Saturday, October 17, 2009

First Horizon loss narrows

The Memphis-based parent company of First Tennessee Bank, First Horizon National Corp., reported a better-than-expected loss of $52.9 million on Friday.
Its third-quarter earnings came in at 24 cents per share, as expenses, bad loans and loan loss provisions all declined during the quarter. But analysts had expected an average 32-cent loss for the quarter, according to Thomson Reuters.

The bank's performance was much better than the same period a year ago. First Horizon's $52.9 million loss, in fact, was less than half of the $125.1 million, or 58 cents per share, it lost in the July-September period in 2008.

The stock climbed 1 cent to $13.50 per share in trading on the New York Stock Exchange.

"(First Horizon) management continues to stick to their knitting,'' said Adam Barkstrom, an analyst with Sterne, Agee & Leach Inc., who has a neutral recommendation on the stock. "They haven't been overly optimistic on the improvement of things. I think they've been much more realistic than other management teams."

The First Horizon report came on a day when other bank stocks were falling. On Friday, Bank of America reported a disappointing $2.2 billion loss for the quarter, as it wrote off an additional $1 billion worth of bad loans on its books. Its stock fell 84 cents to $17.26 per share in Friday trading as the Dow Jones average closed down overall by 67 points to finish the week at 9,995.91, just shy of the 10,000-point benchmark it had achieved earlier in the week for the first time since early October 2008.

First Horizon officials said they're continuing to wind down their mortgage and construction loan business outside Tennessee, which has been an albatross for the company for more than a year.

Morgan Keegan & Co. analyst Robert Patten said in a note that he expects First Horizon's residential real estate lending portfolio outside of the state, which accounted for nearly 75 percent of bad loans, to be a thing of the past by year-end.

Patten, who is bullish on the stock, said that will help the bank, and he expects a profit for the company in the first quarter of next year.

First Horizon's allowance for loan losses fell about 2 percent to $944.8 million during the quarter. The bank also has seen growth in deposits.

"We have enjoyed some good growth in households, both in terms of deposits and businesses,'' said Doyle Rippee, Nashville regional president. "Our loan growth has been strong in consumer business. We opened new banking centers last year, and our pipelines for new business are growing."

The bank has 48 branches in the Nashville metropolitan statistical area, up from 46 two years ago. Deposits in the area climbed 1.6 percent from last year to $1.64 billion as of June 2009, according to the latest deposit market share report from the Federal Deposit Insurance Corp. First Tennessee is the sixth-largest bank in the Nashville area.

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