XNYS:FHN First Horizon National Corp Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

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 National Corporation

(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

 

 

(Former name, former address and former fiscal year, if changed since last report)

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.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding on June 30, 2012

Common Stock, $.625 par value

  248,810,099

 

 

 


Table of Contents

Table of Contents

FIRST HORIZON NATIONAL CORPORATION

INDEX

 

Part I. Financial Information

  
   Item 1. Financial Statements      2  
   Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations      74  
   Item 3. Quantitative and Qualitative Disclosures about Market Risk      123  
   Item 4. Controls and Procedures      123  
Part II. Other Information   
   Item 1. Legal Proceedings      124  
   Item 1A . Risk Factors      124  
   Item 2. Unregistered Sales of Equity Securities and use of Proceeds      124  
   Item 3. Defaults upon Senior Securities      124  
   Item 4. Mine Safety Disclosures      124  
   Item 5. Other Information      124  
   Item 6. Exhibits      125  
Signatures      127  
Exhibit Index   
   Exhibit 10.3   
   Exhibit 10.4   
   Exhibit 31(a)   
   Exhibit 31(b)   
   Exhibit 32(a)   
   Exhibit 32(b)   


Table of Contents

Table of Contents

PART I.

FINANCIAL INFORMATION

 

Item 1. Financial Statements

  

The Consolidated Condensed Statements of Condition

     3  

The Consolidated Condensed Statements of Income

     4  

The Consolidated Condensed Statements of Comprehensive Income

     5  

The Consolidated Condensed Statements of Equity

     6  

The Consolidated Condensed Statements of Cash Flows

     7  

The Notes to Consolidated Condensed Financial Statements

  

Note 1 Financial Information

     8  

Note 2 Acquisition and Divestitures

     10  

Note 3 Investment Securities

     11  

Note 4 Loans

     13  

Note 5 Mortgage Servicing Rights

     24  

Note 6 Intangible Assets

     25  

Note 7 Other Income and Other Expense

     27  

Note 8 Earnings Per Share

     28  

Note 9 Contingencies and Other Disclosures

     30  

Note 10 Pensions, Savings, and Other Employee Benefits

     40  

Note 11 Business Segment Information

     42  

Note 12 Loan Sales and Securitizations

     44  

Note 13 Variable Interest Entities

     47  

Note 14 Derivatives

     53  

Note 15 Fair Value of Assets & Liabilities

     58  

Note 16 Restructuring, Repositioning, and Efficiency Initiatives

     72  

This financial information reflects all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial condition and results of operations for the interim periods presented.

 

2


Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF CONDITION

 

     First Horizon National Corporation  
     June 30     December 31  

(Dollars in thousands, except restricted and share amounts)(Unaudited)

   2012     2011     2011  

Assets:

      

Cash and due from banks (Restricted - $ - on June 30, 2012; $1.8 million on June 30, 2011; and $4.9 million on December 31, 2011)

   $ 330,931     $ 313,416     $ 384,667  

Federal funds sold and securities purchased under agreements to resell

     525,504       598,000       443,588  
  

 

 

   

 

 

   

 

 

 

Total cash and cash equivalents (Restricted - $ - million on June 30, 2012; $1.8 million on June 30, 2011; and $4.9 million on December 31, 2011)

     856,435       911,416       828,255  
  

 

 

   

 

 

   

 

 

 

Interest-bearing cash

     484,430       263,441       452,856  

Trading securities

     1,361,717       1,196,380       988,217  

Loans held-for-sale

     424,051       397,931       413,897  

Securities available-for-sale (Note 3)

     3,264,866       3,230,477       3,066,272  

Loans, net of unearned income (Restricted - $.1 billion on June 30, 2012; $.7 billion on June 30, 2011; and $.6 billion on December 31, 2011) (Note 4)

     16,185,763       16,061,646       16,397,127  

Less: Allowance for loan losses (Restricted - $6.0 million on June 30, 2012; $33.0 million on June 30, 2011; and $31.8 million on December 31, 2011) (Note 4)

     321,051       524,091       384,351  
  

 

 

   

 

 

   

 

 

 

Total net loans (Restricted - $.1 billion on June 30, 2012; $.7 billion on
June 30, 2011; and $.6 billion on December 31, 2011)

     15,864,712       15,537,555       16,012,776  
  

 

 

   

 

 

   

 

 

 

Mortgage servicing rights (Note 5)

     129,291       186,958       144,069  

Goodwill (Note 6)

     134,242       135,683       133,659  

Other intangible assets, net (Note 6)

     24,659       28,384       26,243  

Capital markets receivables

     377,496       625,243       164,987  

Premises and equipment, net

     311,753       330,392       321,253  

Real estate acquired by foreclosure

     69,603       92,662       85,244  

Other assets (Restricted–$2.6 million on June 30, 2012; $13.9 million on June 30, 2011; and $13.4 million on December 31, 2011)

     2,189,700       2,117,544       2,151,656  
  

 

 

   

 

 

   

 

 

 

Total assets (Restricted - $.1 billion on June 30, 2012; $.7 billion on June 30, 2011; and $.6 billion on December 31, 2011)

   $ 25,492,955     $ 25,054,066     $ 24,789,384  
  

 

 

   

 

 

   

 

 

 

Liabilities and equity:

      

Deposits:

      

Savings

   $ 5,979,874     $ 6,382,963     $ 6,624,405  

Time deposits

     1,109,163       1,277,905       1,173,375  

Other interest-bearing deposits

     3,565,873       2,784,787       3,193,697  

Certificates of deposit $100,000 and more

     628,539       513,269       608,518  
  

 

 

   

 

 

   

 

 

 

Interest-bearing

     11,283,449       10,958,924       11,599,995  

Noninterest-bearing (Restricted - $.9 million on June 30, 2011; and $ - on June 30, 2012 and December 31, 2011)

     4,833,994       4,937,103       4,613,014  
  

 

 

   

 

 

   

 

 

 

Total deposits (Restricted - $.9 million on June 30, 2011; and $ - on June 30, 2012 and December 31, 2011)

     16,117,443       15,896,027       16,213,009  
  

 

 

   

 

 

   

 

 

 

Federal funds purchased and securities sold under agreements to repurchase

     1,780,990       2,005,999       1,887,052  

Trading liabilities

     470,631       498,915       347,285  

Other short-term borrowings

     1,094,179       187,902       172,550  

Term borrowings (Restricted - $.1 billion on June 30, 2012; $.7 billion on June 30, 2011; and $.6 billion on December 31, 2011)

     2,294,224       2,502,517       2,481,660  

Capital markets payables

     203,548       464,993       164,708  

Other liabilities (Restricted - $ - on June 30, 2012 and 2011; and $.1 million on December 31, 2011)

     1,017,534       816,331       838,483  
  

 

 

   

 

 

   

 

 

 

Total liabilities (Restricted - $.1 billion on June 30, 2012; $.7 billion on June 30, 2011; and $.6 billion on December 31, 2011)

     22,978,549       22,372,684       22,104,747  
  

 

 

   

 

 

   

 

 

 

Equity:

      

First Horizon National Corporation Shareholders’ Equity:

      

Common stock - $.625 par value (shares authorized - 400,000,000; shares issued - 248,810,099 on June 30, 2012; 263,698,516 on June 30, 2011; and 257,468,092 on December 31, 2011)

     155,506       164,812       160,918  

Capital surplus

     1,528,161       1,638,423       1,601,346  

Undivided profits

     658,157       691,490       757,364  

Accumulated other comprehensive loss, net

     (122,583     (108,508     (130,156
  

 

 

   

 

 

   

 

 

 

Total First Horizon National Corporation Shareholders’ Equity

     2,219,241       2,386,217       2,389,472  
  

 

 

   

 

 

   

 

 

 

Noncontrolling interest

     295,165       295,165       295,165  
  

 

 

   

 

 

   

 

 

 

Total equity

     2,514,406       2,681,382       2,684,637  
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 25,492,955     $ 25,054,066     $ 24,789,384  
  

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated condensed financial statements.

 

3


Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

 

      First Horizon National Corporation  
     Three Months Ended
June 30
    Six Months Ended
June 30
 

(Dollars and shares in thousands except per share data)(Unaudited)

   2012     2011     2012     2011  

Interest income:

        

Interest and fees on loans

   $ 161,117     $ 160,928     $ 322,694     $ 324,431  

Interest on investment securities

     25,971       31,250       52,277       60,442  

Interest on loans held-for-sale

     3,628       3,267       7,366       6,924  

Interest on trading securities

     9,622       11,224       19,058       22,068  

Interest on other earning assets

     397       88       843       497  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

     200,735       206,757       402,238       414,362  
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense:

        

Interest on deposits:

        

Savings

     4,744       7,019       10,363       14,269  

Time deposits

     5,541       7,783       11,457       15,815  

Other interest-bearing deposits

     1,655       1,638       3,173       3,190  

Certificates of deposit $100,000 and more

     2,305       2,613       4,611       5,322  

Interest on trading liabilities

     2,843       4,102       5,358       7,893  

Interest on short-term borrowings

     1,150       1,468       2,515       3,009  

Interest on term borrowings

     9,822       9,274       20,157       19,249  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

     28,060       33,897       57,634       68,747  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     172,675       172,860       344,604       345,615  

Provision for loan losses

     15,000       1,000       23,000       2,000  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

     157,675       171,860       321,604       343,615  
  

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest income:

        

Capital markets

     74,913       77,921       181,656       167,978  

Mortgage banking

     9,889       32,101       33,230       59,827  

Deposit transactions and cash management

     30,123       34,726       58,864       67,005  

Trust services and investment management

     6,477       6,684       12,285       13,044  

Brokerage management fees and commissions

     8,759       7,662       17,255       15,817  

Insurance commissions

     830       764       1,398       1,453  

Debt securities gains/(losses), net

     —          1       328       772  

Equity securities gains/(losses), net

     5,065       —          5,065       27  

Gain on divestiture

     —          —          200       —     

All other income and commissions (Note 7)

     22,851       27,734       51,067       58,006  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

     158,907       187,593       361,348       383,929  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted gross income after provision for loan losses

     316,582       359,453       682,952       727,544  
  

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest expense:

        

Employee compensation, incentives, and benefits

     149,616       151,160       325,074       307,672  

Repurchase and foreclosure provision

     250,000       24,563       299,256       61,767  

Legal and professional fees

     8,417       20,451       14,484       38,803  

Contract employment and outsourcing

     10,844       8,142       21,959       15,030  

Occupancy

     11,486       13,061       23,605       27,922  

Operations services

     9,477       13,907       18,604       27,768  

Equipment rentals, depreciation, and maintenance

     7,789       8,481       15,405       16,371  

Computer software

     9,960       8,375       19,425       16,460  

FDIC premium expense

     6,801       8,839       13,137       16,894  

Foreclosed real estate

     1,908       5,803       6,078       12,592  

Communications and courier

     4,484       5,069       8,983       10,288  

Amortization of intangible assets

     979       1,006       1,952       2,012  

Miscellaneous loan costs

     1,298       859       2,625       2,351  

All other expense (Note 7)

     54,118       74,739       78,584       102,322  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest expense

     527,177       344,455       849,171       658,252  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss)before income taxes

     (210,595     14,998       (166,219     69,292  

Provision/(benefit) for income taxes

     (88,178     (4,167     (77,608     7,995  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) from continuing operations

     (122,417     19,165       (88,611     61,297  

Income/(loss) from discontinued operations, net of tax (a)

     487       3,671       52       4,541  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss)

   $ (121,930   $ 22,836     $ (88,559   $ 65,838  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to noncontrolling interest

     2,844       2,844       5,688       5,688  

Net income/(loss) available to common shareholders

   $ (124,774   $ 19,992     $ (94,247   $ 60,150  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings/(loss) per share from continuing operations (Note 8)

   $ (0.50   $ 0.06     $ (0.38   $ 0.21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings/(loss) per share from continuing operations (Note 8)

   $ (0.50   $ 0.06     $ (0.38   $ 0.21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings/(loss) per share available to common shareholders (Note 8)

   $ (0.50   $ 0.08     $ (0.38   $ 0.23  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings/(loss) per share available to common shareholders
(Note 8)

   $ (0.50   $ 0.08     $ (0.38   $ 0.23  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares (Note 8)

     249,104       261,289       251,317       261,233  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted average common shares (Note 8)

     249,104       262,756       251,317       263,690  
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated condensed financial statements.

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) Due to the nature of the subsidiary preferred stock issued by First Horizon Preferred Funding, LLC, First Horizon Preferred Funding II, LLC, and FTBNA, all components of Income/(loss) from discontinued operations, net of tax have been attributed solely to FHN as the controlling interest holder.

 

4


Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

 

     First Horizon National Corporation  
     Three Months Ended
June 30
     Six Months Ended
June 30
 

(Dollars in thousands)(Unaudited)

   2012     2011      2012     2011  

Net income/(loss)

   $ (121,930   $ 22,836      $ (88,559   $ 65,838  

Other comprehensive income/(loss), net of tax:

         

Unrealized fair value adjustments:

         

Securities available for sale

     (3,397     18,730        (3,390     12,702  

Recognized pension and other employee benefit plans net periodic benefit costs

     5,428       3,140        10,964       6,336  
  

 

 

   

 

 

    

 

 

   

 

 

 

Other comprehensive income/(loss)

     2,031       21,870        7,574       19,038  
  

 

 

   

 

 

    

 

 

   

 

 

 

Comprehensive income/(loss)

     (119,899     44,706        (80,985     84,876  
  

 

 

   

 

 

    

 

 

   

 

 

 

Comprehensive income attributable to noncontrolling interest

     2,844       2,844        5,688       5,688  
  

 

 

   

 

 

    

 

 

   

 

 

 

Comprehensive income/(loss) attributable to controlling interest

   $ (122,743   $ 41,862      $ (86,673   $ 79,188  
  

 

 

   

 

 

    

 

 

   

 

 

 

See accompanying notes to consolidated condensed financial statements.

 

5


Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

 

      First Horizon National Corporation  
     2012     2011  

(Dollars in thousands except per share data)(Unaudited)

   Controlling
Interest
    Noncontrolling
Interest
    Total     Controlling
Interest
    Noncontrolling
Interest
    Total  

Balance, January 1

   $ 2,389,472     $ 295,165     $ 2,684,637     $ 2,382,840     $ 295,165     $ 2,678,005  

Net income/(loss)

     (94,247     5,688       (88,559     60,150       5,688       65,838  

Other comprehensive income/(loss) (a)

     7,574       —          7,574       19,038       —          19,038  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income/(loss)

     (86,673     5,688       (80,985     79,188       5,688       84,876  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common stock warrant repurchased – CPP

     —          —          —          (79,700     —          (79,700

Common stock repurchased (b)

     (83,946     —          (83,946     (887     —          (887

Cash dividends declared ($.01/share)

     (4,961     —          (4,961     (5,151     —          (5,151

Common stock issued for:

            

Stock options and restricted stock - equity awards

     8       —          8       —          —          —     

Stock-based compensation expense

     8,084       —          8,084       5,147       —          5,147  

Dividends declared—noncontrolling interest of subsidiary preferred stock

     —          (5,688     (5,688     —          (5,688     (5,688

Tax benefit reversals—stock-based compensation plans

     (2,743     —          (2,743     —          —          —     

Other changes in equity

     —          —          —          4,780       —          4,780  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30

   $ 2,219,241     $ 295,165     $ 2,514,406     $ 2,386,217     $ 295,165     $ 2,681,382  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated condensed financial statements.

 

(a) Due to the nature of the subsidiary preferred stock issued by First Horizon Preferred Funding, LLC, First Horizon Preferred Funding II, LLC, and FTBNA, all components of Other comprehensive income/(loss) have been attributed solely to FHN as the controlling interest holder.
(b) 2012 includes $81.4 million repurchased under the share repurchase program launched in fourth quarter 2011.

 

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

 

      First Horizon National Corporation  
     Six Months Ended June 30  

(Dollars in thousands) (Unaudited)

   2012     2011  

Operating Activities

    

Net income/(loss)

   $ (88,559   $ 65,838  

Adjustments to reconcile net income/(loss) to net cash provided/(used) by operating activities:

    

Provision for loan losses

     23,000       2,000  

Provision/(benefit) for deferred income tax

     (78,906     27,290  

Depreciation and amortization of premises and equipment

     17,395       17,166  

Amortization of intangible assets

     1,952       2,368  

Net other amortization and accretion

     39,213       25,021  

Net (increase)/decrease in derivatives

     (5,504     (126

Market value adjustment on mortgage servicing rights

     2,443       7,359  

Repurchase and foreclosure provision

     299,256       61,767  

Fair value adjustment to foreclosed real estate

     9,392       9,651  

Goodwill impairment

     —          10,100  

Loss accruals from litigation and regulatory matters

     22,253       40,585  

(Gains)/losses on divestitures (a)

     (485     (753

Stock-based compensation expense

     8,084       5,147  

Tax benefit reversals stock-based compensation plans

     2,743       —     

Equity securities (gains)/losses, net

     (5,065     (27

Debt securities gains, net

     (328     (772

Gains on extinguishment of debt

     —          (5,761

Net (gain)/losses on sale/disposal of fixed assets

     (1,466     152  

Net (increase)/decrease in:

    

Trading securities

     (378,719     (430,692

Loans held-for-sale

     (10,154     (22,642

Capital markets receivables

     (212,509     (479,152

Interest receivable

     2,828       3,305  

Other assets

     9,216       (42,243

Net increase/(decrease) in:

    

Capital markets payables

     38,840       399,487  

Interest payable

     (572     (4,712

Other liabilities

     (128,945     (124,797

Trading liabilities

     123,346       136,995  
  

 

 

   

 

 

 

Total adjustments

     (222,692     (363,284
  

 

 

   

 

 

 

Net cash provided/(used) by operating activities

     (311,251     (297,446
  

 

 

   

 

 

 

Investing Activities

    

Available-for-sale securities:

    

Sales

     47,493       458,414  

Maturities

     466,773       410,961  

Purchases

     (718,178     (1,049,026

Premises and equipment:

    

Purchases

     (8,565     (25,543

Net (increase)/decrease in:

    

Loans

     127,933       596,708  

Interests retained from securitizations classified as trading securities

     5,219       4,062  

Interest-bearing cash

     (31,574     254,298  

Cash receipts related to divestitures

     2,278       16,368  
  

 

 

   

 

 

 

Net cash provided/(used) by investing activities

     (108,621     666,242  
  

 

 

   

 

 

 

Financing Activities

    

Common stock:

    

Cash dividends paid

     (5,137     (2,712

Repurchase of shares (b)

     (83,946     (887

Repurchase of common stock warrant - CPP

     —          (79,700

Tax benefit reversals stock-based compensation plans

     (2,743     —     

Stock option exercised

     8       —     

Cash dividends paid - preferred stock - noncontrolling interest

     (5,688     (5,556

Term borrowings:

    

Payments/maturities

     (176,948     (625,203

Increases in restricted term borrowings

     2,505       1,850  

Net cash paid for extinguishment of debt

     —          (100,000

Net increase/(decrease) in:

    

Deposits

     (95,566     687,796  

Short-term borrowings

     815,567       (101,742
  

 

 

   

 

 

 

Net cash provided/(used) by financing activities

     448,052       (226,154
  

 

 

   

 

 

 

Net increase/(decrease) in cash and cash equivalents

     28,180       142,642  
  

 

 

   

 

 

 

Cash and cash equivalents at beginning of period

     828,255       768,774  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 856,435     $ 911,416  
  

 

 

   

 

 

 

Supplemental Disclosures

    

Total interest paid

   $ 57,915     $ 73,144  

Total taxes paid

     34,330       12,493  

Total taxes refunded

     637       52  

Transfer from loans to other real estate owned

     18,336       33,118  
  

 

 

   

 

 

 

See accompanying notes to consolidated condensed financial statements.

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) Net of tax, gains on divestitures are $4.2 million for 2011.
(b) 2012 includes $81.4 million repurchased under the share repurchase program launched in fourth quarter 2011.

 

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Notes to the Consolidated Financial Statements

Note 1 – Financial Information

Basis of Accounting. The unaudited interim consolidated condensed financial statements of First Horizon National Corporation (“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. In the opinion of management, all necessary adjustments have been made for a fair presentation of financial position and results of operations for the periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed in this filing. The operating results for the interim 2012 periods are not necessarily indicative of the results that may be expected going forward. For further information, refer to the audited consolidated financial statements in the 2011 Annual Report to shareholders.

Summary of Accounting Changes. Effective January 1, 2012, the FASB issued Accounting Standards Update 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”). ASU 2011-08 provides that an entity may first perform a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, when determining whether it is necessary to perform the current two-step goodwill impairment test discussed in FASB Accounting Standards Codification 350, “Intangibles – Goodwill and Other” (“ASC 350”). Thus, if an entity concludes from its qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, it must perform the two-step test. ASU 2011-08 provides examples of events and circumstances that should be considered in an evaluation of whether it is more likely than not that the fair value of an entity’s reporting unit is less than its carrying amount. The new qualitative indicators replace the guidance previously provided in ASC 350 which is used to determine whether an interim goodwill impairment test is required, and is applicable for assessing whether to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts. Under the provisions of ASU 2011-08, entities will be allowed, on the basis of their discretion, to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test, and will be able to resume performing the qualitative assessment in any subsequent period. ASU 2011-08 removes the current alternative in ASC 350 which allows for the carryforward of the detailed calculation of the fair value of a reporting unit from one year to the next if certain conditions are met. The provisions of ASU 2011-08 are effective for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of the provisions of ASU 2011-08 had no effect on FHN’s statement of condition, results of operations, or cash flows.

Effective January 1, 2012, the FASB issued Accounting Standards Update 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires that net income and other comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 also provides that regardless of the method used to present comprehensive income, presentation is required on the face of the financial statements of reclassification adjustments for items that are reclassified from other comprehensive income to net income. ASU 2011-05 does not change the current option for entities to present components of other comprehensive income gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which other comprehensive income is presented or disclosed in the notes to the financial statements. The provisions of ASU 2011-05 are effective for periods beginning after December 15, 2011, with retrospective application to all periods presented in the financial statements required. No transition disclosures are required upon adoption. For interim reporting periods, filers are only required to present total comprehensive income in a single continuous statement or in two consecutive statements. On December 23, 2011, the FASB issued ASU 2011-12, which indefinitely defers the provisions of ASU 2011-05 that require entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented (for both interim and annual financial statements). Upon adoption of the provisions of ASU 2011-05 and ASU 2011-12 on January 1, 2012, FHN revised its financial statements and disclosures accordingly.

Effective January 1, 2012, the FASB issued Accounting Standards Update 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 provides that the highest-and-best use and valuation-premise concepts included in ASC 820 are only relevant when measuring the fair value of nonfinancial assets, thereby prohibiting the grouping of financial instruments for purposes of determining their fair values when the unit of account is specified in other guidance. However, under ASU 2011-04 an exception is permitted which allows an entity to measure the fair value of financial instruments that are managed on the basis of the entity’s net exposure to a particular market risk, or to the credit risk of a particular counterparty, on a net basis when certain criteria are met. Such criteria include that there is evidence that the entity manages its financial instruments in that way, the entity applies such accounting policy election consistently from period to period, and the entity is required or has elected to measure those financial assets and financial liabilities at fair value in the statement of financial position at the end of each reporting period. Additionally, to qualify for the exception to the valuation premise, market risks that are being offset must be substantially the same. ASU 2011-04 also extends ASC 820’s prohibition on the use of blockage factors in fair value measurements to all three levels of the fair value hierarchy except for fair value measurements of Level 2 and 3 measurements when market participants would incorporate the premium or discount into the measurement at the level of the unit of

 

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Table of Contents

Note 1 — Financial Information (Continued)

 

account specified in other guidance. ASU 2011-04 also provides that an entity should measure the fair value of its own equity instruments from the perspective of a market participant that holds the instruments as assets. Under ASC 820, as amended, expanded disclosures are required including disclosure of quantitative information about significant unobservable inputs used in Level 3 fair value measurements, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of recurring Level 3 measurements. Additional disclosures required under ASU 2011-04 include disclosure of fair value by level for each class of assets and liabilities not recorded at fair value but for which fair value is disclosed, and disclosure of any transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for those transfers. The provisions of ASU 2011-04 are effective for periods beginning after December 15, 2011, with disclosure of the change, if any, in valuation technique and related inputs resulting from application of the amendments to ASC 820 required upon adoption, along with quantification of the total effect of the change, if practicable. Upon adoption of the provisions of ASU 2011-04, FHN revised its disclosures accordingly. Adoption of ASU 2011-04 had no effect on FHN’s statement of condition, results of operations, or cash flows.

Effective January 1, 2012, the FASB issued Accounting Standards Update 2011-03, “Reconsideration of Effective Control for Repurchase Agreements” (“ASU 2011-03”). For entities that enter into agreements to transfer financial assets that both entitle and obligate the transferor to repurchase or redeem the financial assets before their maturity, ASU 2011-03 removes from the assessment of effective control under ASC 860, “Transfers and Servicing”, the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, as well as the collateral maintenance implementation guidance related to that criterion. Under ASC 860-10, as amended, the remaining criteria related to whether effective control over transferred financial assets has been maintained would still need to be evaluated, including whether the financial assets to be repurchased or redeemed are the same or substantially the same as those transferred, the agreement is to repurchase or redeem them before maturity at a fixed or determinable price, and whether the agreement is entered into contemporaneously with, or in contemplation of, the transfer. The provisions of ASU 2011-03 are effective for periods beginning after December 15, 2011, with prospective application to transactions or modifications of existing transactions that occur on or after the effective date. Since FHN accounts for all of its repurchase agreements as secured borrowings, adopting the provisions of ASU 2011-03 did not have an effect on FHN’s statement of condition, results of operations, or cash flows.

Accounting Changes Issued but Not Currently Effective. In December 2011, the FASB issued Accounting Standards Update 2011-11, “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). ASU 2011-11 creates new disclosure requirements about the nature of an entity’s rights of setoff and related arrangements associated with its financial instruments and derivative instruments. ASU 2011-11 requires entities to disclose both gross and net information about both instruments/transactions eligible for offset in the balance sheet and instruments/transactions subject to an agreement similar to a master netting arrangement. The scope of ASU 2011-11 includes derivatives, sale and repurchase agreements/reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. The provisions of ASU 2011-11 are effective for periods beginning after January 1, 2013, with retrospective application to all periods presented in the financial statements required. FHN is currently assessing the effects of adopting the provisions of ASU 2011-11.

 

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Table of Contents

Note 2 – Acquisitions and Divestitures

In 2011, FHN sold First Horizon Insurance, Inc. (“FHI”), the former subsidiary of First Tennessee Bank, a property and casualty insurance agency that served customers in over 40 states, Highland Capital Management Corporation (“Highland”), the former subsidiary of First Horizon National Corporation which provided asset management services, and First Horizon Msaver, Inc. (“Msaver”), the former subsidiary of First Tennessee Bank which provided administrative services for health savings accounts. FHN recognized $4.2 million combined after-tax gains on the sales of FHI and Highland and a $5.7 million after-tax gain related to the sale of Msaver. Additionally, in connection with the agreement to sell FHI, FHN incurred a pre-tax goodwill impairment of $10.1 million which was more than offset by $11.1 million of tax benefits recognized in first quarter 2011 related to the sale. The sales of FHI and Highland closed in second quarter 2011 and the sale of Msaver closed in third quarter 2011. The financial results of these businesses, the goodwill impairment, the gains on sales, and associated tax effects are reflected in the Income/(loss) from discontinued operations, net of tax line on the Consolidated Condensed Statements of Income for all periods presented.

In addition to the divestitures mentioned above, FHN acquires or divests assets from time to time in transactions that are considered business combinations or divestitures but are not material to FHN individually or in the aggregate.

 

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Table of Contents

Note 3 – Investment Securities

The following tables summarize FHN’s available for sale (“AFS”) securities on June 30, 2012 and 2011:

 

     On June 30, 2012  

(Dollars in thousands)

   Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair
Value
 

Securities available for sale:

          

U.S. treasuries

   $ 39,993      $ 3      $ —        $ 39,996  

Government agency issued mortgage-backed securities (“MBS”)

     1,306,114        77,610        —          1,383,724  

Government agency issued collateralized mortgage obligations (“CMO”)

     1,563,120        27,623        (1,367     1,589,376  

Other U.S. government agencies

     12,815        338        —          13,153  

States and municipalities

     17,970        —           —          17,970  

Equity (a)

     220,124        2        —          220,126  

Other

     510        11        —          521  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total securities available for sale (b)

   $ 3,160,646      $ 105,587      $ (1,367   $ 3,264,866  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(a) Includes restricted investments in FHLB-Cincinnati stock of $125.5 million and FRB stock of $66.0 million. The remainder is money market, venture capital, and cost method investments.
(b) Includes $3.0 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes. Of this amount, $.5 billion was pledged as collateral for securities sold under repurchase agreements.

 

     June 30, 2011  

(Dollars in thousands)

   Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
     Fair
Value
 

Securities available for sale:

           

U.S. treasuries

   $ 46,073      $ 177      $ —         $ 46,250  

Government agency issued MBS

     1,445,021        56,746        —           1,501,767  

Government agency issued CMO

     1,386,962        36,932        —           1,423,894  

Other U.S. government agencies

     18,791        1,136        —           19,927  

States and municipalities

     19,365        —           —           19,365  

Equity (a)

     218,715        19        —           218,734  

Other

     511        29        —           540  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities available for sale (b)

   $ 3,135,438      $ 95,039      $ —         $ 3,230,477  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Includes restricted investments in FHLB-Cincinnati stock of $125.5 million and FRB stock of $66.1 million. The remainder is money market, venture capital, and cost method investments.
(b) Includes $2.9 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes. Of this amount, $1.1 billion was pledged as collateral for securities sold under repurchase agreements.

National banks chartered by the federal government are, by law, members of the Federal Reserve System. Each member bank is required to own stock in its regional Federal Reserve Bank (“FRB”). Given this requirement, FRB stock may not be sold, traded, or pledged as collateral for loans. Membership in the Federal Home Loan Bank (“FHLB”) 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.

 

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Note 3 – Investment Securities (Continued)

 

The amortized cost and fair value by contractual maturity for the available for sale securities portfolio on June 30, 2012 are provided below:

 

     Available for Sale  

(Dollars in thousands)

   Amortized
Cost
     Fair
Value
 

Within 1 year

   $ 48,467      $ 48,488  

After 1 year; within 5 years

     5,841        6,161  

After 5 years; within 10 years

     —           —     

After 10 years

     16,470        16,470  
  

 

 

    

 

 

 

Subtotal

     70,778        71,119  
  

 

 

    

 

 

 

Government agency issued MBS and CMO

     2,869,234        2,973,100  

Equity and other securities

     220,634        220,647  
  

 

 

    

 

 

 

Total

   $ 3,160,646      $ 3,264,866  
  

 

 

    

 

 

 

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.

The table below provides information on gross realized gains and gross realized losses from investment securities for the three and six months ended June 30:

     Three Months Ended      Six Months Ended  

(Dollars in thousands)

   2012     2011      2012     2011  

Gross gains on sales of securities

   $ 5,105     $ 1      $ 5,433     $ 9,422  

Gross (losses) on sales of securities

     —          —           —          (8,623
  

 

 

   

 

 

    

 

 

   

 

 

 

Net gain/(loss) on sales of securities (a)

   $ 5,105     $ 1      $ 5,433     $ 799  
  

 

 

   

 

 

    

 

 

   

 

 

 

Venture capital investments (b)

     —          —           —          —     

Net other than temporary impairment (“OTTI”) recorded

     (40     —           (40     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Total securities gain/(loss), net

   $ 5,065     $ 1      $ 5,393     $ 799  
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(a) Proceeds from sales for the three months ended June 30, 2012 were $8.4 million, and were $47.5 million and $458.4 million for the six months ended June 30, 2012 and 2011, respectively. Proceeds from sales during second quarter 2011 were immaterial.
(b) Generally includes write-offs and/or unrealized fair value adjustments related to venture capital investments.

There were no unrealized losses within the available for sale portfolio on June 30, 2011. The following table provides information on investments within the available for sale portfolio that had unrealized losses on June 30, 2012:

 

     On June 30, 2012  
     Less than 12 months     12 months or longer      Total  
     Fair      Unrealized     Fair      Unrealized      Fair      Unrealized  

(Dollars in thousands)

   Value      Losses     Value      Losses      Value      Losses  

Government agency issued CMO

   $  235,282      $ (1,367   $  —         $ —         $ 235,282      $ (1,367
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total temporarily impaired securities

   $  235,282      $ (1,367   $  —         $ —         $ 235,282      $ (1,367
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

FHN has reviewed investment securities that were in unrealized loss positions in accordance with its accounting policy for OTTI and does not consider them other-than-temporarily impaired. For debt 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. The decline in value is primarily attributable to interest rates and not credit losses. For equity securities, FHN has both the ability and intent to hold these securities for the time necessary to recover the amortized cost.

 

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Table of Contents

Note 4 – Loans

The following table provides the balance of loans by portfolio segment as of June 30, 2012 and 2011, and December 31, 2011:

 

     June 30      December 31  

(Dollars in thousands)

   2012      2011      2011  

Commercial:

        

Commercial, financial, and industrial

   $ 7,981,365      $ 7,180,261      $ 8,014,927  

Commercial real estate

        

Income CRE

     1,224,944        1,310,779        1,257,497  

Residential CRE

     89,225        182,857        120,913  

Retail:

        

Consumer real estate

     5,408,105        5,383,223        5,291,364  

Permanent mortgage

     738,766        1,015,122        787,597  

Credit card & other

     278,958        295,373        284,051  

Restricted real estate loans and secured borrowings (a)

     464,400        694,031        640,778  
  

 

 

    

 

 

    

 

 

 

Loans, net of unearned income

   $ 16,185,763      $ 16,061,646      $ 16,397,127  

Allowance for loan losses

     321,051        524,091        384,351  
  

 

 

    

 

 

    

 

 

 

Total net loans

   $ 15,864,712      $ 15,537,555      $ 16,012,776  
  

 

 

    

 

 

    

 

 

 

 

(a) Balances as of June 30, 2012 and 2011, and December 31, 2011, include $447.5 million, $649.2 million, and $600.2 million of consumer real estate loans and $16.9 million, $44.9 million, and $40.6 million of permanent mortgage loans, respectively.

Components of the Loan Portfolio

For purposes of this disclosure, the loan portfolio was disaggregated into segments and then further disaggregated into classes for certain disclosures. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. A class is generally determined based on the initial measurement attribute (i.e., amortized cost or purchased credit impaired), risk characteristics of the loan, and an entity’s method for monitoring and assessing credit risk. Commercial loan portfolio segments include commercial, financial, and industrial (“C&I”) and commercial real estate (“CRE”). Commercial classes within C&I include general C&I, loans to mortgage companies, and the trust preferred loans (“TRUPs”)(i.e., loans to bank and insurance-related businesses) portfolio. Loans to mortgage companies includes commercial lines of credit to qualified mortgage companies exclusively for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Commercial classes within commercial real estate include income CRE and residential CRE. Retail loan portfolio segments include consumer real estate, permanent mortgage, and the credit card and other portfolio. Retail classes include home equity lines of credit (“HELOC”) and real estate (“R/E”) installment loans within the consumer real estate segment, permanent mortgage (which is both a segment and a class), and credit card and other. Restricted real estate loans and secured borrowings include residential real estate loans in both consolidated and nonconsolidated variable interest entities. Restricted real estate loans relate to consolidated securitization trusts and are discussed in Note 13 – Variable Interest Entities. Other real estate loans secure borrowings related to nonconsolidated VIEs and remain on FHN’s balance sheet as the securitizations do not qualify for sale treatment.

Concentrations

FHN has a concentration of loans secured by residential real estate (41 percent of total loans), the majority of which is in the consumer real estate portfolio (33 percent of total loans). Additionally, on June 30, 2012, FHN had a sizeable portfolio of bank-related loans (including TRUPs) totaling $.6 billion (7 percent of the C&I portfolio, or 4 percent of total loans). Additionally, FHN had loans to mortgage companies totaling $1.3 billion (16 percent of the C&I portfolio, or 8 percent of total loans) as of June 30, 2012.

Allowance for Loan Losses

The allowance for loan losses (“ALLL”) includes the following components: reserves for commercial loans evaluated based on pools of credit graded loans and reserves for pools of smaller-balance homogeneous retail loans, both determined in accordance with the ASC Topic related to Contingencies (“ASC 450-20-50”). The reserve factors applied to these pools are an estimate of probable incurred losses based on management’s evaluation of historical net losses from loans with similar characteristics and are subject to adjustment by management to reflect current events, trends, and conditions (including economic considerations and trends). The slow economic recovery, weak housing market, elevated unemployment levels, and both positive and negative portfolio segment-specific trends, are examples of additional factors considered by management in determining the allowance for loan losses. Also included are reserves, determined in accordance with the Receivables Topic (“ASC 310-10-45”), for loans determined by management to be individually impaired.

 

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Table of Contents

Note 4 – Loans (Continued)

 

Commercial

For commercial loans, reserves are established using historical net loss factors by grade level, loan product, and business segment. An assessment of the quality of individual commercial loans is made utilizing credit grades assigned internally based on a dual grading system which estimates both the probability of default (“PD”) and loss severity in the event of default. PD grades range from 1-16 while estimated loss severities, or loss given default (“LGD”) grades, range from 1-12. This credit grading system is intended to identify and measure the credit quality of the loan portfolio by analyzing the migration of loans between grading categories. It is also integral to the estimation methodology utilized in determining the allowance for loan losses since an allowance is established for pools of commercial loans based on the credit grade assigned. The appropriate relationship team performs the process of categorizing commercial loans into the appropriate credit grades, initially as a component of the approval of the loan, and subsequently throughout the life of the loan as part of the servicing regimen. The proper loan grade for larger exposures is confirmed by a senior credit officer in the approval process. To determine the most appropriate credit grade for each loan, the credit risk grading system employs scorecards for particular categories of loans that consist of a number of objective and subjective measures that are weighted in a manner that produces a rank ordering of risk within pass-graded credits. Loan grading discipline is regularly reviewed by Credit Risk Assurance to determine if the process continues to result in accurate loan grading across the portfolio.

FHN may utilize availability of guarantors/sponsors to support lending decisions during the credit underwriting process and when determining the assignment of internal loan grades. Where guarantor contributions are determined to be a source of repayment, an assessment of the guarantee is made. This guarantee assessment would include but not be limited to factors such as type and feature of the guarantee, consideration for the guarantee, key provisions of the guarantee agreement, and ability of the guarantor to be a viable secondary source of repayment. Reliance on the guarantee 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 debt cash flows. Therefore, a proper evaluation of each guarantor is critical. FHN establishes a guarantor’s ability (financial wherewithal) to support a credit based on an analysis of recent information on the guarantor’s financial condition. This would generally include income and asset information from sources such as recent tax returns, credit reports, and personal financial statements. In analyzing this information FHN seeks to assess a combination of liquidity, global cash flow, cash burn rate, and contingent liabilities to demonstrate the guarantor’s capacity to sustain support for the credit and fulfill the obligation. FHN also considers the volume and amount of guarantees provided for all global indebtedness and the likelihood of realization. Guarantor financial information is periodically updated throughout the life of the loan. FHN presumes a guarantor’s willingness to perform until financial support becomes necessary or if there is any current or prior indication or future expectation that the guarantor may not willingly and voluntarily perform under the terms of the guarantee. In FHN’s risk grading approach, it is deemed 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 guarantee 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. FHN establishes guarantor willingness to support the credit through documented evidence of previous and ongoing support of the credit. Previous performance under a guarantor’s obligation to pay is not considered if the performance was involuntary.

Retail

The ALLL for smaller-balance homogenous retail loans is determined based on pools of similar loan types that have similar credit risk characteristics. FHN manages retail loan credit risk on a class basis. Reserves by portfolio are determined using segmented roll-rate models that incorporate various factors including historical delinquency trends, experienced loss frequencies, and experienced loss severities. Generally, reserves for retail loans reflect inherent losses in the portfolio that are expected to be recognized over the following twelve months.

Individually Impaired

Generally, classified nonaccrual commercial loans over $1 million and all commercial and consumer loans classified as troubled debt restructurings (“TDRs”) are deemed to be impaired and are individually assessed for impairment measurement in accordance with ASC 310-10. For all commercial portfolio segments, commercial TDRs and other individually impaired commercial loans are measured based on the present value of expected future payments discounted at the loan’s effective interest rate (“the DCF method”), observable market prices, or for loans that are solely dependent on the collateral for repayment, the estimated fair value of the collateral less estimated costs to sell (net realizable value). For loans measured using the DCF method or by observable market prices, if the recorded investment in the impaired loan exceeds this amount, a specific allowance is established as a component of the ALLL until such time as a loss is expected and recognized; however, for impaired collateral-dependent loans, FHN will charge off the full difference between the book value and the best estimate of net realizable value. Beginning in first quarter 2012, the allowance for TDRs in all consumer portfolio segments was determined by estimating the expected future cash flows using the modified interest rate (if an interest rate concession), incorporating payoff and net charge-off rates specific to the TDRs within the portfolio segment

 

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Note 4 – Loans (Continued)

 

being assessed, and discounted using the pre-modification interest rate. Generally, the discount rates of variable rate TDRs are adjusted to reflect changes in the interest rate index in which the rates are tied. The discounted cash flows are then compared to the outstanding principal balance in order to determine required reserves.

The following table provides a rollforward of the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2012 and 2011:

    
                             Credit        
           Commercial     Consumer     Permanent     Card and        

(Dollars in thousands)

   C&I     Real Estate     Real Estate     Mortgage     Other     Total  

Balance as of April 1, 2011

   $ 220,600     $ 123,480     $ 179,394     $ 55,640     $ 10,014     $ 589,128  

Charge-offs

     (12,793     (9,426     (44,526     (11,367     (5,232     (83,344

Recoveries

     6,881       1,752       4,654       2,984       1,036       17,307  

Provision

     (8,410     (16,339     23,133       (655     3,271       1,000  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2011 (a) (b)

     206,278       99,467       162,655       46,602       9,089       524,091  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of January 1, 2011

     239,469       155,085       192,350       65,009       12,886       664,799  

Charge-offs

     (24,852     (23,711     (91,764     (20,784     (9,584     (170,695

Recoveries

     8,837       5,066       8,436       3,534       2,114       27,987  

Provision

     (17,176     (36,973     53,633       (1,157     3,673       2,000  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2011 (a) (b)

     206,278       99,467       162,655       46,602       9,089       524,091  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance—individually evaluated for impairment

     50,673       9,797       23,656       14,586       752       99,464  

Allowance—collectively evaluated for impairment

     155,605       89,670       138,999       32,016       8,337       424,627  

Loans, net of unearned as of June 30, 2011:

            

Individually evaluated for impairment

     215,904       174,379       88,088       115,008       1,186       594,565  

Collectively evaluated for impairment

     6,964,357       1,319,257       5,944,313       944,967       294,187       15,467,081  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans, net of unearned (a) (b)

     7,180,261       1,493,636       6,032,401       1,059,975       295,373       16,061,646  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of April 1, 2012

     119,578       46,049       141,647       32,572       6,170       346,016  

Charge-offs

     (10,159     (4,002     (29,136     (3,071     (3,360     (49,728

Recoveries

     2,162       1,043       5,175       648       735       9,763  

Provision

     (936     (1,544     15,735       (1,037     2,782       15,000  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2012 (a) (b)

     110,645       41,546       133,421       29,112       6,327       321,051  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of January 1, 2012

     130,413       55,586       165,077       26,194       7,081       384,351  

Charge-offs

     (16,233     (13,621     (63,269     (7,709     (5,979     (106,811

Recoveries

     6,676       1,539       9,314       1,171       1,811       20,511  

Provision

     (10,211     (1,958     22,299       9,456       3,414       23,000  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2012 (a) (b)

     110,645       41,546       133,421       29,112       6,327       321,051  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance—individually evaluated for impairment

     31,458       7,707       32,688       24,131       221       96,205  

Allowance—collectively evaluated for impairment

     79,187       33,839       100,733       4,981       6,106       224,846  

Loans, net of unearned as of June 30, 2012:

            

Individually evaluated for impairment

     155,863       92,645       125,040       119,537       933       494,018  

Collectively evaluated for impairment

     7,825,502       1,221,524       5,730,524       636,170       278,025       15,691,745  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans, net of unearned (a) (b)

   $ 7,981,365     $ 1,314,169     $ 5,855,564     $ 755,707     $ 278,958     $ 16,185,763  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Balances as of June 30, 2012 and 2011 include $19.0 million and $29.9 million of reserves, respectively, and $447.5 million and $649.2 million of balances in restricted consumer real estate loans and secured borrowings, respectively.
(b) Balances as of June 30, 2012 and 2011 include $1.3 million and $3.1 million of reserves, respectively, and $16.9 million and $44.9 million of balances in restricted permanent mortgage loans and secured borrowings, respectively.

 

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Note 4 – Loans (Continued)

 

Impaired Loans

The following tables provide information by class related to individually impaired loans. Recorded investment is defined as the amount of the investment in a loan, before valuation allowance but which does reflect any direct write-down of the investment. For purposes of this disclosure, LOCOM has been excluded.

 

                          Three Months Ended      Six Months Ended  
     June 30, 2012      June 30, 2012      June 30, 2012  
            Unpaid             Average      Interest      Average      Interest  
     Recorded      Principal      Related      Recorded      Income      Recorded      Income  

(Dollars in thousands)

   Investment      Balance      Allowance      Investment      Recognized      Investment      Recognized  

Impaired loans with no related allowance recorded:

                    

Commercial:

                    

General C&I

   $ 62,122      $ 81,423      $ —         $ 62,858      $ 204      $ 68,551      $ 407  

TRUPs

     47,000        47,000        —           47,000        —           47,000        —     

Income CRE

     51,375        92,153        —           57,783        76        59,514        153  

Residential CRE

     22,341        39,993        —           23,276        62        23,316        134  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 182,838      $ 260,569      $ —         $ 190,917      $ 342      $ 198,381      $ 694  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Impaired loans with related allowance recorded:

                    

Commercial:

                    

General C&I

   $ 18,948      $ 18,948      $ 7,629      $ 15,889      $ 33      $ 16,696      $ 67  

TRUPs

     33,700        33,700        23,829        33,700        —           33,700        —     

Income CRE

     1,529        1,577        189        1,869        14        1,876        29  

Residential CRE

     17,400        17,400        7,518        18,457        —           19,276        —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 71,577      $ 71,625      $ 39,165      $ 69,915      $ 47      $ 71,548      $ 96  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Retail:

                    

HELOC

   $ 57,175      $ 57,175      $ 13,903      $ 54,793      $ 411      $ 53,547      $ 784  

R/E installment loans

     67,865        67,865        18,785        66,505        276        69,036        541  

Permanent mortgage

     119,537        119,537        24,131        110,785        734        96,300        1,390  

Credit card & other

     933        933        221        980        10        1,025        21  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 245,510      $ 245,510      $ 57,040      $ 233,063      $ 1,431      $ 219,908      $ 2,736  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

   $ 254,415      $ 332,194      $ 39,165      $ 260,832      $ 389      $ 269,929      $ 790  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total retail

   $ 245,510      $ 245,510      $ 57,040      $ 233,063      $ 1,431      $ 219,908      $ 2,736  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans

   $ 499,925      $ 577,704      $ 96,205      $ 493,895      $ 1,820      $ 489,837      $ 3,526  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

16


Table of Contents

Note 4 – Loans (Continued)

 

     June 30, 2011      Three Months Ended
June 30, 2011
     Six Months Ended
June 30, 2011
 
            Unpaid             Average      Interest      Average      Interest  
     Recorded      Principal      Related      Recorded      Income      Recorded      Income  

(Dollars in thousands)

   Investment      Balance      Allowance      Investment      Recognized      Investment      Recognized  

Impaired loans with no related allowance recorded:

                    

Commercial:

                    

General C&I

   $ 91,940      $ 117,491      $ —         $ 91,082      $ 232      $ 66,902      $ 489  

TRUPs

     57,000        57,000        —           47,500        —           42,500        —     

Income CRE

     96,935        167,950        —           110,102        392        102,411        531  

Residential CRE

     42,920        86,214        —           53,571        269        51,161        344  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 288,795      $ 428,655      $ —         $ 302,255      $ 893      $ 262,974      $ 1,364  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Impaired loans with related allowance recorded:

                    

Commercial:

                    

General C&I

   $ 43,956      $ 53,258      $ 23,980      $ 49,949      $ 81      $ 78,748      $ 140  

TRUPs

     30,000        30,000        26,693        30,000        —           30,000        —     

Income CRE

     12,129        12,314        3,550        11,866        11        23,335        11  

Residential CRE

     22,395        22,631        6,247        22,351        —           31,354        —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 108,480      $ 118,203      $ 60,470      $ 114,166      $ 92      $ 163,437      $ 151  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Retail:

                    

HELOC

   $ 36,617      $ 36,617      $ 11,819      $ 33,507      $ 180      $ 30,996      $ 321  

R/E installment loans

     51,471        51,471        11,837        49,822        182        47,935        344  

Permanent mortgage

     115,008        115,008        14,586        109,449        434        105,886        914  

Credit card & other

     1,186        1,186        752        1,250        12        975        24  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 204,282      $ 204,282      $ 38,994      $ 194,028      $ 808      $ 185,792      $ 1,603  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

   $ 397,275      $ 546,858      $ 60,470      $ 416,421      $ 985      $ 426,411      $ 1,515  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total retail

   $ 204,282      $ 204,282      $ 38,994      $ 194,028      $ 808      $ 185,792      $ 1,603  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans

   $ 601,557      $ 751,140      $ 99,464      $ 610,449      $ 1,793      $ 612,203      $ 3,118  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Certain previously reported amounts have been reclassified to agree with current presentation.

Asset Quality Indicators

As previously discussed, FHN employs a dual grade commercial risk grading methodology to assign an estimate for PD and the LGD for each commercial loan, 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. Each PD grade corresponds to an estimated one-year default probability percentage; a PD 1 has the lowest expected default probability, and probabilities increase as grades progress down the scale. PD 1 through PD 12 are “pass” grades. Prior to second quarter 2011, all loans with an assigned PD grade of “12” which is the lowest pass grade were included on the Watch List. In second quarter 2011, FHN implemented an enhanced process for determining which loans warrant additional oversight and monitoring. The identification of Watch List loans is now determined by the appropriate relationship team and is generally driven by specific events that may impact borrowers, rather than being driven solely by the assigned PD grade. This process enhancement did not have a material impact on the allowance for loan losses. PD grades 13-16 correspond to the regulatory-defined categories of special mention (13), substandard (14), doubtful (15), and loss (16). Pass loan grades are required to be reassessed no less frequently than annually or whenever there has been a material change in the financial condition of the borrower or risk characteristics of the relationship. All commercial loans over $1 million and certain commercial loans over $500,000 that are graded 13 or worse are reassessed on a quarterly basis. LGD grades are assigned based on a scale of 1-12 and represent FHN’s expected recovery based on collateral type in the event a loan defaults.

 

17


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Note 4 – Loans (Continued)

 

The following tables provide the balances of commercial loan portfolio classes with associated allowance, disaggregated by PD grade as of June 30, 2012 and 2011:

 

     June 30, 2012  

(Dollars in thousands)

   General
C&I
     Loans to
Mortgage
Companies
     TRUPS (a)      Income CRE      Residential
CRE
     Total      Percent
of Total
    Allowance
for Loan
Losses
 

PD Grade:

                      

1

   $ 203,161      $ —         $ —         $ —         $ —         $ 203,161        2 %   $ 47  

2

     168,993        —           —           2,574        —           171,567        2        83  

3

     137,717        —           —           12,153        —           149,870        2        83  

4

     248,077        —           —           4,238        92        252,407        3        216  

5

     535,981        —           —           34,141        288        570,410        6        1,172  

6

     817,360        130,089        —           170,330        5,182        1,122,961        12        3,531  

7

     1,003,718        541,878        —           143,177        4,847        1,693,620        18        8,688  

8

     887,169        344,980        —           177,960        1,464        1,411,573        15        10,968  

9

     645,263        227,737        —           168,392        1,383        1,042,775        11        10,298  

10

     524,040        29,317        —           86,247        977        640,581        7        7,839  

11

     455,296        —           —           126,599        2,094        583,989        6        11,065  

12

     154,564        —           —           13,081        2,098        169,743        2        2,959  

13

     156,823        —           338,180        62,625        4,380        562,008        6        8,942  

14,15,16

     275,159        —           —           170,523        26,679        472,361        5        47,135  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Collectively evaluated for impairment

     6,213,321        1,274,001        338,180        1,172,040        49,484        9,047,026        97        113,026  

Individually evaluated for impairment

     81,070        —           74,793        52,904        39,741        248,508        3        39,165  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total commercial loans

   $ 6,294,391      $ 1,274,001      $ 412,973      $ 1,224,944      $ 89,225      $ 9,295,534        100 %   $ 152,191  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
     June 30, 2011  

(Dollars in thousands)

   General C&I      Loans to
Mortgage
Companies
     TRUPS (a)      Income CRE      Residential
CRE
     Total      Percent
of Total
    Allowance
for Loan
Losses
 

PD Grade:

                      

1

   $ 111,827      $ —         $ —         $ —         $ —         $ 111,827        1 %   $ 11  

2

     127,485        —           —           2,666        —           130,151        2        36  

3

     172,584        —           —           13,427        —           186,011        2        121  

4

     188,023        —           —           7,348        148        195,519        2        608  

5

     305,426        —           —           17,254        129        322,809        4        1,095  

6

     814,788        62,472        —           69,419        917        947,596        11        6,318  

7

     767,160        179,029        —           111,342        2,588        1,060,119        12        11,301  

8

     1,155,176        255,790        —           173,455        6,464        1,590,885        18        18,549  

9

     553,646        84,316        —           119,095        3,012        760,069        9        18,316  

10

     443,673        264        —           146,320        2,276        592,533        7        13,067  

11

     540,792        —           —           111,022        1,237        653,051        9        19,109  

12

     101,010        —           —           17,069        5,187        123,266        1        4,387  

13

     333,245        —           329,473        125,393        10,136        798,247        9        42,673  

14,15,16

     417,476        656        20,046        287,906        85,447        811,531        9        109,684  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Collectively evaluated for impairment

     6,032,311        582,527        349,519        1,201,716        117,541        8,283,614        96        245,275  

Individually evaluated for impairment

     135,896        —           80,008        109,063        65,316        390,283        4        60,470  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total commercial loans

   $ 6,168,207      $ 582,527      $ 429,527      $ 1,310,779      $ 182,857      $ 8,673,897        100 %   $ 305,745  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(a) Balances as of June 30, 2012 and 2011, presented net of $34.2 million and $35.6 million, respectively, LOCOM. Based on the underlying structure of the notes, the highest possible internal grade is “13”.

The retail 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 retail loan-types, FHN is able to utilize the Fair Isaac Corporation (“FICO”) score, among other attributes, to assess the 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 retail portfolio.

 

18


Table of Contents

Note 4 – Loans (Continued)

 

The following tables reflect period-end balances and average FICO scores by origination vintage for the HELOC, real estate installment, and permanent mortgage classes of loans as of June 30, 2012 and 2011:

 

HELOC    June 30, 2012      June 30, 2011  

(Dollars in thousands)

   Period End
Balance (a)
     Avg  orig
FICO
     Avg
Refreshed
FICO
     Period End
Balance (a)
     Avg orig
FICO
     Avg
Refreshed
FICO
 

Origination Vintage

                 

pre-2003

   $ 153,428        721        715      $ 205,846        723        720  

2003

     249,536        733        724        297,529        733        726  

2004

     546,681        728        719        636,798        728        720  

2005

     679,687        734        720        789,493        734        721  

2006

     500,840        741        726        592,715        742        726  

2007

     521,706        746        731        599,372        746        732  

2008

     279,200        755        749        306,902        755        749  

2009

     163,683        753        750        191,666        755        755  

2010

     159,522        754        753        192,126        756        758  

2011

     155,018        759        757        72,312        756        758  

2012

     79,029        761        760        N/A         N/A         N/A   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 3,488,330        740        730      $ 3,884,759        740        730  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Balances as of June 30, 2012 and 2011 include $447.5 million and $649.2 million of restricted loan and secured borrowing balances.

 

R/E Installment Loans    June 30, 2012      June 30, 2011  

(Dollars in thousands)

   Period  End
Balance
     Avg  orig
FICO
     Avg
Refreshed
FICO
     Period End
Balance
     Avg orig
FICO
     Avg
Refreshed
FICO
 

Origination Vintage

                 

pre-2003

   $ 46,628        688        686      $ 68,535        693        689  

2003

     134,820        721        731        191,650        723        732  

2004

     84,741        708        705        112,979        712        712  

2005

     239,744        719        714        304,444        721        716  

2006

     261,208        720        706        333,664        722        707  

2007

     364,488        728        712        464,712        731        715  

2008

     131,770        729        725        182,390        737        733  

2009

     77,922        750        749        117,535        752        754  

2010

     173,949        746        754        211,984        748        749  

2011

     449,788        761        759        159,749        757        755  

2012

     402,176        765        763        N/A         N/A         N/A   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,367,234        739        733      $ 2,147,642        731        724  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

                                                     
Permanent Mortgage    June 30, 2012      June 30, 2011  

(Dollars in thousands)

   Period End
Balance (a)
     Avg  orig
FICO
     Avg
Refreshed
FICO
     Period End
Balance (a)
     Avg orig
FICO
     Avg
Refreshed
FICO
 

Origination Vintage

                 

pre-2004

   $   140,986        724        731      $ 196,488        726        732  

2004

     10,896        716        692        13,822        724        700  

2005

     55,985        740        715        70,767        740        720  

2006

     102,491        735        707        142,381        732        686  

2007

     308,801        732        703        407,145        731        678  

2008

     136,548        742        713        229,372        736        679  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 755,707        733        712      $ 1,059,975        732        691  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Balances as of June 30, 2012 and 2011 include $16.9 million and $44.9 million of restricted loan and secured borrowing balances.

 

19


Table of Contents

Note 4 – Loans (Continued)

 

The following table reflects accruing delinquency amounts for the credit card and other portfolio classes.

 

     Credit Card      Other  

(Dollars in thousands)

   June 30, 2012      June 30, 2011      June 30, 2012      June 30, 2011  

Accruing delinquent balances:

           

30-89 days past due

   $ 1,569      $ 1,480      $ 369      $ 908  

90+ days past due

     1,286        1,141        339        10  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,855      $ 2,621      $ 708      $ 918  
  

 

 

    

 

 

    

 

 

    

 

 

 

Nonaccrual and Past Due Loans

For all portfolio segments and classes, 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, or on a case-by-case basis if FHN continues to receive payments, but there are atypical loan structures or other borrower-specific issues. FHN does have a meaningful portion of loans that are classified as nonaccrual but where it continues to receive payments.

The following table reflects accruing and non-accruing loans by class on June 30, 2012:

 

     Accruing      Non-Accruing  

(Dollars in thousands)

   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  

Commercial (C&I) :

                          

General C&I

   $ 6,189,015      $ 21,152      $ 1,735       $ 6,211,902      $ 43,834      $ 7,752      $ 30,903      $ 82,489      $ 6,294,391  

Loans to mortgage companies

     1,274,001        —           —           1,274,001        —           —           —           —           1,274,001  

TRUPs (a)

     338,180        —           —           338,180        —           —           74,793        74,793        412,973  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total C&I

     7,801,196        21,152        1,735        7,824,083        43,834        7,752        105,696        157,282        7,981,365  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial real estate:

                          

Income CRE

     1,161,209        6,508        —           1,167,717        17,449        930        38,848        57,227        1,224,944  

Residential CRE

     44,413        5,973        —           50,386        19,505        921        18,413        38,839        89,225  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     1,205,622        12,481        —           1,218,103        36,954