FORM 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to         

Commission File Number 001-15185

 

 

First Horizon National Corporation

(Exact name of registrant as specified in its charter)

 

 

 

TN   62-0803242

(State or other jurisdiction

incorporation of organization)

 

(IRS Employer

Identification No.)

165 MADISON AVENUE

MEMPHIS, TENNESSEE

  38103
(Address of principal executive office)   (Zip Code)

(Registrant’s telephone number, including area code) (901) 523-4444

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company    ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

   Outstanding on June 30, 2014
Common Stock, $.625 par value    237,146,617

 

 

 


Table of Contents

Table of Contents

FIRST HORIZON NATIONAL CORPORATION

INDEX

 

Part I. Financial Information

  

Item 1. Financial Statements

     2   

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     78   

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     119   

Item 4. Controls and Procedures

     119   

Part II. Other Information

  

Item 1. Legal Proceedings

     120   

Item 1A. Risk Factors

     120   

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     120   

Item 3. Defaults Upon Senior Securities

     120   

Item 4. Mine Safety Disclosures

     120   

Item 5. Other Information

     120   

Item 6. Exhibits

     121   

Signatures

     122   

Exhibit Index

     123   

Exhibit 31(a)

  

Exhibit 31(b)

  

Exhibit 32(a)

  

Exhibit 32(b)

  


Table of Contents

PART I.

FINANCIAL INFORMATION

 

Item 1. Financial Statements

  

The Consolidated Condensed Statements of Condition (unaudited)

     3   

The Consolidated Condensed Statements of Income (unaudited)

     4   

The Consolidated Condensed Statements of Comprehensive Income (unaudited)

     5   

The Consolidated Condensed Statements of Equity (unaudited)

     6   

The Consolidated Condensed Statements of Cash Flows (unaudited)

     7   

The Notes to the Consolidated Condensed Financial Statements (unaudited)

     8   

Note 1 Financial Information

     8   

Note 2 Acquisitions and Divestitures

     10   

Note 3 Investment Securities

     11   

Note 4 Loans

     13   

Note 5 Allowance for Loan Losses

     24   

Note 6 Mortgage Servicing Rights

     26   

Note 7 Intangible Assets

     27   

Note 8 Other Income and Other Expense

     28   

Note 9 Changes in Accumulated Other Comprehensive Income Balances

     29   

Note 10 Earnings Per Share

     31   

Note 11 Contingencies and Other Disclosures

     32   

Note 12 Pensions, Savings, and Other Employee Benefits

     42   

Note 13 Business Segment Information

     44   

Note 14 Variable Interest Entities

     46   

Note 15 Derivatives

     52   

Note 16 Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing and Lending Transactions

     58   

Note 17 Fair Value of Assets & Liabilities

     59   

Note 18 Restructuring, Repositioning, and Efficiency

     76   

This financial information reflects all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial condition and results of operations for the interim periods presented.

 

2


Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF CONDITION

 

      First Horizon National Corporation  
     June 30     December 31  

(Dollars in thousands, except restricted and per share amounts)(Unaudited)

   2014     2013     2013  

Assets:

      

Cash and due from banks (Restricted—$—million on June 30, 2014; and $1.2 million on June 30, 2013 and December 31, 2013)

   $ 417,108     $ 382,601     $ 349,216  

Federal funds sold

     51,537       52,169       66,079  

Securities purchased under agreements to resell (Note 16)

     624,477       602,126       412,614  
  

 

 

   

 

 

   

 

 

 

Total cash and cash equivalents (Restricted—$—million on June 30, 2014; and $1.2 million on June 30, 2013 and December 31, 2013)

     1,093,122       1,036,896       827,909  
  

 

 

   

 

 

   

 

 

 

Interest-bearing cash

     255,920       344,150       730,297  

Trading securities

     1,150,280       1,267,348       801,718  

Loans held-for-sale

     358,945       385,105       370,152  

Securities available-for-sale (Note 3) (a)

     3,576,542       3,228,379       3,398,457  

Securities held-to-maturity (Note 3)

     4,279       —         —    

Loans, net of unearned income (Restricted—$.1 billion on June 30, 2014; June 30, 2013; and December 31, 2013) (Note 4) (a)

     15,795,709       16,197,952       15,389,074  

Less: Allowance for loan losses (Restricted—$.7 million on June 30, 2014; $3.8 million on June 30, 2013; and $4.4 million on December 31, 2013) (Note 5)

     243,628       261,934       253,809  
  

 

 

   

 

 

   

 

 

 

Total net loans (Restricted—$.1 billion on June 30, 2014; June 30, 2013; and December 31, 2013) (a)

     15,552,081       15,936,018       15,135,265  
  

 

 

   

 

 

   

 

 

 

Mortgage servicing rights (Note 6)

     3,197       113,853       72,793  

Goodwill (Note 7) (a)

     141,943       140,479       141,943  

Other intangible assets, net (Note 7)

     20,025       23,144       21,988  

Capital markets receivables

     174,224       151,660       45,255  

Premises and equipment, net (a)

     300,533       314,764       305,244  

Real estate acquired by foreclosure (a)

     57,552       69,901       71,562  

Derivative assets (Note 15)

     162,067       235,759       181,866  

Other assets (Restricted—$.4 million on June 30, 2014; $1.7 million on June 30, 2013; and $1.9 million on December 31, 2013) (a)

     1,372,040       1,605,344       1,685,384  
  

 

 

   

 

 

   

 

 

 

Total assets (Restricted—$.1 billion on June 30, 2014; June 30, 2013; and December 31, 2013) (a)

   $ 24,222,750     $ 24,852,800     $ 23,789,833  
  

 

 

   

 

 

   

 

 

 

Liabilities and equity:

      

Deposits:

      

Savings

   $ 6,317,197     $ 6,928,447     $ 6,732,326  

Time deposits

     808,822       1,051,327       951,755  

Other interest-bearing deposits

     4,014,071       3,825,235       3,859,079  

Certificates of deposit $100,000 and more

     503,597       602,921       553,957  
  

 

 

   

 

 

   

 

 

 

Interest-bearing

     11,643,687       12,407,930       12,097,117  

Noninterest-bearing

     4,513,800       4,603,954       4,637,839  
  

 

 

   

 

 

   

 

 

 

Total deposits

     16,157,487       17,011,884       16,734,956  
  

 

 

   

 

 

   

 

 

 

Federal funds purchased

     947,946       1,142,749       1,042,633  

Securities sold under agreements to repurchase (Note 16)

     475,530       433,761       442,789  

Trading liabilities

     706,119       596,869       368,348  

Other short-term borrowings

     1,073,250       446,909       181,146  

Term borrowings (Restricted—$.1 billion on June 30, 2014; June 30, 2013; and December 31, 2013)

     1,501,209       1,800,255       1,739,859  

Capital markets payables

     95,299       90,231       21,173  

Derivative liabilities (Note 15)

     138,336       198,489       154,280  

Other liabilities (a)

     501,423       585,245       603,898  
  

 

 

   

 

 

   

 

 

 

Total liabilities (Restricted—$.1 billion on June 30, 2014; June 30, 2013; and December 31, 2013) (a)

     21,596,599       22,306,392       21,289,082  
  

 

 

   

 

 

   

 

 

 

Equity:

      

First Horizon National Corporation Shareholders’ Equity:

      

Preferred stock—Series A, non-cumulative perpetual, no par value, liquidation preference of $100,000 per share—(shares authorized—1,000; shares issued—1,000 on June 30, 2014, June 30, 2013 and December 31, 2013)

     95,624       95,624       95,624  

Common stock—$.625 par value (shares authorized—400,000,000; shares issued—237,146,617 on June 30, 2014; 240,554,552 on June 30, 2013; and 236,369,554 on December 31, 2013)

     148,217       150,347       147,731  

Capital surplus

     1,416,012       1,416,563       1,416,767  

Undivided profits

     792,978       777,108       695,207  

Accumulated other comprehensive loss, net (Note 9)

     (122,111     (188,665     (150,009
  

 

 

   

 

 

   

 

 

 

Total First Horizon National Corporation Shareholders’ Equity

     2,330,720       2,250,977       2,205,320  
  

 

 

   

 

 

   

 

 

 

Noncontrolling interest (a)

     295,431       295,431       295,431  
  

 

 

   

 

 

   

 

 

 

Total equity (a)

     2,626,151       2,546,408       2,500,751  
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity (Restricted—$.1 billion on June 30, 2014; June 30, 2013; and December 31, 2013) (a)

   $ 24,222,750     $ 24,852,800     $ 23,789,833  
  

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated condensed financial statements.

 

(a) June 30, 2013 balance has been re-presented due to purchase accounting adjustments made in third quarter 2013.

 

3


Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

 

     First Horizon National Corporation  
     Three Months Ended
June 30
    Six Months Ended
June 30
 

(Dollars and shares in thousands except per share data, unless otherwise noted)(Unaudited)

   2014     2013     2014      2013  

Interest income:

         

Interest and fees on loans

   $ 142,710     $ 151,314     $ 281,367      $ 304,599  

Interest on investment securities available-for-sale

     23,650       20,664       46,784        41,526  

Interest on investment securities held-to-maturity

     66       —         132        —    

Interest on loans held-for-sale

     3,209       3,169       6,424        6,671  

Interest on trading securities

     7,687       8,770       15,792        17,051  

Interest on other earning assets

     37       74       444        543  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total interest income

     177,359       183,991       350,943        370,390  
  

 

 

   

 

 

   

 

 

    

 

 

 

Interest expense:

         

Interest on deposits:

         

Savings

     2,792       3,689       5,875        8,086  

Time deposits

     2,486       4,064       5,548        8,281  

Other interest-bearing deposits

     746       1,013       1,564        2,158  

Certificates of deposit $100,000 and more

     869       1,550       1,892        3,111  

Interest on trading liabilities

     4,087       3,354       7,658        6,550  

Interest on short-term borrowings

     1,195       1,156       2,300        2,462  

Interest on term borrowings

     8,416       9,146       16,979        18,341  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total interest expense

     20,591       23,972       41,816        48,989  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net interest income

     156,768       160,019       309,127        321,401  

Provision for loan losses

     5,000       15,000       15,000        30,000  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net interest income after provision for loan losses

     151,768       145,019       294,127        291,401  
  

 

 

   

 

 

   

 

 

    

 

 

 

Noninterest income:

         

Capital markets

     47,680       69,265       104,520        148,428  

Deposit transactions and cash management

     27,911       28,254       54,367        55,910  

Brokerage, management fees and commissions

     12,843       10,540       25,119        19,888  

Mortgage banking

     8,861       5,589       27,890        14,962  

Bankcard income

     7,919       5,299       12,439        10,181  

Trust services and investment management

     7,309       6,950       14,053        13,278  

Bank-owned life insurance

     3,312       3,946       9,344        9,418  

Other service charges

     3,143       3,503       5,988        6,589  

Insurance commissions

     611       730       1,048        1,330  

Equity securities gains/(losses), net

     (1,923     4       3,734        28  

Debt securities gains/(losses), net

     —         (355     —          (355

All other income and commissions (Note 8)

     9,235       8,907       14,129        19,402  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total noninterest income

     126,901       142,632       272,631        299,059  
  

 

 

   

 

 

   

 

 

    

 

 

 

Adjusted gross income after provision for loan losses

     278,669       287,651       566,758        590,460  
  

 

 

   

 

 

   

 

 

    

 

 

 

Noninterest expense:

         

Employee compensation, incentives, and benefits (three and six months ended June 30, 2014, include $1.1 million and $1.7 million, respectively, and three and six months ended June 30, 2013, include $2.9 million and $5.4 million, respectively, of expense associated with pension and post-retirement plans reclassified from accumulated other comprehensive income)

     119,659       130,500       238,888        269,684  

Occupancy

     11,944       11,785       29,536        24,607  

Computer software

     11,087       9,608       21,743        19,684  

Operations services

     8,804       8,842       17,786        16,912  

Equipment rentals, depreciation, and maintenance

     7,442       7,597       15,291        15,417  

Legal and professional fees

     6,151       14,065       21,190        25,236  

Contract employment and outsourcing

     5,318       8,581       9,643        17,620  

Advertising and public relations

     4,312       4,121       10,220        8,068  

Communications and courier

     3,948       4,531       8,172        8,968  

FDIC premium expense

     1,136       5,037       5,127        11,048  

Amortization of intangible assets

     981       928       1,963        1,856  

Foreclosed real estate

     439       1,287       1,223        2,726  

All other expense (Note 8)

     (15,889     20,526       4,764        46,122  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total noninterest expense

     165,332       227,408       385,546        467,948  
  

 

 

   

 

 

   

 

 

    

 

 

 

Income/(loss)before income taxes

     113,337       60,243       181,212        122,512  

Provision/(benefit) for income taxes (three and six months ended June 30, 2014, include $.4 million and $.7 million, respectively, and three and six months ended June 30, 2013, include $1.1 million and $2.1 million, respectively, of income tax benefit reclassified from accumulated other comprehensive income)

     32,157       15,008       50,802        32,738  
  

 

 

   

 

 

   

 

 

    

 

 

 

Income/(loss) from continuing operations

     81,180       45,235       130,410        89,774  

Income/(loss) from discontinued operations, net of tax (a)

     —         1       —          431  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income/(loss)

   $ 81,180     $ 45,236     $ 130,410      $ 90,205  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income attributable to noncontrolling interest

     2,859       2,843       5,672        5,656  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income/(loss) attributable to controlling interest

   $ 78,321     $ 42,393     $ 124,738      $ 84,549  
  

 

 

   

 

 

   

 

 

    

 

 

 

Preferred stock dividends

     1,550       1,550       3,100        2,738  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income/(loss) available to common shareholders

   $ 76,771     $ 40,843     $ 121,638      $ 81,811  
  

 

 

   

 

 

   

 

 

    

 

 

 

Basic earnings/(loss) per share from continuing operations (Note 10)

   $ 0.33     $ 0.17     $ 0.52      $ 0.34  
  

 

 

   

 

 

   

 

 

    

 

 

 

Diluted earnings/(loss) per share from continuing operations (Note 10)

   $ 0.32     $ 0.17     $ 0.51      $ 0.34  
  

 

 

   

 

 

   

 

 

    

 

 

 

Basic earnings/(loss) per share (Note 10)

   $ 0.33     $ 0.17     $ 0.52      $ 0.34  
  

 

 

   

 

 

   

 

 

    

 

 

 

Diluted earnings/(loss) per share (Note 10)

   $ 0.32     $ 0.17     $ 0.51      $ 0.34  
  

 

 

   

 

 

   

 

 

    

 

 

 

Weighted average common shares (Note 10)

     235,797       239,248       235,492        240,055  
  

 

 

   

 

 

   

 

 

    

 

 

 

Diluted average common shares (Note 10)

     237,250       240,891       237,325        241,859  
  

 

 

   

 

 

   

 

 

    

 

 

 

See accompanying notes to consolidated condensed financial statements.

 

(a) Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of Income/(loss) from discontinued operations, net of tax have been attributed solely to FHN as the controlling interest holder.

 

4


Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

 

     First Horizon National Corporation  
     Three Months Ended
June 30
    Six Months Ended
June 30
 

(Dollars in thousands) (unaudited)

   2014      2013     2014      2013  

Net income/(loss)

   $ 81,180      $ 45,236     $ 130,410      $ 90,205  

Other comprehensive income/(loss), net of tax:

          

Unrealized fair value adjustments:

          

Securities available-for-sale

     17,358        (39,152     26,837        (45,811

Recognized pension and other employee benefit plans net periodic benefit costs

     650        2,126       1,061        3,489  
  

 

 

    

 

 

   

 

 

    

 

 

 

Other comprehensive income/(loss)

     18,008        (37,026 )     27,898        (42,322 )
  

 

 

    

 

 

   

 

 

    

 

 

 

Comprehensive income/(loss)

     99,188        8,210       158,308        47,883  
  

 

 

    

 

 

   

 

 

    

 

 

 

Comprehensive income attributable to noncontrolling interest

     2,859        2,843       5,672        5,656  
  

 

 

    

 

 

   

 

 

    

 

 

 

Comprehensive income/(loss) attributable to controlling interest

   $ 96,329      $ 5,367     $ 152,636      $ 42,227  
  

 

 

    

 

 

   

 

 

    

 

 

 

See accompanying notes to consolidated condensed financial statements.

 

5


Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

 

     First Horizon National Corporation  
     2014     2013  

(Dollars in thousands except per share data)(Unaudited)

   Controlling
Interest
    Noncontrolling
Interest
    Total     Controlling
Interest
    Noncontrolling
Interest
    Total  

Balance, January 1

   $ 2,205,320     $ 295,431     $ 2,500,751     $ 2,214,041     $ 295,165     $ 2,509,206  

Net income/(loss)

     124,738       5,672       130,410       84,549       5,656       90,205  

Other comprehensive income/(loss) (a)

     27,898       —         27,898       (42,322     —         (42,322
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income/(loss)

     152,636       5,672       158,308       42,227       5,656       47,883  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Preferred stock issuance (1,000 shares issued at $100,000 per share net of offering costs)

     —         —         —         95,624       —         95,624  

Cash dividends declared:

            

Preferred stock ($3,100 per share and $2,738 per share for the six months ended June 30, 2014 and 2013, respectively)

     (3,100     —         (3,100     (2,738     —         (2,738

Common stock ($.10 per share)

     (23,875     —         (23,875     (24,376     —         (24,376

Common stock repurchased (b)

     (4,871     —         (4,871     (81,156     —         (81,156

Common stock issued for:

            

Stock options and restricted stock—equity awards

     620       —         620       257       —         257  

Stock-based compensation expense

     5,687       —         5,687       8,291       —         8,291  

Dividends declared—noncontrolling interest of subsidiary preferred stock

     —         (5,672     (5,672     —         (5,656     (5,656

Tax benefit reversals—stock-based compensation plans

     (1,705     —         (1,705     (1,277     —         (1,277

Real estate investment trust (“REIT”) preferred stock issuance

     —         —         —         —         92       92  

Acquired noncontrolling interest-REIT (c)

     —         —         —         —         174       174  

Other changes in equity

     8       —         8       84       —         84  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30 (c)

   $ 2,330,720     $ 295,431     $ 2,626,151     $ 2,250,977     $ 295,431     $ 2,546,408  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated condensed financial statements.

 

(a) Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of Other comprehensive income/(loss) have been attributed solely to FHN as the controlling interest holder.
(b) 2013 includes $77.9 million repurchased under the share repurchase program launched in 2011 including $40.0 million associated with a prepaid variable share repurchase agreement.
(c) Second quarter 2013 balance has been re-presented due to purchase accounting adjustments made in third quarter 2013.

 

6


Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

 

     First Horizon National Corporation  
     Six Months Ended June 30  

(Dollars in thousands)(Unaudited)

   2014     2013  

Operating Activities

    

Net income/(loss)

   $ 130,410     $ 90,205  

Adjustments to reconcile net income/(loss) to net cash provided/(used) by operating activities:

    

Provision for loan losses

     15,000       30,000  

Provision/(benefit) for deferred income taxes

     9,597        34,642   

Depreciation and amortization of premises and equipment

     18,016       17,794  

Amortization of intangible assets

     1,963       1,856  

Net other amortization and accretion

     8,003       19,266  

Net (increase)/decrease in derivatives

     559       10,528  

Fair value adjustment on mortgage servicing rights

     (1,246     (11,335

Fair value adjustment on foreclosed real estate

     1,391       2,951  

Litigation and regulatory matters

     490       6,070  

(Gains)/losses on divestitures

     —         (638

Stock-based compensation expense

     5,687       8,291  

Tax benefit reversals stock-based compensation plans

     1,705       1,277  

Equity securities (gains)/losses, net

     (3,734     (28

Debt securities (gains)/losses, net

     —         355  

(Gains)/losses on extinguishment of debt

     4,350       —    

Loss on deconsolidation of debt

     1,960       —    

Net (gains)/losses on sale/disposal of fixed assets

     2,114       774  

Proceeds from sale of mortgage servicing rights

     69,919       —    

Net (increase)/decrease in:

    

Trading securities

     (347,692     (7,456

Loans held-for-sale

     11,207       16,832  

Capital markets receivables

     (128,969     (33,888

Interest receivable

     2,076       1,882  

Other assets

     322,467        62,487   

Net increase/(decrease) in:

    

Capital markets payables

     74,126       (20,098

Interest payable

     (595     (2,118

Other liabilities

     (151,064     (173,881

Trading liabilities

     337,771       32,440  
  

 

 

   

 

 

 

Total adjustments

     255,101        (1,997
  

 

 

   

 

 

 

Net cash provided/(used) by operating activities

     385,511        88,208  
  

 

 

   

 

 

 

Investing Activities

    

Available-for-sale securities:

    

Sales

     4,555       18,897  

Maturities

     310,067       568,419  

Purchases

     (449,425     (760,374

Premises and equipment:

    

Sales

     32       —    

Purchases

     (15,451     (15,945

Net (increase)/decrease in:

    

Loans

     (431,786     689,539  

Interests retained from securitizations classified as trading securities

     689       2,828  

Interest-bearing cash

     474,377       36,207  

Cash receipts related to divestitures

     —         1,638  

Cash received for acquisition

     —         54,872  
  

 

 

   

 

 

 

Net cash provided/(used) by investing activities

     (106,942     596,081  
  

 

 

   

 

 

 

Financing Activities

    

Common stock:

    

Stock options exercised

     624       257  

Cash dividends paid

     (23,878     (14,494

Repurchase of shares (a)

     (4,871     (81,156

Tax benefit reversals stock-based compensation plans

     (1,705     (1,277

Preferred stock issuance

     —         95,624  

Cash dividends paid—preferred stock—noncontrolling interest

     (5,687     (5,687

Cash dividends paid—Series A preferred stock

     (3,100     (1,188

Term borrowings:

    

Payments/maturities

     (228,850     (387,564

Increases in restricted and secured term borrowings

     2,089       3,552  

Net increase/(decrease) in:

    

Deposits

     (578,136     20,077  

Short-term borrowings

     830,158       (381,799
  

 

 

   

 

 

 

Net cash provided/(used) by financing activities

     (13,356     (753,655
  

 

 

   

 

 

 

Net increase/(decrease) in cash and cash equivalents

     265,213       (69,366
  

 

 

   

 

 

 

Cash and cash equivalents at beginning of period

     827,909       1,106,262  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,093,122     $ 1,036,896  
  

 

 

   

 

 

 

Supplemental Disclosures

    

Total interest paid

   $ 41,626     $ 50,299  

Total taxes paid

     31,950       4,787  

Total taxes refunded

     1,880       4,687  

Transfer from loans to other real estate owned

     11,505       8,817  
  

 

 

   

 

 

 

See accompanying notes to consolidated condensed financial statements.

 

(a) 2013 includes $77.9 million repurchased under the share repurchase program launched in 2011, including $40.0 million associated with a prepaid variable share repurchase agreement.

 

7


Table of Contents

Notes to the Consolidated Condensed Financial Statements (Unaudited)

Note 1 – Financial Information

Basis of Accounting. The unaudited interim consolidated condensed financial statements of First Horizon National Corporation (“FHN”), including its subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of America and follow general practices within the industries in which it operates. This preparation requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions are based on information available as of the date of the financial statements and could differ from actual results. In the opinion of management, all necessary adjustments have been made for a fair presentation of financial position and results of operations for the periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed in this Quarterly Report on Form 10-Q. The operating results for the interim 2014 periods are not necessarily indicative of the results that may be expected going forward. For further information, refer to the audited consolidated financial statements in the 2013 Annual Report to shareholders, which were filed as Exhibit 13 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2013.

Summary of Accounting Changes. Effective January 2014, FHN adopted provisions of FASB ASU 2013-11 “Income Taxes: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Generally, ASU 2013-11 requires that an unrecognized tax benefit should reduce a deferred tax asset (“DTA”) that has been established for a net operating loss (“NOL”), a tax credit carryforward, or other similar tax losses. However, if a filer does not have such carryforwards or similar tax losses at the reporting date, the uncertain tax position should be recorded as a liability. If a filer does have a DTA, but is not required by tax law of the applicable jurisdiction to use the DTA to settle additional taxes from the disallowance of a tax position and that is the filer’s intent, the uncertain tax position should be recognized as a liability in that situation as well and not netted with the DTA. The assessment of whether a DTA is available is based on the unrecognized tax benefit and DTA that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The adoption of provisions of ASU 2013-11, did not have a material effect on FHN’s statement of condition, results of operations, or cash flows.

Accounting Changes Issued but Not Currently Effective. In January 2014, the FASB issued ASU 2014-01, “Equity Method and Joint Ventures: Accounting for Investments in Qualified Affordable Housing Projects.” ASU 2014-01 permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using a proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense/(benefit). A reporting entity should evaluate whether the conditions have been met to apply the proportional amortization method to an investment in a qualified affordable housing project through a limited liability entity at the time of initial investment on the basis of facts and circumstances that exist at that time. A reporting entity should reevaluate the conditions upon the occurrence of certain specified events. An investment in a qualified affordable housing project through a limited liability entity should be tested for impairment when there are events or changes in circumstances indicating that it is more likely than not that the carrying amount of the investment will not be realized. For those investments in qualified affordable housing projects not accounted for using the proportional amortization method, the investment should be accounted for as an equity method investment or a cost method investment. The decision to apply the proportional amortization method of accounting is an accounting policy decision that should be applied consistently to all qualifying affordable housing project investments rather than a decision to be applied to individual investments. The provisions of ASU 2014-01 are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014, and will be applied retrospectively to all periods presented. Early adoption is permitted. FHN is evaluating the effects of ASU 2014-01 on its portfolio of low income housing investments.

In January 2014, the FASB issued ASU 2014-04, “Receivables—Troubled Debt Restructurings by Creditors: Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” ASU 2014-04 clarifies that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. ASU 2014-04 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt ASU 2014-04 using either a modified retrospective transition method or a prospective transition method. Under the modified retrospective transition method, an entity should apply ASU 2014-04 by means of a cumulative-effect adjustment to residential consumer mortgage loans and foreclosed residential real estate properties existing as of the beginning of the annual period for which the amendments are effective. Early adoption is permitted. FHN is evaluating the requirements of ASU 2014-04 with respect to its current foreclosure accounting practices.

 

8


Table of Contents

Note 1 – Financial Information (Continued)

 

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 does not change revenue recognition for financial instruments. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This is accomplished through a five-step recognition framework involving 1) the identification of contracts with customers, 2) identification of performance obligations, 3) determination of the transaction price, 4) allocation of the transaction price to the performance obligations and 5) recognition of revenue as performance obligations are satisfied. Additionally, qualitative and quantitative information is required for disclosure regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. Transition to the new requirements may be made by retroactively revising prior financial statements (with certain practical expedients permitted) or by a cumulative effect through retained earnings. If the latter option is selected, additional disclosures are required for comparability. FHN is evaluating the effects of ASU 2014-09 on its revenue recognition practices.

In June 2014, the FASB issued ASU 2014-11, “Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures.” ASU 2014-11 makes two changes to accounting for repurchase agreements. First, it requires secured borrowing accounting for repurchase-to-maturity transactions. Second, it requires separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. ASU 2014-11 also requires additional disclosures for repurchase transactions that are recognized as secured borrowings, including disaggregation by class of collateral, the remaining contractual tenor of the arrangements and the risks inherent in the agreements. Adoption of ASU 2014-11 will only affect FHN’s disclosures as it does not execute repurchase-to maturity or repurchase financing transactions. These disclosure revisions are effective for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015.

In June 2014, the FASB issued ASU 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition in determining expense recognition for the award. Thus, compensation cost is recognized over the requisite service period based on the probability of achievement of the performance condition. Expense is adjusted after the requisite service period for changes in the probability of achievement. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The adoption of ASU 2014-12 will have no effect on FHN.

 

9


Table of Contents

Note 2 – Acquisitions and Divestitures

On June 7, 2013, First Tennessee Bank National Association (“FTBNA”) acquired substantially all of the assets and liabilities of Mountain National Bank (“MNB”) a community bank headquartered in Sevierville, Tennessee from the Federal Deposit Insurance Corporation (“FDIC”), as receiver, pursuant to a purchase and assumption agreement. Prior to the acquisition, MNB operated 12 branches in Sevier and Blount counties in eastern Tennessee.

Excluding purchase accounting adjustments, FHN acquired approximately $452 million in assets, including approximately $249 million in loans, and assumed approximately $362 million of MNB deposits. There was no premium associated with the acquired deposits and assets were acquired at a discount of $33 million from book value. FHN did not enter into a loss-sharing agreement with the FDIC associated with the MNB purchase. In relation to the acquisition FHN recorded $7.7 million in goodwill, representing the excess of the estimated fair value of liabilities assumed over the estimated fair value of the assets acquired.

See Note 2—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2013, for additional information about the MNB acquisition.

On May 27, 2014, FTBNA entered into an agreement to purchase thirteen bank branches. The purchase of the branches is expected to close in the second half of 2014, subject to approval by regulators and customary closing conditions. The branches are in communities in Middle and East Tennessee including Waverly, Columbia, Lawrenceburg, Lewisburg, Sparta, Rockwood, Greeneville, Kingston, Bristol, Johnson City, and Kingsport. FTBNA would assume approximately $660 million of deposits at a deposit premium of 3.32 percent based on deposit balances near the time the transaction closes. FTBNA will acquire an immaterial amount of loans as part of the transaction.

FHN acquires or divests assets from time to time in transactions that are considered business combinations or divestitures but are not material to FHN individually or in the aggregate.

 

10


Table of Contents

Note 3 – Investment Securities

The following tables summarize FHN’s investment securities on June 30, 2014 and 2013:

 

     June 30, 2014  

(Dollars in thousands)

   Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair
Value
 

Securities available-for-sale (“AFS”):

          

U.S. treasuries

   $ 39,995      $ 4      $ —       $ 39,999  

Government agency issued mortgage-backed securities (“MBS”)

     724,785        39,679        (1,622     762,842  

Government agency issued collateralized mortgage obligations (“CMO”)

     2,582,242        21,211        (34,065     2,569,388  

Other U.S. government agencies

     1,973        88        —         2,061  

States and municipalities

     15,155        —          —         15,155  

Equity and other (a)

     187,106        17        (26     187,097  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total securities available-for-sale (b)

   $ 3,551,256      $ 60,999      $ (35,713   $ 3,576,542  
  

 

 

    

 

 

    

 

 

   

 

 

 

Securities held-to-maturity (“HTM”):

          

States and municipalities

   $ 4,279      $ 1,277      $ —       $ 5,556  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total securities held-to-maturity

   $ 4,279      $ 1,277      $ —       $ 5,556  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(a) Includes restricted investments in FHLB-Cincinnati stock of $87.9 million and FRB stock of $66.0 million. The remainder is money market, venture capital, and cost method investments.
(b) Includes $3.4 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

 

     June 30, 2013  

(Dollars in thousands)

   Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair
Value
 

Securities available-for-sale:

          

U.S. treasuries

   $ 39,991      $ 6      $ —       $ 39,997  

Government agency issued MBS (a)

     959,851        36,205        (4,294     991,762  

Government agency issued CMO

     1,970,151        12,409        (28,522     1,954,038  

Other U.S. government agencies

     2,687        167        —         2,854  

States and municipalities

     16,434        11        —         16,445  

Equity and other (b)

     223,241        42        —         223,283  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total securities available-for-sale (a)(c)

   $ 3,212,355      $ 48,840      $ (32,816   $ 3,228,379  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(a) Balance has been re-presented due to purchase accounting adjustments made in third quarter 2013.
(b) Includes restricted investments in FHLB-Cincinnati stock of $128.0 million and FRB stock of $66.2 million. The remainder is money market, venture capital, and cost method investments.
(c) Includes $3.0 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

The amortized cost and fair value by contractual maturity for the available-for-sale and held-to-maturity securities portfolios on June 30, 2014, are provided below:

 

     Held-to-Maturity      Available-for-Sale  

(Dollars in thousands)

   Amortized
Cost
     Fair
Value
     Amortized
Cost
     Fair
Value
 

Within 1 year

   $ —        $ —        $ 39,995      $ 39,999  

After 1 year; within 5 years

     —          —          3,473        3,561  

After 5 years; within 10 years

     —          —          —          —    

After 10 years

     4,279        5,556        13,655        13,655  
  

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     4,279        5,556        57,123        57,215  
  

 

 

    

 

 

    

 

 

    

 

 

 

Government agency issued MBS and CMO

     —          —          3,307,027        3,332,230  

Equity and other

     —          —          187,106        187,097  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 4,279      $ 5,556      $ 3,551,256      $ 3,576,542  
  

 

 

    

 

 

    

 

 

    

 

 

 

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

11


Table of Contents

Note 3 – Investment Securities (Continued)

 

The table below provides information on gross gains and gross losses from investment securities for the three and six months ended June 30:

 

     Three Months Ended
June 30
    Six Months Ended
June 30
 

(Dollars in thousands)

   2014     2013     2014     2013  

Gross gains on sales of securities

   $ 77     $ 12     $ 5,734     $ 42  

Gross losses on sales of securities

     —         (363     —         (369
  

 

 

   

 

 

   

 

 

   

 

 

 

Net gain/(loss) on sales of securities (a)

     77       (351     5,734       (327
  

 

 

   

 

 

   

 

 

   

 

 

 

Venture capital investments (b)

     (2,000     —         (2,000     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total securities gain/(loss), net

   $ (1,923 )   $ (351   $ 3,734     $ (327
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Proceeds from sales for the three months ended June 30, 2014 were not material. Proceeds for the six months ended June 30, 2014 were $5.7 million, inclusive of $1.4 million of equity securities. Proceeds from the three and six months ended June 30, 2013, were $18.9 million.
(b) Includes write-offs and /or unrealized fair value adjustments related to venture capital investments.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of June 30, 2014 and 2013:

 

     As of June 30, 2014  
     Less than 12 months     12 months or longer     Total  

(Dollars in thousands)

   Fair
Value
     Unrealized
Losses
    Fair
Value
     Unrealized
Losses
    Fair
Value
     Unrealized
Losses
 

Government agency issued CMO

   $ 437,212      $ (2,276   $ 1,004,964      $ (31,789   $ 1,442,176      $ (34,065

Government agency issued MBS

     34,041        (83     108,491        (1,539     142,532        (1,622
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total debt securities

     471,253        (2,359     1,113,455        (33,328     1,584,708        (35,687
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Equity

     43        (26 )     —           —         43        (26
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total temporarily impaired securities

   $ 471,296      $ (2,385   $ 1,113,455      $ (33,328   $ 1,584,751      $ (35,713
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     As of June 30, 2013  
     Less than 12 months     12 months or longer     Total  

(Dollars in thousands)

   Fair
Value
     Unrealized
Losses
    Fair
Value
     Unrealized
Losses
    Fair
Value
     Unrealized
Losses
 

Government agency issued CMO

   $ 1,233,820      $ (28,365   $ 15,967      $ (157   $ 1,249,787      $ (28,522

Government agency issued MBS

     192,747        (4,294     —          —         192,747        (4,294
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total temporarily impaired securities

   $ 1,426,567      $ (32,659   $ 15,967      $ (157   $ 1,442,534      $ (32,816
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

FHN has reviewed investment securities that were in unrealized loss positions in accordance with its accounting policy for other than temporary impairment “(OTTI”) and does not consider them other-than-temporarily impaired. For debt securities with unrealized losses, FHN does not intend to sell them and it is more-likely-than-not that FHN will not be required to sell them prior to recovery. The decline in value is primarily attributable to interest rates and not credit losses. For equity securities, FHN has both the ability and intent to hold these securities for the time necessary to recover the amortized cost.

 

12


Table of Contents

Note 4 – Loans

The following table provides the balance of loans by portfolio segment as of June 30, 2014 and 2013, and December 31, 2013:

 

     June 30      December 31  

(Dollars in thousands)

   2014      2013      2013  

Commercial:

        

Commercial, financial, and industrial (a)

   $ 8,402,836      $ 8,368,067      $ 7,923,576  

Commercial real estate

     1,231,513        1,218,206        1,133,279  

Retail:

        

Consumer real estate (b)

     5,218,930        5,549,440        5,333,371  

Permanent mortgage (c)

     594,001        746,154        662,242  

Credit card & other

     348,429        316,085        336,606  
  

 

 

    

 

 

    

 

 

 

Loans, net of unearned income (a)

   $ 15,795,709      $ 16,197,952      $ 15,389,074  

Allowance for loan losses

     243,628        261,934        253,809  
  

 

 

    

 

 

    

 

 

 

Total net loans (a)

   $ 15,552,081      $ 15,936,018      $ 15,135,265  
  

 

 

    

 

 

    

 

 

 

 

(a) Balance as of June 30, 2013 has been re-presented due to purchase accounting adjustments made in third quarter 2013.
(b) Balances as of June 30, 2014 and 2013, and December 31, 2013 include $84.4 million, $367.0 million, and $333.8 million of restricted and secured real estate loans, respectively. See Note 14—Variable Interest Entities for additional information.
(c) Balances as of June 30, 2013, and December 31, 2013 include $12.4 million and $11.2 million of restricted and secured 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 (“PCI”)), 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 exclusively 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 commercial real estate 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 loans secured by residential real estate (37 percent of total loans), the majority of which is in the consumer real estate portfolio (33 percent of total loans). Loans to finance and insurance companies total $1.7 billion (21 percent of the C&I portfolio, or 11 percent of the total loans). FHN had loans to mortgage companies, commercial lines of credit to qualified mortgage companies exclusively for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors, totaling $1.1 billion (13 percent of the C&I portfolio, or 7 percent of total loans) as of June 30, 2014. As a result, 34 percent of the C&I category was sensitive to impacts on the financial services industry.

Acquisition

On June 7, 2013, FHN acquired substantially all of the assets and liabilities of MNB from the FDIC. The acquisition included approximately $249 million of loans. These loans were initially recorded at fair value which incorporates expected credit losses, among other things, in accordance with ASC 805 resulting in no carryover of allowance for loan loss (“ALLL”) from the acquiree. At acquisition, FHN designated certain loans as PCI (see discussion below) with the remaining loans accounted for under ASC 310-20, “Nonrefundable Fees and Other Costs”. For loans accounted for under ASC 310-20, the difference between the loans’ book value to MNB and the estimated fair value at the time of the acquisition will be accreted back into interest income over the remaining contractual life and the subsequent accounting and reporting will be similar to FHN’s originated loan portfolio.

PCI Loans

ASC 310-30, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer,” provides guidance for acquired loans that have experienced deterioration of credit quality between origination and the time of acquisition and for which the timely collection of the interest and principal is no longer reasonably assured PCI loans. FHN considered several factors when determining whether a loan met the definition of a PCI loan at the time of acquisition including accrual status, loan grade, delinquency trends, prior partial charge-offs, as well as both originated versus refreshed credit scores and ratios when available.

 

13


Table of Contents

Note 4 – Loans (Continued)

 

PCI loans were initially recorded at fair value which was estimated by discounting expected cash flows at acquisition date. The expected cash flow includes all contractually expected amounts (including interest) and incorporates an estimate for future expected credit losses, pre-payment assumptions, and yield requirement for a market participant, among other things. To the extent possible, certain PCI loans were aggregated into pools with composite interest rate and cash flows expected to be collected for the pool. Aggregation into loan pools is based on common risk characteristics that include similar credit risk or risk ratings, and one or more predominant risk characteristics. Generally, FHN pooled loans with smaller balances and common internal loan grades and portfolio types. Subsequent to the initial accounting at acquisition, each PCI pool is accounted for as a single unit.

Accretable yield is initially established at acquisition and is the excess of cash flows expected to be collected over the initial investment in the loan and is recognized in interest income over the remaining life of the loan, or pool of loans. Nonaccretable difference is the difference between the contractually required payments at acquisition and the cash flows expected to be collected at acquisition. FHN estimates expected cash flows for PCI loans on a quarterly basis. Increases in expected cash flows from the last measurement will result in reversal of any nonaccretable difference (or allowance for loan losses to the extent any has been recorded) with a prospective positive impact on interest income. Decreases to the expected cash flows will result in an increase in the allowance for loan losses through increased provision expense.

FHN does not report PCI loans as nonperforming loans due to the accretion of interest income. Additionally, PCI loans that have been pooled and subsequently modified will not be reported as troubled debt restructurings since the pool is the unit of measurement.

The following table presents a rollforward of the accretable yield for the three and six months ended June 30, 2014 and 2013:

 

     Three Months Ended
June 30
    Six Months Ended
June 30
 

(Dollars in thousands)

   2014     2013     2014     2013  

Balance, beginning of period

   $ 15,828     $ —       $ 13,490     $ —    

Additions (a)

     224       6,650       335       6,650  

Accretion

     (1,927     (218     (3,584     (218

Adjustment for payoffs

     (489     —         (722     —    

Adjustment for charge-offs

     (5     —         (69     —    

Increase in accretable yield (b)

     2,878       —         7,059       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, end of period (a)

   $ 16,509     $ 6,432     $ 16,509     $ 6,432  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Three and six months ended June 30, 2013 amounts have been re-presented as the PCI population was finalized in third quarter 2013.
(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 June 30, 2014, the ALLL related to PCI loans was $2.5 million and loan loss provision recognized during the three and six months ended June 30, 2014 was $.6 million and $1.7 million, respectively. The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI loans as of June 30, 2014, and 2013, and December 31, 2013:

 

     June 30, 2014      June 30, 2013      December 31, 2013  

(Dollars in thousands)

   Carrying value      Unpaid balance      Carrying value      Unpaid balance      Carrying value      Unpaid balance  

Commercial, financial and industrial (a)

   $ 6,738      $ 8,256      $ 7,748      $ 9,568      $ 7,077      $ 9,169  

Commercial real estate (a)

     32,938        45,295        40,480        56,927        38,042        53,648  

Consumer real estate (a)

     733        1,074        897        1,307        878        1,291  

Credit card and other

     11        16        18        26        12        21  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (a)

   $ 40,420      $ 54,641      $ 49,143      $ 67,828      $ 46,009      $ 64,129  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Balances as of June 30, 2013 have been re-presented as the PCI loan population was finalized in third quarter 2013.

 

14


Table of Contents

Note 4 – Loans (Continued)

 

Impaired Loans

The following tables provide information at June 30, 2014 and 2013, 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, 2014      Three Months Ended
June 30, 2014
     Six Months Ended
June 30, 2014
 

(Dollars in thousands)

   Recorded
Investment
     Unpaid
Principal
Balance
     Related
Allowance
     Average
Recorded
Investment
     Interest
Income
Recognized
     Average
Recorded
Investment
     Interest
Income
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  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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

 

15


Table of Contents

Note 4 – Loans (Continued)

 

     June 30, 2013      Three Months Ended
June 30, 2013
     Six Months Ended
June 30, 2013
 

(Dollars in thousands)

   Recorded
Investment
     Unpaid
Principal
Balance
     Related
Allowance
     Average
Recorded
Investment
     Interest
Income
Recognized
     Average
Recorded
Investment
     Interest
Income
Recognized
 

Impaired loans with no related allowance recorded:

                    

Commercial:

                    

General C&I

   $ 47,432      $ 55,225      $ —        $ 54,140      $ 28      $ 53,873      $ 108  

TRUPS

     6,500        6,500        —          8,250        —          15,250        —    

Income CRE

     22,978        33,744        —          25,557        93        28,389        168  

Residential CRE

     10,967        15,997        —          12,630        59        12,803        122  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 87,877      $ 111,466      $ —        $ 100,577      $ 180      $ 110,315      $ 398  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Retail:

                    

HELOC (a)

   $ 19,709      $ 41,264      $ —        $ 20,383      $ —        $ 20,023      $ —    

R/E installment loans (a)

     12,193        15,184        —          12,761        —          11,258        —    

Permanent mortgage (a)

     11,134        14,916        —          10,953        —          10,172        —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 43,036      $ 71,364      $ —        $ 44,097      $ —        $ 41,453      $ —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Impaired loans with related allowance recorded:

                    

Commercial:

                    

General C&I

   $ 24,216      $ 30,555      $ 2,433      $ 13,985      $ 37      $ 17,258      $ 37  

TRUPS

     43,700        43,700        13,768        41,950        —          38,700        —    

Income CRE

     4,830        6,129        441        2,950        15        2,954        26  

Residential CRE

     2,081        3,944        111        1,041        16        521        16  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 74,827      $ 84,328      $ 16,753      $ 59,926      $ 68      $ 59,433      $ 79  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Retail:

                    

HELOC

   $ 67,672      $ 68,336      $ 18,122      $ 65,369      $ 464      $ 63,661      $ 890  

R/E installment loans

     78,624        79,594        24,271        73,549        404        74,157        689  

Permanent mortgage

     111,997        124,869        22,725        110,640        705        111,856        1,388  

Credit card & other

     717        717        240        732        8        767        16  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 259,010      $ 273,516      $ 65,358      $ 250,290      $ 1,581      $ 250,441      $ 2,983  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

   $ 162,704      $ 195,794      $ 16,753      $ 160,503      $ 248      $ 169,748      $ 477  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total retail

   $ 302,046      $ 344,880      $ 65,358      $ 294,387      $ 1,581      $ 291,894      $ 2,983  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans

   $ 464,750      $ 540,674      $ 82,111      $ 454,890      $ 1,829      $ 461,642      $ 3,460  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(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. 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.

 

16


Table of Contents

Note 4 – Loans (Continued)

 

The following tables provide the balances of commercial loan portfolio classes with associated allowance, disaggregated by PD grade as of June 30, 2014 and 2013.

 

     June 30, 2014  

(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

   $ 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  

Purchased 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  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

17


Table of Contents

Note 4 – Loans (Continued)

 

     June 30, 2013  

(Dollars in thousands)

   General C&I      Loans to
Mortgage
Companies
     TRUPS (a)      Income CRE      Residential
CRE
     Total      Percent of
Total
    Allowance
for Loan
Losses
 

PD Grade:

                      

1

   $ 227,858       $ —         $ —         $ —         $ —         $ 227,858         2   $ 75   

2

     176,086         —           —           1,809         116         178,011         2        73   

3

     186,420         —           —           5,520         —           191,940         2        207   

4

     295,896         —           —           7,763         321         303,980         3        455   

5

     658,296         —           —           33,783         128         692,207         7        1,321   

6

     989,615         141,660         —           175,144         10,288         1,316,707         14        2,812   

7

     1,023,498         379,727         —           218,459         2,292         1,623,976         17        3,469   

8

     956,367         532,802         —           222,598         4,837         1,716,604         19        5,677   

9

     665,510         286,958         —           127,895         1,134         1,081,497         11        9,779   

10

     435,497         45,532         —           137,057         529         618,615         6        8,030   

11

     428,761         —           —           40,635         1,238         470,634         5        10,336   

12

     126,410         —           —           39,872         2,431         168,713         2        2,885   

13

     151,532         —           332,708         32,488         768         517,496         5        9,013   

14,15,16

     200,683         343         3,335         63,723         9,175         277,259         3        36,548   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Collectively evaluated for impairment

     6,522,429         1,387,022         336,043         1,106,746         33,257         9,385,497         98        90,680   

Individually evaluated for impairment

     71,648         —           46,433         27,808         13,048         158,937         2        16,753   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total commercial loans (b)

   $ 6,594,077       $ 1,387,022       $ 382,476       $ 1,134,554       $ 46,305       $ 9,544,434         100   $ 107,433   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(a) Balances as of June 30, 2014 and 2013, presented net of $26.2 million and $29.9 million, respectively, in lower of cost or market (“LOCOM”) valuation allowance. Based on the underlying structure of the notes, the highest possible internal grade is “13”.
(b) June 30, 2013 table excludes PCI loans.

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 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.

 

18


Table of Contents

Note 4 – Loans (Continued)

 

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, 2014 and 2013:

 

HELOC    June 30, 2014      June 30, 2013  

(Dollars in thousands)

Origination Vintage

   Period End
Balance
     Average
Origination
FICO
     Average
Refreshed
FICO
     Period End
Balance
     Average
Origination
FICO
     Average
Refreshed
FICO
 

pre-2003

   $ 68,332         708         703       $ 98,178         712         702   

2003

     120,962         723         710         186,941         730         719   

2004

     346,431         725         713         447,817         727         718   

2005

     500,404         732         722         572,954         733         720   

2006

     365,886         740         728         421,023         740         726   

2007

     384,391         743         729         441,879         744         728   

2008

     208,637         753         748         240,776         754         747   

2009

     110,934         751         745         126,901         751         743   

2010

     106,954         753         750         128,058         753         750   

2011

     105,295         759         755         124,889         759         755   

2012

     128,733         759         759         153,692         759         759   

2013

     167,149         760         760         72,772         760         759   

2014

     51,982         760         762         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,666,090         741         732       $ 3,015,880         740         730   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

R/E Installment Loans    June 30, 2014      June 30, 2013  

(Dollars in thousands)

Origination Vintage

   Period End
Balance
     Average
Origination
FICO
     Average
Refreshed
FICO
     Period End
Balance
     Average
Origination
FICO
     Average
Refreshed
FICO
 

pre-2003

   $ 18,623         680         683       $ 29,998         683         684   

2003

     62,823         713         724         90,764         718         728   

2004

     47,502         700         699         61,949         702         705   

2005

     141,545         716         712         183,982         717         712   

2006

     156,538         714         702         197,308         716         704   

2007

     224,425         724         709         283,175         726         711   

2008

     74,106         721         714         98,690         724         719   

2009

     33,506         739         732         46,487         746         740   

2010

     113,437         748         754         138,621         747         753   

2011

     309,172         760         759         365,971         760         762   

2012

     653,179         764         765         727,688         764         764   

2013

     497,720         757         756         308,927         759         758   

2014

     220,264         756         754         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,552,840         747         744       $ 2,533,560         745         742   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Permanent Mortgage    June 30, 2014      June 30, 2013  

(Dollars in thousands)

Origination Vintage

   Period End
Balance
     Average
Origination
FICO
     Average
Refreshed
FICO
     Period End
Balance
     Average
Origination
FICO
     Average
Refreshed
FICO
 

pre-2004

   $ 169,338         724         720       $ 226,048         725         726   

2004

     19,378         713         714         26,804         714         692   

2005

     37,572         737         737         43,459         737         713   

2006

     68,693         730         721         86,655         733         712   

2007

     207,116         733         712         248,727         733         711   

2008

     91,904         741         704         114,461         742         713   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 594,001         729         713       $ 746,154         731         713   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Nonaccrual and Past Due Loans

For all portfolio segments and classes other than PCI loans, loans are placed on nonaccrual status if it becomes evident that full collection of principal and interest is at risk, impairment has been recognized as a partial charge-off of principal balance, or on a case-by-case

 

19


Table of Contents

Note 4 – Loans (Continued)

 

basis if FHN continues to receive payments, but there are atypical loan structures or other borrower-specific issues. PCI loans are classified in the table below as accruing. FHN has a meaningful portion of loans that are classified as nonaccrual even though loan payments are being received; these include residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy, and also current second lien loans behind first lien loans with performance issues. 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 at the time of modification and is determined to be a TDR, except for residential real estate secured loans discharged in bankruptcy (“discharged bankruptcies”) that are placed on nonaccrual regardless of delinquency status. Current stand-alone second liens are placed on nonaccrual status if they are junior to first liens that are 90 days or more past due or the first lien has been modified into a TDR.

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

 

     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

   $ 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