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Loans
 12 Months Ended
Dec. 31, 2019
Receivables [Abstract]  
Loans Loans
The following table provides the balance of loans, net of unearned income, by portfolio segment as of December 31, 2019 and 2018:
 
 
December 31
(Dollars in thousands)
 
2019
 
2018
Commercial: (a)
 
 
 
 
Commercial, financial, and industrial
 
$
20,051,091

 
$
16,514,328

Commercial real estate
 
4,337,017

 
4,030,870

Consumer:
 
 
 
 
Consumer real estate (b)
 
6,006,749

 
6,249,516

Permanent mortgage
 
170,390

 
222,448

Credit card & other
 
495,864

 
518,370

Loans, net of unearned income
 
$
31,061,111

 
$
27,535,532

Allowance for loan losses
 
200,307

 
180,424

Total net loans
 
$
30,860,804

 
$
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)
Balance as of December 31, 2018 includes $16.2 million of restricted real estate loans. See Note 21—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 (14 percent of the C&I portfolio, or 9 percent of the total loans). FHN had loans to mortgage companies totaling $4.4 billion (22 percent of the C&I segment, or 14 percent of total loans) as of December 31, 2019. As a result, 36 percent of the C&I segment is sensitive to impacts on the financial services industry.
Restrictions
On December 31, 2019, $5.2 billion of commercial loans were pledged to secure potential discount window borrowings from the Federal Reserve Bank. As of December 31, 2019 and 2018, FHN pledged all of its first and second lien mortgages,
HELOCs, excluding restricted real estate loans, and commercial real estate loans to secure potential borrowings from the FHLB-Cincinnati. Restricted loans secured borrowings associated with consolidated VIEs. See Note 21 - Variable Interest Entities for additional discussion.
Acquisition
Generally, the fair value for acquired loans is estimated using a discounted cash flow analysis with significant unobservable inputs (Level 3) including adjustments for expected credit losses, prepayment speeds, current market rates for similar loans, and an adjustment for investor-required yield given product-type and various risk characteristics.
At acquisition, FHN designated certain loans as PCI with the remaining loans accounted for under ASC 310-20, “Nonrefundable Fees and Other Costs”. Of the loans designated as PCI at acquisition, $4.7 million is held-for-sale. For loans accounted for under ASC 310-20, the difference between each loan’s book value and the estimated fair value at the time of the acquisition will be accreted into interest income over its remaining contractual life and the subsequent accounting and reporting will be similar to a loan in FHN’s originated portfolio.

Purchased Credit-Impaired Loans
The following table presents a rollforward of the accretable yield for the year ended December 31, 2019 and 2018:
 
 
Year Ended December 31
(Dollars in thousands)
 
2019
 
2018
Balance, beginning of period
 
$
13,375

 
$
15,623

Accretion
 
(5,792
)
 
(9,467
)
Adjustment for payoffs
 
(2,438
)
 
(3,896
)
Adjustment for charge-offs
 
(479
)
 
(1,115
)
Adjustment for pool excess recovery (a)
 
—

 
(123
)
Increase in accretable yield (b)
 
5,513

 
12,791

Disposals
 
(4
)
 
(240
)
Other
 
(367
)
 
(198
)
Balance, end of period
 
$
9,808

 
$
13,375

 
(a)
Represents the removal of accretable difference for the remaining loans in a pool which is now in a recovery state.
(b)
Includes changes in the accretable yield due to both transfers from the nonaccretable difference and the impact of changes in the expected timing of the cash flows.
At December 31, 2019, the ALLL related to PCI loans was $2.0 million compared to $4.0 million at December 31, 2018. Net charge-offs related to PCI loans during 2019 were $5.8 million, compared to $6.7 million in 2018. The loan loss provision expense related to PCI loans during 2019 was $1.3 million, compared to $4.8 million during 2018.
The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI loans as of December 31, 2019 and 2018:
 
 
December 31, 2019
 
December 31, 2018
(Dollars in thousands)
 
Carrying value
 
Unpaid balance
 
Carrying value
 
Unpaid balance
Commercial, financial and industrial
 
$
24,973

 
$
25,938

 
$
38,873

 
$
44,259

Commercial real estate
 
5,078

 
5,466

 
15,197

 
17,232

Consumer real estate
 
23,681

 
26,245

 
30,723

 
34,820

Credit card and other
 
489

 
567

 
1,627

 
1,879

Total
 
$
54,221

 
$
58,216

 
$
86,420

 
$
98,190



Impaired Loans
The following tables provide information at December 31, 2019 and 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.
 
 
December 31, 2019
(Dollars in thousands)
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average Recorded
Investment
 
Interest
Income
Recognized
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
General C&I
 
$
52,672

 
$
63,602

 
$
—

 
$
61,382

 
$
690

Loans to mortgage companies
 
—

 
—

 
—

 
9,314

 
—

Income CRE
 
1,563

 
1,563

 
—

 
1,620

 
33

Total
 
$
54,235

 
$
65,165

 
$
—

 
$
72,316

 
$
723

Consumer:
 
 
 
 
 
 
 
 
 
 
HELOC (a)
 
$
4,940

 
$
10,438

 
$
—

 
$
6,582

 
$
—

R/E installment loans (a)
 
5,329

 
6,105

 
—

 
5,335

 
—

Permanent mortgage (a)
 
2,264

 
3,949

 
—

 
3,017

 
—

Total
 
$
12,533

 
$
20,492

 
$
—

 
$
14,934

 
$
—

Impaired loans with related allowance recorded:
 
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
General C&I
 
$
29,766

 
$
31,536

 
$
6,196

 
$
14,328

 
$
4

TRUPS
 
—

 
—

 
—

 
2,445

 
—

Income CRE
 
—

 
—

 
—

 
221

 
9

Total
 
$
29,766

 
$
31,536

 
$
6,196

 
$
16,994

 
$
13

Consumer:
 
 
 
 
 
 
 
 
 
 
HELOC
 
$
55,522

 
$
59,122

 
$
7,016

 
$
61,294

 
$
1,868

R/E installment loans
 
34,862

 
35,780

 
4,521

 
40,181

 
1,016

Permanent mortgage
 
59,329

 
68,341

 
7,761

 
63,630

 
2,149

Credit card & other
 
653

 
653

 
422

 
694

 
18

Total
 
$
150,366

 
$
163,896

 
$
19,720

 
$
165,799

 
$
5,051

Total commercial
 
$
84,001

 
$
96,701

 
$
6,196

 
$
89,310

 
$
736

Total consumer
 
$
162,899

 
$
184,388

 
$
19,720

 
$
180,733

 
$
5,051

Total impaired loans
 
$
246,900

 
$
281,089

 
$
25,916

 
$
270,043

 
$
5,787

(a)
All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.
 
 
December 31, 2018
(Dollars in thousands)
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
     General C&I
 
$
42,902

 
$
45,387

 
$
—

 
$
24,186

 
$
757

     Income CRE
 
1,589

 
1,589

 
—

 
1,434

 
51

     Residential CRE
 
—

 
—

 
—

 
374

 
—

     Total
 
$
44,491

 
$
46,976

 
$
—

 
$
25,994

 
$
808

Consumer:
 
 
 
 
 
 
 
 
 
 
     HELOC (a)
 
$
8,645

 
$
16,648

 
$
—

 
$
8,723

 
$
—

     R/E installment loans (a)
 
4,314

 
4,796

 
—

 
4,300

 
—

     Permanent mortgage (a)
 
3,601

 
6,003

 
—

 
4,392

 
—

     Total
 
$
16,560

 
$
27,447

 
$
—

 
$
17,415

 
$
—

Impaired loans with related allowance recorded:
 
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
     General C&I
 
$
2,802

 
$
2,802

 
$
149

 
$
16,011

 
$
—

     TRUPS
 
2,888

 
3,700

 
925

 
2,981

 
—

     Income CRE
 
377

 
377

 
—

 
348

 
10

     Residential CRE
 
—

 
—

 
—

 
99

 
—

     Total
 
$
6,067

 
$
6,879

 
$
1,074

 
$
19,439

 
$
10

Consumer:
 
 
 
 
 
 
 
 
 
 
     HELOC
 
$
66,482

 
$
69,610

 
$
11,241

 
$
69,535

 
$
2,273

     R/E installment loans
 
38,993

 
39,851

 
6,743

 
40,118

 
1,024

     Permanent mortgage
 
67,245

 
78,010

 
9,419

 
73,259

 
2,290

     Credit card & other
 
695

 
695

 
337

 
626

 
14

     Total
 
$
173,415

 
$
188,166

 
$
27,740

 
$
183,538

 
$
5,601

Total commercial
 
$
50,558

 
$
53,855

 
$
1,074

 
$
45,433

 
$
818

Total consumer
 
$
189,975

 
$
215,613

 
$
27,740

 
$
200,953

 
$
5,601

Total impaired loans
 
$
240,533

 
$
269,468

 
$
28,814

 
$
246,386

 
$
6,419



(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 December 31, 2019 and 2018:
 
 
December 31, 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
 
$
696,040

 
$
—

 
$
—

 
$
1,848

 
$
—

 
$
697,888

 
3
%
 
$
69

2
 
767,048

 
—

 
—

 
48,906

 
38

 
815,992

 
4

 
165

3
 
743,123

 
877,210

 
3,314

 
474,067

 
806

 
2,098,520

 
9

 
274

4
 
1,237,772

 
692,971

 
46,375

 
680,223

 
477

 
2,657,818

 
11

 
738

5
 
1,986,761

 
670,402

 
72,512

 
993,628

 
1,700

 
3,725,003

 
15

 
8,265

6
 
2,511,290

 
1,410,387

 
27,263

 
717,062

 
17,027

 
4,683,029

 
19

 
12,054

7
 
2,708,707

 
509,616

 
18,378

 
641,345

 
30,925

 
3,908,971

 
16

 
20,409

8
 
1,743,364

 
136,771

 
—

 
269,407

 
16,699

 
2,166,241

 
9

 
22,514

9
 
1,101,873

 
77,139

 
31,909

 
169,586

 
13,007

 
1,393,514

 
6

 
17,484

10
 
563,635

 
21,229

 
18,536

 
59,592

 
2,153

 
665,145

 
3

 
10,197

11
 
495,140

 
—

 
—

 
81,682

 
2,302

 
579,124

 
2

 
13,454

12
 
262,906

 
15,158

 
—

 
28,807

 
1,074

 
307,945

 
1

 
8,471

13
 
232,823

 
—

 
—

 
32,966

 
1,126

 
266,915

 
1

 
8,142

14,15,16
 
263,076

 
—

 
—

 
43,400

 
626

 
307,102

 
1

 
29,318

Collectively evaluated for impairment
 
15,313,558

 
4,410,883

 
218,287

 
4,242,519

 
87,960

 
24,273,207

 
100

 
151,554

Individually evaluated for impairment
 
82,438

 
—

 
—

 
1,563

 
—

 
84,001

 
—

 
6,196

Purchased credit-impaired loans
 
25,925

 
—

 
—

 
4,155

 
820

 
30,900

 
—

 
848

Total commercial loans
 
$
15,421,921

 
$
4,410,883

 
$
218,287

 
$
4,248,237

 
$
88,780

 
$
24,388,108

 
100
%
 
$
158,598

(a)
Balances presented net of a $19.1 million valuation allowance.

 
 
 
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 $20.2 million valuation allowance. In 3Q18, FHN sold $55.5 million of TRUPS loans with a $5.0 million valuation allowance. Upon sale, a gain of $3.8 million was recognized in the Non-Strategic segment within Fixed Income in the Consolidated Statement of Income. An additional TRUPS loan with a principal balance of $3.0 million and a valuation of $.3 million was paid off in fourth quarter 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 December 31, 2019 and 2018:
 
 
December 31, 2019
 
December 31, 2018
 
 
HELOC
 
R/E Installment
Loans
 
Permanent
Mortgage
 
HELOC
 
R/E Installment
Loans
 
Permanent
Mortgage
FICO score 740 or greater
 
62.0
%
 
 
72.9
%
 
 
44.8
%
 
 
61.4
%
 
 
71.3
%
 
 
51.8
%
 
FICO score 720-739
 
8.6

 
 
8.3

 
 
9.7

 
 
8.5

 
 
8.8

 
 
7.6

 
FICO score 700-719
 
7.6

 
 
6.1

 
 
12.3

 
 
7.6

 
 
7.0

 
 
10.6

 
FICO score 660-699
 
10.8

 
 
7.7

 
 
16.3

 
 
10.9

 
 
7.6

 
 
14.7

 
FICO score 620-659
 
4.7

 
 
2.6

 
 
9.7

 
 
5.1

 
 
2.8

 
 
6.5

 
FICO score less than 620 (a)
 
6.3

 
 
2.4

 
 
7.2

 
 
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 December 31, 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
 
$
15,314,292

 
$
7,155

 
$
237

 
$
15,321,684

 
$
36,564

 
$
14,385

 
$
23,363

 
$
74,312

 
$
15,395,996

Loans to mortgage companies
 
4,410,883

 
—

 
—

 
4,410,883

 
—

 
—

 
—

 
—

 
4,410,883

TRUPS (a)
 
218,287

 
—

 
—

 
218,287

 
—

 
—

 
—

 
—

 
218,287

Purchased credit-impaired loans
 
23,840

 
287

 
1,798

 
25,925

 
—

 
—

 
—

 
—

 
25,925

Total commercial (C&I)
 
19,967,302

 
7,442

 
2,035

 
19,976,779

 
36,564

 
14,385

 
23,363

 
74,312

 
20,051,091

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income CRE
 
4,242,044

 
679

 
—

 
4,242,723

 
—

 
19

 
1,340

 
1,359

 
4,244,082

Residential CRE
 
87,487

 
7

 
—

 
87,494

 
—

 
466

 
—

 
466

 
87,960

Purchased credit-impaired loans
 
4,752

 
128

 
95

 
4,975

 
—

 
—

 
—

 
—

 
4,975

Total commercial real estate
 
4,334,283

 
814

 
95

 
4,335,192

 
—

 
485

 
1,340

 
1,825

 
4,337,017

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
1,217,344

 
9,156

 
5,669

 
1,232,169

 
43,007

 
4,227

 
7,472

 
54,706

 
1,286,875

R/E installment loans
 
4,662,783

 
10,580

 
5,138

 
4,678,501

 
13,001

 
1,005

 
2,601

 
16,607

 
4,695,108

Purchased credit-impaired loans
 
18,720

 
2,770

 
3,276

 
24,766

 
—

 
—

 
—

 
—

 
24,766

Total consumer real estate
 
5,898,847

 
22,506

 
14,083

 
5,935,436

 
56,008

 
5,232

 
10,073

 
71,313

 
6,006,749

Permanent mortgage
 
149,663

 
2,314

 
4,032

 
156,009

 
7,709

 
71

 
6,601

 
14,381

 
170,390

Credit card & other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card
 
198,917

 
1,076

 
1,178

 
201,171

 
—

 
—

 
—

 
—

 
201,171

Other
 
291,700

 
1,802

 
337

 
293,839

 
101

 
44

 
189

 
334

 
294,173

Purchased credit-impaired loans
 
323

 
98

 
99

 
520

 
—

 
—

 
—

 
—

 
520

Total credit card & other
 
490,940

 
2,976

 
1,614

 
495,530

 
101

 
44

 
189

 
334

 
495,864

Total loans, net of unearned income
 
$
30,841,035

 
$
36,052

 
$
21,859

 
$
30,898,946

 
$
100,382

 
$
20,217

 
$
41,566

 
$
162,165

 
$
31,061,111


(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


(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 December 31, 2019 and 2018, FHN had $206.3 million and $228.2 million of portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $19.7 million, or 10 percent as of December 31, 2019, and $27.7 million, or 12 percent as of December 31, 2018. Additionally, $51.1 million and $57.8 million of loans held-for-sale as of December 31, 2019 and 2018, respectively, were classified as TDRs.







The following tables reflect portfolio loans that were classified as TDRs during the year ended December 31, 2019 and 2018:
 
 
2019
 
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
 
4

 
$
14,179

 
$
14,101

 
9

 
$
27,639

 
$
27,190

     Total commercial (C&I)
 
4

 
14,179

 
14,101

 
9

 
27,639

 
27,190

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
Income CRE
 
—

 
—

 
—

 
4

 
643

 
637

     Total commercial real estate
 
—

 
—

 
—

 
4

 
643

 
637

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
74

 
8,028

 
7,946

 
103

 
9,406

 
9,283

R/E installment loans
 
96

 
10,408

 
10,445

 
92

 
8,077

 
7,848

     Total consumer real estate
 
170

 
18,436

 
18,391

 
195

 
17,483

 
17,131

Permanent mortgage
 
8

 
1,771

 
1,798

 
8

 
1,001

 
1,184

Credit card & other
 
85

 
379

 
358

 
132

 
604

 
570

Total troubled debt restructurings
 
267

 
$
34,765

 
$
34,648

 
348

 
$
47,370

 
$
46,712

 
 
 
 
 
 
 
 
 
 
 
 
 

The following tables present TDRs which re-defaulted during 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.
 
 
2019
 
2018
(Dollars in thousands)
 
Number
 
Recorded
Investment
 
Number
 
Recorded
Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
General C&I
 
—

 
$
—

 
2

 
$
579

Total commercial (C&I)
 
—

 
—

 
2

 
579

Consumer real estate:
 
 
 
 
 
 
 
 
HELOC
 
7

 
1,141

 
6

 
239

R/E installment loans
 
3

 
98

 
2

 
146

Total consumer real estate
 
10

 
1,239

 
8

 
385

Permanent mortgage
 
1

 
7

 
6

 
749

Credit card & other
 
32

 
115

 
49

 
239

Total troubled debt restructurings
 
43

 
$
1,361

 
65

 
$
1,952