Loans | Note 4 – Loans The following table provides the balance of loans by portfolio segment as of June 30, 2015 and 2014, and December, 31 2014: June 30 December 31 (Dollars in thousands) 2015 2014 2014 Commercial: Commercial, financial, and industrial $ 9,832,563 $ 8,402,836 $ 9,007,286 Commercial real estate 1,400,715 1,231,513 1,277,717 Retail: Consumer real estate (a) 4,870,271 5,218,930 5,048,071 Permanent mortgage 487,679 594,001 538,961 Credit card & other 345,544 348,429 358,131 Loans, net of unearned income $ 16,936,772 $ 15,795,709 $ 16,230,166 Allowance for loan losses 221,351 243,628 232,448 Total net loans $ 16,715,421 $ 15,552,081 $ 15,997,718 (a) Balances as of June 30, 2015 and 2014, and December 31, 2014 include $ 66 .4 million, $ 84.4 million, and $ 76.8 million of restricted real estate loans, respectively. See Note 13 - Variable Interest Entities for additional information. C OMPONENTS OF THE LOAN PORTFOLIO T he loan portfolio is disaggregated into segments and then further disaggregated into classes for certain disclosures. GAAP defines a portfolio segment as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. A class is generally determined based on the initial measurement attribute (i.e., amortized cost or purchased credit - impaired), risk characteristics of the loan, and FHN ’s method for monitoring and as sessing credit risk. Commercial loan portfolio segments include commercial, financial and industrial (" C&I ") and commercial real estate (" CRE ") . Commercial classes within C&I include general C&I, loans to mortgage companies, the trust preferred loans (" TRU P S") (i.e. long-term unsecured loans to bank and insurance - related businesses) portfolio and PCI loans . Loans to mortgage companies includes commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mo rtgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Commercial classes within CRE include income CRE , residential CRE and PCI loans . Retail loan portfolio segments include consumer real estate, permanent mortgage, an d the credit card and other portfolio. Retail classes include HELOC , real estate (" R/E ") installment and PCI loans within the consumer real estate segment, permanent mortgage (which is both a segment and a class), and credit card and other. Concentrations FHN has a concentration of residential real estate loans ( 32 percent of total loans), the majority of which is in the consumer real estate segment ( 29 percent of total loans). Loans to finance and insurance companies total $ 2. 1 billion ( 2 1 percent of the C&I portfolio , or 12 percent of the total loans). F HN had loans to mortgage companies totaling $1.8 billion ( 18 percent of the C&I segment, or 11 percent of total loans) as of June 30 , 2015 . As a result, 39 percent of the C&I segment was sensiti ve to impacts on the financial services industry. Purchased Credit Impaired Loans The following table presents a rollforward of the accretable yield for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended June 30 June 30 (Dollars in thousands) 2015 2014 2015 2014 Balance, beginning of period $ 10,468 $ 15,828 $ 14,714 $ 13,490 Additions - 224 - 335 Accretion (1,576) (1,927) (4,948) (3,584) Adjustment for payoffs (760) (489) (2,096) (722) Adjustment for charge-offs - (5) - (69) Increase in accretable yield (a) 216 2,878 678 7,059 Balance, end of period $ 8,348 $ 16,509 $ 8,348 $ 16,509 Includes changes in the accretable yield due to both transfers from the nonaccretable difference and the impact of changes in the expected timing of the cash flows. At June 30, 2015, the ALLL related to PCI loans was $2.8 million compared to $2.5 million at June 30, 2014. A loan loss provision credit of $.3 million was recognized during the three months ended June 30, 2015 as compared to a loan loss provision expense of $.6 million recognized during the three months ended June 30, 2014. A loan loss provision credit of $.6 million was recognized during the six months ended June 30, 2015 as compared to a loan loss provision expense of $1.7 million recognized during the six months ended June 30, 2014. The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI loans as of June 30, 2015 and 2014, and December 31, 2014: June 30, 2015 June 30, 2014 December 31, 2014 (Dollars in thousands) Carrying value Unpaid balance Carrying value Unpaid balance Carrying value Unpaid balance Commercial, financial and industrial $ 4,870 $ 5,507 $ 6,738 $ 8,256 $ 5,044 $ 5,813 Commercial real estate 20,262 24,830 32,938 45,295 32,553 43,246 Consumer real estate 1,927 2,796 733 1,074 598 868 Credit card and other 9 11 11 16 10 14 Total $ 27,068 $ 33,144 $ 40,420 $ 54,641 $ 38,205 $ 49,941 Impaired Loans The following tables provide information at June 30, 2015 and 2014, by class related to individually impaired loans and consumer TDR's. Recorded investment is defined as the amount of the investment in a loan, before valuation allowance but which does reflect any direct write-down of the investment. For purposes of this disclosure, PCI loans and LOCOM have been excluded. June 30, 2015 Three Months Ended Six Months Ended June 30, 2015 June 30, 2015 Unpaid Average Interest Average Interest Recorded Principal Related Recorded Income Recorded Income (Dollars in thousands) Investment Balance Allowance Investment Recognized Investment Recognized Impaired loans with no related allowance recorded: Commercial: General C&I $ 12,402 $ 15,690 $ - $ 13,016 $ - $ 12,305 $ - Income CRE 4,187 11,262 - 4,198 - 5,283 - Residential CRE - - - - - 287 - Total $ 16,589 $ 26,952 $ - $ 17,214 $ - $ 17,875 $ - Retail: HELOC (a) $ 12,577 $ 30,604 $ - $ 12,588 $ - $ 12,788 $ - R/E installment loans (a) 4,959 6,211 - 4,739 - 4,704 - Permanent mortgage (a) 6,403 8,603 - 6,804 - 7,018 - Total $ 23,939 $ 45,418 $ - $ 24,131 $ - $ 24,510 $ - Impaired loans with related allowance recorded: Commercial: General C&I $ 30,549 $ 37,741 $ 8,117 $ 28,400 $ 237 $ 24,087 $ 490 TRUPS 13,399 13,700 4,810 13,414 - 13,429 - Income CRE 6,788 8,298 533 6,742 33 7,140 63 Residential CRE 1,518 1,886 102 1,571 6 1,534 13 Total $ 52,254 $ 61,625 $ 13,562 $ 50,127 $ 276 $ 46,190 $ 566 Retail: HELOC $ 87,292 $ 89,454 $ 21,967 $ 86,197 $ 461 $ 85,417 $ 909 R/E installment loans 67,269 68,151 19,439 68,330 331 69,227 658 Permanent mortgage 100,754 113,290 17,857 102,194 637 103,555 1,228 Credit card & other 418 418 155 451 4 479 8 Total $ 255,733 $ 271,313 $ 59,418 $ 257,172 $ 1,433 $ 258,678 $ 2,803 Total commercial $ 68,843 $ 88,577 $ 13,562 $ 67,341 $ 276 $ 64,065 $ 566 Total retail $ 279,672 $ 316,731 $ 59,418 $ 281,303 $ 1,433 $ 283,188 $ 2,803 Total impaired loans $ 348,515 $ 405,308 $ 72,980 $ 348,644 $ 1,709 $ 347,253 $ 3,369 All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance. June 30, 2014 Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 Unpaid Average Interest Average Interest Recorded Principal Related Recorded Income Recorded Income (Dollars in thousands) Investment Balance Allowance Investment Recognized Investment Recognized Impaired loans with no related allowance recorded: Commercial: General C&I $ 15,489 $ 17,280 $ - $ 14,809 $ - $ 17,594 $ - TRUPS - - - - - 1,625 - Income CRE 6,838 14,397 - 7,669 - 8,090 - Residential CRE 1,148 1,827 - 574 - 287 - Total $ 23,475 $ 33,504 $ - $ 23,052 $ - $ 27,596 $ - Retail: HELOC (a) $ 17,390 $ 38,216 $ - $ 16,771 $ - $ 16,629 $ - R/E installment loans (a) 7,464 10,009 - 8,932 - 9,818 - Permanent mortgage (a) 7,862 9,785 - 7,858 - 8,007 - Total $ 32,716 $ 58,010 $ - $ 33,561 $ - $ 34,454 $ - Impaired loans with related allowance recorded: Commercial: General C&I $ 32,395 $ 38,331 $ 3,150 $ 30,059 $ 78 $ 26,146 $ 157 TRUPS 3,520 3,700 925 8,535 - 16,057 - Income CRE 8,842 10,214 641 10,331 62 11,214 164 Residential CRE 6,029 11,477 667 6,204 61 6,426 124 Total $ 50,786 $ 63,722 $ 5,383 $ 55,129 $ 201 $ 59,843 $ 445 Retail: HELOC $ 77,283 $ 78,492 $ 17,475 $ 75,285 $ 457 $ 73,539 $ 891 R/E installment loans 74,748 75,634 26,450 74,243 297 73,629 566 Permanent mortgage 111,604 125,012 19,323 112,796 706 113,145 1,429 Credit card & other 524 524 266 648 5 653 16 Total $ 264,159 $ 279,662 $ 63,514 $ 262,972 $ 1,465 $ 260,966 $ 2,902 Total commercial $ 74,261 $ 97,226 $ 5,383 $ 78,181 $ 201 $ 87,439 $ 445 Total retail $ 296,875 $ 337,672 $ 63,514 $ 296,533 $ 1,465 $ 295,420 $ 2,902 Total impaired loans $ 371,136 $ 434,898 $ 68,897 $ 374,714 $ 1,666 $ 382,859 $ 3,347 All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance. Asset Quality Indicators FHN employs a dual grade commercial risk grading methodology to assign an estimate for the probability of default (" PD ") and the loss given default (" LGD ") for each commercial loan using factors specific to various industry, portfolio, or product segments that result in a rank ordering of risk and the assignment of grades PD 1 to PD 16. Each PD grade correspon ds to an estimated one-year default probability percentage; a PD 1 has the lowest expected default probability, and probabilities increase as grades progress down the scale. PD 1 through PD 12 are “pass” grades. P D grades 13-16 correspond to the regulatory -defined categories of special mention (13), substandard (14), doubtful (15), and loss ( 16 ). Pass loan grades are required to be reassessed annually or earlier whenever there has been a material change in the financial condition of the borrower or risk cha racteristics of the relationship. All commercial loans over $ 1 million and certain commercial loans over $ 500,000 that are graded 13 or worse are reassessed on a quarterly basis. LGD grades are assigned based on a scale of 1 - 12 and represent FHN’s expected recovery based on collateral type in the event a loan defaults . See Note 5 - Allowance for Loan Losses for further discussion on the credit grading system. The following tables provide the balances of commercial loan portfolio classes with associated allowance, disaggregated by PD grade as of June 30, 2015 and 2014. June 30, 2015 Loans to Allowance General Mortgage Income Residential Percentage for Loan (Dollars in thousands) C&I Companies TRUPS (a) CRE CRE Total of Total Losses PD Grade: 1 $ 495,855 $ - $ - $ 554 $ - $ 496,409 4 % $ 126 2 590,328 - - 11,602 41 601,971 5 332 3 484,072 317,856 - 84,178 181 886,287 8 350 4 670,972 366,791 - 96,689 54 1,134,506 10 868 5 1,135,773 304,500 - 213,213 5,288 1,658,774 15 6,372 6 1,223,233 618,616 - 267,983 4,499 2,114,331 20 10,234 7 1,186,480 139,217 - 365,840 2,844 1,694,381 15 13,203 8 749,504 28,068 - 163,904 272 941,748 8 13,942 9 419,687 24,617 - 43,752 383 488,439 4 7,900 10 222,799 - - 27,840 202 250,841 2 5,147 11 179,139 - - 24,010 1,071 204,220 2 5,438 12 76,209 - - 17,884 543 94,636 1 2,704 13 122,862 - 305,382 3,633 287 432,164 4 4,944 14,15,16 109,820 - - 27,045 2,054 138,919 1 12,829 Collectively evaluated for impairment 7,666,733 1,799,665 305,382 1,348,127 17,719 11,137,626 99 84,389 Individually evaluated for impairment 42,951 - 12,785 10,975 1,518 68,229 1 13,562 Purchased credit-impaired loans 5,047 - - 20,612 1,764 27,423 - 2,291 Total commercial loans $ 7,714,731 $ 1,799,665 $ 318,167 $ 1,379,714 $ 21,001 $ 11,233,278 100 % $ 100,242 June 30, 2014 Loans to Allowance General Mortgage Income Residential Percent of for Loan (Dollars in thousands) C&I Companies TRUPS (a) CRE CRE Total Total Losses PD Grade: 1 $ 366,235 $ - $ - $ - $ - $ 366,235 4 % $ - 2 260,581 - - 3,110 235 263,926 3 245 3 360,700 76,569 - 983 - 438,252 5 307 4 387,884 77,110 - 7,591 - 472,585 5 746 5 760,726 62,031 - 158,071 6,041 986,869 10 2,579 6 991,013 199,651 - 189,927 4,738 1,385,329 14 1,674 7 1,189,915 182,749 - 285,384 6,087 1,664,135 17 2,696 8 771,697 301,174 - 227,419 53 1,300,343 13 2,739 9 686,657 123,423 - 108,523 5,911 924,514 10 5,896 10 375,862 77,058 - 40,228 1,563 494,711 5 5,379 11 361,870 1,517 - 26,275 2,128 391,790 4 8,397 12 136,560 - - 32,356 994 169,910 2 1,857 13 120,903 - 325,882 8,938 2,007 457,730 5 6,435 14,15,16 137,500 - 9,385 49,842 4,944 201,671 2 37,666 Collectively evaluated for impairment 6,908,103 1,101,282 335,267 1,138,647 34,701 9,518,000 99 76,616 Individually evaluated for impairment 47,884 - 3,520 15,680 7,177 74,261 1 5,383 Purchase credit-impaired loans 6,780 - - 33,351 1,957 42,088 - 2,413 Total commercial loans $ 6,962,767 $ 1,101,282 $ 338,787 $ 1,187,678 $ 43,835 $ 9,634,349 100 % $ 84,412 Balances as of June 30 , 2015 and 2014 , each presented net of $ 26.2 million in lower of cost or market (“LOCOM”) valuation allowance. Based on the underlying structure of the notes, the highest possible internal grade is " 13 ". The retail portfolio is comprised primarily of smaller-balance loans which are very similar in nature in that most are standard products and are backed by residential real estate. Because of the similarities of retail loan-types, FHN is able to utilize the Fair Isaac Corporati on (“FICO”) score, among other attributes, to assess the credit quality of consumer borrowers. FICO scores are refreshed on a quarterly basis in an attempt to reflect the recent risk profile of the borrowers. Accruing delinquency amounts are indicators of asset quality within the credit card and other retail portfolio. The following tables reflect period end balances and average FICO scores by origination vintage for the HELOC, real estate installment, and permanent mortgage classes of loans as of June 30, 2015 and 2014: HELOC June 30, 2015 June 30, 2014 Average Average Average Average (Dollars in thousands) Period End Origination Refreshed Period End Origination Refreshed Origination Vintage Balance FICO FICO Balance FICO FICO pre-2003 $ 46,789 708 703 $ 68,332 708 703 2003 86,928 720 709 120,962 723 710 2004 236,022 723 708 346,431 725 713 2005 382,946 730 718 500,404 732 722 2006 306,652 739 727 365,886 740 728 2007 327,360 744 729 384,391 743 729 2008 183,224 753 748 208,637 753 748 2009 92,774 752 744 110,934 751 745 2010 88,337 754 747 106,954 753 750 2011 86,584 758 751 105,295 759 755 2012 107,715 760 757 128,733 759 759 2013 136,449 757 757 167,149 760 760 2014 120,544 761 763 51,982 760 762 2015 60,176 764 763 - - - Total $ 2,262,500 742 732 $ 2,666,090 741 732 R/E Installment Loans June 30, 2015 June 30, 2014 Average Average Average Average (Dollars in thousands) Period End Origination Refreshed Period End Origination Refreshed Origination Vintage Balance FICO FICO Balance FICO FICO pre-2003 $ 10,180 678 686 $ 18,623 680 683 2003 39,996 713 722 62,823 713 724 2004 34,944 698 697 47,502 700 699 2005 106,185 715 711 141,545 716 712 2006 116,730 712 704 156,538 714 702 2007 175,807 722 708 224,425 724 709 2008 56,222 719 712 74,106 721 714 2009 24,999 736 727 33,506 739 732 2010 82,230 750 760 113,437 748 754 2011 254,298 760 759 309,172 760 759 2012 562,078 764 765 653,179 764 765 2013 443,257 755 757 497,720 757 756 2014 439,744 756 755 220,264 756 754 2015 261,101 757 756 - - - Total $ 2,607,771 749 748 $ 2,552,840 747 744 Permanent Mortgage June 30, 2015 June 30, 2014 Average Average Average Average (Dollars in thousands) Period End Origination Refreshed Period End Origination Refreshed Origination Vintage Balance FICO FICO Balance FICO FICO pre-2004 $ 126,365 722 717 $ 169,338 724 720 2004 14,586 712 711 19,378 713 714 2005 32,187 736 734 37,572 737 737 2006 56,378 732 734 68,693 730 721 2007 176,298 733 717 207,116 733 712 2008 81,865 741 710 91,904 741 704 Total $ 487,679 730 717 $ 594,001 729 713 Nonaccrual and Past Due Loans The following table reflects accruing and non-accruing loans by class on June 30, 2015: Accruing Non-Accruing 30-89 90+ 30-89 90+ Total Days Days Total Days Days Non- Total (Dollars in thousands) Current Past Due Past Due Accruing Current Past Due Past Due Accruing Loans Commercial (C&I): General C&I $ 7,673,986 $ 4,830 $ 199 $ 7,679,015 $ 13,781 $ 2,536 $ 14,352 $ 30,669 $ 7,709,684 Loans to mortgage companies 1,797,877 1,669 - 1,799,546 - - 119 119 1,799,665 TRUPS (a) 305,382 - - 305,382 - - 12,785 12,785 318,167 Purchased credit-impaired loans 4,153 201 693 5,047 - - - - 5,047 Total commercial (C&I) 9,781,398 6,700 892 9,788,990 13,781 2,536 27,256 43,573 9,832,563 Commercial real estate: Income CRE 1,344,440 2,916 - 1,347,356 1,285 2,041 8,420 11,746 1,359,102 Residential CRE 19,114 123 - 19,237 - - - - 19,237 Purchased credit-impaired loans 22,238 - 138 22,376 - - - - 22,376 Total commercial real estate 1,385,792 3,039 138 1,388,969 1,285 2,041 8,420 11,746 1,400,715 Consumer real estate: HELOC 2,150,344 22,240 9,785 2,182,369 65,345 5,243 9,543 80,131 2,262,500 R/E installment loans 2,557,513 9,172 4,272 2,570,957 27,294 1,873 5,227 34,394 2,605,351 Purchased credit-impaired loans 2,012 4 404 2,420 - - - - 2,420 Total consumer real estate 4,709,869 31,416 14,461 4,755,746 92,639 7,116 14,770 114,525 4,870,271 Permanent mortgage 444,187 5,450 5,569 455,206 15,495 1,981 14,997 32,473 487,679 Credit card & other Credit card 182,477 1,446 1,284 185,207 - - - - 185,207 Other 158,530 873 177 159,580 - - 749 749 160,329 Purchased credit-impaired loans 8 - - 8 - - - - 8 Total credit card & other 341,015 2,319 1,461 344,795 - - 749 749 345,544 Total loans, net of unearned $ 16,662,261 $ 48,924 $ 22,521 $ 16,733,706 $ 123,200 $ 13,674 $ 66,192 $ 203,066 $ 16,936,772 Total TRUPS i nclude s LOCOM valuation allowance of $26.2 million. The following table reflects accruing and non-accruing loans by class on June 30, 2014: Accruing Non-Accruing 30-89 90+ 30-89 90+ Total Days Days Total Days Days Non- Total (Dollars in thousands) Current Past Due Past Due Accruing Current Past Due Past Due Accruing Loans Commercial (C&I): General C&I $ 6,900,880 $ 9,707 $ 704 $ 6,911,291 $ 13,105 $ 3,850 $ 27,741 $ 44,696 $ 6,955,987 Loans to mortgage companies 1,097,367 3,782 - 1,101,149 - - 133 133 1,101,282 TRUPS (a) 335,267 - - 335,267 - - 3,520 3,520 338,787 Purchased credit-impaired loans 5,226 322 1,232 6,780 - - - - 6,780 Total commercial (C&I) 8,338,740 13,811 1,936 8,354,487 13,105 3,850 31,394 48,349 8,402,836 Commercial real estate: Income CRE 1,134,752 8,044 - 1,142,796 271 133 11,127 11,531 1,154,327 Residential CRE 39,429 - - 39,429 1,297 - 1,152 2,449 41,878 Purchased credit-impaired loans 29,827 259 5,222 35,308 - - - - 35,308 Total commercial real estate 1,204,008 8,303 5,222 1,217,533 1,568 133 12,279 13,980 1,231,513 Consumer real estate: HELOC 2,548,170 19,772 9,677 2,577,619 71,653 5,888 10,930 88,471 2,666,090 R/E installment loans 2,490,461 11,264 7,889 2,509,614 32,881 3,002 6,568 42,451 2,552,065 Purchased credit-impaired loans 775 - - 775 - - - - 775 Total consumer real estate 5,039,406 31,036 17,566 5,088,008 104,534 8,890 17,498 130,922 5,218,930 Permanent mortgage 546,846 5,559 4,573 556,978 16,935 3,410 16,678 37,023 594,001 Credit card & other Credit card 184,014 2,010 1,564 187,588 - - - - 187,588 Other 158,233 937 317 159,487 - - 1,342 1,342 160,829 Purchased credit-impaired loans 12 - - 12 - - - - 12 Total credit card & other 342,259 2,947 1,881 347,087 - - 1,342 1,342 348,429 Total loans, net of unearned $ 15,471,259 $ 61,656 $ 31,178 $ 15,564,093 $ 136,142 $ 16,283 $ 79,191 $ 231,616 $ 15,795,709 Total TRUPS i nclu des LOCOM valuation allowance of $ 26.2 million. Troubled Debt Restructurings As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Each occurrence is unique to the borrower and is evaluated separately. FHN considers regulatory guidelines when restructuring loans to ensure that prudent le nding practices are followed. As such, qualification criteria and payment terms consider the borrower’s current and prospective ability to comply with the modified terms of the loan. A modification is classified as a TDR if the borrower is experiencing fin ancial difficulty and it is determined that FHN has granted a concession to the borrower. FHN may determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrowe r may default in the foreseeable future. Many aspects of a borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty, particularly as it relates to commercial borrowers due to the complex nature of loan structures, business/industry risk , and borrower/guarantor structures. Concessions could include extension of the maturity date, reductions of the interest rate (which may make the rate lower than current market for a new loan with similar risk ) , reductio n or forgiveness of accrued interest, or principal forgiveness. When evaluating whether a concession has been granted, FHN also considers whether the borrower has provided additional collateral or guarantors , among other things, and whether such additions adequately compensate FHN for the restructured terms. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty and whether a concession has been granted is subjective in nature and management’s judgment is req uired when determining whether a modification is classified as a TDR. For all classes within the commercial portfolio segment, TDRs are typically modified through forbearance agreements (generally 6 to 12 months). Forbearance agreements could include reduc ed interest rates, reduced payments, release of guarantor, or entering into short sale agreements. FHN’s proprietary modification programs for consumer loans are generally structured using parameters of U.S. government-sponsored programs such as Home Affor dable Modification Program (“HAMP”). Within the HELOC and R/E installment loans classes of the consumer portfolio segment, TDRs are typically modified by reducing the interest rate (in increments of 25 basis points to a minimum of 1 percent for up to 5 yea rs) and a possible maturity date extension to reach an affordable housing debt ratio. Permanent mortgage TDRs are typically modified by reducing the interest rate (in increments of 25 basis points to a minimum of 2 percent for up to 5 years) and a possible maturity date extension to reach an affordable housing debt ratio. After 5 years the interest rate steps up 1 percent every year thereafter until it reaches the Federal Home Loan Mortgage Corporation Weekly Survey Rate cap. Contractual maturities may be extended to 40 years on permanent mortgages and to 30 years for consumer real estate loans. Within the credit card class of the consumer portfolio segment, TDRs are typically modified through either a short-term credit card hardship program or a longer-ter m credit card workout program. In the credit card hardship program, borrowers may be granted rate and payment reductions for 6 months to 1 year. In the credit card workout program, customers are granted a rate reduction to 0 percent and term extensions for up to 5 years to pay off the remaining balance. Despite the absence of a loan modification, the discharge of personal liability through bankruptcy proceedings is considered a concession . As a result, FHN classifie s all non-reaffirmed residential real es tate loans discharged in Chapter 7 bankruptcy as nonaccruing TDRs . On June 30 , 2015 and 2014 , FHN had $ 310.6 million and $ 350.9 million portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $ 61.0 million and $ 6 5.8 million, or 20 percent as of June 30 , 2015 , and 19 percent as of June 30 , 2014 . Additionally, $ 80.8 m illion and $ 139.5 million of loans held-for-sale as of June 30 , 2015 and 2014 , respectively were classified as TDRs. The following tables reflect portfolio loans that were classified as TDRs during the three and six months ended June 30, 2015 and 2014: Three Months Ended June 30, 2015 Six Months Ended June 30, 2015 Pre-Modification Post-Modification Pre-Modification Post-Modification Outstanding Outstanding Outstanding Outstanding (Dollars in thousands) Number Recorded Investment Recorded Investment Number Recorded Investment Recorded Investment Commercial (C&I): General C&I - $ - $ - 2 $ 1,388 $ 1,325 Total commercial (C&I) - - - 2 1,388 1,325 Consumer real estate: HELOC 65 7,237 7,147 102 10,964 10,854 R/E installment loans 22 1,912 1,916 38 3,266 3,293 Total consumer real estate 87 9,149 9,063 140 14,230 14,147 Permanent mortgage 4 1,718 1,733 6 2,039 2,054 Credit card & other 6 20 19 12 48 46 Total troubled debt restructurings 97 $ 10,887 $ 10,815 160 $ 17,705 $ 17,572 Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Pre-Modification Post-Modification Pre-Modification Post-Modification Outstanding Outstanding Outstanding Outstanding (Dollars in thousands) Number Recorded Investment Recorded Investment Number Recorded Investment Recorded Investment Commercial (C&I): General C&I 2 $ 736 $ 522 2 $ 736 $ 522 Total commercial (C&I) 2 736 522 2 736 522 Commercial real estate: Income CRE 2 421 421 2 421 421 Residential CRE 1 976 960 1 976 960 Total commercial real estate 3 1,397 1,381 3 1,397 1,381 Consumer real estate: HELOC 97 8,279 8,557 164 14,069 14,325 R/E installment loans 45 3,132 3,093 117 8,275 8,195 Total consumer real estate 142 11,411 11,650 281 22,344 22,520 Permanent mortgage 12 2,082 2,080 24 6,675 6,167 Credit card & other 14 60 57 34 147 142 Total troubled debt restructurings 173 $ 15,686 $ 15,690 344 $ 31,299 $ 30,732 The following tables present TDRs which re-defaulted during the three and six months ended June 30, 2015 and 2014, and as to which the modification occurred 12 months or less prior to the re-default. Financing receivables that became classified as TDRs within the previous 12 months and for which there was a payment default during the period are calculated by first identifying TDRs that defaulted during the period and then determining whether they were modified within the 12 months prior to the default. For purposes of this disclosure, FHN generally defines payment default as 30 or more days past due. Three Months Ended Six Months Ended June 30, 2015 June 30, 2015 Recorded Recorded (Dollars in thousands) Number Investment Number Investment Commercial (C&I): General C&I - $ - - $ - Total commercial (C&I) - - - - Commercial real estate: Income CRE - - - - Residential CRE 1 896 1 896 Total commercial real estate 1 896 1 896 Consumer real estate: HELOC 6 278 7 308 R/E installment loans 1 26 2 112 Total consumer real estate 7 304 9 420 Permanent mortgage - - - - Credit card & other 2 5 3 8 Total troubled debt restructurings 10 $ 1,205 13 $ 1,324 Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 Recorded Recorded (Dollars in thousands) Number Investment Number Investment Commercial (C&I): General C&I - $ - 4 $ 512 Total commercial (C&I) - - 4 512 Commercial real estate: Income CRE - - 2 389 Residential CRE - - - - Total commercial real estate - - 2 389 Consumer real estate: HELOC 2 128 5 339 R/E installment loans 5 305 7 368 Total consumer real estate 7 433 12 707 Permanent mortgage 2 781 2 781 Credit card & other 2 4 2 4 Total troubled debt restructurings 11 $ 1,218 22 $ 2,393 The determination of whether a TDR is placed on nonaccrual status generally follows the same internal policies and procedures as other portfolio loans. However, FHN will typically place a consumer real estate loan on nonaccrual status if it is 30 or more days delinquent upon modification into a TDR. For commercial loans, a nonaccrual TDR that is reasonably assured of repayment according to its modified terms may be returned to accrual status by FHN upon a de tailed credit evaluation of the borrower’s financial condition and prospects for repayment under the revised terms. For consumer loans, FHN’s evaluation supporting the decision to return a modified loan to accrual status includes consideration of the borro wer’s sustained historical repayment performance for a reasonable period prior to the date on which the loan is returned to accrual status, which is generally a minimum of six months. FHN may also consider a borrower’s sustained historical repayment perfor mance for a reasonable time prior to the restructuring in assessing whether the borrower can meet the restructured terms, as it may indicate that the borrower is capable of servicing the level of debt under the modified terms. Otherwise, FHN will continue to classify a restructured loan as nonaccrual . Consistent with regulatory guidance, upon sustained performance and classification as a TDR over FHN’s year-end, the loan will be removed from TDR status as long as the modified terms were market-based at the t ime of modification. |