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First Horizon: JPMorgan Settlement Loser

NEW YORK ( TheStreet) -- First Horizon National Corp. (FHN - Get Report) shares lost 1.18% in unusually active trading on an otherwise unremarkable day for financial stocks Monday.

More than 8.2 million First Horizon shares changed hands Monday compared to a trailing daily three-month average of 3.3 million shares. While some of the activity may have been an ongoing reaction to First Horizon's third quarter earnings report Friday, an expected $4 billion mortgage settlement for JPMorgan Chase (JPM - Get Report) with the Federal Housing Finance Authority clearly had an impact as well. The JPMorgan deal, widely leaked but not yet official, is part of an expected $13 billion JPMorgan settlement with the U.S. Justice Department.

First Horizon "may be the most exposed to a FHFA settlement before any litigation reserves are used," argued Wells Fargo analyst Matt Burnell in a research note published Monday. He expects a deal could reduce earnings by 44% in 2014.

Burnell wrote JPM's reported FHFA settlement payment "amounts to 12.1% of the loans sold to Fannie Mae (FNMA)and Freddie Mac (FMCC) before the crisis." This is similar to UBS's (UBS) ratio of 14%, Burnell stated.

Burnell sees "relatively sizeable exposure," for Bank of America (BAC - Get Report) as well, with Morgan Stanley (MS - Get Report) and Goldman Sachs (GS - Get Report) facing more manageable (but still material levels) of risk.

Several news reports have stated a Bank of America deal will cost the bank $6 billion. Bank of America shares fell 0.75% to $14.52 JPMorgan shares were down just .06% to $54.26, Morgan Stanley shares were down 0.88% to $29.43 and Goldman shares were up 0.68% to 159.77%. Trading volumes for all those big bank names were roughly average.

The major indices U.S. stock market indicaes were essentially flat on the day.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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BAC $15.45 -0.64%
FHN $14.01 -1.41%
GS $177.01 0.56%
JPM $60.81 -0.99%
MS $31.43 -0.22%


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