Via EDGAR
October 10, 2014
Mr. John P. Nolan
Senior Assistant Chief Accountant
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
Re: | First Horizon National Corporation (“FHN” or “we”) |
Form 10-K for the Fiscal Year Ended December 31, 2013 (“2013 Form 10-K”) |
Filed February 27, 2014 |
Response dated October 3, 2014 |
File No. 000-15185 |
Dear Mr. Nolan:
We are in receipt of the letter from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated October 7, 2014, to Mr. William C. Losch III, Executive Vice President and Chief Financial Officer, regarding the above-referenced filing. We appreciate the Staff’s careful review of our filing and look forward to working with the Staff to resolve the Staff’s comments. For your convenience, we have included the Staff’s comment below in boldface followed by our response. As this request pertains to disclosure in future filings, our response includes an illustrative example of the future proposed disclosure enhancement. In this particular case, the proposed tables are based on recent year-end quantitative data and will be updated in our Form 10-K Filing for the period ended December 31, 2014.
Form 10-K for Fiscal Year Ended December 31, 2013
Exhibit 13
Asset Quality – Trend Analysis of 2013 compared to 2012
Table 19, page 39
1. | We have reviewed your response to our comment number one of your supplemental response dated October 3, 2014. Please expand the disclosure in the first table titled Nonaccrual/Nonperforming Loans, Foreclosed Assets, and Other Disclosures in future filings to specifically state whether or not loans past due 90 days or more and still accruing are included in total nonperforming loans. |
Response:
In future Annual Reports on Form 10-K, FHN will revise the disclosure that was initially presented in Table 19, page 39 on Form 10-K for the Fiscal Period Ended December 31, 2013, and then subsequently enhanced as proposed in our supplemental response to the Commission dated October 3, 2014, to incorporate the clarification requested in Item one above.
Mr. John P. Nolan
United States Securities and Exchange Commission
October 10, 2014
Page 2
Specifically, we have added footnote (d) to the line items within the “Nonaccrual/Nonperforming, Foreclosed Assets, and Other Disclosures” table below to clarify that nonperforming loans/assets and related ratios do not include loans that are 90 or more days past due and still accruing interest. Additionally, within the second proposed table “Accruing Delinquencies and Other Credit Disclosures,” we have added footnote (b) to certain line items to further clarify that such loans are not included within nonperforming/nonaccrual loan disclosures.
Nonaccrual/Nonperforming Loans, Foreclosed Assets, and Other Disclosures (a)
December 31 | ||||||||||||||||||||
(Dollars in thousands) | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Consumer real estate | $ | 117,598 | $ | 64,445 | $ | 38,776 | $ | 35,451 | $ | 17,900 | ||||||||||
Permanent mortgage | 38,171 | 32,721 | 35,989 | 125,718 | 97,909 | |||||||||||||||
Credit card & other (b) | 1,397 | 1,698 | 2,141 | 19,276 | 189,846 | |||||||||||||||
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Total consumer | 157,166 | 98,864 | 76,906 | 180,445 | 305,655 | |||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial, financial, and industrial | 79,759 | 122,600 | 162,229 | 213,993 | 135,464 | |||||||||||||||
Commercial real estate | 18,101 | 45,570 | 114,965 | 252,467 | 458,311 | |||||||||||||||
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Total commercial | 97,860 | 168,170 | 277,194 | 466,460 | 593,775 | |||||||||||||||
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Total nonperforming loans (c) (d) | 255,026 | 267,034 | 354,100 | 646,905 | 899,430 | |||||||||||||||
Nonperforming loans held-for-sale (d) | 61,139 | 51,385 | 46,651 | 41,546 | 19,773 | |||||||||||||||
Foreclosed real estate and other assets | 45,753 | 41,767 | 68,885 | 110,536 | 113,709 | |||||||||||||||
Foreclosed real estate from GNMA loans | 25,809 | 18,923 | 16,360 | 14,865 | 11,481 | |||||||||||||||
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Total foreclosed real estate and other assets | 71,562 | 60,690 | 85,245 | 125,401 | 125,190 | |||||||||||||||
Total nonperforming assets (d) (e) | $ | 361,918 | $ | 360,186 | $ | 469,636 | $ | 798,987 | $ | 1,032,912 | ||||||||||
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Troubled debt restructurings (f): | ||||||||||||||||||||
Accruing restructured loans | $ | 246,894 | $ | 243,884 | $ | 206,210 | $ | 144,252 | $ | 36,714 | ||||||||||
Nonaccruing restructured loans (d) (g) | 105,409 | 114,138 | 72,798 | 116,191 | 36,093 | |||||||||||||||
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Total troubled debt restructurings (f) | $ | 352,303 | $ | 358,022 | $ | 279,008 | $ | 260,443 | $ | 72,807 | ||||||||||
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Ratios: | ||||||||||||||||||||
Allowance to nonperforming loans in the loan portfolio (d) | 1.00 | x | 1.04 | x | 1.09 | x | 1.03 | x | 1.00 | x | ||||||||||
NPL% (d) (h) | 1.66 | % | 1.60 | % | 2.16 | % | 3.85 | % | 4.96 | % | ||||||||||
NPA% (d) (i) | 1.95 | % | 1.84 | % | 2.57 | % | 4.48 | % | 5.56 | % |
Certain previously reported amounts have been re-presented to be consistent with current presentation.
(a) | Balances do not include PCI loans even though the customer may be contractually past due. PCI loans were recorded at fair value upon acquisition and accrete interest income over the remaining life of the loan. |
(b) | Nonperforming loans in this category are primarily One-time-close construction loans. |
(c) | FHN estimates interest income that would have been earned during 2013 was approximately $14 million if the loans had performed in accordance with their original terms. |
(d) | Excludes loans that are 90 or more days past due and still accruing interest. |
(e) | Balances do not include PCI loans or government-insured foreclosed real estate. |
(f) | Excludes TDRs that are classified as held-for-sale nearly all of which are accounted for under the fair value option. |
(g) | Amounts also included in nonperforming loans above. |
(h) | Nonperforming loans in the loan portfolio to total period end loans. |
(i) | Nonperforming assets related to the loan portfolio to total loans plus foreclosed assets exclusive of government-insured foreclosed real estate. |
Mr. John P. Nolan
United States Securities and Exchange Commission
October 10, 2014
Page 3
Accruing Delinquencies and Other Credit Disclosures
December 31 | ||||||||||||||||||||
(Dollars in thousands) | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||
Loans past due 90 days or more and still accruing (a) (b): | ||||||||||||||||||||
Consumer: | ||||||||||||||||||||
Consumer real estate | $ | 21,484 | $ | 30,403 | $ | 37,625 | $ | 47,937 | $ | 66,074 | ||||||||||
Permanent mortgage | 6,129 | 9,592 | 12,415 | 29,367 | 59,986 | |||||||||||||||
Credit card & other | 1,763 | 1,833 | 1,502 | 1,758 | 4,604 | |||||||||||||||
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Total consumer | 29,376 | 41,828 | 51,542 | 79,062 | 130,664 | |||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial, financial, and industrial | 1,810 | 422 | 234 | 182 | 2,856 | |||||||||||||||
Commercial real estate | 1,078 | — | — | — | 4,303 | |||||||||||||||
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Total commercial | 2,888 | 422 | 234 | 182 | 7,159 | |||||||||||||||
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Total loans past due 90 days or more and still accruing (a) (b) | $ | 32,264 | $ | 42,250 | $ | 51,776 | $ | 79,244 | $ | 137,823 | ||||||||||
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Loans 30 to 89 days past due | $ | 70,298 | $ | 80,893 | $ | 110,813 | $ | 173,233 | $ | 291,021 | ||||||||||
Loans 30 to 89 days past due - guaranteed (c) | 187 | 47 | 67 | 3,801 | 76 | |||||||||||||||
Loans held-for-sale 30 to 89 days past due | 14,538 | 15,333 | 7,591 | 8,646 | 17,524 | |||||||||||||||
Loans held-for-sale 30 to 89 days past due - guaranteed portion (c) | 11,660 | 12,986 | 6,108 | 3,490 | 17,524 | |||||||||||||||
Loans held-for-sale 90 days past due (b) | 37,599 | 34,002 | 42,308 | 33,409 | 35,781 | |||||||||||||||
Loans held-for-sale 90 days past due - guaranteed portion (b) (c) | 35,118 | 31,699 | 36,299 | 26,790 | 32,159 | |||||||||||||||
Potential problem assets (d) | $ | 343,359 | $ | 496,308 | $ | 729,421 | $ | 1,144,185 | $ | 1,382,698 |
Certain previously reported amounts have been re-presented to be consistent with current presentation.
(a) | Excludes loans classified as held-for-sale. |
(b) | Amounts are not included in nonperforming/nonaccrual loans. |
(c) | Guaranteed loans include FHA, VA, and GNMA loans repurchased through the GNMA buyout program. |
(d) | Includes past due loans. |
* * * * * *
First Horizon National Corporation acknowledges that it is responsible for the adequacy and accuracy of the disclosure in the filing, that Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing, and that it may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
We hope our response adequately addresses the comment raised in your letter. Any questions with respect to the foregoing should be directed to the undersigned at (901)257-6223.
Sincerely,
/s/ Jeff L. Fleming
Jeff L. Fleming
Executive Vice President and Chief Accounting Officer