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NEW YORK (
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.