Louisiana
LIBERTY BANCORP DENNING, LLC Direct Florida
840 Denning LLC Indirect Florida
Martin & Company, Inc. Direct Tennessee
_________________________
    (1)    At December 31, 2023, 300,000 shares of non-voting preferred stock issued by this subsidiary are outstanding and are not owned by First Horizon. That preferred stock has an aggregate liquidation preference amount of $300,000,000 and is not participating with the common stock of this subsidiary in the event of liquidation.


Consolidated Subsidiaries of the Bank
Subsidiary of the Bank Type of Ownership by the Bank Jurisdiction of Incorporation or Organization
Acadiana Holdings, LLC Direct Louisiana
C1 Trustee, Inc. Direct North Carolina
Capital Financial Leasing, LLC Direct Delaware
FHIS, Inc. FS
 Direct Tennessee
FHN Advisory Services, LLC Direct Nevada
FHN Financial Capital Assets Corp. Direct Tennessee
FHN Financial Securities Corp. FS
 Direct Tennessee
First Horizon Advisors, Inc. FS
 Direct Tennessee
First Horizon Asset Securities, Inc. Direct Delaware
First Horizon CDE 1, LLC Direct Tennessee
First Horizon CDE 2, LLC Direct Tennessee
First Horizon CDE 3, LLC Direct Tennessee
First Horizon Community Development Enterprises, LLC Direct Tennessee
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 2023 FORM 10-K ANNUAL REPORT


EXHIBIT 21
Subsidiaries
Subsidiary of the Bank Type of Ownership by the Bank Jurisdiction of Incorporation or Organization
First Horizon Community Investment Group, Inc. Direct Tennessee
CC Community Development Holdings, Inc. Indirect Tennessee
FHCIG Second Harvest Investment Fund, LLC Indirect Tennessee
FHCIG Our House Investment Fund, LLC Indirect Tennessee
FHCIG GoTextbooks Investment Fund, LLC Indirect Tennessee
First Horizon Insurance Agency, Inc FS
 Direct Georgia
First Horizon Insurance Services, Inc FS
 Direct Tennessee
First Tennessee New Markets Corporation Direct Tennessee
FT Building, LLC Direct Tennessee
FT Leasing, Inc. Direct Tennessee
FTB QOF I, Inc. Direct Tennessee
FTB QOF II, Inc. Direct Tennessee
FTB QOF III, Inc. Direct Tennessee
FTB QOF IV, Inc. Direct Tennessee
FTRE Holding, LLC Direct Delaware
First Horizon TE1, LLC Indirect Delaware
First Horizon Preferred Funding III, Inc. Indirect Delaware
First Horizon Preferred Funding IV, Inc. Indirect Maryland
FTB Securities Investment II, LLC Indirect Delaware
FT Real Estate Securities Company, Inc. Indirect Delaware
IB SPE Management, Inc. Direct Delaware
IBERIA Civic Impact Partners LLC Direct Louisiana
IBERIA Collage Impact Fund, LLC Indirect Louisiana
IBERIA NOCHI Impact Fund I, LLC Indirect Louisiana
IBERIA NOCHI Impact Fund II, LLC Indirect Louisiana
IBERIA Plush Mill Impact Fund, LLC Indirect Louisiana
IBERIA VCOM Impact Fund, LLC Indirect Louisiana
Iberia Corporate Asset Finance, LLC Direct Alabama
Iberia Financial Services, LLC Direct Louisiana
IBERIA INVESTMENT FUND I, LLC Direct Louisiana
IBERIA CommCare Impact Fund LLC Indirect Louisiana
JPO, Inc. Direct Tennessee
Mercantile Capital Corporation Direct Florida


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 2023 FORM 10-K ANNUAL REPORT


EXHIBIT 21
Subsidiaries
Selected Non-Consolidated Entities
The following are selected entities affiliated with First Horizon and the Bank which were not consolidated with First Horizon or the Bank at December 31, 2023.
Name Jurisdiction of Incorporation or Organization
Capital Bank Statutory Trust III Connecticut
Civitas Statutory Trust I Delaware
FNB United Statutory Trust I Connecticut
FNB United Statutory Trust II Delaware
GreenBank Capital Trust I Delaware
Greene County Capital Trust II Delaware
Southern Community Capital Trust III Delaware
TIBFL Statutory Trust III Delaware

Other Business Names Used
At December 31, 2023, First Horizon, its subsidiaries, the Bank, the Bank’s subsidiaries, and the Bank’s divisions did business in certain jurisdictions under the following names:
First Horizon
First Tennessee Bank
First Horizon Advisors
First Horizon Home Loans
First Tennessee Home Loans
First Horizon Housing Corporation
First Tennessee Housing Corporation
First Horizon Equity Lending
FHN Financial
FHN Financial Capital Markets
FHN Financial Portfolio Advisors
FHN Financial Municipal Advisors
Martin & Company Investment Counsel
First Horizon Commercial Mortgage Banking
First Horizon Fitness Finance
First Horizon Restaurant Finance
First Horizon SBA Franchise Finance
First Horizon Finance Company
First Horizon Insurance Services
PMC Real Estate Capital
VirtualBank



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 2023 FORM 10-K ANNUAL REPORT

EX-23 12 afy2023xexh23xfirsthorizon.htm EX-23 Document

Consent of Independent Registered Public Accounting Firm


We consent to the incorporation by reference in the registration statement No. 333-264514 on Form S-3, registration statement No. 333-219052 on Form S-4 (including post-effective amendment No. 1 thereto on Form S-8), registration statement No. 333-235757 on Form S-4 (including post-effective amendment No. 1 thereto on Form S-8), and registration statements Nos. 333-92145, 333-73440, 333-108750, 333-109862, 333-123404, 333-124297, 333-133635, 333-166818, 333-181162, 333-211120, 333-212850, 333-238038, 333-239877, 333-255580, 333-273513, and 333-273514 on Forms S-8 of our reports dated February 22, 2024, with respect to the consolidated financial statements of First Horizon Corporation and the effectiveness of internal control over financial reporting.

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Memphis, Tennessee
February 22, 2024

EX-24 13 a10-kfy2023xexh24xpoa.htm EX-24 Document

EXHIBIT 24
Power of Attorney
Power of Attorney

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint HOPE DMUCHOWSKI, JEFF L. FLEMING, CLYDE A. BILLINGS, JR., and DANE P. SMITH, jointly and each of them severally, his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him or her and in his or her name, place, and stead, in any and all capacities, to execute and sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 to be filed with the Securities and Exchange Commission (the “SEC”) pursuant to the provisions of the Securities Exchange Act of 1934 by First Horizon Corporation and, further, to execute and sign any and all amendments thereto and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, or their or his or her substitute or substitutes, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

SIGNATURE TITLE DATE
/s/ D. Bryan Jordan
Chairman of the Board, President, and Chief Executive
Officer and Director
(principal executive officer)
February 22, 2024
D. Bryan Jordan
/s/ Hope Dmuchowski
Senior Executive Vice President and Chief Financial Officer
(principal financial officer)
February 22, 2024
Hope Dmuchowski
/s/ Jeff L. Fleming
Executive Vice President and Chief Accounting Officer
(principal accounting officer)
February 22, 2024
Jeff L. Fleming
/s/ Harry V. Barton, Jr.
 Director
February 22, 2024
Harry V. Barton, Jr.
/s/ Velia Carboni
 Director
February 22, 2024
Velia Carboni
/s/ John N. Casbon
 Director
February 22, 2024
John N. Casbon
/s/ John C. Compton
 Director
February 22, 2024
John C. Compton
/s/ Wendy P. Davidson
 Director
February 22, 2024
Wendy P. Davidson
/s/ John W. Dietrich
 Director
February 22, 2024
John W. Dietrich
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  1
 2023 FORM 10-K ANNUAL REPORT


EXHIBIT 24
Power of Attorney
SIGNATURE TITLE DATE
/s/ William H. Fenstermaker
 Director
February 22, 2024
William H. Fenstermaker
/s/ J. Michael Kemp, Sr.
 Director
February 22, 2024
J. Michael Kemp, Sr.
/s/ Rick E. Maples
 Director
February 22, 2024
Rick E. Maples
/s/ Vicki R. Palmer
 Director
February 22, 2024
Vicki R. Palmer
/s/ Colin V. Reed
 Director
February 22, 2024
Colin V. Reed
/s/ Cecelia D. Stewart
 Director
February 22, 2024
Cecelia D. Stewart
/s/ Rosa Sugrañes
 Director
February 22, 2024
Rosa Sugrañes
/s/ R. Eugene Taylor
 Director
February 22, 2024
R. Eugene Taylor

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  2
 2023 FORM 10-K ANNUAL REPORT

EX-31.A 14 a10-kfy2023xexh31asoxcert.htm EX-31.A Document

Exhibit 31(a)
FIRST HORIZON CORPORATION
RULE 13a-14(a) CERTIFICATIONS OF CEO
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(ANNUAL REPORT)

CERTIFICATIONS

I, D. Bryan Jordan, certify that:

1.    I have reviewed this annual report on Form 10-K of First Horizon Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 22, 2024

/s/ D. Bryan Jordan            
D. Bryan Jordan
Chairman of the Board, President and Chief Executive Officer

EX-31.B 15 a10-kfy2023xexh31bsoxcert.htm EX-31.B Document

Exhibit 31(b)
FIRST HORIZON CORPORATION
RULE 13a-14(a) CERTIFICATIONS OF CFO
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(ANNUAL REPORT)

CERTIFICATIONS

I, Hope Dmuchowski, certify that:

1.    I have reviewed this annual report on Form 10-K of First Horizon Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 22, 2024


/s/ Hope Dmuchowski        
Hope Dmuchowski
Senior Executive Vice President and Chief Financial Officer

EX-32.A 16 a10-kfy2023xexh32asoxcert.htm EX-32.A Document

Exhibit 32(a)
CERTIFICATION OF PERIODIC REPORT
18 USC 1350 CERTIFICATIONS OF CEO
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
As Codified at 18 U.S.C. Section 1350


I, the undersigned D. Bryan Jordan, Chairman of the Board, President and Chief Executive Officer of First Horizon Corporation (“Corporation”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, as follows:

1.    The Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.


Dated: February 22, 2024



/s/ D. Bryan Jordan            
D. Bryan Jordan
Chairman of the Board, President and Chief Executive Officer


EX-32.B 17 a10-kfy2023xexh32bsoxcert.htm EX-32.B Document

Exhibit 32(b)
CERTIFICATION OF PERIODIC REPORT
18 USC 1350 CERTIFICATIONS OF CFO
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
As Codified at 18 U.S.C. Section 1350


I, the undersigned Hope Dmuchowski, Senior Executive Vice President and Chief Financial Officer of First Horizon Corporation (“Corporation”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, as follows:

1.    The Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.


Dated: February 22, 2024



/s/ Hope Dmuchowski        
Hope Dmuchowski    
Senior Executive Vice President and Chief Financial Officer


EX-97 18 afy2023xexh97xeacrecoveryp.htm EX-97 Document

BOARD APPROVED POLICY
Erroneously Awarded Compensation Recovery

Latest revision date
10/24/23

Latest review/approval date
10/24/23

Effective date
10/02/23

Review frequency
Annually

Related policies
•Compensation Recovery

Related documents
•Senior Executive Acknowledgment and Agreement regarding Erroneously Awarded Compensation Policy

I.    General Statement of Policy

Overview

In accordance with Section 303A.14 of the Listed Company Manual of FHN’s Primary Exchange, Section 10D of the Exchange Act, and SEC Rule 10D-1, it is the policy of First Horizon Corporation (“FHN”) and its subsidiaries (collectively, the “Company”) that, if an Accounting Restatement occurs, FHN will recover, reasonably promptly, Erroneously Awarded Compensation that is Received by any Senior Executive. For this purpose, recovery by a subsidiary of FHN is treated as recovery by FHN.

II.    Implementation

A.    Recovery of Erroneously Awarded Compensation. If the Compensation Committee determines that an Accounting Restatement (within the meaning of this policy) has occurred:

1.    The Compensation Committee is authorized and directed to determine, for each Senior Executive, the amount of any Erroneously Awarded Compensation Received by each Senior Executive.

2. If the Compensation Committee determines that Erroneously Awarded Compensation was Received by one or more Senior Executives, the Compensation Committee shall promptly notify each such Senior Executive with a written notice: (a) stating that an Accounting Restatement has occurred within the meaning of this policy; (b) stating that a Financial Reporting Measure relevant to Incentive Compensation Received by the Senior Executive was impacted by that Restatement, which Measure shall be identified; (c) stating the amount of the Erroneously Awarded Compensation resulting from the Accounting Restatement; and (d) demanding repayment or return of such Erroneously Awarded Compensation, as applicable. The notice need not provide, but any Senior Executive may request, information used by the Committee to determine that an Accounting Restatement has occurred and the amount of Erroneously Awarded Compensation, and the Committee’s analysis of information to arrive at its determinations.




3.    For Clawback Eligible Incentive Compensation based on FHN’s stock price or TSR, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement:

a.    The Compensation Committee is authorized and directed to determine the amount to be repaid or returned based on the Committee’s reasonable estimate of the effect of the Accounting Restatement on FHN’s stock price or TSR upon which the Clawback Eligible Incentive Compensation was Received.

b.    Management shall maintain documentation of the determination of such reasonable estimate and provide the relevant documentation as required to FHN’s Primary Exchange.

4.    Except as set forth in II.B. below, neither the Committee nor FHN may accept an amount that is less than the amount of Erroneously Awarded Compensation in satisfaction of a Senior Executive’s obligations under this policy.

5.    The Compensation Committee has discretion to determine the appropriate means of recovering Erroneously Awarded Compensation based on the facts and circumstances of each instance. Without limiting the foregoing, the Compensation Committee may:

a.    seek reimbursement in cash, in shares of stock, or both, whether or not the cash or shares were part of the Erroneously Awarded Compensation;

b.    cancel, forfeit, or offset outstanding awards in whole or in part, whether or not vested and whether or not related to any Erroneously Awarded Compensation;

c.    cancel, forfeit, or offset awards that have not yet been granted or awarded, whether or not contractually committed and whether or not related to any Erroneously Awarded Compensation; or

d.    cancel, forfeit, or offset deferred compensation, subject to limitations of and compliance with applicable employment and tax laws and regulations, whether or not related to any Erroneously Awarded Compensation.

6.    To the extent that a Senior Executive fails to repay all Erroneously Awarded Compensation to FHN when due, FHN shall take all actions reasonable and appropriate to recover such Erroneously Awarded Compensation from the Executive. The Senior Executive shall be required to reimburse FHN for any and all expenses reasonably incurred (including legal fees) by FHN in recovering such Erroneously Awarded Compensation in accordance with the immediately preceding sentence.

B.    Exceptions to Recovery. Notwithstanding anything herein to the contrary, FHN is not required to take the actions contemplated by II.A. above if the Compensation Committee determines that recovery would be impracticable and if either of the following additional conditions is met:

1. The Compensation Committee determines that the direct expense paid to a third party to assist in enforcing this policy would exceed the amount to be recovered. Before making this determination, FHN must make a reasonable attempt to recover the Erroneously Awarded Compensation, document such attempt(s), and provide such documentation to FHN’s Primary Exchange.




2.    The Compensation Committee determines that recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of FHN, to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Code and regulations thereunder.

C.    Definitions. As used in this Policy:

1.    “Erroneously Awarded Compensation” that is Received by a Senior Executive means, in the event of an Accounting Restatement, the amount by which (x) the total amount of Clawback Eligible Incentive Compensation previously Received by the Senior Executive exceeds (y) the total amount of Clawback Eligible Incentive Compensation that otherwise would have been Received had such Compensation been determined based on the restated amounts in such Accounting Restatement. In determining the amount of Erroneously Awarded Compensation Received by a Senior Executive:

a.    For Clawback Eligible Incentive Compensation based on stock price or TSR, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement, then the amount of Erroneously Awarded Compensation will be based on the Compensation Committee’s reasonable estimate of the effect of the Accounting Restatement on the stock price or TSR as provided in II.A.3. above.

b.    All amounts will be computed without regard to any taxes withheld or paid by the Company or by the Senior Executive.

2.    “Incentive Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure.

3.    “Clawback Eligible Incentive Compensation” means all Incentive Compensation, of every type and instance, that is Received by a Senior Executive (i) on or after the Effective Date of this policy, (ii) after beginning service as a Senior Executive, (iii) who served as a Senior Executive at any time during the applicable performance period relating to the Incentive Compensation (whether or not such Senior Executive is serving at the time the Erroneously Awarded Compensation is required to be repaid to FHN), (iv) while FHN has a class of securities listed on its Primary Exchange or on any other national securities exchange or national securities association, and (v) during the applicable Clawback Period.
4.    “Clawback Period” means, with respect to any Accounting Restatement, the three completed fiscal years of FHN immediately preceding the Accounting Restatement Date, and if FHN changes its fiscal year, any transition period of less than nine months within or immediately following those three completed fiscal years.

5.    “Financial Reporting Measure” means any measure that is determined and presented in accordance with the accounting principles used in preparing FHN’s financial statements, and any measure that is derived wholly or in part from such measure; provided, however, that a Financial Reporting Measure is not required to be presented within FHN’s financial statements or included in a filing with the SEC to qualify as a “Financial Reporting Measure.” For purposes of this policy, “Financial Reporting Measure” includes, but is not limited to, stock price and TSR.




6.    “TSR” means total shareholder return.

7.    “Accounting Restatement” means an accounting restatement due to the material noncompliance of FHN with any financial reporting requirement under the Exchange Act or other applicable U.S. securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (a “Traditional Restatement”), or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (an “Other Material Restatement”).

8.    “Accounting Restatement Date” means the earlier to occur of: (i) the date the Board, a committee of the Board, or the officer or officers of FHN authorized to take such action if the Board action is not required, concludes, or reasonably should have concluded, that FHN is required to prepare an Accounting Restatement; and (ii) the date a court, regulator, or other legally authorized body directs FHN to prepare an Accounting Restatement.

9.    “Received” means, with respect to any Incentive Compensation, actual or deemed receipt. Specifically: Incentive Compensation is deemed “Received” in FHN’s fiscal period during which the Financial Reporting Measure specified in the Incentive Compensation award is attained, even if the payment or grant of the Incentive Compensation to the Senior Executive occurs after the end of that period.

10.    “Senior Executive” means any current or former executive officer of FHN, as determined by the Board in accordance with: Section 10D of the Exchange Act; SEC Rule 10D-1; SEC Rule 16a-1(f); and the listing standards of FHN’s Primary Exchange.

11.    “Executive Agreement” means any employment agreement, indemnity agreement, severance agreement, equity award agreement, compensatory plan, or any other agreement or arrangement of the Company with a Senior Executive.

12.    “Board” means FHN’s Board of Directors.
13.    “Compensation Committee" means the Compensation Committee of the Board.

14.    “Primary Exchange” is the primary national securities exchange on which FHN's common stock is listed (currently the New York Stock Exchange).

15.    “SEC” means the U.S. Securities and Exchange Commission.

16.    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

17.    “Tax Code” means the U.S. Internal Revenue Code of 1986, as amended.

D.    Supplemental Effect. This policy supplements FHN’s Compensation Recovery Policy; this policy does not amend or supersede that policy. Incentive Compensation Received by a Senior Executive may be recoverable under either policy or both policies. A particular amount of Incentive Compensation may be recovered only once; recovery of an amount under one policy will satisfy recovery of that amount under the other. Similarly, this policy supplements error-correction and recovery provisions in certain Incentive Compensation plans and programs of the Company.




E.    Administration.

1.    The Compensation Committee is authorized and directed to administer this policy, and to oversee its administration to the extent delegated to management.

2.    The Compensation Committee is authorized to interpret this policy and to make all determinations necessary, appropriate, or advisable for the administration of this policy and for FHN’s compliance with the rules and listing standards of FHN’s Primary Exchange applicable to this policy, with Section 10D of the Exchange Act, and with Rule 10D-1 and any other applicable regulation, rule, or interpretation of the SEC. Any determinations made by the Compensation Committee shall be final and binding on all affected individuals.

3.    The Compensation Committee may amend this policy, acting on behalf of the Board, to conform the policy to changes in any such laws, rules, regulations, or listing standards, including changes in interpretation or guidance. Management may make in-the-spirit updating and other ministerial amendments.

4.    The Compensation Committee is not required or authorized to oversee or assess any accounting, audit, or financial reporting functions of FHN. In determining whether an Accounting Restatement has occurred for purposes of this policy, the Compensation Committee is authorized and directed to seek and accept information from FHN’s reported financial statements, from the Board’s Audit Committee, and from management as provided in III. below, and to apply the terms and definitions of this policy in the context of the information so obtained.

5.    The Board may act in lieu of the Compensation Committee on any matter, with each Board member who is also an employee of the Company recusing, if permitted by the rules and listing standards of FHN’s Primary Exchange applicable to this policy, with Section 10D of the Exchange Act, and with Rule 10D-1 and any other applicable regulation, rule, or interpretation of the SEC.

F.    Indemnification Not Applicable. FHN may not indemnify any Senior Executive against (i) the loss of any Erroneously Awarded Compensation that must be repaid, returned, or recovered pursuant to the terms of this policy, or (ii) any claims relating to the Company’s enforcement of its rights under this policy. In addition:

1.    The charter and bylaws of FHN and of each of its subsidiaries shall be interpreted and implemented consistently with the foregoing.

2.    FHN may not enter into any Executive Agreement that exempts or excludes any Incentive Compensation that is granted, paid, or awarded to a Senior Executive from the application of this policy, or that waives FHN’s right to recovery of any Erroneously Awarded Compensation in accordance with this policy.

3.    This policy shall supersede any provision of any Executive Agreement that exempts any Incentive Compensation that is granted, paid, or awarded to a Senior Executive from the application of this policy or that waives FHN’s right to recovery of any Erroneously Awarded Compensation, whether entered into before, on, or after the Effective Date of this policy.

4. The Compensation Committee is directed to obtain, from each current and future Senior Executive affected by this policy, an acknowledgement and agreement that this policy supersedes any contrary or inconsistent provision that may be in any Executive Agreement which the Company may have, or will have, with such Executive.




G.    Legal Supremacy of Policy. This policy shall be binding and enforceable against all Senior Executives and, to the extent required by applicable law or by guidance from the SEC or FHN’s Primary Exchange, against their beneficiaries, heirs, executors, administrators, or other legal representatives. The Board intends this policy to be applied to the fullest extent required by applicable law. Any Executive Agreement of the Company with a Senior Executive shall be deemed to include, as a condition to the creation, grant, or payment of any benefit thereunder, an agreement by the Senior Executive to abide by the terms of this policy. Any right of recovery under this policy is in addition to, and not in lieu of, any other remedies or rights of recovery that may be available to FHN under applicable law, regulation, or rule or pursuant to the terms of any other policy of FHN or any provision in any Executive Agreement.


Exceptions

Exceptions under II.B. above must be noted and properly mitigated

III.    Delegation of Authority

Each of the Chief Executive Officer and Chief Financial Officer are authorized and directed to report to the Compensation Committee when, in their judgment, an Accounting Restatement (within the meaning of this policy) may have occurred or may be about to occur, unless the Audit Committee has already so advised the Compensation Committee, and they are required to assist the Compensation Committee as requested in determining whether an Accounting Restatement in fact has occurred. If the Compensation Committee determines that an Accounting Restatement has occurred, the Chief Human Resources Officer, the Chief Accounting Officer (in the case of Financial Reporting Measures other than stock price and TSR), and the Chief Financial Officer (in the case of stock price or TSR), are authorized and directed to present information and calculations to the Compensation Committee pertinent to the determinations that Committee must make under this policy in connection with that Accounting Restatement. The Compensation Committee may rely upon all such information provided to it, but may not delegate its authority to determine whether an Accounting Restatement has occurred, nor to determine the amount of any Erroneously Awarded Compensation.