Allowance for Loan Losses

3 Months Ended

Mar. 31, 2017

Note 5 - Allowance for Loan Losses

The ALLL includes the following components: reserves for commercial loans evaluated based on pools of credit graded loans and reserves for pools of smaller-balance homogeneous consumer loans, both determined in accordance with ASC 450-20-50. The reserve factors applied to these pools are an estimate of probable incurred losses based on management’s evaluation of historical net losses from loans with similar characteristics and are subject to qualitative adjustments by management to reflect current events, trends, and conditions (including economic considerations and trends). The current economic conditions and trends, performance of the housing market, unemployment levels, labor participation rate, regulatory guidance, and both positive and negative portfolio segment-specific trends, are examples of additional factors considered by management in determining the ALLL. Additionally, management considers the inherent uncertainty of quantitative models that are driven by historical loss data. Management evaluates the periods of historical losses that are the basis for the loss rates used in the quantitative models and selects historical loss periods that are believed to be the most reflective of losses inherent in the loan portfolio as of the balance sheet date. Management also periodically reviews analysis of the loss emergence period which is the amount of time it takes for a loss to be confirmed (initial charge-off) after a loss event has occurred. FHN performs extensive studies as it relates to the historical loss periods used in the model and the loss emergence period and model assumptions are adjusted accordingly. The ALLL also includes reserves determined in accordance with ASC 310-10-35 for loans determined by management to be individually impaired and an allowance associated with PCI loans. See Note 1 – Summary of Significant Accounting Policies and Note 5 - Allowance for Loan Losses in the Notes to Consolidated Financial Statements on FHN’s Form 10-K for the year ended December 31, 2016, for additional information about the policies and methodologies used in the aforementioned components of the ALLL.

The following table provides a rollforward of the allowance for loan losses by portfolio segment for the three months ended March 31, 2017 and 2016:
				Commercial		Consumer		Permanent		Credit Card
(Dollars in thousands)		C&I		Real Estate		Real Estate		Mortgage		and Other		Total
Balance as of January 1, 2017		$	89,398	$	33,852	$	50,357	$	16,289	$	12,172	$	202,068
Charge-offs			(600)		-		(3,849)		(483)		(3,481)		(8,413)
Recoveries			1,676		221		5,676		903		837		9,313
Provision/(provision credit) for loan losses			2,633		(3,185)		(2,504)		(816)		2,872		(1,000)
Balance as of March 31, 2017			93,107		30,888		49,680		15,893		12,400		201,968
Allowance - individually evaluated for impairment			3,775		192		28,701		11,532		122		44,322
Allowance - collectively evaluated for impairment			89,142		30,646		20,629		4,361		12,278		157,056
Allowance - purchased credit-impaired loans			190		50		350		-		-		590
Loans, net of unearned as of March 31, 2017:
	Individually evaluated for impairment		44,970		3,096		146,472		88,743		269		283,550
	Collectively evaluated for impairment		11,620,748		2,166,069		4,308,917		320,492		346,399		18,762,625
	Purchased credit-impaired loans		38,278		4,146		1,422		-		53		43,899
Total loans, net of unearned income		$	11,703,996	$	2,173,311	$	4,456,811	$	409,235	$	346,721	$	19,090,074
Balance as of January 1, 2016		$	73,637	$	25,159	$	80,614	$	18,947	$	11,885	$	210,242
Charge-offs			(6,525)		(642)		(6,926)		(112)		(3,407)		(17,612)
Recoveries			780		222		5,735		779		888		8,404
Provision/(provision credit) for loan losses			12,995		887		(12,102)		(860)		2,080		3,000
Balance as of March 31, 2016			80,887		25,626		67,321		18,754		11,446		204,034
Allowance - individually evaluated for impairment			9,148		488		31,119		16,975		146		57,876
Allowance - collectively evaluated for impairment			71,615		24,840		35,477		1,779		11,299		145,010
Allowance - purchased credit-impaired loans			124		298		725		-		1		1,148
Loans, net of unearned as of March 31, 2016:
	Individually evaluated for impairment		44,465		8,950		162,128		96,874		345		312,762
	Collectively evaluated for impairment		10,181,677		1,826,677		4,523,885		345,917		353,822		17,231,978
	Purchased credit-impaired loans		13,041		12,942		4,217		-		54		30,254
Total loans, net of unearned income		$	10,239,183	$	1,848,569	$	4,690,230	$	442,791	$	354,221	$	17,574,994