UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-15185

First Horizon National Corporation

(Exact name of registrant as specified in its charter)

Tennessee		62-0803242
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
165 Madison Avenue Memphis, Tennessee		38103
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code) (901) 523-4444

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding on June 30, 2011
Common Stock, $.625 par value		263,698,516

 

 

FIRST HORIZON NATIONAL CORPORATION

INDEX

Part I. Financial Information			2
Item 1. Financial Statements			2
Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition			69
Item 3. Quantitative and Qualitative Disclosures about Market Risk			128
Item 4. Controls and Procedures			128
Part II. Other Information			129
Item 1. Legal Proceedings			129
Item 1A. Risk Factors			129
Item 2. Unregistered Sales of Equity Securities and use of Proceeds			130
Item 3. Defaults upon Senior Securities			130
Item 4. [Reserved]			130
Item 5. Other Information			130
Item 6. Exhibits			131
Signatures			133
Exhibit Index			134
EX-31.A
EX-31.B
EX-32.A
EX-32.B

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements			2
The Consolidated Condensed Statements of Condition			3
The Consolidated Condensed Statements of Income			4
The Consolidated Condensed Statements of Equity			5
The Consolidated Condensed Statements of Cash Flows			6
The Notes to Consolidated Condensed Financial Statements			7
Note 1 Financial Information			7
Note 2 Acquisitions and Divestitures			10
Note 3 Investment Securities			11
Note 4 Loans			13
Note 5 Mortgage Servicing Rights			21
Note 6 Intangible Assets			22
Note 7 Other Income and Other Expense			24
Note 8 Earnings Per Share			25
Note 9 Contingencies and Other Disclosures			26
Note 10 Pension, Savings, and Other Employee Benefits			35
Note 11 Business Segment Information			37
Note 12 Preferred Stock and Other Capital			39
Note 13 Loan Sales and Securitizations			40
Note 14 Variable Interest Entities			44
Note 15 Derivatives			49
Note 16 Fair Value of Assets & Liabilities			55
Note 17 Restructuring, Repositioning, and Efficiency Initiatives			67

This financial information reflects all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods presented.

CONSOLIDATED CONDENSED STATEMENTS OF CONDITION

		First Horizon National Corporation
		June 30								December 31
(Dollars in thousands except restricted and share amounts)(Unaudited)		2011				2010				2010
Assets:
Cash and due from banks (Restricted — $1.8 million on June 30, 2011; $0 on June 30, 2010; and $3.1 million on December 31, 2010)		$	313,416			$	364,857			$	344,384
Federal funds sold and securities purchased under agreements to resell			598,000				602,910				424,390
Total cash and cash equivalents (Restricted — $1.8 million on June 30, 2011; $0 on June 30, 2010; and $3.1 million on December 31, 2010)			911,416				967,767				768,774
Interest-bearing cash			263,441				275,148				517,739
Trading securities			1,196,380				1,806,789				769,750
Loans held for sale			397,931				505,237				375,289
Securities available for sale (Note 3)			3,230,477				2,489,819				3,031,930
Loans, net of unearned income (Restricted — $.7 billion on June 30, 2011; $.8 billion on June 30, 2010; and $.8 billion on December 31, 2010) (Note 4)			16,061,646				17,154,050				16,782,572
Less: Allowance for loan losses (Restricted — $33.0 million on June 30, 2011; $50.1 million on June 30, 2010; and $47.5 million on December 31, 2010) (Note 4)			524,091				781,269				664,799
Total net loans (Restricted — $.7 billion on June 30, 2011; $.8 billion on June 30, 2010; and $.7 billion on December 31, 2010)			15,537,555				16,372,781				16,117,773
Mortgage servicing rights (Note 5)			186,958				201,746				207,319
Goodwill (Note 6)			135,683				162,180				162,180
Other intangible assets, net (Note 6)			28,384				35,645				32,881
Capital markets receivables			625,243				828,866				146,091
Premises and equipment, net			330,392				307,452				322,319
Real estate acquired by foreclosure			92,662				122,548				125,401
Other assets (Restricted — $13.9 million on June 30, 2011; $24.7 million on June 30, 2010; and $19.7 million on December 31, 2010)			2,117,544				2,178,248				2,121,506
Total assets (Restricted — $.7 billion on June 30, 2011; $.8 billion on June 30, 2010; and $.7 billion on December 31, 2010)		$	25,054,066			$	26,254,226			$	24,698,952
Liabilities and equity:
Deposits:
Savings		$	6,382,963			$	5,385,698			$	6,036,895
Time deposits			1,277,905				1,545,475				1,390,995
Other interest-bearing deposits			2,784,787				3,237,183				2,842,306
Certificates of deposit $100,000 and more			513,269				623,955				561,750
Interest-bearing			10,958,924				10,792,311				10,831,946
Noninterest-bearing (Restricted — $.9 million on June 30, 2011; $.9 million on June 30, 2010; and $1.2 million on December 31, 2010)			4,937,103				4,409,505				4,376,285
Total deposits (Restricted — $.9 million on June 30, 2011; $.9 million on June 30, 2010; and $1.2 million on December 31, 2010)			15,896,027				15,201,816				15,208,231
Federal funds purchased and securities sold under agreements to repurchase			2,005,999				2,278,890				2,114,908
Trading liabilities			498,915				481,477				361,920
Other short-term borrowings and commercial paper			187,902				487,449				180,735
Term borrowings (Restricted — $.7 billion on June 30, 2011; $.8 billion on June 30, 2010; and $.8 billion on December 31, 2010)			2,502,517				2,926,675				3,228,070
Capital markets payables			464,993				754,079				65,506
Other liabilities (Restricted — $0 million on June 30, 2011; $.1 million on June 30, 2010; and $.1 million on December 31, 2010)			816,331				836,607				861,577
Total liabilities (Restricted — $.7 billion on June 30, 2011; $.8 billion on June 30, 2010; and $.8 billion on December 31, 2010)			22,372,684				22,966,993				22,020,947
Equity:
First Horizon National Corporation Shareholders’ Equity:
Preferred stock — no par value (shares authorized - 5,000,000; no shares issued on June 30, 2011 or December 31, 2010; shares issued — series CPP 866,540 on June 30, 2010) (Note 12)			—				806,856				—
Common stock — $.625 par value (shares authorized - 400,000,000; shares issued - 263,698,516 on June 30, 2011; 236,839,568 on June 30, 2010; and 263,366,429 on December 31, 2010) (a)			164,812				143,021				164,604
Capital surplus			1,638,423				1,296,484				1,630,210
Capital surplus common stock warrant — CPP (Note 12)			—				83,860				83,860
Undivided profits			691,490				767,769				631,712
Accumulated other comprehensive loss, net			(108,508	)			(105,922	)			(127,546	)
Total First Horizon National Corporation Shareholders’ Equity			2,386,217				2,992,068				2,382,840
Noncontrolling interest (Note 12)			295,165				295,165				295,165
Total equity			2,681,382				3,287,233				2,678,005
Total liabilities and equity		$	25,054,066			$	26,254,226			$	24,698,952

See accompanying notes to consolidated condensed financial statements.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

		First Horizon National Corporation
		Three Months Ended								Six Months Ended
		June 30								June 30
(Dollars in thousands except per share data)(Unaudited)		2011				2010				2011				2010
Interest income:
Interest and fees on loans		$	160,928			$	173,472			$	324,431			$	346,815
Interest on investment securities			31,250				29,092				60,442				60,247
Interest on loans held for sale			3,267				5,565				6,924				10,533
Interest on trading securities			11,224				11,450				22,068				21,164
Interest on other earning assets			88				786				497				1,102
Total interest income			206,757				220,365				414,362				439,861
Interest expense:
Interest on deposits:
Savings			7,019				8,095				14,269				15,513
Time deposits			7,783				9,894				15,815				20,488
Other interest-bearing deposits			1,638				2,654				3,190				5,172
Certificates of deposit $100,000 and more			2,613				3,414				5,322				6,788
Interest on trading liabilities			4,102				5,043				7,893				10,458
Interest on short-term borrowings			1,468				1,747				3,009				3,669
Interest on term borrowings			9,274				7,454				19,249				15,314
Total interest expense			33,897				38,301				68,747				77,402
Net interest income			172,860				182,064				345,615				362,459
Provision for loan losses			1,000				70,000				2,000				175,000
Net interest income after provision for loan losses			171,860				112,064				343,615				187,459
Noninterest income:
Capital markets			77,921				100,876				167,978				215,447
Mortgage banking			32,101				63,301				59,827				98,185
Deposit transactions and cash management			35,060				39,018				67,697				74,785
Trust services and investment management			6,684				6,850				13,044				13,173
Brokerage management fees and commissions			6,139				6,006				13,028				12,345
Insurance commissions			835				1,358				1,591				2,511
Debt securities gains/(losses), net			1				—				772				—
Equity securities gains/(losses), net			-				75				27				(1,831	)
All other income and commissions (Note 7)			30,031				26,453				62,350				72,571
Total noninterest income			188,772				243,937				386,314				487,186
Adjusted gross income after provision for loan losses			360,632				356,001				729,929				674,645
Noninterest expense:
Employee compensation, incentives, and benefits			151,880				161,381				309,059				338,374
Repurchase and foreclosure provision			24,563				56,188				61,767				96,894
Operations services			13,973				15,310				27,901				29,907
Occupancy			13,110				15,367				28,020				29,829
Legal and professional fees			20,624				18,083				39,182				32,010
FDIC premium expense			8,839				9,196				16,894				17,689
Computer software			8,380				7,337				16,470				14,419
Contract employment			8,177				7,274				15,098				13,448
Equipment rentals, depreciation, and maintenance			8,503				7,572				16,419				13,534
Foreclosed real estate			5,803				5,137				12,592				15,607
Communications and courier			5,084				5,835				10,331				12,024
Miscellaneous loan costs			859				4,546				2,351				8,658
Amortization of intangible assets			1,032				1,078				2,064				2,156
All other expense (Note 7)			74,999				23,007				102,825				50,741
Total noninterest expense			345,826				337,311				660,973				675,290
Income/(loss) before income taxes			14,806				18,690				68,956				(645	)
Provision/(benefit) for income taxes			(4,242)				(1,659	)			7,866				(18,177	)
Income from continuing operations			19,048				20,349				61,090				17,532
Income/(loss) from discontinued operations, net of tax			3,788				129				4,748				(6,947	)
Net income		$	22,836			$	20,478			$	65,838			$	10,585
Net income attributable to noncontrolling interest			2,844				2,844				5,688				5,688
Net income attributable to controlling interest		$	19,992			$	17,634			$	60,150			$	4,897
Preferred stock dividends			-				14,938				—				29,856
Net income/(loss) available to common shareholders		$	19,992			$	2,696			$	60,150			$	(24,959	)
Basic earnings/(loss) per share from continuing operations (Note 8)		$	0.06			$	0.01			$	0.21			$	(0.08	)
Diluted earnings/(loss) per share from continuing operations (Note 8)		$	0.06			$	0.01			$	0.21			$	(0.08	)
Basic earnings/(loss) per share available to common shareholders (Note 8)		$	0.08			$	0.01			$	0.23			$	(0.11	)
Diluted earnings/(loss) per share available to common shareholders (Note 8)		$	0.08			$	0.01			$	0.23			$	(0.11	)
Weighted average common shares (Note 8)			261,289				234,556				261,233				234,513
Diluted average common shares (Note 8)			262,756				240,968				263,690				234,513

See accompanying notes to consolidated condensed financial statements.

Certain previously reported amounts have been reclassified to agree with current presentation.

CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

		First Horizon National Corporation
		2011												2010
(Dollars in thousands except per share data)(Unaudited)		Controlling Interest				Noncontrolling Interest				Total				Controlling Interest				Noncontrolling Interest				Total
Balance, January 1		$	2,382,840			$	295,165			$	2,678,005			$	3,007,303			$	295,165			$	3,302,468
Adjustment to reflect adoption of amendments to ASC 810			—				—				—				(10,562	)			—				(10,562	)
Net income			60,150				5,688				65,838				4,897				5,688				10,585
Other comprehensive income:
Unrealized fair value adjustments, net of tax:
Securities available for sale			12,702				—				12,702				3,264				—				3,264
Recognized pension and other employee benefit plans net periodic benefit costs			6,336				—				6,336				5,022				—				5,022
Comprehensive income			79,188				5,688				84,876				13,183				5,688				18,871
Preferred stock — (CPP) accretion			—				—				—				8,172				—				8,172
Preferred stock — (CPP) dividends			—				—				—				(29,835	)			—				(29,835	)
Common stock repurchased			(887	)			—				(887	)			(481	)			—				(481	)
Cash dividends declared ($.01/share)			(5,151	)			—				(5,151	)			—				—				—
Common stock issued related to stock-based compensation arrangements			—				—				—				179				—				179
Stock-based compensation expense			5,147				—				5,147				4,116				—				4,116
Dividends paid to noncontrolling interest of subsidiary preferred stock			—				(5,688	)			(5,688	)			—				(5,688	)			(5,688	)
Repurchase of common stock warrant — CPP			(79,700	)			—				(79,700	)			—				—				—
Other changes in equity			4,780				—				4,780				(7	)			—				(7	)
Balance, June 30		$	2,386,217			$	295,165			$	2,681,382			$	2,992,068			$	295,165			$	3,287,233

See accompanying notes to consolidated condensed financial statements.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

		First Horizon National Corporation
		Six Months Ended June 30
(Dollars in thousands)(Unaudited)		2011				2010
Operating Activities
Net income		$	65,838			$	10,585
Adjustments to reconcile net income to net cash used by operating activities:
Provision for loan losses			2,000				175,000
Provision for deferred income tax			27,290				134,163
Depreciation and amortization of premises and equipment			17,166				15,054
Amortization of intangible assets			2,368				2,762
Net other amortization and accretion			25,289				21,232
Increase in derivatives, net			(394	)			(21,757	)
Market value adjustment on mortgage servicing rights			7,359				57,356
Repurchase and foreclosure provision			61,767				96,894
Fair value adjustment to foreclosed real estate			9,651				9,376
Goodwill impairment			10,100				3,348
Loss accruals from litigation and regulatory matters			40,585				1,270
Gains on divestitures (a)			(753	)			—
Stock-based compensation expense			5,147				4,116
Excess tax provision from stock-based compensation arrangements			—				17
Equity securities (gains)/losses, net			(27	)			1,831
Debt securities gains, net			(772	)			—
Gains on extinguishment of debt			(5,761	)			(17,060	)
Net losses on disposal of fixed assets			152				1,107
Net (increase)/decrease in:
Trading securities			(430,692	)			(1,116,647	)
Loans held for sale			(22,642	)			(52,736	)
Capital markets receivables			(479,152	)			(494,462	)
Interest receivable			3,305				2,583
Mortgage servicing rights — bulk sales			—				24,558
Other assets			(31,880	)			60,442
Net increase/(decrease) in:
Capital markets payables			399,487				461,104
Interest payable			(4,712	)			(3,351	)
Other liabilities			(135,160	)			(82,037	)
Trading liabilities			136,995				188,090
Total adjustments			(363,284	)			(527,747	)
Net cash used by operating activities			(297,446	)			(517,162	)
Investing Activities
Available for sale securities:
Sales			458,414				56,240
Maturities			410,961				554,320
Purchases			(1,049,026	)			(401,747	)
Premises and equipment:
Purchases			(25,543	)			(9,789	)
Net (increase)/decrease in:
Interests retained from securitizations classified as trading securities			4,062				4,983
Loans			596,708				853,278
Interest-bearing cash			254,298				264,152
Cash receipts related to divestitures			16,368				—
Net cash provided by investing activities			666,242				1,321,437
Financing Activities
Common stock:
Exercise of stock options			—				93
Cash dividends paid			(2,712	)			—
Repurchase of shares			(887	)			(481	)
Repurchase of common stock warrant — CPP			(79,700	)			—
Excess tax provision from stock-based compensation arrangements			—				(17	)
Cash dividends paid — preferred stock — CPP			—				(21,664	)
Cash dividends paid — preferred stock — noncontrolling interest			(5,556	)			(5,688	)
Term borrowings:
Payments/maturities			(623,353	)			(104,335	)
Net cash paid for extinguishment of debt			(100,000	)			(87,840	)
Net increase/(decrease) in:
Deposits			687,796				334,601
Short-term borrowings			(101,742	)			(869,772	)
Net cash used by financing activities			(226,154	)			(755,103	)
Net increase in cash and cash equivalents			142,642				49,172
Cash and cash equivalents at beginning of period			768,774				918,595
Cash and cash equivalents at end of period		$	911,416			$	967,767
Supplemental Disclosures
Total interest paid		$	73,144			$	80,405
Total income taxes paid			13,527				716
Transfer from loans to other real estate owned			33,118				100,551

See accompanying notes to consolidated condensed financial statements.

Certain previously reported amounts have been reclassified to agree with current presentation.

(a) Net of tax, gains on divestitures are $4.2 million for 2011.

Notes to Consolidated Condensed Financial Statements

Note 1 — Financial Information

The unaudited interim Consolidated Condensed Financial Statements of First Horizon National Corporation (“FHN”), including its subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of America and follow general practices within the industries in which it operates. This preparation requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions are based on information available as of the date of the financial statements and could differ from actual results. In the opinion of management, all necessary adjustments have been made for a fair presentation of financial position and results of operations for the periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed in this filing. The operating results for the interim 2011 periods are not necessarily indicative of the results that may be expected going forward. For further information, refer to the audited consolidated financial statements in the 2010 Annual Report to shareholders.

Accounting Changes. Effective January 1, 2011, FHN adopted the provisions of FASB Accounting Standards Update 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” (“ASU 2010-20”), for certain disclosures about activity that occurs during a reporting period. Effective December 31, 2010, FHN adopted the provisions of ASU 2010-20 related to disclosures as of the end of a reporting period, and the amendments to the rollforward of the allowance for credit losses. Additionally, in January 2011, FASB Accounting Standards Update 2011-01, “Deferral of the Effective Date of Disclosures About Troubled Debt Restructurings in Update No. 2010-20”, was issued which temporarily delays the disclosure requirements related to modifications to be effective concurrent with the effective date of Accounting Standards Update 2011-02, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. ASU 2010-20 provides enhanced disclosures related to the credit quality of financing receivables and the allowance for credit losses, and provides that new and existing disclosures should be disaggregated based on how an entity develops its allowance for credit losses and how it manages credit exposures. Under the provisions of ASU 2010-20, additional disclosures required for financing receivables include information regarding the aging of past due receivables, credit quality indicators, and modifications of financing receivables. Comparative disclosures are required only for periods ending subsequent to initial adoption. Upon adoption of the provisions of ASU 2010-20 for certain disclosures about activity that occurs during a reporting period on January 1, 2011, and related to disclosures as of the end of a reporting period, and the amendments to the rollforward of the allowance for credit losses, on December 31, 2010, FHN revised its disclosures accordingly.

Effective January 1, 2011, FHN adopted the provisions of FASB Accounting Standards Update 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”), related to the requirement to provide the activity of purchases, sales, issuances, and settlements related to recurring Level 3 measurements on a gross basis in the Level 3 reconciliation. Effective January 1, 2010, FHN adopted all other provisions of ASU 2010-06. ASU 2010-06 updates FASB Accounting Standards Codification 820, “Fair Value Measurements and Disclosures” (“ASC 820”) to require disclosure of significant transfers into and out of Level 1 and Level 2 of the fair value hierarchy, as well as disclosure of an entity’s policy for determining when transfers between all levels of the hierarchy are recognized. The updated provisions of ASC 820 also require that fair value measurement disclosures be provided by each “class” of assets and liabilities, and that disclosures providing a description of the valuation techniques and inputs used to measure fair value be included for both recurring and nonrecurring fair value measurements classified as either Level 2 or Level 3. Under ASC 820, as amended, separate disclosure is required in the Level 3 reconciliation of total gains and losses recognized in other comprehensive income. Comparative disclosures are required only for periods ending subsequent to initial adoption. Upon adoption of the amendments to ASC 820 on January 1, 2011 and January 1, 2010, respectively, FHN revised its disclosures accordingly.

Accounting Changes Issued but Not Currently Effective. In June 2011, the FASB issued Accounting Standards Update 2011-05, “Presentation of Comprehensive Income” (ASU 2011-05). ASU 2011-05 requires that net income and other comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 also provides that regardless of the method used to present comprehensive income, presentation is required on the face of the financial statements of reclassification adjustments for items that are reclassified from other comprehensive income to net income. ASU 2011-05 does not change the current option for entities to present components of other comprehensive income gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which other comprehensive income is presented or disclosed in the notes to the financial statements. The provisions of ASU 2011-05 are effective for periods beginning after December 15, 2011, with retrospective application to all periods presented in the financial statements required. Early adoption of the provisions in ASU 2011-05 is permitted, and no transition disclosures are required upon adoption. FHN is currently assessing the effects of adopting the provisions of ASU 2011-05.

Note 1 — Financial Information (continued)

In May 2011, the FASB issued Accounting Standards Update 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04). ASU 2011-04 provides that the highest-and-best use and valuation-premise concepts included in ASC 820 are only relevant when measuring the fair value of nonfinancial assets, thereby prohibiting the grouping of financial instruments for purposes of determining their fair values when the unit of account is specified in other guidance. However, under ASU 2011-04 an exception is permitted which allows an entity to measure the fair value of financial instruments that are managed on the basis of the entity’s net exposure to a particular market risk, or to the credit risk of a particular counterparty, on a net basis when certain criteria are met. Such criteria include that there is evidence that the entity manages its financial instruments in that way, the entity applies such accounting policy election consistently from period to period, and the entity is required or has elected to measure those financial assets and financial liabilities at fair value in the statement of financial position at the end of each reporting period. Additionally, to qualify for the exception to the valuation premise, the market risks that are being offset must be substantially the same. ASU 2011-04 also extends ASC 820’s prohibition on the use of blockage factors in fair value measurements to all three levels of the fair value hierarchy except for fair value measurements of Level 2 and 3 measurements when market participants would incorporate the premium or discount into the measurement at the level of the unit of account specified in other guidance. ASU 2011-04 also provides that an entity should measure the fair value of its own equity instruments from the perspective of a market participant that holds the instruments as assets. Under ASC 820, as amended, expanded disclosures are required including disclosure of quantitative information about significant unobservable inputs used in Level 3 fair value measurements, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements. Additional disclosures required under ASU 2011-04 include disclosure of fair value by level for each class of assets and liabilities not recorded at fair value but for which fair value is disclosed, and disclosure of any transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for those transfers. The provisions of ASU 2011-04 are effective for periods beginning after December 15, 2011, with disclosure of the change, if any, in valuation technique and related inputs resulting from application of the amendments to ASC 820 required upon adoption, along with quantification of the total effect of the change, if practicable. FHN is currently assessing the effects of adopting the provisions of ASU 2011-04.

In April 2011, the FASB issued Accounting Standards Update 2011-03, “Reconsideration of Effective Control for Repurchase Agreements” (“ASU 2011-03”). For entities that enter into agreements to transfer financial assets that both entitle and obligate the transferor to repurchase or redeem the financial assets before their maturity, ASU 2011-03 removes from the assessment of effective control under ASC 860, “Transfers and Servicing”, the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, as well as the collateral maintenance implementation guidance related to that criterion. Under ASC 860-10, as amended, the remaining criteria related to whether effective control over transferred financial assets has been maintained would still need to be evaluated, including whether the financial assets to be repurchased or redeemed are the same or substantially the same as those transferred, the agreement is to repurchase or redeem them before maturity at a fixed or determinable price, and whether the agreement is entered into contemporaneously with, or in contemplation of, the transfer. The provisions of ASU 2011-03 are effective for periods beginning after December 15, 2011, with prospective application to transactions or modifications of existing transactions that occur on or after the effective date. Since FHN accounts for all of its repurchase agreements as secured borrowings, adopting the provisions of ASU 2011-03 will not have an effect on FHN’s statement of condition, results of operations, or cash flows.

In April 2011, the FASB issued Accounting Standards Update 2011-02, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring” (“ASU 2011-02”). ASU 2011-02 provides that a situation in which a market rate is not readily available is an indicator of a troubled debt restructuring, but not a determinative factor, and that an assessment should consider all modified terms of the restructuring when making a final determination regarding a troubled debt restructuring designation. ASU 2011-02 also provides that a modification that results in a temporary or permanent increase to the contractual interest rate cannot be presumed to be a rate that is at or above market. ASU 2011-02 explicitly precludes creditors from using the borrower’s effective rate test in FASB Accounting Standards Codification 470-60, “Debt-Troubled Debt Restructuring by Debtors” (“ASC 470-60”) in its evaluation of whether a modification was executed at a market rate. Under the provisions of ASU 2011-02, a borrower that is not currently in default may still be considered to be experiencing financial difficulty when default is probable in the foreseeable future. ASU 2011-02 provides factors that an entity should consider when determining whether a delay in amount of payments is significant, as insignificant delays in cash flows would not be considered a concession to a borrower under its provisions. The provisions of ASU 2011-02 are effective for periods beginning after June 15, 2011, with retrospective application to the beginning of the annual period of adoption for identification and disclosure purposes, and prospective application for impairment purposes.

Note 1 — Financial Information (continued)

Disclosure of the total amount of loans and the associated reserves related to those loans that are considered impaired under ASC 310, “Receivables”, as a result of the clarification in guidance is required upon initial application. FHN is currently assessing the effects of adopting the provisions of ASU 2011-02.

Note 2 — Acquisitions and Divestitures

In first quarter 2011, FHN contracted to sell First Horizon Insurance, Inc. (“FHI”), the former subsidiary of First Tennessee Bank, a property and casualty insurance agency that serves customers in over 40 states and Highland Capital Management Corporation (“Highland”), the former subsidiary of First Horizon National Corporation which provides trust and asset management services. Both divestitures closed in second quarter 2011. In connection with the agreement to sell FHI, FHN incurred a pre-tax goodwill impairment of $10.1 million which was more than offset by $11.1 million of tax benefits recognized in first quarter. Upon closing of the FHI and Highland sales in second quarter 2011, FHN recognized $4.2 million after-tax gains on the sales. The financial results of these businesses, the goodwill impairment, the gains on sales, and associated tax effects are reflected in the Income/(loss) from discontinued operations, net of tax line on the Consolidated Condensed Statements of Income for all periods presented.

In first quarter 2010, FHN exited its institutional research business, FTN Equity Capital Markets (“FTN ECM”), and incurred a pre-tax goodwill impairment of $3.3 million (approximately $2.0 million after taxes). FHN exited this business through an immediate cessation of operations on February 1, 2010. Additional charges, primarily representing severance and contract terminations, of $6.1 million are included within the Income/(loss) from discontinued operations, net of tax line on the Consolidated Condensed Statements of Income in first quarter 2010 and relate to the effects of closing FTN ECM. These charges are included with the amounts described in Note 17 — Restructuring, Repositioning, and Efficiency. FHN had initially reached an agreement for the sale of this business which resulted in a pre-tax goodwill impairment of $14.3 million (approximately $9 million after taxes) in 2009; however, the contracted sale failed to close and was terminated in early 2010. The financial results of this business, including the goodwill impairments, are reflected in the Income/(loss) from discontinued operations, net of tax line on the Consolidated Condensed Statements of Income for all periods presented.

In addition to the divestitures mentioned above, FHN acquires or divests assets from time to time in transactions that are considered business combinations or divestitures but are not material to FHN individually or in the aggregate.

Note 3 — Investment Securities

The following tables summarize FHN’s available for sale (“AFS”) securities on June 30, 2011 and 2010:

		On June 30, 2011
						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
(Dollars in thousands)		Cost				Gains				Losses				Value
Securities available for sale:
U.S. Treasuries		$	46,073			$	177			$	—			$	46,250
Government agency issued mortgage-backed securities (“MBS”)			1,445,021				56,746				—				1,501,767
Government agency issued collateralized mortgage obligations (“CMO”)			1,386,962				36,932				—				1,423,894
Other U.S. government agencies			18,791				1,136				—				19,927
States and municipalities			19,365				—				—				19,365
Equity (a)			218,715				19				—				218,734
Other			511				29				—				540
Total securities available for sale (b)		$	3,135,438			$	95,039			$	—			$	3,230,477

		On June 30, 2010
						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
(Dollars in thousands)		Cost				Gains				Losses				Value
Securities available for sale:
U.S. Treasuries		$	68,315			$	253			$	—			$	68,568
Government agency issued MBS			852,915				62,686				—				915,601
Government agency issued CMO			1,054,579				41,927				—				1,096,506
Other U.S. government agencies			101,355				6,268				—				107,623
States and municipalities			41,875				—				—				41,875
Equity (a)			258,667				437				(4	)			259,100
Other			511				35				—				546
Total securities available for sale (b)		$	2,378,217			$	111,606			$	(4	)		$	2,489,819

National banks chartered by the federal government are, by law, members of the Federal Reserve System. Each member bank is required to own stock in its regional Federal Reserve Bank (“FRB”). Given this requirement, Federal Reserve stock may not be sold, traded, or pledged as collateral for loans. Membership in the Federal Home Loan Bank (“FHLB”) network requires ownership of capital stock. Member banks are entitled to borrow funds from the FHLB and are required to pledge mortgage loans as collateral. Investments in the FHLB are non-transferable and, generally, membership is maintained primarily to provide a source of liquidity as needed.

Note 3 — Investment Securities (continued)

The amortized cost and fair value by contractual maturity for the available for sale securities portfolio on June 30, 2011 are provided below:

		Available for Sale
		Amortized				Fair
(Dollars in thousands)		Cost				Value
Within 1 year		$	46,073			$	46,250
After 1 year; within 5 years			18,791				19,927
After 5 years; within 10 years			2,795				2,795
After 10 years			16,570				16,570
Subtotal			84,229				85,542
Government agency issued MBS and CMO			2,831,983				2,925,661
Equity and other securities			219,226				219,274
Total		$	3,135,438			$	3,230,477

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The table below provides information on realized gross gains and realized gross losses on sales from the available for sale portfolio for the three and six months ended June 30, 2011 and 2010:

		Three Months Ended								Six Months Ended
(Dollars in thousands)		2011				2010				2011				2010
Gross gains on sales of securities		$	1			$	76			$	9,422			$	196
Gross (losses) on sales of securities			-				(1	)			(8,623	)			(1	)
Net gain/(loss) on sales of securities (a)		$	1			$	75			$	799			$	195
Venture capital investments (b)			—				—				—				(1,838	)
Net other than temporary impairment (“OTTI”) recorded (c)			—				—				—				(188	)
Total securities gain/(loss)		$	1			$	75			$	799			$	(1,831	)

There were no unrealized losses within the available for sale portfolio on June 30, 2011. The following table provides information on investments within the available for sale portfolio that have unrealized losses on June 30, 2010:

		On June 30, 2010
		Less than 12 months								12 months or longer								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
(Dollars in thousands)		Value				Losses				Value				Losses				Value				Losses
Equity		$	40			$	(4	)		$	—			$	—			$	40			$	(4	)
Total temporarily impaired securities		$	40			$	(4	)		$	—			$	—			$	40			$	(4	)

FHN has reviewed investment securities that are in unrealized loss positions in accordance with its accounting policy for OTTI and does not consider them other-than-temporarily impaired. FHN does not intend to sell the debt securities and it is more-likely-than-not that FHN will not be required to sell the securities prior to recovery. The decline in value is primarily attributable to interest rates and not credit losses. For equity securities, FHN has both the ability and intent to hold these securities for the time necessary to recover the amortized cost. There were no other-than-temporary impairments of debt securities for the three months ended June 30, 2011 and 2010, or for the six months ended June 30, 2011. FHN recognized a $.2 million other-than-temporary impairment of an equity investment for the six months ended June 30, 2010.

Note 4- Loans

The following table provides the balance of loans by portfolio on June 30, 2011, June 30, 2010, and December 31, 2010:

		June 30								December 31
(Dollars in thousands)		2011				2010				2010
Commercial:
Commercial, financial, and industrial		$	7,180,261			$	7,003,798			$	7,338,155
Commercial real estate
Income CRE			1,310,779				1,609,835				1,406,646
Residential CRE			182,857				396,934				263,878
Retail:
Consumer real estate			5,383,223				5,935,536				5,617,619
Permanent mortgage			1,015,122				1,018,887				1,086,859
Credit card & other			295,373				355,230				311,924
Restricted real estate loans (a)			694,031				833,830				757,491
Loans, net of unearned income		$	16,061,646			$	17,154,050			$	16,782,572
Allowance for loan losses			524,091				781,269				664,799
Total net loans		$	15,537,555			$	16,372,781			$	16,117,773

FHN has a concentration of loans secured by residential real estate (45 percent of total loans), the majority of which is in the consumer real estate portfolio (34 percent of total loans). Additionally, on June 30, 2011, FHN had bank-related and trust preferred loans (“TRUPs”) (i.e., loans to bank and insurance-related businesses) totaling $.7 billion (10 percent of the C&I portfolio, or 4 percent of total loans). Due to the higher credit losses encountered throughout the financial services industry, limited availability of market liquidity, and the impact from economic conditions on these borrowers these loans have experienced stress throughout the economic downturn.

Components of the Loan Portfolio. For purposes of the disclosures required pursuant to the adoption of amendments to ASC 310, the loan portfolio was disaggregated into segments and then further disaggregated into classes for certain disclosures. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. A class is generally determined based on the initial measurement attribute (i.e., amortized cost or purchased credit impaired), risk characteristics of the loan, and an entity’s method for monitoring and assessing credit risk. Commercial loan portfolio segments include commercial, financial, and industrial (“C&I”) and commercial real estate (“CRE”). Commercial classes within C&I include general C&I, loans to mortgage companies, and the TRUPs portfolio. Loans to mortgage companies includes commercial lines of credit to qualified mortgage companies exclusively for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Commercial classes within commercial real estate include income CRE and residential CRE. Retail loan portfolio segments include consumer real estate, permanent mortgage, and the combined credit card and other portfolios. Retail classes include HELOC and real estate (“R/E”) installment loans within the consumer real estate segment, permanent mortgage (which is both a segment and a class), and credit card and other. Restricted real estate loans include HELOCs that were previously securitized on balance sheet as well as HELOC and some permanent mortgages that were consolidated on January 1, 2010 in conjunction with the adoption of amendments to ASC 810. Due to the winding down nature and decreasing size of the OTC residential construction portfolio, in most cases the remaining balances and activity of this portfolio has been combined with and included within the other retail class.

Allowance for Loan Losses. The allowance for loan losses (“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 retail loans, both determined in accordance with the ASC Topic related to Contingencies (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 adjustment by management to reflect current events, trends, and conditions (including economic considerations and trends). The slow economic recovery, weak housing market, and elevated unemployment levels are examples of additional factors considered by management in determining the allowance for loan losses. Also included are reserves, determined in accordance with the Receivables Topic (ASC 310-10-45), for loans determined by management to be individually impaired.

Key components of the estimation process are as follows: (1) commercial loans determined by management to be individually impaired loans are evaluated individually and specific reserves are determined based on the difference between the outstanding loan amount and the estimated net realizable value of the collateral (if collateral dependent) or the present value of expected future cash flows; (2) individual

Note 4 — Loans (continued)

commercial loans not considered to be individually impaired are segmented based on similar credit risk characteristics and evaluated on a pool basis; (3) reserve rates for the commercial segment are calculated based on historical net charge-offs and are subject to adjustment by management to reflect current events, trends, and conditions (including economic considerations and trends); (4) management’s estimate of probable incurred losses reflects the reserve rate applied against the balance of loans in the commercial segment of the loan portfolio; (5) retail loans are segmented based on loan type; (6) reserve amounts for each retail portfolio segment are calculated using analytical models based on net loss experience and are subject to adjustment by management to reflect current events, trends, and conditions (including economic considerations and trends); and (7) the reserve amount for each retail portfolio segment reflects management’s estimate of probable incurred losses in the retail segment of the loan portfolio.

Commercial. For commercial loans, reserves are established using historical net loss factors by grade level, loan product, and business segment. An assessment of the quality of individual commercial loans is made utilizing credit grades assigned internally based on a dual grading system which estimates both the probability of default (“PD”) and loss severity in the event of default. PD grades range from 1-16 while estimated loss severities, or loss given default (“LGD”), grades range from 1-12. This credit grading system is intended to identify and measure the credit quality of the loan portfolio by analyzing the migration of loans between grading categories. It is also integral to the estimation methodology utilized in determining the allowance for loan losses since an allowance is established for pools of commercial loans based on the credit grade assigned. The appropriate relationship team performs the process of categorizing commercial loans into the appropriate credit grades, initially as a component of the approval of the loan, and subsequently throughout the life of the loan as part of our servicing regimen. The proper loan grade for larger exposures is confirmed by a senior credit officer in the approval process. To determine the most appropriate credit grade for each loan, the credit risk grading system employs scorecards for particular categories of loans that consist of a number of objective and subjective measures that are weighted in a manner that produces a rank ordering of risk within pass-graded credits. Loan grades are frequently reviewed by Credit Risk Assurance to determine if the process continues to result in accurate loan grading across the portfolio.

FHN may utilize availability of guarantors/sponsors to support lending decisions during the credit underwriting process and when determining the assignment of internal loan grades. Where guarantor contributions are determined to be a source of repayment, an assessment of the guarantee is made. This guarantee assessment would include but not be limited to factors such as type and feature of the guarantee, consideration for the guarantee, key provisions of the guarantee agreement, and ability of the guarantor to be a viable secondary source of repayment.

Reliance on the guarantee as a viable secondary source of repayment is a function of an analysis proving capability to pay factoring in, among other things, liquidity, and direct/indirect debt cash flows. Therefore, a proper evaluation of each guarantor is critical. FHN establishes a guarantor’s ability (financial wherewithal) to support a credit based on an analysis of recent information on the guarantor’s financial condition. This would generally include income and asset information from sources such as recent tax returns, credit reports, and personal financial statements. In analyzing this information FHN seeks to assess a combination of liquidity, global cash flow, cash burn rate, and contingent liabilities to demonstrate the guarantor’s capacity to sustain support for the credit and fulfill the obligation. FHN also considers the volume and amount of guarantees provided for all global indebtedness and the likelihood of realization. Guarantor financial information is periodically updated throughout the life of the loan. FHN presumes a guarantor’s willingness to perform until financial support becomes necessary or if there is any current or prior indication or future expectation that the guarantor may not willingly and voluntarily perform under the terms of the guarantee.

In FHN’s risk grading approach, it is deemed that financial support becomes necessary generally at a point when the loan would otherwise be graded substandard, reflecting a well-defined weakness. At that point, provided willingness is appropriately demonstrated, a strong, legally enforceable guarantee can mitigate the risk of default or loss, justify a less severe rating, and consequently reduce the level of allowance or charge-off that might otherwise be deemed appropriate. FHN establishes guarantor willingness to support the credit through documented evidence of previous and ongoing support of the credit. Previous performance under a guarantor’s obligation to pay is not considered if the performance was involuntary.

Retail. The ALLL for smaller-balance homogenous retail loans is determined based on pools of similar loan types that have similar credit risk characteristics. FHN manages retail loan credit risk on a class basis. Reserves by portfolio are determined using segmented roll-rate models that incorporate various factors including historical delinquency trends, experienced loss frequencies, and experienced loss severities. Generally, reserves for retail loans reflect inherent losses in the portfolio that are expected to be recognized over the following twelve months.

Note 4 — Loans (continued)

Individually Impaired. Under ASC 310-10, individually impaired loans are measured based on the present value of expected future payments discounted at the loan’s effective interest rate (“the DCF method”), observable market prices, or for loans that are solely dependent on the collateral for repayment, the estimated fair value of the collateral less estimated costs to sell (net realizable value). For loans measured using the DCF method or by observable market prices, if the recorded investment in the impaired loan exceeds this amount, a specific allowance is established as a component of the allowance for loan and lease losses; however, for impaired collateral-dependent loans, FHN will charge off the full difference between the book value and the best estimate of net realizable value.

The following table provides a rollforward of the allowance for loan losses by portfolio segment for the first six months of 2011 and 2010:

						Commercial Real				Consumer				Permanent				Credit Card and
(Dollars in thousands)		C&I				Estate				Real Estate				Mortgage				Other (a)				Total
Balance as of January 1, 2010		$	276,648			$	205,724			$	215,087			$	123,897			$	75,558			$	896,914
Adjustment due to amendments of ASC 810			—				—				16,106				8,472				—				24,578
Charge-offs			(54,941	)			(89,307	)			(114,399	)			(46,903	)			(34,393	)			(339,943	)
Recoveries			7,213				5,793				7,990				776				2,948				24,720
Provision			48,115				76,137				80,968				(8,929	)			(21,291	)			175,000
Balance as of June 30, 2010 (b) (c)			277,035				198,347				205,752				77,313				22,822				781,269
Allowance — individually evaluated for impairment			52,091				28,158				11,873				8,922				1,163				102,207
Allowance — collectively evaluated for impairment			224,944				170,189				193,879				68,391				21,659				679,062
Loans, net of unearned as of June 30, 2010:
Individually evaluated for impairment			171,947				294,836				41,337				64,384				634				573,138
Collectively evaluated for impairment			6,831,851				1,711,933				6,664,513				1,018,019				354,596				16,580,912
Total loans, net of unearned (b) (c)		$	7,003,798			$	2,006,769			$	6,705,850			$	1,082,403			$	355,230			$	17,154,050
Balance as of January 1, 2011		$	239,469			$	155,085			$	192,350			$	65,009			$	12,886			$	664,799
Charge-offs			(24,852	)			(23,711	)			(91,764	)			(20,784	)			(9,584	)			(170,695	)
Recoveries			8,837				5,066				8,436				3,534				2,114				27,987
Provision			(17,176	)			(36,973	)			53,633				(1,157	)			3,673				2,000
Balance as of June 30, 2011 (b) (c)			206,278				99,467				162,655				46,602				9,089				524,091
Allowance — individually evaluated for impairment			50,673				9,797				23,656				14,586				752				99,464
Allowance — collectively evaluated for impairment			155,605				89,670				138,999				32,016				8,337				424,627
Loans, net of unearned as of June 30, 2011:
Individually evaluated for impairment			222,896				174,379				91,117				111,979				1,186				601,557
Collectively evaluated for impairment			6,957,365				1,319,257				5,941,284				947,996				294,187				15,460,089
Total loans, net of unearned (b) (c)		$	7,180,261			$	1,493,636			$	6,032,401			$	1,059,975			$	295,373			$	16,061,646

Impaired Loans. Generally, classified non-accrual commercial loans over $1 million are deemed to be impaired and are assessed for impairment measurement in accordance with ASC 310-10. Also, all commercial and retail consumer loans classified as troubled debt restructurings are deemed to be impaired and are assessed for impairment measurement in accordance with ASC 310-10.

When a loan is placed on nonaccrual status, accrued interest is reversed through interest income. FHN’s policy is that interest payments received on impaired and nonaccrual loans are recognized as a payment of principal. Once all principal has been received, additional payments are recognized as interest income on a cash basis.

Note 4 — Loans (continued)

The average balance of impaired loans was $610.5 million and $612.2 million for the three and six months ended June 30, 2011, and $1.8 million and $3.1 million of interest income was recognized during the respective periods related to such impaired loans. The average balance of impaired loans was $613.4 million and $568.7 million for the three and six months ended June 30, 2010, and $.7 million and $1.3 million of interest income was recognized during the respective periods related to such impaired loans. The following tables provide loan classes with the period-end and quarterly average amount of recorded investment in impaired loans for which there is a related allowance for loan loss, the period-end and quarterly average amount of recorded investment in impaired loans where there is no related allowance for loan loss, the total unpaid principal balance of the impaired loans, and amount of interest income recognized on the impaired loans:

														Three Months Ended								Six Months Ended
		June 30, 2011												June 30, 2011								June 30, 2011
		Recorded				Unpaid Principal				Related				Average Recorded				Interest Income				Average Recorded				Interest Income
(Dollars in thousands)		Investment				Balance				Allowance				Investment				Recognized				Investment				Recognized
Impaired loans with no related allowance recorded:
Commercial:
General C&I		$	96,198			$	117,608			$	—			$	89,618			$	232			$	70,328			$	489
TRUPs			52,742				57,000				—				43,857				—				39,074				—
Income CRE			96,935				173,878				—				110,102				392				102,411				531
Residential CRE			42,920				93,746				—				53,571				269				51,161				344
Total		$	288,795			$	442,232			$	—			$	297,148			$	893			$	262,974			$	1,364
Impaired loans with related allowance recorded:
Commercial:
General C&I		$	46,690			$	53,258			$	23,980			$	57,790			$	81			$	81,482			$	140
TRUPs			27,266				30,000				26,693				27,266				—				27,266				—
Income CRE			12,129				12,314				3,550				11,866				11				23,335				11
Residential CRE			22,395				22,631				6,247				22,351				—				31,354				—
Total		$	108,480			$	118,203			$	60,470			$	119,273			$	92			$	163,437			$	151
Retail:
HELOC		$	36,617			$	36,617			$	11,818			$	33,507			$	180			$	30,996			$	321
R/E Installment Loans			54,500				54,500				11,837				51,337				182				49,450				344
Permanent Mortgage			111,979				111,979				14,586				107,935				434				104,372				914
Credit Card & Other			1,186				1,186				752				1,250				12				975				24
Total		$	204,282			$	204,282			$	38,993			$	194,029			$	808			$	185,793			$	1,603
Total commercial		$	397,275			$	560,435			$	60,470			$	416,421			$	985			$	426,411			$	1,515
Total retail		$	204,282			$	204,282			$	38,993			$	194,029			$	808			$	185,793			$	1,603
Total impaired loans		$	601,557			$	764,717			$	99,463			$	610,450			$	1,793			$	612,204			$	3,118

		June 30, 2010
		Recorded				Unpaid Principal				Related
(Dollars in thousands)		Investment				Balance				Allowance
Impaired loans with no related allowance recorded:
Commercial:
General C&I		$	25,552			$	32,233			$	—
TRUPs			36,756				42,700				—
Income CRE			98,816				190,519				—
Residential CRE			96,584				202,797				—
Total		$	257,708			$	468,249			$	—
Impaired loans with related allowance recorded:
Commercial:
General C&I		$	82,373			$	118,120			$	38,069
TRUPs			27,266				30,000				14,022
Income CRE			45,841				52,735				12,107
Residential CRE			53,595				60,319				16,051
Total		$	209,075			$	261,174			$	80,249
Retail:
HELOC		$	17,493			$	17,493			$	5,025
R/E Installment Loans			23,844				23,844				6,849
Permanent Mortgage			64,384				64,384				9,793
OTC, Credit Card, & Other			634				634				292
Total		$	106,355			$	106,355			$	21,959
Total commercial		$	466,783			$	729,423			$	80,249
Total retail		$	106,355			$	106,355			$	21,959
Total impaired loans		$	573,138			$	835,778			$	102,208