First Horizon National Corp.'s second-quarter widened though loan-loss provisions fell from the prior quarter as results missed analysts' expectations.
The parent of First Tennessee Bank began boosting its mortgage business in the mid-1990s, following with bank branches in some of the new markets to lure mortgage borrowers as bank customers.
But the subprime implosion and homeowner-mortgage woes have caused it to cut back on mortgage banking and get rid of branches outside its Tennessee home base. It slashed its quarterly dividend 41% in April, joining other U.S. banks doing so in an effort to conserve cash.
First Horizon, which received $866 million in the fall from the Treasury Department's Troubled Asset Relief Program, posted a loss of $123.2 million, or 58 cents a share, wider than its year-earlier loss of $19.1 million, or 10 cents a share. Revenue fell 23% to $491.4 million.
Analysts surveyed by Thomson Reuters were expecting a loss of 33 cents a share on revenue of $566 million.
Loan-loss provisions fell 13% to $260 million from the prior quarter but rose 18% from a year ago. The net charge-off rate climbed to 4.77% from 3.9% in the prior quarter while nonperforming assets, or loans that may go bad, rose to 6.15% from 5.98%.
The company said its tangible common equity ratio rose to 7.3% from 7% a year earlier. The closely watched figure measures how much of a bank's hard assets its common stockholders actually own.
Some observers expect First Horizon to return to its normal earnings power after the financial crisis sooner than most regional banks, crediting its gradual approach. Though Chief Executive Bryan Jordan said in April he expected economic weakness to continue for "a few more quarters," he saw the company as well positioned for a recovery.
The stock's performance reflects that optimism. Its shares didn't crater last fall when those of other banks did. First Horizon shares closed Thursday at $12.68 and were inactive in premarket trading Friday. The stock is up 69% over the past year.