First Horizon to Slash 1,500 Jobs

The company looks to shrink its mortgage exposure.
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Memphis-based First Horizon National (SYMBOL) plans to slash its mortgage and national banking businesses in a move that will eliminate at least 1,500 jobs by early next year.

The company said late Wednesday that it intends to cut up to 50% of its mortgage sales force, reduce support staff and close underperforming mortgage branches. First Horizon employs about 12,000 workers.

"We're going to be aggressive and dramatically improve our performance and efficiency by keeping only our most productive sales performers, who for us generate almost 90 percent of our production,'' said CEO Jerry Baker in a press release. "In addition, we'll make reductions in our wholesale divisions and specialty sales forces.''

First Horizon also will shrink the real estate portfolios on its balance sheet by making further changes in its consumer and construction lending business. "New originations are expected to decline significantly as a result of continued product and program changes and the retention of only the most productive sales people."

In addition, the company will cut back-office support in consumer and construction lending as production is reduced, and will exit selected national markets for business banking.

First Horizon also said it will move the national cross-sales of deposit products to an Internet-based model, "eliminating the need for banking specialists in mortgage offices."

On July 19, First Horizon said it would pursue the sale, closure or consolidation of First Horizon Bank branches in its four national full-service banking markets of Atlanta, Baltimore, Dallas and Northern Virginia. First Horizon will continue to offer mortgage loans in these markets.

"This strategic shift will reduce our real estate exposure and position us appropriately for the expected ongoing contraction of the housing market,'' said Baker." As we focus our energy on continuing to build our strong banking franchise in Tennessee, we will enhance shareholder value by deemphasizing our more volatile national businesses, improving short-term profitability and increasing longer-term returns.''

Shares of First Horizon, which have fallen more than 20% in two months, closed Wednesday up 26 cents to $29.46.