Pension plan. FHN sponsors a noncontributory, qualified defined benefit pension plan to employees hired or re-hired on or before September 1, 2007. Pension benefits are based on years of service, average compensation near retirement or other termination, and estimated social security benefits at age 65. The contributions are based upon actuarially determined amounts necessary to fund the total benefit obligation. FHN did not make any contributions to the qualified pension plan in 2012. Future decisions to contribute to the plan will be based upon pension funding requirements under the Pension Protection Act, the maximum deductible under the Internal Revenue Code, and the actual performance of plan assets. Management has assessed the need for future contributions, and does not currently anticipate that FHN will make a contribution to the qualified pension plan in 2013.

FHN also maintains non-qualified plans including a supplemental retirement plan that covers certain employees whose benefits under the qualified pension plan have been limited. These other non-qualified plans are unfunded, and contributions to these plans cover all benefits paid under the non-qualified plans. Payments made under the non-qualified plans were $7.3 million for 2012. FHN anticipates making benefit payments under the non-qualified plans of $6.2 million in 2013.

The accrual of benefits under the qualified pension plan and the supplemental pension plan ceased as of December 31, 2012.

FHN utilizes the minimum amortization method in determining the amount of actuarial gains or losses to include in plan expense. Under this approach, the net deferred actuarial gain or loss that exceeds a threshold is amortized over the average remaining service period of active plan participants. In conjunction with the freeze of the pension plans on December 31, 2012, all participants are now considered inactive under applicable accounting guidance for determining the appropriate period for prospective amortization of actuarial gains and losses. Thus, effective January 1, 2013, FHN changed the amortization term for actuarial gains and losses from the estimated average remaining service period of active employees to the estimated average remaining life expectancy of the remaining participants. This extension of the amortization period significantly lowers annual pension expense.

Savings plan. FHN provides all qualifying full-time employees with the opportunity to participate in the FHN tax qualified 401(k) savings plan. The qualified plan allows employees to defer receipt of earned salary, up to tax law limits, on a tax-advantaged basis. Accounts, which are held in trust, may be invested in a wide range of mutual funds and in FHN common stock. Up to tax law limits, in 2012 FHN provided a 50 percent match for the first 6 percent of salary deferred. The match rate increased to 100 percent for the first 6 percent of salary deferred beginning in 2013 when benefits under the pension plans became frozen. Through a non-qualified savings restoration plan, starting in 2013 FHN provides a restorative benefit to certain highly-compensated employees who participate in the savings plan and whose contribution elections are capped by tax limitations.

Employer Non-Elective Contribution (“ENEC”) Program. The ENEC program is a feature of the FHN savings plan. Prior to 2013 it was provided only to employees not eligible for the pension plan. After 2012 it is available only to employees not participating in a regular bonus plan. With the ENEC program, FHN generally makes contributions to eligible employees' savings plan accounts based upon company performance. Contribution amounts are a percentage of each employee's base salary (as defined in the savings plan) earned the prior year. FHN contributed $1.5 million for the plan in 2012 related to the 2011 plan year, and FHN contributed $1.7 million for the plan in 2013 related to the 2012 plan year. All contributions made to eligible employees' savings plan accounts in relation to the ENEC program are invested in company stock. With the increased match in the savings plan, FHN does not anticipate making contributions under the ENEC related to the 2013 plan year.

Other employee benefits. FHN provides postretirement life insurance benefits to certain employees and also provides postretirement medical insurance to retirement-eligible employees. The postretirement medical plan is contributory with retiree contributions adjusted annually and is based on criteria that are a combination of the employee's age and years of service. For any employee retiring on or after January 1, 1995, FHN contributes a fixed amount based on years of service and age at the time of retirement. FHN's postretirement benefits include prescription drug benefits. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“the Act”) introduced a prescription drug benefit under Medicare Part D as well as a federal subsidy to sponsors of retiree health care that provide a benefit that is actuarially equivalent to Medicare Part D. FHN currently anticipates receiving a prescription drug subsidy under the Act through 2013. In third quarter 2013, FHN notified participants of revisions to the employee medical plan effective January 1, 2014, the effects of which are being prospectively amortized beginning in third quarter 2013.

The components of net periodic benefit cost for the three months ended September 30 are as follows:

		Pension Benefits				Other Benefits
(Dollars in thousands)		2013		2012		2013		2012
Components of net periodic benefit cost
Service cost		$	(77)	$	2,453	$	114	$	102
Interest cost			8,097		8,191		505		612
Expected return on plan assets			(8,756)		(9,967)		(199)		(225)
Amortization of unrecognized:
	Transition (asset)/obligation		-		-		-		184
	Prior service cost/(credit)		89		100		(25)		(3)
	Actuarial (gain)/loss		2,585		9,351		(106)		(60)
Net periodic benefit cost			1,938		10,128		289		610
ASC 715 settlement expense			-		1,231		-		-
Total periodic benefit costs		$	1,938	$	11,359	$	289	$	610

The components of net periodic benefit cost for the nine months ended September 30 are as follows:

		Pension Benefits				Other Benefits
(Dollars in thousands)		2013		2012		2013		2012
Components of net periodic benefit cost
Service cost		$	47	$	11,156	$	382	$	350
Interest cost			24,271		24,780		1,601		1,724
Expected return on plan assets			(26,210)		(29,860)		(593)		(686)
Amortization of unrecognized:
	Transition (asset)/obligation		-		-		-		552
	Prior service cost/(credit)		265		299		(9)		(7)
	Actuarial (gain)/loss		7,374		26,999		(72)		(366)
Net periodic benefit cost			5,747		33,374		1,309		1,567
ASC 715 settlement expense			370		1,231		-		-
Total periodic benefit costs		$	6,117	$	34,605	$	1,309	$	1,567