First Horizon National (FHN) in Memphis said Thursday that its first-quarter profit fell l3% from the same period in 2011, to $30.5 million, as improvement in its banking and capital markets units could not offset steep losses in its defunct mortgage operations.
The $26 billion-asset parent of First Tennessee Bank said that its “nonstrategic” segment lost $44 million in the quarter as it continued to repurchase soured home loans and “work through issues from the mortgage business the company sold in 2008.” The company also said that losses in its corporate segment widened to $18 million, from $8 million in the first quarter of 2011, due to declining yields in the securities portfolio.
The company’s two main units, regional banking and capital markets, posted solid results for the quarter. Pre-tax net income at the regional bank improved by 13% year over year, due to improved asset quality and higher loan volume, which offset a 10% drop in noninterest income. In the capital markets division, FTN Financial, pre-tax net income rose 45% on the strength of higher revenue from fixed-income sales.
On a per-share basis, First Horizon earned 12 cents, a penny below estimates of analysts polled by Thomson Reuters.
First Horizon’s shares were down nearly 7% in early trading Thursday, to $9.27.
First Horizon also announced Thursday that it intends to deploy some of its excess capital by reinstating its dividend and buying back $200 million of its shares. Beginning July 1 it will pay a quarterly dividend of one cent per share.