This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

First Horizon Meets Loss Estimate; Shares Tank

Stocks in this article: FHN

  • First Horizon posts a second-quarter net loss of $124.8 million, or 50 cents a share.
  • Previously announced charges of $272 million take 67-cent bite from earnings.
  • Repurchased $36.9 million worth of shares during the second quarter; $74.5 remaining authorized for buybacks.

Updated with market close information and comment from Deutsche Bank analyst Matt O'Connor.

NEW YORK ( TheStreet) -- First Horizon National Corp. (FHN - Get Report) of Memphis, Tenn., on Friday reported a second-quarter net loss to common shareholders of $124.8 million, or 50 cents a share, matching the consensus estimate among analysts polled by Thomson Reuters.

The company had previously announced $272 million in second-quarter charges "for mortgage repurchase and litigation matters," which "a negative impact on earnings per share of approximately $.67 for the quarter."

First Horizon's shares declined over 5% to close at $8.09.

First Horizon earned $30.5 million, or 12 cents a share, in the first quarter, and $20.0 million, or eight cents a share, during the second quarter of 2011.

First Horizon said that "the repurchase liability for first lien mortgage loans increased to $360.5 million in second quarter from $161.2 million in first quarter," and that the company's second-quarter mortgage putback provision "reflects a change in estimate of FHN's repurchase obligations for alleged breaches of reps and warranties related to mortgage loans sold," to Fannie Mae (FNMA) and Freddie Mac (FMCC).

The company reported second-quarter net interest income of $172.7 million, increasing from $171.9 million the previous quarter, but declining slightly from $172.9 million a year earlier. Main subsidiary First Tennessee Bank grew its second-quarter revenue 3% from the first quarter, "driven by higher net interest income and fees," as "period-end loans and average deposits in the bank both grew 3 percent from first to second quarter."

The second-quarter net interest margin was 3.16%, increasing from 3.12% in the first quarter, although it was down from 3.20% a year earlier. The net interest margin is the spread between the average yield on loans and investments and the average cost for deposits and borrowings. The industry trend over the past year has been for margins to contract, as short-term interest rates remain close to zero, and long-term rates continue to decline.

A release of $25 million in loan loss reserves had a positive effect on second-quarter bottom line. First Horizon's loan quality continued to improve, as its annualized ratio of net charge-offs to average loans declined to 1.01% in the first quarter, from 1.16% the previous quarter, and 1.67% a year earlier. Reserves covered 1.98% of total loans as of June 30, implying further reserve releases over coming quarters.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs