On Sep 18, 2013, we maintained our Neutral recommendation on
First Horizon National Corporation
) primarily based on its prudent expense management and improved
credit quality. However, lower top line and regulatory issues
First Horizon's second-quarter earnings of 17 cents per share
lagged the Zacks Consensus Estimate, but were well ahead of the
year-ago loss of 50 cents. Lower non-interest expenses drove the
results. However, pressure on revenue growth persisted due to
decline in both net interest and non-interest income.
Despite the macroeconomic pressure, First Horizon's credit
quality continues to normalize. Credit metrics consistently
improved in first half 2013 as the overall financial condition of
businesses and consumers strengthened and the housing market
improved in many areas. Going forward, we expect asset quality to
improve with continuous reduction in problem assets.
We are also impressed with the company's cost-control measures,
which aided in improving bottom-line performance amid the
sluggish macroeconomic environment. Moreover, we believe that the
company's solid capital levels will offer flexibility regarding
capital deployment as well as other strategic acquisitions in
Tennessee or its adjacent markets that will be accretive to
However, First Horizon's mortgage repurchase issues remain an
overhang on its earnings. We are also concerned about the
company's top-line growth and margins, which continue to be
impacted by the low rate environment. Additionally, regulatory
issues are expected to limit the company's flexibility with
respect to business investments.
Over the last 60 days, the Zacks Consensus Estimate for 2013
declined 1.4% to 74 cents, while dipped 1.1% to 89 cents for
2014. As a result, First Horizon currently carries a Zacks Rank
Other Banks Worth Considering
Some better performing Southeast banks include
SY Bancorp Inc.
Simmons First National Corporation
). All these 3 banks carry a Zacks Rank #1 (Strong Buy).
FIRST HRZN NATL (FHN): Free Stock Analysis
SIMMONS FIRST A (SFNC): Free Stock Analysis
S Y BANCORP INC (SYBT): Free Stock Analysis
WESBANCO INC (WSBC): Free Stock Analysis
To read this article on Zacks.com click here.