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First Horizon National Corporation (FHN): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:

First Horizon reported in-line adjusted third-quarter 2014 earnings, while it came below the prior-year quarter results. The quarter experienced top-line growth, lower expenses and provision for loan losses. Further, credit quality improved and the company remained well capitalized. The company is set to further enhance its footprint in North Carolina as it recently inked a deal to acquire TrustAtlantic Financial Corp. Further, the company acquired 13 branches in Tennessee. The company is focused on cost control and boosting long-term profitability by focusing on strengthening its core Tennessee banking franchise, which augurs well. However, margin pressure, regulatory issues and sluggish economic recovery remain challenges for First Horizon.

Overview:

Formerly known as First Tennessee National Corporation, First Horizon National Corporation (FHN) is a financial services company based in Memphis, TN and was founded in 1968. The company began as a small community bank chartered in 1864. It is the holding company for First Tennessee Bank and FTN Financial. First Tennessee Bank offers deposit products, loans, investments, insurance, financial planning, trusts, asset management and cash management services in Tennessee. FTN Financial provides capital markets and investment banking services. As of Sep 30, 2014, First Horizon had $24.0 billion in total assets, $15.8 billion in loans net of unearned income and $16.1 billion in deposits.

The company operates through 4 business segments: regional banking, capital markets, corporate, and non-strategic.

The Regional Banking segment offers financial products and services, including traditional lending and deposit taking, to retail and commercial customers in Tennessee and surrounding markets. Regional banking provides investments, financial planning, trust services and asset management, credit card, cash management, and first lien mortgage originations within the Tennessee footprint. Additionally, the regional banking segment includes correspondent banking, which provides credit, depository, and other banking related services to other financial institutions.

The Capital Markets segment consists of fixed income sales, trading, and strategies for institutional clients in the U.S. and abroad, as well as loan sales, portfolio advisory and derivative sales.

The Corporate segment consists of gains on the extinguishment of debt, unallocated corporate expenses, expense on subordinated debt issuances and preferred stock, bank-owned life insurance, unallocated interest income associated with excess equity, net impact of raising incremental capital, revenue and expense associated with deferred compensation plans, funds management, low income housing investment activities, and various charges related to restructuring, repositioning, and efficiency.

The Non-Strategic segment includes the wind-down of national consumer lending activities, legacy mortgage banking elements including servicing fees, and the associated ancillary revenues and expenses related to these businesses. It also consists of the wind-down trust preferred loan portfolio and exited businesses along with the associated restructuring, repositioning, and efficiency charges.

In Jun 2013, First Tennessee Bank National Association, the regional banking group of First Horizon took over all the assets and deposits of Mountain National Bank of Sevierville, TN, from the Federal Deposit Insurance Corporation (FDIC). Notably, as of Mar 31, 2013, Mountain National Bank had assets worth about $437 million and approximately $373 million of deposits.

In Oct 2014, First Tennessee Bank National Association, the major subsidiary of First Horizon enhanced its footprint in Tennessee by completing the purchase of 13 branches in the state from Bank of America Corporation. First Tennessee Bank paid a deposit premium of 3.32% based on deposit balances of around $440 million at the time of the closure of the transaction. The deal also included some loan balances, though not significant. This transaction paved the way for First Tennessee to further spread its wings in several parts of Middle and East Tennessee including Waverly, Columbia, Lawrenceburg and Johnson City.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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