First Horizon National Corp. of Memphis said that because of reduced investor appetite for the loans, it will no longer originate or fund nonprime mortgages.
Gerald Baker, the $38.8 billion-asset banking company's president and chief executive, said Wednesday in a press release that it also plans to restructure itself "more aggressively" by consolidating more operations, cutting jobs, and closing unprofitable locations. Nonprime loans make up less than 2% of its mortgage originations, he said. The company is to hold a conference call today.
First Horizon's first-quarter earnings fell 7.8% from the fourth quarter and 67.2% from a year earlier, to $70.5 million. Earnings per share of 55 cents were down 5 cents from the fourth quarter and 3 cents from a year earlier. The first quarter included a $15 million loss from mortgage hedging, offset by $10.3 million in securities gains and a $7.5 million reduction in tax expense.
Net interest income fell 3.5% from the fourth quarter and 3.4% from a year earlier, to $237.4 million. The margin shrank by 2 basis points from the fourth quarter and 15 basis points from a year earlier, to 2.84%.
Net chargeoffs rose 97% from the fourth quarter and 79.7% from a year earlier, to $26.6 million, because of problematic residential real estate construction loans and "a few" commercial and industrial loans.