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 and six months ended June 30, 2017 and 2016:



(Dollars in thousands)	C&I			Commercial Real Estate			Consumer Real Estate			Permanent Mortgage			Credit Card and Other			Total
Balance as of April 1, 2017	$	93,107		$	30,888		$	49,680		$	15,893		$	12,400		$	201,968
Charge-offs	(1,865		)	(20		)	(3,951		)	(843		)	(3,151		)	(9,830		)
Recoveries	600			140			5,143			488			748			7,119
Provision/(provision credit) for loan losses	537			(538		)	(4,803		)	860			1,944			(2,000		)
Balance as of June 30, 2017	92,379			30,470			46,069			16,398			11,941			197,257
Balance as of January 1, 2017	$	89,398		$	33,852		$	50,357		$	16,289		$	12,172		$	202,068
Charge-offs	(2,465		)	(20		)	(7,800		)	(1,326		)	(6,632		)	(18,243		)
Recoveries	2,276			361			10,819			1,391			1,585			16,432
Provision/(provision credit) for loan losses	3,170			(3,723		)	(7,307		)	44			4,816			(3,000		)
Balance as of June 30, 2017	92,379			30,470			46,069			16,398			11,941			197,257
Allowance - individually evaluated for impairment	3,641			176			27,149			11,858			161			42,985
Allowance - collectively evaluated for impairment	88,609			30,277			18,536			4,540			11,780			153,742
Allowance - purchased credit-impaired loans	129			17			384			—			—			530
Loans, net of unearned as of June 30, 2017:
Individually evaluated for impairment	38,034			3,024			137,999			85,913			360			265,330
Collectively evaluated for impairment	12,538,913			2,204,947			4,278,063			322,182			353,135			19,697,240
Purchased credit-impaired loans	21,272			4,025			1,397			—			55			26,749
Total loans, net of unearned income	$	12,598,219		$	2,211,996		$	4,417,459		$	408,095		$	353,550		$	19,989,319
Balance as of April 1, 2016	$	80,887		$	25,626		$	67,321		$	18,754		$	11,446		$	204,034
Charge-offs	(7,869		)	(51		)	(6,582		)	(349		)	(3,445		)	(18,296		)
Recoveries	1,602			909			6,082			484			992			10,069
Provision/(provision credit) for loan losses	6,352			3,780			(7,740		)	(1,289		)	2,897			4,000
Balance as of June 30, 2016	80,972			30,264			59,081			17,600			11,890			199,807
Balance as of January 1, 2016	$	73,637		$	25,159		$	80,614		$	18,947		$	11,885		$	210,242
Charge-offs	(14,394		)	(693		)	(13,508		)	(461		)	(6,852		)	(35,908		)
Recoveries	2,382			1,131			11,817			1,263			1,880			18,473
Provision/(provision credit) for loan losses	19,347			4,667			(19,842		)	(2,149		)	4,977			7,000
Balance as of June 30, 2016	80,972			30,264			59,081			17,600			11,890			199,807
Allowance - individually evaluated for impairment	4,076			434			31,911			15,583			147			52,151
Allowance - collectively evaluated for impairment	76,786			29,449			26,834			2,017			11,743			146,829
Allowance - purchased credit-impaired loans	110			381			336			—			—			827
Loans, net of unearned as of June 30, 2016:
Individually evaluated for impairment	51,447			8,298			163,339			95,882			356			319,322
Collectively evaluated for impairment	11,117,452			1,951,306			4,475,856			343,132			360,275			18,248,021
Purchased credit-impaired loans	10,546			9,808			1,584			—			56			21,994
Total loans, net of unearned income	$	11,179,445		$	1,969,412		$	4,640,779		$	439,014		$	360,687		$	18,589,337