One of the most volatile stocks during the already jaw-dropping turbulence on Wall Street during the past two days has been Tennessee's largest banking company, First Horizon National Corp.
The Memphis-based holding company, which owns First Tennessee Bank, watched panicky investors sell off the company's stock on Monday, and shares dropped 36 percent to $7.25 per share. Then, on Tuesday, it bounced back 29 percent to $9.36 per share, nearly erasing the losses from the previous day.
The wild ride mirrored Wall Street's performance over the last 48 hours and was typical of how a number of regional banks' shares plummeted one day, only to recover the next. Regions Financial Corp. fell 41 percent in trading on the New York Stock Exchange on Monday but was back up 16 percent on Tuesday. Fifth Third Bancorp was down 44 percent on Monday but climbed 31 percent a day later.
The rebound came as Wall Street also snapped back with a gain of 485 points on Tuesday after its biggest sell-off in years a day earlier, when the Dow collapsed by a record 778 points.
"We are living in unprecedented times,'' said Morgan Keegan & Co. senior bank analyst Robert Patten. "Never in my 29-year career have I seen financial markets like this."
Rumors have been flying about First Horizon and other regional banks as investors worry which institution might be the next to fail or to be sold at fire-sale prices.
Such concerns increased after Citigroup acquired Wachovia Corp., the North Carolina lender that also operates here, over the weekend, according to bank analyst Adam Barkstrom of Sterne, Agee & Leach.
"I've been doing this a long time, and I have never seen markets this crazy," Barkstrom said. "It's just amazing to me."
Some analysts have tried to keep a sense of humor amid the rise and fall in markets. Patten sent out a "financials Final Four" table Tuesday to clients, so they can pick which banks will survive, much like sports fans pick winners during the NCAA March Madness basketball tournament.
First Horizon's shares suffered from rumors on Monday about a run on the bank that proved to be false, Barkstrom said. He and another analyst have since upgraded their ratings of the stock, saying First Horizon's fundamentals don't justify rock-bottom pricing. Barkstrom said he doesn't expect First Horizon to fall into the distressed bank category.
To appease worried investors, First Horizon issued a news release Tuesday repeating that its financial situation hasn't changed and noting that the bank's Tier 1 capital ratio was 10.5 percent. Federal regulators refer to a bank with 5 percent as well capitalized.
The company's new president and chief executive officer, Bryan Jordan, visited clients and a bank advisory board in Nashville on Tuesday, saying he has been trying to explain what's going on amid all the turmoil.
He said the company had gotten ahead of its problems by selling the bulk of its mortgage business, closing bank branches outside of Tennessee and raising $690 million in capital during the spring. The banking company expects to charge off $485 million to $585 million in bad loans during the year, mostly tied to real estate loans outside the state.
"For the most part, I think we've taken most of the significant steps we're going to take,'' Jordan said during an interview Tuesday, adding that the chances of a sale of the company during the next year are very low.
Nashville-area president Tony Thompson said commercial loan volume is up 9 percent in Middle Tennessee from last year and the bank will have 50 offices by the end of the year in the six-county region that includes Nashville, up from 25 in 2003.
"I'm very excited about the company coming out of this,'' Jordan said. "It will be focused on our core banking business, and it will be focused on our capital markets business."
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