Updated with market close information.



) -- JPMorgan analyst Steven Alexopoulos on Thursday raised his price target on

First Horizon National

(FHN) - Get Report

by 18%, calling the Memphis,Tenn., lender his "top pick for 2012" among small and mid-cap U.S. banks.

First Horizon's shares were rose 6 to close at $8.25.

Through Wednesday's close at $7.82, the shares were down 33% year-to-date, compared to a 26% decline for the

KBW Bank Index


. The shares traded for 0.9 times tangible book value, according to SNL Financial, and for 11.5 times the consensus 2012 earnings estimate of 67 cents a share, among analysts polled by FactSet.

First Horizon National CEO Bryan Jordan

Alexopoulos reiterated his "Overweight" rating on First Horizon's shares, while raising his "December 2012 price target" to $10 from $8.50, after a meeting with CEO Bryan Jordan left the analyst "feeling better" about the company's "mortgage putback risk, capital return opportunities, and long-term profitability goals." The analyst raised his 2012 EPS estimate to 58 cents from 40 cents.

First Horizon in October commenced a

$100 million share buyback program

, and Alexopoulos said the company's capital return would "exceed 100% return of net income to shareholders via buyback and dividend," if the buybacks were completed by the middle of 2012. The analyst added that "management viewed the opportunity to repurchase shares as the most accretive option on the table today for capital deployment," since the shares were trading at a discount to book value.

With all eyes on the third round of Federal Reserve

stress tests

for the largest banks, which will require banks to prove they can withstand a severe recession before gaining approval on plans to increase dividends and share buybacks, and with the Fed's ultimate capital requirements for financial companies with over $50 billion in assets still unresolved following the regulator's

173-page rules proposal

on Tuesday, Alexopoulos said that First Horizon had much more flexibility on capital management, since the company is considered "systemically 'unimportant'" with only $25 billion in total assets.

Despite a recent warning by


(STI) - Get Report

that the Atlanta lender would increase its provisions for mortgage putback demands during the fourth quarter, Alexopoulos believes First Horizon "is positioned to buck this trend and see mortgage provision decline on a quarterly basis in 4Q," and that "there is likely considerable room in 2012 to see improvement in required provision expense as compared to 2011."

Guggenheim analyst Marty Mosby said on Thursday SunTrust's bump in fourth-quarter mortgage putback expenses has resulted from a focus by Fannie Mae and Freddie Mac "on getting any claims processed as soon as possible versus any new exposure."

Mosby reiterated his "Buy" rating on SunTrust, with a $22 price target, which would be a 30% gain from Thursday's closing price of $16.95.

Getting back to First Horizon, Alexopoulos said that "Over the longer term, we now see FHN as a $1.40+ earner, with a primary variable being how many shares the company is able to retire with the stock trading below" tangible book value.

Interested in more on First Horizon National? See TheStreet Ratings' report card for

this stock



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Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.