The parent company of First Tennessee Bank posted a bigger-than-expected loss in the second quarter due to a charge from a mortgage buyback demand from Fannie Mae and Freddie Mac.
First Horizon National Corp., said today it lost $124.8 million, or 50 cents per share, in the second quarter after the banking firm took a $272 million charge relating to the mortgage buyback demand from the government sponsored enterprises. Analysts surveyed by Thomson Reuters had expected First Horizon to lose 49 cents per share in the quarter.
Shares of First Horizon stock fell as the market opened today.
Investors have been pressing U.S. banks to buy back soured home loans which were bundled into mortgage-backed securities. Investors in such instruments claim the loans did not meet meet guarantees made by the banks at the time they were sold.
To cover potential litigation and other expenses from such claims from Fannie Mae, Freddie Mac and others, First Horizon said last month it would add to its mortgage repurchase reserve in the second quarter.
That charge reversed five previous consecutive quarters of profit and pushed the bank into the red for the second quarter.
But First Tennessee’s ongoing banking operations continued to improve this spring.
"Our company continues to generate solid results in our regional bank through First Tennessee and our capital markets group through FTN Financial, and our employees continue to win new business, improve the way they serve our customers and work more efficiently at every turn," First Horizon Bryan Jordan said in a statement today. "We are pleased with the progress our folks have made on our efforts to position us for the future including technology investments and the continued wind-down of our non-strategic businesses."
Revenues at the regional bank, First Tennessee, grew 3 percent from first to second quarter, driven by higher net interest income and fees.
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