The company originally began selling branches located outside of its home state in late 2007 -- giving priority to its in-state bank subsidiary First Tennessee Bank, with 180 branches even then -- and it's toiled throughout the crisis to get out from under troubled home equity and construction and industrial loans, a task that continues to this day. That said, it did make it through the crisis and there are more bright spots than blemishes on its balance sheet these days.
New management gets plenty of credit for the bank's survival. Longtime CEO Jerry Baker announced his retirement in 2008, naming Bryan Jordan, the former CFO at First Horizon (and previous finance head at Regions Financial (RF)) to succeed him in September of that year. Losch himself started at the company in early 2009, after his predecessor employer, Wachovia, was acquired by Wells Fargo (WFC), where he was the CFO for Wachovia's main banking subsidiary.
|William 'BJ' Losch, First Horizon's chief financial officer.|
But while the surprise second-quarter profit was attributable to improved credit costs as the bank's loan loss provision fell for a fifth straight quarter, First Horizon wasn't able to release any reserves, like many institutions did in the second quarter.
Nonperforming loans totaled $790.5 million at quarter's end, and the bank said its commercial real estate income loan portfolio continues to show stress. Another issue is its bailout tab. First Horizon accepted $866 million in funding from the U.S. Treasury's Troubled Asset Relief Program, and despite some speculation about paying it back earlier this year, it's yet to do so.The decision by Keefe, Bruyette & Woods to lower its rating on the stock in the wake of the second-quarter report illustrates the conflict that seems to be holding the shares back. The firm likes the bank's long-term prospects, and said it views it as one of the best capitalized banks in the Southeast
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