(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2018
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| 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) | |
Large accelerated filer ☒ |
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| Smaller reporting company ☐ | Emerging Growth Company ☐ | |||||||||
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| Class | Outstanding on June 30, 2018 | |
| Common Stock, $.625 par value | 325,003,353 | |
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| First Horizon National Corporation | ||||||||
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| June 30 | December 31 | |||||||
(Dollars in thousands, except per share amounts) | 2017 | 2016 | ||||||
Assets: | ||||||||
Cash and due from banks | $ | 387,053 | $ | 373,274 | ||||
Federal funds sold | 34,036 | 50,838 | ||||||
Securities purchased under agreements to resell (Note 15) | 657,991 | 613,682 | ||||||
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Total cash and cash equivalents | 1,079,080 | 1,037,794 | ||||||
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Interest-bearing cash | 573,666 | 1,060,034 | ||||||
Trading securities | 1,315,891 | 897,071 | ||||||
Loansheld-for-sale (a) | 432,771 | 111,248 | ||||||
Securitiesavailable-for-sale (Note 3) | 3,949,592 | 3,943,499 | ||||||
Securitiesheld-to-maturity (Note 3) | 10,000 | 14,347 | ||||||
Loans, net of unearned income (Note 4) (b) | 19,989,319 | 19,589,520 | ||||||
Less: Allowance for loan losses (Note 5) | 197,257 | 202,068 | ||||||
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Total net loans | 19,792,062 | 19,387,452 | ||||||
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Goodwill (Note 6) | 236,335 | 191,371 | ||||||
Other intangible assets, net (Note 6) | 45,121 | 21,017 | ||||||
Fixed income receivables | 127,724 | 57,411 | ||||||
Premises and equipment, net (June 30, 2017 and December 31, 2016 include $5.0 million and $5.8 million, respectively, classified asheld-for-sale) | 292,463 | 289,385 | ||||||
Real estate acquired by foreclosure (c) | 11,901 | 16,237 | ||||||
Derivative assets (Note 14) | 91,653 | 121,654 | ||||||
Other assets | 1,411,697 | 1,406,711 | ||||||
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Total assets | $ | 29,369,956 | $ | 28,555,231 | ||||
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Liabilities and equity: | ||||||||
Deposits: | ||||||||
Savings | $ | 8,607,801 | $ | 9,428,197 | ||||
Time deposits | 1,373,618 | 1,355,133 | ||||||
Other interest-bearing deposits | 6,049,345 | 5,948,439 | ||||||
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Interest-bearing | 16,030,764 | 16,731,769 | ||||||
Noninterest-bearing | 6,302,585 | 5,940,594 | ||||||
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Total deposits | 22,333,349 | 22,672,363 | ||||||
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Federal funds purchased | 314,892 | 414,207 | ||||||
Securities sold under agreements to repurchase (Note 15) | 743,684 | 453,053 | ||||||
Trading liabilities | 555,793 | 561,848 | ||||||
Other short-term borrowings | 1,044,658 | 83,177 | ||||||
Term borrowings | 1,033,329 | 1,040,656 | ||||||
Fixed income payables | 28,571 | 21,002 | ||||||
Derivative liabilities (Note 14) | 92,717 | 135,897 | ||||||
Other liabilities | 396,075 | 467,944 | ||||||
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Total liabilities | 26,543,068 | 25,850,147 | ||||||
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Equity: | ||||||||
First Horizon National Corporation Shareholders’ Equity: | ||||||||
Preferred stock—Series A,non-cumulative perpetual, no par value, liquidation preference of $100,000 per share—(shares authorized—1,000; shares issued—1,000 on June 30, 2017 and December 31, 2016) | 95,624 | 95,624 | ||||||
Common stock—$.625 par value (shares authorized—400,000,000; shares issued— 234,135,417 on June 30, 2017 and 233,623,686 on December 31, 2016) | 146,336 | 146,015 | ||||||
Capital surplus | 1,395,797 | 1,386,636 | ||||||
Undivided profits | 1,131,162 | 1,029,032 | ||||||
Accumulated other comprehensive loss, net (Note 8) | (237,462 | ) | (247,654 | ) | ||||
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Total First Horizon National Corporation Shareholders’ Equity | 2,531,457 | 2,409,653 | ||||||
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Noncontrolling interest | 295,431 | 295,431 | ||||||
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Total equity | 2,826,888 | 2,705,084 | ||||||
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Total liabilities and equity | $ | 29,369,956 | $ | 28,555,231 | ||||
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| First Horizon National Corporation | ||||||||
| (Unaudited) | December 31 | |||||||
| June 30 | ||||||||
| (Dollars in thousands, except per share amounts) | 2018 | 2017 | ||||||
| Assets: | ||||||||
| Cash and due from banks | $ | 602,952 | $ | 639,073 | ||||
| Federal funds sold | 91,303 | 87,364 | ||||||
| Securities purchased under agreements to resell (Note 15) | 782,765 | 725,609 | ||||||
| Total cash and cash equivalents | 1,477,020 | 1,452,046 | ||||||
| Interest-bearing cash | 750,634 | 1,185,600 | ||||||
| Trading securities | 1,649,470 | 1,416,345 | ||||||
| Loans held-for-sale (a) | 692,659 | 699,377 | ||||||
| Securities available-for-sale (Note 3) | 4,724,411 | 5,170,255 | ||||||
| Securities held-to-maturity (Note 3) | 10,000 | 10,000 | ||||||
| Loans, net of unearned income (Note 4) (b) | 27,701,740 | 27,658,929 | ||||||
| Less: Allowance for loan losses (Note 5) | 185,462 | 189,555 | ||||||
| Total net loans | 27,516,278 | 27,469,374 | ||||||
| Goodwill (Note 6) | 1,409,276 | 1,386,853 | ||||||
| Other intangible assets, net (Note 6) | 167,955 | 184,389 | ||||||
| Fixed income receivables | 68,148 | 68,693 | ||||||
| Premises and equipment, net (June 30, 2018 and December 31, 2017 include $43.6 million and $53.2 million, respectively, classified as held-for-sale) | 525,175 | 532,251 | ||||||
| Other real estate owned (“OREO”) (c) | 29,712 | 43,382 | ||||||
| Derivative assets (Note 14) | 122,056 | 81,634 | ||||||
| Other assets | 1,934,001 | 1,723,189 | ||||||
| Total assets | $ | 41,076,795 | $ | 41,423,388 | ||||
| Liabilities and equity: | ||||||||
| Deposits: | ||||||||
| Savings (December 31, 2017 includes $22.6 million classified as held-for-sale) | $ | 11,284,013 | $ | 10,872,665 | ||||
| Time deposits, net (December 31, 2017 includes $8.0 million classified as held-for-sale) | 3,543,987 | 3,322,921 | ||||||
| Other interest-bearing deposits | 7,911,977 | 8,401,773 | ||||||
| Interest-bearing | 22,739,977 | 22,597,359 | ||||||
| Noninterest-bearing (December 31, 2017 includes $4.8 million classified as held-for-sale) | 8,237,890 | 8,023,003 | ||||||
| Total deposits | 30,977,867 | 30,620,362 | ||||||
| Federal funds purchased | 351,655 | 399,820 | ||||||
| Securities sold under agreements to repurchase (Note 15) | 713,152 | 656,602 | ||||||
| Trading liabilities | 743,721 | 638,515 | ||||||
| Other short-term borrowings | 1,836,852 | 2,626,213 | ||||||
| Term borrowings | 1,227,281 | 1,218,097 | ||||||
| Fixed income payables | 14,739 | 48,996 | ||||||
| Derivative liabilities (Note 14) | 135,349 | 85,061 | ||||||
| Other liabilities | 526,430 | 549,234 | ||||||
| Total liabilities | 36,527,046 | 36,842,900 | ||||||
| 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, 2018 and December 31, 2017) | 95,624 | 95,624 | ||||||
| Common stock - $.625 par value (shares authorized - 400,000,000; shares issued - 325,003,353 on June 30, 2018 and 326,736,214 on December 31, 2017) | 203,127 | 204,211 | ||||||
| Capital surplus | 3,113,612 | 3,147,613 | ||||||
| Undivided profits | 1,254,069 | 1,160,434 | ||||||
| Accumulated other comprehensive loss, net (Note 8) | (412,114 | ) | (322,825 | ) | ||||
| Total First Horizon National Corporation Shareholders’ Equity | 4,254,318 | 4,285,057 | ||||||
| Noncontrolling interest | 295,431 | 295,431 | ||||||
| Total equity | 4,549,749 | 4,580,488 | ||||||
| Total liabilities and equity | $ | 41,076,795 | $ | 41,423,388 | ||||
| (a) | June 30, |
| (b) | June 30, |
| (c) | June 30, |
(Dollars and shares in thousands except per share data, unless otherwise noted) (Unaudited) Interest income: Interest and fees on loans Interest on investment securitiesavailable-for-sale Interest on investment securitiesheld-to-maturity Interest on loansheld-for-sale Interest on trading securities Interest on other earning assets Total interest income Interest expense: Interest on deposits: Savings Time deposits Other interest-bearing deposits Interest on trading liabilities Interest on short-term borrowings Interest on term borrowings Total interest expense Net interest income Provision/(provision credit) for loan losses Net interest income after provision/(provision credit) for loan losses Noninterest income: Fixed income Deposit transactions and cash management Brokerage, management fees and commissions Trust services and investment management Bankcard income Bank-owned life insurance Debt securities gains/(losses), net (Note 3 and Note 8) Equity securities gains/(losses), net (Note 3) All other income and commissions (Note 7) Total noninterest income Adjusted gross income after provision/(provision credit) for loan losses Noninterest expense: Employee compensation, incentives, and benefits Occupancy Computer software Operations services Professional fees Equipment rentals, depreciation, and maintenance FDIC premium expense Communications and courier Advertising and public relations Legal fees Contract employment and outsourcing Amortization of intangible assets Repurchase and foreclosure provision/(provision credit) All other expense (Note 7) Total noninterest expense Income/(loss) before income taxes Provision/(benefit) for income taxes Net income/(loss) Net income attributable to noncontrolling interest Net income/(loss) attributable to controlling interest Preferred stock dividends Net income/(loss) available to common shareholders Basic earnings/(loss) per share (Note 9) Diluted earnings/(loss) per share (Note 9) Weighted average common shares (Note 9) Diluted average common shares (Note 9) Cash dividends declared per common share reflect the retroactive effect of the adoption of ASU 2017-07 “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” See Note 1 - Financial Information for additional information. (Dollars in thousands) (Unaudited) Net income/(loss) Other comprehensive income/(loss), net of tax: Net unrealized gains/(losses) on securitiesavailable-for-sale Net unrealized gains/(losses) on cash flow hedges Net unrealized gains/(losses) on pension and other postretirement plans Other comprehensive income/(loss) Comprehensive income Comprehensive income attributable to noncontrolling interest Comprehensive income attributable to controlling interest Income tax expense/(benefit) of items included in Other comprehensive income: Net unrealized gains/(losses) on securitiesavailable-for-sale Net unrealized gains/(losses) on cash flow hedges Net unrealized gains/(losses) on pension and other postretirement plans (Dollars in thousands except per share data) (Unaudited) Balance, January 1 Net income/(loss) Other comprehensive income/(loss) (a) Comprehensive income Cash dividends declared: Preferred stock ($3,100 per share for the six months ended June 30, 2017 and 2016) Common stock ($.18 and $.14 per share for the six months ended June 30, 2017 and 2016, respectively) Common stock repurchased (b) Common stock issued for: Stock options and restricted stock—equity awards Stock-based compensation expense Dividends declared—noncontrolling interest of subsidiary preferred stock Tax benefit/(benefit reversal)—stock based compensation expense Balance, June 30 First Horizon National Corporation Three Months Ended
June 30 Six Months Ended
June 30 2017 2016 2017 2016 $ 192,580 $ 163,054 $ 373,044 $ 321,477 25,657 23,953 51,292 48,427 132 198 329 395 3,510 1,198 4,793 2,459 9,418 8,020 15,771 15,771 4,044 953 8,923 2,511 235,341 197,376 454,152 391,040 11,194 4,146 20,404 8,336 2,918 2,474 5,751 4,797 5,074 2,526 9,217 4,830 4,203 3,782 7,984 7,821 2,903 1,203 4,295 2,331 8,348 6,981 16,092 14,587 34,640 21,112 63,743 42,702 200,701 176,264 390,409 348,338 (2,000 ) 4,000 (3,000 ) 7,000 202,701 172,264 393,409 341,338 55,110 77,913 105,788 144,890 27,858 26,991 52,423 53,828 12,029 10,665 23,935 21,080 7,698 7,224 14,351 13,789 5,605 6,558 11,060 11,817 4,351 3,743 7,598 7,132 405 — 449 1,654 — 99 — 19 14,617 12,321 29,008 25,610 127,673 145,514 244,612 279,819 330,374 317,778 638,021 621,157 139,088 143,370 274,020 280,521 12,800 12,736 25,140 25,340 12,285 11,226 23,084 22,813 11,524 10,521 22,399 20,421 9,659 4,284 14,405 9,483 7,036 7,182 13,387 13,341 5,927 4,848 11,666 9,769 4,117 3,039 7,917 6,789 4,095 4,481 8,696 9,454 3,496 5,891 8,779 10,770 3,255 2,497 6,213 4,922 1,964 1,299 3,196 2,599 (21,733 ) (31,400 ) (21,971 ) (31,400 ) 24,404 46,848 43,191 68,927 217,917 226,822 440,122 453,749 112,457 90,956 197,899 167,408 17,253 30,016 44,307 54,255 $ 95,204 $ 60,940 $ 153,592 $ 113,153 2,852 2,852 5,672 5,703 $ 92,352 $ 58,088 $ 147,920 $ 107,450 1,550 1,550 3,100 3,100 $ 90,802 $ 56,538 $ 144,820 $ 104,350 $ 0.39 $ 0.24 $ 0.62 $ 0.45 $ 0.38 $ 0.24 $ 0.61 $ 0.44 233,482 231,573 233,280 233,112 236,263 233,576 236,225 235,121 $ 0.09 $ 0.07 $ 0.18 $ 0.14 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) 2018 2017 2018 2017 Interest income: Interest and fees on loans $ 323,974 $ 192,580 $ 623,467 $ 373,044 Interest on investment securities available-for-sale 32,634 25,657 65,481 51,292 Interest on investment securities held-to-maturity 132 132 263 329 Interest on loans held-for-sale 11,228 3,510 23,372 4,793 Interest on trading securities 14,742 9,418 29,150 15,771 Interest on other earning assets 5,101 4,044 9,433 8,923 Total interest income 387,811 235,341 751,166 454,152 Interest expense: Interest on deposits: Savings 25,600 11,194 40,500 20,404 Time deposits 11,236 2,918 20,761 5,751 Other interest-bearing deposits 11,913 5,074 22,521 9,217 Interest on trading liabilities 4,790 4,203 9,914 7,984 Interest on short-term borrowings 10,110 2,903 20,152 4,295 Interest on term borrowings 13,230 8,348 25,213 16,092 Total interest expense 76,879 34,640 139,061 63,743 Net interest income 310,932 200,701 612,105 390,409 Provision/(provision credit) for loan losses — (2,000 ) (1,000 ) (3,000 ) Net interest income after provision/(provision credit) for loan losses 310,932 202,701 613,105 393,409 Noninterest income: Fixed income 37,697 55,110 83,203 105,788 Deposit transactions and cash management 36,083 27,858 72,067 52,423 Brokerage, management fees and commissions 13,740 12,029 27,223 23,935 Trust services and investment management 8,132 7,698 15,409 14,351 Bankcard income 6,635 5,605 13,080 11,060 Bank-owned life insurance 5,773 4,351 9,766 7,598 Debt securities gains/(losses), net (Note 3 and Note 8) — 405 52 449 Equity securities gains/(losses), net (Note 3) 31 — 65 — All other income and commissions (Note 7) 19,434 14,617 42,677 29,008 Total noninterest income 127,525 127,673 263,542 244,612 Adjusted gross income after provision/(provision credit) for loan losses 438,457 330,374 876,647 638,021 Noninterest expense: Employee compensation, incentives, and benefits 165,890 138,276 337,144 272,770 Occupancy 22,503 12,800 42,954 25,140 Professional fees 15,415 9,659 27,687 14,405 Computer software 15,123 12,285 30,255 23,084 Operational services 14,653 11,524 30,214 22,399 Equipment rentals, depreciation, and maintenance 10,708 7,036 20,726 13,387 9,978 5,927 18,592 11,666 Communications and courier 7,530 4,117 15,762 7,917 Amortization of intangible assets 6,460 1,964 12,934 3,196 5,907 3,255 9,960 6,213 Advertising and public relations 5,070 4,095 8,669 8,696 Legal fees 2,784 3,496 5,129 8,779 Repurchase and foreclosure provision/(provision credit) (252 ) (21,733 ) (324 ) (21,971 ) All other expense (Note 7) 50,999 25,216 86,331 44,441 Total noninterest expense 332,768 217,917 646,033 440,122 Income/(loss) before income taxes 105,689 112,457 230,614 197,899 Provision/(benefit) for income taxes 19,697 17,253 49,628 44,307 Net income/(loss) $ 85,992 $ 95,204 $ 180,986 $ 153,592 Net income attributable to noncontrolling interest 2,852 2,852 5,672 5,672 Net income/(loss) attributable to controlling interest $ 83,140 $ 92,352 $ 175,314 $ 147,920 Preferred stock dividends 1,550 1,550 3,100 3,100 Net income/(loss) available to common shareholders $ 81,590 $ 90,802 $ 172,214 $ 144,820 Basic earnings/(loss) per share (Note 9) $ 0.25 $ 0.39 $ 0.53 $ 0.62 Diluted earnings/(loss) per share (Note 9) $ 0.25 $ 0.38 $ 0.52 $ 0.61 Weighted average common shares (Note 9) 325,153 233,482 325,817 233,280 Diluted average common shares (Note 9) 328,426 236,263 329,353 236,225 Cash dividends declared per common share $ 0.12 $ 0.09 $ 0.24 $ 0.18 reclassifiedrevised to agree with current presentation. First Horizon National Corporation Three Months Ended
June 30 Six Months Ended
June 30 2017 2016 2017 2016 $ 95,204 $ 60,940 $ 153,592 $ 113,153 8,938 16,037 7,375 55,197 2,155 1,226 241 4,691 1,403 844 2,576 1,970 12,496 18,107 10,192 61,858 107,700 79,047 163,784 175,011 2,852 2,852 5,672 5,703 $ 104,848 $ 76,195 $ 158,112 $ 169,308 $ 5,543 $ 9,967 $ 4,573 $ 34,304 1,336 762 149 2,915 870 525 1,597 1,225 First Horizon National Corporation Three Months Ended
June 30 Six Months Ended
June 30(Dollars in thousands) (Unaudited) 2018 2017 2018 2017 Net income/(loss) $ 85,992 $ 95,204 $ 180,986 $ 153,592 Other comprehensive income/(loss), net of tax: Net unrealized gains/(losses) on securities available-for-sale (21,094 ) 8,938 (80,637 ) 7,375 Net unrealized gains/(losses) on cash flow hedges (2,994 ) 2,155 (11,787 ) 241 Net unrealized gains/(losses) on pension and other postretirement plans 2,059 1,403 3,346 2,576 Other comprehensive income/(loss) (22,029 ) 12,496 (89,078 ) 10,192 Comprehensive income 63,963 107,700 91,908 163,784 Comprehensive income attributable to noncontrolling interest 2,852 2,852 5,672 5,672 Comprehensive income attributable to controlling interest $ 61,111 $ 104,848 $ 86,236 $ 158,112 Income tax expense/(benefit) of items included in Other comprehensive income: Net unrealized gains/(losses) on securities available-for-sale $ (6,924 ) $ 5,543 $ (26,471 ) $ 4,573 Net unrealized gains/(losses) on cash flow hedges (983 ) 1,336 (3,870 ) 149 Net unrealized gains/(losses) on pension and other postretirement plans 676 870 1,098 1,597 First Horizon National Corporation 2017 2016 Controlling
Interest Noncontrolling
Interest Total Controlling
Interest Noncontrolling
Interest Total $ 2,409,653 $ 295,431 $ 2,705,084 $ 2,344,155 $ 295,431 $ 2,639,586 147,920 5,672 153,592 107,450 5,703 113,153 10,192 — 10,192 61,858 — 61,858 158,112 5,672 163,784 169,308 5,703 175,011 (3,100 ) — (3,100 ) (3,100 ) — (3,100 ) (42,404 ) — (42,404 ) (32,991 ) — (32,991 ) (4,953 ) — (4,953 ) (89,698 ) — (89,698 ) 4,309 — 4,309 1,509 — 1,509 9,840 — 9,840 7,796 — 7,796 — (5,672 ) (5,672 ) — (5,703 ) (5,703 ) — — — (486 ) — (486 ) $ 2,531,457 $ 295,431 $ 2,826,888 $ 2,396,493 $ 295,431 $ 2,691,924 First Horizon National Corporation 2018 2017 (Dollars in thousands except per share data) (Unaudited) Total Total Balance, January 1 $ 4,285,057 $ 295,431 $ 4,580,488 $ 2,409,653 $ 295,431 $ 2,705,084 Adjustment to reflect adoption of ASU 2017-12 67 — 67 — — — Beginning balance, as adjusted $ 4,285,124 $ 295,431 $ 4,580,555 $ 2,409,653 $ 295,431 $ 2,705,084 Net income/(loss) 175,314 5,672 180,986 147,920 5,672 153,592 Other comprehensive income/(loss) (a) (89,078 ) — (89,078 ) 10,192 — 10,192 Comprehensive income/(loss) 86,236 5,672 91,908 158,112 5,672 163,784 Cash dividends declared: Preferred stock ($3,100 per share for the six months ended June 30, 2018 and 2017) (3,100 ) — (3,100 ) (3,100 ) — (3,100 ) Common stock ($.24 and $.18 per share for the six months ended June 30, 2018 and 2017, respectively) (78,858 ) — (78,858 ) (42,404 ) — (42,404 ) Common stock repurchased (4,790 ) — (4,790 ) (4,953 ) — (4,953 ) Common stock issued for: Stock options and restricted stock - equity awards 4,421 — 4,421 4,309 — 4,309 Acquisition equity adjustment (b) (46,035 ) — (46,035 ) — — — Stock-based compensation expense 11,453 — 11,453 9,840 — 9,840 Dividends declared - noncontrolling interest of subsidiary preferred stock — (5,672 ) (5,672 ) — (5,672 ) (5,672 ) Other (133 ) — (133 ) Balance, June 30 $ 4,254,318 $ 295,431 $ 4,549,749 $ 2,531,457 $ 295,431 $ 2,826,888 (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) 2016 includes $86.4 million repurchased under share repurchase programs.See Note 2- Acquisitions and Divestitures for additional information.
(Dollars in thousands) (Unaudited) Operating Activities Net income/(loss) Adjustments to reconcile net income/(loss) to net cash provided/(used) by operating activities: Provision/(provision credit) for loan losses Provision/(benefit) for deferred income taxes Depreciation and amortization of premises and equipment Amortization of intangible assets Net other amortization and accretion Net (increase)/decrease in derivatives Repurchase and foreclosure provision/(provision credit) (Gains)/losses and write-downs on other real estate, net Litigation and regulatory matters Stock-based compensation expense Equity securities (gains)/losses, net Debt securities (gains)/losses, net Net (gains)/losses on sale/disposal of fixed assets Loansheld-for-sale: Purchases and originations Gross proceeds from settlements and sales (Gain)/loss due to fair value adjustments and other Net (increase)/decrease in: Trading securities Fixed income receivables Interest receivable Other assets Net increase/(decrease) in: Trading liabilities Fixed income payables Interest payable Other liabilities Total adjustments Net cash provided/(used) by operating activities Investing Activities Available-for-sale securities: Sales Maturities Purchases Held-to-maturity securities: Prepayments and maturities Premises and equipment: Sales Purchases Proceeds from sales of other real estate Net (increase)/decrease in: Loans Interests retained from securitizations classified as trading securities Interest-bearing cash Cash (paid)/received for acquisition, net Net cash provided/(used) by investing activities Financing Activities Common stock: Stock options exercised Cash dividends paid Repurchase of shares (a) Cash dividends paid—preferred stock—noncontrolling interest Cash dividends paid—Series A preferred stock Term borrowings: Payments/maturities Net increase/(decrease) in: Deposits Short-term borrowings Net cash provided/(used) by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental Disclosures Total interest paid Total taxes paid Total taxes refunded Transfer from loans to other real estate owned 2017. ASU 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. In February 2016, the FASB issued ASU2016-08, “Principal versus Agent Considerations,” which provides additional guidance on whether an entity should recognize revenue on a gross or net basis, based on which party controls the specified good or service before that good or service is transferred to a customer. In April 2016, the FASB issued ASU2016-10, “Identifying Performance Obligations and Licensing,” which clarifies the original guidance included in ASU2014-09 for identification of the goods or services provided to customers and enhances the implementation guidance for licensing arrangements. ASU2016-12, assessed in combination with all other deferred tax assets rather than being assessed in isolation. ASU2016-01 also makes several changes to existing fair value presentation and disclosure requirements, including a provision that all disclosures must use an exit price concept in the determination of fair value. current expected credit loss (“CECL”) is measured as the difference between amortized cost and the net amount expected to be collected. This represents a departure from existing GAAP as the “incurred loss” methodology for recognizing credit losses delays recognition until it is probable a loss has been incurred. The measurement of current expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Additionally, current disclosures of credit quality indicators in relation to the amortized cost of financing receivables will be further disaggregated by year of origination. ASU2016-13 leaves the methodology for measuring credit losses on AFS debt securities largely unchanged, with the maximum credit loss representing the difference between amortized cost and fair value. However, such credit losses will be recognized through an allowance for credit losses, which permits recovery of previously recognized credit losses if circumstances change. standard. review of FHN's merger with CBF. (Dollars in thousands) Assets: Cash and due from banks Interest-bearing cash Trading securities Loansheld-for-sale Investment securities Other intangible assets, net Premises and equipment, net Other assets Total assets acquired Liabilities: Securities sold under agreements to repurchase Other short-term borrowings Fixed income payables Other liabilities Total liabilities assumed Net Assets Acquired Consideration paid: Cash Goodwill FTN Financial acquired approximately $418 million in assets, inclusive of approximately $236 million of HFS loans and $139 (Dollars in thousands) Securitiesavailable-for-sale: U.S. treasuries Government agency issued mortgage-backed securities (“MBS”) Government agency issued collateralized mortgage obligations (“CMO”) Equity and other (a) AFS debt securities recorded at fair value through earnings: SBA-interest only strips (b) Total securitiesavailable-for-sale (c) Securitiesheld-to-maturity: Corporate bonds Total securitiesheld-to-maturity First Horizon National Corporation Six Months Ended June 30 2017 2016 $ 153,592 $ 113,153 (3,000 ) 7,000 (16,862 ) 34,366 16,617 16,036 3,196 2,599 14,288 10,722 (13,683 ) 564 (20,000 ) (31,400 ) 180 (788 ) (753 ) 25,652 9,840 7,796 — (19 ) (449 ) (1,654 ) (71 ) 4,155 (549,331 ) (5,953 ) 461,119 14,668 2,777 (349 ) (280,135 ) (283,283 ) (70,313 ) (156,279 ) (2,443 ) 6,751 1,324 (36,559 ) (6,055 ) 223,521 (88,920 ) 67,328 1,303 (5,025 ) (52,669 ) (36,422 ) (594,040 ) (136,573 ) (440,448 ) (23,420 ) 63 1,543 268,155 315,301 (265,770 ) (311,592 ) 4,740 — 2,103 2,786 (20,498 ) (27,034 ) 7,340 18,095 (404,379 ) (921,015 ) 397 1,774 490,500 281,093 (123,971 ) — (41,320 ) (639,049 ) 2,823 807 (37,809 ) (30,960 ) (4,953 ) (89,698 ) (5,672 ) (5,672 ) (3,100 ) (3,100 ) (7,239 ) (259,938 ) (338,689 ) 663,246 917,693 562,671 523,054 837,356 41,286 174,887 1,037,794 1,031,063 $ 1,079,080 $ 1,205,950 $ 61,908 $ 47,355 21,805 11,334 8,200 2,425 3,184 4,297 First Horizon National Corporation Six Months Ended June 30 (Dollars in thousands) (Unaudited) 2018 2017 Operating Activities Net income/(loss) $ 180,986 $ 153,592 Adjustments to reconcile net income/(loss) to net cash provided/(used) by operating activities: Provision/(provision credit) for loan losses (1,000 ) (3,000 ) Provision/(benefit) for deferred income taxes 38,030 (16,862 ) Depreciation and amortization of premises and equipment 23,761 16,617 Amortization of intangible assets 12,934 3,196 Net other amortization and accretion (8,945 ) 14,288 Net (increase)/decrease in derivatives (13,735 ) (13,683 ) Fair value adjustment on interest-only strips (1,296 ) — Repurchase and foreclosure provision/(provision credit) — (20,000 ) (Gains)/losses and write-downs on OREO, net 167 180 Litigation and regulatory matters 688 (753 ) Stock-based compensation expense 11,453 9,840 Equity securities (gains)/losses, net (65 ) — Debt securities (gains)/losses, net (52 ) (449 ) Net (gains)/losses on sale/disposal of fixed assets (1,614 ) (71 ) Loans held-for-sale: Purchases and originations (1,132,675 ) (549,331 ) Gross proceeds from settlements and sales (a) 524,195 461,119 (Gain)/loss due to fair value adjustments and other (8,119 ) 2,777 Net (increase)/decrease in: Trading securities 366,476 (280,135 ) Fixed income receivables 545 (70,313 ) Interest receivable (9,721 ) (2,443 ) Other assets 31,376 (4,366 ) Net increase/(decrease) in: Trading liabilities 105,206 (6,055 ) Fixed income payables (34,257 ) (88,920 ) Interest payable 3,773 1,303 Other liabilities (44,228 ) (52,669 ) Total adjustments (137,103 ) (599,730 ) Net cash provided/(used) by operating activities 43,883 (446,138 ) Investing Activities Available-for-sale securities: Sales 13,104 63 Maturities 320,631 268,155 Purchases (254,992 ) (265,770 ) Held-to-maturity securities: Prepayments and maturities — 4,740 Premises and equipment: Sales 6,566 2,103 Purchases (25,050 ) (20,498 ) Proceeds from sales of OREO 17,513 7,340 Proceeds from BOLI 7,630 5,690 Net (increase)/decrease in: Loans (18,465 ) (404,379 ) Interests retained from securitizations classified as trading securities 567 397 Interest-bearing cash 434,966 490,500 Cash paid related to divestitures (27,599 ) — Cash (paid)/received for acquisition, net (b) (46,017 ) (123,971 ) Net cash provided/(used) by investing activities 428,854 (35,630 ) Financing Activities Common stock: Stock options exercised 4,420 2,823 Cash dividends paid (60,752 ) (37,809 ) Repurchase of shares (4,790 ) (4,953 ) Cash dividends paid - preferred stock - noncontrolling interest (5,703 ) (5,672 ) Cash dividends paid - Series A preferred stock (3,100 ) (3,100 ) Term borrowings: Payments/maturities (5,221 ) (7,239 ) Increases in restricted and secured term borrowings 20,965 — Net increase/(decrease) in: Deposits 387,394 (338,689 ) Short-term borrowings (780,976 ) 917,693 Net cash provided/(used) by financing activities (447,763 ) 523,054 Net increase/(decrease) in cash and cash equivalents 24,974 41,286 Cash and cash equivalents at beginning of period 1,452,046 1,037,794 Cash and cash equivalents at end of period $ 1,477,020 $ 1,079,080 Supplemental Disclosures Total interest paid $ 133,791 $ 61,908 Total taxes paid 12,497 21,805 Total taxes refunded 830 8,200 Transfer from loans to OREO 4,010 3,184 Transfer from loans HFS to trading securities 600,168 265,134 (a)2016 includes $86.4 million repurchased under share repurchase programs.20172018 period are not necessarily indicative of the results that may be expected going forward. For further information, refer to the audited consolidated financial statements in Exhibit 13 to FHN’s Annual Report on Form10-K for the year ended December 31, 2016.2017,2018, FHN adopted the provisions of Accounting Standards Update (“ASU”)2016-09, “Improvements to Employee Share-Based Payment Accounting,” which makes several revisions to equity compensation accounting. Under the new guidance all excess tax benefits and deficiencies that occur when an award vests, is exercised, or expires are recognized in income tax expense as discrete period items. Previously, these transactions were typically recorded directly within equity. Consistent with this change, excess tax benefits and deficiencies are no longer included within estimated proceeds when performing the treasury stock method for calculation of diluted earnings per share. Excess tax benefits are also recognized at the time an award is exercised or vests compared to the previous requirement to delay recognition until the deduction reduces taxes payable. The presentation of excess tax benefits in the statement of cash flows shifted to an operating activity from the prior classification as a financing activity.2016-09 also provides an accounting policy election to recognize forfeitures of awards as they occur when estimating stock-based compensation expense rather than the previous requirement to estimate forfeitures from inception. Further, ASU2016-09 permits employers to use anet-settlement feature to withhold taxes on equity compensation awards up to the maximum statutory tax rate without affecting the equity classification of the award. Under previous guidance, withholding of equity awards in excess of the minimum statutory requirement resulted in liability classification for the entire award. The related cash remittance by the employer for employee taxes is treated as a financing activity in the statement of cash flows. Transition to the new guidance was accomplished through a combination of retrospective (cash flows), cumulative-effect adjustment to equity (forfeitures) and prospective methodologies (tax windfalls and shortfalls). FHN estimates, based on currently enacted tax rates, that adoption of ASU2016-09 in 2017 will result in an incremental effect on tax provision ranging from $2.0 million of tax benefit to $1.0 million of additional tax provision. The actual effects of adoption in 2017 will primarily depend upon the share price of the FHN’s common stock, which affects the vesting of certain performance awards, probability of exercise of certain stock options and the magnitude of windfalls for all awards upon either vesting or exercise. The effects on earnings per share calculations and election to account for forfeitures as incurred have not been significant.Effective January 1, 2017, FHN early adopted the provisions of ASU2016-16, “Intra-Entity Transfers of Assets Other Than Inventory” which requires recognition of the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Therefore, ASU2016-16 reverses the previous requirement to delay recognition of the tax consequences of these transactions until the associated assets are sold to an outside party. Adoption of ASU2016-16 did not have a significant effect on FHN.Accounting Changes Issued but Not Currently EffectiveIn May 2014, the FASB issued ASU2014-09, “Revenue from Contracts with Customers.Customers,” and all related amendments to all contracts using a modified retrospective transaction method. ASU2014-09 does not change revenue recognition for financial assets. The core principle of ASU2014-09 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 frameworkNote 1 – Financial Information (Continued) “Narrow-Scope “Narrow-These ASUs are effective in annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016, and associated interim periods. 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 will not early adopt these ASUs and is evaluating their effects on its revenue recognition practices. Currently, FHN anticipates that it will electelected to adopt the provisions of the revenue recognition standards through athe cumulative effect alternative and determined that there were no significant effects on the timing of recognition, which resulted in no cumulative effect adjustment being required. Beginning in first quarter 2018, in situations where FHN's broker-dealer operations serve as the lead underwriter, the associated revenues and expenses are presented gross. The effect on 2018 revenues and expenses is not expected to retained earnings with comparability disclosures provided throughout 2018.In February 2017,be significant.FASB issuedprovisions of ASU2017-05, “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” whichthrough the cumulative effect approach. ASU 2017-05 clarifies the meaning and application of the term in"in substance nonfinancial assetasset" in transactions involving both financial and nonfinancial assets. If substantially all of the fair value of the assets that are promised to the counterparty in a contract are concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty are in substance nonfinancial assets within the scope of revenue recognition guidance for nonfinancial assets. ASU2017-05 also clarifies that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it with the amount of revenue recognized based on the allocation guidance provided in ASU2014-09. ASU2017-05 also requires an entity to derecognize a distinct nonfinancial asset or distinct in substance nonfinancial asset in a partial sale transaction when it 1) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with Topic 810 and 2) transfers control of the asset in accordance with the provisions of ASU2014-09. Once an entity transfers control of a distinct nonfinancial asset or distinct in substance nonfinancial asset, it is required to measure any noncontrolling interest it receives (or retains) at fair value. ASU2017-05 hasFHN determined that there were no significant effects on the same effective date and transition provisions as ASU2014-09 and the two standards must be adopted simultaneously although the transition methods may be different. FHN is evaluating the effectstiming of ASU2017-05 on its revenue recognition, practices. Currently,which resulted in no cumulative effect adjustment being required.anticipates that it will elect to adoptadopted the provisions of ASU2017-05 through a cumulative effect to retained earnings with comparability disclosures provided throughout 2018.In January 2016, the FASB issued ASU2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU2016-01 makes several revisions to the accounting, presentation and disclosure for financial instruments. Equity investments (except those accounted for under the equity method, those that result in consolidation of the investee, and those held by entities subject to specialized industry accounting which already apply fair value through earnings) are required to be measured at fair value with changes in fair value recognized in net income. This excludes FRB and FHLB stock holdings which are specifically exempted from the provisions of ASU2016-01. An entity may elect to measure equity investments that do not have readily determinable market values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar instruments from the same issuer. ASU2016-01 also requires a qualitative impairment review for equity investments without readily determinable fair values, with measurement at fair value required if impairment is determined to exist. For liabilities for which fair value has been elected, ASU2016-01 revises current accounting to record the portion of fair value changes resulting from instrument-specific credit risk within other comprehensive income rather than earnings. FHN has not elected fair value accounting for any existing financial liabilities. Additionally, ASU2016-01 clarifies that the need for a valuation allowance on a deferred tax asset related toavailable-for-sale securities should beNote 1 – Financial Information (Continued)ASU2016-01Transition is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Transition will be through a cumulative effect adjustment to retained earnings for equity investments with readily determinable fair values. Equity investments without readily determinable fair values, for which the accounting election is made, will have any initial fair value marks recorded through earnings prospectively after adoption.will reclassify allreclassified $265.9 million of equity investments out ofavailable-for-sale AFS securities to Other assets, leaving only debt securities within thisthe AFS classification. FHN has evaluated the nature of its current equity investments (excluding FRB and FHLB stock holdings which are specifically exempted from the provisions of ASU 2016-01) and determined that substantially all qualifyqualified for the election available to assets without readily determinable fair values, including its holdings of Visa Class B shares. Accordingly, FHN intends to applyhas applied this election and any future fair value marks for these investments will be recognized through earnings on a prospective basis subsequent to adoption. FHN continues to evaluate the appropriate characteristics of “similar” instruments as well as related valuation inputs and methodologies for its equity investments without readily determinable fair values. The requirements of ASU2016-01 related to assessment of deferred tax assets and disclosure of the fair value of financial instruments willdid not have a significant effect on FHN because its current accounting and disclosure practices conform to the requirements of ASU2016-01.also continuesadopted the provisions of ASU 2016-04, “Recognition of Breakage of Certain Prepaid Stored-Value Products,” which indicates that liabilities related to evaluate the impactsale of prepaid stored-value products are considered financial liabilities and should have a breakage estimate applied for estimated unused funds. ASU 2016-04 does not apply to stored-value products that can only be redeemed for cash, are subject to escheatment or are linked to a segregated bank account. The adoption of ASU2016-01 2016-04 did not have a significant effect on other aspects of itsFHN’s current accounting and disclosure practices. Three Months Ended
June 30, 2017 Six Months Ended
June 30, 2017 Fiscal Years Ended December 31 (Dollars in thousands) 2017 2016 2015 Proceeds from BOLI $ 4,997 $ 5,690 $ 11,440 $ 2,740 $ 2,425 Three Months Ended
June 30, 2017 Six Months Ended
June 30, 2017 Fiscal Years Ended December 31 2017 2016 2015 Net periodic benefit cost reclassified $ 812 $ 1,250 $ 1,946 $ (843 ) $ (1,168 ) transitionJuly 2018, the FASB issued ASU 2018-11, “Leases - Targeted Improvements,” which provides an election for a cumulative effect adjustment to retained earnings upon initial adoption of ASU 2016-02. Alternatively, under the initial guidance of ASU 2016-02, lessees and lessors are required to recognize and measure leases at the beginning of the earliest comparative period presented using a modified retrospective approach. The modified retrospective approach includesBoth adoption alternatives include a number of optional practical expedients that entities may elect to apply, which would result in continuing to account for leases that commence before the effective date in accordance with previous requirements (unless the lease is modified) except that lessees are required to recognize aright-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous requirements. ASU2016-02 also requires expanded qualitative and quantitative disclosures to assess the amount, timing, and uncertainty of cash flows arising from lease arrangements. ASU2016-02 is and ASU 2018-11 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. FHN is evaluating the impact of ASU2016-02 on its current accounting and disclosure practices.In March 2016, Upon adoption, FHN intends to utilize the FASB issuedcumulative effect transition alternative provided by ASU2016-04, 2018-11. “Recognition of Breakage of Certain Prepaid Stored-Value Products,” which indicates that liabilities related to the sale of prepaid stored-value products are considered financial liabilities and should have a breakage estimate applied for estimated unused funds. ASU2016-04 does not apply to stored-value products that can only be redeemed for cash, are subject to escheatment or are linked to a segregated bank account. ASU2016-04 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. FHN is evaluating the impact of ASU2016-04 on its current accounting and disclosure practices.Note 1 – Financial Information (Continued)is still evaluatingcontinues to evaluate the impact of ASU2016-13 on its current accounting 2016-13. FHN has met with industry experts, initiated training for key employees associated with the new standard, and disclosure practices.In August 2016,defined an initial approach that it is currently testing. FHN has begun developing the FASB issued ASU2016-15, “Classification of Certain Cash Receiptsformal models and Cash Payments,” which clarifies multiple cash flow presentation issues including providing guidance as to classification on the cash flow statement for certain cash receipts and cash payments where diversity in practice exists. ASU2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The provisions of ASU2016-15processes that will be applied retroactively and will result in proceeds from bank-owned life insurance (“BOLI”) being classified as an investing activity rather than their prior classification as an operating activity.In March 2017, the FASB issued ASU2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” which requires the disaggregation of the service cost component from the other components of net benefit cost for pension and postretirement plans. Service cost must be included in the same income statement line item as other compensation-related expenses. All other components of net benefit cost are required to be presented inimplement the income statement separately from the service cost component, with disclosure of the line items where these amounts are recorded. The presentation requirements of ASU2017-07 must be applied retrospectively and adoption is required for annual periods beginning after December 15, 2017, including interim periods within those annual periods. FHN’s disclosures for pension and postretirement costs provide details of the service cost and all other components for expenses recognized for its applicable benefit plans. These amounts are currently included in Employee compensation, incentives, and benefits expense in the Consolidated Condensed Statements of Income. Upon adoption of ASU2017-07 FHN will reclassify the expense componentsNote 1 – Financial Information (Continued)other than service cost into All other expense and revise its disclosures accordingly. The amounts to be reclassified are presented in Note 11—Pension, Savings, and Other Employee Benefits in this Quarterly Report on Form10-Q for the quarter ended June 30, 2017 and in Note 18—Pension, Savings, and Other Employee Benefits in Exhibit 13 to FHN’s Annual Report on Form10-K for the year ended December 31, 2016.In March 2017, the FASB issued ASU2017-08, “Premium Amortization on Purchased Callable Debt Securities” which shortens the amortization period for securities that have explicit, noncontingent call features that are callable at fixed prices and on preset dates. In contrast to the current requirement for premium amortization to extend to the contractual maturity date, ASU2017-08 requires the premium to be amortized to the earliest call date. ASU2017-08 does not change the amortization of discounts, which will continue to be amortized to maturity. The new guidance does not apply to debt securities where the prepayment date is not preset or the price is not known in advance, which includes debt securities that qualify for amortization based on estimated prepayment rates. ASU2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 with early adoption permitted. Transition is accomplished through a cumulative-effect adjustment directly to retained earnings as of the beginning of the year of adoption. Based upon the current composition of its debt securities portfolios, FHN does not anticipate a significant effect upon adoption.May 4,November 30, 2017, FHN andcompleted its acquisition of Capital Bank Financial Corp. (“Capital Bank” or “CBF”Corporation ("CBF") announced that they had entered into an agreement and plan of merger. Under the agreement FHN will acquireits subsidiaries, including Capital Bank Corporation, for an aggregate of 92,042,232 shares of FHN common stock and $423.6 million in cash in a transaction valued at $2.2 billion. In second quarter 2018, FHN canceled 2,373,220 common shares which is headquarteredhad been issued but set aside for certain shareholders of CBF who have commenced a dissenters' appraisal process resulting in Charlotte, North Carolina,a reduction in equity consideration and reported approximately $10 billionan increase in cash consideration of assets at March 31, 2017. At the time of announcement Capital Bank$46.0 million. The final appraisal or settlement amount, as applicable, may differ from current estimates. CBF operated 193178 branches in North and South Carolina, Tennessee, Florida and Virginia. Collectively, Capital Bank shareholders will receive approximately $411 million in cash plus FHN common shares which are expected to represent approximately 29 percent of FHN’s outstanding common shares immediately after consummation of the merger. The total transaction value, measuredVirginia at the time of announcement, wasclosing. In relation to the acquisition, FHN acquired approximately $2.2 billion. $9.9 billion in assets, including approximately $7.3 billion in loans and $1.2 billion in AFS securities, and assumed approximately $8.1 billion of CBF deposits.agreement callsfollowing schedule details acquired assets and liabilities and consideration paid, as well as adjustments to record the assets and liabilities at their estimated fair values as of November 30, 2017. These fair value measurements are based on third party and internal valuations. Capital Bank Financial Corporation As Purchase Accounting/Fair Acquired Value Adjustments (unaudited) As recorded (Dollars in thousands) (unaudited) 2017 2018 (a) by FHN Assets: Cash and cash equivalents $ 205,999 $ — $ — $ 205,999 Trading securities 4,758 (4,758 ) (b) — — Loans held-for-sale — 134,003 (9,085 ) 124,918 Securities available-for-sale 1,017,867 175,526 — 1,193,393 Securities held-to-maturity 177,549 (177,549 ) — — Loans 7,596,049 (320,372 ) 867 7,276,544 Allowance for loan losses (45,711 ) 45,711 — — CBF Goodwill 231,292 (231,292 ) — — Other intangible assets 24,498 119,302 (2,593 ) 141,207 Premises and equipment 196,298 37,054 (1,905 ) 231,447 OREO 43,077 (9,149 ) (315 ) 33,613 Other assets 617,232 41,320 (c) (7,528 ) (c) 651,024 Total assets acquired $ 10,068,908 $ (190,204 ) $ (20,559 ) $ 9,858,145 Liabilities: Deposits $ 8,141,593 $ (849 ) $ (642 ) $ 8,140,102 Securities sold under agreements to repurchase 26,664 — — 26,664 Other short-term borrowings 390,391 — — 390,391 Term borrowings 119,486 67,683 — 187,169 Other liabilities 59,995 4,291 2,524 66,810 Total liabilities assumed 8,738,129 71,125 1,882 8,811,136 Net assets acquired $ 1,330,779 $ (261,329 ) $ (22,441 ) 1,047,009 Consideration paid: Equity (1,746,724 ) Cash (469,609 ) Total consideration paid (2,216,333 ) Goodwill $ 1,169,324 (a) Amounts reflect adjustments made to provisional fair value estimates during the measurement period ending November 30, 2018. These adjustments were recorded in FHN's Consolidated Condensed Statement of Condition as of June 30, 2018 with a corresponding adjustment to goodwill. (b) Amount represents a conformity adjustment to align with FHN presentation. (c) Amount primarily relates to a net deferred tax asset recorded for the effects of the purchase accounting adjustments. two memberscurrent and deferred tax assets and liabilities are also considered provisional as FHN continues to evaluate the nature and extent of Capital Bank’s boardpermanent and temporary (timing) differences between the book and tax bases of directors to join FHN’s board after closing. The transaction is expected to close in fourth quarter 2017, subject to regulatory approvals, approval by shareholdersthe acquired assets and liabilities assumed. Additionally, the accounting policies of both FHN and CBF are in the process of Capitalbeing reviewed in detail. Upon completion of such review, conforming adjustments or financial statement reclassification may be determined. June 30, 2018 (Dollars in thousands) Three Months Ended Six Months Ended Professional fees (a) $ 8,989 $ 14,621 Employee compensation, incentives and benefits (b) 2,548 6,494 Contract employment and outsourcing (c) 1,704 3,103 Occupancy (d) 2,214 2,221 Miscellaneous expense (e) 3,103 5,138 All other expense (f) 23,244 40,285 Total $ 41,802 $ 71,862 othercommitments to the Board of Governors of the Federal Reserve System, which were entered into in connection with a customary conditions.securitization,securitization, and analysis of Small Business Administration (“SBA”) loans, for approximatelyapproximately $131 million in cash. Coastal, which was based in Houston, TX, also traded United States Department of Agriculture (“USDA”) loans and fixed income products and provided municipal underwriting and advisory services to its clients. Coastal’s government-guaranteed loan products, combined with FTN Financial’s existing SBA trading activities, have established an additional major product sector for FTN Financial.The following schedule details acquired assets and liabilities and consideration paid, as well as preliminary adjustments to record the assets and liabilities at their estimated fair values as of April 3, 2017: Coastal Securities, Inc. Purchase Accounting/ As
Acquired Fair Value
Adjustments As recorded
by FHN $ 7,502 $ — $ 7,502 4,132 — 4,132 423,662 (284,580 ) 139,082 — 236,088 236,088 — 1,413 1,413 — 27,300 27,300 1,229 — 1,229 1,658 14 1,672 $ 438,183 $ (19,765 ) $ 418,418 $ 201,595 $ — $ 201,595 33,509 — 33,509 143,647 (47,158 ) 96,489 958 (642 ) 316 379,709 (47,800 ) 331,909 $ 58,474 $ 28,035 86,509 (131,473 ) $ 44,964 The valuation of other intangible assets, including customer relationships and noncompete agreements, are preliminary as management continues to review the valuation assumptions and methodologies for these assets. In relation to the acquisition,acquired (referacquired.Note 6—Intangible AssetsConsolidated Financial Statements on Form 10-K for the year ended December 31, 2017, for additional information), and all of which is expected to be deductible for tax purposes. The goodwill is the result of adding an experienced workforce, establishing an additional major product sector for FTN Financial, expected synergies, and other factors. FHN’s operating results for 2017 include the operating results of the acquired assets and assumed liabilities of Coastal subsequent to the acquisition on April 3, 2017.In second quarter 2016, FHN recognized $6.4 million of acquisition-related expenses primarily associated withinformation about the CBF and Coastal acquisitions. These expenses were primarily included in Professional fees, Legal fees, and Employee compensation, incentives and benefits on the Consolidated Condensed Statements of Income.On September 16, 2016, FTBNA acquired $537.4 million in unpaid principal balance (“UPB”) of restaurant franchise loans from GE Capital’s Southeast and Southwest regional portfolios. Subsequent to the acquisition the acquired loans were combined with existing FTBNA relationships to establish a franchise finance specialty banking business.combinationcombinations or divestitures but are not material to FHN individually or in the aggregate.20172018 and December 31, 2016: June 30, 2017 Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value $ 100 $ — $ — $ 100 2,130,894 13,160 (14,438 ) 2,129,616 1,646,533 4,754 (19,464 ) 1,631,823 186,892 — (2 ) 186,890 $ 3,964,419 $ 17,914 $ (33,904 ) 3,948,429 1,163 $ 3,949,592 $ 10,000 $ — $ (9 ) $ 9,991 $ 10,000 $ — $ (9 ) $ 9,991 June 30, 2018 (Dollars in thousands) Securities available-for-sale: U.S. treasuries $ 100 $ — $ (2 ) $ 98 Government agency issued mortgage-backed securities (“MBS”) 2,564,334 4,524 (74,558 ) 2,494,300 Government agency issued collateralized mortgage obligations (“CMO”) 2,180,120 395 (72,935 ) 2,107,580 Other U.S. government agencies 54,797 — (395 ) 54,402 Corporates and other debt 55,609 488 (259 ) 55,838 States and municipalities 6,433 3 (30 ) 6,406 $ 4,861,393 $ 5,410 $ (148,179 ) 4,718,624 SBA-interest only strips (a) 5,787 Total securities available-for-sale (b) $ 4,724,411 Securities held-to-maturity: Corporates and other debt $ 10,000 $ — $ (214 ) $ 9,786 Total securities held-to-maturity $ 10,000 $ — $ (214 ) $ 9,786 (a) Includes restricted investments in FHLB-Cincinnati stock of $87.9 million and FRB stock of $68.6 million. The remainder is money market, mutual funds, and cost method investments.(b)SBA-interest only strips are recorded at elected fair value. See Note 16—16 - Fair Value for additional information.(c)(b) Includes $3.5$3.7 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.
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(Dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Securitiesavailable-for-sale: | ||||||||||||||||
U.S. treasuries | $ | 100 | $ | — | $ | — | $ | 100 | ||||||||
Government agency issued MBS | 2,217,593 | 14,960 | (23,866 | ) | 2,208,687 | |||||||||||
Government agency issued CMO | 1,566,986 | 4,909 | (23,937 | ) | 1,547,958 | |||||||||||
Equity and other (a) | 186,756 | — | (2 | ) | 186,754 | |||||||||||
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Total securitiesavailable-for-sale (b) | $ | 3,971,435 | $ | 19,869 | $ | (47,805 | ) | $ | 3,943,499 | |||||||
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|
|
|
|
| |||||||||
Securitiesheld-to-maturity: | ||||||||||||||||
States and municipalities | $ | 4,347 | $ | 393 | $ | — | $ | 4,740 | ||||||||
Corporate bonds | 10,000 | 33 | — | 10,033 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total securitiesheld-to-maturity | $ | 14,347 | $ | 426 | $ | — | $ | 14,773 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2017 | ||||||||||||||||
| (Dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
| Securities available-for-sale: | ||||||||||||||||
| U.S. treasuries | $ | 100 | $ | — | $ | (1 | ) | $ | 99 | |||||||
| Government agency issued MBS | 2,580,442 | 10,538 | (13,604 | ) | 2,577,376 | |||||||||||
| Government agency issued CMO | 2,302,439 | 1,691 | (34,272 | ) | 2,269,858 | |||||||||||
| Corporates and other debt | 55,799 | 23 | (40 | ) | 55,782 | |||||||||||
| Equity and other (a) | 265,863 | 7 | — | 265,870 | ||||||||||||
| $ | 5,204,643 | $ | 12,259 | $ | (47,917 | ) | 5,168,985 | |||||||||
| AFS debt securities recorded at fair value through earnings: | ||||||||||||||||
| SBA-interest only strips (b) | 1,270 | |||||||||||||||
| Total securities available-for-sale (c) | $ | 5,170,255 | ||||||||||||||
| Securities held-to-maturity: | ||||||||||||||||
| Corporates and other debt | $ | 10,000 | $ | — | $ | (99 | ) | $ | 9,901 | |||||||
| Total securities held-to-maturity | $ | 10,000 | $ | — | $ | (99 | ) | $ | 9,901 | |||||||
| (a) | Includes restricted investments in FHLB-Cincinnati stock of $87.9 million and FRB stock of |
| (b) | SBA-interest only strips are recorded at elected fair value. See Note 16 - Fair Value of Assets and Liabilities for additional information. |
| (c) | Includes |
| Held-to-Maturity | Available-for-Sale | |||||||||||||||
(Dollars in thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
Within 1 year | $ | — | $ | — | $ | 100 | $ | 100 | ||||||||
After 1 year; within 5 years | — | — | — | 9 | ||||||||||||
After 5 years; within 10 years | 10,000 | 9,991 | — | 582 | ||||||||||||
After 10 years | — | — | — | 572 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | 10,000 | 9,991 | 100 | 1,263 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Government agency issued MBS and CMO (a) | — | — | 3,777,427 | 3,761,439 | ||||||||||||
Equity and other | — | — | 186,892 | 186,890 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 10,000 | $ | 9,991 | $ | 3,964,419 | $ | 3,949,592 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Held-to-Maturity | Available-for-Sale | |||||||||||||||
| (Dollars in thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
| Within 1 year | $ | — | $ | — | $ | 15,250 | $ | 15,042 | ||||||||
| After 1 year; within 5 years | — | — | 95,255 | 95,321 | ||||||||||||
| After 5 years; within 10 years | 10,000 | 9,786 | — | 1,360 | ||||||||||||
| After 10 years | — | — | 6,434 | 10,808 | ||||||||||||
| Subtotal | 10,000 | 9,786 | 116,939 | 122,531 | ||||||||||||
| Government agency issued MBS and CMO (a) | — | — | 4,744,454 | 4,601,880 | ||||||||||||
| Total | $ | 10,000 | $ | 9,786 | $ | 4,861,393 | $ | 4,724,411 | ||||||||
| (a) | 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. |
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Gross gains on sales of securities | $ | 405 | $ | 162 | $ | 449 | $ | 3,999 | ||||||||
Gross (losses) on sales of securities | — | (63 | ) | — | (2,326 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net gain/(loss) on sales of securities (a) (b) | $ | 405 | $ | 99 | $ | 449 | $ | 1,673 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Gross gains on sales of securities | $ | — | $ | 405 | $ | 52 | $ | 449 | ||||||||
| Gross (losses) on sales of securities | — | — | — | — | ||||||||||||
| Net gain/(loss) on sales of securities (a) (b) | $ | — | $ | 405 | $ | 52 | $ | 449 | ||||||||
| (a) | Cash proceeds from the sale of |
| (b) | Three and six months ended June 30, 2017 includes a $.4 million gain associated with the call of a $4.4 millionheld-to-maturity municipal bond. |
| As of June 30, 2017 | ||||||||||||||||||||||||
| 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 | $ | 981,771 | $ | (14,899 | ) | $ | 128,377 | $ | (4,565 | ) | $ | 1,110,148 | $ | (19,464 | ) | |||||||||
Government agency issued MBS | 1,599,386 | (14,438 | ) | — | — | 1,599,386 | (14,438 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total debt securities | 2,581,157 | (29,337 | ) | 128,377 | (4,565 | ) | 2,709,534 | (33,902 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Equity | 7 | (2 | ) | — | — | 7 | (2 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total temporarily impaired securities | $ | 2,581,164 | $ | (29,339 | ) | $ | 128,377 | $ | (4,565 | ) | $ | 2,709,541 | $ | (33,904 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2017:
| As of June 30, 2018 | ||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
| (Dollars in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
| U.S. treasuries | $ | 98 | $ | (2 | ) | $ | — | $ | — | $ | 98 | $ | (2 | ) | ||||||||||
| Government agency issued MBS | 1,937,255 | (57,182 | ) | 317,784 | (17,376 | ) | 2,255,039 | (74,558 | ) | |||||||||||||||
| Government agency issued CMO | 1,278,976 | (30,862 | ) | 754,927 | (42,073 | ) | 2,033,903 | (72,935 | ) | |||||||||||||||
| Other U.S. government agencies | 54,402 | (395 | ) | — | — | 54,402 | (395 | ) | ||||||||||||||||
| Corporates and other debt | 40,586 | (259 | ) | — | — | 40,586 | (259 | ) | ||||||||||||||||
| States and municipalities | 4,724 | (30 | ) | — | — | 4,724 | (30 | ) | ||||||||||||||||
| Total temporarily impaired securities | $ | 3,316,041 | $ | (88,730 | ) | $ | 1,072,711 | $ | (59,449 | ) | $ | 4,388,752 | $ | (148,179 | ) | |||||||||
| As of December 31, 2016 | ||||||||||||||||||||||||
| 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 | $ | 1,059,471 | $ | (19,052 | ) | $ | 116,527 | $ | (4,885 | ) | $ | 1,175,998 | $ | (23,937 | ) | |||||||||
Government agency issued MBS | 1,912,126 | (23,866 | ) | — | — | 1,912,126 | (23,866 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total debt securities | 2,971,597 | (42,918 | ) | 116,527 | (4,885 | ) | 3,088,124 | (47,803 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Equity | 7 | (2 | ) | — | — | 7 | (2 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total temporarily impaired securities | $ | 2,971,604 | $ | (42,920 | ) | $ | 116,527 | $ | (4,885 | ) | $ | 3,088,131 | $ | (47,805 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| As of December 31, 2017 | ||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
| (Dollars in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
| U.S. treasuries | $ | 99 | $ | (1 | ) | $ | — | $ | — | $ | 99 | $ | (1 | ) | ||||||||||
| Government agency issued MBS | 1,455,476 | (4,738 | ) | 331,900 | (8,866 | ) | 1,787,376 | (13,604 | ) | |||||||||||||||
| Government agency issued CMO | 1,043,987 | (7,464 | ) | 832,173 | (26,808 | ) | 1,876,160 | (34,272 | ) | |||||||||||||||
| Corporates and other debt | 15,294 | (40 | ) | — | — | 15,294 | (40 | ) | ||||||||||||||||
| Total temporarily impaired securities | $ | 2,514,856 | $ | (12,243 | ) | $ | 1,164,073 | $ | (35,674 | ) | $ | 3,678,929 | $ | (47,917 | ) | |||||||||
equity investments with readily determinable fair values.
| June 30 | December 31 | |||||||
(Dollars in thousands) | 2017 | 2016 | ||||||
Commercial: | ||||||||
Commercial, financial, and industrial | $ | 12,598,219 | $ | 12,148,087 | ||||
Commercial real estate | 2,211,996 | 2,135,523 | ||||||
Consumer: | ||||||||
Consumer real estate (a) | 4,417,459 | 4,523,752 | ||||||
Permanent mortgage | 408,095 | 423,125 | ||||||
Credit card & other | 353,550 | 359,033 | ||||||
|
|
|
| |||||
Loans, net of unearned income | $ | 19,989,319 | $ | 19,589,520 | ||||
Allowance for loan losses | 197,257 | 202,068 | ||||||
|
|
|
| |||||
Total net loans | $ | 19,792,062 | $ | 19,387,452 | ||||
|
|
|
| |||||
| June 30 | December 31 | |||||||
| (Dollars in thousands) | 2018 | 2017 | ||||||
| Commercial: | ||||||||
| Commercial, financial, and industrial | $ | 16,438,745 | $ | 16,057,273 | ||||
| Commercial real estate | 4,136,356 | 4,214,695 | ||||||
| Consumer: | ||||||||
| Consumer real estate (a) | 6,222,611 | 6,367,755 | ||||||
| Permanent mortgage | 354,916 | 399,307 | ||||||
| Credit card & other | 549,112 | 619,899 | ||||||
| Loans, net of unearned income | $ | 27,701,740 | $ | 27,658,929 | ||||
| Allowance for loan losses | 185,462 | 189,555 | ||||||
| Total net loans | $ | 27,516,278 | $ | 27,469,374 | ||||
| (a) | Balances as of June 30, |
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Balance, beginning of period | $ | 5,198 | $ | 8,958 | $ | 6,871 | $ | 8,542 | ||||||||
Accretion | (919 | ) | (996 | ) | (1,770 | ) | (2,147 | ) | ||||||||
Adjustment for payoffs | (761 | ) | (2,452 | ) | (1,034 | ) | (4,229 | ) | ||||||||
Adjustment for charge-offs | — | (11 | ) | — | (674 | ) | ||||||||||
Adjustment for pool excess recovery (a) | — | — | (222 | ) | — | |||||||||||
Increase/(decrease) in accretable yield (b) | 409 | 705 | 114 | 4,712 | ||||||||||||
Other | 118 | (33 | ) | 86 | (33 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance, end of period | $ | 4,045 | $ | 6,171 | $ | 4,045 | $ | 6,171 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Balance, beginning of period | $ | 15,323 | $ | 5,198 | $ | 15,623 | $ | 6,871 | ||||||||
| Accretion | (2,607 | ) | (919 | ) | (4,744 | ) | (1,770 | ) | ||||||||
| Adjustment for payoffs | (1,107 | ) | (761 | ) | (1,719 | ) | (1,034 | ) | ||||||||
| Adjustment for charge-offs | (373 | ) | — | (924 | ) | — | ||||||||||
| Adjustment for pool excess recovery (a) | — | — | — | (222 | ) | |||||||||||
| Increase/(decrease) in accretable yield (b) | 3,481 | 409 | 6,659 | 114 | ||||||||||||
| Disposals | (214 | ) | — | (240 | ) | — | ||||||||||
| Other | (29 | ) | 118 | (181 | ) | 86 | ||||||||||
| Balance, end of period | $ | 14,474 | $ | 4,045 | $ | 14,474 | $ | 4,045 | ||||||||
| (a) | Represents the removal of accretable difference for the remaining loans in a pool which is now in a recovery state. |
| (b) | Includes changes in the accretable yield due to both transfers from the nonaccretable difference and the impact of changes in the expected timing and amounts of the cash flows. |
2017.
| June 30, 2017 | December 31, 2016 | |||||||||||||||
(Dollars in thousands) | Carrying value | Unpaid balance | Carrying value | Unpaid balance | ||||||||||||
Commercial, financial and industrial | $ | 21,143 | $ | 22,089 | $ | 40,368 | $ | 41,608 | ||||||||
Commercial real estate | 4,008 | 5,264 | 4,763 | 6,514 | ||||||||||||
Consumer real estate | 1,013 | 1,388 | 1,172 | 1,677 | ||||||||||||
Credit card and other | 55 | 63 | 52 | 64 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 26,219 | $ | 28,804 | $ | 46,355 | $ | 49,863 | ||||||||
|
|
|
|
|
|
|
| |||||||||
2017:
| June 30, 2018 | December 31, 2017 | |||||||||||||||
| (Dollars in thousands) | Carrying value | Unpaid balance | Carrying value | Unpaid balance | ||||||||||||
| Commercial, financial and industrial | $ | 54,143 | $ | 60,727 | $ | 96,598 | $ | 109,280 | ||||||||
| Commercial real estate | 27,042 | 31,181 | 36,107 | 41,488 | ||||||||||||
| Consumer real estate | 35,674 | 39,920 | 38,176 | 42,568 | ||||||||||||
| Credit card and other | 2,969 | 3,381 | 5,500 | 6,351 | ||||||||||||
| Total | $ | 119,828 | $ | 135,209 | $ | 176,381 | $ | 199,687 | ||||||||
| June 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
(Dollars in thousands) | Recorded Investment | Unpaid Principal Balance | Related Allowance | Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||||||||||
Impaired loans with no related allowance recorded: | ||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||
General C&I | $ | 9,487 | $ | 16,604 | $ | — | $ | 10,419 | $ | 16,636 | $ | — | ||||||||||||
Income CRE | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 9,487 | $ | 16,604 | $ | — | $ | 10,419 | $ | 16,636 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Consumer: | ||||||||||||||||||||||||
HELOC (a) | $ | 9,937 | $ | 20,411 | $ | — | $ | 11,383 | $ | 21,662 | $ | — | ||||||||||||
R/E installment loans (a) | 3,933 | 4,960 | — | 3,957 | 4,992 | — | ||||||||||||||||||
Permanent mortgage (a) | 5,904 | 8,739 | — | 5,311 | 7,899 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 19,774 | $ | 34,110 | $ | — | $ | 20,651 | $ | 34,553 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Impaired loans with related allowance recorded: | ||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||
General C&I | $ | 25,411 | $ | 25,880 | $ | 2,716 | $ | 34,334 | $ | 34,470 | $ | 3,294 | ||||||||||||
TRUPS | 3,136 | 3,700 | 925 | 3,209 | 3,700 | 925 | ||||||||||||||||||
Income CRE | 1,731 | 1,731 | 57 | 1,831 | 2,209 | 62 | ||||||||||||||||||
Residential CRE | 1,293 | 1,761 | 119 | 1,293 | 1,761 | 132 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 31,571 | $ | 33,072 | $ | 3,817 | $ | 40,667 | $ | 42,140 | $ | 4,413 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Consumer: | ||||||||||||||||||||||||
HELOC | $ | 75,778 | $ | 78,449 | $ | 16,061 | $ | 84,711 | $ | 87,126 | $ | 15,927 | ||||||||||||
R/E installment loans | 48,351 | 49,143 | 11,088 | 53,409 | 54,559 | 12,875 | ||||||||||||||||||
Permanent mortgage | 80,009 | 91,744 | 11,858 | 88,615 | 100,983 | 12,470 | ||||||||||||||||||
Credit card & other | 360 | 360 | 161 | 306 | 306 | 133 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 204,498 | $ | 219,696 | $ | 39,168 | $ | 227,041 | $ | 242,974 | $ | 41,405 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial | $ | 41,058 | $ | 49,676 | $ | 3,817 | $ | 51,086 | $ | 58,776 | $ | 4,413 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total consumer | $ | 224,272 | $ | 253,806 | $ | 39,168 | $ | 247,692 | $ | 277,527 | $ | 41,405 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total impaired loans | $ | 265,330 | $ | 303,482 | $ | 42,985 | $ | 298,778 | $ | 336,303 | $ | 45,818 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
| (Dollars in thousands) | Recorded Investment | Unpaid Principal Balance | Related Allowance | Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||||||||||
| Impaired loans with no related allowance recorded: | ||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||
| General C&I | $ | 25,924 | $ | 37,325 | $ | — | $ | 8,183 | $ | 17,372 | $ | — | ||||||||||||
| Income CRE | 1,748 | 1,748 | — | — | — | — | ||||||||||||||||||
| Residential CRE | 504 | 972 | — | — | — | — | ||||||||||||||||||
| Total | $ | 28,176 | $ | 40,045 | $ | — | $ | 8,183 | $ | 17,372 | $ | — | ||||||||||||
| Consumer: | ||||||||||||||||||||||||
| HELOC (a) | $ | 8,811 | $ | 17,299 | $ | — | $ | 9,258 | $ | 19,193 | $ | — | ||||||||||||
| R/E installment loans (a) | 3,370 | 3,834 | — | 4,093 | 4,663 | — | ||||||||||||||||||
| Permanent mortgage (a) | 4,195 | 6,586 | — | 5,132 | 7,688 | — | ||||||||||||||||||
| Total | $ | 16,376 | $ | 27,719 | $ | — | $ | 18,483 | $ | 31,544 | $ | — | ||||||||||||
| Impaired loans with related allowance recorded: | ||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||
| General C&I | $ | 3,692 | $ | 3,692 | $ | 288 | $ | 31,774 | $ | 38,256 | $ | 5,119 | ||||||||||||
| TRUPS | 2,983 | 3,700 | 925 | 3,067 | 3,700 | 925 | ||||||||||||||||||
| Income CRE | — | — | — | 1,612 | 1,612 | 49 | ||||||||||||||||||
| Residential CRE | — | — | — | 795 | 1,263 | 83 | ||||||||||||||||||
| Total | $ | 6,675 | $ | 7,392 | $ | 1,213 | $ | 37,248 | $ | 44,831 | $ | 6,176 | ||||||||||||
| Consumer: | ||||||||||||||||||||||||
| HELOC | $ | 70,739 | $ | 73,717 | $ | 12,641 | $ | 72,469 | $ | 75,207 | $ | 14,382 | ||||||||||||
| R/E installment loans | 39,415 | 40,168 | 7,758 | 43,075 | 43,827 | 8,793 | ||||||||||||||||||
| Permanent mortgage | 72,666 | 83,678 | 10,787 | 79,662 | 90,934 | 12,105 | ||||||||||||||||||
| Credit card & other | 604 | 604 | 305 | 593 | 593 | 311 | ||||||||||||||||||
| Total | $ | 183,424 | $ | 198,167 | $ | 31,491 | $ | 195,799 | $ | 210,561 | $ | 35,591 | ||||||||||||
| Total commercial | $ | 34,851 | $ | 47,437 | $ | 1,213 | $ | 45,431 | $ | 62,203 | $ | 6,176 | ||||||||||||
| Total consumer | $ | 199,800 | $ | 225,886 | $ | 31,491 | $ | 214,282 | $ | 242,105 | $ | 35,591 | ||||||||||||
| Total impaired loans | $ | 234,651 | $ | 273,323 | $ | 32,704 | $ | 259,713 | $ | 304,308 | $ | 41,767 | ||||||||||||
| (a) | All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance. |
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||||||
(Dollars in thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||||||||||
Impaired loans with no related allowance recorded: | ||||||||||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||
General C&I | $ | 9,941 | $ | — | $ | 13,333 | $ | — | $ | 10,174 | $ | — | $ | 11,278 | $ | — | ||||||||||||||||
Income CRE | — | — | 2,468 | — | — | — | 2,468 | — | ||||||||||||||||||||||||
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Total | $ | 9,941 | $ | — | $ | 15,801 | $ | — | $ | 10,174 | $ | — | $ | 13,746 | $ | — | ||||||||||||||||
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Consumer: | ||||||||||||||||||||||||||||||||
HELOC (a) | $ | 10,331 | $ | — | $ | 11,105 | $ | — | $ | 10,692 | $ | — | $ | 11,013 | $ | — | ||||||||||||||||
R/E installment loans (a) | 3,925 | — | 4,407 | — | 3,931 | — | 4,420 | — | ||||||||||||||||||||||||
Permanent mortgage (a) | 5,854 | — | 4,161 | — | 5,705 | — | 4,298 | — | ||||||||||||||||||||||||
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Total | $ | 20,110 | $ | — | $ | 19,673 | $ | — | $ | 20,328 | $ | — | $ | 19,731 | $ | — | ||||||||||||||||
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Impaired loans with related allowance recorded: | ||||||||||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||
General C&I | $ | 28,402 | $ | 189 | $ | 31,333 | $ | 292 | $ | 30,632 | $ | 403 | $ | 28,127 | $ | 379 | ||||||||||||||||
TRUPS | 3,160 | — | 3,291 | — | 3,178 | — | 3,307 | — | ||||||||||||||||||||||||
Income CRE | 1,767 | 14 | 4,780 | 20 | 1,792 | 28 | 4,959 | 40 | ||||||||||||||||||||||||
Residential CRE | 1,293 | 5 | 1,376 | 6 | 1,293 | 10 | 1,386 | 12 | ||||||||||||||||||||||||
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Total | $ | 34,622 | $ | 208 | $ | 40,780 | $ | 318 | $ | 36,895 | $ | 441 | $ | 37,779 | $ | 431 | ||||||||||||||||
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Consumer: | ||||||||||||||||||||||||||||||||
HELOC | $ | 78,608 | $ | 577 | $ | 88,299 | $ | 494 | $ | 80,841 | $ | 1,141 | $ | 88,439 | $ | 981 | ||||||||||||||||
R/E installment loans | 49,373 | 317 | 58,923 | 345 | 50,637 | 635 | 59,447 | 662 | ||||||||||||||||||||||||
Permanent mortgage | 81,475 | 574 | 92,218 | 541 | 83,626 | 1,189 | 93,725 | 1,058 | ||||||||||||||||||||||||
Credit card & other | 315 | 3 | 351 | 3 | 301 | 5 | 355 | 6 | ||||||||||||||||||||||||
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Total | $ | 209,771 | $ | 1,471 | $ | 239,791 | $ | 1,383 | $ | 215,405 | $ | 2,970 | $ | 241,966 | $ | 2,707 | ||||||||||||||||
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Total commercial | $ | 44,563 | $ | 208 | $ | 56,581 | $ | 318 | $ | 47,069 | $ | 441 | $ | 51,525 | $ | 431 | ||||||||||||||||
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Total consumer | $ | 229,881 | $ | 1,471 | $ | 259,464 | $ | 1,383 | $ | 235,733 | $ | 2,970 | $ | 261,697 | $ | 2,707 | ||||||||||||||||
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Total impaired loans | $ | 274,444 | $ | 1,679 | $ | 316,045 | $ | 1,701 | $ | 282,802 | $ | 3,411 | $ | 313,222 | $ | 3,138 | ||||||||||||||||
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| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
| (Dollars in thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||||||||||
| Impaired loans with no related allowance recorded: | ||||||||||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||||||||||
| General C&I | $ | 24,825 | $ | 183 | $ | 9,941 | $ | — | $ | 20,389 | $ | 358 | $ | 10,174 | $ | — | ||||||||||||||||
| Income CRE | 1,665 | 13 | — | — | 1,228 | 25 | — | — | ||||||||||||||||||||||||
| Residential CRE | 500 | — | — | — | 374 | — | — | — | ||||||||||||||||||||||||
| Total | $ | 26,990 | $ | 196 | $ | 9,941 | $ | — | $ | 21,991 | $ | 383 | $ | 10,174 | $ | — | ||||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||
| HELOC (a) | $ | 9,034 | $ | — | $ | 10,331 | $ | — | $ | 9,145 | $ | — | $ | 10,692 | $ | — | ||||||||||||||||
| R/E installment loans (a) | 3,553 | — | 3,925 | — | 3,733 | — | 3,931 | — | ||||||||||||||||||||||||
| Permanent mortgage (a) | 4,749 | — | 5,854 | — | 4,983 | — | 5,705 | — | ||||||||||||||||||||||||
| Total | $ | 17,336 | $ | — | $ | 20,110 | $ | — | $ | 17,861 | $ | — | $ | 20,328 | $ | — | ||||||||||||||||
| Impaired loans with related allowance recorded: | ||||||||||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||||||||||
| General C&I | $ | 8,850 | $ | — | $ | 28,402 | $ | 189 | $ | 15,870 | $ | — | $ | 30,632 | $ | 403 | ||||||||||||||||
| TRUPS | 3,005 | — | 3,160 | — | 3,026 | — | 3,178 | — | ||||||||||||||||||||||||
| Income CRE | — | — | 1,767 | 14 | 403 | — | 1,792 | 28 | ||||||||||||||||||||||||
| Residential CRE | — | — | 1,293 | 5 | 199 | — | 1,293 | 10 | ||||||||||||||||||||||||
| Total | $ | 11,855 | $ | — | $ | 34,622 | $ | 208 | $ | 19,498 | $ | — | $ | 36,895 | $ | 441 | ||||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||
| HELOC | $ | 70,789 | $ | 578 | $ | 78,608 | $ | 577 | $ | 71,222 | $ | 1,155 | $ | 80,841 | $ | 1,141 | ||||||||||||||||
| R/E installment loans | 40,280 | 251 | 49,373 | 317 | 41,195 | 518 | 50,637 | 635 | ||||||||||||||||||||||||
| Permanent mortgage | 74,227 | 574 | 81,475 | 574 | 75,976 | 1,152 | 83,626 | 1,189 | ||||||||||||||||||||||||
| Credit card & other | 653 | 3 | 315 | 3 | 650 | 6 | 301 | 5 | ||||||||||||||||||||||||
| Total | $ | 185,949 | $ | 1,406 | $ | 209,771 | $ | 1,471 | $ | 189,043 | $ | 2,831 | $ | 215,405 | $ | 2,970 | ||||||||||||||||
| Total commercial | $ | 38,845 | $ | 196 | $ | 44,563 | $ | 208 | $ | 41,489 | $ | 383 | $ | 47,069 | $ | 441 | ||||||||||||||||
| Total consumer | $ | 203,285 | $ | 1,406 | $ | 229,881 | $ | 1,471 | $ | 206,904 | $ | 2,831 | $ | 235,733 | $ | 2,970 | ||||||||||||||||
| Total impaired loans | $ | 242,130 | $ | 1,602 | $ | 274,444 | $ | 1,679 | $ | 248,393 | $ | 3,214 | $ | 282,802 | $ | 3,411 | ||||||||||||||||
| (a) | All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance. |
Note 4 – Loans (Continued)
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.
| June 30, 2017 | ||||||||||||||||||||||||||||||||
(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 | $ | 599,112 | $ | — | $ | — | $ | 1,342 | $ | — | $ | 600,454 | 4 | % | $ | 93 | ||||||||||||||||
2 | 912,224 | — | — | 11,375 | 77 | 923,676 | 6 | 432 | ||||||||||||||||||||||||
3 | 482,603 | 615,227 | — | 154,399 | 41 | 1,252,270 | 8 | 294 | ||||||||||||||||||||||||
4 | 952,746 | 455,459 | — | 250,107 | 217 | 1,658,529 | 11 | 941 | ||||||||||||||||||||||||
5 | 1,431,131 | 209,681 | — | 462,468 | 248 | 2,103,528 | 14 | 8,023 | ||||||||||||||||||||||||
6 | 1,575,587 | 464,550 | — | 392,030 | 6,480 | 2,438,647 | 17 | 10,258 | ||||||||||||||||||||||||
7 | 1,559,070 | 170,351 | — | 412,035 | 3,312 | 2,144,768 | 15 | 13,480 | ||||||||||||||||||||||||
8 | 1,061,919 | 89,754 | — | 298,308 | 5,432 | 1,455,413 | 10 | 23,210 | ||||||||||||||||||||||||
9 | 491,733 | 62,426 | — | 66,838 | 5,013 | 626,010 | 4 | 10,802 | ||||||||||||||||||||||||
10 | 363,620 | 3,583 | — | 47,567 | 8,123 | 422,893 | 3 | 9,243 | ||||||||||||||||||||||||
11 | 214,592 | — | — | 44,301 | 3,183 | 262,076 | 2 | 7,522 | ||||||||||||||||||||||||
12 | 180,210 | 21,691 | — | 13,000 | 2,742 | 217,643 | 1 | 7,684 | ||||||||||||||||||||||||
13 | 107,024 | — | 304,236 | 6,688 | 111 | 418,059 | 3 | 3,821 | ||||||||||||||||||||||||
14,15,16 | 210,344 | 40 | — | 8,531 | 979 | 219,894 | 1 | 23,083 | ||||||||||||||||||||||||
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Collectively evaluated for impairment | 10,141,915 | 2,092,762 | 304,236 | 2,168,989 | 35,958 | 14,743,860 | 99 | 118,886 | ||||||||||||||||||||||||
Individually evaluated for impairment | 34,897 | — | 3,137 | 1,731 | 1,293 | 41,058 | 1 | 3,817 | ||||||||||||||||||||||||
Purchased credit-impaired loans | 21,272 | — | — | 3,974 | 51 | 25,297 | — | 146 | ||||||||||||||||||||||||
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Total commercial loans | $ | 10,198,084 | $ | 2,092,762 | $ | 307,373 | $ | 2,174,694 | $ | 37,302 | $ | 14,810,215 | 100 | % | $ | 122,849 | ||||||||||||||||
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Note 4 – Loans (Continued)
| December 31, 2016 | ||||||||||||||||||||||||||||||||
(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 | $ | 465,179 | $ | — | $ | — | $ | 1,078 | $ | — | $ | 466,257 | 3 | % | $ | 77 | ||||||||||||||||
2 | 791,183 | — | — | 11,742 | 87 | 803,012 | 6 | 403 | ||||||||||||||||||||||||
3 | 491,386 | 462,486 | — | 153,670 | — | 1,107,542 | 8 | 304 | ||||||||||||||||||||||||
4 | 978,282 | 332,107 | — | 222,422 | — | 1,532,811 | 11 | 953 | ||||||||||||||||||||||||
5 | 1,232,401 | 275,209 | — | 365,653 | 702 | 1,873,965 | 13 | 6,670 | ||||||||||||||||||||||||
6 | 1,540,519 | 614,109 | — | 338,344 | 9,338 | 2,502,310 | 17 | 10,403 | ||||||||||||||||||||||||
7 | 1,556,117 | 317,283 | — | 352,390 | 2,579 | 2,228,369 | 16 | 14,010 | ||||||||||||||||||||||||
8 | 963,359 | 30,974 | — | 425,503 | 2,950 | 1,422,786 | 10 | 25,986 | ||||||||||||||||||||||||
9 | 611,774 | 4,299 | — | 105,277 | 4,417 | 725,767 | 5 | 13,857 | ||||||||||||||||||||||||
10 | 355,359 | 8,663 | — | 50,484 | 9,110 | 423,616 | 3 | 8,400 | ||||||||||||||||||||||||
11 | 238,230 | — | — | 20,600 | 6,541 | 265,371 | 2 | 6,556 | ||||||||||||||||||||||||
12 | 170,531 | — | — | 15,395 | 4,168 | 190,094 | 1 | 6,377 | ||||||||||||||||||||||||
13 | 121,276 | — | 304,236 | 6,748 | 311 | 432,571 | 3 | 4,225 | ||||||||||||||||||||||||
14,15,16 | 194,572 | 59 | — | 16,313 | 1,659 | 212,603 | 1 | 20,297 | ||||||||||||||||||||||||
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Collectively evaluated for impairment | 9,710,168 | 2,045,189 | 304,236 | 2,085,619 | 41,862 | 14,187,074 | 99 | 118,518 | ||||||||||||||||||||||||
Individually evaluated for impairment | 44,753 | — | 3,209 | 1,831 | 1,293 | 51,086 | 1 | 4,413 | ||||||||||||||||||||||||
Purchased credit-impaired loans | 40,532 | — | — | 4,583 | 335 | 45,450 | — | 319 | ||||||||||||||||||||||||
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Total commercial loans | $ | 9,795,453 | $ | 2,045,189 | $ | 307,445 | $ | 2,092,033 | $ | 43,490 | $ | 14,283,610 | 100 | % | $ | 123,250 | ||||||||||||||||
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| June 30, 2018 | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | General C&I | Loans to Mortgage Companies | TRUPS (a) | Income CRE | Residential CRE | Total | Percentage of Total | Allowance for Loan Losses | |||||||||||||||||||||||
| PD Grade: | |||||||||||||||||||||||||||||||
| 1 | $ | 547,654 | $ | — | $ | — | $ | 2,104 | $ | — | $ | 549,758 | 3 | % | $ | 64 | |||||||||||||||
| 2 | 840,122 | — | — | 10,236 | 41 | 850,399 | 4 | 280 | |||||||||||||||||||||||
| 3 | 633,000 | 727,078 | — | 255,090 | 214 | 1,615,382 | 8 | 255 | |||||||||||||||||||||||
| 4 | 845,405 | 586,315 | — | 457,716 | — | 1,889,436 | 9 | 700 | |||||||||||||||||||||||
| 5 | 1,892,574 | 347,919 | 63,017 | 463,421 | 1,421 | 2,768,352 | 13 | 8,003 | |||||||||||||||||||||||
| 6 | 1,475,963 | 426,654 | 90,296 | 447,840 | 6,117 | 2,446,870 | 12 | 8,830 | |||||||||||||||||||||||
| 7 | 2,387,509 | 109,693 | 65,193 | 499,585 | 5,054 | 3,067,034 | 15 | 14,442 | |||||||||||||||||||||||
| 8 | 1,078,583 | 70,924 | 4,068 | 220,208 | 11,600 | 1,385,383 | 7 | 19,828 | |||||||||||||||||||||||
| 9 | 2,604,602 | 86,253 | 45,117 | 1,382,306 | 60,385 | 4,178,663 | 20 | 22,349 | |||||||||||||||||||||||
| 10 | 371,017 | — | 18,536 | 54,896 | 3,488 | 447,937 | 2 | 8,782 | |||||||||||||||||||||||
| 11 | 257,439 | — | — | 40,893 | 341 | 298,673 | 1 | 7,509 | |||||||||||||||||||||||
| 12 | 300,482 | — | — | 110,184 | 6,306 | 416,972 | 2 | 5,802 | |||||||||||||||||||||||
| 13 | 247,731 | — | 17,621 | 57,845 | 9 | 323,206 | 2 | 8,895 | |||||||||||||||||||||||
| 14,15,16 | 209,046 | — | — | 8,874 | 800 | 218,720 | 1 | 21,434 | |||||||||||||||||||||||
| Collectively evaluated for impairment | 13,691,127 | 2,354,836 | 303,848 | 4,011,198 | 95,776 | 20,456,785 | 99 | 127,173 | |||||||||||||||||||||||
| Individually evaluated for impairment | 29,617 | — | 2,982 | 1,748 | 504 | 34,851 | — | 1,213 | |||||||||||||||||||||||
| Purchased credit-impaired loans | 56,335 | — | — | 23,781 | 3,349 | 83,465 | 1 | 2,280 | |||||||||||||||||||||||
| Total commercial loans | $ | 13,777,079 | $ | 2,354,836 | $ | 306,830 | $ | 4,036,727 | $ | 99,629 | $ | 20,575,101 | 100 | % | $ | 130,666 | |||||||||||||||
| (a) | Balances |
| December 31, 2017 | |||||||||||||||||||||||||||||||
| (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 | $ | 536,244 | $ | — | $ | — | $ | 2,500 | $ | — | $ | 538,744 | 3 | % | $ | 70 | |||||||||||||||
| 2 | 877,635 | — | — | 1,798 | 69 | 879,502 | 4 | 339 | |||||||||||||||||||||||
| 3 | 582,224 | 652,982 | — | 210,073 | 40 | 1,445,319 | 7 | 272 | |||||||||||||||||||||||
| 4 | 959,581 | 629,432 | — | 309,699 | — | 1,898,712 | 9 | 854 | |||||||||||||||||||||||
| 5 | 1,461,632 | 328,477 | — | 415,764 | 2,474 | 2,208,347 | 11 | 7,355 | |||||||||||||||||||||||
| 6 | 1,668,247 | 335,169 | — | 456,706 | 3,179 | 2,463,301 | 12 | 10,495 | |||||||||||||||||||||||
| 7 | 2,257,400 | 47,720 | — | 554,590 | 9,720 | 2,869,430 | 14 | 13,490 | |||||||||||||||||||||||
| 8 | 1,092,994 | 35,266 | — | 241,938 | 6,454 | 1,376,652 | 7 | 21,831 | |||||||||||||||||||||||
| 9 | 2,633,854 | 70,915 | — | 1,630,176 | 61,475 | 4,396,420 | 22 | 9,804 | |||||||||||||||||||||||
| 10 | 373,537 | — | — | 43,297 | 4,590 | 421,424 | 2 | 8,808 | |||||||||||||||||||||||
| 11 | 226,382 | — | — | 31,785 | 2,936 | 261,103 | 1 | 6,784 | |||||||||||||||||||||||
| 12 | 409,838 | — | — | 156,717 | 6,811 | 573,366 | 3 | 5,882 | |||||||||||||||||||||||
| 13 | 202,613 | — | 303,848 | 15,707 | 268 | 522,436 | 3 | 7,265 | |||||||||||||||||||||||
| 14,15,16 | 228,852 | — | — | 6,587 | 823 | 236,262 | 1 | 24,400 | |||||||||||||||||||||||
| Collectively evaluated for impairment | 13,511,033 | 2,099,961 | 303,848 | 4,077,337 | 98,839 | 20,091,018 | 99 | 117,649 | |||||||||||||||||||||||
| Individually evaluated for impairment | 39,957 | — | 3,067 | 1,612 | 795 | 45,431 | — | 6,176 | |||||||||||||||||||||||
| Purchased credit-impaired loans | 99,407 | — | — | 31,615 | 4,497 | 135,519 | 1 | 2,813 | |||||||||||||||||||||||
| Total commercial loans | $ | 13,650,397 | $ | 2,099,961 | $ | 306,915 | $ | 4,110,564 | $ | 104,131 | $ | 20,271,968 | 100 | % | $ | 126,638 | |||||||||||||||
| (a) | Balances presented net of a $25.5 million valuation allowance. Based on the underlying structure of the notes, the highest possible internal grade was “13” prior to second quarter 2018. In second quarter 2018, this portfolio was re-graded to align with the scorecard grading methodologies which resulted in upgrades to a majority of this portfolio. |
| June 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
| HELOC | R/E Installment Loans | Permanent Mortgage | HELOC | R/E Installment Loans | Permanent Mortgage | |||||||||||||||||||
FICO score 740 or greater | 57.9 | % | 71.2 | % | 44.5 | % | 56.9 | % | 70.3 | % | 45.0 | % | ||||||||||||
FICO score720-739 | 8.8 | 7.8 | 11.2 | 8.8 | 8.3 | 9.5 | ||||||||||||||||||
FICO score700-719 | 8.3 | 6.8 | 11.5 | 8.6 | 6.8 | 9.2 | ||||||||||||||||||
FICO score660-699 | 12.7 | 8.7 | 15.4 | 13.2 | 8.4 | 17.1 | ||||||||||||||||||
FICO score620-659 | 5.2 | 3.0 | 8.2 | 5.6 | 3.5 | 9.1 | ||||||||||||||||||
FICO score less than 620 (a) | 7.1 | 2.5 | 9.2 | 6.9 | 2.7 | 10.1 | ||||||||||||||||||
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Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
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| |||||||||||||
| June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
| HELOC | R/E Installment Loans | Permanent Mortgage | HELOC | R/E Installment Loans | Permanent Mortgage | |||||||||||||||||||
| FICO score 740 or greater | 61.4 | % | 74.8 | % | 50.4 | % | 60.0 | % | 73.1 | % | 46.4 | % | ||||||||||||
| FICO score 720-739 | 8.7 | 7.7 | 10.2 | 8.7 | 8.0 | 12.8 | ||||||||||||||||||
| FICO score 700-719 | 7.9 | 6.1 | 9.2 | 8.3 | 6.4 | 9.2 | ||||||||||||||||||
| FICO score 660-699 | 10.7 | 6.7 | 13.9 | 11.1 | 7.2 | 14.8 | ||||||||||||||||||
| FICO score 620-659 | 4.8 | 2.6 | 6.8 | 4.9 | 2.8 | 7.3 | ||||||||||||||||||
| FICO score less than 620 (a) | 6.5 | 2.1 | 9.5 | 7.0 | 2.5 | 9.5 | ||||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
| (a) | For this group, a majority of the loan balances had FICO scores at the time of the origination that exceeded 620 but have since deteriorated as the loans have seasoned. |
| 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 | $ | 10,151,612 | $ | 3,277 | $ | 69 | $ | 10,154,958 | $ | 8,864 | $ | 1,925 | $ | 11,065 | $ | 21,854 | $ | 10,176,812 | ||||||||||||||||||
Loans to mortgage companies | 2,092,722 | — | — | 2,092,722 | — | — | 40 | 40 | 2,092,762 | |||||||||||||||||||||||||||
TRUPS (a) | 304,236 | — | — | 304,236 | — | — | 3,137 | 3,137 | 307,373 | |||||||||||||||||||||||||||
Purchased credit-impaired loans | 21,046 | 15 | 211 | 21,272 | — | — | — | — | 21,272 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total commercial (C&I) | 12,569,616 | 3,292 | 280 | 12,573,188 | 8,864 | 1,925 | 14,242 | 25,031 | 12,598,219 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||||||
Income CRE | 2,169,748 | 117 | — | 2,169,865 | 111 | — | 744 | 855 | 2,170,720 | |||||||||||||||||||||||||||
Residential CRE | 36,456 | — | — | 36,456 | — | — | 795 | 795 | 37,251 | |||||||||||||||||||||||||||
Purchased credit-impaired loans | 3,997 | 28 | — | 4,025 | — | — | — | — | 4,025 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total commercial real estate | 2,210,201 | 145 | — | 2,210,346 | 111 | — | 1,539 | 1,650 | 2,211,996 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Consumer real estate: | ||||||||||||||||||||||||||||||||||||
HELOC | 1,449,129 | 14,514 | 9,440 | 1,473,083 | 42,500 | 3,926 | 8,302 | 54,728 | 1,527,811 | |||||||||||||||||||||||||||
R/E installment loans | 2,856,164 | 7,465 | 4,175 | 2,867,804 | 16,436 | 1,547 | 2,464 | 20,447 | 2,888,251 | |||||||||||||||||||||||||||
Purchased credit-impaired loans | 1,168 | 133 | 96 | 1,397 | — | — | — | — | 1,397 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total consumer real estate | 4,306,461 | 22,112 | 13,711 | 4,342,284 | 58,936 | 5,473 | 10,766 | 75,175 | 4,417,459 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Permanent mortgage | 369,803 | 3,334 | 7,154 | 380,291 | 13,241 | 1,522 | 13,041 | 27,804 | 408,095 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Credit card & other: | ||||||||||||||||||||||||||||||||||||
Credit card | 182,539 | 1,316 | 1,173 | 185,028 | — | — | — | — | 185,028 | |||||||||||||||||||||||||||
Other | 167,580 | 672 | 85 | 168,337 | — | — | 130 | 130 | 168,467 | |||||||||||||||||||||||||||
Purchased credit-impaired loans | 55 | — | — | 55 | — | — | — | — | 55 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total credit card & other | 350,174 | 1,988 | 1,258 | 353,420 | — | — | 130 | 130 | 353,550 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total loans, net of unearned income | $ | 19,806,255 | $ | 30,871 | $ | 22,403 | $ | 19,859,529 | $ | 81,152 | $ | 8,920 | $ | 39,718 | $ | 129,790 | $ | 19,989,319 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
2018:
| Accruing | Non-Accruing | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Current | 30-89 Days Past Due | 90+ Days Past Due | Total Accruing | Current | 30-89 Days Past Due | 90+ Days Past Due | Total Non- Accruing | Total Loans | |||||||||||||||||||||||||||
| Commercial (C&I): | ||||||||||||||||||||||||||||||||||||
| General C&I | $ | 13,696,352 | $ | 7,518 | $ | 639 | $ | 13,704,509 | $ | 9,358 | $ | 510 | $ | 6,367 | $ | 16,235 | $ | 13,720,744 | ||||||||||||||||||
| Loans to mortgage companies | 2,354,836 | — | — | 2,354,836 | — | — | — | — | 2,354,836 | |||||||||||||||||||||||||||
| TRUPS (a) | 303,848 | — | — | 303,848 | — | — | 2,982 | 2,982 | 306,830 | |||||||||||||||||||||||||||
| Purchased credit-impaired loans | 41,046 | 850 | 14,439 | 56,335 | — | — | — | — | 56,335 | |||||||||||||||||||||||||||
| Total commercial (C&I) | 16,396,082 | 8,368 | 15,078 | 16,419,528 | 9,358 | 510 | 9,349 | 19,217 | 16,438,745 | |||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||||||||||
| Income CRE | 4,010,460 | 1,436 | — | 4,011,896 | 43 | 96 | 911 | 1,050 | 4,012,946 | |||||||||||||||||||||||||||
| Residential CRE | 95,887 | — | — | 95,887 | — | — | 393 | 393 | 96,280 | |||||||||||||||||||||||||||
| Purchased credit-impaired loans | 25,926 | 968 | 236 | 27,130 | — | — | — | — | 27,130 | |||||||||||||||||||||||||||
| Total commercial real estate | 4,132,273 | 2,404 | 236 | 4,134,913 | 43 | 96 | 1,304 | 1,443 | 4,136,356 | |||||||||||||||||||||||||||
| Consumer real estate: | ||||||||||||||||||||||||||||||||||||
| HELOC | 1,557,368 | 13,302 | 7,669 | 1,578,339 | 46,823 | 4,157 | 8,852 | 59,832 | 1,638,171 | |||||||||||||||||||||||||||
| R/E installment loans | 4,511,603 | 10,938 | 6,014 | 4,528,555 | 14,766 | 1,721 | 3,083 | 19,570 | 4,548,125 | |||||||||||||||||||||||||||
| Purchased credit-impaired loans | 31,886 | 3,819 | 610 | 36,315 | — | — | — | — | 36,315 | |||||||||||||||||||||||||||
| Total consumer real estate | 6,100,857 | 28,059 | 14,293 | 6,143,209 | 61,589 | 5,878 | 11,935 | 79,402 | 6,222,611 | |||||||||||||||||||||||||||
| Permanent mortgage | 323,736 | 2,391 | 4,419 | 330,546 | 13,143 | 259 | 10,968 | 24,370 | 354,916 | |||||||||||||||||||||||||||
| Credit card & other: | ||||||||||||||||||||||||||||||||||||
| Credit card | 189,849 | 1,097 | 1,055 | 192,001 | — | — | — | — | 192,001 | |||||||||||||||||||||||||||
| Other | 347,702 | 5,534 | 460 | 353,696 | 100 | 51 | 209 | 360 | 354,056 | |||||||||||||||||||||||||||
| Purchased credit-impaired loans | 1,310 | 1,366 | 379 | 3,055 | — | — | — | — | 3,055 | |||||||||||||||||||||||||||
| Total credit card & other | 538,861 | 7,997 | 1,894 | 548,752 | 100 | 51 | 209 | 360 | 549,112 | |||||||||||||||||||||||||||
| Total loans, net of unearned income | $ | 27,491,809 | $ | 49,219 | $ | 35,920 | $ | 27,576,948 | $ | 84,233 | $ | 6,794 | $ | 33,765 | $ | 124,792 | $ | 27,701,740 | ||||||||||||||||||
| 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 | $ | 9,720,231 | $ | 5,199 | $ | 23 | $ | 9,725,453 | $ | 16,106 | $ | 374 | $ | 12,988 | $ | 29,468 | $ | 9,754,921 | ||||||||||||||||||
Loans to mortgage companies | 2,041,408 | 3,722 | — | 2,045,130 | — | — �� | 59 | 59 | 2,045,189 | |||||||||||||||||||||||||||
TRUPS (a) | 304,236 | — | — | 304,236 | — | — | 3,209 | 3,209 | 307,445 | |||||||||||||||||||||||||||
Purchased credit-impaired loans | 40,113 | 185 | 234 | 40,532 | — | — | — | — | 40,532 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total commercial (C&I) | 12,105,988 | 9,106 | 257 | 12,115,351 | 16,106 | 374 | 16,256 | 32,736 | 12,148,087 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||||||
Income CRE | 2,085,455 | 14 | — | 2,085,469 | 232 | 460 | 1,289 | 1,981 | 2,087,450 | |||||||||||||||||||||||||||
Residential CRE | 42,182 | 178 | — | 42,360 | — | — | 795 | 795 | 43,155 | |||||||||||||||||||||||||||
Purchased credit-impaired loans | 4,809 | 109 | — | 4,918 | — | — | — | — | 4,918 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total commercial real estate | 2,132,446 | 301 | — | 2,132,747 | 232 | 460 | 2,084 | 2,776 | 2,135,523 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Consumer real estate: | ||||||||||||||||||||||||||||||||||||
HELOC | 1,602,640 | 17,997 | 10,859 | 1,631,496 | 46,964 | 4,201 | 8,922 | 60,087 | 1,691,583 | |||||||||||||||||||||||||||
R/E installment loans | 2,794,866 | 7,844 | 5,158 | 2,807,868 | 17,989 | 2,383 | 2,353 | 22,725 | 2,830,593 | |||||||||||||||||||||||||||
Purchased credit-impaired loans | 1,319 | 164 | 93 | 1,576 | — | — | — | — | 1,576 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total consumer real estate | 4,398,825 | 26,005 | 16,110 | 4,440,940 | 64,953 | 6,584 | 11,275 | 82,812 | 4,523,752 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Permanent mortgage | 385,972 | 4,544 | 5,428 | 395,944 | 11,867 | 2,194 | 13,120 | 27,181 | 423,125 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Credit card & other: | ||||||||||||||||||||||||||||||||||||
Credit card | 188,573 | 1,622 | 1,456 | 191,651 | — | — | — | — | 191,651 | |||||||||||||||||||||||||||
Other | 166,062 | 992 | 134 | 167,188 | — | — | 142 | 142 | 167,330 | |||||||||||||||||||||||||||
Purchased credit-impaired loans | 52 | — | — | 52 | — | — | — | — | 52 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total credit card & other | 354,687 | 2,614 | 1,590 | 358,891 | — | — | 142 | 142 | 359,033 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total loans, net of unearned income | $ | 19,377,918 | $ | 42,570 | $ | 23,385 | $ | 19,443,873 | $ | 93,158 | $ | 9,612 | $ | 42,877 | $ | 145,647 | $ | 19,589,520 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
2017:
| 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 | $ | 13,514,752 | $ | 8,057 | $ | 95 | $ | 13,522,904 | $ | 1,761 | $ | 7,019 | $ | 19,306 | $ | 28,086 | $ | 13,550,990 | ||||||||||||||||||
| Loans to mortgage companies | 2,099,961 | — | — | 2,099,961 | — | — | — | — | 2,099,961 | |||||||||||||||||||||||||||
| TRUPS (a) | 303,848 | — | — | 303,848 | — | — | 3,067 | 3,067 | 306,915 | |||||||||||||||||||||||||||
| Purchased credit-impaired loans | 77,843 | 2,207 | 19,357 | 99,407 | — | — | — | — | 99,407 | |||||||||||||||||||||||||||
| Total commercial (C&I) | 15,996,404 | 10,264 | 19,452 | 16,026,120 | 1,761 | 7,019 | 22,373 | 31,153 | 16,057,273 | |||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||||||||||
| Income CRE | 4,077,106 | 1,240 | — | 4,078,346 | 56 | — | 546 | 602 | 4,078,948 | |||||||||||||||||||||||||||
| Residential CRE | 98,844 | — | — | 98,844 | — | — | 791 | 791 | 99,635 | |||||||||||||||||||||||||||
| Purchased credit-impaired loans | 31,173 | 2,686 | 2,253 | 36,112 | — | — | — | — | 36,112 | |||||||||||||||||||||||||||
| Total commercial real estate | 4,207,123 | 3,926 | 2,253 | 4,213,302 | 56 | — | 1,337 | 1,393 | 4,214,695 | |||||||||||||||||||||||||||
| Consumer real estate: | ||||||||||||||||||||||||||||||||||||
| HELOC | 1,743,776 | 17,744 | 9,702 | 1,771,222 | 40,508 | 3,626 | 8,354 | 52,488 | 1,823,710 | |||||||||||||||||||||||||||
| R/E installment loans | 4,475,669 | 7,274 | 3,573 | 4,486,516 | 14,439 | 1,957 | 2,603 | 18,999 | 4,505,515 | |||||||||||||||||||||||||||
| Purchased credit-impaired loans | 35,356 | 2,016 | 1,158 | 38,530 | — | — | — | — | 38,530 | |||||||||||||||||||||||||||
| Total consumer real estate | 6,254,801 | 27,034 | 14,433 | 6,296,268 | 54,947 | 5,583 | 10,957 | 71,487 | 6,367,755 | |||||||||||||||||||||||||||
| Permanent mortgage | 365,527 | 3,930 | 3,460 | 372,917 | 13,245 | 1,052 | 12,093 | 26,390 | 399,307 | |||||||||||||||||||||||||||
| Credit card & other: | ||||||||||||||||||||||||||||||||||||
| Credit card | 193,940 | 1,371 | 1,053 | 196,364 | — | — | — | — | 196,364 | |||||||||||||||||||||||||||
| Other | 415,070 | 2,666 | 103 | 417,839 | 31 | — | 165 | 196 | 418,035 | |||||||||||||||||||||||||||
| Purchased credit-impaired loans | 2,993 | 1,693 | 814 | 5,500 | — | — | — | — | 5,500 | |||||||||||||||||||||||||||
| Total credit card & other | 612,003 | 5,730 | 1,970 | 619,703 | 31 | — | 165 | 196 | 619,899 | |||||||||||||||||||||||||||
| Total loans, net of unearned income | $ | 27,435,858 | $ | 50,884 | $ | 41,568 | $ | 27,528,310 | $ | 70,040 | $ | 13,654 | $ | 46,925 | $ | 130,619 | $ | 27,658,929 | ||||||||||||||||||
| Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | |||||||||||||||||||||||
(Dollars in thousands) | Number | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | Number | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | ||||||||||||||||||
Commercial (C&I): | ||||||||||||||||||||||||
General C&I | 1 | $ | 815 | $ | 799 | 2 | $ | 842 | $ | 836 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial (C&I) | 1 | 815 | 799 | 2 | 842 | 836 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Consumer real estate: | ||||||||||||||||||||||||
HELOC | 27 | 2,293 | 2,270 | 62 | 4,882 | 4,743 | ||||||||||||||||||
R/E installment loans | 14 | 799 | 782 | 28 | 1,756 | 1,684 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total consumer real estate | 41 | 3,092 | 3,052 | 90 | 6,638 | 6,427 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Permanent mortgage | 4 | 699 | 693 | 9 | 2,009 | 1,996 | ||||||||||||||||||
Credit card & other | 23 | 144 | 140 | 29 | 165 | 160 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total troubled debt restructurings | 69 | $ | 4,750 | $ | 4,684 | 130 | $ | 9,654 | $ | 9,419 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | |||||||||||||||||||||||
(Dollars in thousands) | Number | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | Number | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | ||||||||||||||||||
Commercial (C&I): | ||||||||||||||||||||||||
General C&I | 4 | $ | 19,175 | $ | 18,067 | 5 | $ | 19,883 | $ | 18,775 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total commercial (C&I) | 4 | 19,175 | 18,067 | 5 | 19,883 | 18,775 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Consumer real estate: | ||||||||||||||||||||||||
HELOC | 53 | 5,258 | 5,246 | 152 | 12,698 | 12,616 | ||||||||||||||||||
R/E installment loans | 19 | 3,326 | 3,614 | 34 | 4,224 | 4,509 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total consumer real estate | 72 | 8,584 | 8,860 | 186 | 16,922 | 17,125 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Permanent mortgage | 4 | 841 | 840 | 4 | 841 | 840 | ||||||||||||||||||
Credit card & other | 1 | 2 | 2 | 5 | 21 | 20 | ||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total troubled debt restructurings | 81 | $ | 28,602 | $ | 27,769 | 200 | $ | 37,667 | $ | 36,760 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2017:
| Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 | |||||||||||||||||||||
| (Dollars in thousands) | Number | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | Number | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | ||||||||||||||||
| Commercial (C&I): | ||||||||||||||||||||||
| General C&I | 3 | $ | 544 | $ | 537 | 8 | $ | 2,048 | $ | 1,751 | ||||||||||||
| Total commercial (C&I) | 3 | 544 | 537 | 8 | 2,048 | 1,751 | ||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||
| Income CRE | 3 | 201 | 195 | 3 | 201 | 195 | ||||||||||||||||
| Total commercial real estate | 3 | 201 | 195 | 3 | 201 | 195 | ||||||||||||||||
| Consumer real estate: | ||||||||||||||||||||||
| HELOC | 34 | 3,824 | 3,806 | 64 | 6,584 | 6,539 | ||||||||||||||||
| R/E installment loans | 10 | 772 | 770 | 15 | 1,383 | 1,382 | ||||||||||||||||
| Total consumer real estate | 44 | 4,596 | 4,576 | 79 | 7,967 | 7,921 | ||||||||||||||||
| Permanent mortgage | 4 | 434 | 440 | 5 | 709 | 713 | ||||||||||||||||
| Credit card & other | 27 | 95 | 94 | 68 | 305 | 291 | ||||||||||||||||
| Total troubled debt restructurings | 81 | $ | 5,870 | $ | 5,842 | 163 | $ | 11,230 | $ | 10,871 | ||||||||||||
| Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | |||||||||||||||||||||
| (Dollars in thousands) | Number | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | Number | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | ||||||||||||||||
| Commercial (C&I): | ||||||||||||||||||||||
| General C&I | 1 | $ | 815 | $ | 799 | 2 | $ | 842 | $ | 836 | ||||||||||||
| Total commercial (C&I) | 1 | 815 | 799 | 2 | 842 | 836 | ||||||||||||||||
| Consumer real estate: | ||||||||||||||||||||||
| HELOC | 27 | 2,293 | 2,270 | 62 | 4,882 | 4,743 | ||||||||||||||||
| R/E installment loans | 14 | 799 | 782 | 28 | 1,756 | 1,684 | ||||||||||||||||
| Total consumer real estate | 41 | 3,092 | 3,052 | 90 | 6,638 | 6,427 | ||||||||||||||||
| Permanent mortgage | 4 | 699 | 693 | 9 | 2,009 | 1,996 | ||||||||||||||||
| Credit card & other | 23 | 144 | 140 | 29 | 165 | 160 | ||||||||||||||||
| Total troubled debt restructurings | 69 | $ | 4,750 | $ | 4,684 | 130 | $ | 9,654 | $ | 9,419 | ||||||||||||
| Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | |||||||||||||||
(Dollars in thousands) | Number | Recorded Investment | Number | Recorded Investment | ||||||||||||
Commercial (C&I): | ||||||||||||||||
General C&I | 2 | $ | 2,228 | 3 | $ | 8,007 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total commercial (C&I) | 2 | 2,228 | 3 | 8,007 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Consumer real estate: | ||||||||||||||||
HELOC | — | — | 4 | 685 | ||||||||||||
R/E installment loans | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total consumer real estate | — | — | 4 | 685 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Permanent mortgage | 1 | 538 | 1 | 538 | ||||||||||||
Credit card & other | 1 | 11 | 3 | 18 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total troubled debt restructurings | 4 | $ | 2,777 | 11 | $ | 9,248 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | |||||||||||||||
(Dollars in thousands) | Number | Recorded Investment | Number | Recorded Investment | ||||||||||||
Commercial (C&I): | ||||||||||||||||
General C&I | — | $ | — | — | $ | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total commercial (C&I) | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Consumer real estate: | ||||||||||||||||
HELOC | 1 | 102 | 2 | 138 | ||||||||||||
R/E installment loans | 1 | 180 | 1 | 180 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total consumer real estate | 2 | 282 | 3 | 318 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Permanent mortgage | — | — | — | — | ||||||||||||
Credit card & other | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total troubled debt restructurings | 2 | $ | 282 | 3 | $ | 318 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 | |||||||||||||
| (Dollars in thousands) | Number | Recorded Investment | Number | Recorded Investment | ||||||||||
| Commercial (C&I): | ||||||||||||||
| General C&I | 1 | $ | 258 | 1 | $ | 258 | ||||||||
| Total commercial (C&I) | 1 | 258 | 1 | 258 | ||||||||||
| Consumer real estate: | ||||||||||||||
| HELOC | 2 | 95 | 4 | 164 | ||||||||||
| R/E installment loans | 1 | 25 | 1 | 25 | ||||||||||
| Total consumer real estate | 3 | 120 | 5 | 189 | ||||||||||
| Permanent mortgage | 1 | 293 | 2 | 405 | ||||||||||
| Credit card & other | 12 | 75 | 26 | 156 | ||||||||||
| Total troubled debt restructurings | 17 | $ | 746 | 34 | $ | 1,008 | ||||||||
| Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | |||||||||||||
| (Dollars in thousands) | Number | Recorded Investment | Number | Recorded Investment | ||||||||||
| Commercial (C&I): | ||||||||||||||
| General C&I | 2 | $ | 2,228 | 3 | $ | 8,007 | ||||||||
| Total commercial (C&I) | 2 | 2,228 | 3 | 8,007 | ||||||||||
| Consumer real estate: | ||||||||||||||
| HELOC | — | — | 4 | 685 | ||||||||||
| Total consumer real estate | — | — | 4 | 685 | ||||||||||
| Permanent mortgage | 1 | 538 | 1 | 538 | ||||||||||
| Credit card & other | 1 | 11 | 3 | 18 | ||||||||||
| Total troubled debt restructurings | 4 | $ | 2,777 | 11 | $ | 9,248 | ||||||||
(Dollars in thousands) | C&I | Commercial Real Estate | Consumer Real Estate | Permanent Mortgage | Credit Card and Other | Total | ||||||||||||||||||
Balance as of April 1, 2017 | $ | 93,107 | $ | 30,888 | $ | 49,680 | $ | 15,893 | $ | 12,400 | $ | 201,968 | ||||||||||||
Charge-offs | (1,865 | ) | (20 | ) | (3,951 | ) | (843 | ) | (3,151 | ) | (9,830 | ) | ||||||||||||
Recoveries | 600 | 140 | 5,143 | 488 | 748 | 7,119 | ||||||||||||||||||
Provision/(provision credit) for loan losses | 537 | (538 | ) | (4,803 | ) | 860 | 1,944 | (2,000 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of June 30, 2017 | 92,379 | 30,470 | 46,069 | 16,398 | 11,941 | 197,257 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of January 1, 2017 | $ | 89,398 | $ | 33,852 | $ | 50,357 | $ | 16,289 | $ | 12,172 | $ | 202,068 | ||||||||||||
Charge-offs | (2,465 | ) | (20 | ) | (7,800 | ) | (1,326 | ) | (6,632 | ) | (18,243 | ) | ||||||||||||
Recoveries | 2,276 | 361 | 10,819 | 1,391 | 1,585 | 16,432 | ||||||||||||||||||
Provision/(provision credit) for loan losses | 3,170 | (3,723 | ) | (7,307 | ) | 44 | 4,816 | (3,000 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of June 30, 2017 | 92,379 | 30,470 | 46,069 | 16,398 | 11,941 | 197,257 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Allowance—individually evaluated for impairment | 3,641 | 176 | 27,149 | 11,858 | 161 | 42,985 | ||||||||||||||||||
Allowance—collectively evaluated for impairment | 88,609 | 30,277 | 18,536 | 4,540 | 11,780 | 153,742 | ||||||||||||||||||
Allowance—purchased credit-impaired loans | 129 | 17 | 384 | — | — | 530 | ||||||||||||||||||
Loans, net of unearned as of June 30, 2017: | ||||||||||||||||||||||||
Individually evaluated for impairment | 38,034 | 3,024 | 137,999 | 85,913 | 360 | 265,330 | ||||||||||||||||||
Collectively evaluated for impairment | 12,538,913 | 2,204,947 | 4,278,063 | 322,182 | 353,135 | 19,697,240 | ||||||||||||||||||
Purchased credit-impaired loans | 21,272 | 4,025 | 1,397 | — | 55 | 26,749 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total loans, net of unearned income | $ | 12,598,219 | $ | 2,211,996 | $ | 4,417,459 | $ | 408,095 | $ | 353,550 | $ | 19,989,319 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of April 1, 2016 | $ | 80,887 | $ | 25,626 | $ | 67,321 | $ | 18,754 | $ | 11,446 | $ | 204,034 | ||||||||||||
Charge-offs | (7,869 | ) | (51 | ) | (6,582 | ) | (349 | ) | (3,445 | ) | (18,296 | ) | ||||||||||||
Recoveries | 1,602 | 909 | 6,082 | 484 | 992 | 10,069 | ||||||||||||||||||
Provision/(provision credit) for loan losses | 6,352 | 3,780 | (7,740 | ) | (1,289 | ) | 2,897 | 4,000 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of June 30, 2016 | 80,972 | 30,264 | 59,081 | 17,600 | 11,890 | 199,807 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of January 1, 2016 | $ | 73,637 | $ | 25,159 | $ | 80,614 | $ | 18,947 | $ | 11,885 | $ | 210,242 | ||||||||||||
Charge-offs | (14,394 | ) | (693 | ) | (13,508 | ) | (461 | ) | (6,852 | ) | (35,908 | ) | ||||||||||||
Recoveries | 2,382 | 1,131 | 11,817 | 1,263 | 1,880 | 18,473 | ||||||||||||||||||
Provision/(provision credit) for loan losses | 19,347 | 4,667 | (19,842 | ) | (2,149 | ) | 4,977 | 7,000 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as of June 30, 2016 | 80,972 | 30,264 | 59,081 | 17,600 | 11,890 | 199,807 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Allowance—individually evaluated for impairment | 4,076 | 434 | 31,911 | 15,583 | 147 | 52,151 | ||||||||||||||||||
Allowance—collectively evaluated for impairment | 76,786 | 29,449 | 26,834 | 2,017 | 11,743 | 146,829 | ||||||||||||||||||
Allowance—purchased credit-impaired loans | 110 | 381 | 336 | — | — | 827 | ||||||||||||||||||
Loans, net of unearned as of June 30, 2016: | ||||||||||||||||||||||||
Individually evaluated for impairment | 51,447 | 8,298 | 163,339 | 95,882 | 356 | 319,322 | ||||||||||||||||||
Collectively evaluated for impairment | 11,117,452 | 1,951,306 | 4,475,856 | 343,132 | 360,275 | 18,248,021 | ||||||||||||||||||
Purchased credit-impaired loans | 10,546 | 9,808 | 1,584 | — | 56 | 21,994 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total loans, net of unearned income | $ | 11,179,445 | $ | 1,969,412 | $ | 4,640,779 | $ | 439,014 | $ | 360,687 | $ | 18,589,337 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2017:
| (Dollars in thousands) | C&I | Commercial Real Estate | Consumer Real Estate | Permanent Mortgage | Credit Card and Other | Total | ||||||||||||||||||
| Balance as of April 1, 2018 | $ | 100,238 | $ | 29,057 | $ | 32,750 | $ | 15,435 | $ | 9,714 | $ | 187,194 | ||||||||||||
| Charge-offs | (3,287 | ) | (228 | ) | (1,481 | ) | (300 | ) | (4,712 | ) | (10,008 | ) | ||||||||||||
| Recoveries | 1,036 | 75 | 5,444 | 631 | 1,090 | 8,276 | ||||||||||||||||||
| Provision/(provision credit) for loan losses | (1,153 | ) | 4,928 | (4,944 | ) | (1,688 | ) | 2,857 | — | |||||||||||||||
| Balance as of June 30, 2018 | 96,834 | 33,832 | 31,769 | 14,078 | 8,949 | 185,462 | ||||||||||||||||||
| Balance as of January 1, 2018 | $ | 98,211 | $ | 28,427 | $ | 37,371 | $ | 15,565 | $ | 9,981 | $ | 189,555 | ||||||||||||
| Charge-offs | (5,362 | ) | (272 | ) | (3,392 | ) | (460 | ) | (9,005 | ) | (18,491 | ) | ||||||||||||
| Recoveries | 2,555 | 81 | 9,827 | 696 | 2,239 | 15,398 | ||||||||||||||||||
| Provision/(provision credit) for loan losses | 1,430 | 5,596 | (12,037 | ) | (1,723 | ) | 5,734 | (1,000 | ) | |||||||||||||||
| Balance as of June 30, 2018 | 96,834 | 33,832 | 31,769 | 14,078 | 8,949 | 185,462 | ||||||||||||||||||
| Allowance - individually evaluated for impairment | 1,213 | — | 20,399 | 10,787 | 305 | 32,704 | ||||||||||||||||||
| Allowance - collectively evaluated for impairment | 93,429 | 33,744 | 10,730 | 3,291 | 8,557 | 149,751 | ||||||||||||||||||
| Allowance - purchased credit-impaired loans | 2,192 | 88 | 640 | — | 87 | 3,007 | ||||||||||||||||||
| Loans, net of unearned as of June 30, 2018: | ||||||||||||||||||||||||
Individually evaluated for impairment | 32,599 | 2,252 | 122,335 | 76,861 | 604 | 234,651 | ||||||||||||||||||
Collectively evaluated for impairment | 16,349,811 | 4,106,974 | 6,063,961 | 278,055 | 545,453 | 27,344,254 | ||||||||||||||||||
Purchased credit-impaired loans | 56,335 | 27,130 | 36,315 | — | 3,055 | 122,835 | ||||||||||||||||||
| Total loans, net of unearned income | $ | 16,438,745 | $ | 4,136,356 | $ | 6,222,611 | $ | 354,916 | $ | 549,112 | $ | 27,701,740 | ||||||||||||
| Balance as of April 1, 2017 | $ | 93,107 | $ | 30,888 | $ | 49,680 | $ | 15,893 | $ | 12,400 | $ | 201,968 | ||||||||||||
| Charge-offs | (1,865 | ) | (20 | ) | (3,951 | ) | (843 | ) | (3,151 | ) | (9,830 | ) | ||||||||||||
| Recoveries | 600 | 140 | 5,143 | 488 | 748 | 7,119 | ||||||||||||||||||
| Provision/(provision credit) for loan losses | 537 | (538 | ) | (4,803 | ) | 860 | 1,944 | (2,000 | ) | |||||||||||||||
| Balance as of June 30, 2017 | 92,379 | 30,470 | 46,069 | 16,398 | 11,941 | 197,257 | ||||||||||||||||||
| Balance as of January 1, 2017 | $ | 89,398 | $ | 33,852 | $ | 50,357 | $ | 16,289 | $ | 12,172 | $ | 202,068 | ||||||||||||
| Charge-offs | (2,465 | ) | (20 | ) | (7,800 | ) | (1,326 | ) | (6,632 | ) | (18,243 | ) | ||||||||||||
| Recoveries | 2,276 | 361 | 10,819 | 1,391 | 1,585 | 16,432 | ||||||||||||||||||
| Provision/(provision credit) for loan losses | 3,170 | (3,723 | ) | (7,307 | ) | 44 | 4,816 | (3,000 | ) | |||||||||||||||
| Balance as of June 30, 2017 | 92,379 | 30,470 | 46,069 | 16,398 | 11,941 | 197,257 | ||||||||||||||||||
Allowance - individually evaluated for impairment | 3,641 | 176 | 27,149 | 11,858 | 161 | 42,985 | ||||||||||||||||||
Allowance - collectively evaluated for impairment | 88,609 | 30,277 | 18,536 | 4,540 | 11,780 | 153,742 | ||||||||||||||||||
| Allowance - purchased credit-impaired loans | 129 | 17 | 384 | — | — | 530 | ||||||||||||||||||
| Loans, net of unearned as of June 30, 2017: | ||||||||||||||||||||||||
| Individually evaluated for impairment | 38,034 | 3,024 | 137,999 | 85,913 | 360 | 265,330 | ||||||||||||||||||
| Collectively evaluated for impairment | 12,538,913 | 2,204,947 | 4,278,063 | 322,182 | 353,135 | 19,697,240 | ||||||||||||||||||
| Purchased credit-impaired loans | 21,272 | 4,025 | 1,397 | — | 55 | 26,749 | ||||||||||||||||||
| Total loans, net of unearned income | $ | 12,598,219 | $ | 2,211,996 | $ | 4,417,459 | $ | 408,095 | $ | 353,550 | $ | 19,989,319 | ||||||||||||
| June 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
(Dollars in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||
Core deposit intangibles | $ | 16,850 | $ | (5,677 | ) | $ | 11,173 | $ | 16,850 | $ | (4,721 | ) | $ | 12,129 | ||||||||||
Customer relationships (a) | 76,865 | (48,274 | ) | 28,591 | 54,865 | (46,302 | ) | 8,563 | ||||||||||||||||
Other (a) (b) | 5,622 | (265 | ) | 5,357 | 555 | (230 | ) | 325 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 99,337 | $ | (54,216 | ) | $ | 45,121 | $ | 72,270 | $ | (51,253 | ) | $ | 21,017 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
| (Dollars in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||
| Core deposit intangibles (a) | $ | 157,150 | $ | (18,146 | ) | $ | 139,004 | $ | 160,650 | $ | (8,176 | ) | $ | 152,474 | ||||||||||
| Customer relationships | 77,865 | (53,211 | ) | 24,654 | 77,865 | (50,777 | ) | 27,088 | ||||||||||||||||
| Other (b) | 5,622 | (1,325 | ) | 4,297 | 5,622 | (795 | ) | 4,827 | ||||||||||||||||
| Total | $ | 240,637 | $ | (72,682 | ) | $ | 167,955 | $ | 244,137 | $ | (59,748 | ) | $ | 184,389 | ||||||||||
| (a) |
| (b) | Balance primarily includes noncompete covenants, as well as |
(Dollars in thousands) | ||||
| Year | Amortization | |||
Remainder of 2017 | $ | 3,929 | ||
2018 | 7,483 | |||
2019 | 7,179 | |||
2020 | 4,303 | |||
2021 | 4,123 | |||
2022 | 3,356 | |||
| (Dollars in thousands) | ||||
| Year | Amortization | |||
| Remainder of 2018 | $ | 12,931 | ||
| 2019 | 24,834 | |||
| 2020 | 21,159 | |||
| 2021 | 19,547 | |||
| 2022 | 17,412 | |||
| 2023 | 16,117 | |||
(Dollars in thousands) | Regional Banking | Fixed Income | Total | |||||||||
December 31, 2015 | $ | 93,303 | $ | 98,004 | $ | 191,307 | ||||||
|
|
|
|
|
| |||||||
Additions | — | — | — | |||||||||
|
|
|
|
|
| |||||||
June 30, 2016 | $ | 93,303 | $ | 98,004 | $ | 191,307 | ||||||
|
|
|
|
|
| |||||||
December 31, 2016 | $ | 93,367 | $ | 98,004 | $ | 191,371 | ||||||
|
|
|
|
|
| |||||||
Additions (a) | — | 44,964 | 44,964 | |||||||||
|
|
|
|
|
| |||||||
June 30, 2017 | $ | 93,367 | $ | 142,968 | $ | 236,335 | ||||||
|
|
|
|
|
| |||||||
2017.
| (Dollars in thousands) | Regional Banking | Fixed Income | Total | |||||||||
| December 31, 2016 | $ | 93,367 | $ | 98,004 | $ | 191,371 | ||||||
| Additions (a) | — | 44,964 | 44,964 | |||||||||
| June 30, 2017 | $ | 93,367 | $ | 142,968 | $ | 236,335 | ||||||
| December 31, 2017 | $ | 1,243,885 | $ | 142,968 | $ | 1,386,853 | ||||||
| Additions (a) | 22,423 | — | 22,423 | |||||||||
| June 30, 2018 | $ | 1,266,308 | $ | 142,968 | $ | 1,409,276 | ||||||
additional information.
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
All other income and commissions: | ||||||||||||||||
Other service charges | $ | 3,109 | $ | 2,996 | $ | 6,093 | $ | 5,709 | ||||||||
ATM interchange fees | 3,083 | 2,879 | 5,861 | 5,837 | ||||||||||||
Deferred compensation | 1,491 | 795 | 3,318 | 1,124 | ||||||||||||
Electronic banking fees | 1,306 | 1,381 | 2,629 | 2,778 | ||||||||||||
Mortgage banking | 1,268 | 598 | 2,529 | 1,871 | ||||||||||||
Letter of credit fees | 1,122 | 1,115 | 2,158 | 2,176 | ||||||||||||
Insurance commissions | 592 | 552 | 1,475 | 1,039 | ||||||||||||
Other | 2,646 | 2,005 | 4,945 | 5,076 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 14,617 | $ | 12,321 | $ | 29,008 | $ | 25,610 | ||||||||
|
|
|
|
|
|
|
| |||||||||
All other expense: | ||||||||||||||||
Travel and entertainment | $ | 3,162 | $ | 2,495 | $ | 5,510 | $ | 4,557 | ||||||||
Other insurance and taxes | 2,443 | 3,014 | 4,833 | 6,327 | ||||||||||||
Customer relations | 1,543 | 1,483 | 2,879 | 3,362 | ||||||||||||
Employee training and dues | 1,453 | 1,338 | 2,996 | 2,728 | ||||||||||||
Supplies | 1,093 | 930 | 1,956 | 1,956 | ||||||||||||
Tax credit investments | 942 | 831 | 1,884 | 1,537 | ||||||||||||
Miscellaneous loan costs | 699 | 565 | 1,321 | 1,282 | ||||||||||||
Litigation and regulatory matters | 533 | 26,000 | 241 | 25,525 | ||||||||||||
Foreclosed real estate | 446 | (432 | ) | 650 | (690 | ) | ||||||||||
Other | 12,090 | 10,624 | 20,921 | 22,343 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 24,404 | $ | 46,848 | $ | 43,191 | $ | 68,927 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| All other income and commissions: | |||||||||||||||
Other service charges | $ | 3,728 | $ | 3,109 | $ | 8,076 | $ | 6,093 | |||||||
| ATM and interchange fees | 3,413 | 3,083 | 6,680 | 5,861 | |||||||||||
| Dividend income (a) | 3,124 | — | 5,373 | — | |||||||||||
| Mortgage banking | 2,431 | 1,268 | 4,977 | 2,529 | |||||||||||
| Letter of credit fees | 1,295 | 1,122 | 2,544 | 2,158 | |||||||||||
| Electronic banking fees | 1,228 | 1,306 | 2,432 | 2,629 | |||||||||||
| Deferred compensation | 991 | 1,491 | 1,442 | 3,318 | |||||||||||
| Insurance commissions | 476 | 592 | 1,233 | 1,475 | |||||||||||
| Other | 2,748 | 2,646 | 9,920 | 4,945 | |||||||||||
| Total | $ | 19,434 | $ | 14,617 | $ | 42,677 | $ | 29,008 | |||||||
| All other expense: | |||||||||||||||
| Travel and entertainment | $ | 5,131 | $ | 3,162 | $ | 8,114 | $ | 5,510 | |||||||
| Other insurance and taxes | 2,752 | 2,443 | 5,417 | 4,833 | |||||||||||
| Supplies | 1,987 | 1,093 | 3,823 | 1,956 | |||||||||||
| Employee training and dues | 1,849 | 1,453 | 3,628 | 2,996 | |||||||||||
| Non-service components of net periodic pension and post-retirement cost | 1,530 | 851 | 2,034 | 1,328 | |||||||||||
| Customer relations | 1,358 | 1,543 | 2,421 | 2,879 | |||||||||||
| Tax credit investments | 1,079 | 942 | 2,216 | 1,884 | |||||||||||
| Miscellaneous loan costs | 1,035 | 699 | 2,177 | 1,321 | |||||||||||
| OREO | 810 | 446 | 918 | 650 | |||||||||||
| Litigation and regulatory matters | 16 | 533 | 2,150 | 241 | |||||||||||
| Other (b) | 33,452 | 12,051 | 53,433 | 20,843 | |||||||||||
| Total | $ | 50,999 | $ | 25,216 | $ | 86,331 | $ | 44,441 | |||||||
| (a) | Effective January 1, 2018, FHN adopted ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” and began recording dividend income from FRB and FHLB holdings in Other income. Prior to first quarter 2018 these amounts were included in Interest income on the Consolidated Condensed Statements of Income. |
| (b) | Expense increase for the three and six months ended June 30, 2018 largely attributable to acquisition- and integration-related expenses associated with the CBF acquisition. See Note 2 - Acquisitions and Divestitures for additional information. |
(Dollars in thousands) | Securities AFS | Cash Flow Hedges | Pension and Post-retirement Plans | Total | ||||||||||||
Balance as of April 1, 2017 | $ | (18,795 | ) | $ | (3,179 | ) | $ | (227,984 | ) | $ | (249,958 | ) | ||||
Net unrealized gains/(losses) | 9,188 | 3,059 | — | 12,247 | ||||||||||||
Amounts reclassified from AOCI | (250 | ) | (904 | ) | 1,403 | 249 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income/(loss) | 8,938 | 2,155 | 1,403 | 12,496 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of June 30, 2017 | $ | (9,857 | ) | $ | (1,024 | ) | $ | (226,581 | ) | $ | (237,462 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Balance as of January 1, 2017 | $ | (17,232 | ) | $ | (1,265 | ) | $ | (229,157 | ) | $ | (247,654 | ) | ||||
Net unrealized gains/(losses) | 7,652 | 1,997 | — | 9,649 | ||||||||||||
Amounts reclassified from AOCI | (277 | ) | (1,756 | ) | 2,576 | 543 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income/(loss) | 7,375 | 241 | 2,576 | 10,192 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of June 30, 2017 | $ | (9,857 | ) | $ | (1,024 | ) | $ | (226,581 | ) | $ | (237,462 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
(Dollars in thousands) | Securities AFS | Cash Flow Hedges | Pension and Post-retirement Plans | Total | ||||||||||||
Balance as of April 1, 2016 | $ | 42,554 | $ | 3,465 | $ | (216,460 | ) | $ | (170,441 | ) | ||||||
Net unrealized gains/(losses) | 16,037 | 1,600 | — | 17,637 | ||||||||||||
Amounts reclassified from AOCI | — | (374 | ) | 844 | 470 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income/(loss) | 16,037 | 1,226 | 844 | 18,107 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of June 30, 2016 | $ | 58,591 | $ | 4,691 | $ | (215,616 | ) | $ | (152,334 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of January 1, 2016 | $ | 3,394 | $ | — | $ | (217,586 | ) | $ | (214,192 | ) | ||||||
Net unrealized gains/(losses) | 56,217 | 5,439 | — | 61,656 | ||||||||||||
Amounts reclassified from AOCI | (1,020 | ) | (748 | ) | 1,970 | 202 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income/(loss) | 55,197 | 4,691 | 1,970 | 61,858 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of June 30, 2016 | $ | 58,591 | $ | 4,691 | $ | (215,616 | ) | $ | (152,334 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
2017:
| (Dollars in thousands) | Securities AFS | Cash Flow Hedges | Pension and Post-retirement Plans | Total | ||||||||||||
| Balance as of April 1, 2018 | $ | (86,382 | ) | $ | (16,763 | ) | $ | (286,940 | ) | $ | (390,085 | ) | ||||
| Net unrealized gains/(losses) | (21,094 | ) | (3,457 | ) | — | (24,551 | ) | |||||||||
| Amounts reclassified from AOCI | — | 463 | 2,059 | 2,522 | ||||||||||||
| Other comprehensive income/(loss) | (21,094 | ) | (2,994 | ) | 2,059 | (22,029 | ) | |||||||||
| Balance as of June 30, 2018 | $ | (107,476 | ) | $ | (19,757 | ) | $ | (284,881 | ) | $ | (412,114 | ) | ||||
| Balance as of January 1, 2018 | $ | (26,834 | ) | $ | (7,764 | ) | $ | (288,227 | ) | $ | (322,825 | ) | ||||
| Adjustment to reflect adoption of ASU 2016-01 and ASU 2017-12 | (5 | ) | (206 | ) | — | (211 | ) | |||||||||
| Beginning balance, as adjusted | $ | (26,839 | ) | $ | (7,970 | ) | $ | (288,227 | ) | $ | (323,036 | ) | ||||
| Net unrealized gains/(losses) | (80,598 | ) | (12,095 | ) | — | (92,693 | ) | |||||||||
| Amounts reclassified from AOCI | (39 | ) | 308 | 3,346 | 3,615 | |||||||||||
| Other comprehensive income/(loss) | (80,637 | ) | (11,787 | ) | 3,346 | (89,078 | ) | |||||||||
| Balance as of June 30, 2018 | $ | (107,476 | ) | $ | (19,757 | ) | $ | (284,881 | ) | $ | (412,114 | ) | ||||
| (Dollars in thousands) | Securities AFS | Cash Flow Hedges | Pension and Post-retirement Plans | Total | ||||||||||||
| Balance as of April 1, 2017 | $ | (18,795 | ) | $ | (3,179 | ) | $ | (227,984 | ) | $ | (249,958 | ) | ||||
| Net unrealized gains/(losses) | 9,188 | 3,059 | — | 12,247 | ||||||||||||
| Amounts reclassified from AOCI | (250 | ) | (904 | ) | 1,403 | 249 | ||||||||||
| Other comprehensive income/(loss) | 8,938 | 2,155 | 1,403 | 12,496 | ||||||||||||
| Balance as of June 30, 2017 | $ | (9,857 | ) | $ | (1,024 | ) | $ | (226,581 | ) | $ | (237,462 | ) | ||||
| Balance as of January 1, 2017 | $ | (17,232 | ) | $ | (1,265 | ) | $ | (229,157 | ) | $ | (247,654 | ) | ||||
| Net unrealized gains/(losses) | 7,652 | 1,997 | — | 9,649 | ||||||||||||
| Amounts reclassified from AOCI | (277 | ) | (1,756 | ) | 2,576 | 543 | ||||||||||
| Other comprehensive income/(loss) | 7,375 | 241 | 2,576 | 10,192 | ||||||||||||
| Balance as of June 30, 2017 | $ | (9,857 | ) | $ | (1,024 | ) | $ | (226,581 | ) | $ | (237,462 | ) | ||||
(Dollars in thousands) | Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||
Details about AOCI | 2017 | 2016 | 2017 | 2016 | Affected line item in the statement where net income | |||||||||||||
Securities AFS: | ||||||||||||||||||
Realized (gains)/losses on securities AFS | $ | (405 | ) | $ | — | $ | (449 | ) | $ | (1,654 | ) | Debt securities gains/(losses), net | ||||||
Tax expense/(benefit) | 155 | — | 172 | 634 | Provision/(benefit) for income taxes | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
| (250 | ) | — | (277 | ) | (1,020 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Cash flow hedges: | ||||||||||||||||||
Realized (gains)/losses on cash flow hedges | (1,465 | ) | (607 | ) | (2,845 | ) | (1,213 | ) | Interest and fees on loans | |||||||||
Tax expense/(benefit) | 561 | 233 | 1,089 | 465 | Provision/(benefit) for income taxes | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
| (904 | ) | (374 | ) | (1,756 | ) | (748 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||
Pension and Postretirement Plans: | ||||||||||||||||||
Amortization of prior service cost and net actuarial gain/(loss) | 2,273 | 1,369 | 4,173 | 3,195 | Employee compensation, incentives, and benefits | |||||||||||||
Tax expense/(benefit) | (870 | ) | (525 | ) | (1,597 | ) | (1,225 | ) | Provision/(benefit) for income taxes | |||||||||
|
|
|
|
|
|
|
| |||||||||||
| 1,403 | 844 | 2,576 | 1,970 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total reclassification from AOCI | $ | 249 | $ | 470 | $ | 543 | $ | 202 | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
| (Dollars in thousands) | Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||
| Details about AOCI | 2018 | 2017 | 2018 | 2017 | Affected line item in the statement where net income is presented | |||||||||||||
| Securities AFS: | ||||||||||||||||||
| Realized (gains)/losses on securities AFS | $ | — | $ | (405 | ) | $ | (52 | ) | $ | (449 | ) | Debt securities gains/(losses), net | ||||||
| Tax expense/(benefit) | — | 155 | 13 | 172 | Provision/(benefit) for income taxes | |||||||||||||
| — | (250 | ) | (39 | ) | (277 | ) | ||||||||||||
| Cash flow hedges: | ||||||||||||||||||
| Realized (gains)/losses on cash flow hedges | 615 | (1,465 | ) | 409 | (2,845 | ) | Interest and fees on loans | |||||||||||
| Tax expense/(benefit) | (152 | ) | 561 | (101 | ) | 1,089 | Provision/(benefit) for income taxes | |||||||||||
| 463 | (904 | ) | 308 | (1,756 | ) | |||||||||||||
| Pension and Postretirement Plans: | ||||||||||||||||||
| Amortization of prior service cost and net actuarial gain/(loss) | 2,735 | 2,273 | 4,444 | 4,173 | All other expense | |||||||||||||
| Tax expense/(benefit) | (676 | ) | (870 | ) | (1,098 | ) | (1,597 | ) | Provision/(benefit) for income taxes | |||||||||
| 2,059 | 1,403 | 3,346 | 2,576 | |||||||||||||||
| Total reclassification from AOCI | $ | 2,522 | $ | 249 | $ | 3,615 | $ | 543 | ||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(Dollars and shares in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income/(loss) | $ | 95,204 | $ | 60,940 | $ | 153,592 | $ | 113,153 | ||||||||
Net income attributable to noncontrolling interest | 2,852 | 2,852 | 5,672 | 5,703 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income/(loss) attributable to controlling interest | 92,352 | 58,088 | 147,920 | 107,450 | ||||||||||||
Preferred stock dividends | 1,550 | 1,550 | 3,100 | 3,100 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income/(loss) available to common shareholders | $ | 90,802 | $ | 56,538 | $ | 144,820 | $ | 104,350 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted average common shares outstanding—basic | 233,482 | 231,573 | 233,280 | 233,112 | ||||||||||||
Effect of dilutive securities | 2,781 | 2,003 | 2,945 | 2,009 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted average common shares outstanding—diluted | 236,263 | 233,576 | 236,225 | 235,121 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income/(loss) per share available to common shareholders | $ | 0.39 | $ | 0.24 | $ | 0.62 | $ | 0.45 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted income/(loss) per share available to common shareholders | $ | 0.38 | $ | 0.24 | $ | 0.61 | $ | 0.44 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| (Dollars and shares in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net income/(loss) | $ | 85,992 | $ | 95,204 | $ | 180,986 | $ | 153,592 | ||||||||
| Net income attributable to noncontrolling interest | 2,852 | 2,852 | 5,672 | 5,672 | ||||||||||||
| Net income/(loss) attributable to controlling interest | 83,140 | 92,352 | 175,314 | 147,920 | ||||||||||||
| Preferred stock dividends | 1,550 | 1,550 | 3,100 | 3,100 | ||||||||||||
| Net income/(loss) available to common shareholders | $ | 81,590 | $ | 90,802 | $ | 172,214 | $ | 144,820 | ||||||||
| Weighted average common shares outstanding—basic | 325,153 | 233,482 | 325,817 | 233,280 | ||||||||||||
| Effect of dilutive securities | 3,273 | 2,781 | 3,536 | 2,945 | ||||||||||||
| Weighted average common shares outstanding—diluted | 328,426 | 236,263 | 329,353 | 236,225 | ||||||||||||
| Net income/(loss) per share available to common shareholders | $ | 0.25 | $ | 0.39 | $ | 0.53 | $ | 0.62 | ||||||||
| Diluted income/(loss) per share available to common shareholders | $ | 0.25 | $ | 0.38 | $ | 0.52 | $ | 0.61 | ||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(Shares in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Stock options excluded from the calculation of diluted EPS | 2,721 | 3,842 | 2,512 | 3,804 | ||||||||||||
Weighted average exercise price of stock options excluded from the calculation of diluted EPS | $ | 25.24 | $ | 22.68 | $ | 25.85 | $ | 23.06 | ||||||||
Other equity awards excluded from the calculation of diluted EPS | 482 | 959 | 247 | 867 | ||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| (Shares in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Stock options excluded from the calculation of diluted EPS | 2,446 | 2,721 | 2,428 | 2,512 | ||||||||||||
| Weighted average exercise price of stock options excluded from the calculation of diluted EPS | $ | 24.38 | $ | 25.24 | $ | 24.60 | $ | 25.85 | ||||||||
| Other equity awards excluded from the calculation of diluted EPS | 565 | 482 | 404 | 247 | ||||||||||||
Note 10 – Contingencies and Other Disclosures (Continued)
Underwriters areco-defendants in theFDIC-New York matter and have demanded, under provisions in the applicable underwriting agreements, that FHN indemnify them for their expenses and any losses they may incur. In addition, FHN has received indemnity demands from underwriters in certain other suits as to which investors claim to have purchased certificates in FH proprietary securitizations but as to which FHN has not been named a defendant.
Matters Related to Capital Bank Financial Transaction
On July 14, 2017, a complaint captioned Robert Garfield v. First Horizon National Corporation, et al., No.CH-17-1022, was filed on behalf
In addition, Capital Bank Financial and the individual members of the Capital Bank Financial board of directors have been named as defendants in three substantially similar putative derivative and class action lawsuits filed by alleged shareholders of Capital Bank Financial. These actions are captioned: (1) Bushansky v. Capital Bank Financial Corp., et al., No.3:17-cv-00422 (W.D. North Carolina filed July 17, 2017); (2) Parshall v. Capital Bank Financial Corp., et al., No.3:17-cv-00428 (W.D. North Carolina filed July 19, 2017); and (3) Catherine McNamara v. Capital Bank Financial Corp., et al., No.3:17-cv-00439 (W.D. North Carolina filed July 25, 2017). The Parshall complaint also names FHN as a defendant. The three complaints allege that the registration statement on FormS-4 which FHN filed on June 29, 2017 omits and/or misrepresents material information which renders it false and misleading. Specifically, the complaints allege that the registration statement omits material information regarding (i) the financial projections of Capital Bank Financial, FHN, and the pro forma combined company; (ii) material information regarding the engagement of an investment banker; (iii) the holdings of certain investment bankers in Capital Bank Financial and FHN; and (iv) certain provisions ofnon-disclosure agreements between Capital Bank Financial and prospective bidders, which included FHN. The complaints further allege that an investment banker’s valuation analyses and fairness opinion were misleading. The complaints seek, among other things, an order enjoining the merger, as well as other equitable relief and/or money damages, interest, costs, fees (including attorneys’ fees) and expenses.
The outcome of these pending matters, and any additional future litigation concerning FHN’s transaction with Capital Bank Financial, is uncertain. Any of these suits, if fully or partially successful, could prevent or delay completion of the transaction and could result in substantial costs to FHN, including any costs associated with the indemnification of FHN’s directors and officers and, after the transaction closes, indemnification of Capital Bank Financial’s directors and officers.
Material Gain Contingency Matter
In second quarter 2015 FHN reached an agreement with DOJ and HUD to settle potential claims related to FHN’s underwriting and origination of loans insured by FHA. Under that agreement FHN paid $212.5 million. FHN believes that certain insurance policies, having an aggregate policy limit of $75 million, provide coverage for FHN’s losses and related costs. The insurers have denied and/or reserved rights to deny coverage. FHN sued the insurers to enforce the policies under Tennessee law. The trial court granted summary judgment to the defendants, and FHN has appealed. In connection with this litigation FHN seeks to partly recoup previously recognized expenses associated with the settled matter. Under applicable financial accounting guidance FHN has determined that although material gain from this litigation is not probable, there is a reasonably possible (more than remote) chance of a material gain outcome for FHN. FHN cannot determine a probable outcome that may result from this matter because of the uncertainty of the potential outcomes of the legal proceedings and also due to significant uncertainties regarding: legal interpretation of the relevant contracts; potential remedies that might be available or awarded; and the ultimate effect of counterclaims asserted by the defendants. Additional information concerning FHN’s former mortgage businesses is provided below in “Obligations from Legacy Mortgage Businesses.”
Note 10 – Contingencies and Other Disclosures (Continued)
securitizations. FHN also originated mortgage loans eligible for FHA insurance or VA guaranty. In addition, FHN originated and sold HELOCs and second lien mortgages through other whole loans sold to private purchasers and, to a lesser extent, through FH proprietary securitizations. Currently, only one FH securitization of HELOCs remains outstanding.
Note 10 – Contingencies and Other Disclosures (Continued)
A certificate holder has contacted FHN, claiming that it has been damaged from alleged deficiencies in servicing loans held in certain FH proprietary securitization trusts. The holder has sued the FH securitization trustee on related grounds, but has not yet sued FHN. FHN cannot predict how this matter will proceed nor can FHN predict whether this matter ultimately will be material to FHN.
| Agencies | the two GSEs and Ginnie Mae | HELOC | home equity line of credit | |||||
| certificates | securities sold to investors representing interests in mortgage loan securitizations | HUD | Dept. of Housing and Urban Development | |||||
| DOJ | U.S. Department of Justice | LTV | loan-to-value, a ratio of the loan amount divided by the home value | |||||
| DRA | definitive resolution agreement with a GSE | MI | private mortgage insurance, insuring against borrower payment default | |||||
Fannie Mae, Fannie, FNMA | Federal National Mortgage Association | MSR | mortgage servicing rights | |||||
FH proprietary securitization | securitization of mortgages sponsored by FHN under its First Horizon brand | nonconforming loans | loans that did not conform to Agency program requirements | |||||
| FHA | Federal Housing Administration | other whole loans sold | mortgage loans sold to private,non-Agency purchasers | |||||
| Freddie Mac, Freddie, FHLMC | Federal Home Loan Mortgage Corporation | 2008 platform sale, platform | FHN’s sale of its national mortgage origination and servicing platforms in 2008 | |||||
Ginnie Mae, Ginnie, GNMA | Government National Mortgage Association | pipeline or active pipeline | pipeline of mortgage repurchase, make-whole, & certain related claims against FHN | |||||
| GSEs | Fannie Mae and Freddie Mac | VA | Veterans Administration | |||||
FHN’s FHA and VA program lending was substantial prior to the 2008 platform sale, and has continued at a much lower level since then. As lender, FHN made certain representations and warranties as to the compliance of the loans with program requirements. Over the past several years, most recently in first quarter 2015, FHN occasionally has recognized significant losses associated with settling claims and potential claims by government agencies, and by private parties asserting claims on behalf of agencies, related to these origination activities.
Note 10 – Contingencies and Other Disclosures (Continued)
At June 30, 2017,2018, FHN had not accrued a liability for exposure for repurchase of first-lien loans related to FH proprietary securitizations arising from claims from the trustee that FHN breached its representations and warranties in FH proprietary securitizations at closing.closing, and no such claims had been made. FHN’s trustee is a defendant in lawsuits in which the plaintiffs have asserted that the trustee has duties to review loans and otherwise to act against FHN outside of the duties specified in the applicable trust documents; FHN is not a defendant and is not able to assess what, if any, exposure FHN may have as a result of them.
Certain government entities have subpoenaed information from FHN and others. These entities include the FDIC (on behalf of certain failed banks) and the FHLBs of San Francisco, Atlanta, and Seattle, among others. These entities purport to act on behalf of several purchasers of FH proprietary securitizations, and ofnon-FH securitizations which included other whole loans sold. Collectively, the subpoenas seek information concerning: a number of FH proprietary securitizations and/or underlying loan originations; and originations of certain other whole loans sold which, in many cases, were included by the purchaser in its own securitizations. Some subpoenas fail to identify the specific investments made or loans at issue. Moreover, FHN has limited information regarding at least some of the loans under review. Unless and until a review (if related to specific loans) becomes an identifiable repurchase claim, the associated loans are not considered part of the active pipeline.
Note 10 – Contingencies and Other Disclosures (Continued)
As of December 31, 2017, the aggregate benefit obligation for the plans was $18.7 million and aggregate plan assets were $18.6 million. Benefit payments, expense and actuarial gains/losses related to these plans were insignificant for 2018 and 2017. Additional funding amounts to these plans are dependent upon the potential settlement of the plans. Due to the insignificant financial statement impact, these two plans are not included in the disclosures that follow.
2018.
| Pension Benefits | Other Benefits | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Components of net periodic benefit cost | ||||||||||||||||
Service cost | $ | 10 | $ | 10 | $ | 27 | $ | 27 | ||||||||
Interest cost | 7,380 | 7,882 | 325 | 317 | ||||||||||||
Expected return on plan assets | (8,890 | ) | (9,772 | ) | (237 | ) | (229 | ) | ||||||||
Amortization of unrecognized: | ||||||||||||||||
Prior service cost/(credit) | 13 | 50 | 24 | 42 | ||||||||||||
Actuarial (gain)/loss | 2,380 | 2,067 | (143 | ) | (232 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net periodic benefit cost/(credit) | $ | 893 | $ | 237 | $ | (4 | ) | $ | (75 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
| Pension Benefits | Other Benefits | |||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Components of net periodic benefit cost | ||||||||||||||||
| Service cost | $ | 10 | $ | 10 | $ | 34 | $ | 27 | ||||||||
| Interest cost | 6,987 | 7,380 | 327 | 325 | ||||||||||||
| Expected return on plan assets | (8,226 | ) | (8,890 | ) | (269 | ) | (237 | ) | ||||||||
| Amortization of unrecognized: | ||||||||||||||||
| Prior service cost/(credit) | — | 13 | — | 24 | ||||||||||||
| Actuarial (gain)/loss | 2,956 | 2,380 | (91 | ) | (143 | ) | ||||||||||
| Net periodic benefit cost/(credit) | $ | 1,727 | $ | 893 | $ | 1 | $ | (4 | ) | |||||||
| Pension Benefits | Other Benefits | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Components of net periodic benefit cost | ||||||||||||||||
Service cost | $ | 19 | $ | 20 | $ | 54 | $ | 55 | ||||||||
Interest cost | 14,759 | 15,764 | 651 | 634 | ||||||||||||
Expected return on plan assets | (17,781 | ) | (19,545 | ) | (474 | ) | (458 | ) | ||||||||
Amortization of unrecognized: | ||||||||||||||||
Prior service cost/(credit) | 26 | 99 | 48 | 85 | ||||||||||||
Actuarial (gain)/loss | 4,760 | 4,135 | (285 | ) | (465 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net periodic benefit cost/(credit) | $ | 1,783 | $ | 473 | $ | (6 | ) | $ | (149 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
| Pension Benefits | Other Benefits | |||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Components of net periodic benefit cost | ||||||||||||||||
| Service cost | $ | 20 | $ | 19 | $ | 67 | $ | 54 | ||||||||
| Interest cost | 13,973 | 14,759 | 654 | 651 | ||||||||||||
| Expected return on plan assets | (16,451 | ) | (17,781 | ) | (538 | ) | (474 | ) | ||||||||
| Amortization of unrecognized: | ||||||||||||||||
| Prior service cost/(credit) | — | 26 | — | 48 | ||||||||||||
| Actuarial (gain)/loss | 5,912 | 4,760 | (182 | ) | (285 | ) | ||||||||||
| Net periodic benefit cost/(credit) | $ | 3,454 | $ | 1,783 | $ | 1 | $ | (6 | ) | |||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Consolidated | ||||||||||||||||
Net interest income | $ | 200,701 | $ | 176,264 | $ | 390,409 | $ | 348,338 | ||||||||
Provision/(provision credit) for loan losses | (2,000 | ) | 4,000 | (3,000 | ) | 7,000 | ||||||||||
Noninterest income | 127,673 | 145,514 | 244,612 | 279,819 | ||||||||||||
Noninterest expense | 217,917 | 226,822 | 440,122 | 453,749 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income/(loss) before income taxes | 112,457 | 90,956 | 197,899 | 167,408 | ||||||||||||
Provision/(benefit) for income taxes (a) | 17,253 | 30,016 | 44,307 | 54,255 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income/(loss) | $ | 95,204 | $ | 60,940 | $ | 153,592 | $ | 113,153 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Average assets | $ | 28,876,350 | $ | 26,828,548 | $ | 28,841,422 | $ | 26,723,621 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Consolidated | |||||||||||||||
| Net interest income | $ | 310,932 | $ | 200,701 | $ | 612,105 | $ | 390,409 | |||||||
| Provision/(provision credit) for loan losses | — | (2,000 | ) | (1,000 | ) | (3,000 | ) | ||||||||
| Noninterest income | 127,525 | 127,673 | 263,542 | 244,612 | |||||||||||
| Noninterest expense | 332,768 | 217,917 | 646,033 | 440,122 | |||||||||||
| Income/(loss) before income taxes | 105,689 | 112,457 | 230,614 | 197,899 | |||||||||||
| Provision/(benefit) for income taxes | 19,697 | 17,253 | 49,628 | 44,307 | |||||||||||
| Net income/(loss) | $ | 85,992 | $ | 95,204 | $ | 180,986 | $ | 153,592 | |||||||
| Average assets | $ | 40,173,712 | $ | 28,876,350 | $ | 40,261,729 | $ | 28,841,422 | |||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Regional Banking | ||||||||||||||||
Net interest income | $ | 201,997 | $ | 178,318 | $ | 395,386 | $ | 350,627 | ||||||||
Provision/(provision credit) for loan losses | 260 | 10,883 | 3,358 | 25,651 | ||||||||||||
Noninterest income | 64,737 | 61,275 | 123,713 | 120,551 | ||||||||||||
Noninterest expense | 152,659 | 164,524 | 300,723 | 309,920 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income/(loss) before income taxes | 113,815 | 64,186 | 215,018 | 135,607 | ||||||||||||
Provision/(benefit) for income taxes | 41,136 | 22,333 | 77,724 | 47,709 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income/(loss) | $ | 72,679 | $ | 41,853 | $ | 137,294 | $ | 87,898 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Average assets | $ | 18,431,757 | $ | 16,575,643 | $ | 18,194,854 | $ | 16,260,417 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Fixed Income | ||||||||||||||||
Net interest income | $ | 4,979 | $ | 3,146 | $ | 6,130 | $ | 5,813 | ||||||||
Noninterest income | 55,205 | 78,083 | 106,027 | 145,205 | ||||||||||||
Noninterest expense | 54,001 | 62,802 | 102,686 | 121,427 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income/(loss) before income taxes | 6,183 | 18,427 | 9,471 | 29,591 | ||||||||||||
Provision/(benefit) for income taxes | 1,946 | 6,785 | 2,970 | 10,677 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income/(loss) | $ | 4,237 | $ | 11,642 | $ | 6,501 | $ | 18,914 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Average assets | $ | 2,696,430 | $ | 2,470,724 | $ | 2,288,336 | $ | 2,370,201 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Corporate | ||||||||||||||||
Net interest income/(expense) | $ | (14,995 | ) | $ | (15,847 | ) | $ | (29,095 | ) | $ | (30,208 | ) | ||||
Noninterest income | 6,218 | 4,909 | 11,694 | 10,632 | ||||||||||||
Noninterest expense | 24,563 | 15,930 | 41,443 | 29,391 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income/(loss) before income taxes | (33,340 | ) | (26,868 | ) | (58,844 | ) | (48,967 | ) | ||||||||
Provision/(benefit) for income taxes (a) | (35,711 | ) | (12,744 | ) | (48,769 | ) | (23,959 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income/(loss) | $ | 2,371 | $ | (14,124 | ) | $ | (10,075 | ) | $ | (25,008 | ) | |||||
|
|
|
|
|
|
|
| |||||||||
Average assets | $ | 6,226,743 | $ | 5,833,303 | $ | 6,789,751 | $ | 6,097,764 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Non-Strategic | ||||||||||||||||
Net interest income | $ | 8,720 | $ | 10,647 | $ | 17,988 | $ | 22,106 | ||||||||
Provision/(provision credit) for loan losses | (2,260 | ) | (6,883 | ) | (6,358 | ) | (18,651 | ) | ||||||||
Noninterest income | 1,513 | 1,247 | 3,178 | 3,431 | ||||||||||||
Noninterest expense | (13,306 | ) | (16,434 | ) | (4,730 | ) | (6,989 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Income/(loss) before income taxes | 25,799 | 35,211 | 32,254 | 51,177 | ||||||||||||
Provision/(benefit) for income taxes | 9,882 | 13,642 | 12,382 | 19,828 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income/(loss) | $ | 15,917 | $ | 21,569 | $ | 19,872 | $ | 31,349 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Average assets | $ | 1,521,420 | $ | 1,948,878 | $ | 1,568,481 | $ | 1,995,239 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Regional Banking | |||||||||||||||
| Net interest income | $ | 308,870 | $ | 201,658 | $ | 607,569 | $ | 394,740 | |||||||
| Provision/(provision credit) for loan losses | 6,139 | 260 | 11,451 | 3,358 | |||||||||||
| Noninterest income | 78,568 | 64,740 | 157,421 | 123,718 | |||||||||||
| Noninterest expense | 212,445 | 152,637 | 417,646 | 300,687 | |||||||||||
| Income/(loss) before income taxes | 168,854 | 113,501 | 335,893 | 214,413 | |||||||||||
| Provision/(benefit) for income taxes | 39,634 | 41,015 | 78,996 | 77,491 | |||||||||||
| Net income/(loss) | $ | 129,220 | $ | 72,486 | $ | 256,897 | $ | 136,922 | |||||||
| Average assets | $ | 28,746,968 | $ | 18,432,141 | $ | 28,611,686 | $ | 18,195,201 | |||||||
| Fixed Income | |||||||||||||||
| Net interest income | $ | 9,174 | $ | 4,985 | $ | 17,637 | $ | 6,141 | |||||||
| Noninterest income | 38,363 | 55,207 | 83,968 | 106,030 | |||||||||||
| Noninterest expense | 48,300 | 54,022 | 98,844 | 102,729 | |||||||||||
| Income/(loss) before income taxes | (763 | ) | 6,170 | 2,761 | 9,442 | ||||||||||
| Provision/(benefit) for income taxes | (414 | ) | 1,941 | 328 | 2,959 | ||||||||||
| Net income/(loss) | $ | (349 | ) | $ | 4,229 | $ | 2,433 | $ | 6,483 | ||||||
| Average assets | $ | 3,251,876 | $ | 2,696,144 | $ | 3,365,912 | $ | 2,288,083 | |||||||
| Corporate | |||||||||||||||
| Net interest income/(expense) | $ | (14,002 | ) | $ | (14,637 | ) | $ | (27,192 | ) | $ | (28,408 | ) | |||
| Noninterest income | 8,848 | 6,219 | 18,327 | 11,695 | |||||||||||
| Noninterest expense | 66,020 | 24,566 | 117,136 | 41,440 | |||||||||||
| Income/(loss) before income taxes | (71,174 | ) | (32,984 | ) | (126,001 | ) | (58,153 | ) | |||||||
| Provision/(benefit) for income taxes | (21,691 | ) | (35,574 | ) | (34,135 | ) | (48,503 | ) | |||||||
| Net income/(loss) | $ | (49,483 | ) | $ | 2,590 | $ | (91,866 | ) | $ | (9,650 | ) | ||||
| Average assets | $ | 6,956,898 | $ | 6,226,499 | $ | 7,033,090 | $ | 6,789,515 | |||||||
| Non-Strategic | |||||||||||||||
| Net interest income | $ | 6,890 | $ | 8,695 | $ | 14,091 | $ | 17,936 | |||||||
| Provision/(provision credit) for loan losses | (6,139 | ) | (2,260 | ) | (12,451 | ) | (6,358 | ) | |||||||
| Noninterest income | 1,746 | 1,507 | 3,826 | 3,169 | |||||||||||
| Noninterest expense | 6,003 | (13,308 | ) | 12,407 | (4,734 | ) | |||||||||
| Income/(loss) before income taxes | 8,772 | 25,770 | 17,961 | 32,197 | |||||||||||
| Provision/(benefit) for income taxes | 2,168 | 9,871 | 4,439 | 12,360 | |||||||||||
| Net income/(loss) | $ | 6,604 | $ | 15,899 | $ | 13,522 | $ | 19,837 | |||||||
| Average assets | $ | 1,217,970 | $ | 1,521,566 | $ | 1,251,041 | $ | 1,568,623 | |||||||
| Three Months Ended June 30, 2018 | |||||||||||||||||||
| (Dollars in thousands) | Regional Banking | Fixed Income | Corporate | Non-Strategic | Consolidated | ||||||||||||||
| Noninterest income: | |||||||||||||||||||
| Fixed income (a) | $ | 130 | $ | 37,567 | $ | — | $ | — | $ | 37,697 | |||||||||
| Deposit transactions and cash management | 34,522 | 3 | 1,497 | 61 | 36,083 | ||||||||||||||
| Brokerage, management fees and commissions | 13,740 | — | — | — | 13,740 | ||||||||||||||
| Trust services and investment management | 8,146 | — | (14 | ) | — | 8,132 | |||||||||||||
| Bankcard income | 6,658 | — | 55 | (78 | ) | 6,635 | |||||||||||||
| Bank-owned life insurance (b) | — | — | 5,773 | — | 5,773 | ||||||||||||||
| Debt securities gains/(losses), net (b) | — | — | — | — | — | ||||||||||||||
| Equity securities gains/(losses), net (b) | — | — | 31 | — | 31 | ||||||||||||||
| All other income and commissions (c) | 15,372 | 793 | 1,506 | 1,763 | 19,434 | ||||||||||||||
| Total noninterest income | $ | 78,568 | $ | 38,363 | $ | 8,848 | $ | 1,746 | $ | 127,525 | |||||||||
| Three Months Ended June 30, 2017 | |||||||||||||||||||
| Regional Banking | Fixed Income | Corporate | Non-Strategic | Consolidated | |||||||||||||||
| Noninterest income: | |||||||||||||||||||
| Fixed income | $ | 139 | $ | 54,971 | $ | — | $ | — | $ | 55,110 | |||||||||
| Deposit transactions and cash management | 26,433 | — | 1,376 | 49 | 27,858 | ||||||||||||||
| Brokerage, management fees and commissions | 12,029 | — | — | — | 12,029 | ||||||||||||||
| Trust services and investment management | 7,712 | — | (14 | ) | — | 7,698 | |||||||||||||
| Bankcard income | 5,495 | — | 57 | 53 | 5,605 | ||||||||||||||
| Bank-owned life insurance | — | — | 4,351 | — | 4,351 | ||||||||||||||
| Debt securities gains/(losses), net | 386 | — | 19 | — | 405 | ||||||||||||||
| Equity securities gains/(losses), net | — | — | — | — | — | ||||||||||||||
| All other income and commissions | 12,546 | 236 | 430 | 1,405 | 14,617 | ||||||||||||||
| Total noninterest income | $ | 64,740 | $ | 55,207 | $ | 6,219 | $ | 1,507 | $ | 127,673 | |||||||||
| (a) | Includes $7.3 million of underwriting, portfolio advisory, and other noninterest income |
Assets: Cash and due from banks Loans, net of unearned income Less: Allowance for loan losses Total net loans Other assets Total assets Liabilities: Term borrowings Other liabilities Total liabilities 2017: (Dollars in thousands) Provision/(benefit) for income taxes: Amortization of qualifying LIHTC investments Low income housing tax credits Other tax benefits related to qualifying LIHTC investments the trusts hold no recourse to the assets of FHN. Additionally, FHN has no contractual requirements to provide financial support to the trusts. Based on their restrictive nature, the trusts are considered VIEs as the holders of equity at risk do not have the power through voting rights, or similar rights, to direct the activities that most significantly impact the trusts’ economic performance. (Dollars in thousands) Type Low income housing partnerships Other tax credit investments (b) (c) Small issuer trust preferred holdings (d) On-balance sheet trust preferred securitization Proprietary residential mortgage securitizations Holdings of agency mortgage-backed securities (d) Commercial loan troubled debt restructurings (g) Sale-leaseback transaction(b) Represents noninterest income excluded from the scope of ASC 606. Amount is presented for informational purposes to reconcile total non-interest income. (c) Includes other service charges, ATM and interchange fees, electronic banking fees, and insurance commission in scope of ASC 606. Six Months Ended June 30, 2018 (Dollars in thousands) Regional Banking Fixed Income Corporate Non-Strategic Consolidated Noninterest income: Fixed income (a) $ 211 $ 82,992 $ — $ — $ 83,203 Deposit transactions and cash management 69,262 6 2,691 108 72,067 Brokerage, management fees and commissions 27,223 — — — 27,223 Trust services and investment management 15,438 — (29 ) — 15,409 Bankcard income 12,951 — 112 17 13,080 Bank-owned life insurance (b) — — 9,766 — 9,766 Debt securities gains/(losses), net (b) — — 52 — 52 Equity securities gains/(losses), net (b) — — 65 — 65 All other income and commissions (c) (d) 32,336 970 5,670 3,701 42,677 Total noninterest income $ 157,421 $ 83,968 $ 18,327 $ 3,826 $ 263,542 Six Months Ended June 30, 2017 Regional Banking Fixed Income Corporate Non-Strategic Consolidated Noninterest income: Fixed income $ 213 $ 105,575 $ — $ — $ 105,788 Deposit transactions and cash management 49,667 — 2,665 91 52,423 Brokerage, management fees and commissions 23,935 — — — 23,935 Trust services and investment management 14,392 — (41 ) — 14,351 Bankcard income 10,837 — 113 110 11,060 Bank-owned life insurance — — 7,598 — 7,598 Debt securities gains/(losses), net 386 — 63 — 449 Equity securities gains/(losses), net — — — — — All other income and commissions 24,288 455 1,297 2,968 29,008 Total noninterest income $ 123,718 $ 106,030 $ 11,695 $ 3,169 $ 244,612 (a) Includes $15.6 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards Codification ("ASC") 606, "Revenue From Contracts With Customers." (b) Represents noninterest income excluded from the scope of ASC 606. Amount is presented for informational purposes to reconcile total non-interest income. (c) Includes other service charges, ATM and interchange fees, electronic banking fees, and insurance commission in scope of ASC 606. (d) Corporate includes a $3.3 million gain on the sale of a building. MSRmortgage service rights ("MSR") and a residual interest results in FHN potentially absorbing losses or receiving benefits that are significant to the trust. FHN is considered the primary beneficiary, as it is assumed to have the power, as Master Servicer, to most significantly impact the activities of the VIE. Consolidation of the trust results in the recognition of the trust proceeds as restricted borrowings since the cash flows on the securitized loans can only be used to settle the obligations due to the holders of trust securities. Through first quarter 2016 the trust experienced a rapid amortization period and FHN was obligated to provide subordinated funding. During the period, cash payments from borrowers were accumulated to repay outstanding debt securities while FHN continued to make advances to borrowers when they drew on their lines of credit. FHN then transferred the newly generated receivables into the securitization trust. FHN is reimbursed for these advances only after other parties in the securitization have received all of the cash flows to which they are entitled. If loan losses requiring draws on the related monoline insurers’ policies (which protect bondholders in the securitization) exceed a certain level, FHN may not receive reimbursement for all of the funds advanced to borrowers, as the senior bondholders and the monoline insurers typically have priority for repayment. Amounts funded from monoline insurance policies are considered restricted term borrowings in FHN’s Consolidated Condensed Statements of Condition. Except for recourse due to breaches of representations and warranties made by FHN in connection with the sale of the loans to the trust, the creditors of the trust hold no recourse to the assets of FHN.20172018 and December 31, 2016: June 30, 2017 December 31, 2016 On-Balance Sheet
Consumer Loan
Securitization Rabbi Trusts Used for
Deferred Compensation
Plans On-Balance Sheet
Consumer Loan
Securitization Rabbi Trusts Used for
Deferred Compensation
Plans (Dollars in thousands) Carrying Value Carrying Value Carrying Value Carrying Value $ — N/A $ — N/A 28,765 N/A 35,873 N/A 52 N/A 587 N/A 28,713 N/A 35,286 N/A 72 $ 77,760 283 $ 74,160 $ 28,785 $ 77,760 $ 35,569 $ 74,160 $ 15,886 N/A $ 23,126 N/A 3 $ 58,088 3 $ 54,746 $ 15,889 $ 58,088 $ 23,129 $ 54,746 June 30, 2018 December 31, 2017 Carrying Value Carrying Value Carrying Value Carrying Value Assets: Cash and due from banks $ — N/A $ — N/A Loans, net of unearned income 18,921 N/A 24,175 N/A Less: Allowance for loan losses — N/A — N/A Total net loans 18,921 N/A 24,175 N/A Other assets 38 $ 82,802 47 $ 80,479 Total assets $ 18,959 $ 82,802 $ 24,222 $ 80,479 Liabilities: Term borrowings $ 6,004 N/A $ 11,226 N/A Other liabilities 1 $ 61,925 2 $ 61,733 Total liabilities $ 6,005 $ 61,925 $ 11,228 $ 61,733 not significant$.9 million and $.5 million for the three months ended June 30, 2018 and 2017, respectively and $1.9 million and $1.1 million for six months ended June 30, 2018 and 2017, and 2016.respectively. The following table summarizes the impact to the Provision/(benefit) for income taxes on the Consolidated Condensed Statements of Income for the three and six months ended June 30, 2017,2018, and 20162017 for LIHTC investments accounted for under the proportional amortization method. Three Months Ended
June 30 Six Months Ended
June 30 2018 2017 2018 2017 Provision/(benefit) for income taxes: Amortization of qualifying LIHTC investments $ 2,191 $ 2,362 $ 4,547 $ 4,640 Low income housing tax credits (2,560 ) (2,598 ) (5,097 ) (4,998 ) Other tax benefits related to qualifying LIHTC investments (894 ) (910 ) (1,584 ) (1,829 ) Three Months Ended
June 30 Six Months Ended
June 30, 2017 2016 2017 2016 $ 2,362 $ 2,330 $ 4,640 $ 4,628 (2,598 ) (2,534 ) (4,998 ) (5,057 ) (910 ) (1,069 ) (1,829 ) (2,179 ) Note 13 – Variable Interest Entities (Continued)Prior to fourth quarter 2016 these interests included MSR and interest-only strips. Except for recourse due to breaches of representations and warranties made by FHN in connection with the sale of the loans to the trusts, the creditors ofNote 13 – Variable Interest Entities (Continued)While it held MSR, FHN was assumed to have the power as servicer to most significantly impact the activities of such VIEs. However, in situations where FHN did not have the ability to participate in significant portions of a securitization trust’s cash flows and FHN was not considered the primary beneficiary of the trust. Therefore, these trusts were not consolidated by FHN.2017: Maximum
Loss Exposure Liability
Recognized Classification $ 73,890 $ 19,479 (a) 20,951 — Other assets 332,913 — Loans, net of unearned income 49,361 64,812 (e) 2,459 — Trading securities 4,346,895 — (f) 33,673 — Loans, net of unearned income 14,827 — (h) Classification Low income housing partnerships $ 96,289 $ 36,968 (a) Other tax credit investments (b) (c) 19,023 — Other assets Small issuer trust preferred holdings (d) 332,370 — Loans, net of unearned income On-balance sheet trust preferred securitization 48,479 65,695 (e) Proprietary residential mortgage securitizations 1,724 — Trading securities Holdings of agency mortgage-backed securities (d) 5,092,123 — (f) Commercial loan troubled debt restructurings (g) 18,612 — Loans, net of unearned income Sale-leaseback transaction 14,827 — (h) — 212,378 Term borrowings (a) Maximum loss exposure represents $54.4$59.3 million of current investments and $19.5$37.0 million of accrued contractual funding commitments. Accrued funding commitments represent unconditional contractual obligations for future funding events, and are also recognized in Other liabilities. FHN currently expects to be required to fund these accrued commitments by the end of 2020.(b) A liability is not recognized as investments are written down over the life of the related tax credit.
Note 13 – Variable Interest Entities (Continued)
| (c) | Maximum loss exposure represents current investment balance. Of the initial investment, $18.0 million was funded through loans from community development enterprises. |
| (d) | Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities. |
| (e) | Includes $112.5 million classified as Loans, net of unearned income, and $1.7 million classified as Trading securities which are offset by |
| (f) | Includes |
| (g) | Maximum loss exposure represents |
| (h) | Maximum loss exposure represents the current loan balance plus additional funding commitments less amounts received from the buyer-lessor. |
| (i) | No exposure to loss due to nature of FHN's involvement. |
(Dollars in thousands) | Maximum Loss Exposure | Liability Recognized | Classification | |||||||
Type | ||||||||||
Low income housing partnerships | $ | 73,582 | $ | 17,398 | (a) | |||||
Other tax credit investments (b) (c) | 21,898 | — | Other assets | |||||||
Small issuer trust preferred holdings (d) | 332,985 | — | Loans, net of unearned income | |||||||
On-balance sheet trust preferred securitization | 49,361 | 64,812 | (e) | |||||||
Proprietary residential mortgage securitizations | 2,568 | — | Trading securities | |||||||
Holdings of agency mortgage-backed securities (d) | 4,163,313 | — | (f) | |||||||
Commercial loan troubled debt restructurings (g) | 42,696 | — | Loans, net of unearned income | |||||||
Sale-leaseback transaction | 11,827 | — | (h) | |||||||
| (Dollars in thousands) | Maximum Loss Exposure | Liability Recognized | Classification | |||||||
Type | ||||||||||
| Low income housing partnerships | $ | 94,798 | $ | 33,348 | (a) | |||||
| Other tax credit investments (b) (c) | 20,394 | — | Other assets | |||||||
| Small issuer trust preferred holdings (d) | 332,455 | — | Loans, net of unearned income | |||||||
| On-balance sheet trust preferred securitization | 48,817 | 65,357 | (e) | |||||||
| Proprietary residential mortgage securitizations | 2,151 | — | Trading securities | |||||||
| Holdings of agency mortgage-backed securities (d) | 5,349,287 | — | (f) | |||||||
| Commercial loan troubled debt restructurings (g) | 19,411 | — | Loans, net of unearned income | |||||||
| Sale-leaseback transaction | 14,827 | — | (h) | |||||||
| Proprietary trust preferred issuances (i) | — | 212,378 | Term borrowings | |||||||
| (a) | Maximum loss exposure represents |
| (b) | A liability is not recognized as investments are written down over the life of the related tax credit. |
| (c) | Maximum loss exposure represents current investment balance. Of the initial investment, $18.0 million was funded through loans from community development enterprises. |
| (d) | Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities. |
| (e) | Includes $112.5 million classified as Loans, net of unearned income, and $1.7 million classified as Trading securities which are offset by |
| (f) | Includes |
| (g) | Maximum loss exposure represents |
| (h) | Maximum loss exposure represents the current loan balance plus additional funding commitments less amounts received from the buyer-lessor. |
Derivative Instruments. FHN enters into various derivative contracts both in a dealer capacity to facilitate customer transactions and as a risk management tool. Where contracts have been created for customers, FHN enters into upstream transactions with dealers to offset its risk exposure. Contracts with dealers that require central clearing are novated to a clearing agent who becomes FHN’s counterparty. Derivatives are also used as a risk management tool to hedge FHN’s exposure to changes in interest rates or other defined market risks. (Dollars in thousands) Customer Interest Rate Contracts Offsetting Upstream Interest Rate Contracts Option Contracts Purchased Forwards and Futures Purchased Forwards and Futures Sold (Dollars in thousands) Customer Interest Rate Contracts Offsetting Upstream Interest Rate Contracts Option Contracts Purchased Option Contracts Written Forwards and Futures Purchased Forwards and Futures Sold 2017: June 30, 2018 and was $.2 million in Derivative assets as of December 31, 2017. (Dollars in thousands) Customer Interest Rate Contracts Hedging Hedging Instruments and Hedged Items: Customer Interest Rate Contracts Offsetting Upstream Interest Rate Contracts Debt Hedging Hedging Instruments: Interest Rate Swaps Hedged Items: Term Borrowings (Dollars in thousands) Customer Interest Rate Contracts Hedging Hedging Instruments and Hedged Items: Customer Interest Rate Contracts Offsetting Upstream Interest Rate Contracts Debt Hedging Hedging Instruments: Interest Rate Swaps Hedged Items: Term Borrowings 2017: (Dollars in thousands) Customer Interest Rate Contracts Hedging Hedging Instruments and Hedged Items: Customer Interest Rate Contracts (a) Offsetting Upstream Interest Rate Contracts (a) Debt Hedging Hedging Instruments: Interest Rate Swaps (a) Hedged Items: Term Borrowings (a) (b)(i) No exposure to loss due to nature of FHN's involvement. Commencing in first quarter 2017, aOne central clearinghouse revised the treatment ofconsiders daily margin posted or received from collateral toas legal settlements of the related derivative contracts. This change resultedresults in a reduction in derivative assets and liabilities and corresponding reductions in collateral posted and received as these amounts arebeing now presented net by contract in the Consolidated Condensed Statements of Condition. This change has no effect on hedge accounting or gains/losses for the applicable derivative contracts. On June 30, 20172018 and December 31, 2016,2017, respectively, FHN had $40.4$80.5 million and $47.8$60.3 million of cash receivables and $30.0$98.8 million and $32.8$49.7 million of cash payables related to collateral posting under master netting arrangements, inclusive of collateral posted related to contracts with adjustable collateral posting thresholds and over-collateralized positions, with derivative counterparties. With exchange-traded contracts, the credit risk is limited to the clearinghouse used. Fornon-exchange traded instruments, credit risk may occur when there is a gain in the fair value of the financial instrument and the counterparty fails to perform according to the terms of the contract and/or when the collateral proves to be of insufficient value. See additional discussion regarding master netting agreements and collateral posting requirements later in this note under the heading “Master Netting and Similar Agreements.” Market risk represents the potential loss due to the decrease in the value of a financial instrument caused primarily by changes in interest rates or the prices of debt instruments. FHN manages market risk by establishing and monitoring limits on the types and degree of risk that may be undertaken. FHN continually measures this risk through the use of models that measure value-at-risk and earnings-at-risk.value-at-risk andearnings-at-risk.Note 14 – Derivatives (Continued)$45.6$29.9 million and $69.32016, respectively,$68.0 million and $88.3 million and $126.9 million for the six months ended June 30, 20172018 and 2016,2017, respectively. Trading revenues are inclusive of both derivative andnon-derivative financial instruments, and are included in fixed income noninterest income.20172018 and December 31, 2016: June 30, 2017 Notional Assets Liabilities $ 1,903,647 $ 34,224 $ 12,508 1,903,647 12,368 31,374 25,000 78 — 4,245,499 3,403 10,366 4,562,708 12,646 2,212 December 31, 2016 Notional Assets Liabilities $ 1,697,992 $ 39,495 $ 14,996 1,697,992 14,996 39,495 17,500 63 — 5,000 — 8 2,916,750 6,257 26,659 3,085,396 27,330 6,615 June 30, 2018 (Dollars in thousands) Notional Assets Liabilities Customer interest rate contracts $ 2,204,706 $ 9,837 $ 48,272 Offsetting upstream interest rate contracts 2,204,706 46,619 9,676 Option contracts purchased 70,000 58 — Forwards and futures purchased 5,466,761 16,942 1,902 Forwards and futures sold 5,556,237 2,185 16,836 December 31, 2017 (Dollars in thousands) Notional Assets Liabilities Customer interest rate contracts $ 2,026,753 $ 22,097 $ 18,323 Offsetting upstream interest rate contracts 2,026,753 17,931 20,720 Option contracts purchased 20,000 15 — Forwards and futures purchased 6,257,140 4,354 5,526 Forwards and futures sold 6,292,012 5,806 4,010 using the long-haul method. FHN entered into a pay floating, receive fixed interest rate swap to hedge the interest rate risk of the senior debt.Note 14 – Derivatives (Continued)The balance sheet impact of this swap was $.2 million in Derivative liabilities as of June 30, 2017 and $1.6 million in Derivative assets as of December 31, 2016. There was an insignificant level of ineffectiveness related to this hedge.FHN has designated a derivative transaction in a hedging strategy to manage interest rate risk on $500.0 million of senior debt which matures in December 2020. This qualifies for hedge accounting under ASC815-20 using the long-haul method. FHN entered into a pay floating, receive fixed interest rate swap to hedge the interest rate risk of the senior debt. The balance sheet impact of this swap was $.6 million and $7.3 million in Derivative liabilitiesnot significant as of June 30, 20172018 and was $.1 million in Derivative assets as of December 31, 2016, respectively. There2017.an insignificant levelnot significant as of ineffectiveness related to this hedge.20172018 and December 31, 2016: June 30, 2017 Notional Assets Liabilities $ 1,513,114 $ 17,056 $ 12,944 1,513,114 11,878 15,630 $ 900,000 N/A $ 796 N/A N/A $ 900,000 (a) December 31, 2016 Notional Assets Liabilities $ 1,357,920 $ 17,566 $ 14,277 1,357,920 14,277 18,066 $ 900,000 $ 1,628 $ 7,276 N/A N/A $ 900,000 (a) (a)Represents par value of term borrowings being hedged. June 30, 2018 (Dollars in thousands) Notional Assets Liabilities Customer interest rate contracts $ 1,843,573 $ 6,180 $ 42,760 Offsetting upstream interest rate contracts 1,843,573 40,026 6,383 Debt Hedging Hedging Instruments: Interest rate swaps $ 900,000 $ 22 $ 4 Hedged Items: Term borrowings: Par N/A N/A $ 900,000 Cumulative fair value hedging adjustments N/A N/A (21,542 ) Unamortized premium/(discount) and issuance costs N/A N/A (3,103 ) Total carrying value N/A N/A 875,355 December 31, 2017 (Dollars in thousands) Notional Assets Liabilities Customer Interest Rate Contracts Hedging Customer interest rate contracts $ 1,608,912 $ 11,644 $ 19,780 Offsetting upstream interest rate contracts 1,608,912 18,473 11,019 Debt Hedging Hedging Instruments: Interest rate swaps $ 900,000 $ 371 N/A Hedged Items: Term borrowings: Par N/A N/A $ 900,000 Cumulative fair value hedging adjustments N/A N/A (13,472 ) Unamortized premium/(discount) and issuance costs N/A N/A (3,910 ) Total carrying value N/A N/A $ 882,618 20172018 and 2016: Three Months Ended
June 30 Six Months Ended
June 30 2017 2016 2017 2016 Gains/(Losses) Gains/(Losses) Gains/(Losses) Gains/(Losses) $ 4,099 $ 8,154 823 20,713 (4,099 ) (8,154 ) (823 ) (20,713 ) $ 1,808 $ 6,660 $ (992 ) $ 26,606 (1,804 ) (6,557 ) 929 (26,211 ) Three Months Ended
June 30 Six Months Ended
June 30 2018 2017 2018 2017 (Dollars in thousands) Gains/(Losses) Gains/(Losses) Gains/(Losses) Gains/(Losses) Customer Interest Rate Contracts Hedging Hedging Instruments and Hedged Items: Customer interest rate contracts (a) $ (4,459 ) $ 4,099 $ (29,183 ) $ 823 Offsetting upstream interest rate contracts (a) 4,459 (4,099 ) 29,183 (823 ) Debt Hedging Hedging Instruments: Interest rate swaps (b) $ (1,545 ) $ 1,808 $ (8,140 ) $ (992 ) Hedged Items: Term borrowings (b) (c) 1,520 (1,804 ) 8,070 929 (a) Gains/losses included in the All other expense section ofwithin the Consolidated Condensed Statements of Income.(b) Gains/losses included in the Interest expense for 2018 and All other expense for 2017 within the Consolidated Condensed Statements of Income. (c) Represents gains and losses attributable to changes in fair value due to interest rate risk as designated in ASC815-20 hedging relationships.
Note 14 – Derivatives (Continued)
| June 30, 2017 | ||||||||||||
(Dollars in thousands) | Notional | Assets | Liabilities | |||||||||
Cash Flow Hedges | ||||||||||||
Hedging Instruments: | ||||||||||||
Interest Rate Swaps | $ | 900,000 | N/A | $ | 1,058 | |||||||
Hedged Items: | ||||||||||||
Variability in Cash Flows Related to Debt Instruments (Primarily Loans) | N/A | $ | 900,000 | N/A | ||||||||
| December 31, 2016 | ||||||||||||
(Dollars in thousands) | Notional | Assets | Liabilities | |||||||||
Cash Flow Hedges | ||||||||||||
Hedging Instruments: | ||||||||||||
Interest Rate Swaps | $ | 250,000 | N/A | $ | 2,045 | |||||||
Hedged Items: | ||||||||||||
Variability in Cash Flows Related to Debt Instruments (Primarily Loans) | N/A | $ | 250,000 | N/A | ||||||||
2017:
| June 30, 2018 | ||||||||||||
| (Dollars in thousands) | Notional | Assets | Liabilities | |||||||||
Cash Flow Hedges | ||||||||||||
Hedging Instruments: | ||||||||||||
| Interest rate swaps | $ | 900,000 | $ | 24 | $ | 85 | ||||||
| Hedged Items: | ||||||||||||
| Variability in cash flows related to debt instruments (primarily loans) | N/A | $ | 900,000 | N/A | ||||||||
| December 31, 2017 | ||||||||||
| (Dollars in thousands) | Notional | Assets | Liabilities | |||||||
| Cash Flow Hedges | ||||||||||
Hedging Instruments: | ||||||||||
| Interest rate swaps | $ | 900,000 | $ | 942 | N/A | |||||
| Hedged Items: | ||||||||||
| Variability in cash flows related to debt instruments (primarily loans) | N/A | $ | 900,000 | N/A | ||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
(Dollars in thousands) | Gains/(Losses) | Gains/(Losses) | Gains/(Losses) | Gains/(Losses) | ||||||||||||
Cash Flow Hedges |
| |||||||||||||||
Hedging Instruments: | ||||||||||||||||
Interest Rate Swaps (a) (b) | $ | 3,491 | $ | 1,988 | $ | 390 | $ | 7,606 | ||||||||
Hedged Items: | ||||||||||||||||
Variability in Cash Flows Related to Debt Instruments (Primarily Loans) | N/A | N/A | N/A | N/A | ||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (Dollars in thousands) | Gains/(Losses) | Gains/(Losses) | Gains/(Losses) | Gains/(Losses) | ||||||||||||
| Cash Flow Hedges | ||||||||||||||||
| Hedging Instruments: | ||||||||||||||||
| Interest rate swaps (a) | $ | (3,914 | ) | $ | 3,491 | $ | (15,531 | ) | $ | 390 | ||||||
| Gain/(loss) recognized in Other comprehensive income/(loss) | (3,457 | ) | 3,059 | (12,095 | ) | 1,997 | ||||||||||
| Gain/(loss) reclassified from AOCI into Interest income | 463 | (904 | ) | 308 | (1,756 | ) | ||||||||||
| (a) |
Note 14 – Derivatives (Continued)
FHN hedgesheld-to-maturity trust preferred loans which have an initial fixed rate term before conversion to a floating rate. FHN has entered into pay fixed, receive floating interest rate swaps to hedge the interest rate risk associated with this initial term. Interest paid or received for these swaps is recognized as an adjustment of the interest income of the assets whose risk is being hedged. Basis adjustments remaining at the end of the hedge term are being amortized as an adjustment to interest income over the remaining life of the loans. Gains or losses are included in Other income and commissions on the Consolidated Condensed Statements of Income. These hedges expire in third quarter 2017.
The following tables summarize FHN’s derivative activities associated withheld-to-maturity trust preferred loans as of June 30, 2017 and December 31, 2016:
| June 30, 2017 | ||||||||||||
(Dollars in thousands) | Notional | Assets | Liabilities | |||||||||
Loan Portfolio Hedging | ||||||||||||
Hedging Instruments: | ||||||||||||
Interest Rate Swaps | $ | 6,500 | N/A | $ | 79 | |||||||
Hedged Items: | ||||||||||||
Trust Preferred Loans (a) | N/A | $ | 6,500 | (b) | N/A | |||||||
| December 31, 2016 | ||||||||||||
(Dollars in thousands) | Notional | Assets | Liabilities | |||||||||
Loan Portfolio Hedging | ||||||||||||
Hedging Instruments: | ||||||||||||
Interest Rate Swaps | $ | 6,500 | N/A | $ | 208 | |||||||
Hedged Items: | ||||||||||||
Trust Preferred Loans (a) | N/A | $ | 6,500 | (b) | N/A | |||||||
The following table summarizes gains/(losses) on FHN’s derivatives associated withheld-to-maturity trust preferred loans for the three and six months ended June 30, 2017 and 2016:
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
(Dollars in thousands) | Gains/(Losses) | Gains/(Losses) | Gains/(Losses) | Gains/(Losses) | ||||||||||||
Loan Portfolio Hedging |
| |||||||||||||||
Hedging Instruments: | ||||||||||||||||
Interest Rate Swaps | $ | 68 | $ | 66 | $ | 142 | $ | 109 | ||||||||
Hedged Items: | ||||||||||||||||
Trust Preferred Loans (a) | $ | (67 | ) | $ | (65 | ) | $ | (141 | ) | $ | 106 | |||||
Note 14 – Derivatives (Continued)
(Dollars in thousands) Derivative assets: June 30, 2017 (b) December 31, 2016 (b) 20172018 and December 31, 2016,2017, the derivative liabilities associated with the sales of Visa Class B shares were $5.7$9.4 million and $6.2$5.6 million, respectively. See the Visa Matters section of Note 10 – Contingencies and Other Disclosures for more information regarding FHN’s Visa shares.20172018 and December 31, 2016,2017, these loans were valued at $1.3$6.4 million and $3.8$1.5 million, respectively. The balance sheet amount and the gains/losses associated with these derivatives were not significant.$31.0$21.7 million of assets and $39.3$52.4 million of liabilities on June 30, 2017,2018, and $35.9$23.3 million of assets and $49.0$34.5 million of liabilities on December 31, 2016.2017. As of June 30, 20172018 and December 31, 2016,2017, FHN had received collateral of $110.9$108.7 million and $137.6$119.3 million and posted collateral of $32.0$16.5 million and $39.3$18.9 million, respectively, in the normal course of business related to these agreements.Note 14 – Derivatives (Continued)$30.9$18.5 million of assets and $16.8$47.0 million of liabilities on June 30, 2017,2018, and $35.9$22.8 million of assets and $19.6$19.4 million of liabilities on December 31, 2016.2017. As of June 30, 20172018 and December 31, 2016,2017, FHN had received collateral of $110.9$105.5 million and $137.5$118.6 million and posted collateral of $11.2$15.0 million and $12.9$6.7 million, respectively, in the normal course of business related to these contracts.20172018 and December 31, 2016: Gross amounts not offset in the
Statements of Condition Gross amounts
of recognized
assets Gross amounts
offset in the
Statements of
Condition Net amounts of
assets presented
in the Statements
of Condition (a) Derivative
liabilities
available for
offset Collateral
Received Net amount $ 75,526 $ — $ 75,526 $ (22,842 ) $ (47,292 ) $ 5,392 87,962 — 87,962 (25,953 ) (52,888 ) 9,121 (Dollars in thousands) Net amount Derivative assets: June 30, 2018 (b) $ 102,852 $ — $ 102,852 $ (13,490 ) $ (89,317 ) $ 45 December 31, 2017 (b) 71,458 — 71,458 (17,278 ) (51,271 ) 2,909 (a) Included in Derivative assets on the Consolidated Condensed Statements of Condition. As of June 30, 20172018 and December 31, 2016, $16.12017, $19.2 million and $33.7$10.2 million, respectively, of derivative assets (primarily fixed income forward contracts) have been excluded from these tables because they are generally not subject to master netting or similar agreements.(b) Amounts are comprised entirely of interest rate derivative contracts.
| Gross amounts not offset in the Statements of Condition | ||||||||||||||||||||||||
(Dollars in thousands) | Gross amounts of recognized liabilities | Gross amounts offset in the Statements of Condition | Net amounts of liabilities presented in the Statements of Condition (a) | Derivative assets available for offset | Collateral pledged | Net amount | ||||||||||||||||||
Derivative liabilities: | ||||||||||||||||||||||||
June 30, 2017 (b) | $ | 74,389 | $ | — | $ | 74,389 | $ | (22,842 | ) | $ | (47,615 | ) | $ | 3,932 | ||||||||||
December 31, 2016 (b) | 96,363 | — | 96,363 | (25,953 | ) | (60,746 | ) | 9,664 | ||||||||||||||||
|
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|
|
|
| |||||||||||||
Note 14 – Derivatives (Continued)
Gross amounts not offset in the Statements of Condition | ||||||||||||||||||||||||
| (Dollars in thousands) | Gross amounts of recognized liabilities | Gross amounts offset in the Statements of Condition | Net amounts of liabilities presented in the Statements of Condition (a) | Derivative assets available for offset | Collateral pledged | Net amount | ||||||||||||||||||
| Derivative liabilities: | ||||||||||||||||||||||||
| June 30, 2018 (b) | $ | 107,178 | $ | — | $ | 107,178 | $ | (13,490 | ) | $ | (65,689 | ) | $ | 27,999 | ||||||||||
| December 31, 2017 (b) | 69,842 | — | 69,842 | (17,278 | ) | (51,801 | ) | 763 | ||||||||||||||||
| (a) | Included in Derivative liabilities on the Consolidated Condensed Statements of Condition. As of June 30, |
| (b) | Amounts are comprised entirely of interest rate derivative contracts. |
(Dollars in thousands) Securities purchased under agreements to resell: June 30, 2017 December 31, 2016 2017: (Dollars in thousands) Securities sold under agreements to repurchase: June 30, 2017 December 31, 2016 2017: (Dollars in thousands) Securities sold under agreements to repurchase: U.S. treasuries Government agency issued MBS Government agency issued CMO Government guaranteed loans (SBA and USDA) Total Securities sold under agreements to repurchase (Dollars in thousands) Securities sold under agreements to repurchase: U.S. treasuries Government agency issued MBS Government agency issued CMO Total Securities sold under agreements to repurchase 2017:20172018 and December 31, 2016: Gross amounts not offset in the
Statements of Condition Gross amounts
of recognized
assets Gross amounts
offset in the
Statements of
Condition Net amounts of
assets presented
in the Statements
of Condition Offsetting
securities sold
under agreements
to repurchase Securities collateral
(not recognized on
FHN’s Statements
of Condition) Net amount $ 657,991 $ — $ 657,991 $ (804 ) $ (650,369 ) $ 6,818 613,682 — 613,682 (1,628 ) (603,813 ) 8,241 (Dollars in thousands) Net amount Securities purchased under agreements to resell: June 30, 2018 $ 782,765 $ — $ 782,765 $ (2,090 ) $ (772,347 ) $ 8,328 December 31, 2017 725,609 — 725,609 (259 ) (720,036 ) 5,314 20172018 and December 31, 2016: Gross amounts not offset in the
Statements of Condition Gross amounts
of recognized
liabilities Gross amounts
offset in the
Statements of
Condition Net amounts of
liabilities presented
in the Statements
of Condition Offsetting
securities
purchased under
agreements to resell Securities/
government
guaranteed loans
collateral Net amount $ 743,684 $ — $ 743,684 $ (804 ) $ (742,727 ) $ 153 453,053 — 453,053 (1,628 ) (451,414 ) 11 (Dollars in thousands) Net amount Securities sold under agreements to repurchase: June 30, 2018 $ 713,152 $ — $ 713,152 $ (2,090 ) $ (710,862 ) $ 200 December 31, 2017 656,602 — 656,602 (259 ) (656,216 ) 127 20172018 and December 31, 2016: June 30, 2017 Overnight and
Continuous Up to 30 Days Total $ 31,598 $ — $ 31,598 427,561 — 427,561 — 13,867 13,867 270,658 — 270,658 $ 729,817 $ 13,867 $ 743,684 December 31, 2016 Overnight and
Continuous Up to 30 Days Total $ 14,864 $ — $ 14,864 421,771 — 421,771 — 16,418 16,418 $ 436,635 $ 16,418 $ 453,053 June 30, 2018 (Dollars in thousands) Up to 30 Days Total Securities sold under agreements to repurchase: U.S. treasuries $ 24,153 $ — $ 24,153 Government agency issued MBS 383,835 6,929 390,764 Government agency issued CMO 54,530 3,023 57,553 Government guaranteed loans (SBA and USDA) 240,682 — 240,682 Total Securities sold under agreements to repurchase $ 703,200 $ 9,952 $ 713,152 December 31, 2017 (Dollars in thousands) Up to 30 Days Total Securities sold under agreements to repurchase: U.S. treasuries $ 13,830 $ — $ 13,830 Government agency issued MBS 424,821 5,365 430,186 Government agency issued CMO 54,037 3,666 57,703 Government guaranteed loans (SBA and USDA) 154,883 — 154,883 Total Securities sold under agreements to repurchase $ 647,571 $ 9,031 $ 656,602
| June 30, 2017 | ||||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Trading securities—fixed income: | ||||||||||||||||
U.S. treasuries | $ | — | $ | 112,602 | $ | — | $ | 112,602 | ||||||||
Government agency issued MBS | — | 344,218 | — | 344,218 | ||||||||||||
Government agency issued CMO | — | 241,237 | — | 241,237 | ||||||||||||
Other U.S. government agencies | — | 142,596 | — | 142,596 | ||||||||||||
States and municipalities | — | 56,321 | — | 56,321 | ||||||||||||
Trading loans | — | 38,716 | — | 38,716 | ||||||||||||
Corporate and other debt | — | 376,261 | 5 | 376,266 | ||||||||||||
Equity, mutual funds, and other | — | 1,476 | — | 1,476 | ||||||||||||
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|
| |||||||||
Total trading securities—fixed income | — | 1,313,427 | 5 | 1,313,432 | ||||||||||||
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|
|
|
| |||||||||
Trading securities—mortgage banking | — | — | 2,459 | 2,459 | ||||||||||||
Loansheld-for-sale | — | 1,633 | 20,587 | 22,220 | ||||||||||||
Securitiesavailable-for-sale: | ||||||||||||||||
U.S. treasuries | — | 100 | — | 100 | ||||||||||||
Government agency issued MBS | — | 2,129,616 | — | 2,129,616 | ||||||||||||
Government agency issued CMO | — | 1,631,823 | — | 1,631,823 | ||||||||||||
Interest-only strips | — | — | 1,163 | 1,163 | ||||||||||||
Equity, mutual funds, and other | 25,182 | — | — | 25,182 | ||||||||||||
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|
| |||||||||
Total securitiesavailable-for-sale | 25,182 | 3,761,539 | 1,163 | 3,787,884 | ||||||||||||
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|
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| |||||||||
Other assets: | ||||||||||||||||
Deferred compensation assets | 35,064 | — | — | 35,064 | ||||||||||||
Derivatives, forwards and futures | 16,049 | — | — | 16,049 | ||||||||||||
Derivatives, interest rate contracts | — | 75,604 | — | 75,604 | ||||||||||||
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|
|
| |||||||||
Total other assets | 51,113 | 75,604 | — | 126,717 | ||||||||||||
|
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|
|
|
| |||||||||
Total assets | $ | 76,295 | $ | 5,152,203 | $ | 24,214 | $ | 5,252,712 | ||||||||
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| |||||||||
Trading liabilities—fixed income: | ||||||||||||||||
U.S. treasuries | $ | — | $ | 380,102 | $ | — | $ | 380,102 | ||||||||
Government agency issued MBS | — | 212 | — | 212 | ||||||||||||
Government agency issued CMO | — | 2,124 | — | 2,124 | ||||||||||||
States and municipalities | — | 1,178 | — | 1,178 | ||||||||||||
Other U.S. government agencies | — | 998 | — | 998 | ||||||||||||
Corporate and other debt | — | 171,179 | — | 171,179 | ||||||||||||
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|
| |||||||||
Total trading liabilities—fixed income | — | 555,793 | — | 555,793 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other liabilities: | ||||||||||||||||
Derivatives, forwards and futures | 12,578 | — | — | 12,578 | ||||||||||||
Derivatives, interest rate contracts | — | 74,389 | — | 74,389 | ||||||||||||
Derivatives, other | — | 50 | 5,700 | 5,750 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total other liabilities | 12,578 | 74,439 | 5,700 | 92,717 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities | $ | 12,578 | $ | 630,232 | $ | 5,700 | $ | 648,510 | ||||||||
|
|
|
|
|
|
|
| |||||||||
2018:
| June 30, 2018 | ||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Trading securities—fixed income: | ||||||||||||||||
| U.S. treasuries | $ | — | $ | 53,315 | $ | — | $ | 53,315 | ||||||||
| Government agency issued MBS | — | 185,118 | — | 185,118 | ||||||||||||
| Government agency issued CMO | — | 305,125 | — | 305,125 | ||||||||||||
| Other U.S. government agencies | — | 111,516 | — | 111,516 | ||||||||||||
| States and municipalities | — | 89,629 | — | 89,629 | ||||||||||||
| Corporates and other debt | — | 902,580 | — | 902,580 | ||||||||||||
| Equity, mutual funds, and other | — | 463 | — | 463 | ||||||||||||
| Total trading securities—fixed income | — | 1,647,746 | — | 1,647,746 | ||||||||||||
| Trading securities—mortgage banking | — | — | 1,724 | 1,724 | ||||||||||||
| Loans held-for-sale (elected fair value) | — | 2,222 | 16,718 | 18,940 | ||||||||||||
| Securities available-for-sale: | ||||||||||||||||
| U.S. treasuries | — | 98 | — | 98 | ||||||||||||
| Government agency issued MBS | — | 2,494,300 | — | 2,494,300 | ||||||||||||
| Government agency issued CMO | — | 2,107,580 | — | 2,107,580 | ||||||||||||
| Other U.S. government agencies | — | 54,402 | — | 54,402 | ||||||||||||
| States and municipalities | — | 6,406 | — | 6,406 | ||||||||||||
| Corporates and other debt | — | 55,838 | — | 55,838 | ||||||||||||
| Interest-only strips (elected fair value) | — | — | 5,787 | 5,787 | ||||||||||||
| Total securities available-for-sale | — | 4,718,624 | 5,787 | 4,724,411 | ||||||||||||
| Other assets: | ||||||||||||||||
| Deferred compensation mutual funds | 40,068 | — | — | 40,068 | ||||||||||||
| Equity, mutual funds, and other | 27,135 | — | — | 27,135 | ||||||||||||
| Derivatives, forwards and futures | 19,127 | — | — | 19,127 | ||||||||||||
| Derivatives, interest rate contracts | — | 102,766 | — | 102,766 | ||||||||||||
| Derivatives, other | — | 163 | — | 163 | ||||||||||||
| Total other assets | 86,330 | 102,929 | — | 189,259 | ||||||||||||
| Total assets | $ | 86,330 | $ | 6,471,521 | $ | 24,229 | $ | 6,582,080 | ||||||||
| Trading liabilities—fixed income: | ||||||||||||||||
| U.S. treasuries | $ | — | $ | 520,463 | $ | — | $ | 520,463 | ||||||||
| Other U.S. government agencies | — | 329 | — | 329 | ||||||||||||
| States and municipalities | — | 2,572 | — | 2,572 | ||||||||||||
| Corporates and other debt | — | 220,357 | — | 220,357 | ||||||||||||
| Total trading liabilities—fixed income | — | 743,721 | — | 743,721 | ||||||||||||
| Other liabilities: | ||||||||||||||||
| Derivatives, forwards and futures | 18,738 | — | — | 18,738 | ||||||||||||
| Derivatives, interest rate contracts | — | 107,179 | — | 107,179 | ||||||||||||
| Derivatives, other | — | 7 | 9,425 | 9,432 | ||||||||||||
| Total other liabilities | 18,738 | 107,186 | 9,425 | 135,349 | ||||||||||||
| Total liabilities | $ | 18,738 | $ | 850,907 | $ | 9,425 | $ | 879,070 | ||||||||
| December 31, 2016 | ||||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Trading securities—fixed income: | ||||||||||||||||
U.S. treasuries | $ | — | $ | 146,988 | $ | — | $ | 146,988 | ||||||||
Government agency issued MBS | — | 256,611 | — | 256,611 | ||||||||||||
Government agency issued CMO | — | 150,058 | — | 150,058 | ||||||||||||
Other U.S. government agencies | — | 52,314 | — | 52,314 | ||||||||||||
States and municipalities | — | 60,351 | — | 60,351 | ||||||||||||
Corporate and other debt | — | 227,934 | 5 | 227,939 | ||||||||||||
Equity, mutual funds, and other | — | 242 | — | 242 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total trading securities—fixed income | — | 894,498 | 5 | 894,503 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Trading securities—mortgage banking | — | — | 2,568 | 2,568 | ||||||||||||
Loansheld-for-sale | — | 2,345 | 21,924 | 24,269 | ||||||||||||
Securitiesavailable-for-sale: | ||||||||||||||||
U.S. treasuries | — | 100 | — | 100 | ||||||||||||
Government agency issued MBS | — | 2,208,687 | — | 2,208,687 | ||||||||||||
Government agency issued CMO | — | 1,547,958 | — | 1,547,958 | ||||||||||||
Equity, mutual funds, and other | 25,249 | — | — | 25,249 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total securitiesavailable-for-sale | 25,249 | 3,756,745 | — | 3,781,994 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other assets: | ||||||||||||||||
Mortgage servicing rights | — | — | 985 | 985 | ||||||||||||
Deferred compensation assets | 32,840 | — | — | 32,840 | ||||||||||||
Derivatives, forwards and futures | 33,587 | — | — | 33,587 | ||||||||||||
Derivatives, interest rate contracts | — | 88,025 | — | 88,025 | ||||||||||||
Derivatives, other | — | 42 | — | 42 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total other assets | 66,427 | 88,067 | 985 | 155,479 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 91,676 | $ | 4,741,655 | $ | 25,482 | $ | 4,858,813 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Trading liabilities—fixed income: | ||||||||||||||||
U.S. treasuries | $ | — | $ | 381,229 | $ | — | $ | 381,229 | ||||||||
Other U.S. government agencies | — | 844 | — | 844 | ||||||||||||
Corporate and other debt | — | 179,775 | — | 179,775 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total trading liabilities—fixed income | — | 561,848 | — | 561,848 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other liabilities: | ||||||||||||||||
Derivatives, forwards and futures | 33,274 | — | — | 33,274 | ||||||||||||
Derivatives, interest rate contracts | — | 96,371 | — | 96,371 | ||||||||||||
Derivatives, other | — | 7 | 6,245 | 6,252 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total other liabilities | 33,274 | 96,378 | 6,245 | 135,897 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities | $ | 33,274 | $ | 658,226 | $ | 6,245 | $ | 697,745 | ||||||||
|
|
|
|
|
|
|
| |||||||||
2017:
| December 31, 2017 | ||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Trading securities—fixed income: | ||||||||||||||||
| U.S. treasuries | $ | — | $ | 128,995 | $ | — | $ | 128,995 | ||||||||
| Government agency issued MBS | — | 227,038 | — | 227,038 | ||||||||||||
| Government agency issued CMO | — | 275,014 | — | 275,014 | ||||||||||||
| Other U.S. government agencies | — | 54,699 | — | 54,699 | ||||||||||||
| States and municipalities | — | 34,573 | — | 34,573 | ||||||||||||
| Corporates and other debt | — | 693,877 | — | 693,877 | ||||||||||||
| Equity, mutual funds, and other | — | (2 | ) | — | (2 | ) | ||||||||||
| Total trading securities—fixed income | — | 1,414,194 | — | 1,414,194 | ||||||||||||
| Trading securities—mortgage banking | — | — | 2,151 | 2,151 | ||||||||||||
| Loans held-for-sale | — | 1,955 | 18,926 | 20,881 | ||||||||||||
| Securities available-for-sale: | ||||||||||||||||
| U.S. treasuries | — | 99 | — | 99 | ||||||||||||
| Government agency issued MBS | — | 2,577,376 | — | 2,577,376 | ||||||||||||
| Government agency issued CMO | — | 2,269,858 | — | 2,269,858 | ||||||||||||
| Corporates and other debt | — | 55,782 | — | 55,782 | ||||||||||||
| Interest-only strips | — | — | 1,270 | 1,270 | ||||||||||||
| Equity, mutual funds, and other | 27,017 | — | — | 27,017 | ||||||||||||
| Total securities available-for-sale | 27,017 | 4,903,115 | 1,270 | 4,931,402 | ||||||||||||
| Other assets: | ||||||||||||||||
| Deferred compensation assets | 39,822 | — | — | 39,822 | ||||||||||||
| Derivatives, forwards and futures | 10,161 | — | — | 10,161 | ||||||||||||
| Derivatives, interest rate contracts | — | 71,473 | — | 71,473 | ||||||||||||
| Total other assets | 49,983 | 71,473 | — | 121,456 | ||||||||||||
| Total assets | $ | 77,000 | $ | 6,390,737 | $ | 22,347 | $ | 6,490,084 | ||||||||
| Trading liabilities—fixed income: | ||||||||||||||||
| U.S. treasuries | $ | — | $ | 506,679 | $ | — | $ | 506,679 | ||||||||
| Corporates and other debt | — | 131,836 | — | 131,836 | ||||||||||||
| Total trading liabilities—fixed income | — | 638,515 | — | 638,515 | ||||||||||||
| Other liabilities: | ||||||||||||||||
| Derivatives, forwards and futures | 9,535 | — | — | 9,535 | ||||||||||||
| Derivatives, interest rate contracts | — | 69,842 | — | 69,842 | ||||||||||||
| Derivatives, other | — | 39 | 5,645 | 5,684 | ||||||||||||
| Total other liabilities | 9,535 | 69,881 | 5,645 | 85,061 | ||||||||||||
| Total liabilities | $ | 9,535 | $ | 708,396 | $ | 5,645 | $ | 723,576 | ||||||||
| Three Months Ended June 30, 2017 | ||||||||||||||||
(Dollars in thousands) | Trading securities | Interest- only strips- AFS | Loans held- for-sale | Net derivative liabilities | ||||||||||||
Balance on April 1, 2017 | $ | 2,335 | $ | — | $ | 21,221 | $ | (5,950 | ) | |||||||
Total net gains/(losses) included in: | ||||||||||||||||
Net income | 271 | 280 | 410 | (49 | ) | |||||||||||
Purchases | — | 1,413 | 43 | — | ||||||||||||
Settlements | (142 | ) | (3,317 | ) | (827 | ) | 299 | |||||||||
Net transfers into/(out of) Level 3 | — | 2,787 | (260 | )(c) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance on June 30, 2017 | $ | 2,464 | $ | 1,163 | $ | 20,587 | $ | (5,700 | ) | |||||||
|
|
|
|
|
|
|
| |||||||||
Net unrealized gains/(losses) included in net income | $ | 229 | (a) | $ | (53 | )(b) | $ | 410 | (a) | $ | (49 | )(d) | ||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30, 2016 | ||||||||||||||||||||
(Dollars in thousands) | Trading securities | Loans held-for-sale | Securities available- for-sale | Mortgage servicing rights, net | Net derivative liabilities | |||||||||||||||
Balance on April 1, 2016 | $ | 3,057 | $ | 26,287 | $ | 1,500 | $ | 1,725 | $ | (4,620 | ) | |||||||||
Total net gains/(losses) included in: | ||||||||||||||||||||
Net income | 55 | 429 | — | 31 | (2,514 | ) | ||||||||||||||
Purchases | — | 327 | — | — | — | |||||||||||||||
Sales | — | — | — | (205 | ) | — | ||||||||||||||
Settlements | (286 | ) | (1,132 | ) | — | (145 | ) | 299 | ||||||||||||
Net transfers into/(out of) Level 3 | — | (173 | )(c) | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance on June 30, 2016 | $ | 2,826 | $ | 25,738 | $ | 1,500 | $ | 1,406 | $ | (6,835 | ) | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net unrealized gains/(losses) included in net income | $ | (5 | )(a) | $ | 429 | (a) | $ | — | $ | — | $ | (2,514 | )(d) | |||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| Three Months Ended June 30, 2018 | ||||||||||||||||||||||||
| (Dollars in thousands) | Trading securities | Interest- only strips- AFS | Loans held- for-sale | Net derivative liabilities | ||||||||||||||||||||
| Balance on April 1, 2018 | $ | 1,926 | $ | 2,733 | $ | 18,334 | $ | (5,645 | ) | |||||||||||||||
| Total net gains/(losses) included in: | ||||||||||||||||||||||||
| Net income | 124 | (296 | ) | 540 | (4,079 | ) | ||||||||||||||||||
| Purchases | — | — | 34 | — | ||||||||||||||||||||
| Sales | — | — | — | — | ||||||||||||||||||||
| Settlements | (326 | ) | — | (2,134 | ) | 299 | ||||||||||||||||||
| Net transfers into/(out of) Level 3 | — | 3,350 | (b) | (56 | ) | (d) | — | |||||||||||||||||
| Balance on June 30, 2018 | $ | 1,724 | $ | 5,787 | $ | 16,718 | $ | (9,425 | ) | |||||||||||||||
| Net unrealized gains/(losses) included in net income | $ | 87 | (a) | $ | (128 | ) | (c) | $ | 542 | (a) | $ | (4,079 | ) | (e) | ||||||||||
| Three Months Ended June 30, 2017 | ||||||||||||||||||||||||
| (Dollars in thousands) | Trading securities | Interest-only strips-AFS | Loans held-for-sale | Net derivative liabilities | ||||||||||||||||||||
| Balance on April 1, 2017 | $ | 2,335 | $ | — | $ | 21,221 | $ | (5,950 | ) | |||||||||||||||
| Total net gains/(losses) included in: | ||||||||||||||||||||||||
| Net income | 271 | 267 | 410 | (49 | ) | |||||||||||||||||||
| Purchases | — | 1,413 | 43 | — | ||||||||||||||||||||
| Settlements | (142 | ) | (3,291 | ) | (827 | ) | 299 | |||||||||||||||||
| Net transfers into/(out of) Level 3 | — | 2,774 | (b) | (260 | ) | (d) | — | |||||||||||||||||
| Balance on June 30, 2017 | $ | 2,464 | $ | 1,163 | $ | 20,587 | $ | (5,700 | ) | |||||||||||||||
| Net unrealized gains/(losses) included in net income | $ | 229 | (a) | $ | (53 | ) | (c) | $ | 410 | (a) | $ | (49 | ) | (e) | ||||||||||
| (a) | Primarily included in mortgage banking income on the Consolidated Condensed Statements of Income. |
| (b) | Transfers into interest-only strips - AFS level 3 measured on a recurring basis reflect movements from loans held-for-sale (Level 2 nonrecurring). |
| (c) | Primarily included in fixed income on the Consolidated Condensed Statements of Income. |
| (d) | Transfers out of loansheld-for-sale level 3 measured on a recurring basis generally reflect movements into |
| (e) | Included in Other expense. |
| Six Months Ended June 30, 2017 | ||||||||||||||||
(Dollars in thousands) | Trading securities | Interest- only strips- AFS | Loans held- for-sale | Net derivative liabilities | ||||||||||||
Balance on January 1, 2017 | $ | 2,573 | $ | — | $ | 21,924 | $ | (6,245 | ) | |||||||
Total net gains/(losses) included in: | ||||||||||||||||
Net income | 288 | 280 | 1,332 | (50 | ) | |||||||||||
Purchases | — | 1,413 | 75 | — | ||||||||||||
Settlements | (397 | ) | (3,317 | ) | (2,401 | ) | 595 | |||||||||
Net transfers into/(out of) Level 3 | — | 2,787 | (343 | )(c) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance on June 30, 2017 | $ | 2,464 | $ | 1,163 | $ | 20,587 | $ | (5,700 | ) | |||||||
|
|
|
|
|
|
|
| |||||||||
Net unrealized gains/(losses) included in net income | $ | 202 | (a) | $ | (53 | )(b) | $ | 1,332 | (a) | $ | (50 | )(d) | ||||
|
|
|
|
|
|
|
| |||||||||
| Six Months Ended June 30, 2016 | ||||||||||||||||||||
(Dollars in thousands) | Trading securities | Loans held-for- sale | Securities available- for-sale | Mortgage servicing rights, net | Net derivative liabilities | |||||||||||||||
Balance on January 1, 2016 | $ | 4,377 | $ | 27,418 | $ | 1,500 | $ | 1,841 | $ | (4,810 | ) | |||||||||
Total net gains/(losses) included in: | ||||||||||||||||||||
Net income | 202 | 771 | — | 31 | (2,623 | ) | ||||||||||||||
Purchases | — | 475 | — | — | — | |||||||||||||||
Sales | — | — | — | (205 | ) | — | ||||||||||||||
Settlements | (1,753 | ) | (2,497 | ) | — | (261 | ) | 598 | ||||||||||||
Net transfers into/(out of) Level 3 | — | (429 | )(c) | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance on June 30, 2016 | $ | 2,826 | $ | 25,738 | $ | 1,500 | $ | 1,406 | $ | (6,835 | ) | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net unrealized gains/(losses) included in net income | $ | 79 | (a) | $ | 771 | (a) | $ | — | $ | — | $ | (2,623 | )(d) | |||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| Six Months Ended June 30, 2018 | ||||||||||||||||||||||||
| (Dollars in thousands) | Trading securities | Interest- only strips- AFS | Loans held- for-sale | Net derivative liabilities | ||||||||||||||||||||
| Balance on January 1, 2018 | $ | 2,151 | $ | 1,270 | $ | 18,926 | $ | (5,645 | ) | |||||||||||||||
| Total net gains/(losses) included in: | ||||||||||||||||||||||||
| Net income | 140 | 1,296 | 709 | (4,375 | ) | |||||||||||||||||||
| Purchases | — | — | 62 | — | ||||||||||||||||||||
| Sales | — | — | — | — | ||||||||||||||||||||
| Settlements | (567 | ) | (9,193 | ) | (2,923 | ) | 595 | |||||||||||||||||
| Net transfers into/(out of) Level 3 | — | 12,414 | (b) | (56 | ) | (d) | — | |||||||||||||||||
| Balance on June 30, 2018 | $ | 1,724 | $ | 5,787 | $ | 16,718 | $ | (9,425 | ) | |||||||||||||||
| Net unrealized gains/(losses) included in net income | $ | 63 | (a) | $ | (109 | ) | (c) | $ | 709 | (a) | $ | (4,375 | ) | (e) | ||||||||||
| Six Months Ended June 30, 2017 | ||||||||||||||||||||||||
| (Dollars in thousands) | Trading securities | Interest-only-strips- AFS | Loans held- for-sale | Net derivative liabilities | ||||||||||||||||||||
| Balance on January 1, 2017 | $ | 2,573 | $ | — | $ | 21,924 | $ | (6,245 | ) | |||||||||||||||
| Total net gains/(losses) included in: | ||||||||||||||||||||||||
| Net income | 288 | 267 | 1,332 | (50 | ) | |||||||||||||||||||
| Purchases | — | 1,413 | 75 | — | ||||||||||||||||||||
| Settlements | (397 | ) | (3,291 | ) | (2,401 | ) | 595 | |||||||||||||||||
| Net transfers into/(out of) Level 3 | — | 2,774 | (b) | (343 | ) | (d) | — | |||||||||||||||||
| Balance on June 30, 2017 | $ | 2,464 | $ | 1,163 | $ | 20,587 | $ | (5,700 | ) | |||||||||||||||
| Net unrealized gains/(losses) included in net income | $ | 202 | (a) | $ | (53 | ) | (c) | $ | 1,332 | (a) | $ | (50 | ) | (e) | ||||||||||
| (a) | Primarily included in mortgage banking income on the Consolidated Condensed Statements of Income. |
| (b) | Transfers into interest-only strips - AFS level 3 measured on a recurring basis reflect movements from loans held-for-sale (Level 2 nonrecurring). |
| (c) | Primarily included in fixed income on the Consolidated Condensed Statements of Income. |
| (d) | Transfers out of loansheld-for-sale level 3 measured on a recurring basis generally reflect movements into |
| (e) | Included in Other expense. |
Note 16 – Fair Value of Assets & Liabilities (Continued)
| Carrying value at June 30, 2017 | ||||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Loansheld-for-sale—SBAs and USDA | $ | — | $ | 331,754 | $ | 1,577 | $ | 333,331 | ||||||||
Loansheld-for-sale—first mortgages | — | — | 613 | 613 | ||||||||||||
Loans, net of unearned income (a) | — | — | 29,260 | 29,260 | ||||||||||||
Real estate acquired by foreclosure (b) | — | — | 7,038 | 7,038 | ||||||||||||
Other assets (c) | — | — | 28,156 | 28,156 | ||||||||||||
| Carrying value at December 31, 2016 | ||||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Loansheld-for-sale—SBAs | $ | — | $ | 4,286 | $ | — | $ | 4,286 | ||||||||
Loansheld-for-sale—first mortgages | — | — | 638 | 638 | ||||||||||||
Loans, net of unearned income (a) | — | — | 31,070 | 31,070 | ||||||||||||
Real estate acquired by foreclosure (b) | — | — | 11,235 | 11,235 | ||||||||||||
Other assets (c) | — | — | 29,609 | 29,609 | ||||||||||||
| Carrying value at June 30, 2018 | ||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Loans held-for-sale—SBAs and USDA | $ | — | $ | 578,498 | $ | 1,025 | $ | 579,523 | ||||||||
| Loans held-for-sale—first mortgages | — | — | 607 | 607 | ||||||||||||
| Loans, net of unearned income (a) | — | — | 29,061 | 29,061 | ||||||||||||
| OREO (b) | — | — | 26,457 | 26,457 | ||||||||||||
| Other assets (c) | — | — | 24,699 | 24,699 | ||||||||||||
| Carrying value at December 31, 2017 | ||||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Loans held-for-sale—SBAs and USDA | $ | — | $ | 465,504 | $ | 1,473 | $ | 466,977 | ||||||||
| Loans held-for-sale—first mortgages | — | — | 618 | 618 | ||||||||||||
| Loans, net of unearned income (a) | — | — | 26,666 | 26,666 | ||||||||||||
| OREO (b) | — | — | 39,566 | 39,566 | ||||||||||||
| Other assets (c) | — | — | 26,521 | 26,521 | ||||||||||||
| (a) | Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. |
| (b) | Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as |
| (c) | Represents tax credit investments accounted for under the equity method. |
Note 16 – Fair Value of Assets & Liabilities (Continued)
| Net gains/(losses) Three months ended June 30, | Net gains/(losses) Six Months Ended June 30, | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Loansheld-for-sale—SBAs and USDA | $ | (1,140 | ) | $ | — | $ | (1,173 | ) | $ | — | ||||||
Loansheld-for-sale—first mortgages | 13 | 2 | 16 | 7 | ||||||||||||
Loans, net of unearned income (a) | (452 | ) | 353 | 32 | (4,319 | ) | ||||||||||
Real estate acquired by foreclosure (b) | (176 | ) | (314 | ) | (621 | ) | (850 | ) | ||||||||
Other assets (c) | (942 | ) | (831 | ) | (1,884 | ) | (1,537 | ) | ||||||||
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| $ | (2,697 | ) | $ | (790 | ) | $ | (3,630 | ) | $ | (6,699 | ) | |||||
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| Net gains/(losses) Three Months Ended June 30 | Net gains/(losses) Six Months Ended June 30 | |||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Loans held-for-sale—SBAs and USDA | $ | (1,425 | ) | $ | (1,140 | ) | $ | (1,987 | ) | $ | (1,173 | ) | ||||
| Loans held-for-sale—first mortgages | (1 | ) | 13 | 4 | 16 | |||||||||||
| Loans, net of unearned income (a) | 665 | (452 | ) | 1,167 | 32 | |||||||||||
| OREO (b) | (262 | ) | (176 | ) | (1,422 | ) | (621 | ) | ||||||||
| Other assets (c) | (1,079 | ) | (942 | ) | (2,216 | ) | (1,884 | ) | ||||||||
| $ | (2,102 | ) | $ | (2,697 | ) | $ | (4,454 | ) | $ | (3,630 | ) | |||||
| (a) | Write-downs on these loans are recognized as part of provision for loan losses. |
| (b) | Represents losses of foreclosed properties that were measured subsequent to their initial classification as |
| (c) | Represents tax credit investments accounted for under the equity method. |
| (Dollars in Thousands) | ||||||||||
Level 3 Class | Fair Value at June 30, 2017 | Valuation Techniques | Unobservable Input | Values Utilized | ||||||
Available-for-sale- securitiesSBA-interest only strips | $ | 1,163 | Discounted cash flow | Constant prepayment rate | 9% - 11% | |||||
| Bond equivalent yield | 15%- 19% | |||||||||
Loansheld-for-sale - residential real estate | 21,200 | Discounted cash flow | Prepayment speeds - First mortgage | 2% - 12% | ||||||
| Prepayment speeds - HELOC | 3% - 15% | |||||||||
| Foreclosure losses | 50% - 70% | |||||||||
| Loss severity trends - First mortgage | 5% - 50% of UPB | |||||||||
| Loss severity trends - HELOC | 15% - 100% of UPB | |||||||||
Loansheld-for-sale- unguaranteed interest in SBA loans | 1,577 | Discounted cash flow | Constant prepayment rate | 8% - 12% | ||||||
| Bond equivalent yield | 9% - 10% | |||||||||
Derivative liabilities, other | 5,700 | Discounted cash flow | Visa covered litigation resolution amount | $4.4 billion - $5.2 billion | ||||||
| Probability of resolution scenarios | 10% - 30% | |||||||||
| Time until resolution | 18 - 48 months | |||||||||
Loans, net of unearned income (a) | 29,260 | Appraisals from comparable properties | Marketability adjustments for specific properties | 0% - 10% of appraisal | ||||||
| Other collateral valuations | Borrowing base certificates adjustment | 20% - 50% of gross value | ||||||||
| Financial Statements/Auction values adjustment | 0% - 25% of reported value | |||||||||
Real estate acquired by foreclosure (b) | 7,038 | Appraisals from comparable properties | Adjustment for value changes since appraisal | 0% - 10% of appraisal | ||||||
Other assets (c) | 28,156 | Discounted cash flow | Adjustments to current sales yields for specific properties | 0% - 15% adjustment to yield | ||||||
| Appraisals from comparable properties | Marketability adjustments for specific properties | 0% - 25% of appraisal | ||||||||
| (Dollars in thousands) | ||||||||||
| Level 3 Class | Fair Value at June 30, 2018 | Valuation Techniques | Unobservable Input | Values Utilized | ||||||
| Available-for-sale- securities SBA-interest only strips | $ | 5,787 | Discounted cash flow | Constant prepayment rate | 11% | |||||
| Bond equivalent yield | 12%- 14% | |||||||||
| Loans held-for-sale - residential real estate | 17,325 | Discounted cash flow | Prepayment speeds - First mortgage | 2% - 11% | ||||||
| Prepayment speeds - HELOC | 5% - 12% | |||||||||
| Foreclosure losses | 50% - 70% | |||||||||
| Loss severity trends - First mortgage | 5% - 25% of UPB | |||||||||
| Loss severity trends - HELOC | 50% - 100% of UPB | |||||||||
| Loans held-for-sale- unguaranteed interest in SBA loans | 1,025 | Discounted cash flow | Constant prepayment rate | 8% - 12% | ||||||
| Bond equivalent yield | 13% - 14% | |||||||||
| Derivative liabilities, other | 9,425 | Discounted cash flow | Visa covered litigation resolution amount | $5.0 billion - $5.6 billion | ||||||
| Probability of resolution scenarios | 20% - 30% | |||||||||
| Time until resolution | 24- 48 months | |||||||||
Loans, net of unearned income (a) | 29,061 | Appraisals from comparable properties | Marketability adjustments for specific properties | 0% - 10% of appraisal | ||||||
| Other collateral valuations | Borrowing base certificates adjustment | 20% - 50% of gross value | ||||||||
| Financial Statements/Auction values adjustment | 0% - 25% of reported value | |||||||||
| OREO (b) | 26,457 | Appraisals from comparable properties | Adjustment for value changes since appraisal | 0% - 10% of appraisal | ||||||
| Other assets (c) | 24,699 | Discounted cash flow | Adjustments to current sales yields for specific properties | 0% - 15% adjustment to yield | ||||||
| Appraisals from comparable properties | Marketability adjustments for specific properties | 0% - 25% of appraisal | ||||||||
| (a) | Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for loan losses. |
| (b) | Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as |
| (c) | Represents tax credit investments accounted for under the equity method. |
| (Dollars in Thousands) | ||||||||||
Level 3 Class | Fair Value at December 31, 2016 | Valuation Techniques | Unobservable Input | Values | ||||||
Loansheld-for-sale—residential real estate | $ | 22,562 | Discounted cash flow | Prepayment speeds—First mortgage | 2% - 13% | |||||
| Prepayment speeds—HELOC | 3% - 15% | |||||||||
| Foreclosure Losses | 50% - 70% | |||||||||
| Loss severity trends—First mortgage | 5% - 50% of UPB | |||||||||
| Loss severity trends - HELOC | 15% - 100% of UPB | |||||||||
Derivative liabilities, other | 6,245 | Discounted cash flow | Visa covered litigation resolution amount | $4.4 billion - $5.2 billion | ||||||
| Probability of resolution scenarios | 10% - 30% | |||||||||
| Time until resolution | 24 - 54 months | |||||||||
Loans, net of unearned income (a) | 31,070 | Appraisals from comparable properties | Marketability adjustments for specific properties | 0% - 10% of appraisal | ||||||
| Other collateral valuations | Borrowing base certificates adjustment | 20% - 50% of gross value | ||||||||
| Financial Statements/Auction values adjustment | 0% - 25% of reported value | |||||||||
Real estate acquired by foreclosure (b) | 11,235 | Appraisals from comparable properties | Adjustment for value changes since appraisal | 0% - 10% of appraisal | ||||||
Other assets (c) | 29,609 | Discounted cash flow | Adjustments to current sales yields for specific properties | 0% - 15% adjustment to yield | ||||||
| Appraisals from comparable properties | Marketability adjustments for specific properties | 0% - 25% of appraisal | ||||||||
| (Dollars in thousands) | ||||||||||
| Level 3 Class | Fair Value at December 31, 2017 | Valuation Techniques | Unobservable Input | Values Utilized | ||||||
| Available-for-sale- securities SBA-interest only strips | $ | 1,270 | Discounted cash flow | Constant prepayment rate | 10% - 11% | |||||
| Bond equivalent yield | 17% | |||||||||
| Loans held-for-sale - residential real estate | 19,544 | Discounted cash flow | Prepayment speeds - First mortgage | 2% - 12% | ||||||
| Prepayment speeds - HELOC | 5% - 12% | |||||||||
| Foreclosure losses | 50% - 70% | |||||||||
| Loss severity trends - First mortgage | 5% - 30% of UPB | |||||||||
| Loss severity trends - HELOC | 15% - 100% of UPB | |||||||||
| Loans held-for-sale- unguaranteed interest in SBA loans | 1,473 | Discounted cash flow | Constant prepayment rate | 8% - 12% | ||||||
| Bond equivalent yield | 9% - 10% | |||||||||
| Derivative liabilities, other | 5,645 | Discounted cash flow | Visa covered litigation resolution amount | $4.4 billion - $5.2 billion | ||||||
| Probability of resolution scenarios | 10% - 30% | |||||||||
| Time until resolution | 18 - 48 months | |||||||||
Loans, net of unearned income (a) | 26,666 | Appraisals from comparable properties | Marketability adjustments for specific properties | 0% - 10% of appraisal | ||||||
| Other collateral valuations | Borrowing base certificates adjustment | 20% - 50% of gross value | ||||||||
| Financial Statements/Auction values adjustment | 0% - 25% of reported value | |||||||||
| OREO (b) | 39,566 | Appraisals from comparable properties | Adjustment for value changes since appraisal | 0% - 10% of appraisal | ||||||
| Other assets (c) | 26,521 | Discounted cash flow | Adjustments to current sales yields for specific properties | 0% - 15% adjustment to yield | ||||||
| Appraisals from comparable properties | Marketability adjustments for specific properties | 0% - 25% of appraisal | ||||||||
| (a) | Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for loan losses. |
| (b) | Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as |
| (c) | Represents tax credit investments accounted for under the equity method. |
value election, these loans would be subject to valuation at the LOCOM value, which would prevent subsequent values from exceeding the initial fair value, determined at the time of repurchase, but would require recognition of subsequent declines in value. Thus, the fair value election provides for a more timely recognition of any potential future recoveries in asset values while not affecting the requirement to recognize subsequent declines in value. (Dollars in thousands) Residential real estate loansheld-for-sale reported at fair value: Total loans Nonaccrual loans Loans 90 days or more past due and still accruing (Dollars in thousands) Residential real estate loansheld-for-sale reported at fair value: Total loans Nonaccrual loans Loans 90 days or more past due and still accruing (Dollars in thousands) Changes in fair value included in net income: Mortgage banking noninterest income Loansheld-for-sale Short-term financial assets. Federal funds sold, securities purchased under agreements to resell, and interest bearing deposits with other financial institutions and the Federal Reserve are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization. Loansheld-for-sale. Residential real estate loansheld-for-sale are valued using current transaction prices and/or values on similar assets when available, including committed bids for specific loans or loan portfolios. Uncommitted bids may be adjusted based on other available market information. For all other loans FHN determines the fair value of residential real estate loansheld-for-sale using a discounted cash flow model which incorporates both observable and unobservable inputs. Inputs include current mortgage rates for similar products, estimated prepayment rates, foreclosure losses, and various loan performance measures (delinquency, LTV, credit score). Adjustments for delinquency and other differences in loan characteristics are typically reflected in the model’s discount rates. Loss severity trends and the value of underlying collateral are also considered in assessing the appropriate fair value for severely delinquent loans and loans in foreclosure. The valuation of HELOCs also incorporates estimated cancellation rates for loans expected to become delinquent. (Dollars in thousands) Assets: Loans, net of unearned income and allowance for loan losses Commercial: Commercial, financial and industrial Commercial real estate Consumer: Consumer real estate Permanent mortgage Credit card & other Total loans, net of unearned income and allowance for loan losses Short-term financial assets: Interest-bearing cash Federal funds sold Securities purchased under agreements to resell Total short-term financial assets Trading securities (a) Loansheld-for-sale (a) Securitiesavailable-for-sale (a) (b) Securitiesheld-to-maturity Derivative assets (a) Other assets: Tax credit investments Deferred compensation assets Total other assets Nonearning assets: Cash & due from banks Fixed income receivables Accrued interest receivable Total nonearning assets Total assets Liabilities: Deposits: Defined maturity Undefined maturity Total deposits Trading liabilities (a) Short-term financial liabilities: Federal funds purchased Securities sold under agreements to repurchase Other short-term borrowings Total short-term financial liabilities Term borrowings: Real estate investment trust-preferred Term borrowings—new market tax credit investment Borrowings secured by residential real estate Other long term borrowings Total term borrowings Derivative liabilities (a) Other noninterest-bearing liabilities: Fixed income payables Accrued interest payable Total other noninterest-bearing liabilities Total liabilities on theunderlying relatedSBA-interest only strips are delinquent, in default or prepaying, and adjusts the fair value down 20—20 - 100% depending on the length of time in default.Note 16 – Fair Value of Assets & Liabilities (Continued)estate acquired by foreclosure.Estate Owned. Collateral-dependent loans and Real estate acquired by foreclosureOREO are primarily valued using appraisals based on sales of comparable properties in the same or similar markets. Multiple appraisal firms are utilized to ensure that estimated values are consistent between firms. This process occurs within FHN’s Credit Risk Management (commercial) and Default Servicing functions (primarily consumer). The Credit Risk Management Committee reviews dispositions and additions of foreclosed assetsOREO annually. Back testing is performed during the year through comparison to ultimate disposition values. Other collateral (receivables, inventory, equipment, etc.) is valued through borrowing base certificates, financial statements and/or auction valuations. These valuations are discounted based on the quality of reporting, knowledge of the marketability/collectability of the collateral and historical disposition rates.. except for mortgage origination operations which utilize the platform acquired from CBF. FHN determined that the election reduces certain timing differences and better matches changes in the value of such loans with changes in the value of derivatives and forward delivery commitments used as economic hedges for these assets at the time of election.Note 16 – Fair Value of Assets & Liabilities (Continued) June 30, 2017 Fair value
carrying
amount Aggregate
unpaid
principal Fair value carrying amount
less aggregate unpaid
principal $ 22,220 $ 31,580 $ (9,360 ) 6,419 11,736 (5,317 ) 35 43 (8 ) December 31, 2016 Fair value
carrying
amount Aggregate
unpaid
principal Fair value carrying amount
less aggregate unpaid
principal $ 24,269 $ 35,262 $ (10,993 ) 6,775 12,910 (6,135 ) 211 331 (120 ) June 30, 2018 (Dollars in thousands) Residential real estate loans held-for-sale reported at fair value: Total loans $ 18,940 $ 26,644 $ (7,704 ) Nonaccrual loans 4,674 8,830 (4,156 ) Loans 90 days or more past due and still accruing 34 51 (17 ) December 31, 2017 (Dollars in thousands) Residential real estate loans held-for-sale reported at fair value: Total loans $ 20,881 $ 29,755 $ (8,874 ) Nonaccrual loans 5,783 10,881 (5,098 ) Loans 90 days or more past due and still accruing — — — Three Months Ended
June 30 Six Months Ended
June 30 2017 2016 2017 2016 $ 410 $ 429 $ 1,332 $ 771 Three Months Ended
June 30 Six Months Ended
June 30(Dollars in thousands) 2018 2017 2018 2017 Changes in fair value included in net income: Mortgage banking noninterest income Loans held-for-sale $ 540 $ 410 $ 709 $ 1,332 and 2016, the amountsamount for residential real estate loansheld-for-sale include included gains of $.2 million, in pretax earnings that are attributable to changes in instruments-specific credit risk. For the six months ended June 30, 2017,2018, and 2016,2017, the amounts for residentialthe real estate loansheld-for-sale included gains of $.3 million in pretax earnings that are attributable to changes in instrument-specificinstruments-specific credit risk. The portion of the fair value adjustments related to credit risk was determined based on estimated default rates and estimated loss severities. Interest income on residential real estate loansheld-for-sale measured at fair value is calculated based on the note rate of the loan and is recorded in the interest income section of the Consolidated Condensed Statements of Income as interest on loansheld-for-sale.Note 16 – Fair Value of Assets & Liabilities (Continued)disclosed under ASCdisclosed.825-10-50.320-10-25, federal bank stock holdings, and short-term investments in mutual funds. 320-10-25. Valuations ofavailable-for-sale securities are performed using observable inputs obtained from market transactions in similar securities. Typical inputs include LIBOR and U.S. treasury curves, consensus prepayment estimates, and credit spreads. When available, broker quotes are used to support these valuations.Investments in the stock of the Federal Reserve Bank and Federal Home Loan Banks are recognized at historical cost in the Consolidated Condensed Statements of Condition which is considered to approximate fair value. Short-term investments in mutual funds are measured at the funds’ reported closing net asset values. Investments in equity securities are valued using quoted market prices when available. Cost method investments are valued at historical cost less any recorded impairment due to the illiquid nature of these investments.Note 16 – Fair Value of Assets & Liabilities (Continued)Securitiesheld-to-maturity. Securitiesheld-to-maturity reflects debt securities for which management has the positive intent and ability to hold to maturity. To the extent possible, valuations ofheld-to-maturity securities are performed using observable inputs obtained from market transactions in similar securities. Typical inputs include LIBOR and U.S. treasury curves and credit spreads. Debt securities with limited trading activity are valued using a discounted cash flow model that incorporates a combination of observable and unobservable inputs. Primary observable inputs include contractual cash flows, the treasury curve and credit spreads from similar instruments. Significant unobservable inputs include estimated credit spreads for individual issuers and instruments as well as prepayment speeds, as applicable.Loans, net of unearned income. Loans, net of unearned income are recognized at the amount of funds advanced, less charge-offs and an estimation of credit risk represented by the allowance for loan losses. The fair value estimates for disclosure purposes differentiate loans based on their financial characteristics, such as product classification, vintage, loan category, pricing features, and remaining maturity.The fair value of floating rate loans is estimated through comparison to recent market activity in loans of similar product types, with adjustments made for differences in loan characteristics. In situations where market pricing inputs are not available, fair value is considered to approximate book value due to the monthly repricing for commercial and consumer loans, with the exception of floating rate1-4Collateral-Dependent loans. family residential mortgage loans which reprice annually and will lag movements in market rates. The fair value for floating rate1-4 family mortgage loans is calculated by discounting future cash flows to their present value. Future cash flows are discounted to their present value by using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same time period. Prepayment assumptions based on historical prepayment speeds and industry speeds for similar loans have been applied to the floating rate1-4 family residential mortgage portfolio.The fair value of fixed rate loans is estimated through comparison to recent market activity in loans of similar product types, with adjustments made for differences in loan characteristics. In situations where market pricing inputs are not available, fair value is estimated by discounting future cash flows to their present value. Future cash flows are discounted to their present value by using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same time period. Prepayment assumptions based on historical prepayment speeds and industry speeds for similar loans have been applied to the fixed rate mortgage and installment loan portfolios.For all loan portfolio classes, adjustments are made to reflect liquidity or illiquidity of the market. Such adjustments reflect discounts that FHN believes are consistent with what a market participant would consider in determining fair value given current market conditions.Note 16 – Fair Value of Assets & Liabilities (Continued)Individually impaired loans are measured using either a discounted cash flow methodology or the estimated fair value of the underlying collateral less costs to sell, if the loan is considered collateral-dependent. In accordance with accounting standards, the discounted cash flow analysis utilizes the loan’s effective interest rate for discounting expected cash flow amounts. Thus, this analysis is not considered a fair value measurement in accordance with ASC 820. However, the results of this methodology are considered to approximate fair value for the applicable loans. Expected cash flows are derived from internally-developed inputs primarily reflecting expected default rates on contractual cash flows. For loans measured using the estimated fair value of collateral less costs to sell, fair value is estimated using appraisals of the collateral. Collateral values are monitored and additional write-downs are recognized if it is determined that the estimated collateral values have declined further. Estimated costs to sell are based on current amounts of disposal costs for similar assets. Carrying value is considered to reflect fair value for these loans.Real estate acquired by foreclosure. Real estate acquired by foreclosureassets that are considered financial assets.mutual funds and equity investments (including other mutual funds) with readily determinable fair values. Tax credit investments accounted for under the equity method are written down to estimated fair value quarterly based on the estimated value of the associated tax credits which incorporates estimates of required yield for hypothetical investors. The fair value of all other tax credit investments is estimated using recent transaction information with adjustments for differences in individual investments. Deferred compensation assetsmutual funds are recognized at fair value, which is based on quoted prices in active markets. In For periods prior to 2018, in accordance with ASC 825, the fair value of these deposits is approximated by the book value. For the purpose of this disclosure, undefined maturity deposits include demand deposits, checking interest accounts, savings accounts, and money market accounts.Note 16 – Fair Value of Assets & Liabilities (Continued)Term borrowings. The fair value of term borrowings is based on quoted market prices or dealer quotes for the identical liability when traded as an asset. When pricing information for the identical liability is not available, relevant prices for similar debt instruments are used with adjustments being made to the prices obtained for differences in characteristics of the debt instruments. If no relevant pricing information is available, the fair value is approximated by the present value of the contractual cash flows discounted by the investor’s yield which considers FHN’s and FTBNA’s debt ratings.20172018 and December 31, 2016,2017, involve the use of significant internally-developed pricing assumptions for certain components of these line items. The assumptions and valuations utilized for this disclosure are considered to reflect inputs that market participants would use in transactions involving these instruments as of the measurement date. The valuations of legacy assets, particularly consumer loans within thenon-strategic segment and TRUP loans, are influenced by changes in economic conditions since origination and risk perceptions of the financial sector. These considerations affect the estimate of a potential acquirer’s cost of capital and cash flow volatility assumptions from these assets and the resulting fair value measurements may depart significantly from FHN’s internal estimates of the intrinsic value of these assets.2017: June 30, 2017 Book Fair Value Value Level 1 Level 2 Level 3 Total $ 12,505,840 $ — $ — $ 12,424,202 $ 12,424,202 2,181,526 — — 2,155,023 2,155,023 4,371,390 — — 4,319,728 4,319,728 391,697 — — 394,561 394,561 341,609 — — 341,647 341,647 19,792,062 — — 19,635,161 19,635,161 573,666 573,666 — — 573,666 34,036 — 34,036 — 34,036 657,991 — 657,991 — 657,991 1,265,693 573,666 692,027 — 1,265,693 1,315,891 — 1,313,427 2,464 1,315,891 432,771 — 335,193 99,415 434,608 3,949,592 25,182 3,761,539 162,871 3,949,592 10,000 — — 9,991 9,991 91,653 16,049 75,604 — 91,653 99,217 — — 98,983 98,983 35,064 35,064 — — 35,064 134,281 35,064 — 98,983 134,047 387,053 387,053 — — 387,053 127,724 — 127,724 — 127,724 65,330 — 65,330 — 65,330 580,107 387,053 193,054 — 580,107 $ 27,572,050 $ 1,037,014 $ 6,370,844 $ 20,008,885 $ 27,416,743 $ 1,373,618 $ — $ 1,380,279 $ — $ 1,380,279 20,959,731 — 20,959,731 — 20,959,731 22,333,349 — 22,340,010 — 22,340,010 555,793 — 555,793 — 555,793 314,892 — 314,892 — 314,892 743,684 — 743,684 — 743,684 1,044,658 — 1,044,658 — 1,044,658 2,103,234 — 2,103,234 — 2,103,234 46,066 — — 49,350 49,350 18,000 — — 17,961 17,961 15,887 — — 15,093 15,093 953,376 — 966,541 — 966,541 1,033,329 — 966,541 82,404 1,048,945 92,717 12,578 74,439 5,700 92,717 28,571 — 28,571 — 28,571 11,639 — 11,639 — 11,639 40,210 — 40,210 — 40,210 $ 26,158,632 $ 12,578 $ 26,080,227 $ 88,104 $ 26,180,909 June 30, 2018 Fair Value Level 1 Level 2 Level 3 Total Assets: Loans, net of unearned income and allowance for loan losses Commercial: Commercial, financial and industrial $ 16,341,911 $ — $ — $ 16,289,383 $ 16,289,383 Commercial real estate 4,102,524 — — 4,106,951 4,106,951 Consumer: Consumer real estate 6,190,842 — — 6,139,842 6,139,842 Permanent mortgage 340,838 — — 347,349 347,349 Credit card & other 540,163 — — 539,609 539,609 Total loans, net of unearned income and allowance for loan losses 27,516,278 — — 27,423,134 27,423,134 Short-term financial assets: Interest-bearing cash 750,634 750,634 — — 750,634 Federal funds sold 91,303 — 91,303 — 91,303 Securities purchased under agreements to resell 782,765 — 782,765 — 782,765 Total short-term financial assets 1,624,702 750,634 874,068 — 1,624,702 Trading securities (a) 1,649,470 — 1,647,746 1,724 1,649,470 Loans held-for-sale Mortgage loans (elected fair value) (a) 18,940 — 2,222 16,718 18,940 USDA & SBA loans- LOCOM 579,523 — 581,051 1,038 582,089 Other consumer loans- LOCOM 30,175 — 6,959 23,216 30,175 Mortgage loans- LOCOM 64,021 — — 64,021 64,021 Total loans held-for-sale 692,659 — 590,232 104,993 695,225 Securities available-for-sale (a) 4,724,411 — 4,718,624 5,787 4,724,411 Securities held-to-maturity 10,000 — — 9,786 9,786 Derivative assets (a) 122,056 19,127 102,929 — 122,056 Other assets: Tax credit investments 119,186 — — 114,392 114,392 Deferred compensation mutual funds 40,068 40,068 — — 40,068 Equity, mutual funds, and other (b) 245,617 27,135 — 218,482 245,617 Total other assets 404,871 67,203 — 332,874 400,077 Total assets $ 36,744,447 $ 836,964 $ 7,933,599 $ 27,878,298 $ 36,648,861 Liabilities: Defined maturity deposits $ 3,543,987 $ — $ 3,518,069 $ — $ 3,518,069 Trading liabilities (a) 743,721 — 743,721 — 743,721 Short-term financial liabilities: Federal funds purchased 351,655 — 351,655 — 351,655 Securities sold under agreements to repurchase 713,152 — 713,152 — 713,152 Other short-term borrowings 1,836,852 — 1,836,852 — 1,836,852 Total short-term financial liabilities 2,901,659 — 2,901,659 — 2,901,659 Term borrowings: Real estate investment trust-preferred 46,134 — — 47,940 47,940 Term borrowings—new market tax credit investment 18,000 — — 17,898 17,898 Secured borrowings 34,046 — — 33,866 33,866 Junior subordinated debentures 187,950 — — 187,950 187,950 Other long term borrowings 941,151 — 953,035 — 953,035 Total term borrowings 1,227,281 — 953,035 287,654 1,240,689 Derivative liabilities (a) 135,349 18,738 107,186 9,425 135,349 Total liabilities $ 8,551,997 $ 18,738 $ 8,223,670 $ 297,079 $ 8,539,487 (a) Classes are detailed in the recurring and nonrecurring measurement tables. (b) Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $87.9 million and FRB stock of $68.6$130.6 million.
| December 31, 2016 | ||||||||||||||||||||
| Book | Fair Value | |||||||||||||||||||
(Dollars in thousands) | Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets: | ||||||||||||||||||||
Loans, net of unearned income and allowance for loan losses | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial, financial and industrial | $ | 12,058,689 | $ | — | $ | — | $ | 11,918,374 | $ | 11,918,374 | ||||||||||
Commercial real estate | 2,101,671 | — | — | 2,078,306 | 2,078,306 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Consumer real estate | 4,473,395 | — | — | 4,385,669 | 4,385,669 | |||||||||||||||
Permanent mortgage | 406,836 | — | — | 404,930 | 404,930 | |||||||||||||||
Credit card & other | 346,861 | — | — | 347,577 | 347,577 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total loans, net of unearned income and allowance for loan losses | 19,387,452 | — | — | 19,134,856 | 19,134,856 | |||||||||||||||
Short-term financial assets: | ||||||||||||||||||||
Interest-bearing cash | 1,060,034 | 1,060,034 | — | — | 1,060,034 | |||||||||||||||
Federal funds sold | 50,838 | — | 50,838 | — | 50,838 | |||||||||||||||
Securities purchased under agreements to resell | 613,682 | — | 613,682 | — | 613,682 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total short-term financial assets | 1,724,554 | 1,060,034 | 664,520 | — | 1,724,554 | |||||||||||||||
Trading securities (a) | 897,071 | — | 894,498 | 2,573 | 897,071 | |||||||||||||||
Loansheld-for-sale | 111,248 | — | 6,631 | 104,617 | 111,248 | |||||||||||||||
Securitiesavailable-for-sale (a) (b) | 3,943,499 | 25,249 | 3,756,745 | 161,505 | 3,943,499 | |||||||||||||||
Securitiesheld-to-maturity | 14,347 | — | — | 14,773 | 14,773 | |||||||||||||||
Derivative assets (a) | 121,654 | 33,587 | 88,067 | — | 121,654 | |||||||||||||||
Other assets: | ||||||||||||||||||||
Tax credit investments | 100,105 | — | — | 98,400 | 98,400 | |||||||||||||||
Deferred compensation assets | 32,840 | 32,840 | — | — | 32,840 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total other assets | 132,945 | 32,840 | — | 98,400 | 131,240 | |||||||||||||||
Nonearning assets: | ||||||||||||||||||||
Cash & due from banks | 373,274 | 373,274 | — | — | 373,274 | |||||||||||||||
Fixed income receivables | 57,411 | — | 57,411 | — | 57,411 | |||||||||||||||
Accrued interest receivable | 62,887 | — | 62,887 | — | 62,887 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total nonearning assets | 493,572 | 373,274 | 120,298 | — | 493,572 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total assets | $ | 26,826,342 | $ | 1,524,984 | $ | 5,530,759 | $ | 19,516,724 | $ | 26,572,467 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Defined maturity | $ | 1,355,133 | $ | — | $ | 1,361,104 | $ | — | $ | 1,361,104 | ||||||||||
Undefined maturity | 21,317,230 | — | 21,317,230 | — | 21,317,230 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total deposits | 22,672,363 | — | 22,678,334 | — | 22,678,334 | |||||||||||||||
Trading liabilities (a) | 561,848 | — | 561,848 | — | 561,848 | |||||||||||||||
Short-term financial liabilities: | ||||||||||||||||||||
Federal funds purchased | 414,207 | — | 414,207 | — | 414,207 | |||||||||||||||
Securities sold under agreements to repurchase | 453,053 | — | 453,053 | — | 453,053 | |||||||||||||||
Other short-term borrowings | 83,177 | — | 83,177 | — | 83,177 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total short-term financial liabilities | 950,437 | — | 950,437 | — | 950,437 | |||||||||||||||
Term borrowings: | ||||||||||||||||||||
Real estate investment trust-preferred | 46,032 | — | — | 49,350 | 49,350 | |||||||||||||||
Term borrowings—new market tax credit investment | 18,000 | — | — | 17,918 | 17,918 | |||||||||||||||
Borrowings secured by residential real estate | 23,126 | — | — | 21,969 | 21,969 | |||||||||||||||
Other long term borrowings | 953,498 | — | 965,066 | — | 965,066 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total term borrowings | 1,040,656 | — | 965,066 | 89,237 | 1,054,303 | |||||||||||||||
Derivative liabilities (a) | 135,897 | 33,274 | 96,378 | 6,245 | 135,897 | |||||||||||||||
Other noninterest-bearing liabilities: | ||||||||||||||||||||
Fixed income payables | 21,002 | — | 21,002 | — | 21,002 | |||||||||||||||
Accrued interest payable | 10,336 | — | 10,336 | — | 10,336 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total other noninterest-bearing liabilities | 31,338 | — | 31,338 | — | 31,338 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities | $ | 25,392,539 | $ | 33,274 | $ | 25,283,401 | $ | 95,482 | $ | 25,412,157 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| December 31, 2017 | ||||||||||||||||||||
Book Value | Fair Value | |||||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| Assets: | ||||||||||||||||||||
| Loans, net of unearned income and allowance for loan losses | ||||||||||||||||||||
| Commercial: | ||||||||||||||||||||
| Commercial, financial and industrial | $ | 15,959,062 | $ | — | $ | — | $ | 15,990,991 | $ | 15,990,991 | ||||||||||
| Commercial real estate | 4,186,268 | — | — | 4,215,367 | 4,215,367 | |||||||||||||||
| Consumer: | ||||||||||||||||||||
| Consumer real estate | 6,330,384 | — | — | 6,320,308 | 6,320,308 | |||||||||||||||
| Permanent mortgage | 383,742 | — | — | 388,396 | 388,396 | |||||||||||||||
| Credit card & other | 609,918 | — | �� | 607,955 | 607,955 | |||||||||||||||
| Total loans, net of unearned income and allowance for loan losses | 27,469,374 | — | — | 27,523,017 | 27,523,017 | |||||||||||||||
| Short-term financial assets: | ||||||||||||||||||||
| Interest-bearing cash | 1,185,600 | 1,185,600 | — | — | 1,185,600 | |||||||||||||||
| Federal funds sold | 87,364 | — | 87,364 | — | 87,364 | |||||||||||||||
| Securities purchased under agreements to resell | 725,609 | — | 725,609 | — | 725,609 | |||||||||||||||
| Total short-term financial assets | 1,998,573 | 1,185,600 | 812,973 | — | 1,998,573 | |||||||||||||||
| Trading securities (a) | 1,416,345 | — | 1,414,194 | 2,151 | 1,416,345 | |||||||||||||||
| Loans held-for-sale | ||||||||||||||||||||
| Mortgage loans | 88,173 | — | 6,902 | 81,271 | 88,173 | |||||||||||||||
| USDA & SBA loans | 466,977 | — | 467,227 | 1,510 | 468,737 | |||||||||||||||
| Other consumer loans | 144,227 | — | 9,965 | 134,262 | 144,227 | |||||||||||||||
| Securities available-for-sale (a) (b) | 5,170,255 | 27,017 | 4,903,115 | 240,123 | 5,170,255 | |||||||||||||||
| Securities held-to-maturity | 10,000 | — | — | 9,901 | 9,901 | |||||||||||||||
| Derivative assets (a) | 81,634 | 10,161 | 71,473 | — | 81,634 | |||||||||||||||
| Other assets: | ||||||||||||||||||||
| Tax credit investments | 119,317 | — | — | 112,292 | 112,292 | |||||||||||||||
| Deferred compensation assets | 39,822 | 39,822 | — | — | 39,822 | |||||||||||||||
| Total other assets | 159,139 | 39,822 | — | 112,292 | 152,114 | |||||||||||||||
| Nonearning assets: | ||||||||||||||||||||
| Cash & due from banks | 639,073 | 639,073 | — | — | 639,073 | |||||||||||||||
| Fixed income receivables | 68,693 | — | 68,693 | — | 68,693 | |||||||||||||||
| Accrued interest receivable | 97,239 | — | 97,239 | — | 97,239 | |||||||||||||||
| Total nonearning assets | 805,005 | 639,073 | 165,932 | — | 805,005 | |||||||||||||||
| Total assets | $ | 37,809,702 | $ | 1,901,673 | $ | 7,851,781 | $ | 28,104,527 | $ | 37,857,981 | ||||||||||
| Liabilities: | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Defined maturity | $ | 3,322,921 | $ | — | $ | 3,293,650 | $ | — | $ | 3,293,650 | ||||||||||
| Undefined maturity | 27,297,441 | — | 27,297,431 | — | 27,297,431 | |||||||||||||||
| Total deposits | 30,620,362 | — | 30,591,081 | — | 30,591,081 | |||||||||||||||
| Trading liabilities (a) | 638,515 | — | 638,515 | — | 638,515 | |||||||||||||||
| Short-term financial liabilities: | ||||||||||||||||||||
| Federal funds purchased | 399,820 | — | 399,820 | — | 399,820 | |||||||||||||||
| Securities sold under agreements to repurchase | 656,602 | — | 656,602 | — | 656,602 | |||||||||||||||
| Other short-term borrowings | 2,626,213 | — | 2,626,213 | — | 2,626,213 | |||||||||||||||
| Total short-term financial liabilities | 3,682,635 | — | 3,682,635 | — | 3,682,635 | |||||||||||||||
| Term borrowings: | ||||||||||||||||||||
| Real estate investment trust-preferred | 46,100 | — | — | 48,880 | 48,880 | |||||||||||||||
| Term borrowings—new market tax credit investment | 18,000 | — | — | 17,930 | 17,930 | |||||||||||||||
| Secured borrowings | 18,642 | — | — | 18,305 | 18,305 | |||||||||||||||
| Junior subordinated debentures | 187,281 | — | — | 187,281 | 187,281 | |||||||||||||||
| Other long term borrowings | 948,074 | — | 966,292 | — | 966,292 | |||||||||||||||
| Total term borrowings | 1,218,097 | — | 966,292 | 272,396 | 1,238,688 | |||||||||||||||
| Derivative liabilities (a) | 85,061 | 9,535 | 69,881 | 5,645 | 85,061 | |||||||||||||||
| Other noninterest-bearing liabilities: | ||||||||||||||||||||
| Fixed income payables | 48,996 | — | 48,996 | — | 48,996 | |||||||||||||||
| Accrued interest payable | 16,270 | — | 16,270 | — | 16,270 | |||||||||||||||
| Total other noninterest-bearing liabilities | 65,266 | — | 65,266 | — | 65,266 | |||||||||||||||
| Total liabilities | $ | 36,309,936 | $ | 9,535 | $ | 36,013,670 | $ | 278,041 | $ | 36,301,246 | ||||||||||
| (a) | Classes are detailed in the recurring and nonrecurring measurement tables. |
| (b) | Level 3 includes restricted investments in FHLB-Cincinnati stock of $87.9 million and FRB stock of |
| Contractual Amount | Fair Value | |||||||||||||||
(Dollars in thousands) | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | ||||||||||||
Unfunded Commitments: | ||||||||||||||||
Loan commitments | $ | 8,871,103 | $ | 8,744,649 | $ | 2,582 | $ | 2,924 | ||||||||
Standby and other commitments | 305,330 | 277,549 | 3,991 | 4,037 | ||||||||||||
2017:
| Contractual Amount | Fair Value | |||||||||||||||
| (Dollars in thousands) | June 30, 2018 | December 31, 2017 | June 30, 2018 | December 31, 2017 | ||||||||||||
| Unfunded Commitments: | ||||||||||||||||
| Loan commitments | $ | 10,228,615 | $ | 10,678,485 | $ | 2,186 | $ | 2,617 | ||||||||
| Standby and other commitments | 464,600 | 420,728 | 5,028 | 5,274 | ||||||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
FHN’s two major brands—
FTBNA has approximately 300 banking offices in eight southeastern U.S. states, and FTNF has 28 offices in 18 states across the U.S.
its CRE platform.
On September 16, 2016, FTBNA acquired $537.4 million of UPB in restaurant franchise loans from GE Capital. The acquired loans were combined with existing FTBNA relationships to establish a franchise finance specialty banking business.
Refer to Note 2 – Acquisitions and Divestitures in this report and in Exhibit 13 to FHN’s Annual Report on Form10-K for the year ended December 31, 20162017 for additional information.
2017.
Currency (“OCC”), the Board of Governors of the Federal Reserve System (“Federal Reserve” or “Fed”), the Federal Deposit Insurance Corporation (“FDIC”), the Financial Industry Regulatory Authority (“FINRA”), the U.S. Department of the Treasury (“U.S. Treasury”), the Municipal Securities Rulemaking Board (“MSRB”), the Consumer Financial Protection Bureau (“CFPB”), the Financial Stability Oversight Council (“Council”), the Public Company Accounting Oversight Board (“PCAOB”), and other regulators and agencies; pending, threatened, or possible future regulatory, administrative, and judicial outcomes, actions, and proceedings; current or future Executive orders; changes in laws and regulations applicable to FHN; and FHN’s success in executing its business plans and strategies and managing the risks involved in the foregoing, could cause actual results to differ, perhaps materially, from those contemplated by the forward-looking statements.
2017 and significantly impacted FHN's operating results and balance sheet trends for both the three and six month periods ending June 30, 2018.
Noninterest expense decreased 4increased 55 percent and 357 percent, respectively to $217.9from $200.7 million and $440.1$390.4 million for the three and six months ended June 30, 2017 to $310.9 million and $612.1 million for the three and six months ended June 30, 2018. This increase was largely driven by loans and deposits added through the CBF acquisition, as well as the positive impact of higher short-term interest rates and organic loan growth within the regional banking commercial loan portfolios. Noninterest income was relatively flat in second quarter 2018 compared to the prior year. For the six months ended June 30, 2018 noninterest income increased due in large part to additional fee income as a result of the inclusion of Capital Bank, increases in fees generated from
2018.
losses.
shareholder's equity increased 8 percentto $4.6 billion from $2.8 billion for both the three and six months ended June 30, 2017 to $28.9 billion and $28.8 billion from $26.8 billion and $26.7 billion for the three and six months ended June 30, 2016. Average loans also increased 8 percent for both the three and six months ended June 30, 2017 relative2018 compared to the same periods in 2016 to $19.2 billion and $19.0 billion.of 2017. Period-end and average Shareholders’ shareholders’ equity increased to $4.5 billion on June 30, 2018 from $2.8 billion in second quarter 2017 from $2.7 billion in second quarter 2016.
on June 30, 2017.
revenue somewhat offset by higher expenses.
Provision expense was $.3 million in second quarter 2017 compared to $10.9 million in second quarter 2016. The net decrease in provision in second quarter 2017 compared to the prior year reflects continued strong performance in both the commercial and consumer portfolios relative to a year ago and historically low net charge-offs which continued to drive lower loss rates. Second quarter 2017 net charge-offs were $3.0 million compared to $7.6 million a year ago.
Noninterest expense was $152.7 million in second quarter 2017, down 7 percent from $164.5 million in second quarter 2016. The decrease in noninterest expense was largely driven by a $22.0 million decline in accruals related to loss contingencies and litigation matters associated with the resolution of legal matters in second quarter 2016, somewhat offset by increases in personnel-related expenses, operations services, FDIC premium expense and foreclosure related losses in second quarter 2017, relative to the prior year. TheA $3.3 million increase in personnel expense was largely driven by expenses associated with strategic hires in expansion marketsfees from brokerage, management fees, and specialty areas, as well as higher incentive expense associated with loan/deposit growthcommissions and retention initiatives. Thea $2.1 million increase in operations services expense was primarily relatedbankcard income also contributed to an increase in third party fees associated with FHN’s online digital banking platform and the increase in FDIC premium expense wasnoninterest income for the six months ended June 30, 2018 relative to the prior year. These increases were driven by the same factors that impacted second quarter results. Additionally, to a lesser extent, fees from mortgage banking activities and other service charges also increased in the first half of 2018 due in large part to balance sheet growth. The increase in foreclosure-related losses relative to the prior yearinclusion of Capital Bank activity.
Total revenue increased 10 percent to $519.1$11.5 million for the six months ended June 30, 2017, from $471.2 million for the six months ended June 30, 2016, driven by an increase in NII. The increase in NII for theyear-to-date period was also driven by the favorable impact of higher interest rates on loans, higher average balances of commercial loans and noninterest-bearing deposits, and lower deposit costs relative2018, compared to 2016. For the six months ended June 30, 2017 and 2016, noninterest income was $123.7 million and $120.6 million, respectively. The increase in noninterest income was largely driven by an increase in
brokerage, management fees, and commission income from the Bank’s wealth management group and the increase in net securities gains previously mentioned. These increases were somewhat offset by declines in fees from deposit transactions and cash management and bankcard income. The decrease in fees from deposit transactions and cash management was primarily due to lowernon-sufficient funds (“NSF”)/overdraft fees in first quarter 2017 driven by changes in consumer behavior and a modification of billing practices, somewhat mitigated by an increase in fee income associated with cash management activities. The decrease in bankcard income was the result of volume incentives received in the first half of 2016 driven by a significant new relationship, as previously mentioned.
Provision expense was $3.4 million for the six months ended June 30, 2017 compared to $25.72017. The same factors impacting the quarterly change in loan loss provisioning levels also drove the change for the year-to-date period.
Noninterest expense was $300.7$2.8 million and $309.9compared to $9.4 million for the six months ended June 30, 2017 and 2016, respectively.2017. The decreasedecline in noninterest expense was largely attributable to the same drivers affecting the quarterly decrease in expenses discussed above. For theyear-to-date period the expense decrease associated with fixed asset impairment charges recognized in the first half of 2016 was $4.2 million. Additionally, a recovery from a vendor recognized in first quarter 2017 related to previous overbillings also contributed to the expense decreaseresults for the three and six months ended June 30, 2017.
Fixed Income
Pre-tax2018 relative to the same periods of 2017 was the result of lower noninterest income, in the fixed income segment was $6.2 million in second quarter 2017 compared to $18.4 million in second quarter 2016. For the six months ended June 30, 2017, fixed income’spre-tax income was $9.5 million compared to $29.6 million for the six months ended June 30, 2016. The decline in results was driven by lower revenues, somewhat offset by a decline in expenses.
expenses and an increase in NII.
2018.
2017 due to the timing of the acquisition).
increase in noninterest income was largely due in part to higher deferred compensationthe adoption of ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" on January 1, 2018, which resulted in dividend income from FRB and FHLB holdings being recognized in other income rather than Interest income where it was recognized prior to adoption. Additionally, a $1.4 million increase in BOLI policy gains recognizedalso contributed to the increase in noninterest income within the corporate segment in second quarter 2017 relative to the prior year.2018, but was somewhat offset by a decline in deferred compensation income. Deferred compensation income fluctuates with changes in the market value of the underlying investments and is mirrored by changes in deferred compensation expense which is included in personnel expense.
2017; a similar contribution was not made in 2018.
Noninterest expense was $41.4 million and $29.4 million for the six months ended June 30, 2017 and 2016, respectively.2017. The increase in noninterest expense in the first half of 2017 was due to the same factors effecting the quarterly expense increase noted above. For theyear-to-date period, the increase in deferred compensation expense was greater than thefor second quarter impact. Additionally, a loss related to certain derivative contracts recognized in first quarter 2017 also contributed to the expense increase for the six months ended June 30, 2017, but2018 was offsetprimarily driven by a $2.6$67.9 million decreaseincrease of negativeacquisition- and integration-related expenses primarily associated with the CBF acquisition and $4.1 million of valuation adjustments associated with derivatives related to prior sales of Visa Class B shares.
The $3.2 million charitable contribution made in second quarter 2017 to the First Tennessee Foundation offset a portion of the year-to-date expense increase.
c
Total revenue was2018 down from $10.2 million in second quarter 2017 down from $11.92017. NII declined 21 percent to $6.9 million in second quarter 2016. NII declined 18 percent to $8.72018, consistent with the run-off of the non-strategic loan portfolios. Noninterest income was $1.7 million and $
The provision for loan losses within the non-stnon-strategicrategic segment was a provision credit of $6.1 million in second quarter 2018 compared to a provision credit of $2.3 million in second quarter 2017 compared to a provision credit of $6.9 million in the prior year. Overall, thenon-strategic segment continued to reflect stable performance combined with lower loan balances as reserves declined by $3.9$6.5 million from December 31, 2016,2017, to $44.0 $29.0
noninterest expense.
respectively.
For the six months ended June 30, 2017, noninterest2018, noninterest expense was a net expense reversal of $4.7$12.4 million compared to a net expense reversal of $7.0$4.7 million for the six months ended June 30, 2016.2017. The net increase in expense duringfor the first half of 2017 relative to the prior yearyear-to-date period was driven by the same factors that impactedimpacting the quarterly results.
expense increase.
2017.
2017.
regional banking segment.
CBF acquisition, but was also favorably impacted by lower balances of interest bearing cash.
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Assets: | ||||||||||||||||
Earning assets: | ||||||||||||||||
Loans, net of unearned income: | ||||||||||||||||
Commercial loans | 4.03 | % | 3.58 | % | 3.95 | % | 3.58 | % | ||||||||
Consumer loans | 4.21 | 4.08 | 4.17 | 4.08 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total loans, net of unearned income | 4.08 | 3.74 | 4.01 | 3.73 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Loansheld-for-sale | 4.38 | 4.17 | 4.43 | 4.15 | ||||||||||||
Investment securities: | ||||||||||||||||
U.S. treasuries | 0.99 | 0.98 | 0.98 | 0.98 | ||||||||||||
U.S. government agencies | 2.57 | 2.39 | 2.58 | 2.42 | ||||||||||||
States and municipalities | — | 7.27 | 9.38 | 6.98 | ||||||||||||
Corporate bonds | 5.25 | 5.25 | 5.25 | 5.25 | ||||||||||||
Other | 3.10 | 2.47 | 3.12 | 2.66 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investment securities | 2.61 | 2.41 | 2.62 | 2.44 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Trading securities | 3.07 | 2.64 | 2.97 | 2.75 | ||||||||||||
Other earning assets: | ||||||||||||||||
Federal funds sold | 1.58 | 1.11 | 1.49 | 1.20 | ||||||||||||
Securities purchased under agreements to resell | 0.69 | 0.15 | 0.54 | 0.13 | ||||||||||||
Interest bearing cash | 1.02 | 0.48 | 0.88 | 0.49 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total other earning assets | 0.88 | 0.28 | 0.77 | 0.31 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Interest income / total earning assets | 3.59 | % | 3.27 | % | 3.48 | % | 3.25 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||
Savings | 0.49 | % | 0.21 | % | 0.44 | % | 0.21 | % | ||||||||
Other interest-bearing deposits | 0.35 | 0.19 | 0.32 | 0.18 | ||||||||||||
Time deposits | 0.95 | 0.83 | 0.93 | 0.81 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total interest-bearing deposits | 0.47 | 0.25 | 0.43 | 0.25 | ||||||||||||
Federal funds purchased | 1.02 | 0.51 | 0.88 | 0.51 | ||||||||||||
Securities sold under agreements to repurchase | 0.70 | 0.11 | 0.45 | 0.08 | ||||||||||||
Fixed income trading liabilities | 2.21 | 1.84 | 2.29 | 1.98 | ||||||||||||
Other short-term borrowings | 1.30 | 0.66 | 1.28 | 0.78 | ||||||||||||
Term borrowings | 3.23 | 2.60 | 3.10 | 2.45 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Interest expense / total interest-bearing liabilities | 0.72 | 0.48 | 0.66 | 0.48 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net interest spread | 2.87 | % | 2.79 | % | 2.82 | % | 2.77 | % | ||||||||
Effect of interest-free sources used to fund earning assets | 0.20 | 0.13 | 0.18 | 0.13 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net interest margin (a) | 3.07 | % | 2.92 | % | 3.00 | % | 2.90 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||
| Assets: | |||||||||||
| Earning assets: | |||||||||||
| Loans, net of unearned income: | |||||||||||
| Commercial loans | 4.88 | % | 4.03 | % | 4.71 | % | 3.95 | % | |||
| Consumer loans | 4.52 | 4.21 | 4.50 | 4.17 | |||||||
| Total loans, net of unearned income | 4.79 | 4.08 | 4.65 | 4.01 | |||||||
| Loans held-for-sale | 6.18 | 4.38 | 6.43 | 4.43 | |||||||
| Investment securities: | |||||||||||
| U.S. government agencies | 2.69 | 2.57 | 2.68 | 2.58 | |||||||
| States and municipalities | 3.12 | — | 3.11 | 9.38 | |||||||
| Corporates and other debt | 4.38 | 5.25 | 4.46 | 5.25 | |||||||
| Other (a) | 32.48 | 3.26 | 29.78 | 3.22 | |||||||
| Total investment securities | 2.74 | 2.61 | 2.73 | 2.62 | |||||||
| Trading securities | 3.82 | 3.07 | 3.60 | 2.97 | |||||||
| Other earning assets: | |||||||||||
| Federal funds sold | 2.36 | 1.58 | 2.25 | 1.49 | |||||||
| Securities purchased under agreements to resell | 1.62 | 0.69 | 1.37 | 0.54 | |||||||
| Interest bearing cash | 1.75 | 1.02 | 1.58 | 0.88 | |||||||
| Total other earning assets | 1.69 | 0.88 | 1.46 | 0.77 | |||||||
| Interest income / total earning assets | 4.39 | % | 3.59 | % | 4.26 | % | 3.48 | % | |||
| Liabilities: | |||||||||||
| Interest-bearing liabilities: | |||||||||||
| Interest-bearing deposits: | |||||||||||
| Savings | 0.90 | % | 0.49 | % | 0.73 | % | 0.44 | % | |||
| Other interest-bearing deposits | 0.61 | 0.35 | 0.57 | 0.32 | |||||||
| Time deposits | 1.30 | 0.85 | 1.23 | 0.83 | |||||||
| Total interest-bearing deposits | 0.86 | 0.47 | 0.75 | 0.43 | |||||||
| Federal funds purchased | 1.79 | 1.02 | 1.64 | 0.88 | |||||||
| Securities sold under agreements to repurchase | 1.20 | 0.70 | 1.10 | 0.45 | |||||||
| Fixed income trading liabilities | 2.88 | 2.21 | 2.69 | 2.29 | |||||||
| Other short-term borrowings | 1.86 | 1.30 | 1.68 | 1.28 | |||||||
| Term borrowings | 4.34 | 3.23 | 4.13 | 3.10 | |||||||
| Interest expense / total interest-bearing liabilities | 1.14 | 0.72 | 1.03 | 0.66 | |||||||
| Net interest spread | 3.25 | % | 2.87 | % | 3.23 | % | 2.82 | % | |||
| Effect of interest-free sources used to fund earning assets | 0.28 | 0.20 | 0.25 | 0.18 | |||||||
Net interest margin (b) | 3.53 | % | 3.07 | % | 3.48 | % | 3.00 | % | |||
the competitive pricing environment for core deposits.
revenue, largely offset by additional fee income due to the inclusion of Capital Bank and $3.1 million of dividend income as a result of the adoption of ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" (prior
to January 1, 2018 these amounts were included in Interest income). For the six months ended June 30, 2018, the increase in noninterest income was largely the result of the inclusion of Capital Bank, $5.4 million of dividend income, and a $3.3 million gain on the sale of a building. Additionally, increases in fees generated from FTB's wealth management group, an increase in BOLI policy gains and an increase in bankcard income also contributed to the increase in noninterest income in the first half of 2018; however, these increases were offset by lower fixed income revenue relative to the six months ended June 30, 2017.2017.
| Three Months Ended June 30 | Percent Change | Six Months Ended June 30 | Percent Change | |||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
Noninterest income: | ||||||||||||||||||||||||
Fixed income | $ | 45,555 | $ | 69,279 | (34 | %) | $ | 88,282 | $ | 126,862 | (30 | )% | ||||||||||||
Other product revenue | 9,555 | 8,634 | 11 | % | 17,506 | 18,028 | (3 | )% | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total fixed income noninterest income | $ | 55,110 | $ | 77,913 | (29 | %) | $ | 105,788 | $ | 144,890 | (27 | )% | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
| Three Months Ended June 30 | Percent Change | Six Months Ended June 30 | Percent Change | ||||||||||||||||||
(Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| Noninterest income: | |||||||||||||||||||||
| Fixed income | $ | 29,940 | $ | 45,555 | (34 | )% | $ | 67,987 | $ | 88,282 | (23 | )% | |||||||||
| Other product revenue | 7,757 | 9,555 | (19 | )% | 15,216 | 17,506 | (13 | )% | |||||||||||||
| Total fixed income noninterest income | $ | 37,697 | $ | 55,110 | (32 | )% | $ | 83,203 | $ | 105,788 | (21 | )% | |||||||||
Brokerage, Management Fees and Commissions
Noninterest income from brokerage, management fees and commissions increased 13 percent to $12.0 million in second quarter 2017 from $10.7 million in second quarter 2016. Foractivities for the six months ended June 30, 2017 noninterest2018.
conditions, coupled with an increase in the sales of structured products.
Securities Gains/(Losses)
Netnet securities gains were $.4 million, for the three and six months ended June 30, 2017, and were primarily the result of the call of a $4.4 millionheld-to-maturity municipal bond within the regional banking segment. Net securities gains were not material for the three months ended June 30, 2016. For the six months ended June 30, 2016, FHN recognized net securities gains of $1.7 million, which was primarily the result of a $1.7 million gain on an exchange of approximately $294 million of AFS debt securities.
| Three Months Ended June 30 | Percent Change | Six Months Ended June 30 | Percent Change | |||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
Other income: | ||||||||||||||||||||||||
Other service charges | $ | 3,109 | $ | 2,996 | 4 | % | $ | 6,093 | $ | 5,709 | 7 | % | ||||||||||||
ATM interchange fees | 3,083 | 2,879 | 7 | % | 5,861 | 5,837 | * | |||||||||||||||||
Deferred compensation (a) | 1,491 | 795 | 88 | % | 3,318 | 1,124 | NM | |||||||||||||||||
Electronic banking fees | 1,306 | 1,381 | (5 | )% | 2,629 | 2,778 | (5 | )% | ||||||||||||||||
Mortgage banking | 1,268 | 598 | NM | 2,529 | 1,871 | 35 | % | |||||||||||||||||
Letter of credit fees | 1,122 | 1,115 | 1 | % | 2,158 | 2,176 | (1 | )% | ||||||||||||||||
Insurance commissions | 592 | 552 | 7 | % | 1,475 | 1,039 | 42 | % | ||||||||||||||||
Other | 2,646 | 2,005 | 32 | % | 4,945 | 5,076 | (3 | )% | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total | $ | 14,617 | $ | 12,321 | 19 | % | $ | 29,008 | $ | 25,610 | 13 | % | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
| Three Months Ended June 30 | Percent Change | Six Months Ended June 30 | Percent Change | ||||||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| Other income: | |||||||||||||||||||||
Other service charges | $ | 3,728 | $ | 3,109 | 20 | % | $ | 8,076 | $ | 6,093 | 33 | % | |||||||||
| ATM and interchange fees | 3,413 | 3,083 | 11 | % | 6,680 | 5,861 | 14 | % | |||||||||||||
| Dividend income (a) | 3,124 | — | NM | 5,373 | — | NM | |||||||||||||||
| Mortgage banking | 2,431 | 1,268 | 92 | % | 4,977 | 2,529 | 97 | % | |||||||||||||
| Letter of credit fees | 1,295 | 1,122 | 15 | % | 2,544 | 2,158 | 18 | % | |||||||||||||
| Electronic banking fees | 1,228 | 1,306 | (6 | )% | 2,432 | 2,629 | (7 | )% | |||||||||||||
| Deferred compensation | 991 | 1,491 | (34 | )% | 1,442 | 3,318 | (57 | )% | |||||||||||||
| Insurance commissions | 476 | 592 | (20 | )% | 1,233 | 1,475 | (16 | )% | |||||||||||||
| Other | 2,748 | 2,646 | 4 | % | 9,920 | 4,945 | NM | ||||||||||||||
| Total | $ | 19,434 | $ | 14,617 | 33 | % | $ | 42,677 | $ | 29,008 | 47 | % | |||||||||
| (a) |
increase. For the six months ended June 30, 2018, lower legal fees relative to the six months ended June 30, 2017 favorably impacted expense in the first half of 2018, offsetting a portion of the net increase in expenses.
For the six months ended June 30, 2018, computer software expense was $30.3 million, up from $23.1 million for the first half of 2017. The increase in computer software expense in both periods was driven by the inclusion of Capital Bank, as well as FHN's focus on technology-related projects. To a lesser extent acquisition- and integration-related expenses primarily associated with the CBF acquisition also contributed to the increase in computer software expense.
Professional Fees
Professional fees were $9.7 million in second quarter 2017 compared to $4.3 million in second quarter 2016. For the six months ended June 30, 2017 professional fees increased to $14.4 million from $9.5 million for the six months ended June 30, 2016. The increase in professional fees for both periods was2018, primarily driven by acquisition-related expensesacquisition- and integration- related projects primarily associated with the CBF and Coastal acquisitions.
FDIC Premium Expense
FDIC premium expense was $5.9 million in second quarter 2017, compared to $4.8 million in second quarter 2016. For the six months ended June 30, 2017 FDIC premium expense was $11.7 million compared to $9.8 million for the six months ended June 30, 2016. The increase in FDIC premium expense for both periods was due in large part to balance sheet growth.
acquisition.
Credit)
2017.
All other expenses were $43.2 million for the six months ended June 30, 2017 compared to $68.9 million for the six months ended June 30, 2016. The decline in all other expenses for theyear-to-date period was primarily driven by a decline in accruals related to loss contingencies and litigation matters associated with matters settled in 2016. During the six months ended June 30, 2017,2018, FHN recognized a $5.0$4.1 million decrease in fixed asset impairments and lease abandonment charges and a $2.6 million decrease in negativeof valuation adjustments associated with derivatives related to prior sales of Visa Class B shares, which also contributed to the increase in other noninterest income relative to the prior year. These expense decline duringincreases were somewhat offset by a $3.2 million charitable contribution made to the first halfFirst Tennessee Foundation in second quarter 2017; a similar contribution was not made in the second quarter of 2017. Additionally,2018.
in second quarter 2017. The following table provides detail regarding FHN’s other expense.
| Three Months Ended June 30 | Percent Change | Six Months Ended June 30 | Percent Change | |||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
Other expense: | ||||||||||||||||||||||||
Travel and entertainment | $ | 3,162 | $ | 2,495 | 27 | % | $ | 5,510 | $ | 4,557 | 21 | % | ||||||||||||
Other insurance and taxes | 2,443 | 3,014 | (19 | )% | 4,833 | 6,327 | (24 | )% | ||||||||||||||||
Customer relations | 1,543 | 1,483 | 4 | % | 2,879 | 3,362 | (14 | )% | ||||||||||||||||
Employee training and dues | 1,453 | 1,338 | 9 | % | 2,996 | 2,728 | 10 | % | ||||||||||||||||
Supplies | 1,093 | 930 | 18 | % | 1,956 | 1,956 | * | |||||||||||||||||
Tax credit investments | 942 | 831 | 13 | % | 1,884 | 1,537 | 23 | % | ||||||||||||||||
Miscellaneous loan costs | 699 | 565 | 24 | % | 1,321 | 1,282 | 3 | % | ||||||||||||||||
Litigation and regulatory matters | 533 | 26,000 | (98 | )% | 241 | 25,525 | (99 | )% | ||||||||||||||||
Foreclosed real estate | 446 | (432 | ) | NM | 650 | (690 | ) | NM | ||||||||||||||||
Other | 12,090 | 10,624 | 14 | % | 20,921 | 22,343 | (6 | )% | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total | $ | 24,404 | $ | 46,848 | (48 | )% | $ | 43,191 | $ | 68,927 | (37 | )% | ||||||||||||
|
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|
|
|
|
|
| |||||||||||||||||
INCOME TAXES
FHN recorded an income tax provision
| Three Months Ended June 30 | Percent Change | Six Months Ended June 30 | Percent Change | ||||||||||||||||||
(Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| Other expense: | |||||||||||||||||||||
| Travel and entertainment | $ | 5,131 | $ | 3,162 | 62 | % | $ | 8,114 | $ | 5,510 | 47 | % | |||||||||
| Other insurance and taxes | 2,752 | 2,443 | 13 | % | 5,417 | 4,833 | 12 | % | |||||||||||||
| Supplies | 1,987 | 1,093 | 82 | % | 3,823 | 1,956 | 95 | % | |||||||||||||
| Employee training and dues | 1,849 | 1,453 | 27 | % | 3,628 | 2,996 | 21 | % | |||||||||||||
| Non-service components of net periodic pension and post-retirement cost | 1,530 | 851 | 80 | % | 2,034 | 1,328 | 53 | % | |||||||||||||
| Customer relations | 1,358 | 1,543 | (12 | )% | 2,421 | 2,879 | (16 | )% | |||||||||||||
| Tax credit investments | 1,079 | 942 | 15 | % | 2,216 | 1,884 | 18 | % | |||||||||||||
| Miscellaneous loan costs | 1,035 | 699 | 48 | % | 2,177 | 1,321 | 65 | % | |||||||||||||
| OREO | 810 | 446 | 82 | % | 918 | 650 | 41 | % | |||||||||||||
| Litigation and regulatory matters | 16 | 533 | (97 | )% | 2,150 | 241 | NM | ||||||||||||||
| Other (a) | 33,452 | 12,051 | NM | 53,433 | 20,843 | NM | |||||||||||||||
| Total | $ | 50,999 | $ | 25,216 | NM | $ | 86,331 | $ | 44,441 | 94 | % | ||||||||||
As of June 30, 2017 and 2016, FHN established a valuation allowance of $.3 million and $40.5 million, respectively, against its federal capital loss carryforwards.
Tax reform, including the reduction of the corporate tax rate, is expected to be on the legislative agenda this year. A rate reduction, if enacted, will have a net beneficial effect to FHN over the long-term; however, certain deductions may be eliminated or reduced as a part of tax reform which could reduce the beneficial effect of the rate reduction. Additionally, a rate reduction would result in the impairment of a portion of the deferred tax asset in the quarter that it is signed into law by the President. The actual impacts are subject to significant uncertainties including whether, and to what extent, rate reductions or broader tax reform can actually be executed and if executed, the timing.
Fixed income trading inventory and securities purchased under agreements to resell.
short-term borrowings, somewhat offset by increases in deposits and trading liabilities.
2017.
| Quarter Ended June 30, 2017 | Quarter Ended December 31, 2016 | |||||||||||||||||||
(Dollars in thousands) | Amount | Percent of total | Amount | Percent of total | Growth Rate | |||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial, financial, and industrial | $ | 11,830,942 | 62% | $ | 11,987,561 | 62% | (1)% | |||||||||||||
Commercial real estate | 2,175,733 | 11 | 2,089,314 | 11 | 4% | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total commercial | 14,006,675 | 73 | 14,076,875 | 73 | * | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Consumer: | ||||||||||||||||||||
Consumer real estate (a) | 4,431,591 | 23 | 4,545,647 | 23 | (3)% | |||||||||||||||
Permanent mortgage | 408,202 | 2 | 429,914 | 2 | (5)% | |||||||||||||||
Credit card, OTC and other | 355,123 | 2 | 361,311 | 2 | (2)% | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total consumer | 5,194,916 | 27 | 5,336,872 | 27 | (3)% | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total loans, net of unearned income | $ | 19,201,591 | 100% | $ | 19,413,747 | �� | 100% | (1)% | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
(a) Balance as of June 30, 2018 and December 31, 2017, includes $20.1 million and $25.1 million of restricted and secured | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C&I loans are the largest component of the commercial portfolio comprising 84 percent and 85 percent of average commercial loans in second quarter 2017 and fourth quarter 2016, respectively. C&I loans decreased 1 percent, or $.2 billion, from fourth quarter 2016 due to lower balances of loans to mortgage companies, partially offset by net loan growth within several of the regional bank’s portfolios including franchise finance, international, and private client. Commercial real estate loans, increased 4 percent to $2.2 billion in second quarter 2017 because of growth in expansion markets, increased funding under existing commitments, and an increased focus on funded term debt products.
Average consumer loans declined 3 percent, or $.1 billion, from fourth quarter 2016 to $5.2 billion in second quarter 2017. The consumer real estate portfolio (home equity lines and installment loans) declined $114.1 million, to $4.4 billion, as the continued wind-down of portfolios within thenon-strategic segment outpaced a $93.5 million increase in real estate installment loans from new originations within the regional banking segment. The permanent mortgage portfolio declined $21.7 million to $408.2 million in second quarter 2017 driven byrun-off of legacy assets within thenon-strategic segment offset by some growth in mortgage loans within regional banking, primarily related to FHN’s Community Reinvestment Act (“CRA”) initiatives. Credit Card and Other decreased $6.2 million to $355.1 million in second quarter 2017.
respectively.
Additionally, an increase in unrealized losses as a result of higher rates contributed to the decrease in the investment securities balance on June 30, 2018. The increase in average assets in second quarter 2018 compared to fourth quarter 2017 was primarily due to the timing of the CBF acquisition, as second quarter 2018 includes the average impact of three months of CBF balances compared to one month in fourth quarter 2017, somewhat offset by the reclassification of equity securities previously mentioned. FHN manages the size and mix of the investment portfolio to assist in asset liability management, provide liquidity, and optimize risk adjusted returns.
Non-earning assets
Period-endnon-earning Other earning assets were $2.4$3.3 billion on June 30, 2017 compared to $2.32018, a 4 percent decrease from $3.4 billion on December 31, 2016.2017. The decrease in other earning assets on a period-end basis was driven by lower levels of interest bearing cash, somewhat offset by an increase in fixed income trading securities.
increase in non-earning assets as of June 30, 2018, but was somewhat offset by lower cash balances.
decline in other interest bearing deposits.
| Quarter Ended June 30, 2017 | Quarter Ended December 31, 2016 | |||||||||||||||||||
(Dollars in thousands) | Amount | Percent of total | Amount | Percent of total | Growth Rate | |||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||
Consumer interest | $ | 9,330,990 | 41% | $ | 8,641,507 | 39% | 8 % | |||||||||||||
Commercial interest | 3,086,139 | 14 | 2,819,980 | 13 | 9 % | |||||||||||||||
Market-indexed (a) | 3,809,281 | 17 | 4,787,912 | 21 | (20)% | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total interest-bearing deposits | 16,226,410 | 72 | 16,249,399 | 73 | * | |||||||||||||||
Noninterest-bearing deposits | 6,280,472 | 28 | 6,039,025 | 27 | 4 % | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total deposits | $ | 22,506,882 | 100% | $ | 22,288,424 | 100% | 1 % | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
| Quarter Ended June 30, 2018 | Quarter Ended December 31, 2017 | ||||||||||||||||
| (Dollars in thousands) | Amount | Percent of total | Amount | Percent of total | Growth Rate | ||||||||||||
| Interest-bearing deposits: | |||||||||||||||||
| Consumer interest | $ | 12,581,023 | 41 | % | $ | 10,279,937 | 41 | % | 22 | % | |||||||
| Commercial interest | 5,618,245 | 18 | 3,684,643 | 15 | 52 | ||||||||||||
| Market-indexed (a) | 4,488,503 | 15 | 3,958,224 | 16 | 13 | ||||||||||||
| Total interest-bearing deposits | 22,687,771 | 74 | 17,922,804 | 72 | 27 | ||||||||||||
| Noninterest-bearing deposits | 8,003,901 | 26 | 6,972,912 | 28 | 15 | ||||||||||||
| Total deposits | $ | 30,691,672 | 100 | % | $ | 24,895,716 | 100 | % | 23 | % | |||||||
trading inventory.
| Quarter Ended June 30, 2017 | Quarter Ended December 31, 2016 | |||||||||||||||||||
(Dollars in thousands) | Amount | Percent of total | Amount | Percent of total | Growth Rate | |||||||||||||||
Short-term borrowings: | ||||||||||||||||||||
Federal funds purchased | $ | 435,854 | 21% | $ | 528,266 | 28% | (17)% | |||||||||||||
Securities sold under agreements to repurchase | 616,837 | 30 | 378,837 | 20 | 63 % | |||||||||||||||
Trading liabilities | 762,667 | 37 | 745,011 | 39 | 2 % | |||||||||||||||
Other short-term borrowings | 221,472 | 12 | 243,527 | 13 | (9)% | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total short-term borrowings | $ | 2,036,830 | 100% | $ | 1,895,641 | 100% | 7 % | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
| Quarter Ended June 30, 2018 | Quarter Ended December 31, 2017 | ||||||||||||||||
| (Dollars in thousands) | Amount | Percent of total | Amount | Percent of total | Growth Rate | ||||||||||||
| Short-term borrowings: | |||||||||||||||||
| Federal funds purchased | $ | 368,321 | 12 | % | $ | 425,900 | 14 | % | (14 | )% | |||||||
| Securities sold under agreements to repurchase | 667,689 | 22 | 595,275 | 20 | 12 | ||||||||||||
| Trading liabilities | 666,092 | 21 | 741,063 | 25 | (10 | ) | |||||||||||
| Other short-term borrowings | 1,399,580 | 45 | 1,246,087 | 41 | 12 | ||||||||||||
| Total short-term borrowings | $ | 3,101,682 | 100 | % | $ | 3,008,325 | 100 | % | 3 | % | |||||||
2018 from $1.1 billion in fourth quarter 2017 primarily driven by a full quarter of average impact of the addition of $212.4 million junior subordinated debentures underlying trust preferred debt acquired in association with the CBF acquisition. In fourth quarter 2017, this balance was only included for one month due to the timing of the CBF acquisition.
2017.
In January 2014, FHN’s board of directors approved a share repurchase program which enables FHN to repurchase its common stock in the open market or in privately negotiated transactions, subject to certain conditions. In July 2015 and April 2016 the board increased and extended that program. The current program authorizes total purchases of up to $350 million and expires on January 31, 2018. During second quarter 2017, FHN did not repurchase any common shares under the program. In second quarter 2016 FHN repurchased $11.4 million of common shares under the program. Total purchases under this program through June 30, 2017 were $160.3 million. FHN does not anticipate repurchasing any shares under this authorization through the closing of the Capital Bank acquisition.
(Dollars in thousands) | June 30, 2017 | December 31, 2016 | ||||||
Shareholders’ equity | $ | 2,531,457 | $ | 2,409,653 | ||||
FHNnon-cumulative perpetual preferred | (95,624 | ) | (95,624 | ) | ||||
|
|
|
| |||||
Common equity | $ | 2,435,833 | $ | 2,314,029 | ||||
Regulatory adjustments: | ||||||||
Disallowed goodwill and other intangibles | (232,086 | ) | (165,292 | ) | ||||
Net unrealized (gains)/losses on securitiesavailable-for-sale | 9,857 | 17,232 | ||||||
Net unrealized (gains)/losses on pension and other postretirement plans | 226,581 | 229,157 | ||||||
Net unrealized (gains)/losses on cash flow hedges | 1,024 | 1,265 | ||||||
Disallowed deferred tax assets | (22,153 | ) | (18,027 | ) | ||||
Other deductions from common equity tier 1 | (478 | ) | (377 | ) | ||||
|
|
|
| |||||
Common equity tier 1 | $ | 2,418,578 | $ | 2,377,987 | ||||
FHNnon-cumulative perpetual preferred | 95,624 | 95,624 | ||||||
Qualifying noncontrolling interest—FTBNA preferred stock | 249,662 | 256,811 | ||||||
Other deductions from tier 1 | (64,166 | ) | (58,551 | ) | ||||
|
|
|
| |||||
Tier 1 capital | $ | 2,699,698 | $ | 2,671,871 | ||||
Tier 2 capital | 243,250 | 254,139 | ||||||
|
|
|
| |||||
Total regulatory capital | $ | 2,942,948 | $ | 2,926,010 | ||||
|
|
|
| |||||
Risk-Weighted Assets | ||||||||
First Horizon National Corporation | $ | 24,566,487 | $ | 23,914,158 | ||||
First Tennessee Bank National Association | 24,027,476 | 23,447,251 | ||||||
Average Assets for Leverage | ||||||||
First Horizon National Corporation | 28,793,889 | 28,581,251 | ||||||
First Tennessee Bank National Association | 27,925,008 | 27,710,158 | ||||||
| June 30, 2017 | December 31, 2016 | |||||||||||||||
| Ratio | Amount | Ratio | Amount | |||||||||||||
Common Equity Tier 1 | ||||||||||||||||
First Horizon National Corporation | 9.85% | $ | 2,418,578 | 9.94% | $ | 2,377,987 | ||||||||||
First Tennessee Bank National Association | 9.57 | 2,299,275 | 9.80 | 2,298,080 | ||||||||||||
Tier 1 | ||||||||||||||||
First Horizon National Corporation | 10.99 | 2,699,698 | 11.17 | 2,671,871 | ||||||||||||
First Tennessee Bank National Association | 10.51 | 2,525,919 | 10.83 | 2,538,382 | ||||||||||||
Total | ||||||||||||||||
First Horizon National Corporation | 11.98 | 2,942,948 | 12.24 | 2,926,010 | ||||||||||||
First Tennessee Bank National Association | 11.38 | 2,735,182 | 11.78 | 2,762,271 | ||||||||||||
Tier 1 Leverage | ||||||||||||||||
First Horizon National Corporation | 9.38 | 2,699,698 | 9.35 | 2,671,871 | ||||||||||||
First Tennessee Bank National Association | 9.05 | 2,525,919 | 9.16 | 2,538,382 | ||||||||||||
(Dollars in thousands) | June 30, 2018 | December 31, 2017 | ||||||
| Shareholders’ equity | $ | 4,254,318 | $ | 4,285,057 | ||||
| FHN non-cumulative perpetual preferred | (95,624 | ) | (95,624 | ) | ||||
| Common equity | $ | 4,158,694 | $ | 4,189,433 | ||||
| Regulatory adjustments: | ||||||||
| Disallowed goodwill and other intangibles | (1,518,717 | ) | (1,480,725 | ) | ||||
| Net unrealized (gains)/losses on securities available-for-sale | 107,476 | 26,834 | ||||||
| Net unrealized (gains)/losses on pension and other postretirement plans | 284,881 | 288,227 | ||||||
| Net unrealized (gains)/losses on cash flow hedges | 19,757 | 7,764 | ||||||
| Disallowed deferred tax assets | (48,834 | ) | (69,065 | ) | ||||
| Other deductions from common equity tier 1 | (299 | ) | (313 | ) | ||||
| Common equity tier 1 | $ | 3,002,958 | $ | 2,962,155 | ||||
| FHN non-cumulative perpetual preferred | 95,624 | 95,624 | ||||||
| Qualifying noncontrolling interest—FTBNA preferred stock | 252,407 | 257,080 | ||||||
| Other deductions from tier 1 | (12,810 | ) | (33,381 | ) | ||||
| Tier 1 capital | $ | 3,338,179 | $ | 3,281,478 | ||||
| Tier 2 capital | 422,472 | 422,276 | ||||||
| Total regulatory capital | $ | 3,760,651 | $ | 3,703,754 | ||||
| Risk-Weighted Assets | ||||||||
| First Horizon National Corporation | $ | 33,437,145 | $ | 33,373,877 | ||||
| First Tennessee Bank National Association | 32,698,480 | 32,786,547 | ||||||
| Average Assets for Leverage | ||||||||
| First Horizon National Corporation | 39,003,215 | 31,824,751 | ||||||
| First Tennessee Bank National Association | 38,117,285 | 31,016,187 | ||||||
| June 30, 2018 | December 31, 2017 | |||||||||||||
| Ratio | Amount | Ratio | Amount | |||||||||||
| Common Equity Tier 1 | ||||||||||||||
| First Horizon National Corporation | 8.98 | % | $ | 3,002,958 | 8.88 | % | $ | 2,962,155 | ||||||
| First Tennessee Bank National Association | 9.47 | 3,097,088 | 9.28 | 3,041,420 | ||||||||||
| Tier 1 | ||||||||||||||
| First Horizon National Corporation | 9.98 | 3,338,179 | 9.83 | 3,281,478 | ||||||||||
| First Tennessee Bank National Association | 10.36 | 3,388,698 | 10.12 | 3,317,684 | ||||||||||
| Total | ||||||||||||||
| First Horizon National Corporation | 11.25 | 3,760,651 | 11.10 | 3,703,754 | ||||||||||
| First Tennessee Bank National Association | 10.98 | 3,589,188 | 10.74 | 3,520,670 | ||||||||||
| Tier 1 Leverage | ||||||||||||||
| First Horizon National Corporation | 8.56 | 3,338,179 | 10.31 | 3,281,478 | ||||||||||
| First Tennessee Bank National Association | 8.89 | 3,388,698 | 10.70 | 3,317,684 | ||||||||||
Capital, and Leverage capital ratios must be at least 6.5 percent, 8 percent, 10 percent, and 5 percent, respectively. As of June 30, 2017,2018, each of FHN and FTBNA had sufficient capital to qualify as a well-capitalized institution. RegulatoryFor both FHN and FTBNA, the risk-based regulatory capital ratios generally decreasedincreased in second quarter 2018 relative to fourth quarter 2017 primarily due to the impact of net income less dividends with no share repurchases under the general repurchase authority during the first half of 2018. The increase in the ratios for FHN was partially offset by CBF dissenters' share cancellations. The Tier 1 leverage ratio declined for both FHNC and FTBNA as average assets for leverage in the second quarter 2018 reflect the full impact of 2017 relativethe CBF acquisition compared to only one month in fourth quarter 2016 due primarily to2017. During the impactremainder of increased disallowed intangible assets due to the Coastal acquisition and the continued phased-in implementation of the Basel III regulations as well as, increases in risk-weighted assets primarily as a result of a net increase in period end loans. These decreases were partially offset by net income less dividends. During 2017,2018, capital ratios are expected to remain above well-capitalizedwell capitalized standards.
- General Authority
| (Dollar values and volume in thousands, except per share data) | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced programs | Maximum approximate dollar value that may yet be purchased under the programs | ||||||||
| 2018 | ||||||||||||
| April 1 to April 30 | — | N/A | — | $ | 250,000 | |||||||
| May 1 to May 31 | — | N/A | — | $ | 250,000 | |||||||
| June 1 to June 30 | — | N/A | — | $ | 250,000 | |||||||
| Total | — | N/A | — | |||||||||
(Volume in thousands, except per share data) | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced programs | Maximum number of shares that may yet be purchased under the programs | ||||||||||||
2017 | ||||||||||||||||
April 1 April 30 | 12 | $ | 18.97 | 12 | 25,628 | |||||||||||
May 1 to May 31 | 149 | $ | 17.99 | 149 | 25,479 | |||||||||||
June 1 to June 30 | 2 | $ | 17.14 | 2 | 25,477 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 163 | $ | 18.06 | 163 | ||||||||||||
|
|
|
|
|
| |||||||||||
Compensation Plan Programs:
Other Repurchase Authority:
(Dollar values and volume in thousands, except per share data) | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced programs | Maximum approximate dollar value that may yet be purchased under the programs | ||||||||||||
2017 | ||||||||||||||||
April 1 April 30 | — | N/A | — | $ | 189,690 | |||||||||||
May 1 to May 31 | — | N/A | — | $ | 189,690 | |||||||||||
June 1 to June 30 | — | N/A | — | $ | 189,690 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | — | N/A | — | |||||||||||||
|
|
|
|
|
| |||||||||||
N/A—Not applicable
Other Programs:
| (Volume in thousands, except per share data) | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced programs | Maximum number of shares that may yet be purchased under the programs | |||||||||
| 2018 | |||||||||||||
| April 1 to April 30 | * | $ | 18.68 | * | 25,333 | ||||||||
| May 1 to May 31 | 137 | $ | 18.78 | 137 | 25,196 | ||||||||
| June 1 to June 30 | 1 | $ | 18.81 | 1 | 25,195 | ||||||||
| Total | 139 | $ | 18.78 | 139 | |||||||||
2017. cr (Dollars in thousands) Industry: Finance & insurance Loans to mortgage companies Health care & social assistance Wholesale trade Accommodation & food service Real estate rental & leasing (a) Manufacturing Transportation & warehousing Public administration Other (education, arts, entertainment, etc) (b) Total C&I loan portfolio (22(23 percent of totaltotal loans). Industry concentrations are discussed under the heading C&I below.foundfound in Table 17 – Asset QualityQuality by Portfolio. Credit underwriting guidelines are outlined in Exhibit 13 to FHN’s Annual Report on Form10-K for the year ended December 31, 2016,2017, in the Loan Portfolio Composition discussion in the Asset Quality Section beginning on page 2627 and continuing to page 46. FHN’s credit underwriting guidelines and loan product offerings as of June 30, 2017,2018, are generally consistent with those reported and disclosed in the Company’s Form10-K for the year ended December 31, 2016.$12.6$16.4 billion on June 30, 2017,2018, and is comprised of loans used for general business purposes and primarily composed of relationship customers in Tennessee and other selected markets.purposes. Typical products include working capital lines of credit, term loan financing of owner-occupied real estate and fixed assets, and trade credit enhancement through letters of credit.2017,2018, and December 31, 2016.2017. For purposes of this disclosure, industries are determined based on the North American Industry Classification System (“NAICS”) industry codes used by Federal statistical agencies in classifying business establishments for the collection, analysis, and publication of statistical data related to the U.S. business economy. June 30, 2017 December 31, 2016 Amount Percent Amount Percent $ 2,724,227 22 % $ 2,573,713 21 % 2,092,762 17 2,045,189 17 913,252 7 893,629 7 900,507 7 826,226 7 882,551 7 987,973 8 868,023 7 769,457 6 847,640 7 762,947 6 581,929 5 578,586 5 577,808 5 565,119 5 2,209,520 16 2,145,248 18 $ 12,598,219 100 % $ 12,148,087 100 % June 30, 2018 December 31, 2017 Amount Percent Amount Percent Finance & insurance $ 2,780,488 17 % $ 2,859,769 18 % Loans to mortgage companies 2,354,836 14 2,099,961 13 Real estate rental & leasing (a) 1,374,771 8 1,408,299 9 Health care & social assistance 1,219,095 7 1,201,285 7 Accommodation & food service 1,182,776 7 1,145,944 7 Manufacturing 1,182,686 7 �� 1,184,861 7 Wholesale trade 1,079,080 7 1,060,642 7 Retail trade 750,396 5 831,790 5 Transportation & warehousing 740,319 5 716,572 4 Other (education, arts, entertainment, etc) (b) 3,774,298 23 3,548,150 23 Total C&I loan portfolio $ 16,438,745 100 % $ 16,057,273 100 % (a) Leasing, rental of real estate, equipment, and goods. (b) Industries in this category each comprise less than 5 percent for 2017.2018.
| 2017 | ||||||||||||
| Three months ended | ||||||||||||
(Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | |||||||||
Allowance for loan losses as of April 1 | $ | 91,625 | $ | 1,482 | $ | 93,107 | ||||||
Charge-offs | (1,865 | ) | — | (1,865 | ) | |||||||
Recoveries | 594 | 6 | 600 | |||||||||
Provision/(provision credit) for loan losses | 604 | (67 | ) | 537 | ||||||||
|
|
|
|
|
| |||||||
Allowance for loan losses as of June 30 | $ | 90,958 | $ | 1,421 | $ | 92,379 | ||||||
|
|
|
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|
| |||||||
Net charge-offs % (qtr. annualized) | 0.04 | % | NM | 0.04 | % | |||||||
Allowance / charge-offs | 17.85x | NM | 18.21x | |||||||||
|
|
|
|
|
| |||||||
| As of June 30 | ||||||||||||
Period-end loans | $ | 12,178,619 | $ | 419,600 | $ | 12,598,219 | ||||||
Nonperforming loans | 21,030 | 4,001 | 25,031 | |||||||||
Troubled debt restructurings | 25,411 | — | 25,411 | |||||||||
|
|
|
|
|
| |||||||
30+ Delinq. % (a) | 0.03 | % | — | % | 0.03 | % | ||||||
NPL % | 0.17 | 0.95 | 0.20 | |||||||||
Allowance / loans % | 0.75 | 0.34 | 0.73 | |||||||||
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|
|
|
| |||||||
| 2016 | ||||||||||||
| Three months ended | ||||||||||||
(Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | |||||||||
Allowance for loan losses as of April 1 | $ | 79,471 | $ | 1,416 | $ | 80,887 | ||||||
Charge-offs | (7,688 | ) | (181 | ) | (7,869 | ) | ||||||
Recoveries | 1,569 | 33 | 1,602 | |||||||||
Provision/(provision credit) for loan losses | 6,245 | 107 | 6,352 | |||||||||
|
|
|
|
|
| |||||||
Allowance for loan losses as of June 30 | $ | 79,597 | $ | 1,375 | $ | 80,972 | ||||||
|
|
|
|
|
| |||||||
Net charge-offs % (qtr. annualized) | 0.25 | % | 0.14 | % | 0.24 | % | ||||||
Allowance / charge-offs | 3.23x | 2.31x | 3.21x | |||||||||
|
|
|
|
|
| |||||||
| As of December 31 | ||||||||||||
Period-end loans | $ | 11,728,160 | $ | 419,927 | $ | 12,148,087 | ||||||
Nonperforming loans | 28,619 | 4,117 | 32,736 | |||||||||
Troubled debt restructurings | 34,334 | — | 34,334 | |||||||||
|
|
|
|
|
| |||||||
30+ Delinq. % (a) | 0.08 | % | — | % | 0.08 | % | ||||||
NPL % | 0.24 | 0.98 | 0.27 | |||||||||
Allowance / loans % | 0.75 | 0.33 | 0.74 | |||||||||
|
|
|
|
|
| |||||||
| 2018 | |||||||||||||
| Three months ended | |||||||||||||
| (Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | ||||||||||
| Allowance for loan losses as of April 1 | $ | 98,982 | $ | 1,256 | $ | 100,238 | |||||||
| Charge-offs | (3,287 | ) | — | (3,287 | ) | ||||||||
| Recoveries | 1,033 | 3 | 1,036 | ||||||||||
| Provision/(provision credit) for loan losses | (1,202 | ) | 49 | (1,153 | ) | ||||||||
| Allowance for loan losses as of June 30 | $ | 95,526 | $ | 1,308 | $ | 96,834 | |||||||
| Net charge-offs % (qtr. annualized) | 0.06 | % | NM | 0.06 | % | ||||||||
| Allowance / net charge-offs | 10.57 | x | NM | 10.73 | x | ||||||||
| As of June 30 | |||||||||||||
| Period-end loans | $ | 16,019,441 | $ | 419,304 | $ | 16,438,745 | |||||||
| Nonperforming loans | 16,235 | 2,982 | 19,217 | ||||||||||
| Troubled debt restructurings | 14,544 | — | 14,544 | ||||||||||
| 30+ Delinq. % (a) | 0.15 | % | — | % | 0.14 | % | |||||||
| NPL % | 0.10 | 0.71 | 0.12 | ||||||||||
| Allowance / loans % | 0.60 | 0.31 | 0.59 | ||||||||||
| 2017 | |||||||||||||
| Three months ended | |||||||||||||
| (Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | ||||||||||
| Allowance for loan losses as of April 1 | $ | 91,625 | $ | 1,482 | $ | 93,107 | |||||||
| Charge-offs | (1,865 | ) | — | (1,865 | ) | ||||||||
| Recoveries | 594 | 6 | 600 | ||||||||||
| Provision/(provision credit) for loan losses | 604 | (67 | ) | 537 | |||||||||
| Allowance for loan losses as of June 30 | $ | 90,958 | $ | 1,421 | $ | 92,379 | |||||||
| Net charge-offs % (qtr. annualized) | 0.04 | % | NM | 0.04 | % | ||||||||
| Allowance / net charge-offs | 17.85 | x | NM | 18.21 | x | ||||||||
| As of December 31 | |||||||||||||
| Period-end loans | $ | 15,639,060 | $ | 418,213 | $ | 16,057,273 | |||||||
| Nonperforming loans | 28,086 | 3,067 | 31,153 | ||||||||||
| Troubled debt restructurings | 17,670 | — | 17,670 | ||||||||||
| 30+ Delinq. % (a) | 0.20 | % | — | % | 0.19 | % | |||||||
| NPL % | 0.18 | 0.73 | 0.19 | ||||||||||
| Allowance / loans % | 0.62 | 0.33 | 0.61 | ||||||||||
| (a) | 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest. |
ability to withstand cyclical downturns, maintains active development and investment activities providing for regular financing opportunities, and is fundamentally sound as evidenced by a prudent loan structure, appropriate covenants and recourse, and capable and willing sponsors in markets with positive homebuilding and economic dynamics.
| 2017 | ||||||||||||
| Three months ended | ||||||||||||
(Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | |||||||||
Allowance for loan losses as of April 1 | $ | 30,888 | $ | — | $ | 30,888 | ||||||
Charge-offs | (20 | ) | — | (20 | ) | |||||||
Recoveries | 126 | 14 | 140 | |||||||||
Provision/(provision credit) for loan losses | (524 | ) | (14 | ) | (538 | ) | ||||||
|
|
|
|
|
| |||||||
Allowance for loan losses as of June 30 | $ | 30,470 | $ | — | $ | 30,470 | ||||||
|
|
|
|
|
| |||||||
Net charge-offs % (qtr. annualized) | NM | NM | NM | |||||||||
Allowance / charge-offs | NM | NM | NM | |||||||||
|
|
|
|
|
| |||||||
| As of June 30 | ||||||||||||
Period-end loans | $ | 2,211,996 | $ | — | $ | 2,211,996 | ||||||
Nonperforming loans | 1,650 | — | 1,650 | |||||||||
Troubled debt restructurings | 3,023 | — | 3,023 | |||||||||
|
|
|
|
|
| |||||||
30+ Delinq. % (a) | 0.01 | % | — | % | 0.01 | % | ||||||
NPL % | 0.07 | — | 0.07 | |||||||||
Allowance / loans % | 1.38 | — | 1.38 | |||||||||
|
|
|
|
|
| |||||||
| 2016 | ||||||||||||
| Three months ended | ||||||||||||
(Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | |||||||||
Allowance for loan losses as of April 1 | $ | 25,626 | $ | — | $ | 25,626 | ||||||
Charge-offs | (51 | ) | — | (51 | ) | |||||||
Recoveries | 764 | 145 | 909 | |||||||||
Provision/(provision credit) for loan losses | 3,925 | (145 | ) | 3,780 | ||||||||
|
|
|
|
|
| |||||||
Allowance for loan losses as of June 30 | $ | 30,264 | $ | — | $ | 30,264 | ||||||
|
|
|
|
|
| |||||||
Net charge-offs % (qtr. annualized) | NM | NM | NM | |||||||||
Allowance / charge-offs | NM | NM | NM | |||||||||
|
|
|
|
|
| |||||||
| As of December 31 | ||||||||||||
Period-end loans | $ | 2,135,523 | $ | — | $ | 2,135,523 | ||||||
Nonperforming loans | 2,776 | — | 2,776 | |||||||||
Troubled debt restructurings | 3,124 | — | 3,124 | |||||||||
|
|
|
|
|
| |||||||
30+ Delinq. % (a) | 0.01 | % | — | % | 0.01 | % | ||||||
NPL % | 0.13 | — | 0.13 | |||||||||
Allowance / loans % | 1.59 | — | 1.59 | |||||||||
|
|
|
|
|
| |||||||
| 2018 | |||||||||||||
| Three months ended | |||||||||||||
| (Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | ||||||||||
| Allowance for loan losses as of April 1 | $ | 29,057 | $ | — | $ | 29,057 | |||||||
| Charge-offs | (228 | ) | — | (228 | ) | ||||||||
| Recoveries | 75 | — | 75 | ||||||||||
| Provision/(provision credit) for loan losses | 4,928 | — | 4,928 | ||||||||||
| Allowance for loan losses as of June 30 | $ | 33,832 | $ | — | $ | 33,832 | |||||||
| Net charge-offs % (qtr. annualized) | 0.01 | % | — | % | 0.01 | % | |||||||
| Allowance / net charge-offs | 55.04 | x | — | 55.04 | x | ||||||||
| As of June 30 | |||||||||||||
| Period-end loans | $ | 4,136,356 | $ | — | $ | 4,136,356 | |||||||
| Nonperforming loans | 1,443 | — | 1,443 | ||||||||||
| Troubled debt restructurings | 3,278 | — | 3,278 | ||||||||||
| 30+ Delinq. % (a) | 0.06 | % | — | % | 0.06 | % | |||||||
| NPL % | 0.03 | — | 0.03 | ||||||||||
| Allowance / loans % | 0.82 | — | 0.82 | ||||||||||
| 2017 | |||||||||||||
| Three months ended | |||||||||||||
| (Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | ||||||||||
| Allowance for loan losses as of April 1 | $ | 30,888 | $ | — | $ | 30,888 | |||||||
| Charge-offs | (20 | ) | — | (20 | ) | ||||||||
| Recoveries | 126 | 14 | 140 | ||||||||||
| Provision/(provision credit) for loan losses | (524 | ) | (14 | ) | (538 | ) | |||||||
| Allowance for loan losses as of June 30 | $ | 30,470 | $ | — | $ | 30,470 | |||||||
| Net charge-offs % (qtr. annualized) | NM | NM | NM | ||||||||||
| Allowance / net charge-offs | NM | NM | NM | ||||||||||
| As of December 31 | |||||||||||||
| Period-end loans | $ | 4,214,695 | $ | — | $ | 4,214,695 | |||||||
| Nonperforming loans | 1,393 | — | 1,393 | ||||||||||
| Troubled debt restructurings | 2,407 | — | 2,407 | ||||||||||
| 30+ Delinq. % (a) | 0.15 | % | — | % | 0.15 | % | |||||||
| NPL % | 0.03 | — | 0.03 | ||||||||||
| Allowance / loans % | 0.67 | — | 0.67 | ||||||||||
| (a) | 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest. |
Months remaining in draw period: 0-12 13-24 25-36 37-48 49-60 >60 Total (Dollars in thousands) Allowance for loan losses as of April 1 Charge-offs Recoveries Provision/(provision credit) for loan losses Allowance for loan losses as of June 30 Net charge-offs % (qtr. annualized) Allowance / charge-offs Period-end loans Nonperforming loans Troubled debt restructurings 30+ Delinq. % (a) NPL % Allowance / loans % (Dollars in thousands) Allowance for loan losses as of April 1 Charge-offs Recoveries Provision/(provision credit) for loan losses Allowance for loan losses as of June 30 Net charge-offs % (qtr. annualized) Allowance / charge-offs Period-end loans Nonperforming loans Troubled debt restructurings 30+ Delinq. % (a) NPL % Allowance / loans % $4.4$6.2 billion on June 30, 2017,2018, and is primarily composed of home equity lines and installment loans including restrictedrestricted balances (loans consolidated under ASC 810). The largest geographical concentrations of balances as of June 30, 2017,2018, are in Tennessee (71(53 percent), North Carolina (16 percent), Florida (11 percent), and California (4 percent), and North Carolina (4 percent) with no other state representing more than 3 percent of the portfolio. As of June 30, 2017,2018, approximately 7378 percent of the consumer real estate portfolio was in a first lien position. At origination, weighted average FICO score of this portfolio was 751753 and refreshed FICO scores averaged 749 as of758 on both June 30, 2017, as compared to 7502018, and 747, respectively, as of December 31, 2016. Generally,2017. Generally, performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.$1.5$1.6 billion of the consumer real estate portfolio as of June 30, 2017.2018. FHN’s HELOCs typically have a 5 or 10 year draw period followed by a 10 or 20 year repayment period, respectively. During the draw period, a borrower is able to draw on the line and is only required to make interest payments. The line is automatically frozen if a borrower becomes 45 days or more past due on payments. Once the draw period has concluded, the line is closed and the borrower is required to make both principal and interest payments monthly until the loan matures. The principal payment generally is fully amortizing, but payment amounts will adjust when variable rates reset to reflect changes in the prime rate.2017, and December 31, 2016, approximately 62 percent2018, approximately 70 percent of FHN’sFHN's HELOCs are in the draw period.period compared to approximately 72 percent as of December 31, 2017. Based on when draw periods are scheduled to end per the line agreement, it is expected that $437.4 $435.9 million, or 4637 percent ofof HELOCs currently in the draw period, will enter the repayment period during the next 60 months. Delinquencies andcharge-off rates for HELOCs that have entered the repayment period are initially higher than HELOCs still in the draw period because of the increased minimum payment requirement; however, after some seasoning, performance of these loans usually begins to stabilize. The home equity lines of the consumer real estate portfolio are being monitored closely for those nearing the end of the draw period and borrowers are initially being contacted at least 24 months before the repayment period begins to remind the customer of the terms of their agreement and to inform them of options. The following table shows the HELOCs currently in the draw period and expected timing of conversion to the repayment period. June 30, 2017 December 31, 2016 (Dollars in thousands) Repayment
Amount Percent Repayment
Amount Percent $ 169,157 18 % $ 212,665 20 % 78,637 8 127,662 12 54,758 6 73,331 7 64,116 7 68,768 6 70,760 7 68,792 7 507,933 54 514,126 48 $ 945,361 100 % $ 1,065,344 100 % Consumer June 30, 2018 December 31, 2017 (Dollars in thousands) Percent Percent Months remaining in draw period: 0-12 $ 93,323 8 % $ 138,333 10 % 13-24 68,789 6 88,188 7 25-36 83,519 7 99,109 8 37-48 94,488 8 96,997 7 49-60 95,822 8 105,753 8 >60 721,775 63 792,723 60 Total $ 1,157,716 100 % $ 1,321,103 100 % Overall,2017.2018 despite deterioration of some metrics compared to year-end. Specifically, the regional bank’s asset quality metrics were relatively stable from a year ago, with the exception of NPLs as a percentage of loans which increased 218 basis points fromyear-endto .54.57 percent and the 30+ delinquencies increased 11 basis points as of June 30, 2017.2018. The balance of nonperforming loans increased $7.9 million to $79.4 million on June 30, 2018, primarily driven by the alignment of CBF's and FTB's policies related to second liens behind delinquent or modified first liens. The non-strategic segment is arun-off portfolio and while the absolute dollars of delinquencies and nonaccruals as well as the 30+ accruing delinquencies ratio improved fromyear-end, nonperforming loans ratios deteriorated and may become more skewed as the portfolio shrinks and some of the stronger borrowers payoff or refinance elsewhere. The ALLL decreased $4.3$5.6 million from December 31, 2016,2017, to $46.1$31.8 million as of June 30, 2017,2018, with the majority of the decline attributable to thenon-strategic segment. The allowance as a percentage of loans declined 78 basis points to 1.04.51 percent as of June 30, 2017,2018, compared toyear-end. The balance of nonperforming loans declined $7.6 million to $75.2 million on June 30, 2017. Loans delinquent 30 or more days and still accruing declinedincreased from $42.1$41.5 million as of December 31, 2016,2017, to $35.8$42.4 million as of June 30, 2017.2018. The portfolio realized net recoveries of $4.0 million in second quarter 2018 compared to net recoveries of $1.2 million in second quarter 2017 compared to net recoveries of $2.2 million in fourth quarter 2016 and net charge-offs of $.5 million in second quarter 2016.2017. The following table shows consumer real estate asset quality trends by segment. 2017 Three months ended Regional Bank Non-Strategic Consolidated $ 19,204 $ 30,476 $ 49,680 (793 ) (3,158 ) (3,951 ) 1,343 3,800 5,143 (1,873 ) (2,930 ) (4,803 ) $ 17,881 $ 28,188 $ 46,069 NM NM NM NM NM NM As of June 30 $ 3,694,736 $ 722,723 $ 4,417,459 19,951 55,224 75,175 45,559 92,440 137,999 0.46 % 2.62 % 0.81 % 0.54 7.64 1.70 0.48 3.90 1.04 2016 Three months ended Regional Bank Non-Strategic Consolidated $ 26,602 $ 40,719 $ 67,321 (1,487 ) (5,095 ) (6,582 ) 1,700 4,382 6,082 (2,537 ) (5,203 ) (7,740 ) $ 24,278 $ 34,803 $ 59,081 NM 0.26 % 0.04 % NM 12.14x 29.40x As of December 31 $ 3,642,894 $ 880,858 $ 4,523,752 18,865 63,947 82,812 47,478 105,982 153,460 0.49 % 2.76 % 0.93 % 0.52 7.26 1.83 0.52 3.56 1.11 2018 Three months ended (Dollars in thousands) Regional Bank Non-Strategic Consolidated Allowance for loan losses as of April 1 $ 15,646 $ 17,104 $ 32,750 Charge-offs (618 ) (863 ) (1,481 ) Recoveries 1,113 4,331 5,444 Provision/(provision credit) for loan losses (393 ) (4,551 ) (4,944 ) Allowance for loan losses as of June 30 $ 15,748 $ 16,021 $ 31,769 Net charge-offs % (qtr. annualized) NM NM NM Allowance / net charge-offs NM �� NM NM As of June 30 Period-end loans $ 5,733,823 $ 488,788 $ 6,222,611 Nonperforming loans 32,713 46,689 79,402 Troubled debt restructurings 44,481 77,854 122,335 30+ Delinq. % (a) 0.51 % 2.63 % 0.68 % NPL % 0.57 9.55 1.28 Allowance / loans % 0.27 3.28 0.51 2017 Three months ended (Dollars in thousands) Regional Bank Non-Strategic Consolidated Allowance for loan losses as of April 1 $ 19,204 $ 30,476 $ 49,680 Charge-offs (793 ) (3,158 ) (3,951 ) Recoveries 1,343 3,800 5,143 Provision/(provision credit) for loan losses (1,873 ) (2,930 ) (4,803 ) Allowance for loan losses as of June 30 $ 17,881 $ 28,188 $ 46,069 Net charge-offs % (qtr. annualized) NM NM NM Allowance / net charge-offs NM NM NM As of December 31 Period-end loans $ 5,774,411 $ 593,344 $ 6,367,755 Nonperforming loans 22,678 48,809 71,487 Troubled debt restructurings 44,375 84,520 128,895 30+ Delinq. % (a) 0.40 % 3.06 % 0.65 % NPL % 0.39 8.23 1.12 Allowance / loans % 0.28 3.53 0.59 (a) 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
2018.
| 2017 | ||||||||||||||||
| Three months ended | ||||||||||||||||
(Dollars in thousands) | Regional Bank | Corporate (a) | Non-Strategic | Consolidated | ||||||||||||
Allowance for loan losses as of April 1 | $ | 1,857 | N/A | $ | 14,036 | $ | 15,893 | |||||||||
Charge-offs | — | N/A | (843 | ) | (843 | ) | ||||||||||
Recoveries | — | N/A | 488 | 488 | ||||||||||||
Provision/(provision credit) for loan losses | 124 | N/A | 736 | 860 | ||||||||||||
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Allowance for loan losses as of June 30 | $ | 1,981 | N/A | $ | 14,417 | $ | 16,398 | |||||||||
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| |||||||||
Net charge-offs % (qtr. annualized) | — | % | N/A | 0.56 | % | 0.35 | % | |||||||||
Allowance / charge-offs | NM | N/A | 10.13x | 11.52x | ||||||||||||
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| As of June 30 | ||||||||||||||||
Period-end loans | $ | 96,769 | $ | 62,708 | $ | 248,618 | $ | 408,095 | ||||||||
Nonperforming loans | 381 | 1,819 | 25,604 | 27,804 | ||||||||||||
Troubled debt restructurings | 937 | 4,251 | 80,725 | 85,913 | ||||||||||||
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30+ Delinq. % (b) | 0.49 | % | 6.52 | % | 2.38 | % | 2.57 | % | ||||||||
NPL % | 0.39 | 2.90 | 10.30 | 6.81 | ||||||||||||
Allowance / loans % | 2.05 | N/A | 5.80 | 4.02 | ||||||||||||
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| 2016 | ||||||||||||||||
| Three months ended | ||||||||||||||||
(Dollars in thousands) | Regional Bank | Corporate (a) | Non-Strategic | Consolidated | ||||||||||||
Allowance for loan losses as of April 1 | $ | 383 | N/A | $ | 18,371 | $ | 18,754 | |||||||||
Charge-offs | — | N/A | (349 | ) | (349 | ) | ||||||||||
Recoveries | — | N/A | 484 | 484 | ||||||||||||
Provision/(provision credit) for loan losses | 196 | N/A | (1,485 | ) | (1,289 | ) | ||||||||||
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Allowance for loan losses as of June 30 | $ | 579 | N/A | $ | 17,021 | $ | 17,600 | |||||||||
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Net charge-offs % (qtr. annualized) | — | % | N/A | NM | NM | |||||||||||
Allowance / charge-offs | NM | N/A | NM | NM | ||||||||||||
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| As of December 31 | ||||||||||||||||
Period-end loans | $ | 76,973 | $ | 71,380 | $ | 274,772 | $ | 423,125 | ||||||||
Nonperforming loans | 393 | 1,186 | 25,602 | 27,181 | ||||||||||||
Troubled debt restructurings | 878 | 3,792 | 89,256 | 93,926 | ||||||||||||
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30+ Delinq. % (b) | 0.72 | % | 4.37 | % | 2.29 | % | 2.36 | % | ||||||||
NPL % | 0.51 | 1.66 | 9.32 | 6.42 | ||||||||||||
Allowance / loans % | 1.58 | N/A | 5.49 | 3.85 | ||||||||||||
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| 2018 | ||||||||||||||||
| Three months ended | ||||||||||||||||
| (Dollars in thousands) | Regional Bank | Corporate (a) | Non-Strategic | Consolidated | ||||||||||||
| Allowance for loan losses as of April 1 | $ | 2,546 | N/A | $ | 12,889 | $ | 15,435 | |||||||||
| Charge-offs | — | N/A | (300 | ) | (300 | ) | ||||||||||
| Recoveries | — | N/A | 631 | 631 | ||||||||||||
| Provision/(provision credit) for loan losses | (68 | ) | N/A | (1,620 | ) | (1,688 | ) | |||||||||
| Allowance for loan losses as of June 30 | $ | 2,478 | N/A | $ | 11,600 | $ | 14,078 | |||||||||
| Net charge-offs % (qtr. annualized) | — | % | N/A | NM | NM | |||||||||||
| Allowance / net charge-offs | NM | N/A | NM | NM | ||||||||||||
| As of June 30 | ||||||||||||||||
| Period-end loans | $ | 109,499 | $ | 44,255 | $ | 201,162 | $ | 354,916 | ||||||||
| Nonperforming loans | 341 | 1,746 | 22,283 | 24,370 | ||||||||||||
| Troubled debt restructurings | 858 | 3,214 | 72,789 | 76,861 | ||||||||||||
| 30+ Delinq. % (b) | 0.69 | % | 3.32 | % | 2.28 | % | 1.92 | % | ||||||||
| NPL % | 0.31 | 3.94 | 11.08 | 6.87 | ||||||||||||
| Allowance / loans % | 2.26 | N/A | 5.77 | 3.97 | ||||||||||||
| 2017 | ||||||||||||||||
| Three months ended | ||||||||||||||||
| (Dollars in thousands) | Regional Bank | Corporate (a) | Non-Strategic | Consolidated | ||||||||||||
| Allowance for loan losses as of April 1 | $ | 1,857 | N/A | $ | 14,036 | $ | 15,893 | |||||||||
| Charge-offs | — | N/A | (843 | ) | (843 | ) | ||||||||||
| Recoveries | — | N/A | 488 | 488 | ||||||||||||
| Provision/(provision credit) for loan losses | 124 | N/A | 736 | 860 | ||||||||||||
| Allowance for loan losses as of June 30 | $ | 1,981 | N/A | $ | 14,417 | $ | 16,398 | |||||||||
| Net charge-offs % (qtr. annualized) | — | % | N/A | 0.56 | % | 0.35 | % | |||||||||
| Allowance / net charge-offs | NM | N/A | 10.13 | x | 11.52 | x | ||||||||||
| As of December 31 | ||||||||||||||||
| Period-end loans | $ | 116,914 | $ | 53,556 | $ | 228,837 | $ | 399,307 | ||||||||
| Nonperforming loans | 427 | 2,157 | 23,806 | 26,390 | ||||||||||||
| Troubled debt restructurings | 941 | 3,637 | 80,216 | 84,794 | ||||||||||||
| 30+ Delinq. % (b) | 0.35 | % | 3.98 | % | 2.12 | % | 1.85 | % | ||||||||
| NPL % | 0.37 | 4.03 | 10.40 | 6.61 | ||||||||||||
| Allowance / loans % | 2.17 | N/A | 5.70 | 3.90 | ||||||||||||
| (a) | An allowance has not been established for these loans as the valuation adjustment taken upon exercise ofclean-up calls included expected losses. |
| (b) | 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest. |
| 2017 | ||||||||||||
| Three months ended | ||||||||||||
(Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | |||||||||
Allowance for loan losses as of April 1 | $ | 12,394 | $ | 6 | $ | 12,400 | ||||||
Charge-offs | (3,084 | ) | (67 | ) | (3,151 | ) | ||||||
Recoveries | 678 | 70 | 748 | |||||||||
Provision/(provision credit) for loan losses | 1,929 | 15 | 1,944 | |||||||||
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Allowance for loan losses as of June 30 | $ | 11,917 | $ | 24 | $ | 11,941 | ||||||
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Net charge-offs % (qtr. annualized) | 2.77 | % | NM | 2.71 | % | |||||||
Allowance / charge-offs | 1.24x | NM | 1.24x | |||||||||
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| As of June 30 | ||||||||||||
Period-end loans | $ | 346,791 | $ | 6,759 | $ | 353,550 | ||||||
Nonperforming loans | — | 130 | 130 | |||||||||
Troubled debt restructurings | 329 | 31 | 360 | |||||||||
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30+ Delinq. % (a) | 0.90 | % | 1.95 | % | 0.92 | % | ||||||
NPL % | — | 1.93 | 0.04 | |||||||||
Allowance / loans % | 3.44 | 0.35 | 3.38 | |||||||||
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| 2016 | ||||||||||||
| Three months ended | ||||||||||||
(Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | |||||||||
Allowance for loan losses as of April 1 | $ | 11,005 | $ | 441 | $ | 11,446 | ||||||
Charge-offs | (3,355 | ) | (90 | ) | (3,445 | ) | ||||||
Recoveries | 929 | 63 | 992 | |||||||||
Provision/(provision credit) for loan losses | 3,054 | (157 | ) | 2,897 | ||||||||
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Allowance for loan losses as of June 30 | $ | 11,633 | $ | 257 | $ | 11,890 | ||||||
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Net charge-offs % (qtr. annualized) | 2.77 | % | 1.15 | % | 2.73 | % | ||||||
Allowance / charge-offs | 1.19x | 2.41x | 1.21x | |||||||||
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| As of December 31 | ||||||||||||
Period-end loans | $ | 351,198 | $ | 7,835 | $ | 359,033 | ||||||
Nonperforming loans | — | 142 | 142 | |||||||||
Troubled debt restructurings | 274 | 32 | 306 | |||||||||
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30+ Delinq. % (a) | 1.16 | % | 1.73 | % | 1.17 | % | ||||||
NPL % | — | 1.82 | 0.04 | |||||||||
Allowance / loans % | 3.42 | 2.26 | 3.39 | |||||||||
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| 2018 | |||||||||||||
| Three months ended | |||||||||||||
| (Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | ||||||||||
| Allowance for loan losses as of April 1 | $ | 9,641 | $ | 73 | $ | 9,714 | |||||||
| Charge-offs | (4,664 | ) | (48 | ) | (4,712 | ) | |||||||
| Recoveries | 1,037 | 53 | 1,090 | ||||||||||
| Provision/(provision credit) for loan losses | 2,874 | (17 | ) | 2,857 | |||||||||
| Allowance for loan losses as of June 30 | $ | 8,888 | $ | 61 | $ | 8,949 | |||||||
| Net charge-offs % (qtr. annualized) | 2.64 | % | NM | 2.61 | % | ||||||||
| Allowance / net charge-offs | 0.61 | x | NM | 0.62 | x | ||||||||
| As of June 30 | |||||||||||||
| Period-end loans | $ | 543,617 | $ | 5,495 | $ | 549,112 | |||||||
| Nonperforming loans | 360 | — | 360 | ||||||||||
| Troubled debt restructurings | 580 | 24 | 604 | ||||||||||
| 30+ Delinq. % (a) | 1.81 | % | 1.31 | % | 1.80 | % | |||||||
| NPL % | 0.07 | — | 0.07 | ||||||||||
| Allowance / loans % | 1.64 | 1.11 | 1.63 | ||||||||||
| 2017 | |||||||||||||
| Three months ended | |||||||||||||
| (Dollars in thousands) | Regional Bank | Non-Strategic | Consolidated | ||||||||||
| Allowance for loan losses as of April 1 | $ | 12,394 | $ | 6 | $ | 12,400 | |||||||
| Charge-offs | (3,084 | ) | (67 | ) | (3,151 | ) | |||||||
| Recoveries | 678 | 70 | 748 | ||||||||||
| Provision/(provision credit) for loan losses | 1,929 | 15 | 1,944 | ||||||||||
| Allowance for loan losses as of June 30 | $ | 11,917 | $ | 24 | $ | 11,941 | |||||||
| Net charge-offs % (qtr. annualized) | 2.77 | % | NM | 2.71 | % | ||||||||
| Allowance / net charge-offs | 1.24 | x | NM | 1.24 | x | ||||||||
| As of December 31 | |||||||||||||
| Period-end loans | $ | 613,540 | $ | 6,359 | $ | 619,899 | |||||||
| Nonperforming loans | 75 | 121 | 196 | ||||||||||
| Troubled debt restructurings | 564 | 29 | 593 | ||||||||||
| 30+ Delinq. % (a) | 1.25 | % | 0.95 | % | 1.24 | % | |||||||
| NPL % | 0.01 | 1.89 | 0.03 | ||||||||||
| Allowance / loans % | 1.61 | 1.36 | 1.61 | ||||||||||
| (a) | 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest. |
| June 30 | December 31 | |||||||
| 2017 | 2016 | |||||||
Key Portfolio Details | ||||||||
C&I | ||||||||
Period-end loans ($ millions) | $ | 12,598 | $ | 12,148 | ||||
30+ Delinq. % (a) | 0.03 | % | 0.08 | % | ||||
NPL % | 0.20 | 0.27 | ||||||
Charge-offs % (qtr. annualized) | 0.04 | NM | ||||||
Allowance / loans % | 0.73 | % | 0.74 | % | ||||
Allowance / charge-offs | 18.21x | NM | ||||||
Commercial Real Estate | ||||||||
Period-end loans ($ millions) | $ | 2,212 | $ | 2,136 | ||||
30+ Delinq. % (a) | 0.01 | % | 0.01 | % | ||||
NPL % | 0.07 | 0.13 | ||||||
Charge-offs % (qtr. annualized) | NM | 0.09 | ||||||
Allowance / loans % | 1.38 | % | 1.59 | % | ||||
Allowance / charge-offs | NM | 17.56x | ||||||
Consumer Real Estate | ||||||||
Period-end loans ($ millions) | $ | 4,417 | $ | 4,524 | ||||
30+ Delinq. % (a) | 0.81 | % | 0.93 | % | ||||
NPL % | 1.70 | 1.83 | ||||||
Charge-offs % (qtr. annualized) | NM | NM | ||||||
Allowance / loans % | 1.04 | % | 1.11 | % | ||||
Allowance / charge-offs | NM | NM | ||||||
Permanent Mortgage | ||||||||
Period-end loans ($ millions) | $ | 408 | $ | 423 | ||||
30+ Delinq. % (a) | 2.57 | % | 2.36 | % | ||||
NPL % | 6.81 | 6.42 | ||||||
Charge-offs % (qtr. annualized) | 0.35 | NM | ||||||
Allowance / loans % | 4.02 | % | 3.85 | % | ||||
Allowance / charge-offs | 11.52x | NM | ||||||
Credit Card and Other | ||||||||
Period-end loans ($ millions) | $ | 354 | $ | 359 | ||||
30+ Delinq. % (a) | 0.92 | % | 1.17 | % | ||||
NPL % | 0.04 | 0.04 | ||||||
Charge-offs % (qtr. annualized) | 2.71 | 3.25 | ||||||
Allowance / loans % | 3.38 | % | 3.39 | % | ||||
Allowance / charge-offs | 1.24x | 1.04x | ||||||
| June 30 | December 31 | ||||||||
| 2018 | 2017 | ||||||||
| Key Portfolio Details | |||||||||
| C&I | |||||||||
| Period-end loans ($ millions) | $ | 16,439 | $ | 16,057 | |||||
| 30+ Delinq. % (a) | 0.14 | % | 0.19 | % | |||||
| NPL % | 0.12 | 0.19 | |||||||
| Charge-offs % (qtr. annualized) | 0.06 | 0.28 | |||||||
| Allowance / loans % | 0.59 | % | 0.61 | % | |||||
| Allowance / net charge-offs | 10.73 | x | 2.52 | x | |||||
| Commercial Real Estate | |||||||||
| Period-end loans ($ millions) | $ | 4,136 | $ | 4,215 | |||||
| 30+ Delinq. % (a) | 0.06 | % | 0.15 | % | |||||
| NPL % | 0.03 | 0.03 | |||||||
| Charge-offs % (qtr. annualized) | 0.01 | NM | |||||||
| Allowance / loans % | 0.82 | % | 0.67 | % | |||||
| Allowance / net charge-offs | 55.04 | x | NM | ||||||
| Consumer Real Estate | |||||||||
| Period-end loans ($ millions) | $ | 6,223 | $ | 6,368 | |||||
| 30+ Delinq. % (a) | 0.68 | % | 0.65 | % | |||||
| NPL % | 1.28 | 1.12 | |||||||
| Charge-offs % (qtr. annualized) | NM | NM | |||||||
| Allowance / loans % | 0.51 | % | 0.59 | % | |||||
| Allowance / net charge-offs | NM | NM | |||||||
| Permanent Mortgage | |||||||||
| Period-end loans ($ millions) | $ | 355 | $ | 399 | |||||
| 30+ Delinq. % (a) | 1.92 | % | 1.85 | % | |||||
| NPL % | 6.87 | 6.61 | |||||||
| Charge-offs % (qtr. annualized) | NM | 0.10 | |||||||
| Allowance / loans % | 3.97 | % | 3.90 | % | |||||
| Allowance / net charge-offs | NM | 37.67 | x | ||||||
| Credit Card and Other | |||||||||
| Period-end loans ($ millions) | $ | 549 | $ | 620 | |||||
| 30+ Delinq. % (a) | 1.80 | % | 1.24 | % | |||||
| NPL % | 0.07 | 0.03 | |||||||
| Charge-offs % (qtr. annualized) | 2.61 | 2.30 | |||||||
| Allowance / loans % | 1.63 | % | 1.61 | % | |||||
| Allowance / net charge-offs | 0.62 | x | 0.99 | x | |||||
| (a) | 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest. |
2017.
2017.
2017.
portfolio.
dependentcollateral-dependent and are charged down to an estimate of collateral value less costs to sell. Because loss content has been recognized through a partialcharge-off, typically reserves are not recorded.
OREO.
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Beginning balance | $ | 10,259 | $ | 17,460 | $ | 11,235 | $ | 24,977 | ||||||||
Valuation adjustments | (176 | ) | (314 | ) | (621 | ) | (850 | ) | ||||||||
New foreclosed property | 1,741 | 2,814 | 2,846 | 3,546 | ||||||||||||
Disposals: | ||||||||||||||||
Single transactions | (4,786 | ) | (5,810 | ) | (6,422 | ) | (13,523 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Ending balance, June 30 (a) | $ | 7,038 | $ | 14,150 | $ | 7,038 | $ | 14,150 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| (Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Beginning balance | $ | 32,375 | $ | 10,259 | $ | 39,566 | $ | 11,235 | ||||||||
| Valuation adjustments | (262 | ) | (176 | ) | (1,422 | ) | (621 | ) | ||||||||
| New foreclosed property | 976 | 1,741 | 4,052 | 2,846 | ||||||||||||
| Disposal | (6,632 | ) | (4,786 | ) | (15,739 | ) | (6,422 | ) | ||||||||
| Ending balance, June 30 (a) | $ | 26,457 | $ | 7,038 | $ | 26,457 | $ | 7,038 | ||||||||
| (a) | Excludes |
2017:
| Three Months Ended June 30 | ||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||||||||||
Allowance for loan losses: | ||||||||||||||||
Beginning balance on April 1 | $ | 201,968 | $ | 204,034 | ||||||||||||
Provision/(provision credit) for loan losses | (2,000 | ) | 4,000 | |||||||||||||
Charge-offs | (9,830 | ) | (18,296 | ) | ||||||||||||
Recoveries | 7,119 | 10,069 | ||||||||||||||
|
|
|
| |||||||||||||
Ending balance on June 30 | $ | 197,257 | $ | 199,807 | ||||||||||||
|
|
|
| |||||||||||||
Reserve for remaining unfunded commitments | 5,554 | 5,351 | ||||||||||||||
Total allowance for loan losses and reserve for unfunded commitments | $ | 202,811 | $ | 205,158 | ||||||||||||
|
|
|
| |||||||||||||
Key ratios | ||||||||||||||||
Allowance / net charge-offs (a) | 18.14x | 6.04x | ||||||||||||||
Net charge-offs % (b) | 0.06 | % | 0.19 | % | ||||||||||||
| As of June 30 | As of December 31 | |||||||||||||||
| 2017 | 2016 | |||||||||||||||
Nonperforming Assets by Segment Regional Banking: | ||||||||||||||||
Nonperforming loans (c) | $ | 43,012 | $ | 50,653 | ||||||||||||
Foreclosed real estate (d) | 3,266 | 5,081 | ||||||||||||||
|
|
|
| |||||||||||||
Total Regional Banking | 46,278 | 55,734 | ||||||||||||||
|
|
|
| |||||||||||||
Non-Strategic: | ||||||||||||||||
Nonperforming loans (c) | 84,959 | 93,808 | ||||||||||||||
Nonperforming loansheld-for-sale net of fair value adjustment (c) | 7,321 | 7,741 | ||||||||||||||
Foreclosed real estate (d) | 3,772 | 6,154 | ||||||||||||||
|
|
|
| |||||||||||||
TotalNon-Strategic | 96,052 | 107,703 | ||||||||||||||
|
|
|
| |||||||||||||
Corporate: | ||||||||||||||||
Nonperforming loans (c) | 1,819 | 1,186 | ||||||||||||||
|
|
|
| |||||||||||||
Total Corporate | 1,819 | 1,186 | ||||||||||||||
|
|
|
| |||||||||||||
Total nonperforming assets (c) (d) | $ | 144,149 | $ | 164,623 | ||||||||||||
|
|
|
| |||||||||||||
| Three Months Ended June 30 | |||||||||
| (Dollars in thousands) | 2018 | 2017 | |||||||
| Allowance for loan losses: | |||||||||
| Beginning balance on April 1 | $ | 187,194 | $ | 201,968 | |||||
| Provision/(provision credit) for loan losses | — | (2,000 | ) | ||||||
| Charge-offs | (10,008 | ) | (9,830 | ) | |||||
| Recoveries | 8,276 | 7,119 | |||||||
| Ending balance on June 30 | $ | 185,462 | $ | 197,257 | |||||
| Reserve for remaining unfunded commitments | 6,536 | 5,554 | |||||||
| Total allowance for loan losses and reserve for unfunded commitments | $ | 191,998 | $ | 202,811 | |||||
| Key ratios | |||||||||
| Allowance / net charge-offs (a) | 26.70 | x | 18.14 | x | |||||
| Net charge-offs % (b) | 0.03 | % | 0.06 | % | |||||
| As of June 30 | As of December 31 | ||||||||
Nonperforming Assets by Segment | 2018 | 2017 | |||||||
Regional Banking: | |||||||||
| Nonperforming loans (c) | $ | 51,092 | $ | 52,659 | |||||
| OREO (d) | 22,288 | 34,844 | |||||||
| Total Regional Banking | 73,380 | 87,503 | |||||||
| Non-Strategic: | |||||||||
| Nonperforming loans (c) | 71,954 | 75,803 | |||||||
| Nonperforming loans held-for-sale net of fair value adjustment (c) | 5,769 | 6,971 | |||||||
| OREO (d) | 4,168 | 4,722 | |||||||
| Total Non-Strategic | 81,891 | 87,496 | |||||||
| Corporate: | |||||||||
| Nonperforming loans (c) | 1,746 | 2,157 | |||||||
| Total Corporate | 1,746 | 2,157 | |||||||
Total nonperforming assets (c) (d) | $ | 157,017 | $ | 177,156 | |||||
| (a) | Ratio is total allowance divided by annualized net charge-offs. |
| (b) | Ratio is annualized net charge-offs divided by quarterly average loans, net of unearned income. |
| (c) | Excludes loans that are 90 or more days past due and still accruing interest. |
| (d) | Excludes |
Loans and commitments: Totalperiod-end loans, net of unearned income Potential problem assets (a) Loans 30 to 89 days past due Loans 90 days past due (b) (c) Loansheld-for-sale 30 to 89 days past due (d) Loansheld-for-sale 30 to 89 days past due—guaranteed portion (d) (e) Loansheld-for-sale 90 days past due (c) (d) Loansheld-for-sale 90 days past due—guaranteed portion (c) (d) (e) Remaining unfunded commitments Key ratios Allowance / loans % Allowance / NPL NPA % (f) NPL % As of June 30 As of December 31 2017 2016 $ 19,989,319 $ 19,589,520 285,395 290,354 30,871 42,570 22,403 23,385 25,571 6,462 25,489 6,248 15,406 14,868 15,271 14,657 $ 8,871,103 $ 8,744,649 0.99 % 1.03 % 1.52x 1.39x 0.68 % 0.80 % 0.65 % 0.74 %
| As of June 30 | As of December 31 | ||||||||
| 2018 | 2017 | ||||||||
| Loans and commitments: | |||||||||
| Total period-end loans, net of unearned income | $ | 27,701,740 | $ | 27,658,929 | |||||
| Potential problem assets (a) | 293,990 | 327,214 | |||||||
| Loans 30 to 89 days past due | 49,219 | 50,884 | |||||||
| Loans 90 days past due (b) (c) | 35,920 | 41,568 | |||||||
| Loans held-for-sale 30 to 89 days past due | 5,537 | 13,419 | |||||||
| Loans held-for-sale 30 to 89 days past due—guaranteed portion (d) | 5,128 | 5,975 | |||||||
| Loans held-for-sale 90 days past due (c) | 8,558 | 10,885 | |||||||
| Loans held-for-sale 90 days past due—guaranteed portion (c) (d) | 8,410 | 9,451 | |||||||
| Remaining unfunded commitments | $ | 10,228,615 | $ | 10,678,485 | |||||
| Key ratios | |||||||||
| Allowance / loans % | 0.67 | % | 0.69 | % | |||||
| Allowance / NPL | 1.49 | x | 1.45 | x | |||||
| NPA % (e) | 0.55 | % | 0.61 | % | |||||
| NPL % | 0.45 | % | 0.47 | % | |||||
| (a) | Includes past due loans. |
| (b) | Excludes loans classified asheld-for-sale. |
| (c) | Amounts are not included in nonperforming/nonaccrual loans. |
| Guaranteed loans include FHA, VA, SBA, USDA, and GNMA loans repurchased through the GNMA buyout program. |
| (e) | Ratio isnon-performing assets related to the loan portfolio to total loans plus |
2017. The decrease in past due loans was primarily driven by the C&I portfolio.
16 percent of TDR balances, as of June 30, 20172018 and December 31, 2016,2017, respectively. Additionally, FHN had $66.1$60.5 million and $69.3$63.2 million of HFS loans classified as TDRs as of June 30, 20172018 and December 31, 2016,2017, respectively. Totalheld-to-maturity held-to-
2017:
| (Dollars in thousands) | As of June 30, 2017 | As of December 31, 2016 | ||||||
Held-to-maturity: | ||||||||
Permanent mortgage: | ||||||||
Current | $ | 64,591 | $ | 73,500 | ||||
Delinquent | 2,413 | 2,751 | ||||||
Non-accrual (a) | 18,909 | 17,675 | ||||||
|
|
|
| |||||
Total permanent mortgage | 85,913 | 93,926 | ||||||
|
|
|
| |||||
Consumer real estate: | ||||||||
Current | 92,303 | 100,383 | ||||||
Delinquent | 3,066 | 4,618 | ||||||
Non-accrual (b) | 42,630 | 48,459 | ||||||
|
|
|
| |||||
Total consumer real estate | 137,999 | 153,460 | ||||||
|
|
|
| |||||
Credit card and other: | ||||||||
Current | 336 | 288 | ||||||
Delinquent | 24 | 18 | ||||||
Non-accrual | — | — | ||||||
|
|
|
| |||||
Total credit card and other | 360 | 306 | ||||||
|
|
|
| |||||
Commercial loans: | ||||||||
Current | 17,055 | 21,887 | ||||||
Delinquent | 303 | — | ||||||
Non-accrual | 11,076 | 15,571 | ||||||
|
|
|
| |||||
Total commercial loans | 28,434 | 37,458 | ||||||
|
|
|
| |||||
Totalheld-to-maturity | $ | 252,706 | $ | 285,150 | ||||
|
|
|
| |||||
Held-for-sale: | ||||||||
Current | $ | 47,877 | $ | 46,625 | ||||
Delinquent | 12,671 | 16,436 | ||||||
Non-accrual | 5,586 | 6,283 | ||||||
|
|
|
| |||||
Totalheld-for-sale | 66,134 | 69,344 | ||||||
|
|
|
| |||||
Total troubled debt restructurings | $ | 318,840 | $ | 354,494 | ||||
|
|
|
| |||||
| (Dollars in thousands) | As of June 30, 2018 | As of December 31, 2017 | ||||||
| Held-to-maturity: | ||||||||
| Permanent mortgage: | ||||||||
| Current | $ | 58,917 | $ | 63,891 | ||||
| Delinquent | 2,258 | 4,463 | ||||||
| Non-accrual (a) | 15,686 | 16,440 | ||||||
| Total permanent mortgage | 76,861 | 84,794 | ||||||
| Consumer real estate: | ||||||||
| Current | 75,931 | 84,697 | ||||||
| Delinquent | 2,179 | 1,975 | ||||||
| Non-accrual (b) | 44,225 | 42,223 | ||||||
| Total consumer real estate | 122,335 | 128,895 | ||||||
| Credit card and other: | ||||||||
| Current | 597 | 544 | ||||||
| Delinquent | 7 | 49 | ||||||
| Non-accrual | — | — | ||||||
| Total credit card and other | 604 | 593 | ||||||
| Commercial loans: | ||||||||
| Current | 15,492 | 15,311 | ||||||
| Delinquent | — | — | ||||||
| Non-accrual | 2,330 | 4,766 | ||||||
| Total commercial loans | 17,822 | 20,077 | ||||||
| Total held-to-maturity | $ | 217,622 | $ | 234,359 | ||||
| Held-for-sale: | ||||||||
| Current | $ | 44,713 | $ | 43,455 | ||||
| Delinquent | 9,577 | 13,269 | ||||||
| Non-accrual | 6,184 | 6,515 | ||||||
| Total held-for-sale | 60,474 | 63,239 | ||||||
| Total troubled debt restructurings | $ | 278,096 | $ | 297,598 | ||||
| (a) | Balances as of June 30, |
| (b) | Balances as of June 30, |
2017. 2017. (Dollars in thousands) 1-day VaR SVaR 10-day VaR SVaR (Dollars in thousands) 1-day VaR SVaR 10-day VaR SVaR (Dollars in thousands) 1-day VaR SVaR 10-day VaR SVaR (Dollars in Thousands) Interest rate risk Credit spread risk Curve steepening Credit spread widening 2017. occur, management believes FHN's asset sensitivity could moderate further. 2017. 2017. 2017. 2017. ability to meet both expected and unexpected cash and collateral needs. Key liquidity ratios, asset liquidity levels and the amount available from funding sources are reported to ALCO on a regular basis. FHN’s Liquidity Policy establishes liquidity limits that are deemed appropriate for FHN’s risk profile. 2017. declared and paid preferred dividends in first and second quarter 2018, payable in October 2018. 25, 2018. the six months ended June 30, 2018, but was somewhat offset by cash paid associated with the cancellation of common shares in connection with CBF dissenting shareholders and cash paid related to the divestiture of two branches. Net cash provided by operating activities was $43.9 million in first half of 2018 and was primarily the result of a net increase in fixed income trading activities of $438.0 million and favorably driven cash-related net income items. Cash outflows of $616.6 million related to a net increase in loans HFS negatively impacted operating cash flows during the first half of 2018, as purchases of government guaranteed loans outpaced sales, including the sale of approximately $120 million UPB of subprime auto loans. Net cash used in financing activities was $447.8 million in first half of 2018, largely driven by a decrease in short-term borrowings, somewhat offset by an increase in deposits. The decrease in short-term borrowings was primarily the result of a decline in FHLB borrowings, which fluctuate largely based on loan demand, deposit levels and balance sheet funding strategies. loans. future is possible. (Dollars in thousands) Repurchase/make whole requests: Agencies Non-Agency whole loan-related MI Other requests (a) Total 2017: (Dollars in thousands) Legacy Mortgage Beginning balance Provision/(provision credit) for repurchase and foreclosure losses (a) Net realized losses Balance on June 30 2017. (Dollars in thousands) Average Tangible Common Equity(Non-GAAP) Average total equity (GAAP) Less: Average noncontrolling interest (a) Less: Average preferred stock (a) (A) Total average common equity Less: Average intangible assets (GAAP) (b) (B) Average Tangible Common Equity(Non-GAAP) Net Income Available to Common Shareholders (C) Net income available to common shareholders (annualized) (GAAP) Ratios (C)/(A) Return on average common equity (“ROE”) (GAAP) (c) (C)/(B) Return on average tangible common equity (“ROTCE”)(Non-GAAP) (d)Except as discussed below, there4752 of Exhibit 13 to FHN’s Annual Report on Form10-K for the year ended December 31, 2016.Except as discussed below, there4853 of Exhibit 13 to FHN’s Annual Report on Form10-K for the year ended December 31, 2016.A summary of FHN’s VaR and SVaR measures for1-day and10-day time horizons is as follows: Three Months Ended
June 30, 2017 Six Months Ended
June 30, 2017 As of
June 30, 2017 Mean High Low Mean High Low $ 1,668 $ 2,394 $ 1,210 $ 1,365 $ 2,394 $ 779 $ 1,605 4,436 6,284 3,217 3,745 6,284 1,775 3,217 3,644 5,251 2,503 3,249 5,712 1,759 4,009 15,686 24,550 11,176 12,568 24,550 4,916 11,176 Three Months Ended
June 30, 2016 Six Months Ended
June 30, 2016 As of
June 30, 2016 Mean High Low Mean High Low $ 767 $ 1,248 $ 446 $ 746 $ 1,411 $ 393 $ 846 3,983 5,298 2,398 3,496 5,789 1,748 3,469 1,892 3,954 898 1,813 4,058 751 1,866 12,826 17,987 8,026 11,326 17,987 3,263 10,376 Year Ended
December 31, 2016 As of
December 31, 2016 Mean High Low $ 821 $ 1,745 $ 393 $ 932 3,643 5,789 1,748 2,830 2,088 5,852 751 2,136 11,671 18,483 3,263 6,443 Three Months Ended
June 30, 2018 Six Months Ended
June 30, 2018 As of
June 30, 2018(Dollars in thousands) Mean High Low Mean High Low 1-day VaR $ 1,747 $ 2,021 $ 1,496 $ 1,747 $ 2,294 $ 1,148 $ 1,921 SVaR 9,568 11,465 8,009 9,664 11,918 6,576 8,767 10-day VaR 3,825 4,349 3,343 3,885 4,589 2,601 3,635 SVaR 27,375 32,343 22,100 27,421 32,343 20,382 28,588 Three Months Ended
June 30, 2017 Six Months Ended
June 30, 2017 As of
June 30, 2017(Dollars in thousands) Mean High Low Mean High Low 1-day VaR $ 1,668 $ 2,394 $ 1,210 $ 1,365 $ 2,394 $ 779 $ 1,605 SVaR 4,436 6,284 3,217 3,745 6,284 1,775 3,217 10-day VaR 3,644 5,251 2,503 3,249 5,712 1,759 4,009 SVaR 15,686 24,550 11,176 12,568 24,550 4,916 11,176 Year Ended
December 31, 2017 As of
December 31, 2017(Dollars in thousands) Mean High Low 1-day VaR $ 1,529 $ 3,310 $ 521 $ 1,287 SVaR 4,704 8,301 1,775 6,230 10-day VaR 3,560 8,039 870 3,059 SVaR 15,511 28,232 4,916 19,813 As of June 30, 2017 As of June 30, 2016 As of December 31, 2016 1-day 10-day 1-day 10-day 1-day 10-day $ 1,194 $ 4,664 $ 744 $ 975 $ 917 $ 1,771 433 570 754 1,666 537 1,391 As of June 30, 2018 As of June 30, 2017 As of December 31, 2017 (Dollars in thousands) 1-day 10-day 1-day 10-day 1-day 10-day Interest rate risk $ 1,035 $ 2,263 $ 1,194 $ 4,664 $ 930 $ 2,084 Credit spread risk 555 1,009 433 570 305 471 multiple times daily, on average.regularly. Additionally, Fixed Income traders actively manage the trading securities inventory continuously throughout each trading day. Accordingly, FHN’s trading securities inventory is highly dynamic, rather than static. As a result, it would be rare for Fixed Income to incur a negative revenue day in its fixed income activities of the level indicated by its VaR measurements.FHN’sFHN's capital adequacy refer to the “Capital”"Capital" section of this MD&A.— - assumes an instantaneous downward move in interest rates of 25 basis points at all points on the interest rate yield curve.— - assumes an instantaneous upward move in interest rates of 25 basis points at all points on the interest rate yield curve.— - assumes an instantaneous flattening of the interest rate yield curve through an increase in short-term rates and a decrease in long-term rates. The2-year point on the Treasury yield curve is assumed to increase 15 basis points and the10-year point on the Treasury yield curve is assumed to decrease 15 basis points. Shifts in other points on the yield curve are predicted based on their correlation to the 2-year and 10-year points.2-year and10-year points.— - assumes an instantaneous steepening of the interest rate yield curve through a decrease in short-term rates and an increase in long-term rates. The2-year point on the Treasury yield curve is assumed to decrease 15 basis points and the10-year point on the Treasury yield curve is assumed to increase 15 basis points. Shifts in other points on the yield curve are predicted based on their correlation to the 2-year and 10-year points.2-year and10-year points.— - assumes an instantaneous increase in credit spreads (the difference between yields on Treasury securities andnon-Treasury securities) of 25 basis points.FHN’sFHN's interest rate risk management practices as described under “Interest"Interest Rate Risk Management”Management" beginning on page 5055 of Exhibit 13 to FHN’sFHN's Annual Report on Form10-K for the year ended December 31, 2016.2017,2018, net interest income exposure over the next 12 months assuming a rate shock of plus 25 basis points, 50 basis points, 100 basis points, and 200 basis points is estimated to have a favorable variance of 1.3.9 percent, 2.61.7 percent, 4.03.1 percent, and 7.76.1 percent, respectively of base net interest income. A steepening yield curve scenario where long-term rates increase by 50 basis points and short-term rates are static, results in a favorable variance in net interest income of 1.1.5 percent of base net interest income. A flattening yield curve scenario where long-term rates decrease by 50 basis points and short-term rates are static, results in an unfavorable variance in net interest income of 1.2.9 percent of base net interest income. A rate shock of minus 25 basis points and minus 50 basis points results in an unfavorable variance in net interest income of 1.6.4 percent and 3.82.2 percent, respectively, of base net interest income. These hypothetical scenarios are used to create a risk measurement framework, and do not necessarily represent management’s current view of future interest rates or market developments. AsJune 30, 2017, any scenarios that indicatedshort-term interest rates higher after a change inprolonged period of very low interest rates has had a positive effect on FHN's net interest income of 3 percent or more from baseand net interest incomemargin. Given recent strength in the economy, the upward trend in interest rates, and market expectations for higher rates in the future, FHN has employed a moderately asset sensitive position. While it is expected that rates will continue to move higher, the movement of rates off the zero boundary during the past year has created the possibility that rates could decline in the future. FHN continues to monitor economic conditions and remains prepared to take any actions to mitigate exposure to falling interest rates should that occur. In addition, it is possible that interest rates continue to rise and that competitive pressures might cause FHN's deposit costs to rise faster than assumed in FHN's simulation analysis. If that were reported to the Board quarterly.FHN’sFHN's capital management practices as described under “Capital"Capital Management and Adequacy”Adequacy" on page 5156 of Exhibit 13 to FHN’sFHN's Annual Report on Form10-K for the year ended December 31, 2016.Except as discussed below, thereFHN’sFHN's operational risk management practices as described under “Operational"Operational Risk Management��Management" on page 5257 of Exhibit 13 to FHN’sFHN's Annual Report on Form10-K for the year ended December 31, 2016.In second quarter 2017, FHN established a Merger Project Office to manage the execution risk in connection with FHN’s proposed Capital Bank merger. The Office has been staffed and an external consultant hired to assist FHN. In addition, the focus of the Investment Rationalization Board has shifted to this project and any other high priority projects.FHN’sFHN's compliance risk management practices as described under “Compliance"Compliance Risk Management”Management" on page 5257 of Exhibit 13 to FHN’sFHN's Annual Report on Form10-K for the year ended December 31, 2016.FHN’sFHN's credit risk management practices as described under “Credit"Credit Risk Management”Management" beginning on page 5257 of Exhibit 13 to FHN’sFHN's Annual Report on Form10-K for the year ended December 31, 2016. securities 2.21.5 billion was available at June 30, 2017)2018), brokered deposits, loan sales, syndications, and access to the Federal Reserve Banks.institution’sinstitution's customer base which provide inexpensive, predictable pricing. The Federal Deposit Insurance Corporation insures these deposits to the extent authorized by law. Generally, these limits are $250 thousand per account owner for interest bearing andnon-interest bearing accounts. The ratio of total loans, excluding loans HFS and restricted real estate loans, to core deposits was 102103 percent on June 30, 20172018 compared to 105101 percent on December 31, 2016.2017,2018, FTBNA and subsidiaries had outstanding preferred shares of $295.4 million, which are reflected as noncontrolling interest on the Consolidated Condensed Statements of Condition.FTBNA’sas outlined above, the Bank's total amount available for dividends was negative $61.3$149.1 million as of June 30, 2017 compared to negative $132.5 million as of December 31, 2016.July 1, 2018. Consequently, FTBNAon that date the bank could not pay common dividends up to that amount to its sole common stockholder, FHN, or to its preferred shareholders without prior regulatory approval. FTBNA declared and paid common dividends to FHN in second and third quarter 2018 in the amount of $90 million and $145 million, respectively. FTBNA applied for and received approval from the OCC to declare and pay common dividends to FHN in first, second and third quarter 2017 in the amounts of $40 million, $50 million, and $80 million, respectively, and in the amount of $250 million in 2016.2017. FTBNA20172018 and each quarter of 2016,2017, with OCC approval as necessary. Additionally, FTBNA declared preferred dividends in third quarter 2017, with OCC approval.$.09$.12 per common share on July 3, 2017,2, 2018, and in July 20172018 the Board approved a $.09$.12 per common share cash dividend payable on October 2, 2017,1, 2018, to shareholders of record on September 8, 2017.7, 2018. FHN paid a cash dividend of $1,550.00 per preferred share on July 10, 2017,2018, and in July 20172018 the Board approved a $1,550.00 per preferred share cash dividend payable on October 10, 2017,2018, to shareholders of record on September 22, 2017.20172018 and 2016.2017. The level of cash and cash equivalents increased $41.3$25.0 million during the first half of 20172018 compared to an increase of $174.9$41.3 million in the secondfirst half of 2016, as2017. In 2018, cash provided by investing and operating activities was more than cash used by financing activities. In 2017, cash provided by financing activities more than offset cash used by investing and operating andactivities.both periods.$41.3$35.6 million in the first half of 2017, as loan growth and cash paid to acquire Coastal, was partially offset by a $490.5 million decrease in interest bearing cash. Net cash used by operating activities was $440.4$446.1 million in the first half of 2017. Operating cash decreased in the first half of 2017 primarily due to net cash outflows of $445.4 million related to fixed income trading activities, aan $85.4 million increase in loansheld-for-sale, and cash outflows of $51.3$57.0 million related to operating assets and liabilities, but were somewhat offset by favorably driven cash-related net income items.Net cash provided by financing activities was $837.4 million in the first half of 2016. Financing cash inflows in 2016 were positively affected by a $663.2 million increase in deposits and a $562.7 million increase in short-term borrowings, but were partially offset by $259.9 million of long-term borrowings, which included the maturity of of $250 million of subordinated notes. Net cash used by investing activities was $639.0 million in the second half of 2016. In 2016, a $921.0 million increase in loans were partially offset by a $281.1 million decrease in interest-bearing cash. Net cash used by operating activities was $23.4 million in the first half of 2016. Operating cash decreased in the first half of 2016 primarily driven by net cash outflows of net fixed income trading activities of $148.7 million and net changes in operating assets and liabilities of $73.0 million.GSEs:government-sponsored entities, or "GSEs": Fannie Mae and Freddie Mac. Also, federally insured or guaranteed whole loans were pooled, and payments to investors were guaranteed through Ginnie Mae. Many mortgage loan originations, especially nonconforming mortgage loans, were sold to investors, or certificate-holders, predominantly through FH proprietary securitizations but also, to a lesser extent, through other whole loans sold to privatenon-Agency purchasers. FHN used only one trustee for all of its FH proprietary securitizations. In addition to FH proprietary securitization and other whole loan sales activities, FHN also originated and sometimes sold or securitized second-lien, line of credit, and government-insured mortgage loans eligible for FHA insurance or VA guaranty. In addition, FHN originatedand sold HELOCs and second lien mortgages through other whole loans sold to private purchasers and, to a lesser extent, through FH proprietary securitizations. Currently, only one FH securitization of HELOCs remains outstanding.During the time these legacy activities were conducted, FHN frequently sold mortgage loans “with servicing retained.” As a result, FHN accumulated substantial amounts of MSR on its balance sheet, as well as contractual servicing obligations and related deposits and receivables. FHN conducted a significant servicing business under its First Horizon Home Loans brand.MI was required by GSE rules for certain of the loans sold to GSEs and was also provided for certain of the loans that were securitized. MI generally was provided for first lien loans sold or securitized having an LTV ratio at origination of greater than 80 percent.In 2007, market conditions deteriorated to the point where mortgage-backed securitizations could no longer be sold economically; FHN’s last securitization occurred that year. FHN continued selling mortgage loans to GSEs until August 31, 2008, when FHN sold its national mortgage origination and servicing platforms along with a portion of its servicing assets and obligations. FHN then contracted to have its remaining servicing obligationssub-serviced. Since the platform sale FHN has sold substantially all remaining servicing assets and obligations in several transactions, concluding in 2014.Certain mortgage-related terms used in this section are defined in “Mortgage-Related Glossary” below.StartingThese claims have been driven primarily by loan delinquencies. In repurchase or make-whole claims a loan purchaser typically asserts that specified loans violated representations and warranties FHN made when the loans were sold. A significant majority of claims received overall have come from GSEs, and the remainder are from purchasers of other whole loan sales. FHN has not received a loan repurchase or make-whole claim from the FH proprietary securitization trustee.MIprivate mortgage insurance ("MI") cancellation notice individually. FHN’s responses include appeal, provide additional information, deny the claim (rescission), repurchase the loan or remit a make-whole payment, or reflect cancellation of MI.After several years resolving repurchase and make-wholewith each GSE on aloan-by-loan basis, in 2013 and 2014 FHN entered into DRAsthrough definitive resolution agreements ("DRAs") with the GSEs, resolvingwhile the remainder have been resolved on a large fraction of potential claims. Starting in 2014 the overall number of such claims diminished substantially, primarily as a result of the DRAs. Each DRA resolved obligations associated with loans originated from 2000 to 2008, but certain obligations and loans were excluded.loan-by-loan basis. Under each DRA, FHN remains responsible for repurchase obligations related to certain excluded defects (such as title defects and violations of the GSE’s Charter Act) and FHN continues to have loan repurchase or monetary compensation obligations under the DRAs related to private mortgage insurance rescissions, cancellations, and denials (with certain exceptions). FHN also has exposure related to loans where there has been a prior bulk sale of servicing, as well as certain other whole-loan sales. With respect to loans where there has been a prior bulk sale of servicing, FHN is not responsible for MI cancellations and denials to the extent attributable to the acts of the current servicer.against FHN in relation to FH proprietary securitizations.MSRmortgage servicing rights ("MSR") was sold at that time, and a significant amount was retained. The related servicing activities, including foreclosure and loss mitigation practices, not sold in 2008 were outsourced through a three-yeartwo separate subservicing arrangement (the “2008 subservicing agreement”) witharrangements to the platform buyer (the “2008"2008 subservicer”). The 2008 subservicing agreement expired in 2011 when FHN entered into a replacement agreement with a new subservicer (the “2011 subservicer”) and the "2011 subservicer". In fourth quarter 2013 and first quarter 2014, FHN contracted to sellsold and transferred a substantial majority of its remaining servicing obligations and servicing assets (including advances) to the 2011 subservicer. The servicing was transferred to the buyer in stages, and was substantially completed in first quarter 2014. The servicing still retained by FHN is not significant and continues to be subserviced.A certificate holdercontactedreceived a notice of indemnification claims from its 2011 subservicer, Nationstar Mortgage LLC, currently doing business as “Mr. Cooper.” The notice asserts several categories of indemnity obligations by FHN claiming that it has been damaged from alleged deficienciesto Nationstar in servicing loans held in certain FH proprietary securitization trusts. The holder has sued the FH securitization trustee on related grounds, but has not yet sued FHN. FHN cannot predict how this matter will proceed nor can FHN predict whether this matter ultimately will be material to FHN.Origination DataFrom 2005 through 2008, FHN originated and sold $69.5 billion ofconnection with mortgage loans tounder the Agencies.subservicing arrangement and under the purchase transaction. This includes $57.6 billion of loans sold to GSEs and $11.9 billion of loans guaranteed by Ginnie Mae. Although FHN conducted these businesses before 2005, GSE loans originatedmatter currently is not in 2005 through 2008 account for a substantial majority of all repurchase requests/make-whole claims received sinceformal litigation, but litigation in the 2008 platform sale.From 2005 through 2007, $26.7 billion of mortgage loans were included in FH proprietary securitizations. The last FH securitization occurred in 2007. On June 30, 2017, the remaining UPB of loans held in FH proprietary securitizations was $3.4 billion, comprised of $2.5 billion ofAlt-A loans and $1.0 billion of Jumbo loans.Mortgage-Related GlossaryAgenciesthe two GSEs and Ginnie MaeHELOChome equity line of creditcertificatessecurities sold to investors representing interests in mortgage loan securitizationsHUDDept. of Housing and Urban DevelopmentDOJU.S. Department of JusticeLTVloan-to-value, a ratio of the loan amount divided by the home valueDRAdefinitive resolution agreement with a GSEMIprivate mortgage insurance, insuring against borrower payment defaultFannie Mae, Fannie, FNMAFederal National Mortgage AssociationMSRmortgage servicing rightsFH proprietary securitizationsecuritization of mortgages sponsored by FHN under its First Horizon brandnonconforming loansloans that did not conform to Agency program requirementsFHAFederal Housing Administrationother whole loans soldmortgage loans sold to private,non-Agency purchasersFreddie Mac, Freddie, FHLMCFederal Home Loan Mortgage Corporation2008 platform sale, platform sale, 2008 saleFHN’s sale of its national mortgage origination and servicing platforms in 2008Ginnie Mae, Ginnie, GNMAGovernment National Mortgage Associationpipeline or active pipelinepipeline of mortgage repurchase, make-whole, & certain related claims against FHNGSEsFannie Mae and Freddie MacVAVeterans AdministrationMI was required for certain of the loans sold to GSEs or that were securitized. Although unresolved MI cancellation notices are not formal repurchase requests, FHN includes those loans in the active pipeline. Additionally, FHN is responsible for covering losses for purchasers to the extent there is a shortfall in MIGenerally, the amount of a loan subject to a repurchase/make-whole claim, or with open MI issues, remains in the active pipeline throughout the resolution process with a claimant. During the last several years the active pipeline has steadily decreased, due in part to settlements and other resolutions, but also due to significant reductions in inflows. On June 30, 2017, the active pipeline was $51.4 million, relatively flat compared to $51.7 million on December 31, 2016.The following table provides a detail of the active pipeline as of June 30, 2017 and 2016:Table 23—Active Pipeline June 30, 2017 December 31, 2016 Number Amount Number Amount 33 $ 5,706 23 $ 4,196 121 18,442 126 19,214 141 22,595 147 23,171 34 4,731 37 5,122 329 $ 51,474 333 $ 51,703 (a)Other requests typically include requests for additional information from both GSE andnon-GSE purchasers.On June 30, 2017, Agencies accounted for approximately 61 percent of the total active pipeline, inclusive of MI cancellation notices, MI curtailments, and all other claims. MI curtailment requests are the largest portion of the active pipeline and are intended onlyoproceeds. Asproceeds; as a result, FHN’sFHN's currently accrued loss from MI curtailments as a percentage of UPB generally is significantly lower than that of a repurchase or make-whole claim. On June 30, 2018, the active pipeline was $12.0 million, compared to $44.1 million on December 31, 2017.2017,2018, the active pipeline contained no loan repurchase or make-whole requests from the FH proprietary securitization trustee related to first lien mortgage loans based on claims related to breaches of representations and warranties related to origination.Make-wholemake-whole and Damagesdamages obligations and estimates for probable incurred losses associated with loan populations excluded from the DRAs are significant components of FHN’s remaining repurchase liability as of June 30, 2017.2018. Other components of that liability primarily relate to other whole loans sold, MI rescissions, and loans included in bulk servicing sales effected prior to the DRAs.cancelled,canceled, FHN applies historical loss factors (including repurchase rates and loss severity ratios) to the total unresolved MI cancellations in the active pipeline, as well as applying these factors to historical average inflows to estimate loss content. Additionally, FHN identifies estimated losses related to MI curtailment requests. Management also evaluates the nature of claims from purchasers and/or servicers of loans sold to determine if qualitative adjustments are appropriate.20172018 and 2016:24—23—Reserves for Repurchase and Foreclosure Losses Three Months Ended
June 30 Six Months Ended
June 30 2017 2016 2017 2016 $ 64,777 $ 114,320 $ 65,309 $ 114,947 (21,733 ) (31,400 ) (21,971 ) (31,400 ) (8,445 ) (15,537 ) (8,739 ) (16,164 ) $ 34,599 $ 67,383 $ 34,599 $ 67,383 (a) Three and six months ended June 30, 2017 and 2016 include $20.0 million and $31.4 million, respectively, related to the settlement of certain repurchase claims. Three Months Ended
June 30 Six Months Ended June 30 (Dollars in thousands) 2018 2017 2018 2017 Legacy Mortgage Beginning balance $ 33,490 $ 64,777 $ 33,556 $ 65,309 Provision/(provision credit) for repurchase and foreclosure losses (252 ) (21,733 ) (324 ) (21,971 ) Net realized losses (1,015 ) (8,445 ) (1,009 ) (8,739 ) Balance on June 30 $ 32,223 $ 34,599 $ 32,223 $ 34,599 FHN’s FHA and VA program lending was substantial prior to the 2008 platform sale, and has continued at a much lower level since then. As lender, FHN made certain representations and warranties as to the compliance of the loans with program requirements. Over the past several years, most recently in first quarter 2015, FHN occasionally has recognized significant losses associated with settling claims and potential claims by government agencies, and by private parties asserting claims on behalf of agencies, related to these origination activities. 2017, FHN had not accrued a liability for any matter related to these government lending programs, and no pending or known threatened matter related to these programs represented a material loss contingency described in Note 10 – Contingencies and Other Disclosures.At June 30, 2017,2018, FHN had not accrued a liability for exposure for repurchase of first-lien loans related to FH proprietary securitizations arising from claims from the trustee that FHN breached its representations and warranties in FH proprietary securitizations at closing. FHN’s trustee is a defendant in lawsuits in which the plaintiffs have asserted that the trustee has duties to review loans and otherwise to act against loan originators and loan servicers, including FHN outside of the duties specified in the applicable trust documents; FHN is not a defendant and is not able to assess what, if any, exposure FHN may have as a result of them.assignees; and (iv) FHN is a defendant in legal actions involvingFHN-originated other whole loans sold.assignees. At June 30, 2017,2018, FHN’s repurchase and foreclosure liability included certain known exposures from other whole loans sold.Certain government entities have subpoenaed information from FHN and others. These entities include the FDIC (on behalf of certain failed banks) and the FHLBs of San Francisco, Atlanta, and Seattle, among others. These entities purport to act on behalf of several purchasers of FH proprietary securitizations, and ofnon-FH securitizations which included other whole loans sold. Collectively, the subpoenas seek information concerning: a number of FH proprietary securitizations and/or underlying loan originations; and originations of certain other whole loans sold which, in many cases, were included by the purchaser in its own securitizations. Some subpoenas fail to identify the specific investments made or loans at issue. Moreover, FHN has limited information regarding at least some of the loans under review. Unless and until a review (if related to specific loans) becomes an identifiable repurchase claim, the associated loans are not considered part of the active pipeline.are likely tocould continue to impact FHN’s quarterly results in ways which are both difficult to predict and unrelated to current operations.valuations; to date all which closed have been moderate in size. FHN has been and remains amenable to a much more impactful acquisition, including the recently announced acquisition of Capital Bank which will increase FHN’s proforma size to approximately $40 billion in assets.valuations. FHN remains committed to organic growth through customer retention, key hires, targeted incentives, and other traditional means.has beenfor many years was muted, compared to earlier recoveries, and somewhat inconsistent from one quarter to the next. Though the economic expansion is over 8 years old, currently the U.S. economy does not appear to be weakening or falling back into recession. Ingrowth by our customers.Thegrowth.point during each of the last three quarters and has signaledpoints, signaling a willingness to continue to raise rates in a measured fashion depending on economic data and trends. If the Fed continues to raise rates, FHN’s net interest margin in the future is likely to continue an improving trend. A steeperHowever, in many instances long-term rates have not risen as much or as quickly as short-term rates, resulting in a flatter yield curve should also bolster activity within FHN’s Fixed Incomeand adverse pressure on net interest margin and our fixed income business. However,Moreover, if future economic data shows a risk of lower growth or recession, interest rates may stall or even fall, which likely would adversely impact FHN’s net interest margin. Falling and/or moderately volatile interest rates, however, should enhance activity within FHN’s Fixed Income business. Also, if Fed actions cause long-term rates to rise slower than short-term rates, then the yield curve would flatten, which would adversely impact FHN’s net interest margin.corporate tax reform, general regulatory reform and financial regulatory reform, allboth of which can affect the overall economy and FHN customers.severalsome matters remain unresolved. The timing or financial impact of resolution of these matters, most of which are in litigation, cannot be predicted with accuracy. Accordingly, thenon-strategic segment is expected to occasionally and unexpectedly impact FHN’s overall quarterly results negatively or positively with reserve accruals or releases. Also, although new legacy matters of significance arise at a much slower pace than in years past and some formerly common legal claims no longer can be made due to the passage of time, potential for new legacy matters remains.All lenders are affected by the heightened regulation of servicing, foreclosure, and loss mitigation practices, at both federal and state levels, implemented since 2009. In addition, 6467 of Exhibit 13 to FHN’s Annual Report on Form10-K for the year ended December 31, 2016.25— 24—Non-GAAP to GAAP Reconciliation Three Months Ended
June 30 Six Months Ended
June 30 2017 2016 2017 2016 $ 2,778,169 $ 2,655,488 $ 2,750,571 $ 2,649,931 295,431 295,431 295,431 295,431 95,624 95,624 95,624 95,624 $ 2,387,114 $ 2,264,433 $ 2,359,516 $ 2,258,876 281,326 215,556 246,734 216,205 $ 2,105,788 $ 2,048,877 $ 2,112,782 $ 2,042,671 $ 364,206 $ 227,395 $ 292,040 $ 209,847 15.26 % 10.04 % 12.38 % 9.29 % 17.30 11.10 13.82 10.27 Three Months Ended
June 30 Six Months Ended
June 302018 2017 2018 2017 Average Tangible Common Equity (Non-GAAP) Average total equity (GAAP) $ 4,552,546 $ 2,778,169 $ 4,563,172 $ 2,750,571 Less: Average noncontrolling interest (a) 295,431 295,431 295,431 295,431 Less: Average preferred stock (a) 95,624 95,624 95,624 95,624 (A) Total average common equity $ 4,161,491 $ 2,387,114 $ 4,172,117 $ 2,359,516 Less: Average intangible assets (GAAP) (b) 1,569,449 281,326 1,568,743 246,734 (B) Average Tangible Common Equity (Non-GAAP) $ 2,592,042 $ 2,105,788 $ 2,603,374 $ 2,112,782 Net Income Available to Common Shareholders (C) Net income available to common shareholders (annualized) (GAAP) $ 327,257 $ 364,206 $ 347,282 $ 292,040 Ratios (C)/(A) Return on average common equity (“ROE”) (GAAP) (c) 7.86 % 15.26 % 8.32 % 12.38 % (C)/(B) Return on average tangible common equity (“ROTCE”) (Non-GAAP) (d) 12.63 17.30 13.34 13.82 (a)Included in Total equity on the Consolidated Condensed Statements of Condition.(b)Includes Goodwill and other intangible assets, net of amortization.(c)Ratio is annualized net income available to common shareholders to average common equity.(d)Ratio is annualized net income available to common shareholders to average tangible common equity.
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
| (a) | Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 2 of Part I of this report, including in particular the section entitled “Risk Management” beginning on page |
| (b) | Note 14 to the Consolidated Condensed Financial Statements appearing on pages |
| (a) | Evaluation of Disclosure Controls and Procedures. FHN’s management, with the participation of FHN’s chief executive officer and chief financial officer, has evaluated the effectiveness of FHN’s disclosure controls and procedures (as defined in Exchange Act Rule13a-15(e)) as of the end of the period covered by this quarterly report. Based on that evaluation, the chief executive officer and the chief financial officer have concluded that FHN’s disclosure controls and procedures were effective as of the end of the period covered by this report. |
| (b) | Changes in Internal Control over Financial Reporting. There have not been any changes in FHN’s internal control over financial reporting during FHN’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, FHN’s internal control over financial reporting. |
| Item 1 | Legal Proceedings |
| Item 1A | Risk Factors |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds |
| (a) | & (b) | Not Applicable | |||
| (c) | ||||
| Although technically not called for by this Item, the disclosure under the caption "Cancellation of Dissenters' Shares," appearing on page 102 of this report, also is incorporated into this Item by reference. | ||||
5
(a)Determination of Frequency of Advisory Vote on Executive Compensation
On April 25, 2017, FHN held its annual meeting of shareholders. Vote item #3 was an advisory proposal regarding the frequency of conducting an advisory vote on executive compensation at FHN’s annual meeting of shareholders. The choices were “every year,” “every two years,” and “every three years.” FHN’s Board of Directors recommended “every year.” As reported in FHN’s Current Report on Form8-K dated April 25, 2017, the “every year” choice received a substantial majority of the votes cast by FHN’s shareholders.
On July 25, 2017, the Board determined that an advisory vote on executive compensation will be conducted every year.
(b)Certain Changes in Director Nomination Process
None.
| Item 6. | Exhibits |
|
| ||
| Description | |||
| 3.1 | Restated Charter of | ||
| 3.2 | Bylaws of FHN, as amended and restated July 24, 2018, incorporated by reference to Exhibit 3.2 to FHN's Current Report on Form 8-K dated July 24, 2018. | ||
| 4 | FHN agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument defining the rights of the holders of the senior and subordinated long-term debt of FHN and its consolidated subsidiaries. | ||
| 31(a) | |||
| 31(b) | |||
| 32(a)** | |||
| 32(b)** | ||
| 101*** | The following financial information from First Horizon National Corporation’s Quarterly Report on Form10-Q for the quarter ended June 30, | |
| 101.INS*** | XBRL Instance Document | |
| 101.SCH*** | XBRL Taxonomy Extension Schema | |
| 101.CAL*** | XBRL Taxonomy Extension Calculation Linkbase | |
| 101.LAB*** | XBRL Taxonomy Extension Label Linkbase | |
| 101.PRE*** | XBRL Taxonomy Extension Presentation Linkbase | |
| 101.DEF*** | XBRL Taxonomy Extension Definition Linkbase |
| ||||||||
| Date: August 7, 2018 | By: | /s/ William C. Losch III | ||||||
| Name: | William C. Losch III | |||||||
| Title: | Executive Vice President and Chief Financial Officer | |||||||
| (Duly Authorized Officer and Principal Financial Officer) | ||||||||
Exhibits marked * represent management contracts or compensatory plans or arrangements required to be identified as such and filed as exhibits. Exhibits marked *R were filed previously in ASCII text format, and arere-filed with this report in html format.
Exhibits marked ** are “furnished” pursuant to 18 U.S.C. Section 1350 and are not “filed” as part of this Report or as a separate disclosure document.
Exhibits marked *** contain or consist of interactive data file information which is unaudited and unreviewed.
In many agreements filed as exhibits, each party makes representations and warranties to other parties. Those representations and warranties are made only to and for the benefit of those other parties in the context of a business contract. Such representations and warranties may be partially or fully waived by such parties, or not enforced by such parties, in their discretion. No such representation or warranty may be relied upon by any other person for any purpose.
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