Allowance for Loan Losses

The ALLL includes the following components: reserves for commercial loans evaluated based on pools of credit graded loans and reserves for pools of smaller-balance homogeneous consumer loans, both determined in accordance with ASC 450-20-50. The reserve factors applied to these pools are an estimate of probable incurred losses based on management’s evaluation of historical net losses from loans with similar characteristics and are subject to qualitative adjustments by management to reflect current events, trends, and conditions (including economic considerations and trends). The current economic conditions and trends, performance of the housing market, unemployment levels, labor participation rate, regulatory guidance, and both positive and negative portfolio segment-specific trends, are examples of additional factors considered by management in determining the ALLL. Additionally, management considers the inherent uncertainty of quantitative models that are driven by historical loss data. Management evaluates the periods of historical losses that are the basis for the loss rates used in the quantitative models and selects historical loss periods that are believed to be the most reflective of losses inherent in the loan portfolio as of the balance sheet date. Management also periodically reviews analysis of the loss emergence period which is the amount of time it takes for a loss to be confirmed (initial charge-off) after a loss event has occurred. FHN performs extensive studies as it relates to the historical loss periods used in the model and the loss emergence period and model assumptions are adjusted accordingly. The ALLL also includes reserves determined in accordance with ASC 310-10-35 for loans determined by management to be individually impaired and an allowance associated with PCI loans. See Note 1 – Summary of Significant Accounting Policies and Note 5 - Allowance for Loan Losses in the Notes to Consolidated Financial Statements on FHN’s Form 10-K for the year ended December 31, 2017, for additional information about the policies and methodologies used in the aforementioned components of the ALLL.

The following table provides a rollforward of the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2018 and 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