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Restructuring, Repositioning, And Efficiency
 9 Months Ended
Sep. 30, 2013
Restructuring, Repositioning, And Efficiency [Abstract]  
Restructuring, Repositioning, And Efficiency

Note 18 – Restructuring, Repositioning, and Efficiency

Beginning in 2007, FHN conducted a company-wide review of business practices with the goal of improving its overall profitability and productivity. Such reviews continue throughout the organization. Since 2007, in order to redeploy capital to higher-return businesses, FHN exited or sold non-strategic businesses, eliminated layers of management, and consolidated functional areas.

Generally, restructuring, repositioning, and efficiency charges related to exited businesses are included in the non-strategic segment while charges related to corporate-driven actions are included in the corporate segment. Net charges recognized by FHN during the nine months ended September 30, 2013, related to restructuring, repositioning, and efficiency activities were $4.5 million. Of this amount, $3.0 million represent exit costs that were accounted for in accordance with the Exit of Disposal Cost Obligations Topic of the FASB Accounting Standards Codification (“ASC 420”). Significant expenses recognized during the nine months ended September 30, 2013 resulted from the following action:

  • Severance and other employee costs of $2.6 million primarily related to efficiency initiatives within corporate and bank services functions which are classified as Employee compensation, incentives, and benefits within noninterest expense.
  • Expense of $2.2 million related to estimated costs for obligations associated with a definitive agreement to sell substantially all remaining legacy mortgage servicing which is reflected in Mortgage banking income.

During the nine months ended September 30, 2012, FHN recognized a net cost of $6.2 million related to restructuring, repositioning, and efficiency activities. Of this amount, $4.7 million represent exit costs that were accounted for in accordance with ASC 420. Significant expenses recognized during the nine months ended September 30, 2012 resulted from the following actions:

  • Severance and other employee costs of $4.8 million primarily related to efficiency initiatives within corporate and bank services functions which are classified as Employee compensation, incentives, and benefits within noninterest expense.
  • Expense of $2.3 million related to prior servicing sales which is reflected in Mortgage banking income.

Settlement of the obligations arising from current initiatives will be funded from operating cash flows. The effect of suspending depreciation on assets held-for-sale was immaterial to FHN's results of operations for all periods. Due to the broad nature of the actions being taken, substantially all components of expense have benefited from past efficiency initiatives and are expected to benefit from the current efficiency initiatives.

Activity in the restructuring and repositioning liability for the three and nine months ended September 30, 2013 and 2012, is presented in the following table, along with other restructuring and repositioning expenses recognized. 
                          
  Three Months Ended Nine Months Ended 
  September 30 September 30 
  2013 2012 2013 2012 
(Dollars in thousands)Expense Liability Expense Liability Expense Liability Expense Liability 
Beginning balance$ - $ 4,277 $ - $ 8,947 $ - $ 19,775 $ - $ 12,026 
Severance and other employee related costs  1,160   1,160   2,730   2,730   2,620   2,620   4,769   4,769 
Facility consolidation costs  38   38   41   41   416   416   (134)   (134) 
Other exit costs, professional fees, and other  -   -   -   -   -   -   111   111 
Total accrued  1,198   5,475   2,771   11,718   3,036   22,811   4,746   16,772 
Payments related to:                        
 Severance and other employee related costs     826      5,718      17,490      8,680 
 Facility consolidation costs     248      529      824      1,406 
 Other exit costs, professional fees, and other     -      -      -      15 
Accrual reversals     7      17      103      1,217 
 Restructuring and repositioning reserve balance   $ 4,394    $ 5,454    $ 4,394    $ 5,454 
                          
Other restructuring and repositioning expense:                        
 Mortgage banking expense on servicing sales  2,192      -      2,192      2,287    
 (Gains)/losses on divestitures  (365)      (180)      (1,004)      (865)    
 Impairment of premises and equipment  369      -      369      5    
 Impairment of other assets  -      -      -      12    
 Other  -      -      (96)      -    
 Total other restructuring and repositioning expense  2,196      (180)      1,461      1,439    
Total restructuring and repositioning charges$ 3,394    $ 2,591    $ 4,497    $ 6,185    

FHN began initiatives related to restructuring in second quarter 2007. Consequently, the following table presents cumulative amounts incurred to date through September 30, 2013, for costs associated with FHN’s restructuring, repositioning, and efficiency initiatives:
      
(Dollars in thousands)Total Expense 
Severance and other employee related costs  $103,313 
Facility consolidation costs  41,112 
Other exit costs, professional fees, and other  19,165 
Other restructuring and repositioning expense:    
 Loan portfolio divestiture  7,672 
 Mortgage banking expense on servicing sales  26,002 
 (Gains)/losses on divestitures   (722) 
 Impairment of premises and equipment  22,766 
 Impairment of intangible assets  48,231 
 Impairment of other assets  40,504 
 Other  7,478 
Total restructuring and repositioning charges incurred to date as of September 30, 2013 $315,521