Loans

12 Months Ended

Dec. 31, 2014

Note 4 – Loans

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

			December 31
(Dollars in thousands)		2014		2013
Commercial:
	Commercial, financial, and industrial	$	9,007,286	$	7,923,576
	Commercial real estate		1,277,717		1,133,279
Retail:
	Consumer real estate (a)		5,048,071		5,333,371
	Permanent mortgage (b)		538,961		662,242
	Credit card & other		358,131		336,606
Loans, net of unearned income		$	16,230,166	$	15,389,074
Allowance for loan losses			232,448		253,809
Total net loans		$	15,997,718	$	15,135,265

Balances as of December 31, 2014 and 2013, include $76.8 million and $333.8 million of restricted and secured real estate loans, respectively. See Note 22 - Variable Interest Entities for additional information.
Balance as of December 31, 2013, includes $11.2 million of restricted and secured real estate loans. See Note 22 - Variable Interest Entities for additional information.

COMPONENTS OF THE LOAN PORTFOLIO

The loan portfolio is disaggregated into segments and then further disaggregated into classes for certain disclosures. GAAP defines a portfolio segment as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. A class is generally determined based on the initial measurement attribute (i.e., amortized cost or purchased credit-impaired), risk characteristics of the loan, and FHN’s method for monitoring and assessing credit risk. Commercial loan portfolio segments include commercial, financial and industrial ("C&I") and commercial real estate ("CRE"). Commercial classes within C&I include general C&I, loans to mortgage companies, the trust preferred loans ("TRUPS") (i.e. long-term unsecured loans to bank and insurance - related businesses) portfolio and PCI loans. Loans to mortgage companies includes commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Commercial classes within commercial real estate include income CRE, residential CRE and PCI loans. Retail loan portfolio segments include consumer real estate, permanent mortgage, and the credit card and other portfolio. Retail classes include HELOC, real estate ("R/E") installment and PCI loans within the consumer real estate segment, permanent mortgage (which is both a segment and a class), and credit card and other.

Concentrations

FHN has a concentration of residential real estate loans (34 percent of total loans), the majority of which is in the consumer real estate portfolio (31 percent of total loans). Loans to finance and insurance companies total $2.0 billion (22 percent of the C&I portfolio, or 12 percent of the total loans). FHN had loans to mortgage companies totaling $1.2 billion (13 percent of the C&I portfolio, or 7 percent of total loans) as of December 31, 2014. As a result, 35 percent of the C&I category was sensitive to impacts on the financial services industry.

Restrictions

On December 31, 2014, $6.1 billion of commercial loans were pledged to secure potential discount window borrowings from the Federal Reserve Bank. Additionally, as of December 31, 2014, FHN pledged all of its held-to-maturity first and second lien mortgages and HELOCs, excluding restricted real estate loans and secured borrowings, to secure potential borrowings from the FHLB-Cincinnati. Restricted and secured borrowings loans secure borrowings associated with both consolidated and nonconsolidated VIEs. See Note 22 – Variable Interest Entities for additional discussion.

Loan Sales

In third quarter 2014, FHN executed the sale of certain loans held-for-sale, see Note 25 – Fair Value of Assets & Liabilities for further detail.

Acquisition

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

The following table presents a rollforward of the accretable yield for the years ended December 31, 2014 and 2013:

		Years Ended
		December 31
(Dollars in thousands)		2014		2013
Balance, beginning of period	$	13,490	$	-
Additions		495		6,650
Accretion		(7,090)		(2,234)
Adjustment for payoffs		(1,575)		(104)
Adjustment for charge-offs		(79)		(4)
Increase in accretable yield (a)		9,473		9,182
Balance, end of period	$	14,714	$	13,490

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 December 31, 2014, the ALLL related to PCI loans was $3.2 million compared to $.8 million in 2013. Net charge-offs recognized during 2014 were $.1 million, compared to $.4 million in 2013. The loan loss provision incurred during 2014 and 2013 was $3.3 million and $1.2 million, respectively. The following table reflects the outstanding principal balance and carrying amounts of the PCI loans as of December 31, 2014 and 2013:

	December 31, 2014				December 31, 2013
(Dollars in thousands)	Carrying value		Unpaid balance		Carrying value		Unpaid balance
Commercial, financial and industrial	$	5,044	$	5,813	$	7,077	$	9,169
Commercial real estate		32,553		43,246		38,042		53,648
Consumer real estate		598		868		878		1,291
Credit card and other		10		14		12		21
Total	$	38,205	$	49,941	$	46,009	$	64,129

Impaired Loans

The following tables provide information at December 31, 2014 and 2013, by class related to individually impaired loans and consumer TDR's. Recorded investment is defined as the amount of the investment in a loan, before valuation allowance but which does reflect any direct write-down of the investment. For purposes of this disclosure, PCI loans and LOCOM have been excluded.

		2014
		2014
				Unpaid				Average		Interest
		Recorded		Principal		Related		Recorded		Income
(Dollars in thousands)		Investment		Balance		Allowance		Investment		Recognized
Impaired loans with no related allowance recorded:
Commercial:
	General C&I	$	9,558	$	10,851	$	-	$	15,826	$	-
	TRUPS		-		-		-		813		-
	Income CRE		8,528		16,242		-		7,671		-
	Residential CRE		1,148		1,827		-		718		-
	Total	$	19,234	$	28,920	$	-	$	25,028	$	-
Retail:
	HELOC (a)	$	13,379	$	32,471	$	-	$	15,670	$	-
	R/E installment loans (a)		4,819		6,247		-		7,855		-
	Permanent mortgage (a)		7,258		9,374		-		7,798		-
	Total	$	25,456	$	48,092	$	-	$	31,323	$	-
Impaired loans with related allowance recorded:
Commercial:
	General C&I	$	13,295	$	17,644	$	863	$	23,382	$	310
	TRUPS		13,460		13,700		4,310		13,524		-
	Income CRE		8,384		9,756		650		9,944		286
	Residential CRE		1,370		5,331		146		5,553		190
	Total	$	36,509	$	46,431	$	5,969	$	52,403	$	786
Retail:
	HELOC	$	84,169	$	86,252	$	18,942	$	77,306	$	1,799
	R/E installment loans		70,858		72,094		21,836		73,374		1,198
	Permanent mortgage		106,201		119,421		16,627		111,528		2,823
	Credit card & other		533		533		254		596		26
	Total	$	261,761	$	278,300	$	57,659	$	262,804	$	5,846
Total commercial		$	55,743	$	75,351	$	5,969	$	77,431	$	786
Total retail		$	287,217	$	326,392	$	57,659	$	294,127	$	5,846
Total impaired loans		$	342,960	$	401,743	$	63,628	$	371,558	$	6,632

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

		2013
		2013
				Unpaid				Average		Interest
		Recorded		Principal		Related		Recorded		Income
(Dollars in thousands)		Investment		Balance		Allowance		Investment		Recognized
Impaired loans with no related allowance recorded:
Commercial:
	General C&I	$	26,626	$	28,089	$	-	$	46,486	$	108
	TRUPS		6,500		6,500		-		9,563		-
	Income CRE		8,524		16,552		-		21,304		168
	Residential CRE		-		-		-		8,145		122
	Total	$	41,650	$	51,141	$	-	$	85,498	$	398
Retail:
	HELOC (a)	$	16,825	$	38,624	$	-	$	19,418	$	-
	R/E installment loans (a)		11,009		14,062		-		11,955		-
	Permanent mortgage (a)		8,460		11,943		-		8,835		-
	Total	$	36,294	$	64,629	$	-	$	40,208	$	-
Impaired loans with related allowance recorded:
Commercial:
	General C&I	$	16,741	$	23,016	$	1,548	$	18,291	$	185
	TRUPS		33,610		33,610		12,747		37,791		-
	Income CRE		12,374		14,094		810		5,725		201
	Residential CRE		6,914		12,249		790		3,148		153
	Total	$	69,639	$	82,969	$	15,895	$	64,955	$	539
Retail:
	HELOC	$	70,297	$	71,692	$	16,506	$	66,154	$	1,821
	R/E installment loans		72,291		73,230		27,667		72,408		1,340
	Permanent mortgage		112,998		125,666		17,042		112,356		2,990
	Credit card & other		545		545		224		698		29
	Total	$	256,131	$	271,133	$	61,439	$	251,616	$	6,180
Total commercial		$	111,289	$	134,110	$	15,895	$	150,453	$	937
Total retail		$	292,425	$	335,762	$	61,439	$	291,824	$	6,180
Total impaired loans		$	403,714	$	469,872	$	77,334	$	442,277	$	7,117

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

Asset Quality Indicators

FHN employs a dual grade commercial risk grading methodology to assign an estimate for the probability of default ("PD") and the loss given default ("LGD") for each commercial loan using factors specific to various industry, portfolio, or product segments that result in a rank ordering of risk and the assignment of grades PD 1 to PD 16. Each PD grade corresponds to an estimated one-year default probability percentage; a PD 1 has the lowest expected default probability, and probabilities increase as grades progress down the scale. PD 1 through PD 12 are “pass” grades. PD grades 13-16 correspond to the regulatory-defined categories of special mention (13), substandard (14), doubtful (15), and loss (16). Pass loan grades are required to be reassessed annually or earlier whenever there has been a material change in the financial condition of the borrower or risk characteristics of the relationship. All commercial loans over $1 million and certain commercial loans over $500,000 that are graded 13 or worse are reassessed on a quarterly basis. LGD grades are assigned based on a scale of 1-12 and represent FHN’s expected recovery based on collateral type in the event a loan defaults. See Note 5 - Allowance for Loan Losses for further discussion on the credit grading system.

The following tables provide the balances of commercial loan portfolio classes with associated allowance, disaggregated by PD grade as of December 31, 2014 and 2013.
	December 31, 2014
			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	$	450,465	$	-	$	-	$	136	$	60	$	450,661	4	%	$	70
2		434,945		-		-		1,344		236		436,525	4			130
3		566,364		134,230		-		73,812		230		774,636	8			201
4		589,341		202,287		-		45,084		232		836,944	8			408
5		821,012		247,058		-		216,628		3,835		1,288,533	13			2,372
6		1,162,551		314,671		-		175,007		5,218		1,657,447	16			5,286
7		1,325,968		157,410		-		224,226		6,669		1,714,273	17			8,517
8		699,334		42,730		-		200,463		7,664		950,191	9			9,307
9		531,979		58,997		-		117,782		834		709,592	7			8,901
10		244,574		5,635		-		38,253		739		289,201	3			4,806
11		287,940		-		-		31,712		938		320,590	3			6,887
12		117,431		-		-		29,453		1,038		147,922	1			4,622
13		87,840		-		325,882		6,116		1,166		421,004	4			3,590
14,15,16		157,868		-		-		29,579		4,204		191,651	2			21,411
Collectively evaluated for impairment		7,477,612		1,163,018		325,882		1,189,595		33,063		10,189,170	99			76,508
Individually evaluated for impairment		22,853		-		12,845		16,912		2,518		55,128	1			5,969
Purchased credit-impaired loans		5,076		-		-		33,914		1,715		40,705	-			3,108
Total commercial loans	$	7,505,541	$	1,163,018	$	338,727	$	1,240,421	$	37,296	$	10,285,003	100	%	$	85,585


	December 31, 2013
			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	$	239,141	$	-	$	-	$	-	$	-	$	239,141	3	%	$	85
2		216,173		-		-		3,363		-		219,536	2			80
3		224,224		-		-		739		83		225,046	2			206
4		321,423		-		-		13,005		213		334,641	4			410
5		821,158		-		-		42,420		225		863,803	10			1,331
6		876,982		96,287		-		229,098		9,989		1,212,356	13			1,643
7		1,135,378		172,236		-		216,744		6,527		1,530,885	17			2,578
8		953,398		295,436		-		218,619		136		1,467,589	16			4,426
9		683,223		167,533		-		111,260		953		962,969	11			8,381
10		402,532		48,802		-		64,893		1,850		518,077	6			7,276
11		387,907		10,169		-		29,774		1,637		429,487	5			9,687
12		129,741		-		-		32,796		4,333		166,870	2			2,488
13		163,458		-		331,940		16,666		2,886		514,950	6			9,047
14,15,16		154,860		146		4,103		52,879		5,551		217,539	2			32,712
Collectively evaluated for impairment		6,709,598		790,609		336,043		1,032,256		34,383		8,902,889	99			80,350
Individually evaluated for impairment		43,367		-		36,864		20,898		6,914		108,043	1			15,895
Total commercial loans (b)	$	6,752,965	$	790,609	$	372,907	$	1,053,154	$	41,297	$	9,010,932	100	%	$	96,245

Balances as of December 31, 2014 and 2013, presented net of $26.2 million and $29.4 million, respectively, in lower of cost or market (“LOCOM”) valuation allowance. Based on the underlying structure of the notes, the highest possible internal grade is "13".
December 31, 2013 table excludes PCI loans amounting to $45.9 million ($.8 million of allowance).

The retail portfolio is comprised primarily of smaller-balance loans which are very similar in nature in that most are standard products and are backed by residential real estate. Because of the similarities of retail loan-types, FHN is able to utilize the Fair Isaac Corporation (“FICO”) score, among other attributes, to assess the quality of consumer borrowers. FICO scores are refreshed on a quarterly basis in an attempt to reflect the recent risk profile of the borrowers. Accruing delinquency amounts are indicators of asset quality within the credit card and other retail portfolio.

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 December 31, 2014 and 2013:

HELOC
	December 31, 2014						December 31, 2013
			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	$	56,335		708		701	$	79,550		711		701
2003		102,073		721		710		141,215		725		711
2004		282,580		723		709		395,323		727		716
2005		451,757		731		722		531,839		732		720
2006		337,440		740		727		383,366		740		726
2007		357,290		744		729		406,299		744		728
2008		194,710		753		747		223,110		753		747
2009		101,594		751		743		115,863		750		744
2010		98,214		753		749		114,393		753		749
2011		96,982		759		753		112,595		758		753
2012		119,333		760		758		138,373		759		760
2013		151,005		758		760		164,665		759		762
2014		120,025		762		762		-		-		-
Total	$	2,469,338		741		732	$	2,806,591		740		730


R/E Installment Loans	December 31, 2014						December 31, 2013
			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	$	13,909		678		684	$	23,827		681		683
2003		49,706		714		724		74,451		716		725
2004		41,414		699		695		54,240		701		700
2005		123,130		715		712		161,205		717		711
2006		134,055		713		702		173,994		715		701
2007		199,473		723		709		249,198		725		709
2008		64,244		720		714		85,192		723		720
2009		28,762		736		725		38,842		742		737
2010		101,310		747		752		125,094		748		755
2011		278,795		760		759		335,343		760		760
2012		608,684		764		766		690,461		764		764
2013		475,272		756		759		514,933		757		754
2014		459,979		756		752		-		-		-
Total	$	2,578,733		748		747	$	2,526,780		746		742


Permanent Mortgage	December 31, 2014						December 31, 2013
			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	$	150,217		723		721	$	194,369		725		725
2004		17,349		712		712		22,720		713		694
2005		34,033		736		740		40,272		737		712
2006		62,053		731		724		79,367		730		711
2007		188,868		733		717		223,440		734		710
2008		86,441		741		709		102,074		741		714
Total	$	538,961		730		717	$	662,242		731		714

Nonaccrual and Past Due Loans


The following table reflects accruing and non-accruing loans by class on December 31, 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	$	7,477,410	$	3,196	$	218	$	$7,480,824	$	636	$	1,726	$	17,279	$	$19,641	$	$7,500,465
Loans to mortgage companies		1,162,894		-		-		1,162,894		-		-		124		124		1,163,018
TRUPS (a)		325,882		-		-		325,882		-		-		12,845		12,845		338,727
Purchased credit-impaired loans		4,180		344		552		5,076		-		-		-		-		5,076
Total commercial (C&I)		8,970,366		3,540		770		8,974,676		636		1,726		30,248		32,610		9,007,286
Commercial real estate:
Income CRE		1,190,562		1,446		-		1,192,008		1,495		1,963		11,041		14,499		1,206,507
Residential CRE		34,541		183		-		34,724		-		-		857		857		35,581
Purchased credit-impaired loans		35,511		3		115		35,629		-		-		-		-		35,629
Total commercial real estate		1,260,614		1,632		115		1,262,361		1,495		1,963		11,898		15,356		1,277,717
Consumer real estate:
HELOC		2,347,361		26,738		11,093		2,385,192		66,410		6,628		11,108		84,146		2,469,338
R/E installment loans		2,524,019		11,951		5,602		2,541,572		27,330		3,268		5,888		36,486		2,578,058
Purchased credit-impaired loans		675		-		-		675		-		-		-		-		675
Total consumer real estate		4,872,055		38,689		16,695		4,927,439		93,740		9,896		16,996		120,632		5,048,071
Permanent mortgage		495,619		3,624		5,640		504,883		16,681		2,382		15,015		34,078		538,961
Credit card & other
Credit card		185,015		1,909		1,822		188,746		-		-		-		-		188,746
Other		167,272		1,137		203		168,612		-		-		763		763		169,375
Purchased credit-impaired loans		10		-		-		10		-		-		-		-		10
Total credit card & other		352,297		3,046		2,025		357,368		-		-		763		763		358,131
Total loans, net of unearned	$	15,950,951	$	50,531	$	$25,245	$	$16,026,727		$112,552	$	15,967	$	$74,920	$	$203,439	$	$16,230,166

Total TRUPS includes LOCOM valuation allowance of $26.2 million.


The following table reflects accruing and non-accruing loans by class on December 31, 2013:

	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	$	6,701,185	$	8,606	$	425	$	6,710,216	$	19,039	$	3,668	$	20,042	$	42,749	$	6,752,965
Loans to mortgage companies		790,463		-		-		790,463		-		-		146		146		790,609
TRUPS (a)		336,043		-		-		336,043		-		-		36,864		36,864		372,907
Purchased credit-impaired loans		5,710		-		1,385		7,095		-		-		-		-		7,095
Total commercial (C&I)		7,833,401		8,606		1,810		7,843,817		19,039		3,668		57,052		79,759		7,923,576
Commercial real estate:
Income CRE		1,030,910		5,822		-		1,036,732		4,339		395		11,688		16,422		1,053,154
Residential CRE		39,295		323		-		39,618		130		-		1,549		1,679		41,297
Purchased credit-impaired loans		34,786		2,964		1,078		38,828		-		-		-		-		38,828
Total commercial real estate		1,104,991		9,109		1,078		1,115,178		4,469		395		13,237		18,101		1,133,279
Consumer real estate:
HELOC		2,688,193		25,609		14,683		2,728,485		59,385		5,261		13,460		78,106		2,806,591
R/E installment loans		2,466,647		12,951		6,801		2,486,399		29,221		3,120		7,151		39,492		2,525,891
Purchased credit-impaired loans		889		-		-		889		-		-		-		-		889
Total consumer real estate		5,155,729		38,560		21,484		5,215,773		88,606		8,381		20,611		117,598		5,333,371
Permanent mortgage		606,707		11,235		6,129		624,071		14,868		952		22,351		38,171		662,242
Credit card & other
Credit card		182,798		1,792		1,369		185,959		-		-		-		-		185,959
Other		147,846		996		394		149,236		1,397		-		-		1,397		150,633
Purchased credit-impaired loans		14		-		-		14		-		-		-		-		14
Total credit card & other		330,658		2,788		1,763		335,209		1,397		-		-		1,397		336,606
Total loans, net of unearned	$	15,031,486	$	70,298	$	32,264	$	15,134,048	$	128,379	$	13,396	$	113,251	$	255,026	$	15,389,074

Total TRUPS includes LOCOM valuation allowance of $29.4 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 lending 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 financial 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 borrower 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), reduction 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 required 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 reduced 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 Affordable 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 years) 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-term 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 and as a result, FHN classifies all non-reaffirmed residential real estate loans after bankruptcy as nonaccruing TDRs.

On December 31, 2014 and 2013, FHN had $331.3 million and $352.3 million portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $59.0 million and $64.6 million, or 18 percent as of December 31, 2014, and 18 percent as of December 31, 2013. Additionally, $80.1 million and $135.6 million of loans held-for-sale as of December 31, 2014 and 2013, respectively were classified as TDRs.


The following table reflects portfolio loans that were classified as TDRs during the years ended December 31, 2014 and 2013:

		2014					2013
			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		4	$	1,767	$	1,492	13	$	17,968	$	17,784
	Total commercial (C&I)	4		1,767		1,492	13		17,968		17,784
Commercial real estate:
Income CRE		2		421		421	5		4,221		4,187
Residential CRE		1		976		960	-		-		-
	Total commercial real estate	3		1,397		1,381	5		4,221		4,187
Consumer real estate:
HELOC		309		27,078		27,514	354		26,606		26,224
R/E installment loans		151		10,050		9,958	426		30,400		30,104
	Total consumer real estate	460		37,128		37,472	780		57,006		56,328
Permanent mortgage		34		9,362		8,879	49		18,716		19,184
Credit card & other		64		327		315	50		233		221
Total troubled debt restructurings		565	$	49,981	$	49,539	897	$	98,144	$	97,704


The following table presents TDRs which re-defaulted during 2014 and 2013, 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 plus days past due.


		2014			2013
			Recorded			Recorded
(Dollars in thousands)		Number	Investment		Number	Investment
Commercial (C&I):
General C&I		6	$	869	11	$	6,705
	Total commercial (C&I)	6		869	11		6,705
Commercial real estate:
Income CRE		4		3,086	4		1,548
Residential CRE		-		-	1		33
	Total commercial real estate	4		3,086	5		1,581
Consumer real estate:
HELOC		7		485	13		604
R/E installment loans		9		530	8		428
	Total consumer real estate	16		1,015	21		1,032
Permanent mortgage		3		1,128	17		7,832
Credit card & other		2		4	17		65
Total troubled debt restructurings		31	$	6,102	71	$	17,215

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, nonaccrual TDRs that are reasonably assured of repayment according to their modified terms may be returned to accrual status by FHN upon a detailed 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 borrower’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 performance 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 restructured loans 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 time of modification.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

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