Notes to Financial Statements
December 31, 2015 and 2014
The following description
of First Horizon National Corporation Savings Plan (the “Plan”) provides only general information. Participants should
refer to the Plan document for a more complete description of the Plan’s provisions.
The Plan is a defined contribution
retirement savings plan established April 23, 1978, for qualified employees of First Horizon National Corporation and certain
affiliates (the “Company” or “Plan Sponsor”) to provide a savings plan for those employees. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Since inception,
the Plan document has been amended periodically to conform with provisions of ERISA and other laws and regulations. The Plan is
administered by the Pension, Savings and Flexible Compensation Committee of the Company. Wilmington Trust Company served as trustee
of the Plan and Aon Hewitt served as recordkeeper of the Plan through March 31, 2015. Effective April 1, 2015, the Company replaced
the trustee of the Plan, Wilmington Trust Company, with State Street Bank and Trust Company. The Company also replaced the recordkeeper
of the Plan, Aon Hewitt, with Transamerica Retirement Solutions Corporation (“Transamerica”).
Pursuant to the Plan document,
certain retirees are allowed to segregate and direct their accounts into investments outside the investment options available
to active participants and defer payment of benefits. These segregated accounts are trusteed by First Tennessee Bank National Association (FTBNA), the Company’s primary affiliate.
Effective April 1, 2015, the
Plan eliminated the Thornburg International Value Fund, replacing it with Non-US Equity Option, and eliminated Royce Premier Fund
(Small Cap Value Equity), replacing it with the Small Cap Value Fund.
Under the terms of the Plan,
full-time employees are eligible to participate in the Plan immediately. Part-time employees are eligible to participate upon
completion of twelve months of service in which they have worked 1,000 hours or more. A participant may authorize payroll deductions
from 1% to 60% of eligible pay (subject to certain legal limitations) as contributions, to be invested as authorized by the participant.
The Plan allows participants to make Pre-tax and Roth contributions (from 1% to 50% of eligible pay) and other after-tax contributions
(from 1% to 10% of eligible pay). Participants may also rollover amounts representing distributions from other defined benefit
and/or defined contribution plans. Participants direct their contributions
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
(1)
|
Plan
Description (continued)
|
into various investment options
offered by the Plan and may elect to change their investment authorizations at any time.
Effective January 1, 2014,
automatic savings plan enrollment deferrals for new hires, rehires, and newly eligible enrollees increased from 1% to 3% of eligible
pay.
The Company makes three types
of contributions on behalf of participants to the Plan:
Company matching contributions
- After one year of service all participants are eligible for matching contributions. Effective January 1, 2013, all participants
receive 100% matching of the first 1% to 6% of participant pre-tax, catch-up, and Roth 401(k) contributions. These contributions
will be invested according to a participant’s current investment elections. Prior to 2013, matching contributions were received
for 50% of the first 1% to 6% of eligible participant contributions and were invested in the First Horizon National Corporation
Common Stock Fund but could be redirected into the other investment options within the Plan. Effective January
1, 2013, these contributions are subject to a three-year vesting schedule for new hires. For all other savings plan participants,
these contributions are 100% vested at all times.
Company savings contributions
- The Company provides Flexible Dollars to employees to spend on benefits or to deposit into the Plan. Participants’ Flexible
Dollars deposited into the Plan are identified as Company savings contributions and are not eligible for matching contributions.
These contributions are 100% vested at all times.
Employer Non Elective Contributions
(“ENECs”) - The Company may also make ENECs for employees not participating in a regular bonus program provided by
the Company. ENECs, which are based upon the Company’s performance from the previous year, are determined annually as a
percentage of an eligible participant’s eligible earnings. These contributions are subject to a two-year cliff vesting schedule
at which point they become 100% vested.
On termination of service due
to death, disability, retirement or termination of service for other reasons, a participant or beneficiary may elect to receive
a lump sum amount equal to the value of the participant’s vested interest in their account, or a direct rollover into an
eligible retirement
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
(1)
|
Plan Description (continued)
|
plan, as defined.
Qualified retirees are also given the option of partial distributions. The Plan also provides for in-service and hardship
withdrawals. A participant may request a withdrawal of all or part of their after-tax, rollover and vested ENECs at any time.
Upon obtaining the age of 59 ½, a participant may request a withdrawal of all or a portion of the value of their
vested account. Hardship withdrawals are allowed at any time for certain financial needs, as defined. Account balances
invested in the First Horizon National Corporation Common Stock Fund may be received in the form of shares of Company common
stock.
Each participant’s
account is credited with the participant’s contributions, the Company’s contributions and Plan earnings or
losses. Additionally, each participant’s account is charged a fixed amount per quarter towards the Plan’s
recordkeeping expenses as well with an allocation for asset management fees, amounts paid to other service providers, and
remaining recordkeeping costs. Allocations are based upon participant contributions or account balances, as defined. The
benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested
account balance.
Participants are vested immediately
in their personal contributions, plus actual earnings thereon. Effective January 1, 2013, Company matching contributions are subject
to a three-year vesting schedule for new hires. For all other savings plan participants, these contributions are 100% vested at
all times. Vesting in the ENEC portion of a participant’s account is based on years of continuous service. ENEC contributions
are subject to a two year cliff vesting schedule at which point the contributions become 100% vested.
At December 31, 2015 forfeited
nonvested accounts totaled $256,118. Forfeited amounts may be reallocated to eligible participants based upon eligible compensation
as defined by the Plan document, used to offset employer contributions, be applied to restore participant’s nonvested account
upon timely exercise of a buy-back right, or be applied towards expenses of the administration of the Plan or its related trust.
Previously forfeited amounts totaling $199,044 were applied towards expenses of the administration of the Plan during 2015.
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
(1)
|
Plan Description (continued)
|
|
(f)
|
Notes
Receivable from Participants
|
Active employee
participants may borrow from their accounts a minimum of $1,000 up to the lesser of $50,000 or 50% of their vested account
balance. General purpose loan terms range from 6 to 60 months and primary residence loan terms range from 6 to 120 months.
The loans are secured by the balance in the participant’s account. Interest rates are set quarterly based on the
interest rate on the 15
th
day of the month preceding the new quarter and is based on the prime rate as published
in the Wall Street Journal. At December 31, 2015, interest rates ranged from 3.25% to 8.25%. Principal and interest is
generally paid ratably through payroll deductions.
Prior to April 1, 2009, participants
could have up to 3 loans outstanding at one time. After April 1, 2009, up to two loans may be outstanding at one time, but participants
could have only one general purpose loan and one primary residence loan per calendar year. Participants who had three outstanding
loans prior to April 1, 2009 have been allowed to keep the outstanding loans.
Prior to April 1,
2015, participants could have loan terms that ranged from 6 months for both general purpose and primary residence
loans. Additionally, participants could only have one general purpose loan and one primary residence loan per calendar
year. Effective April 1, 2015, the minimum loan term was increased to 12 months for both general purpose and primary
residence loans. Also effective April 1, 2015, participants may have either two general purpose loans outstanding or one
general purpose loan and one primary residence loan. A participant is not eligible to receive more than one primary residence
loan and one loan for any other purpose in any twelve month period.
|
(2)
|
Summary
of Significant Accounting Policies
|
The financial statements of
the Plan are prepared under the accrual method of accounting, with the exception of benefit payments which are recorded when paid.
|
(b)
|
Adoption
of New Accounting Standards
|
In 2015, the
Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-07
which amends existing guidance related to the measurement, reporting and disclosure of fully benefit-responsive investment
contracts (“FBRICs”). Additionally, in 2015 the FASB issued ASU 2015-12 which amends various other disclosure
requirements applicable to investments held by defined contribution pension plans. The new guidance requires FBRICs to be
measured, presented, and disclosed only at contract value, and it clarifies that a plan’s investments in stable value
funds are not FBRICs and should be measured and presented only at
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
(2)
|
Summary
of Significant Accounting Policies (continued)
|
fair value. The new guidance
also eliminates or simplifies various disclosure requirements applicable to plan investments. Adoption of the new guidance resulted
in removal of FBRICs and investments for which fair value is measured at net asset value (or its equivalent) from the fair value
hierarchy, the reporting of investments within the fair value hierarchy by general type rather than by classes of investments,
and other changes in investment disclosure requirements. The Plan elected to early adopt these standards in the 2015 financial
statements, each of which requires retrospective application to all periods presented. The adoption of these standards had no
effect on the Plan’s net assets available for benefits. However,
Total Investments - at fair value
were reduced by
$510,831 from the amount previously reported as of December 31, 2014, and the
Adjustment to contract value from fair value
for interest in common/collective trust relating to fully benefit-responsive investment contracts
of $510,831 as of December
31, 2014 was eliminated.
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein, and
disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
|
(d)
|
Investment
Valuation and Income Recognition
|
Investments in
mutual funds are recorded at fair value based on the funds’ reported closing net asset values as of the last business
day of the year. The mutual funds held by the Plan are deemed to be actively traded. Investments in money market funds are
stated at fair value based on the closing net asset value of shares held by the Plan at year-end. The investment in the
stable value fund and the common/collective trust funds are valued at the closing net asset values determined by the trustees
of such funds based upon the fair value of the underlying securities held by a fund less its liabilities. The stable value
fund and the common/collective trust funds provide for daily redemptions by the Plan at reported net asset value per share,
with no advance notice requirement. Investments in common stocks are valued at the last reported sales price on the active
market on which the individual securities are traded on the last business day of the year. The First Horizon National
Corporation Common Stock Fund is accounted for on a unit accounting basis for which the investment is stated at the closing
net asset value determined by the Plan’s trustee as of the last business day of the year.
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
(2)
|
Summary of Significant Accounting Policies (continued)
|
Investments held in the self-directed
brokerage account constitute a broad array of stocks, mutual funds, money market funds, and partnerships/joint venture interests.
Fair values of these investments are determined based on evaluated prices using observable, market-based inputs such as data from
Interactive Data. There were no changes in the valuation methodologies used at December 31, 2015 and 2014.
The preceding methods described
may produce a fair value calculation that may not be indicative of net realizable value or future fair values. Furthermore, although
plan management believes its valuation methods are appropriate and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date.
Investment transactions are
recorded on a trade-date basis. Interest income is recorded on the accrual basis and is recognized when earned. Dividend income
is accrued on the ex-dividend date. Realized gains and losses from investment transactions are reported on the average cost method.
Investment income (loss) includes unrealized and realized appreciation and depreciation of investments.
Pursuant to the Plan document,
certain retirees are allowed to segregate and direct the investment of their accounts and defer payment of benefits. These investments
are individually valued according to the accounts.
Participant and employer contributions
are recognized when earned. Rollovers are recognized when approved by the Plan Sponsor.
Benefits paid to participants
or beneficiaries are recognized when paid.
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
(2)
|
Summary of Significant Accounting Policies (continued)
|
|
(g)
|
Administrative
Expenses
|
Administrative expenses are
recognized when incurred. Certain Plan expenses are paid by the Plan Sponsor and not included in the financial statements. Certain
investment expenses are included in Net depreciation in investments.
|
(h)
|
Notes
Receivable from Participants
|
Notes receivable from participants
are measured at their unpaid principal balances plus any accrued but unpaid interest. Delinquent participant loans are reclassified
as distributions based upon the terms of the Plan document.
|
(3)
|
Risks
and Uncertainties
|
Investments, including the
First Horizon National Corporation common stock fund, are exposed to various risks, such as interest rate, market and credit risks.
Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in their fair values
could occur in the near term and that such changes could materially affect participants’ account balances and the amounts
reported in the statements of net assets available for benefits.
|
(4)
|
Concentration
of Participant Investments
|
The Plan has a significant
portion of its assets invested in First Horizon National Corporation common stock fund. This investment in the First Horizon National
Corporation common stock fund approximates 28% and 27% of the Plan’s net assets available for benefits as of December 31,
2015 and 2014, respectively.
Although it has not expressed
any intent to do so, the Plan Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of termination, the Plan provides that all affected participants’
interests will become fully vested and nonforfeitable.
The Internal Revenue Service
(“IRS”) has determined and informed the Plan Sponsor by a letter dated August 21, 2014, that the Plan and related
trust are designed in accordance with applicable sections of the Internal Revenue Code (“IRC”). The Plan has been
amended since receipt of such letter; however,
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
|
(6)
|
Tax
Status of Plan (continued)
|
the Plan’s management
believes that the Plan remains in compliance with the applicable requirements of the IRC. Management is unaware of any course
of action or series of events that have occurred that might adversely affect the Plan’s qualified status.
Accounting principles generally
accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax
liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination
by the IRS. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31,
2015, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset)
or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently
no audits for any tax periods in progress. The plan administrator believes it is no longer subject to income tax examinations
for years prior to December 31, 2012.
|
(7)
|
Related-Party
and Party-in-Interest Transactions
|
Certain Plan
investments are shares of First Horizon National Corporation common stock and mutual funds and common/collective trust funds
which were managed by Wilmington Trust Company through March 31, 2015. Effective April 1, 2015, State Street Bank and Trust
Company manages the Plan’s shares of First Horizon National Corporation common stock and mutual funds and
common/collective trust funds. First Horizon National Corporation is the Plan sponsor. Wilmington Trust Company was the
custodian and trustee through March 31, 2015. State Street Bank and Trust Company is the custodian and trustee effective
April 1, 2015. Therefore, these transactions with First Horizon National Corporation, Wilmington Trust Company, and State
Street Bank and Trust Company qualify as party-in-interest transactions during the time periods provided above. Due to
serving as trustee of the segregated participant accounts, First Tennessee Bank National Association also qualifies as a
party-in-interest. Additionally, through the self-directed brokerage account, funds are held in short-term investments that
were managed by Aon Hewitt through March 31, 2015. Since Aon Hewitt was the recordkeeper through March 31, 2015, such
transactions also qualify as party-in-interest transactions.
The Company also provides
the Plan with certain management and administrative services for which no fees are charged.
|
(8)
|
Fair
Value Measurements
|
ASC 820,
Fair Value Measurements
and Disclosures,
establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
|
(8)
|
Fair
Value Measurements (continued)
|
inputs (level 3 measurements).
The three levels of the fair value hierarchy under ASC 820 are described as follows:
|
Level 1
|
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.
|
|
Level 2
|
Inputs to the valuation methodology include:
|
|
|
•
|
quoted prices for similar assets or liabilities in active markets;
|
|
|
•
|
quoted prices for identical or similar assets or liabilities in inactive markets;
|
|
|
•
|
inputs other than quoted prices that are observable for the asset or liability;
|
|
|
•
|
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
|
|
Level 3
|
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
|
(8)
|
Fair
Value Measurements (continued)
|
The asset’s or liability’s
fair value measurement level within the fair value hierarchy is based upon the lowest level of any input that is significant to
the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable
inputs. The following table sets forth by level, within the fair value hierarchy, as applicable, the Plan’s investments
at fair value as of December 31, 2015:
I
nvestments
at Fair Value as of December 31, 2015
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company common stock
|
|
$
|
129,032,777
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
129,032,777
|
|
Common stocks - other
|
|
|
702,051
|
|
|
|
—
|
|
|
|
—
|
|
|
|
702,051
|
|
Mutual funds
|
|
|
139,902,129
|
|
|
|
—
|
|
|
|
—
|
|
|
|
139,902,129
|
|
Money market funds
|
|
|
20,519,685
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,519,685
|
|
Self-directed brokerage account
|
|
|
12,719,849
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,719,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments in fair value hierarchy
|
|
|
302,876,491
|
|
|
|
—
|
|
|
|
—
|
|
|
|
302,876,491
|
|
Stable value fund*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,381,454
|
|
Common/collective trust funds*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,178,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments at fair value
|
|
$
|
302,876,491
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
450,436,186
|
|
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
|
(8)
|
Fair
Value Measurements (continued)
|
The following table sets forth
by level, within the fair value hierarchy, as applicable, the Plan’s investments at fair value as of December 31, 2014:
I
nvestments
at Fair Value as of December 31, 2014
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company common stock
|
|
$
|
124,401,123
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124,401,123
|
|
Common stocks - other
|
|
|
1,016,857
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,016,857
|
|
Mutual funds
|
|
|
153,775,956
|
|
|
|
—
|
|
|
|
—
|
|
|
|
153,775,956
|
|
Money market funds
|
|
|
20,205,485
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,205,485
|
|
Self-directed brokerage account
|
|
|
10,331,592
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,331,592
|
|
Total investments in fair value
hierarchy
|
|
|
309,731,013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
309,731,013
|
|
Stable value fund*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,600,304
|
|
Common/collective trust funds*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,708,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments at fair value
|
|
$
|
309,731,013
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
450,040,230
|
|
* Investments measured
at fair value using net asset value per share (or its equivalent) as a practical expedient have not been classified in the
fair value hierarchy. The fair value amounts presented in the hierarchy tables for such investments are intended to
permit reconciliation of the fair value hierarchy to the investments at fair value line item presented in the statements of
net assets available for benefits. Such investments have no redemption restrictions or unfunded commitments and redemptions
of these investments may occur each business day.
There were no transfers of investments between levels of the fair value
hierarchy during 2015.
Included in net assets available
for benefits are amounts allocated to individuals who have elected to withdraw from the Plan, but have not been paid as of December
31, 2015 or 2014. Plan assets allocated to these participants were $0 for 2015 and $351,393 for 2014.
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
(10)
|
Reconciliation of Financial Statements to Form 5500
|
The following is a reconciliation
of net assets available for benefits per the financial statements to the Form 5500 expected to be filed for December 31, 2015 and
2014:
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Net assets available for benefits per the financial statements
|
|
$
|
460,754,445
|
|
|
$
|
459,221,891
|
|
Less: Benefits payable
|
|
|
—
|
|
|
|
(351,393
|
)
|
Add: Adjustment to contract value
|
|
|
—
|
|
|
|
510,831
|
|
Net assets available for benefits per the Form 5500
|
|
$
|
460,754,445
|
|
|
$
|
459,381,329
|
|
The following is a reconciliation
of benefits paid to participants per the financial statements to the Form 5500 expected to be filed for 2015:
|
|
2015
|
|
|
|
|
|
|
Benefits paid to participants per the financial statements
|
|
$
|
36,944,703
|
|
Less: accrual for prior year
|
|
|
(351,393
|
)
|
Add: accrual for current year
|
|
|
—
|
|
Benefits paid to participants per the Form 5500
|
|
$
|
36,593,310
|
|
first
horizon national corporation savings Plan
Notes to Financial Statements
December 31, 2015 and 2014
(10)
|
Reconciliation of Financial Statements to Form 5500 (continued)
|
The following is a reconciliation
of the total increase in net assets available for benefits per the financial statements to the Form 5500 expected to be filed for
2015:
|
|
|
2015
|
|
|
|
|
|
|
Total increase in assets per the financial statements
|
|
$
|
1,532,554
|
|
Cumulative adjustment to contract value
|
|
|
(510,831
|
)
|
Cumulative benefits payable
|
|
|
351,393
|
|
Net income (loss) per the Form 5500
|
|
$
|
1,373,116
|
|
(11)
|
Subsequent Events Evaluation
|
|
|
The Plan has evaluated subsequent events through the date that the financial statements were
filed with the Securities and Exchange Commission.
|
first
horizon national corporation savings Plan
Schedule H, Line 4i - Schedule of Assets
(Held at End of Year),
Plan Number: 002
EIN: 62-0803242
December 31, 2015
** Presented in the aggregate to participants as the Small Cap
Value Fund.
(1) Cost information is omitted for Plan assets which are participant-directed.