Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of merger and integration expense

Total CBF merger and integration expense recognized for the years ended December 31, 2019, 2018, and 2017 are presented in the table below:



	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Professional fees (a)	$	11,221	$	22,337	$	28,151
Employee compensation, incentives and benefits (b)	1,189		9,613		17,077
Contract employment and outsourcing (c)	240		3,681		1,270
Occupancy (d)	1,453		5,236		15
Miscellaneous expense (e)	2,072		7,652		1,291
All other expense (f)	6,695		43,874		8,944
Total	$	22,870	$	92,393	$	56,748

(a) Primarily comprised of fees for legal, accounting, investment bankers, and merger consultants.

(b) Primarily comprised of fees for severance and retention.

(d) Primarily relates to fees associated with lease exit accruals.

(e) Consists of fees for operations services, communications and courier, equipment rentals, depreciation, and maintenance, supplies, travel and entertainment, computer software, and advertising and public relations.

(f) Primarily relates to contract termination charges, costs of shareholder matters and asset impairments related to the integration, as well as other miscellaneous expenses.

Total merger expenses for the IBKC merger recognized during 2019 were as follows:



	Year Ended December 31,
(Dollars in thousands)	2019
Professional fees (a)	$	8,228
Employee compensation, incentives and benefits (b)	3,079
Miscellaneous expense (c)	64
Total IBKC merger expense	$	11,371

(a) Primarily comprised of fees for legal, accounting, investment bankers, and merger consultants.

(b) Primarily comprised of fees for severance and retention.

Schedule of recognized assets acquired and liabilities assumed

The following 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 April 3, 2017:



	Coastal Securities, Inc
	Purchase Accounting/
	As		Fair Value
	Acquired		Adjustments			As recorded
(Dollars in thousands)	(unaudited)		(unaudited)			by FHN
Assets:
Cash and cash equivalents	$	7,502	$	—		$	7,502
Interest-bearing cash	4,132		—			4,132
Trading securities	423,662		(284,580		)	139,082
Loans held-for-sale	—		236,088			236,088
Investment securities	—		1,413			1,413
Other intangible assets, net	—		27,300			27,300
Premises and equipment, net	1,229		—			1,229
Other assets	1,658		14			1,672
Total assets acquired	$	438,183	$	(19,765	)	$	418,418

Liabilities:
Securities sold under agreements to repurchase	$	201,595	$	—		$	201,595
Other short-term borrowings	33,509		—			33,509
Fixed income payables	143,647		(47,158		)	96,489
Other liabilities	958		(642		)	316
Total liabilities assumed	379,709		(47,800		)	331,909
Net assets acquired	$	58,474	$	28,035		86,509
Consideration paid:
Cash						(131,473		)
Goodwill						$	44,964

The following 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				(11,034		)		122,969
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				(9,470		)		223,882
OREO	43,077			(9,149		)		(315		)		33,613
Other assets	617,232			41,320			(c)	(22,422		)	(c)	636,130
Total assets acquired	$	10,068,908		$	(190,204	)		$	(44,967	)		$	9,833,737

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				1,631				65,917
Total liabilities assumed	8,738,129			71,125				989				8,810,243
Net assets acquired	$	1,330,779		$	(261,329	)		$	(45,956	)		1,023,494
Consideration paid:
Equity												(1,746,718		)
Cash												(469,615		)
Total consideration paid												(2,216,333		)
Goodwill												$	1,192,839


(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 Statement of Condition in 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 and adjustments for acquired tax contingencies.

Schedule of business acquisition pro forma information

The following table presents financial information regarding the former CBF operations included in FHN's Consolidated Statements of Income from the date of acquisition (November 30, 2017) through December 31, 2017. Additionally, the table presents unaudited proforma information as if the acquisition of CBF had occurred on January 1, 2016:



	Actual from acquisition date through		Unaudited Pro Forma for
	Actual from acquisition date through		Year Ended December 31
(Dollars in thousands)	December 31, 2017		2017		2016
Net interest income	$	31,253	$	1,165,006	$	1,033,218
Noninterest income	6,192		563,581		638,493
Pre-tax income	16,534		476,911		458,667
Net income available to common shareholders (a)	NM		274,416		293,981

(a) Net income available to common shareholders is not meaningful for actual CBF results from the acquisition date through December 31, 2017 because of the effect of tax reform.