Via EDGAR
October 3, 2014
Mr. John P. Nolan
Senior Assistant Chief Accountant
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
| Re: | First Horizon National Corporation (“FHN” or “we”) |
Form 10-K for Fiscal Year Ended December 31, 2013 (“2013 Form 10-K”)
Filed February 27, 2014
Dear Mr. Nolan:
We are in receipt of the letter from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated September 23, 2014, to Mr. William C. Losch III, Executive Vice President and Chief Financial Officer, regarding the above-referenced filing. We appreciate the Staff’s careful review of our filing and look forward to working with the Staff to resolve the Staff’s comments. For your convenience, we have included the Staff’s comment below in boldface followed by our response. As the request pertains to disclosure in future filings, our response includes an illustrative example of the future proposed disclosure enhancement. In this particular case, the proposed tables are based on recent year-end quantitative data and will be updated in our Form 10-K Filing for the period ended December 31, 2014.
Form 10-K for Fiscal Year Ended December 31, 2013
Exhibit 13
Asset Quality – Trend Analysis of 2013 compared to 2012
Table 19, page 39
| 1. | Please expand your current disclosures in future filings to more clearly define and quantify the individual nonperforming loan components which you aggregate in this table. Additionally, in order to be fully compliant with Item III.C.1 of Guide III, please, separately present the aggregate amounts of loans in each of the following categories for the periods presented: |
(a) Loans accounted for on a nonaccrual basis;
(b) Accruing loans which are contractually past due 90 days or more as to principal or interest payments; and
(c) Loans not included in above which are “troubled debt restructurings”
In this regard, provide a note to the tabular presentation to state the amount of nonaccrual troubled debt restructurings included in (a) Loans accounted for on a nonaccrual basis if not otherwise apparent.
Mr. John P. Nolan
United States Securities and Exchange Commission
October 3, 2014
Page 2
Response:
In future Annual Reports on Form 10-K, FHN will revise the disclosure that was presented in Table 19, page 39 on the Form 10-K for the Fiscal Period Ended December 31, 2013.
In order to accommodate the requested disaggregation of FHN’s nonaccrual loans into portfolio components and other requested disclosures, we anticipate presenting the following tables in our Annual Report on Form 10-K for the period ended December 31, 2014. Please note that we have re-presented, for all periods within the proposed tables below, certain of the disclosures related to loans held-for-sale accounted for under the fair value option in order to incorporate the negative fair value adjustment presented in Table 17 – Nonperforming Loans that was also in our December 31, 2013 Form 10-K.
Nonaccrual/Nonperforming Loans, Foreclosed Assets, and Other Disclosures (a)
| December 31 | ||||||||||||||||||||
(Dollars in thousands) | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Consumer real estate | $ | 117,598 | $ | 64,445 | $ | 38,776 | $ | 35,451 | $ | 17,900 | ||||||||||
Permanent mortgage | 38,171 | 32,721 | 35,989 | 125,718 | 97,909 | |||||||||||||||
Credit card & other (b) | 1,397 | 1,698 | 2,141 | 19,276 | 189,846 | |||||||||||||||
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Total consumer | 157,166 | 98,864 | 76,906 | 180,445 | 305,655 | |||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial, financial, and industrial | 79,759 | 122,600 | 162,229 | 213,993 | 135,464 | |||||||||||||||
Commercial real estate | 18,101 | 45,570 | 114,965 | 252,467 | 458,311 | |||||||||||||||
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Total commercial | 97,860 | 168,170 | 277,194 | 466,460 | 593,775 | |||||||||||||||
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Total nonperforming loans (c) | 255,026 | 267,034 | 354,100 | 646,905 | 899,430 | |||||||||||||||
Nonperforming loans held-for-sale | 61,139 | 51,385 | 46,651 | 41,546 | 19,773 | |||||||||||||||
Foreclosed real estate and other assets | 45,753 | 41,767 | 68,885 | 110,536 | 113,709 | |||||||||||||||
Foreclosed real estate from GNMA loans | 25,809 | 18,923 | 16,360 | 14,865 | 11,481 | |||||||||||||||
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Total foreclosed real estate and other assets | 71,562 | 60,690 | 85,245 | 125,401 | 125,190 | |||||||||||||||
Total nonperforming assets (d) | $ | 361,918 | $ | 360,186 | $ | 469,636 | $ | 798,987 | $ | 1,032,912 | ||||||||||
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Troubled debt restructurings (e): | ||||||||||||||||||||
Accruing restructured loans | $ | 246,894 | $ | 243,884 | $ | 206,210 | $ | 144,252 | $ | 36,714 | ||||||||||
Nonaccruing restructured loans (f) | 105,409 | 114,138 | 72,798 | 116,191 | 36,093 | |||||||||||||||
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Total troubled debt restructurings (e) | $ | 352,303 | $ | 358,022 | $ | 279,008 | $ | 260,443 | $ | 72,807 | ||||||||||
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Ratios: | ||||||||||||||||||||
Allowance to nonperforming loans in the loan portfolio | 1.00 | x | 1.04 | x | 1.09 | x | 1.03 | x | 1.00 | x | ||||||||||
NPL % (g) | 1.66 | % | 1.60 | % | 2.16 | % | 3.85 | % | 4.96 | % | ||||||||||
NPA% (h) | 1.95 | % | 1.84 | % | 2.57 | % | 4.48 | % | 5.56 | % | ||||||||||
Certain previously reported amounts have been re-presented to be consistent with current presentation.
| (a) | Balances do not include PCI loans even though the customer may be contractually past due. PCI loans were recorded at fair value upon acquisition and accrete interest income over the remaining life of the loan. |
| (b) | Nonperforming loans in this category are primarily One-time-close construction loans. |
| (c) | FHN estimates interest income that would have been earned during 2013 was approximately $14 million if the loans had performed in accordance with their original terms. |
| (d) | Balances do not include PCI loans or government-insured foreclosed real estate. |
| (e) | Excludes TDRs that are classified as held-for-sale nearly all of which are accounted for under the fair value option. |
| (f) | Amounts also included in nonperforming loans above. |
| (g) | Nonperforming loans in the loan portfolio to total period end loans. |
| (h) | Nonperforming assets related to the loan portfolio to total loans plus foreclosed assets exclusive of government-insured foreclosed real estate. |
Mr. John P. Nolan
United States Securities and Exchange Commission
October 3, 2014
Page 3
Accruing Delinquencies and Other Credit Disclosures
| December 31 | ||||||||||||||||||||
(Dollars in thousands) | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||
Loans past due 90 days or more and still accruing (a): | ||||||||||||||||||||
Consumer: | ||||||||||||||||||||
Consumer real estate | $ | 21,484 | $ | 30,403 | $ | 37,625 | $ | 47,937 | $ | 66,074 | ||||||||||
Permanent mortgage | 6,129 | 9,592 | 12,415 | 29,367 | 59,986 | |||||||||||||||
Credit card & other | 1,763 | 1,833 | 1,502 | 1,758 | 4,604 | |||||||||||||||
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Total consumer | 29,376 | 41,828 | 51,542 | 79,062 | 130,664 | |||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial, financial, and industrial | 1,810 | 422 | 234 | 182 | 2,856 | |||||||||||||||
Commercial real estate | 1,078 | — | — | — | 4,303 | |||||||||||||||
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Total commercial | 2,888 | 422 | 234 | 182 | 7,159 | |||||||||||||||
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Total loans past due 90 days or more and still accruing (a) | $ | 32,264 | $ | 42,250 | $ | 51,776 | $ | 79,244 | $ | 137,823 | ||||||||||
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Loans 30 to 89 days past due | $ | 70,298 | $ | 80,893 | $ | 110,813 | $ | 173,233 | $ | 291,021 | ||||||||||
Loans 30 to 89 days past due — guaranteed (b) | 187 | 47 | 67 | 3,801 | 76 | |||||||||||||||
Loans held-for-sale 30 to 89 days past due | 14,538 | 15,333 | 7,591 | 8,646 | 17,524 | |||||||||||||||
Loans held-for-sale 30 to 89 days past due — guaranteed portion (b) | 11,660 | 12,986 | 6,108 | 3,490 | 17,524 | |||||||||||||||
Loans held-for-sale 90 days past due | 37,599 | 34,002 | 42,308 | 33,409 | 35,781 | |||||||||||||||
Loans held-for-sale 90 days past due — guaranteed portion (b) | 35,118 | 31,699 | 36,299 | 26,790 | 32,159 | |||||||||||||||
Potential problem assets (c) | $ | 343,359 | $ | 496,308 | $ | 729,421 | $ | 1,144,185 | $ | 1,382,698 | ||||||||||
Certain previously reported amounts have been re-presented to be consistent with current presentation.
| (a) | Excludes loans classified as held-for-sale. |
| (b) | Guaranteed loans include FHA, VA, and GNMA loans repurchased through the GNMA buyout program. |
| (c) | Includes past due loans. |
The proposed tables above, which disaggregate nonperforming loans and provide other requested disclosures, should be read in conjunction with similar disaggregated disclosures in other tables in our Form 10-K as of the most recent three and/or two years ended December 31. This includes for example, Table 15 – Asset Quality by Portfolio which provides the percentage that nonperforming loans comprise of each portfolio segment for the most recent 3 years; Table 20 – Troubled Debt Restructurings which disaggregates TDRs by portfolio segment and performance status; and the accrual/nonaccrual aging table within Note 4 – Loans which provides an aging schedule for both performing and nonperforming loans by portfolio class as of the most recent 2 years.
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First Horizon National Corporation acknowledges that it is responsible for the adequacy and accuracy of the disclosure in the filing, that Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing, and that it may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
We hope our response adequately addresses the comment raised in your letter. Any questions with respect to the foregoing should be directed to the undersigned at (901)257-6223.
Sincerely,
/s/ Jeff L. Fleming
Jeff L. Fleming
Executive Vice President and Chief Accounting Officer
