Restructuring, Repositioning, And Efficiency

3 Months Ended

Mar. 31, 2014

Restructuring And Related Activities [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 three months ended March 31, 2014 related to restructuring, repositioning, and efficiency activities were $5.7 million. Of this amount, $5.5 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”). Significant expenses recognized during the three months ended March 31, 2014 resulted from the following actions:

Lease abandonment expenses of $4.6 million primarily related to efficiency initiatives within corporate and bank services functions which are classified as Occupancy within noninterest expense.

During the three months ended March 31, 2013, FHN recognized a net cost of $.5 million related to restructuring, repositioning, and efficiency activities. Included in this amount is $1.3 million representing exit costs that were accounted for in accordance with ASC 420. There were no individually significant expenses recognized during first quarter 2013.

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 months ended March 31, 2014 and 2013, is presented in the following table, along with other restructuring and repositioning expenses recognized.

		Three Months Ended
		March 31
		2014				2013
(Dollars in thousands)		Expense		Liability		Expense		Liability
Beginning balance				$	3,126			$	19,775
Severance and other employee related costs		$	914		914	$	819		819
Facility consolidation costs			4,597		4,597		438		438
Total accrued			5,511		8,637		1,257		21,032
Payments related to:
	Severance and other employee related costs				571				6,038
	Facility consolidation costs				229				417
Accrual reversals					30				96
	Restructuring and repositioning reserve balance			$	7,807			$	14,481

Other restructuring and repositioning expense:
	(Gains)/losses on divestitures		-				(639)
	Impairment of premises and equipment		222				-
	Other		-				(96)
	Total other restructuring and repositioning expense		222				(735)
Total restructuring and repositioning charges		$	5,733			$	522

FHN began initiatives related to restructuring in second quarter 2007. Consequently, the following table presents cumulative amounts incurred to date through March 31, 2014, for costs associated with FHN’s restructuring, repositioning, and efficiency initiatives:

(Dollars in thousands)		Total Expense
Severance and other employee related costs			$	105,298
Facility consolidation costs				45,424
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			26,002
	(Gains)/losses on divestitures			(718)
	Impairment of premises and equipment			23,004
	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 March 31, 2014			$	322,060

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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