Loans

6 Months Ended

Jun. 30, 2015

Note 4 – Loans

The following table provides the balance of loans by portfolio segment as of June 30, 2015 and 2014, and December, 31 2014:

		June 30				December 31
(Dollars in thousands)		2015		2014		2014
Commercial:
	Commercial, financial, and industrial	$	9,832,563	$	8,402,836	$	9,007,286
	Commercial real estate		1,400,715		1,231,513		1,277,717
Retail:
	Consumer real estate (a)		4,870,271		5,218,930		5,048,071
	Permanent mortgage		487,679		594,001		538,961
	Credit card & other		345,544		348,429		358,131
Loans, net of unearned income		$	16,936,772	$	15,795,709	$	16,230,166
Allowance for loan losses			221,351		243,628		232,448
Total net loans		$	16,715,421	$	15,552,081	$	15,997,718

(a) Balances as of June 30, 2015 and 2014, and December 31, 2014 include $66.4 million, $84.4 million, and $76.8 million of restricted real estate loans, respectively. See Note 13 - 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 PCI loans. Loans to mortgage companies includes 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. Retail loan portfolio segments include consumer real estate, permanent mortgage, and the credit card and other portfolio. Retail classes include HELOC, 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 (32 percent of total loans), the majority of which is in the consumer real estate segment (29 percent of total loans). Loans to finance and insurance companies total $2.1 billion (21 percent of the C&I portfolio, or 12 percent of the total loans). FHN had loans to mortgage companies totaling $1.8 billion (18 percent of the C&I segment, or 11 percent of total loans) as of June 30, 2015. As a result, 39 percent of the C&I segment was 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 six months ended June 30, 2015 and 2014:

	Three Months Ended					Six Months Ended
		June 30				June 30
(Dollars in thousands)		2015		2014		2015		2014
Balance, beginning of period	$	10,468	$	15,828	$	14,714	$	13,490
Additions		-		224		-		335
Accretion		(1,576)		(1,927)		(4,948)		(3,584)
Adjustment for payoffs		(760)		(489)		(2,096)		(722)
Adjustment for charge-offs		-		(5)		-		(69)
Increase in accretable yield (a)		216		2,878		678		7,059
Balance, end of period	$	8,348	$	16,509	$	8,348	$	16,509

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 June 30, 2015, the ALLL related to PCI loans was $2.8 million compared to $2.5 million at June 30, 2014. A loan loss provision credit of $.3 million was recognized during the three months ended June 30, 2015 as compared to a loan loss provision expense of $.6 million recognized during the three months ended June 30, 2014. A loan loss provision credit of $.6 million was recognized during the six months ended June 30, 2015 as compared to a loan loss provision expense of $1.7 million recognized during the six months ended June 30, 2014. The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI loans as of June 30, 2015 and 2014, and December 31, 2014:

	June 30, 2015				June 30, 2014				December 31, 2014
(Dollars in thousands)	Carrying value		Unpaid balance		Carrying value		Unpaid balance		Carrying value		Unpaid balance
Commercial, financial and industrial	$	4,870	$	5,507	$	6,738	$	8,256	$	5,044	$	5,813
Commercial real estate		20,262		24,830		32,938		45,295		32,553		43,246
Consumer real estate		1,927		2,796		733		1,074		598		868
Credit card and other		9		11		11		16		10		14
Total	$	27,068	$	33,144	$	40,420	$	54,641	$	38,205	$	49,941

Impaired Loans

The following tables provide information at June 30, 2015 and 2014, by class related to individually impaired loans and consumer TDR's. Recorded investment is defined as the amount of the investment in a loan, before valuation allowance but which does reflect any direct write-down of the investment. For purposes of this disclosure, PCI loans and LOCOM have been excluded.

		June 30, 2015							Three Months Ended				Six Months Ended
		June 30, 2015							June 30, 2015				June 30, 2015
				Unpaid				Average		Interest		Average		Interest
		Recorded		Principal		Related		Recorded		Income		Recorded		Income
(Dollars in thousands)		Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Commercial:
	General C&I	$	12,402	$	15,690	$	-	$	13,016	$	-	$	12,305	$	-
	Income CRE		4,187		11,262		-		4,198		-		5,283		-
	Residential CRE		-		-		-		-		-		287		-
	Total	$	16,589	$	26,952	$	-	$	17,214	$	-	$	17,875	$	-
Retail:
	HELOC (a)	$	12,577	$	30,604	$	-	$	12,588	$	-	$	12,788	$	-
	R/E installment loans (a)		4,959		6,211		-		4,739		-		4,704		-
	Permanent mortgage (a)		6,403		8,603		-		6,804		-		7,018		-
	Total	$	23,939	$	45,418	$	-	$	24,131	$	-	$	24,510	$	-
Impaired loans with related allowance recorded:
Commercial:
	General C&I	$	30,549	$	37,741	$	8,117	$	28,400	$	237	$	24,087	$	490
	TRUPS		13,399		13,700		4,810		13,414		-		13,429		-
	Income CRE		6,788		8,298		533		6,742		33		7,140		63
	Residential CRE		1,518		1,886		102		1,571		6		1,534		13
	Total	$	52,254	$	61,625	$	13,562	$	50,127	$	276	$	46,190	$	566
Retail:
	HELOC	$	87,292	$	89,454	$	21,967	$	86,197	$	461	$	85,417	$	909
	R/E installment loans		67,269		68,151		19,439		68,330		331		69,227		658
	Permanent mortgage		100,754		113,290		17,857		102,194		637		103,555		1,228
	Credit card & other		418		418		155		451		4		479		8
	Total	$	255,733	$	271,313	$	59,418	$	257,172	$	1,433	$	258,678	$	2,803
Total commercial		$	68,843	$	88,577	$	13,562	$	67,341	$	276	$	64,065	$	566
Total retail		$	279,672	$	316,731	$	59,418	$	281,303	$	1,433	$	283,188	$	2,803
Total impaired loans		$	348,515	$	405,308	$	72,980	$	348,644	$	1,709	$	347,253	$	3,369

All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.


		June 30, 2014							Three Months Ended				Six Months Ended
		June 30, 2014							June 30, 2014				June 30, 2014
				Unpaid				Average		Interest		Average		Interest
		Recorded		Principal		Related		Recorded		Income		Recorded		Income
(Dollars in thousands)		Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Commercial:
	General C&I	$	15,489	$	17,280	$	-	$	14,809	$	-	$	17,594	$	-
	TRUPS		-		-		-		-		-		1,625		-
	Income CRE		6,838		14,397		-		7,669		-		8,090		-
	Residential CRE		1,148		1,827		-		574		-		287		-
	Total	$	23,475	$	33,504	$	-	$	23,052	$	-	$	27,596	$	-
Retail:
	HELOC (a)	$	17,390	$	38,216	$	-	$	16,771	$	-	$	16,629	$	-
	R/E installment loans (a)		7,464		10,009		-		8,932		-		9,818		-
	Permanent mortgage (a)		7,862		9,785		-		7,858		-		8,007		-
	Total	$	32,716	$	58,010	$	-	$	33,561	$	-	$	34,454	$	-
Impaired loans with related allowance recorded:
Commercial:
	General C&I	$	32,395	$	38,331	$	3,150	$	30,059	$	78	$	26,146	$	157
	TRUPS		3,520		3,700		925		8,535		-		16,057		-
	Income CRE		8,842		10,214		641		10,331		62		11,214		164
	Residential CRE		6,029		11,477		667		6,204		61		6,426		124
	Total	$	50,786	$	63,722	$	5,383	$	55,129	$	201	$	59,843	$	445
Retail:
	HELOC	$	77,283	$	78,492	$	17,475	$	75,285	$	457	$	73,539	$	891
	R/E installment loans		74,748		75,634		26,450		74,243		297		73,629		566
	Permanent mortgage		111,604		125,012		19,323		112,796		706		113,145		1,429
	Credit card & other		524		524		266		648		5		653		16
	Total	$	264,159	$	279,662	$	63,514	$	262,972	$	1,465	$	260,966	$	2,902
Total commercial		$	74,261	$	97,226	$	5,383	$	78,181	$	201	$	87,439	$	445
Total retail		$	296,875	$	337,672	$	63,514	$	296,533	$	1,465	$	295,420	$	2,902
Total impaired loans		$	371,136	$	434,898	$	68,897	$	374,714	$	1,666	$	382,859	$	3,347

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. 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. 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 June 30, 2015 and 2014.
	June 30, 2015
			Loans to												Allowance
	General		Mortgage				Income		Residential				Percentage		for Loan
(Dollars in thousands)	C&I		Companies		TRUPS (a)		CRE		CRE		Total		of Total		Losses
PD Grade:
1	$	495,855	$	-	$	-	$	554	$	-	$	496,409	4	%	$	126
2		590,328		-		-		11,602		41		601,971	5			332
3		484,072		317,856		-		84,178		181		886,287	8			350
4		670,972		366,791		-		96,689		54		1,134,506	10			868
5		1,135,773		304,500		-		213,213		5,288		1,658,774	15			6,372
6		1,223,233		618,616		-		267,983		4,499		2,114,331	20			10,234
7		1,186,480		139,217		-		365,840		2,844		1,694,381	15			13,203
8		749,504		28,068		-		163,904		272		941,748	8			13,942
9		419,687		24,617		-		43,752		383		488,439	4			7,900
10		222,799		-		-		27,840		202		250,841	2			5,147
11		179,139		-		-		24,010		1,071		204,220	2			5,438
12		76,209		-		-		17,884		543		94,636	1			2,704
13		122,862		-		305,382		3,633		287		432,164	4			4,944
14,15,16		109,820		-		-		27,045		2,054		138,919	1			12,829
Collectively evaluated for impairment		7,666,733		1,799,665		305,382		1,348,127		17,719		11,137,626	99			84,389
Individually evaluated for impairment		42,951		-		12,785		10,975		1,518		68,229	1			13,562
Purchased credit-impaired loans		5,047		-		-		20,612		1,764		27,423	-			2,291
Total commercial loans	$	7,714,731	$	1,799,665	$	318,167	$	1,379,714	$	21,001	$	11,233,278	100	%	$	100,242


	June 30, 2014
			Loans to													Allowance
	General		Mortgage				Income		Residential				Percent of			for Loan
(Dollars in thousands)	C&I		Companies		TRUPS (a)		CRE		CRE		Total		Total			Losses
PD Grade:
1	$	366,235	$	-	$	-	$	-	$	-	$	366,235	4	%	$		-
2		260,581		-		-		3,110		235		263,926	3				245
3		360,700		76,569		-		983		-		438,252	5				307
4		387,884		77,110		-		7,591		-		472,585	5				746
5		760,726		62,031		-		158,071		6,041		986,869	10				2,579
6		991,013		199,651		-		189,927		4,738		1,385,329	14				1,674
7		1,189,915		182,749		-		285,384		6,087		1,664,135	17				2,696
8		771,697		301,174		-		227,419		53		1,300,343	13				2,739
9		686,657		123,423		-		108,523		5,911		924,514	10				5,896
10		375,862		77,058		-		40,228		1,563		494,711	5				5,379
11		361,870		1,517		-		26,275		2,128		391,790	4				8,397
12		136,560		-		-		32,356		994		169,910	2				1,857
13		120,903		-		325,882		8,938		2,007		457,730	5				6,435
14,15,16		137,500		-		9,385		49,842		4,944		201,671	2				37,666
Collectively evaluated for impairment		6,908,103		1,101,282		335,267		1,138,647		34,701		9,518,000	99				76,616
Individually evaluated for impairment		47,884		-		3,520		15,680		7,177		74,261	1				5,383
Purchase credit-impaired loans		6,780		-		-		33,351		1,957		42,088	-				2,413
Total commercial loans	$	6,962,767	$	1,101,282	$	338,787	$	1,187,678	$	43,835	$	9,634,349	100	%		$	84,412

Balances as of June 30, 2015 and 2014, each presented net of $26.2 million in lower of cost or market (“LOCOM”) valuation allowance. Based on the underlying structure of the notes, the highest possible internal grade is "13".

The retail 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 retail 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 retail portfolio.

The following tables reflect period end balances and average FICO scores by origination vintage for the HELOC, real estate installment, and permanent mortgage classes of loans as of June 30, 2015 and 2014:

HELOC
	June 30, 2015						June 30, 2014
			Average		Average				Average		Average
(Dollars in thousands)	Period End		Origination		Refreshed		Period End		Origination		Refreshed
Origination Vintage	Balance		FICO		FICO		Balance		FICO		FICO
pre-2003	$	46,789		708		703	$	68,332		708		703
2003		86,928		720		709		120,962		723		710
2004		236,022		723		708		346,431		725		713
2005		382,946		730		718		500,404		732		722
2006		306,652		739		727		365,886		740		728
2007		327,360		744		729		384,391		743		729
2008		183,224		753		748		208,637		753		748
2009		92,774		752		744		110,934		751		745
2010		88,337		754		747		106,954		753		750
2011		86,584		758		751		105,295		759		755
2012		107,715		760		757		128,733		759		759
2013		136,449		757		757		167,149		760		760
2014		120,544		761		763		51,982		760		762
2015		60,176		764		763		-		-		-
Total	$	2,262,500		742		732	$	2,666,090		741		732


R/E Installment Loans	June 30, 2015						June 30, 2014
			Average		Average				Average		Average
(Dollars in thousands)	Period End		Origination		Refreshed		Period End		Origination		Refreshed
Origination Vintage	Balance		FICO		FICO		Balance		FICO		FICO
pre-2003	$	10,180		678		686	$	18,623		680		683
2003		39,996		713		722		62,823		713		724
2004		34,944		698		697		47,502		700		699
2005		106,185		715		711		141,545		716		712
2006		116,730		712		704		156,538		714		702
2007		175,807		722		708		224,425		724		709
2008		56,222		719		712		74,106		721		714
2009		24,999		736		727		33,506		739		732
2010		82,230		750		760		113,437		748		754
2011		254,298		760		759		309,172		760		759
2012		562,078		764		765		653,179		764		765
2013		443,257		755		757		497,720		757		756
2014		439,744		756		755		220,264		756		754
2015		261,101		757		756		-		-		-
Total	$	2,607,771		749		748	$	2,552,840		747		744


Permanent Mortgage	June 30, 2015						June 30, 2014
			Average		Average				Average		Average
(Dollars in thousands)	Period End		Origination		Refreshed		Period End		Origination		Refreshed
Origination Vintage	Balance		FICO		FICO		Balance		FICO		FICO
pre-2004	$	126,365		722		717	$	169,338		724		720
2004		14,586		712		711		19,378		713		714
2005		32,187		736		734		37,572		737		737
2006		56,378		732		734		68,693		730		721
2007		176,298		733		717		207,116		733		712
2008		81,865		741		710		91,904		741		704
Total	$	487,679		730		717	$	594,001		729		713

Nonaccrual and Past Due Loans


The following table reflects accruing and non-accruing loans by class on June 30, 2015:

	Accruing								Non-Accruing
			30-89		90+						30-89		90+		Total
			Days		Days		Total				Days		Days		Non-		Total
(Dollars in thousands)	Current		Past Due		Past Due		Accruing		Current		Past Due		Past Due		Accruing		Loans
Commercial (C&I):
General C&I	$	7,673,986	$	4,830	$	199	$	7,679,015	$	13,781	$	2,536	$	14,352	$	30,669	$	7,709,684
Loans to mortgage companies		1,797,877		1,669		-		1,799,546		-		-		119		119		1,799,665
TRUPS (a)		305,382		-		-		305,382		-		-		12,785		12,785		318,167
Purchased credit-impaired loans		4,153		201		693		5,047		-		-		-		-		5,047
Total commercial (C&I)		9,781,398		6,700		892		9,788,990		13,781		2,536		27,256		43,573		9,832,563
Commercial real estate:
Income CRE		1,344,440		2,916		-		1,347,356		1,285		2,041		8,420		11,746		1,359,102
Residential CRE		19,114		123		-		19,237		-		-		-		-		19,237
Purchased credit-impaired loans		22,238		-		138		22,376		-		-		-		-		22,376
Total commercial real estate		1,385,792		3,039		138		1,388,969		1,285		2,041		8,420		11,746		1,400,715
Consumer real estate:
HELOC		2,150,344		22,240		9,785		2,182,369		65,345		5,243		9,543		80,131		2,262,500
R/E installment loans		2,557,513		9,172		4,272		2,570,957		27,294		1,873		5,227		34,394		2,605,351
Purchased credit-impaired loans		2,012		4		404		2,420		-		-		-		-		2,420
Total consumer real estate		4,709,869		31,416		14,461		4,755,746		92,639		7,116		14,770		114,525		4,870,271
Permanent mortgage		444,187		5,450		5,569		455,206		15,495		1,981		14,997		32,473		487,679
Credit card & other
Credit card		182,477		1,446		1,284		185,207		-		-		-		-		185,207
Other		158,530		873		177		159,580		-		-		749		749		160,329
Purchased credit-impaired loans		8		-		-		8		-		-		-		-		8
Total credit card & other		341,015		2,319		1,461		344,795		-		-		749		749		345,544
Total loans, net of unearned	$	16,662,261	$	48,924	$	22,521	$	16,733,706	$	123,200	$	13,674	$	66,192	$	203,066	$	16,936,772

Total TRUPS includes LOCOM valuation allowance of $26.2 million.


The following table reflects accruing and non-accruing loans by class on June 30, 2014:

	Accruing								Non-Accruing
			30-89		90+						30-89		90+		Total
			Days		Days		Total				Days		Days		Non-		Total
(Dollars in thousands)	Current		Past Due		Past Due		Accruing		Current		Past Due		Past Due		Accruing		Loans
Commercial (C&I):
General C&I	$	6,900,880	$	9,707	$	704	$	6,911,291	$	13,105	$	3,850	$	27,741	$	44,696	$	6,955,987
Loans to mortgage companies		1,097,367		3,782		-		1,101,149		-		-		133		133		1,101,282
TRUPS (a)		335,267		-		-		335,267		-		-		3,520		3,520		338,787
Purchased credit-impaired loans		5,226		322		1,232		6,780		-		-		-		-		6,780
Total commercial (C&I)		8,338,740		13,811		1,936		8,354,487		13,105		3,850		31,394		48,349		8,402,836
Commercial real estate:
Income CRE		1,134,752		8,044		-		1,142,796		271		133		11,127		11,531		1,154,327
Residential CRE		39,429		-		-		39,429		1,297		-		1,152		2,449		41,878
Purchased credit-impaired loans		29,827		259		5,222		35,308		-		-		-		-		35,308
Total commercial real estate		1,204,008		8,303		5,222		1,217,533		1,568		133		12,279		13,980		1,231,513
Consumer real estate:
HELOC		2,548,170		19,772		9,677		2,577,619		71,653		5,888		10,930		88,471		2,666,090
R/E installment loans		2,490,461		11,264		7,889		2,509,614		32,881		3,002		6,568		42,451		2,552,065
Purchased credit-impaired loans		775		-		-		775		-		-		-		-		775
Total consumer real estate		5,039,406		31,036		17,566		5,088,008		104,534		8,890		17,498		130,922		5,218,930
Permanent mortgage		546,846		5,559		4,573		556,978		16,935		3,410		16,678		37,023		594,001
Credit card & other
Credit card		184,014		2,010		1,564		187,588		-		-		-		-		187,588
Other		158,233		937		317		159,487		-		-		1,342		1,342		160,829
Purchased credit-impaired loans		12		-		-		12		-		-		-		-		12
Total credit card & other		342,259		2,947		1,881		347,087		-		-		1,342		1,342		348,429
Total loans, net of unearned	$	15,471,259	$	61,656	$	31,178	$	15,564,093	$	136,142	$	16,283	$	79,191	$	231,616	$	15,795,709

Total TRUPS includes LOCOM valuation allowance of $26.2 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. FHN considers regulatory guidelines when restructuring loans to ensure that prudent lending practices are followed. As such, qualification criteria and payment terms consider the borrower’s current and prospective ability to comply with the modified terms of the loan.

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, particularly as it relates to commercial borrowers due to the complex nature of loan structures, business/industry risk, and borrower/guarantor structures. 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. When evaluating whether a concession has been granted, FHN also considers whether the borrower has provided additional collateral or guarantors, among other things, and whether such additions adequately compensate FHN for the restructured terms. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty and whether a concession has been granted is 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 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 ratio. 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 ratio. After 5 years the interest rate steps up 1 percent every year thereafter 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 June 30, 2015 and 2014, FHN had $310.6 million and $350.9 million portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $61.0 million and $65.8 million, or 20 percent as of June 30, 2015, and 19 percent as of June 30, 2014. Additionally, $80.8 million and $139.5 million of loans held-for-sale as of June 30, 2015 and 2014, respectively were classified as TDRs.


The following tables reflect portfolio loans that were classified as TDRs during the three and six months ended June 30, 2015 and 2014:

		Three Months Ended June 30, 2015					Six Months Ended June 30, 2015
			Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
			Outstanding		Outstanding			Outstanding		Outstanding
(Dollars in thousands)		Number	Recorded Investment		Recorded Investment		Number	Recorded Investment		Recorded Investment
Commercial (C&I):
General C&I		-	$	-	$	-	2	$	1,388	$	1,325
	Total commercial (C&I)	-		-		-	2		1,388		1,325
Consumer real estate:
HELOC		65		7,237		7,147	102		10,964		10,854
R/E installment loans		22		1,912		1,916	38		3,266		3,293
	Total consumer real estate	87		9,149		9,063	140		14,230		14,147
Permanent mortgage		4		1,718		1,733	6		2,039		2,054
Credit card & other		6		20		19	12		48		46
Total troubled debt restructurings		97	$	10,887	$	10,815	160	$	17,705	$	17,572

		Three Months Ended June 30, 2014					Six Months Ended June 30, 2014
			Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
			Outstanding		Outstanding			Outstanding		Outstanding
(Dollars in thousands)		Number	Recorded Investment		Recorded Investment		Number	Recorded Investment		Recorded Investment
Commercial (C&I):
General C&I		2	$	736	$	522	2	$	736	$	522
	Total commercial (C&I)	2		736		522	2		736		522
Commercial real estate:
Income CRE		2		421		421	2		421		421
Residential CRE		1		976		960	1		976		960
	Total commercial real estate	3		1,397		1,381	3		1,397		1,381
Consumer real estate:
HELOC		97		8,279		8,557	164		14,069		14,325
R/E installment loans		45		3,132		3,093	117		8,275		8,195
	Total consumer real estate	142		11,411		11,650	281		22,344		22,520
Permanent mortgage		12		2,082		2,080	24		6,675		6,167
Credit card & other		14		60		57	34		147		142
Total troubled debt restructurings		173	$	15,686	$	15,690	344	$	31,299	$	30,732


The following tables present TDRs which re-defaulted during the three and six months ended June 30, 2015 and 2014, and as to which the modification occurred 12 months or less prior to the re-default. Financing receivables that became classified as TDRs within the previous 12 months and for which there was a payment default during the period are calculated by first identifying TDRs that defaulted during the period and then determining whether they were modified within the 12 months prior to the default. For purposes of this disclosure, FHN generally defines payment default as 30 or more days past due.

		Three Months Ended			Six Months Ended
		June 30, 2015			June 30, 2015
			Recorded			Recorded
(Dollars in thousands)		Number	Investment		Number	Investment
Commercial (C&I):
General C&I		-	$	-	-	$	-
	Total commercial (C&I)	-		-	-		-
Commercial real estate:
Income CRE		-		-	-		-
Residential CRE		1		896	1		896
	Total commercial real estate	1		896	1		896
Consumer real estate:
HELOC		6		278	7		308
R/E installment loans		1		26	2		112
	Total consumer real estate	7		304	9		420
Permanent mortgage		-		-	-		-
Credit card & other		2		5	3		8
Total troubled debt restructurings		10	$	1,205	13	$	1,324


		Three Months Ended			Six Months Ended
		June 30, 2014			June 30, 2014
			Recorded			Recorded
(Dollars in thousands)		Number	Investment		Number	Investment
Commercial (C&I):
General C&I		-	$	-	4	$	512
	Total commercial (C&I)	-		-	4		512
Commercial real estate:
Income CRE		-		-	2		389
Residential CRE		-		-	-		-
	Total commercial real estate	-		-	2		389
Consumer real estate:
HELOC		2		128	5		339
R/E installment loans		5		305	7		368
	Total consumer real estate	7		433	12		707
Permanent mortgage		2		781	2		781
Credit card & other		2		4	2		4
Total troubled debt restructurings		11	$	1,218	22	$	2,393

The determination of whether a TDR is placed on nonaccrual status generally follows the same internal policies and procedures as other portfolio loans. However, FHN will typically place a consumer real estate loan on nonaccrual status if it is 30 or more days delinquent upon modification into a TDR. For commercial loans, a nonaccrual TDR that is reasonably assured of repayment according to its modified terms may be returned to accrual status by FHN upon a detailed credit evaluation of the borrower’s financial condition and prospects for repayment under the revised terms. For consumer loans, FHN’s evaluation supporting the decision to return a modified loan to accrual status includes consideration of the borrower’s sustained historical repayment performance for a reasonable period prior to the date on which the loan is returned to accrual status, which is generally a minimum of six months. FHN may also consider a borrower’s sustained historical repayment performance for a reasonable time prior to the restructuring in assessing whether the borrower can meet the restructured terms, as it may indicate that the borrower is capable of servicing the level of debt under the modified terms. Otherwise, FHN will continue to classify a restructured loan as nonaccrual. Consistent with regulatory guidance, upon sustained performance and classification as a TDR over FHN’s year-end, the loan will be removed from TDR status as long as the modified terms were market-based at the time of modification.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References + Details