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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | 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 8.15.1 INCOME TAX EXPENSE
(Dollars in millions) |  | 2021 |  | 2020 |  | 2019
Consolidated Statements of Income: |  |  |  |  |  |
Income tax expense |  | $ | 274 |  |  | $ | 76 |  |  | $ | 134 |
Consolidated Statements of Changes in Equity: |  |  |  |  |  |
Income tax expense (benefit) related to: |  |  |  |  |  |
Net unrealized gains on pension and other postretirement plans |  | 2 |  |  | 3 |  |  | 5 |
Net unrealized gains (losses) on securities available for sale |  | (46) |  |  | 25 |  |  | 35 |
Net unrealized gains (losses) on cash flow hedges |  | (3) |  |  | 3 |  |  | 5 |
Total |  | $ | 227 |  |  | $ | 107 |  |  | $ | 179 |
The components of income tax expense (benefit) for the years ended December 31, were as follows: Table 8.15.2 INCOME TAX EXPENSE COMPONENTS
(Dollars in millions) |  | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |  |
Federal |  | $ | 235 |  |  | $ | 80 |  |  | $ | 106 |
State |  | 39 |  |  | 14 |  |  | 14 |
Deferred: |  |  |  |  |  |
Federal |  | (1) |  |  | (15) |  |  | 5 |
State |  | 1 |  |  | (3) |  |  | 9 |
Total |  | $ | 274 |  |  | $ | 76 |  |  | $ | 134 |
A reconciliation of expected income tax expense (benefit) at the federal statutory rate of 21% for 2021, 2020, and 2019, respectively to the total income tax expense follows: Table 8.15.3 RECONCILIATION FROM STATUTORY RATES
(Dollars in millions) |  | 2021 |  | 2020 |  | 2019
Federal income tax rate |  | 21 | % |  | 21 | % |  | 21 | %
Tax computed at statutory rate |  | $ | 270 |  |  | $ | 196 |  |  | $ | 123 |
Increase (decrease) resulting from: |  |  |  |  |  |
State income taxes, net of federal income tax benefit |  | 32 |  |  | 9 |  |  | 15 |
Bank-owned life insurance |  | (7) |  |  | (6) |  |  | (5) |
401(k) – employee stock ownership plan |  | (1) |  |  | (1) |  |  | (1) |
Tax-exempt interest |  | (10) |  |  | (8) |  |  | (6) |
Non-deductible expenses |  | 8 |  |  | 13 |  |  | 11 |
LIHTC credits and benefits, net of amortization |  | (14) |  |  | (9) |  |  | (4) |
Other tax credits |  | (4) |  |  | (5) |  |  | — |
Other changes in unrecognized tax benefits |  | 4 |  |  | (9) |  |  | 4 |
Purchase accounting gain |  | — |  |  | (112) |  |  | — |
Other |  | (4) |  |  | 8 |  |  | (3) |
Total |  | $ | 274 |  |  | $ | 76 |  |  | $ | 134 |
As of December 31, 2021, FHN had net deferred tax asset balances related to federal and state income tax carryforwards of $38 million and $2 million, respectively, which will expire at various dates as follows: Table 8.15.4 TAX CARRYFORWARD DTA EXPIRATION DATES
(Dollars in millions) |  | Expiration Dates |  | Net Deferred Tax Asset Balance
Losses - federal |  | 2026 - 2035 |  | $ | 38 |
Net operating losses - states |  | 2027 - 2040 |  | 2 |
A DTA or DTL is recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax consequence is calculated by applying enacted statutory tax rates, applicable to future years, to these temporary differences. In order to support the recognition of the DTA, FHN’s management must believe that the realization of the DTA is more likely than not. FHN evaluates the likelihood of realization of the DTA based on both positive and negative evidence available at the time, including (as appropriate) scheduled reversals of DTLs, projected future taxable income, tax planning strategies, and recent financial performance. Realization is dependent on generating sufficient taxable income prior to the expiration of the carryforwards attributable to the DTA. In projecting future taxable income, FHN incorporates assumptions including the estimated amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates used to manage the underlying business. As of December 31, 2021, FHN's net DTA was $52 million compared to less than $1 million at December 31, 2020. At December 31, 2021, FHN's gross DTA (net of a valuation allowance) and gross DTL were $448 million and $396 million, respectively. Although realization is not assured, FHN believes that it meets the more-likely-than-not requirement with respect to the net DTA after valuation allowance. Temporary differences which gave rise to deferred tax assets and deferred tax liabilities on December 31, 2021 and 2020 were as follows: Table 8.15.5 COMPONENTS OF DTAs & DTLs
(Dollars in millions) |  | 2021 |  | 2020
Deferred tax assets: |  |  |  |
Loss reserves |  | $ | 161 |  |  | $ | 205 |
Employee benefits |  | 83 |  |  | 86 |
Accrued expenses |  | 16 |  |  | 7 |
Depreciation and amortization |  | 13 |  |  | — |
Lease liability |  | 94 |  |  | 100 |
Federal loss carryforwards |  | 38 |  |  | 44 |
State loss carryforwards |  | 2 |  |  | 9 |
Investment in debt securities (ASC 320) (a) |  | 12 |  |  | — |
Other |  | 29 |  |  | 20 |
Gross deferred tax assets |  | 448 |  |  | 471 |
Deferred tax liabilities: |  |  |  |
Depreciation and amortization |  | $ | — |  |  | $ | 83 |
Investment in debt securities (ASC 320) (a) |  | — |  |  | 35 |
Equity investments |  | 4 |  |  | 11 |
Other intangible assets |  | 86 |  |  | 93 |
Prepaid expenses |  | 18 |  |  | 15 |
ROU lease asset |  | 85 |  |  | 89 |
Leasing |  | 198 |  |  | 135 |
Other |  | 5 |  |  | 10 |
Gross deferred tax liabilities |  | 396 |  |  | 471 |
Net deferred tax assets |  | $ | 52 |  |  | $ | — |
(a) Tax effects of unrealized gains and losses are tracked on a security-by-security basis. The total unrecognized tax benefits at December 31, 2021 and 2020, was $92 million and $70 million, respectively. To the extent such unrecognized tax benefits as of December 31, 2021 are subsequently recognized, $42 million of tax benefits could impact tax expense and FHN’s effective tax rate in future periods. FHN is currently under audit in several jurisdictions. It is reasonably possible that the unrecognized tax benefits related to federal and state exposures could decrease by $58 million during 2022 if audits are completed and settled and if the applicable statutes of limitations expire as scheduled. FHN recognizes interest accrued and penalties related to unrecognized tax benefits within income tax expense. FHN had approximately $14 million and $11 million accrued for the payment of interest as of December 31, 2021 and 2020, respectively. The total amount of interest and penalties recognized in the Consolidated Statements of Income during 2021 and 2020 was an expense of $3 million and $8 million, respectively. The rollforward of unrecognized tax benefits is shown in the following table: Table 8.15.6 ROLLFORWARD OF UNRECOGNIZED TAX BENEFITS
(Dollars in millions) |  |
Balance at December 31, 2019 |  | $ | 24 |
Increases related to prior year tax positions |  | 56 |
Increases related to current year tax positions |  | 1 |
Settlements |  | (10) |
Lapse of statutes |  | (1) |
Balance at December 31, 2020 |  | $ | 70 |
Increases related to prior year tax positions |  | 24 |
Increases related to current year tax positions |  | 1 |
Lapse of statutes |  | (3) |
Balance at December 31, 2021 |  | $ | 92 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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