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Loans
 9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
Loans Loans
The following table provides the balance of loans, net of unearned income, by portfolio segment as of September 30, 2019 and December 31, 2018:
 
 
September 30
 
December 31
(Dollars in thousands)
 
2019
 
2018
Commercial (a):
 
 
 
 
Commercial, financial, and industrial
 
$
20,293,930

 
$
16,514,328

Commercial real estate
 
4,228,598

 
4,030,870

Consumer:
 
 
 
 
Consumer real estate (b)
 
6,062,829

 
6,249,516

Permanent mortgage
 
182,467

 
222,448

Credit card & other
 
493,009

 
518,370

Loans, net of unearned income
 
$
31,260,833

 
$
27,535,532

Allowance for loan losses
 
193,149

 
180,424

Total net loans
 
$
31,067,684

 
$
27,355,108

 
(a)
In third quarter 2019, FHN corrected a previous mis-classification of commercial loans and reclassified approximately $410 million of market investor CRE loans from the C&I portfolio to the CRE portfolio. These loans were identified during an internal review and assessment by management of certain loan populations, a portion of which relate to loans acquired as part of the Capital Bank merger. The reclassification of these loan balances between regional banking portfolios did not have an impact on FHN’s consolidated period-end or average balance sheet and had an immaterial effect on the allowance for loan losses. No adjustments were made to prior periods as the impact of the reclassification, including the effect on the allowance for loan losses was deemed to be immaterial in all periods.
(b)
Balances as of September 30, 2019 and December 31, 2018, include $12.4 million and $16.2 million of restricted real estate loans, respectively. See Note 14—Variable Interest Entities for additional information.

COMPONENTS OF THE LOAN PORTFOLIO
The loan portfolio is disaggregated into segments and then further disaggregated into classes for certain disclosures. GAAP defines a portfolio segment as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. A class is generally determined based on the initial measurement attribute (i.e., amortized cost or purchased credit-impaired), risk characteristics of the loan, and FHN’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, the trust preferred loans (“TRUPS”) (i.e. long-term unsecured loans to bank and insurance-related businesses) portfolio and purchased credit-impaired (“PCI”) loans. Loans to mortgage companies include commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Commercial classes within CRE include income CRE, residential CRE and PCI loans. Consumer loan portfolio segments include consumer real estate, permanent mortgage, and the credit card and other portfolio. Consumer classes include home equity lines of credit (“HELOCs”), real estate (“R/E”) installment and PCI loans within the consumer real estate segment, permanent mortgage (which is both a segment and a class), and credit card and other.
Concentrations
FHN has a concentration of residential real estate loans (20 percent of total loans), the majority of which is in the consumer real estate segment (19 percent of total loans). Loans to finance and insurance companies total $2.8 billion (13 percent of the C&I portfolio, or 9 percent of the total loans). FHN had loans to mortgage companies totaling $5.0 billion (25 percent of the C&I segment, or 16 percent of total loans) as of September 30, 2019. As a result, 38 percent of the C&I segment is sensitive to impacts on the financial services industry.





Purchased Credit-Impaired Loans
The following table presents a rollforward of the accretable yield for the three and nine months ended September 30, 2019 and 2018:
 
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
(Dollars in thousands)
 
2019
 
2018
 
2019
 
2018
Balance, beginning of period
 
$
11,600

 
$
14,474

 
$
13,375

 
$
15,623

Accretion
 
(1,440
)
 
(2,183
)
 
(4,586
)
 
(6,927
)
Adjustment for payoffs
 
(369
)
 
(840
)
 
(1,084
)
 
(2,559
)
Adjustment for charge-offs
 
(59
)
 
(122
)
 
(314
)
 
(1,046
)
Adjustment for pool excess recovery
 
—

 
(123
)
 
—

 
(123
)
Increase/(decrease) in accretable yield (a)
 
2,416

 
4,062

 
5,080

 
10,721

Disposal
 
(4
)
 
—

 
(4
)
 
(240
)
Other
 
(35
)
 
—

 
(358
)
 
(181
)
Balance, end of period
 
$
12,109

 
$
15,268

 
$
12,109

 
$
15,268

 
(a)
Includes changes in the accretable yield due to both transfers from the nonaccretable difference and the impact of changes in the expected timing and amounts of the cash flows.
At September 30, 2019, the ALLL related to PCI loans was $2.2 million compared to $4.0 million at December 31, 2018. A loan loss provision expense related to PCI loans of $.3 million was recognized during the three months ended September 30, 2019, as compared to a loan loss provision expense of $.9 million recognized during the three months ended September 30, 2018. A loan loss provision credit related to PCI loans of $1.5 million was recognized during the nine months ended September 30, 2019, as compared to a loan loss provision expense of $3.5 million recognized during the nine months ended September 30, 2018.
The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI loans as of September 30, 2019 and December 31, 2018:
 
 
September 30, 2019
 
December 31, 2018
(Dollars in thousands)
 
Carrying value
 
Unpaid balance
 
Carrying value
 
Unpaid balance
Commercial, financial and industrial
 
$
28,777

 
$
30,478

 
$
38,873

 
$
44,259

Commercial real estate
 
6,596

 
7,268

 
15,197

 
17,232

Consumer real estate
 
25,514

 
28,591

 
30,723

 
34,820

Credit card and other
 
637

 
790

 
1,627

 
1,879

Total
 
$
61,524

 
$
67,127

 
$
86,420

 
$
98,190









Impaired Loans
The following tables provide information at September 30, 2019 and December 31, 2018, by class related to individually impaired loans and consumer TDRs, regardless of accrual status. Recorded investment is defined as the amount of the investment in a loan, excluding any valuation allowance but including any direct write-down of the investment. For purposes of this disclosure, PCI loans and the TRUPS valuation allowance have been excluded.
 
 
September 30, 2019
 
December 31, 2018
(Dollars in thousands)
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
General C&I
 
$
63,070

 
$
78,914

 
$
—

 
$
42,902

 
$
45,387

 
$
—

Income CRE
 
1,940

 
1,940

 
—

 
1,589

 
1,589

 
—

Total
 
$
65,010

 
$
80,854

 
$
—

 
$
44,491

 
$
46,976

 
$
—

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC (a)
 
$
6,614

 
$
12,579

 
$
—

 
$
8,645

 
$
16,648

 
$
—

R/E installment loans (a)
 
5,042

 
5,853

 
—

 
4,314

 
4,796

 
—

Permanent mortgage (a)
 
2,791

 
4,619

 
—

 
3,601

 
6,003

 
—

Total
 
$
14,447

 
$
23,051

 
$
—

 
$
16,560

 
$
27,447

 
$
—

Impaired loans with related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
General C&I
 
$
19,508

 
$
23,728

 
$
4,287

 
$
2,802

 
$
2,802

 
$
149

TRUPS
 
2,725

 
3,700

 
140

 
2,888

 
3,700

 
925

Income CRE
 
—

 
—

 
—

 
377

 
377

 
—

Total
 
$
22,233

 
$
27,428

 
$
4,427

 
$
6,067

 
$
6,879

 
$
1,074

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
$
58,924

 
$
62,514

 
$
7,457

 
$
66,482

 
$
69,610

 
$
11,241

R/E installment loans
 
37,735

 
38,714

 
4,901

 
38,993

 
39,851

 
6,743

Permanent mortgage
 
61,511

 
71,406

 
8,363

 
67,245

 
78,010

 
9,419

Credit card & other
 
720

 
720

 
450

 
695

 
695

 
337

Total
 
$
158,890

 
$
173,354

 
$
21,171

 
$
173,415

 
$
188,166

 
$
27,740

Total commercial
 
$
87,243

 
$
108,282

 
$
4,427

 
$
50,558

 
$
53,855

 
$
1,074

Total consumer
 
$
173,337

 
$
196,405

 
$
21,171

 
$
189,975

 
$
215,613

 
$
27,740

Total impaired loans
 
$
260,580

 
$
304,687

 
$
25,598

 
$
240,533

 
$
269,468

 
$
28,814

 
(a)
All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.
 
 
Three Months Ended September 30
 
Nine Months Ended September 30
 
 
2019
 
2018
 
2019
 
2018
(Dollars in thousands)
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     General C&I
 
$
64,558

 
$
173

 
$
23,740

 
$
203

 
$
62,553

 
$
530

 
$
21,506

 
$
561

Loans to mortgage companies
 
18,628

 
—

 
—

 
—

 
12,419

 
—

 
—

 
—

     Income CRE
 
1,690

 
3

 
1,680

 
12

 
1,576

 
30

 
1,379

 
37

     Residential CRE
 
—

 
—

 
500

 
—

 
—

 
—

 
416

 
—

     Total
 
$
84,876

 
$
176

 
$
25,920

 
$
215

 
$
76,548

 
$
560

 
$
23,301

 
$
598

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     HELOC (a)
 
$
6,495

 
$
—

 
$
8,343

 
$
—

 
$
6,852

 
$
—

 
$
8,878

 
$
—

     R/E installment loans (a)
 
5,304

 
—

 
4,631

 
—

 
5,384

 
—

 
4,032

 
—

     Permanent mortgage (a)
 
2,843

 
—

 
3,949

 
—

 
3,180

 
—

 
4,638

 
—

     Total
 
$
14,642

 
$
—

 
$
16,923

 
$
—

 
$
15,416

 
$
—

 
$
17,548

 
$
—

Impaired loans with related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     General C&I
 
$
14,620

 
$
4

 
$
16,375

 
$
—

 
$
10,892

 
$
4

 
$
16,038

 
$
—

     TRUPS
 
2,750

 
—

 
2,960

 
—

 
2,806

 
—

 
3,004

 
—

     Income CRE
 
169

 
—

 
199

 
5

 
294

 
9

 
335

 
5

     Residential CRE
 
—

 
—

 
—

 
—

 
—

 
—

 
133

 
—

     Total
 
$
17,539

 
$
4

 
$
19,534

 
$
5

 
$
13,992

 
$
13

 
$
19,510

 
$
5

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     HELOC
 
$
60,312

 
$
449

 
$
68,913

 
$
556

 
$
62,650

 
$
1,475

 
$
70,452

 
$
1,711

     R/E installment loans
 
39,924

 
250

 
39,147

 
246

 
41,475

 
792

 
40,512

 
764

     Permanent mortgage
 
62,652

 
537

 
71,898

 
585

 
64,700

 
1,632

 
74,617

 
1,737

     Credit card & other
 
710

 
4

 
578

 
3

 
697

 
13

 
626

 
9

     Total
 
$
163,598

 
$
1,240

 
$
180,536

 
$
1,390

 
$
169,522

 
$
3,912

 
$
186,207

 
$
4,221

Total commercial
 
$
102,415

 
$
180

 
$
45,454

 
$
220

 
$
90,540

 
$
573

 
$
42,811

 
$
603

Total consumer
 
$
178,240

 
$
1,240

 
$
197,459

 
$
1,390

 
$
184,938

 
$
3,912

 
$
203,755

 
$
4,221

Total impaired loans
 
$
280,655

 
$
1,420

 
$
242,913

 
$
1,610

 
$
275,478

 
$
4,485

 
$
246,566

 
$
4,824

 
(a)
All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.
Asset Quality Indicators
FHN employs a dual grade commercial risk grading methodology to assign an estimate for the probability of default (“PD”) and the loss given default (“LGD”) for each commercial loan using factors specific to various industry, portfolio, or product segments that result in a rank ordering of risk and the assignment of grades PD 1 to PD 16. This credit grading system is intended to identify and measure the credit quality of the loan 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. 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. 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 annually or earlier 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. Loan grading discipline is regularly reviewed internally by Credit Assurance Services 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. 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. See Note 5 – Allowance for Loan Losses for further discussion on the credit grading system.
The following tables provide the balances of commercial loan portfolio classes with associated allowance, disaggregated by PD grade as of September 30, 2019 and December 31, 2018:
 
 
September 30, 2019
(Dollars in thousands)
 
General
C&I
 
Loans to
Mortgage
Companies
 
TRUPS (a)
 
Income
CRE
 
Residential
CRE
 
Total
 
Percentage
of Total
 
Allowance
for Loan
Losses
PD Grade:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
 
$
651,636

 
$
—

 
$
—

 
$
2,394

 
$
—

 
$
654,030

 
3
%
 
$
68

2
 
798,897

 
—

 
—

 
49,116

 
44

 
848,057

 
3

 
197

3
 
654,023

 
1,127,283

 
3,314

 
407,538

 
1,144

 
2,193,302

 
9

 
283

4
 
1,219,024

 
859,310

 
35,786

 
550,707

 
512

 
2,665,339

 
11

 
813

5
 
2,004,530

 
683,685

 
80,765

 
1,026,006

 
10,338

 
3,805,324

 
16

 
9,398

6
 
2,349,020

 
1,515,178

 
33,815

 
741,795

 
21,484

 
4,661,292

 
19

 
12,139

7
 
2,835,023

 
505,068

 
11,446

 
651,383

 
34,688

 
4,037,608

 
17

 
20,443

8
 
1,536,468

 
210,719

 
—

 
249,301

 
22,253

 
2,018,741

 
8

 
20,488

9
 
992,076

 
123,013

 
26,123

 
158,079

 
14,759

 
1,314,050

 
5

 
15,027

10
 
626,518

 
7,439

 
18,536

 
56,241

 
3,236

 
711,970

 
3

 
9,732

11
 
469,096

 
—

 
—

 
62,676

 
2,489

 
534,261

 
2

 
11,114

12
 
267,147

 
5,856

 
—

 
40,484

 
1,386

 
314,873

 
1

 
9,233

13
 
294,924

 
—

 
5,786

 
76,879

 
1,309

 
378,898

 
2

 
11,906

14,15,16
 
227,322

 
—

 
—

 
33,432

 
512

 
261,266

 
1

 
23,586

Collectively evaluated for impairment
 
14,925,704

 
5,037,551

 
215,571

 
4,106,031

 
114,154

 
24,399,011

 
100

 
144,427

Individually evaluated for impairment
 
82,578

 
—

 
2,725

 
1,940

 
—

 
87,243

 
—

 
4,427

Purchased credit-impaired loans
 
29,801

 
—

 
—

 
5,082

 
1,391

 
36,274

 
—

 
901

Total commercial loans
 
$
15,038,083

 
$
5,037,551

 
$
218,296

 
$
4,113,053

 
$
115,545

 
$
24,522,528

 
100
%
 
$
149,755

 
 
 
December 31, 2018
(Dollars in thousands)
 
General C&I
 
Loans to
Mortgage
Companies
 
TRUPS (a)
 
Income
CRE
 
Residential
CRE
 
Total
 
Percentage
of Total
 
Allowance
for Loan
Losses
PD Grade:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
 
$
610,177

 
$
—

 
$
—

 
$
12,586

 
$
—

 
$
622,763

 
3
%
 
$
100

2
 
835,776

 
—

 
—

 
1,688

 
29

 
837,493

 
4

 
274

3
 
782,362

 
716,971

 
—

 
289,594

 
147

 
1,789,074

 
9

 
315

4
 
1,223,092

 
394,862

 
43,220

 
563,243

 
—

 
2,224,417

 
11

 
686

5
 
1,920,034

 
277,814

 
77,751

 
798,509

 
14,150

 
3,088,258

 
15

 
8,919

6
 
1,722,136

 
365,341

 
45,609

 
657,628

 
33,759

 
2,824,473

 
14

 
8,141

7
 
2,690,784

 
96,603

 
11,446

 
538,909

 
26,135

 
3,363,877

 
16

 
16,906

8
 
1,337,113

 
53,224

 
—

 
265,901

 
20,320

 
1,676,558

 
8

 
18,545

9
 
1,472,852

 
96,292

 
45,117

 
455,184

 
29,849

 
2,099,294

 
10

 
15,454

10
 
490,795

 
13,260

 
18,536

 
60,803

 
3,911

 
587,305

 
3

 
8,675

11
 
311,967

 
—

 
—

 
66,986

 
788

 
379,741

 
2

 
7,973

12
 
244,867

 
9,379

 
—

 
82,574

 
5,717

 
342,537

 
2

 
6,972

13
 
285,987

 
—

 
5,786

 
55,408

 
251

 
347,432

 
2

 
10,094

14,15,16
 
224,853

 
—

 
—

 
28,835

 
837

 
254,525

 
1

 
23,307

Collectively evaluated for impairment
 
14,152,795

 
2,023,746

 
247,465

 
3,877,848

 
135,893

 
20,437,747

 
100

 
126,361

Individually evaluated for impairment
 
45,704

 
—

 
2,888

 
1,966

 
—

 
50,558

 
—

 
1,074

Purchased credit-impaired loans
 
41,730

 
—

 
—

 
12,730

 
2,433

 
56,893

 
—

 
2,823

Total commercial loans
 
$
14,240,229

 
$
2,023,746

 
$
250,353

 
$
3,892,544

 
$
138,326

 
$
20,545,198

 
100
%
 
$
130,258


(a)
Balances presented net of a $19.1 million valuation allowance as of September 30, 2019, and a $20.2 million valuation allowance as of December 31, 2018.
The consumer portfolio is comprised primarily of smaller-balance loans which are very similar in nature in that most are standard products and are backed by residential real estate. Because of the similarities of consumer loan-types, FHN is able to utilize the Fair Isaac Corporation (“FICO”) score, among other attributes, to assess the credit quality of consumer borrowers. FICO scores are refreshed on a quarterly basis in an attempt to reflect the recent risk profile of the borrowers. Accruing delinquency amounts are indicators of asset quality within the credit card and other consumer portfolio.
The following table reflects the percentage of balances outstanding by average, refreshed FICO scores for the HELOC, real estate installment, and permanent mortgage classes of loans as of September 30, 2019 and December 31, 2018:
 
 
September 30, 2019
 
December 31, 2018
 
 
HELOC
 
R/E Installment
Loans
 
Permanent
Mortgage
 
HELOC
 
R/E Installment
Loans
 
Permanent
Mortgage
FICO score 740 or greater
 
61.9
%
 
 
72.9
%
 
 
47.9
%
 
 
61.4
%
 
 
71.3
%
 
 
51.8
%
 
FICO score 720-739
 
8.8

 
 
8.1

 
 
7.9

 
 
8.5

 
 
8.8

 
 
7.6

 
FICO score 700-719
 
7.3

 
 
6.2

 
 
11.0

 
 
7.6

 
 
7.0

 
 
10.6

 
FICO score 660-699
 
10.5

 
 
7.4

 
 
16.7

 
 
10.9

 
 
7.6

 
 
14.7

 
FICO score 620-659
 
5.1

 
 
2.9

 
 
8.2

 
 
5.1

 
 
2.8

 
 
6.5

 
FICO score less than 620 (a)
 
6.4

 
 
2.5

 
 
8.3

 
 
6.5

 
 
2.5

 
 
8.8

 
Total
 
100.0
%
 
 
100.0
%
 
 
100.0
%
 
 
100.0
%
 
 
100.0
%
 
 
100.0
%
 
 
(a)
For this group, a majority of the loan balances had FICO scores at the time of the origination that exceeded 620 but have since deteriorated as the loans have seasoned.

Nonaccrual and Past Due Loans
The following table reflects accruing and non-accruing loans by class on September 30, 2019:
 
 
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
 
$
14,914,990

 
$
18,979

 
$
334

 
$
14,934,303

 
$
43,877

 
$
960

 
$
29,142

 
$
73,979

 
$
15,008,282

Loans to mortgage companies
 
5,037,551

 
—

 
—

 
5,037,551

 
—

 
—

 
—

 
—

 
5,037,551

TRUPS (a)
 
215,571

 
—

 
—

 
215,571

 
—

 
—

 
2,725

 
2,725

 
218,296

Purchased credit-impaired loans
 
27,169

 
773

 
1,859

 
29,801

 
—

 
—

 
—

 
—

 
29,801

Total commercial (C&I)
 
20,195,281

 
19,752

 
2,193

 
20,217,226

 
43,877

 
960

 
31,867

 
76,704

 
20,293,930

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income CRE
 
4,104,826

 
1,208

 
—

 
4,106,034

 
—

 
—

 
1,937

 
1,937

 
4,107,971

Residential CRE
 
114,154

 
—

 
—

 
114,154

 
—

 
—

 
—

 
—

 
114,154

Purchased credit-impaired loans
 
6,082

 
349

 
42

 
6,473

 
—

 
—

 
—

 
—

 
6,473

Total commercial real estate
 
4,225,062

 
1,557

 
42

 
4,226,661

 
—

 
—

 
1,937

 
1,937

 
4,228,598

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
1,267,603

 
9,694

 
6,673

 
1,283,970

 
45,456

 
6,601

 
7,767

 
59,824

 
1,343,794

R/E installment loans
 
4,659,224

 
8,032

 
5,648

 
4,672,904

 
13,068

 
2,420

 
3,911

 
19,399

 
4,692,303

Purchased credit-impaired loans
 
21,245

 
1,938

 
3,549

 
26,732

 
—

 
—

 
—

 
—

 
26,732

Total consumer real estate
 
5,948,072

 
19,664

 
15,870

 
5,983,606

 
58,524

 
9,021

 
11,678

 
79,223

 
6,062,829

Permanent mortgage
 
161,198

 
5,338

 
1,644

 
168,180

 
8,401

 
373

 
5,513

 
14,287

 
182,467

Credit card & other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card
 
200,696

 
1,264

 
1,127

 
203,087

 
—

 
—

 
—

 
—

 
203,087

Other
 
286,983

 
1,728

 
183

 
288,894

 
72

 
76

 
196

 
344

 
289,238

Purchased credit-impaired loans
 
371

 
260

 
53

 
684

 
—

 
—

 
—

 
—

 
684

Total credit card & other
 
488,050

 
3,252

 
1,363

 
492,665

 
72

 
76

 
196

 
344

 
493,009

Total loans, net of unearned income
 
$
31,017,663

 
$
49,563

 
$
21,112

 
$
31,088,338

 
$
110,874

 
$
10,430

 
$
51,191

 
$
172,495

 
$
31,260,833


(a) TRUPS is presented net of the valuation allowance of $19.1 million.










The following table reflects accruing and non-accruing loans by class on December 31, 2018:
 
 
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
 
$
14,153,275

 
$
8,234

 
$
102

 
$
14,161,611

 
$
26,325

 
$
5,537

 
$
5,026

 
$
36,888

 
$
14,198,499

Loans to mortgage companies
 
2,023,746

 
—

 
—

 
2,023,746

 
—

 
—

 
—

 
—

 
2,023,746

TRUPS (a)
 
247,465

 
—

 
—

 
247,465

 
—

 
—

 
2,888

 
2,888

 
250,353

Purchased credit-impaired loans
 
39,433

 
624

 
1,673

 
41,730

 
—

 
—

 
—

 
—

 
41,730

Total commercial (C&I)
 
16,463,919

 
8,858

 
1,775

 
16,474,552

 
26,325

 
5,537

 
7,914

 
39,776

 
16,514,328

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income CRE
 
3,876,229

 
626

 
—

 
3,876,855

 
30

 
—

 
2,929

 
2,959

 
3,879,814

Residential CRE
 
135,861

 
—

 
—

 
135,861

 
32

 
—

 
—

 
32

 
135,893

Purchased credit-impaired loans
 
13,308

 
103

 
1,752

 
15,163

 
—

 
—

 
—

 
—

 
15,163

Total commercial real estate
 
4,025,398

 
729

 
1,752

 
4,027,879

 
62

 
—

 
2,929

 
2,991

 
4,030,870

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
1,443,651

 
11,653

 
10,129

 
1,465,433

 
49,009

 
3,314

 
8,781

 
61,104

 
1,526,537

R/E installment loans
 
4,652,658

 
10,470

 
6,497

 
4,669,625

 
15,146

 
1,924

 
4,474

 
21,544

 
4,691,169

Purchased credit-impaired loans
 
24,096

 
2,094

 
5,620

 
31,810

 
—

 
—

 
—

 
—

 
31,810

Total consumer real estate
 
6,120,405

 
24,217

 
22,246

 
6,166,868

 
64,155

 
5,238

 
13,255

 
82,648

 
6,249,516

Permanent mortgage
 
193,591

 
2,585

 
4,562

 
200,738

 
11,227

 
996

 
9,487

 
21,710

 
222,448

Credit card & other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card
 
188,009

 
2,133

 
1,203

 
191,345

 
—

 
—

 
—

 
—

 
191,345

Other
 
320,551

 
3,570

 
526

 
324,647

 
110

 
60

 
454

 
624

 
325,271

Purchased credit-impaired loans
 
746

 
611

 
397

 
1,754

 
—

 
—

 
—

 
—

 
1,754

Total credit card & other
 
509,306

 
6,314

 
2,126

 
517,746

 
110

 
60

 
454

 
624

 
518,370

Total loans, net of unearned income
 
$
27,312,619

 
$
42,703

 
$
32,461

 
$
27,387,783

 
$
101,879

 
$
11,831

 
$
34,039

 
$
147,749

 
$
27,535,532

Certain previously reported amounts have been reclassified to agree with current presentation.
(a) TRUPS is presented net of the valuation allowance of $20.2 million.








Troubled Debt Restructurings
As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Each occurrence is unique to the borrower and is evaluated separately.
A modification is classified as a TDR if the borrower is experiencing financial difficulty and it is determined that FHN has granted a concession to the borrower. FHN may determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrower may default in the foreseeable future. Many aspects of a borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty. Concessions could include extension of the maturity date, reductions of the interest rate (which may make the rate lower than current market for a new loan with similar risk), reduction or forgiveness of accrued interest, or principal forgiveness. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty, and whether a concession has been granted, are subjective in nature and management’s judgment is required when determining whether a modification is classified as a TDR.
For all classes within the commercial portfolio segment, TDRs are typically modified through forbearance agreements (generally 6 to 12 months). Forbearance agreements could include reduced interest rates, reduced payments, release of guarantor, or entering into short sale agreements. FHN’s proprietary modification programs for consumer loans are generally structured using parameters of U.S. government-sponsored programs such as the former Home Affordable Modification Program (“HAMP”). Within the HELOC and R/E installment loans classes of the consumer portfolio segment, TDRs are typically modified by reducing the interest rate (in increments of 25 basis points to a minimum of 1 percent for up to 5 years) and a possible maturity date extension to reach an affordable housing debt-to-income ratio. After 5 years, the interest rate generally returns to the original interest rate prior to modification; for certain modifications, the modified interest rate increases 2 percent per year until the original interest rate prior to modification is achieved. Permanent mortgage TDRs are typically modified by reducing the interest rate (in increments of 25 basis points to a minimum of 2 percent for up to 5 years) and a possible maturity date extension to reach an affordable housing debt-to-income ratio. After 5 years, the interest rate steps up 1 percent every year until it reaches the Federal Home Loan Mortgage Corporation Weekly Survey Rate cap. Contractual maturities may be extended to 40 years on permanent mortgages and to 30 years for consumer real estate loans. Within the credit card class of the consumer portfolio segment, TDRs are typically modified through either a short-term credit card hardship program or a longer-term credit card workout program. In the credit card hardship program, borrowers may be granted rate and payment reductions for 6 months to 1 year. In the credit card workout program, customers are granted a rate reduction to 0 percent and term extensions for up to 5 years to pay off the remaining balance.
Despite the absence of a loan modification, the discharge of personal liability through bankruptcy proceedings is considered a concession. As a result, FHN classifies all non-reaffirmed residential real estate loans discharged in Chapter 7 bankruptcy as nonaccruing TDRs.
On September 30, 2019 and December 31, 2018, FHN had $220.0 million and $228.2 million of portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $21.2 million, or 10 percent as of September 30, 2019, and $27.7 million, or 12 percent as of December 31, 2018. Additionally, $52.6 million and $57.8 million of loans held-for-sale as of September 30, 2019 and December 31, 2018, respectively, were classified as TDRs.







The following tables reflect portfolio loans that were classified as TDRs during the three and nine months ended September 30, 2019 and 2018:
 
 
Three Months Ended September 30, 2019
 
Nine Months Ended September 30, 2019
(Dollars in thousands)
 
Number
 
Pre-Modification
Outstanding
Recorded Investment
 
Post-Modification
Outstanding
Recorded Investment
 
Number
 
Pre-Modification
Outstanding
Recorded Investment
 
Post-Modification
Outstanding
Recorded Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
 
 
 
 
General C&I
 
1

 
$
62

 
$
59

 
4

 
$
14,179

 
$
14,101

     Total commercial (C&I)
 
1

 
62

 
59

 
4

 
14,179

 
14,101

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
Income CRE
 
—

 
—

 
—

 
—

 
—

 
—

Total commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
13

 
1,638

 
1,631

 
57

 
7,013

 
6,950

R/E installment loans
 
16

 
1,771

 
1,854

 
77

 
9,261

 
9,292

     Total consumer real estate
 
29

 
3,409

 
3,485

 
134

 
16,274

 
16,242

Permanent mortgage
 
—

 
—

 
—

 
5

 
1,469

 
1,498

Credit card & other
 
35

 
134

 
126

 
68

 
317

 
300

Total troubled debt restructurings
 
65

 
$
3,605

 
$
3,670

 
211

 
$
32,239

 
$
32,141

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
 
Nine Months Ended September 30, 2018
(Dollars in thousands)
 
Number
 
Pre-Modification
Outstanding
Recorded Investment
 
Post-Modification
Outstanding
Recorded Investment
 
Number
 
Pre-Modification
Outstanding
Recorded Investment
 
Post-Modification
Outstanding
Recorded Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
 
 
 
 
General C&I
 
1

 
$
25,591

 
$
25,439

 
9

 
$
27,639

 
$
27,190

     Total commercial (C&I)
 
1

 
25,591

 
25,439

 
9

 
27,639

 
27,190

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
Income CRE
 
1

 
442

 
442

 
4

 
643

 
637

Total commercial real estate
 
1

 
442

 
442

 
4

 
643

 
637

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
15

 
1,057

 
1,041

 
79

 
7,641

 
7,580

R/E installment loans
 
62

 
4,561

 
4,356

 
77

 
5,944

 
5,738

     Total consumer real estate
 
77

 
5,618

 
5,397

 
156

 
13,585

 
13,318

Permanent mortgage
 
—

 
—

 
—

 
5

 
709

 
713

Credit card & other
 
12

 
65

 
59

 
80

 
370

 
350

Total troubled debt restructurings
 
91

 
$
31,716

 
$
31,337

 
254

 
$
42,946

 
$
42,208








The following tables present TDRs which re-defaulted during the three and nine months ended September 30, 2019 and 2018, and as to which the modification occurred 12 months or less prior to the re-default. For purposes of this disclosure, FHN generally defines payment default as 30 or more days past due.
 
 
Three Months Ended September 30, 2019
 
Nine Months Ended September 30, 2019
(Dollars in thousands)
 
Number
 
Recorded
Investment
 
Number
 
Recorded
Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
General C&I
 
—

 
$
—

 
—

 
$
—

Total commercial (C&I)
 
—

 
—

 
—

 
—

Consumer real estate:
 
 
 
 
 
 
 
 
HELOC
 
2

 
99

 
4

 
198

R/E installment loans
 
—

 
—

 
1

 
38

Total consumer real estate
 
2

 
99

 
5

 
236

Permanent mortgage
 
1

 
7

 
1

 
7

Credit card & other
 
8

 
45

 
23

 
77

Total troubled debt restructurings
 
11

 
$
151

 
29

 
$
320

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
 
Nine Months Ended September 30, 2018
(Dollars in thousands)
 
Number
 
Recorded
Investment
 
Number
 
Recorded
Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
General C&I
 
1

 
$
321

 
2

 
$
579

Total commercial (C&I)
 
1

 
321

 
2

 
579

Consumer real estate:
 
 
 
 
 
 
 
 
HELOC
 
1

 
40

 
5

 
204

R/E installment loans
 
—

 
—

 
1

 
25

Total consumer real estate
 
1

 
40

 
6

 
229

Permanent mortgage
 
3

 
294

 
5

 
699

Credit card & other
 
13

 
56

 
39

 
212

Total troubled debt restructurings
 
18

 
$
711

 
52

 
$
1,719