Restructuring, Repositioning, And Efficiency

9 Months Ended

Sep. 30, 2014

Restructuring And Related Activities [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 endedSeptember 30, 2014 related to restructuring, repositioning, and efficiency activities were $7.4 million. Of this amount, $7.2 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 endedSeptember 30, 2014 resulted from the following actions:

• Severance and other employee costs of $2.5 million primarily related to efficiency initiatives within corporate and bank services functions which are classified as Employee compensation, incentives and benefits within noninterest expense.
• Lease abandonment expenses of $4.7 million primarily related to efficiency initiatives within corporate and bank services functions which are classified as Occupancy within noninterest expense.

During the nine months endedSeptember 30, 2013, FHN recognized a net cost of $4.5 million related to restructuring, repositioning, and efficiency activities. Included in this amount is $3.0 million representing exit costs that were accounted for in accordance with ASC 420. Significant expenses recognized during the nine months endedSeptember 30, 2013 resulted from the following actions:

• 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.

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, 2014 and 2013, is presented in the following table, along with other restructuring and repositioning expenses recognized.
		Three Months Ended								Nine Months Ended
		September 30								September 30
		2014				2013				2014				2013
(Dollars in thousands)		Expense		Liability		Expense		Liability		Expense		Liability		Expense		Liability
Beginning balance				$	7,247			$	4,277			$	3,126			$	19,775
Severance and other employee related costs		$	926		926	$	1,160		1,160	$	2,495		2,495	$	2,620		2,620
Facility consolidation costs			49		49		38		38		4,657		4,657		416		416
Total accrued			975		8,222		1,198		5,475		7,152		10,278		3,036		22,811
Payments related to:
	Severance and other employee related costs				950				826				2,452				17,490
	Facility consolidation costs				278				248				802				824
Accrual reversals					-				7				30				103
	Restructuring and repositioning reserve balance			$	6,994			$	4,394			$	6,994			$	4,394
Other restructuring and repositioning expense:
	Mortgage banking (income)/expense on servicing sales		-				2,192				(9)				2,192
	(Gains)/losses on divestitures		-				(365)				-				(1,004)
	Impairment of premises and equipment		-				369				222				369
	Other		-				-				-				(96)
	Total other restructuring and repositioning expense		-				2,196				213				1,461
Total restructuring and repositioning charges		$	975			$	3,394			$	7,365			$	4,497

FHN began initiatives related to restructuring in second quarter 2007. The following table presents cumulative amounts incurred to date through September 30, 2014, for costs associated with FHN’s restructuring, repositioning, and efficiency initiatives:
(Dollars in thousands)		Total Expense
Severance and other employee related costs			$	106,879
Facility consolidation costs				45,484
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			25,993
	(Gains)/losses on divestitures			(718)
	Impairment of premises and equipment			23,004
	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, 2014			$	323,692