The net loss available to shareholders was $27.7 million, or 12 cents a share, compared with a loss of $82.8 million, or 37 cents a share, a year ago. Still, it was the eighth straight quarter of losses for First Horizon.
Analysts had expected a loss of 15 cents a share, according to Thomson Reuters. The bank's stock fell 8.5 percent in trading Friday on the New York Stock Exchange, closing at $14.02 a share.
Stock analyst Bob Patten of Morgan Keegan & Co. downgraded First Horizon's stock to "market perform," saying investors had already priced in the bank's recent improvements and there was little chance of short-term growth.
Patten feared investors were selling the stock to lock in profits. The stock price had reached a 52-week high as of this week.
But Kevin Reynolds of Wunderlich Securities in Memphis kept a "buy" rating on the stock Friday. Reynolds said in a note to investors that he expects the bank will return to profitability in the second half of this year, hit a $17-a-share stock price, and repay the government's TARP money in the next 12 months.
Memphis-based First Horizon National Corp. has been hard hit by construction loans and bad mortgages outside Tennessee, but it has been retrenching back into its home state.
Since late last year, it has added 16 or 17 new hires in the Nashville area, according to Middle Tennessee Market President Doyle Rippee.
"We have had a lot of good growth in households and in consumer and business,'' Rippee said. "We think the economy is beginning to look more positive."
Bad loans declineThe number of bad loans is declining on the company's books. Nonperforming assets, or bad loans, have fallen 17 percent from a year ago. The provision for loan losses fell by more than 60 percent to $105 million in the first quarter.
"I'm very encouraged by the progress we're making,'' CEO Bryan Jordan said Friday in an interview. "We have a lot of momentum."
He said that loan losses were narrowing in home equity loans and that he expects commercial real estate to remain under stress but not get worse.
A lot of the bank's trimming of loan losses has come by reducing lending, particularly for developers or builders. The company has cut its portfolio of residential construction loans to builders by more than $3.6 billion in more than two years.
Total loans are down 15 percent from last year to $17.5 billion.
Contact banking and real estate reporter Naomi Snyder at 615-259-8284 or nsnyder@tennessean.com.
Tractor Supply shares up on higher 2010 earnings outlookNo Need to Hit the Panic Button Yet - Added Jobs Push Mortgage Rates Up
