Business Segment Information

9 Months Ended

Sep. 30, 2017

Segment Reporting, Measurement Disclosures [Abstract]

Business Segment Information

Business Segment Information

FHN has four business segments: regional banking, fixed income, corporate, and non-strategic. The regional banking segment offers financial products and services, including traditional lending and deposit taking, to consumer and commercial customers in Tennessee and other selected markets. Regional banking also provides investments, financial planning, trust services and asset management, credit card, and cash management. Additionally, the regional banking segment includes correspondent banking which provides credit, depository, and other banking related services to other financial institutions nationally. The fixed income segment consists of fixed income securities sales, trading, and strategies for institutional clients in the U.S. and abroad, as well as loan sales, portfolio advisory services, and derivative sales. The corporate segment consists of unallocated corporate expenses, expense on subordinated debt issuances, bank-owned life insurance, unallocated interest income associated with excess equity, net impact of raising incremental capital, revenue and expense associated with deferred compensation plans, funds management, tax credit investment activities, derivative valuation adjustments related to prior sales of Visa Class B shares, loss on extinguishment of debt, and acquisition- and integration-related costs. The non-strategic segment consists of the wind-down national consumer lending activities, legacy mortgage banking elements including servicing fees, and the associated ancillary revenues and expenses related to these businesses. Non-strategic also includes the wind-down trust preferred loan portfolio and exited businesses.

Periodically, FHN adapts its segments to reflect managerial or strategic changes. FHN may also modify its methodology of allocating expenses and equity among segments which could change historical segment results. Business segment revenue, expense, asset, and equity levels reflect those which are specifically identifiable or which are allocated based on an internal allocation method. Because the allocations are based on internally developed assignments and allocations, to an extent they are subjective. Generally, all assignments and allocations have been consistently applied for all periods presented. The following table reflects the amounts of consolidated revenue, expense, tax, and average assets for each segment for the three and nine months ended September 30:

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in thousands)	2017		2016		2017			2016
Consolidated
Net interest income	$	209,817	$	185,195	$	600,226		$	533,533
Provision/(provision credit) for loan losses	—		4,000		(3,000		)	11,000
Noninterest income	112,417		148,545		357,029			428,364
Noninterest expense	236,869		233,558		676,991			687,307
Income/(loss) before income taxes	85,365		96,182		283,264			263,590
Provision/(benefit) for income taxes (a)	13,596		28,547		57,903			82,802
Net income/(loss)	$	71,769	$	67,635	$	225,361		$	180,788
Average assets	$	28,874,827	$	27,609,702	$	28,852,679		$	27,021,137

	Three Months Ended September 30						Nine Months Ended September 30
(Dollars in thousands)	2017			2016			2017			2016
Regional Banking
Net interest income	$	209,319		$	190,508		$	604,680		$	541,135
Provision/(provision credit) for loan losses	8,552			8,544			11,910			34,195
Noninterest income	64,369			65,128			188,082			185,679
Noninterest expense	150,464			145,050			451,175			454,970
Income/(loss) before income taxes	114,672			102,042			329,677			237,649
Provision/(benefit) for income taxes	41,267			37,027			118,986			84,736
Net income/(loss)	$	73,405		$	65,015		$	210,691		$	152,913
Average assets	$	19,158,458		$	17,582,899		$	18,519,584		$	16,704,462
Fixed Income
Net interest income	$	5,979		$	2,411		$	12,109		$	8,224
Noninterest income	55,802			72,073			161,829			217,278
Noninterest expense	53,105			59,423			155,791			180,850
Income/(loss) before income taxes	8,676			15,061			18,147			44,652
Provision/(benefit) for income taxes	2,979			5,518			5,949			16,195
Net income/(loss)	$	5,697		$	9,543		$	12,198		$	28,457
Average assets	$	2,586,997		$	2,305,986		$	2,388,984		$	2,348,640
Corporate
Net interest income/(expense)	$	(13,990	)	$	(18,193	)	$	(43,060	)	$	(48,401	)
Noninterest income (b)	(9,477		)	5,134			2,217			15,766
Noninterest expense	23,935			14,929			65,390			44,320
Income/(loss) before income taxes	(47,402		)	(27,988		)	(106,233		)	(76,955		)
Provision/(benefit) for income taxes (a)	(34,255		)	(16,736		)	(83,019		)	(40,695		)
Net income/(loss)	$	(13,147	)	$	(11,252	)	$	(23,214	)	$	(36,260	)
Average assets	$	5,698,161		$	5,880,268		$	6,421,890		$	6,024,736
Non-Strategic
Net interest income	$	8,509		$	10,469		$	26,497		$	32,575
Provision/(provision credit) for loan losses	(8,552		)	(4,544		)	(14,910		)	(23,195		)
Noninterest income	1,723			6,210			4,901			9,641
Noninterest expense	9,365			14,156			4,635			7,167
Income/(loss) before income taxes	9,419			7,067			41,673			58,244
Provision/(benefit) for income taxes	3,605			2,738			15,987			22,566
Net income/(loss)	$	5,814		$	4,329		$	25,686		$	35,678
Average assets	$	1,431,211		$	1,840,549		$	1,522,221		$	1,943,299

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

(a) Provision/(benefit) for income taxes for consolidated results and the Corporate segment for the three and nine months ended September 30, 2017, relative to the prior year periods, was affected by a decline in the effective tax rate in 2017 primarily related to the reversal of the valuation allowance for the deferred tax asset related to its 2012 federal capital loss carryforward based on capital gain transactions initiated in second quarter 2017. See Note 15 – Income Taxes in the Notes to Consolidated Financial Statements on FHN’s Form 10-K for the year ended December 31, 2016, for additional information related to FHN's valuation allowance related to its capital loss carryforward.

(b) Three and nine months ended September 30, 2017 includes a $14.3 million pre-tax loss from the repurchase of equity securities previously included in a financing transaction.