Report of Independent Registered Public
Accounting Firm
To the Plan Administrator and Plan Participants
First Horizon Corporation Savings Plan
Memphis, Tennessee
Opinion on the Financial Statements
We have audited the accompanying statements
of net assets available for benefits of the First Horizon Corporation Savings Plan (the “Plan”) as of December 31, 2021
and 2020, and the related statement of changes in net assets available for benefits for the year ended December 31, 2021, and the
related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly,
in all material respects, the net assets available for benefits of the Plan as of December 31, 2021 and 2020, and the changes in
net assets available for benefits for the year ended December 31, 2021, in conformity with accounting principles generally accepted
in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Plan 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 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 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 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 financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Supplemental Information
The schedule of assets (held at end of
year) as of December 31, 2021 (referred to as the supplemental information) has been subjected to audit procedures performed in
conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the
Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial
statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and
accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information,
we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department
of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our
opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a
whole.
/s/ Mayer Hoffman McCann P.C.
We have served as the Plan’s auditors since 2010.
Memphis, Tennessee
June 24, 2022
first horizon corporation savings Plan
See accompanying notes to financial statements.
See accompanying notes to financial statements.
Notes to Financial Statements
December 31, 2021 and 2020
The following description of
First Horizon Corporation Savings Plan (the “Plan”) provides only general information. Participants should refer to
the Plan document for a more complete description of the Plan’s provisions.
The Plan is a defined contribution
retirement savings plan established April 23, 1978, for qualified employees of First Horizon Corporation and certain affiliates
(the “Company” or “Plan Sponsor”) to provide a savings plan for those employees. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Since inception, the Plan
document has been amended periodically to conform with provisions of ERISA and other laws and regulations. The Plan is administered
by the Pension, Savings and Flexible Compensation Committee of the Company. State Street Bank and Trust Company serves as trustee
of the Plan and Transamerica Retirement Solutions Corporation (“Transamerica”) serves as recordkeeper of the plan.
Prior to December 1, 2020, the Plan Sponsor’s name was First Horizon National Corporation and is now First Horizon Corporation.
The Plan name changed from First Horizon National Corporation Savings Plan to First Horizon Corporation Savings Plan.
Under the terms of the Plan,
full-time employees are eligible to participate in the Plan immediately. Part-time employees are eligible to participate upon completion
of twelve months of service in which they have worked 1,000 hours or more. A participant may authorize payroll deductions from
1% to 60% of eligible pay (subject to certain legal limitations) as contributions, to be invested as authorized by the participant.
The Plan allows participants to make Pre-tax and Roth contributions (from 1% to 50% of eligible pay) and other after-tax contributions
(from 1% to 10% of eligible pay). Participants may also rollover amounts representing distributions from other defined benefit
and/or defined contribution plans. Participants direct their contributions into various investment options offered by the Plan
and may elect to change their investment authorizations at any time.
Automatic savings plan enrollment
deferrals for new hires, rehires, and newly eligible enrollees is 3% of eligible pay.
The Company makes three types
of contributions on behalf of participants to the Plan:
Company matching contributions
- After one year of service all participants are eligible for matching contributions. All participants receive 100% matching of
the first 1% to 6% of participant pre-tax, catch-up, and Roth 401(k) contributions. These contributions will be invested according
to a participant’s current investment elections. Matching contributions are subject to a three-year vesting schedule.
Company savings contributions
- The Company provides Flexible Dollars to employees to spend on benefits or to deposit into the Plan. Participants’ Flexible
Dollars deposited into the Plan are
first horizon corporation savings Plan
Notes to Financial Statements
December 31, 2021 and 2020
| (1) | Plan Description (continued) |
| |
(a) |
Contributions (continued) |
identified as Company savings
contributions and are not eligible for matching contributions. These contributions are 100% vested at all times.
Employer Non-Elective Contributions
(“ENECs”) - The Company may also make ENECs for employees not participating in a regular bonus program provided by
the Company. ENECs, which are based upon the Company’s performance from the previous year, are determined annually as a percentage
of an eligible participant’s eligible earnings. These contributions are subject to a two-year cliff vesting schedule at which
point they become 100% vested.
On termination of service due
to death, disability, retirement or termination of service for other reasons, a participant or beneficiary may elect to receive
a lump sum amount equal to the value of the participant’s vested interest in their account, or a direct rollover into an
eligible retirement plan, as defined. Qualified retirees are also given the option of partial distributions. The Plan also provides
for in-service and hardship withdrawals. A participant may request a withdrawal of all or part of their after-tax, rollover and
vested ENECs at any time. Upon obtaining the age of 59 ½, a participant may request a withdrawal of all or a portion of
the value of their vested account. Hardship withdrawals are allowed at any time for certain financial needs, as defined. Account
balances invested in the First Horizon Corporation Common Stock Fund may be received in the form of cash or shares of Company common
stock.
Each participant’s account
is credited with the participant’s contributions, the Company’s contributions and Plan earnings or losses. Additionally,
each participant’s account is charged a fixed amount per quarter towards the Plan’s recordkeeping expenses as well
as with an allocation for asset management fees, amounts paid to other service providers, and remaining recordkeeping costs. Allocations
are based upon participant contributions or account balances, as defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant’s vested account balance.
Participants are vested immediately
in their personal contributions, plus actual earnings thereon. Company matching contributions are subject to a three-year vesting
schedule. Vesting in the ENEC portion of a participant’s account is based on years of continuous service. ENEC contributions
are subject to a two-year cliff vesting schedule at which point the contributions become 100% vested.
first
horizon corporation savings Plan
Notes to Financial Statements
December 31, 2021 and 2020
| (1) | Plan Description (continued) |
| | |
At December 31, 2021 forfeited
nonvested accounts totaled $152,364 and $96,233 for December 31, 2020. Forfeited amounts may be reallocated to eligible participants
based upon eligible compensation as defined by the Plan document, used to offset employer contributions, be applied to restore
participant’s nonvested account upon timely exercise of a buy-back right, or be applied towards expenses of the administration
of the Plan and its related trust. Previously forfeited amounts totaling $0 were applied towards expenses of the administration
of the Plan during 2021 and $804,707 were applied towards employer contributions during 2021.
| (f) | Notes Receivable from Participants |
Active employee participants
may borrow from their accounts a minimum of $1,000 up to the lesser of $50,000 or 50% of their vested account balance. General
purpose loan terms range from 12 to 60 months and primary residence loan terms range from 12 to 120 months. The loans are secured
by the balance in the participant’s account. Interest rates are set quarterly based on the interest rate on the 15th
day of the month preceding the new quarter and is based on the prime rate as published in the Wall Street Journal. At December
31, 2021, interest rates ranged from 3.25% to 6.5%. Principal and interest is generally paid ratably through payroll deductions.
Participants may have either
two general purpose loans outstanding or one general purpose loan and one primary residence loan. A participant is not eligible
to receive more than one primary residence loan and one loan for any other purpose in any twelve-month period.
| (2) | Summary of Significant Accounting Policies |
| | |
The financial statements of
the Plan are prepared under the accrual method of accounting, with the exception of benefit payments which are recorded when paid.
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein, and disclosure
of contingent assets and liabilities. Actual results could differ from those estimates.
first
horizon corporation savings Plan
Notes to Financial Statements
December 31, 2021 and 2020
| (c) | Investment Valuation and Income Recognition |
Investments in mutual funds
are recorded at fair value based on the funds’ reported closing net asset values as of the last business day of the year.
The mutual funds held by the Plan are deemed to be actively traded. The investment in the stable value fund and the common/collective
trust funds are valued at the closing net asset values determined by the trustees of such funds based upon the fair value of the
underlying securities held by a fund less its liabilities. The stable value fund and the common/collective trust funds provide
for daily redemptions by the Plan at reported net asset value per share, with no advance notice requirement. The First Horizon
Corporation Common Stock Fund is accounted for on a unit accounting basis for which the investment is stated at the closing net
asset value determined by the Plan’s trustee as of the last business day of the year.
Investments held in the self-directed
brokerage account constitute a broad array of stocks, mutual funds, and money market funds. Fair value of these investments are
determined based on evaluated prices using observable, market-based inputs such as data from Interactive Data. There were no changes
in the valuation methodologies used at December 31, 2021 and 2020.
The preceding methods described
may produce a fair value calculation that may not be indicative of net realizable value or future fair value. Furthermore, although
plan management believes its valuation methods are appropriate and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date.
Investment transactions are
recorded on a trade-date basis. Interest income is recorded on the accrual basis and is recognized when earned. Dividend income
is accrued on the ex-dividend date. Realized gains and losses from investment transactions are reported on the average cost method.
Investment income (loss) includes unrealized and realized appreciation and depreciation of investments.
Participant and employer contributions
are recognized when earned. Rollovers are recognized when received.
Benefits paid to participants
or beneficiaries are recognized when paid.
| (f) | Administrative Expenses |
Administrative expenses are
recognized when incurred. Certain Plan expenses are paid by the Plan Sponsor and not included in the financial statements. Certain
investment expenses are included in net appreciation in investments.
first
horizon corporation savings Plan
Notes to Financial Statements
December 31, 2021 and 2020
| (2) | Summary of Significant Accounting Policies (continued) |
| (g) | Notes Receivable
from Participants |
Notes receivable from participants
are measured at their unpaid principal balances plus any accrued but unpaid interest. Delinquent participant loans are reclassified
as distributions based upon the terms of the Plan document.
| (3) | Risks and Uncertainties |
Investments, including the
First Horizon Corporation common stock fund, are exposed to various risks, such as interest rate, market and credit risks. Due
to the level of risk associated with certain investments, it is at least reasonably possible that changes in their fair value could
occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported
in the statements of net assets available for benefits.
The Covid-19 pandemic had
significant financial impact on fair values as markets saw heightened market risk. Asset values could continue to be affected by
market volatility, the impact of this volatility cannot be determined at this time.
| (4) | Concentration of Participant Investments |
The Plan has a significant
portion of its assets invested in BlackRock Equity Index Fund and First Horizon Corporation common stock fund. The investment in
the BlackRock Equity Index Fund approximates 18% and 16% as of December 31, 2021 and 2020, respectively. The investment in the
First Horizon Corporation common stock fund approximates 12% of the Plan’s net assets available for benefits as of both December
31, 2021 and 2020.
Although it has not expressed
any intent to do so, the Plan Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of termination, the Plan provides that all affected participants’
interests will become fully vested and nonforfeitable.
The Internal Revenue
Service (“IRS”) has determined and informed the Plan Sponsor by a letter dated August 21, 2014, that the Plan and related
trust are designed in accordance with applicable sections of
first
horizon corporation savings Plan
Notes to Financial Statements
December 31, 2021 and 2020
| (6) | Tax Status of Plan (continued) |
the Internal Revenue Code
(“IRC”). The Plan has been amended since receipt of such letter; however, the Plan’s management believes that
the Plan remains in compliance with the applicable requirements of the IRC. Management is unaware of any course of action or series
of events that have occurred that might adversely affect the Plan’s qualified status.
Accounting principles generally
accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax
liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination
by the IRS. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31,
2021, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or
disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently
no audits for any tax periods in progress. The plan administrator believes it is no longer subject to income tax examinations for
years prior to December 31, 2018.
| (7) | Related-Party and Party-in-Interest Transactions |
State Street Bank and Trust
Company manages the Plan’s shares of First Horizon Corporation common stock fund and mutual funds and common/collective trust
funds. First Horizon Corporation is the Plan Sponsor. State Street Bank and Trust Company is the trustee. Therefore, these transactions
with First Horizon Corporation and State Street Bank and Trust Company qualify as party-in-interest transactions. Administrative
fees paid to these parties and other service providers which qualify as parties-in-interest total $1,000,089 for 2021.
The Company also provides
the Plan with certain management and administrative services for which no fees are charged.
first
horizon corporation savings Plan
Notes to Financial Statements
December 31, 2021 and 2020
| (8) | Fair Value Measurements |
Accounting Standard Codification
(“ASC”) 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. That
framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements)
and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820
are described as follows:
| |
Level 1 |
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access. |
| |
|
|
| |
Level 2 |
Inputs to the valuation methodology include: |
| | · | quoted prices for similar assets or liabilities in active markets; |
| | | |
| · | quoted prices for identical or similar assets or liabilities in inactive
markets; |
| | | |
| · | inputs other than quoted prices that are observable for the asset
or liability; |
| | | |
| · | inputs that are derived principally from or corroborated by observable
market data by correlation or other means. |
If the asset or liability has a specified (contractual)
term, the level 2 input must be observable for substantially the full term of the asset or liability.
| |
Level 3 |
Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
first
horizon corporation savings Plan
Notes to Financial Statements
December 31, 2021 and 2020
| (8) | Fair Value Measurements (continued) |
The asset’s or liability’s
fair value measurement level within the fair value hierarchy is based upon the lowest level of any input that is significant to
the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable
inputs. The following table sets forth by level, within the fair value hierarchy, as applicable, the Plan’s investments at
fair value as of December 31, 2021:
Investments
at Fair Value as of December 31, 2021
| |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| |
| |
| | |
| | |
| | |
| |
| |
Company common stock fund | |
$ | 121,698,198 | | |
$ | - | | |
$ | - | | |
$ | 121,698,198 | |
| |
Mutual funds | |
| 63,219,907 | | |
| - | | |
| - | | |
| 63,219,907 | |
| |
Self-directed brokerage account | |
| 67,622,716 | | |
| - | | |
| - | | |
| 67,622,716 | |
| |
| |
| | | |
| | | |
| | | |
| | |
| |
Total investments in fair value hierarchy | |
| 252,540,821 | | |
| - | | |
| - | | |
| 252,540,821 | |
| |
Stable value fund* | |
| | | |
| | | |
| | | |
| 72,825,240 | |
| |
Common/collective trust funds* | |
| | | |
| | | |
| | | |
| 657,599,693 | |
| |
Total investments at fair value | |
$ | 252,540,821 | | |
$ | - | | |
$ | - | | |
$ | 982,965,754 | |
first
horizon corporation savings Plan
Notes to Financial Statements
December 31, 2021 and 2020
| (8) | Fair Value Measurements (continued) |
The following table sets forth
by level, within the fair value hierarchy, as applicable, the Plan’s investments at fair value as of December 31, 2020:
Investments
at Fair Value as of December 31, 2020
| |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| |
| |
| | |
| | |
| | |
| |
| |
Company common stock fund | |
$ | 99,562,417 | | |
$ | - | | |
$ | - | | |
$ | 99,562,417 | |
| |
Mutual funds | |
| 103,181,519 | | |
| - | | |
| - | | |
| 103,181,519 | |
| |
Self-directed brokerage account | |
| 57,070,264 | | |
| - | | |
| - | | |
| 57,070,264 | |
| |
| |
| | | |
| | | |
| | | |
| | |
| |
Total investments in fair value hierarchy | |
| 259,814,200 | | |
| - | | |
| - | | |
| 259,814,200 | |
| |
Stable value fund* | |
| | | |
| | | |
| | | |
| 68,706,066 | |
| |
Common/collective trust funds* | |
| | | |
| | | |
| | | |
| 500,131,019 | |
| |
Total investments at fair value | |
$ | 259,814,200 | | |
$ | - | | |
$ | - | | |
$ | 828,651,285 | |
| | * Investments measured at fair value using net asset value per share (or its equivalent) as a practical expedient have
not been classified in the fair value hierarchy. The fair value amounts presented in the hierarchy tables for such
investments are intended to permit reconciliation of the fair value hierarchy to the investments at fair value line item
presented in the statements of net assets available for benefits. Such investments have no redemption restrictions or
unfunded commitments and redemptions of these investments may occur each business day. |
| (9) | Subsequent Events Evaluation |
| | |
| The Plan has evaluated subsequent events through
the date that the financial statements were filed with the Securities and Exchange Commission. |
| | |
| TD Bank Group and First Horizon Corporation announced on February 28, 2022, that they have
signed a definitive agreement for TD to acquire First Horizon in an all-cash transaction. The transaction is expected to
close in the first quarter of TD’s 2023 fiscal year, and is subject to customary closing conditions, including approvals
from First Horizon’s shareholders and regulatory authorities. |
* Indicates party-in-interest to the Plan.
** Presented in the aggregate to participants as the US SMID CAP Growth
Fund.
*** Presented in the aggregate to participants as the US Large Cap Equity
Fund.
**** Presented in the aggregate to participants as the Fixed Income
Option Fund.
***** Presented in the aggregate to participants as the Non-US Equity
Fund.
(1) Cost information is omitted for Plan assets which are participant-directed.
See accompanying report of independent registered public accounting
firm.