Shares of First Horizon National Corp. ( FHN) were down 7.7% to $11.89 in early trading Friday, as the Memphis, Tenn., holding company reported a first-quarter loss of $65 million.

After factoring in $15 million in interest on preferred stock held by the Treasury, the net loss available to common shareholders was $83 million for a loss of 30 cents per diluted common share, which compared to the Thomson Reuters consensus analyst estimate of a 25-cent-per-share loss for the first quarter.

In comparison, the net loss available to common shareholders was $63 million in the fourth quarter and earnings were a positive $8 million in the first quarter of 2008.

In addition to the doubling of interest paid on preferred stock during the first quarter (since the company received $867 million in federal money via the Troubled Assets Relief Program on Nov. 14), earnings were affected by an increase in the quarterly provision for loan-loss reserves to $300 million, from $280 million in the fourth quarter and $240 million in the first quarter of 2008.

The following chart contains asset quality ratios derived from First Horizon National Corp.'s first quarter financial supplement:

First Horizon Corp.'s Asset Quality ($millions)
  March 2009 Dec. 2008 March 2008
Nonperforming Loans Loans $1,133 $1,054 $537
Loans Past Due > 90 Days * $211 $91 $77
Foreclosed Real Estate $119 $104 $84
Total Nonperforming Assets $1,462 $1,249 $698
 
Total Assets $31,208 $31,022 $37,268
 
% Nonperforming Loans 6.53% 5.38% 2.80%
% Nonperforming Assets 4.69% 4.02% 1.87%
 
Net Charge-offs $208 $191 $99
Provision for Loan Losses $300 $280 $240
 
Net Charge-offs/Avg. Loans (Annualized) 3.97% 3.61% 1.81%
Loan Loss Reserves/Total Loans 4.57% 3.99% 2.20%
 
Loan Loss Reserves/Nonperforming Loans & Loans Past Due 90+ Days 70.05% 74.22% 78.72%
* Government-guaranteed balances have been netted out.
Source: First Horizon's First Quarter 2009 financial suppliment.

While First Horizon National Corp., like many bank holding companies, excludes loans past due 90 days or more, but still accruing interest, from "nonperforming loans," we have included these loans, less government-guaranteed balances, in nonperforming assets.

Nonperforming loans and net charge-offs (actual loan losses) continued to increase in the first quarter, although CEO Bryan Jordan said, "Our proactive approach on asset quality continued to pay off as growth in non-performing loans slowed. Our capital position and loan loss reserves remain at near industry-leading levels."

The company has been winding down its National Specialty Lending division, which has been the prime factor in First Horizon National Corp.'s construction and consumer loan quality problems and net charge-offs. This loan portfolio totaled $7.5 billion or 24% of the company's total assets as of March 31, compared to

The company's capital position (augmented in the fourth quarter by the TARP infusion) was strong, with an estimated tier 1 capital ratio of 14.98%, compared to 15.03% last quarter and 8.23% in March 2008.
Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, 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.