Fitch Ratings has affirmed First Horizon National Corp.'s (FHN) ratings at 'BBB-/F3'. The Rating Outlook remains Stable. A full list of rating actions follows at the end of this press release.

The rating action follows a periodic review of the mid-tier regional banking group, which includes BOK Financial Corp. (BOKF), Cathay General Bancorp (CATY), East West Bancorp, Inc. (EWBC), First Horizon National Corp. (FHN), First National of Nebraska, Inc. (FNNI), First Republic Bank (FRC), Fulton Financial Corp (FULT), People's United Financial Inc. (PBCT), Synovus Financial Corp. (SNV), TCF Financial Corp. (TCB), Webster Financial Corp. (WBS), Wintrust Financial Corp (WTFC), and UMB Financial Corporation (UMB).

Company-specific rating rationales for the other banks are published separately.

KEY RATING DRIVERS - IDRS, VRs AND SENIOR DEBT

Fitch's views FHN's ratings as solidly placed at 'BBB-' The company continues to exhibit a strong franchise in the Southeast shown by the #2 market share in the quality economic market of Tennessee. Furthermore, FHN's core business lines (regional bank and capital markets) continue to generate reasonable capital and absorb the risk of potential litigation risks. Finally, Fitch notes the strength of management's efforts to wind down the nonstrategic loan portfolio while minimizing credit losses.

While progress has been made over the last year in addressing legal through an announced agreement with Freddie Mac (FHLMC) and Fannie Mae (FNMA) relating to loans sold to the GSEs leading up to the crisis, Fitch believes FHN's ratings are constrained to their current level over the long-term given additional legal overhang associated with the company's former legacy business strategy as well as its tepid consolidated earnings performance. Furthermore, Fitch continues to believe that FHN's asset quality will lag that of higher-rated peers given the sticky nature of its nonperforming assets.

Over the past year, FHN reached agreements FHLMC and FNMA relating to loans sold to the GSEs between 2000-2008. While Fitch viewed the announcements as generally credit neutral overall, the settlements are also viewed as positive steps forward for FHN in getting out from under various legal overhangs that resulted from past national mortgage lending strategies. The current rating and Outlook for FHN incorporates the view that the $200 million provision made in 3Q'13 would be sufficient to cover both GSE-related settlements and other idiosyncratic costs relating to legacy strategies.

Fitch expects FHN to continue to resolve outstanding legal contingencies over the near-to-mid-term. The company established $92 million of net loss accruals from 4'Q13 through 3Q'14 related to legal matters and points toward resolution of legacy matters. At 3Q'14, its litigation reserve had $56 million set aside to likely cover potential payouts relating to the origination and sale of $27 billion of private-label securitizations between 2005 and 2008. The company is currently subject to five securitization-related lawsuits and three indemnification claims.

Fitch notes FHN is also being investigated by the U.S. Department of Justice (DOJ) (on behalf of the Housing and Urban Development [HUD]) relating to the underwriting of FHA loans which could result in further settlement payouts.

The outcome and timing of these lawsuits, as well as any lawsuits FHN could be named apart of in the future, is presently unclear and thus not explicitly incorporated in FHN's current ratings. However, Fitch expects FHN to maintain reasonable capital levels consistent with its overall risk profile even after settlement of these legacy issues. This expectation is incorporated in today's rating action and the current Outlook.

Overall, capital remains adequate relative to similarly rated banks and supports FHN's current rating. At 3Q'14, FHN had an estimated Basel III capital equity tier 1 (CET1) of 11.4% compared to management's target of between 8.0% and 9.0% in a normalized, higher rate environment. Management has shown its willingness and ability to re-evaluate capital distribution actions, such as pausing its share repurchase program after the FNMA settle was announced in 3Q13, in order to maintain its strong capital base.

FHN's core business lines have maintained adequate performance relative to similarly rated peers. The company's core business lines generate a ROA of between 80 and 100 bps any given quarter, in line with Fitch's expectations and at levels that generate reasonable capital. For instance, FHN's regional bank has generated a return on period-end assets of well-over 1% over the last five quarters, showing great strength in the regional bank franchise.

Fitch anticipates that FHN's core business lines will continue to be reasonably profitable going forward. However, given the sustained low, short-term rate environment, Fitch expects the bank's NIM to remain challenged and the capital markets business to struggle to hit the $1 million ADR goal of management's. This expectation is embedded in FHN's current rating of 'BBB-'.

Furthermore, Fitch expects that performance on a consolidated basis will continue to substantially lag higher rated peers due to the additional costs associated with the company's former legacy business strategy. FHN's nonstrategic book, while now marginally profitable, still necessitates a higher level of credit costs and overhead expense and will be a drag on the bank's consolidated earnings as long as it is a meaningful percentage of total assets (above 5%).

Asset quality, while improving, continues to weigh on FHN's rating and overall risk profile. NPAs have been reduced to under 3.0% but will remain elevated compared to peers given their nature. Accruing TDRs, which make up nearly half of the company's NPAs, primarily consist of stickier consumer-related restructured loans that will most likely weigh down asset quality metrics over the long-term. Fitch views the level of home equity loans that will reset over the rating horizon as a constraint for upward rating movement. While Fitch does not believe capital will be significantly or materially impacted, credit costs and nonperforming loan inflows will likely remain elevated as borrower payments reset from interest only to principal and interest.

RATING SENSITIVITIES - IDRS, VRs AND SENIOR DEBT

Fitch believes FHN's ratings are reasonably situated at 'BBB-' given core business results and franchise strength.

Fitch will continue to monitor and assess FHN's legal risk. To the extent that the company continues to need to take outsized charges that result in material capital deterioration, negative rating action could be taken, although this is not expected. Material capital deterioration could mean that core capital levels drop to the bottom quartile of the peer group.

Given continued expectations that core earnings will be in-line with similarly rated peers, upward rating movement is unlikely over the near to mid-term. However, over the long-term, to the extent that FHN is able to maintain capital at adequate levels, reasonably manage legal risk and credit risk and improve earnings performance, positive rating action could be taken.

KEY RATING DRIVERS - HOLDING COMPANY

The IDR and VR of FHN is equalized with its operating company, First Tennessee Bank, NA, reflecting its role as the bank holding company, which is mandated in the U.S. to act as a source of strength for its bank subsidiaries.

RATING SENSITIVITIES - HOLDING COMPANY

FHN's parent currently has a double leverage ratio in excess of 120%. When double leverage exceeds 120%, Fitch has some discretion to notch the holding company down below its bank subsidiary. However, given that the bank has significant capital levels and that both the bank and holding company have shown the ability to access the capital markets, Fitch has not deemed it necessary to take such an action. Furthermore, the holding company currently has four quarters of coverage in cash, which aids in meeting near-term obligations.

Should FHN's holding company begin to exhibit signs of weakness, demonstrate trouble accessing the capital markets, or have inadequate cash flow coverage to meet near-term obligations, there is the potential that Fitch could notch the holding company IDR and VR from the ratings of the operating companies.

KEY RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR

FHN has a Support Rating of '5' and Support Rating Floor of 'NF'. In Fitch's view, FHN is not systemically important and therefore, the probability of support is unlikely. IDRs and VRs do not incorporate any support.

RATING SENSITVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR

FHN's Support Rating and Support Rating Floor are sensitive to Fitch's assumption around capacity to procure extraordinary support in case of need.

KEY RATING DRIVERS - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

Subordinated debt and other hybrid capital issued by FHN and by various issuing vehicles are all notched down from FHN or its bank subsidiaries' VRs in accordance with Fitch's assessment of each instrument's respective non-performance and relative loss severity risk profiles.

RATING SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The ratings of subordinated debt and other hybrid capital issued by FHN and its subsidiaries are primarily sensitive to any change in FHN's VR.

KEY RATING DRIVERS - LONG- AND SHORT-TERM DEPOSIT RATINGS

FHN's uninsured deposit ratings are rated one notch higher than the company's IDR and senior unsecured debt because U.S. uninsured deposits benefit from depositor preference. U.S. depositor preference gives deposit liabilities superior recovery prospects in the event of default.

KEY RATING SENSITIVITIES - LONG- AND SHORT-TERM DEPOSIT RATINGS

The ratings of long- and short-term deposits issued by FHN and its subsidiaries are primarily sensitive to any change in FHN's long- and short-term IDRs.

Fitch affirms the following ratings:

First Horizon National Corporation

--Long-term IDR at 'BBB-'; Outlook Stable;

--Viability at 'bbb-'';

--Short-term IDR at 'F3';

--Senior at 'BBB-';

--Preferred stock at 'B';

--Support at '5';

--Support Floor at 'NF'.

First Tennessee Bank, N.A.

--Long-term IDR at 'BBB-'; Outlook Stable;

--Viability at 'bbb-';

--Short-term IDR at 'F3';

--Long-term deposits at 'BBB';

--Short-term deposits at 'F3';

--Short-term debt at 'F3';

--Senior debt at 'BBB-';

--Subordinated debt at 'BB+';

--Preferred stock at 'B';

--Support at '5';

--Support Floor at 'NF'.

First Tennessee Capital II

--Preferred stock at 'B+'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'U.S. Banking Quarterly comment: 4Q14' (Jan. 28, 2015);

--'U.S. Banks: The Risks with Energy Slide' (Jan. 16, 2015);

--'U.S. Basel III and Dodd Frank Act Regulatory Guide' (Nov. 21, 2014);

--'2015 Outlook: U.S. Banks (Growth in a Challenging Rate Environment)' (Nov. 12, 2014);

--'U.S. Banks: Implications of an Interest Rate Shock Scenario' (Oct. 30, 2014);

--'U.S. Banks: Liquidity and Deposit Funding (Aug. 8, 2013);

--U.S. Banks: Interest Rate Risks (What Happens When Rates Rise) (June 18, 2013);

--'U.S. Bank Mergers and Acquisitions -- When Will The Catalysts Kick In? (July 11, 2013);

--'Index Trend Analysis - 4Q14 (Fitch Fundamentals Index Remains Neutral)' (Jan. 15, 2015);

--'Risk Radar Global 3Q14' (Sept. 15, 2014);

--'Global Financial Institutions Rating Criteria' (Jan. 31, 2014);

--'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012);

--'Assessing and Rating Bank Subordinated and Hybrid Securities Criteria' (Jan. 31, 2014);

--'U.S. Bank HoldCos & OpCos: Evolving Risk Profiles' (March 27, 2014);

--'Rating Considerations for U.S. Bank Holdco & Opcos' (Update on Position Outlined in 1Q14) (Dec. 1, 2014).

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=978958

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Fitch RatingsPrimary AnalystBain K. Rumohr, CFAAssociate Director+1 312-368-3153Fitch Ratings, Inc.70 West Madison StreetChicago, IL 60602orSecondary AnalystJulie SolarSenior Director+1 312-368-5472orCommittee ChairpersonChristopher WolfeManaging Director+1 212-908-0771orMedia Relations:Alyssa Castelli, +1 212-908-0540alyssa.castelli@fitchratings.comElizabeth Fogerty, +1 212-908-0526elizabeth.fogerty@fitchratings.com