Restructuring, Repositioning, And Efficiency

6 Months Ended

Jun. 30, 2013

Restructuring, Repositioning, And Efficiency [Abstract]

Restructuring, Repositioning, And Efficiency

Note 18 – Restructuring, Repositioning, and Efficiency

Beginning in 2007, FHN conducted a company-wide review of business practices with the goal of improving its overall profitability and productivity. Such reviews continue throughout the organization. Since 2007, in order to redeploy capital to higher-return businesses, FHN exited or sold non-strategic businesses, eliminated layers of management, and consolidated functional areas.

Generally, restructuring, repositioning, and efficiency charges related to exited businesses are included in the non-strategic segment while charges related to corporate-driven actions are included in the corporate segment. Net charges recognized by FHN during the six months ended June 30, 2013, related to restructuring, repositioning, and efficiency activities were $1.1 million. Of this amount, $1.8 million represent exit costs that were accounted for in accordance with the Exit of Disposal Cost Obligations Topic of the FASB Accounting Standards Codification (“ASC 420”). There were no individually significant expenses recognized during the six months ended June 30, 2013.

During the six months ended June 30, 2012, FHN recognized a net cost of $3.6 million related to restructuring, repositioning, and efficiency activities. Of this amount, $2.0 million represent exit costs that were accounted for in accordance with ASC 420. Significant expenses recognized during the six months ended June 30, 2012 resulted from the following actions:

Severance and other employee costs of $2.0 million primarily related to efficiency initiatives within corporate and bank services functions which are classified as Employee compensation, incentives, and benefits within noninterest expense.
Expense of $2.3 million related to prior servicing sales which is reflected in Mortgage banking income.

Settlement of the obligations arising from current initiatives will be funded from operating cash flows. The effect of suspending depreciation on assets held-for-sale was immaterial to FHN's results of operations for all periods. Due to the broad nature of the actions being taken, substantially all components of expense have benefited from past efficiency initiatives and are expected to benefit from the current efficiency initiatives.

Activity in the restructuring and repositioning liability for the three and six months ended June 30, 2013 and 2012, is presented in the following table, along with other restructuring and repositioning expenses recognized.

		Three Months Ended								Six Months Ended
		June 30								June 30
		2013				2012				2013				2012
(Dollars in thousands)		Expense		Liability		Expense		Liability		Expense		Liability		Expense		Liability
Beginning balance		$	-	$	14,481	$	-	$	8,388	$	-	$	19,775	$	-	$	12,026
Severance and other employee related costs			641		641		2,191		2,191		1,460		1,460		2,039		2,039
Facility consolidation costs			(60)		(60)		(219)		(219)		378		378		(175)		(175)
Other exit costs, professional fees, and other			-		-		-		-		-		-		111		111
Total accrued			581		15,062		1,972		10,360		1,838		21,613		1,975		14,001
Payments related to:
	Severance and other employee related costs				10,626				925				16,664				2,962
	Facility consolidation costs				159				285				576				877
	Other exit costs, professional fees, and other				-				-				-				15
Accrual reversals					-				203				96				1,200
	Restructuring and repositioning reserve balance			$	4,277			$	8,947			$	4,277			$	8,947

Other restructuring and repositioning expense:
	Mortgage banking expense on servicing sales		-				2,287				-				2,287
	(Gains)/losses on divestitures		-				(485)				(639)				(685)
	Impairment of premises and equipment		-				-				-				5
	Impairment of other assets		-				12				-				12
	Other		-				-				(96)				-
	Total other restructuring and repositioning expense		-				1,814				(735)				1,619
Total restructuring and repositioning charges		$	581			$	3,786			$	1,103			$	3,594

FHN began initiatives related to restructuring in second quarter 2007. Consequently, the following table presents cumulative amounts incurred to date through June 30, 2013, for costs associated with FHN’s restructuring, repositioning, and efficiency initiatives:

(Dollars in thousands)		Total Expense
Severance and other employee related costs			$	102,153
Facility consolidation costs				41,074
Other exit costs, professional fees, and other				19,165
Other restructuring and repositioning expense:
	Loan portfolio divestiture			7,672
	Mortgage banking expense on servicing sales			23,810
	(Gains)/losses on divestitures			(357)
	Impairment of premises and equipment			22,397
	Impairment of intangible assets			48,231
	Impairment of other assets			40,504
	Other			7,478
Total restructuring and repositioning charges incurred to date as of June 30, 2013			$	312,127