First Horizon (FHN) in Memphis, Tenn., has been quietly building out a commercial lending operation even as it copes with its failed mortgage expansion.

Industry observers for years have focused on the $25.5 billion-asset company's mortgage missteps before the financial crisis and their aftermath. It isn't hard to do given First Horizon's lingering exposure to putbacks. But in some ways, the woes have provided a cover that allowed it to ease into several important commercial markets.

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