First Horizon National Corp. (NYSE:FHN) filed Quarterly Report for the period ended 2012-06-30.
First Horizon National Corporation has a market cap of $2.1 billion; its shares were traded at around $8.48 with and P/S ratio of 1.3. The dividend yield of First Horizon National Corporation stocks is 0.5%.
Highlight of Business Operations:The non-strategic segments pre-tax loss was $275.4 million in 2012 compared to $11.9 million in 2011 due to an increase in expenses combined with a decline in revenue. Total revenue in 2012 was $39.2 million compared to $64.3 million in 2011 with net interest income declining to $24.0 million in 2012 from $31.4 million in the prior year. The decline in net interest income is primarily due to a 19 percent reduction in average loans from 2011. The provision for loan losses decreased $4.6 million to $10.2 million in 2012 due to continued stabilization and runoff of the non-strategic portfolios.
Mortgage banking income was $33.2 million and $59.8 million for the six months ended June 30, 2012 and 2011, respectively. Servicing fees declined $7.9 million to $32.2 million in 2012 consistent with the decline in the servicing portfolio. Positive net hedge results were $10.9 million in 2012 compared to $27.9 million in 2011, reflecting more narrow spreads between mortgage and swap rates in 2012. The negative impact attributable to runoff was $12.2 million and $12.7 million in 2012 and 2011, respectively, and is primarily the result of a smaller servicing portfolio. Origination income in 2012 was $2.1 million compared to $3.8 million in 2011, due to a decline in both refinance and home-purchase originations from a year ago correlated with a reduction in sales force. Unhedged fair value adjustments of the remaining mortgage warehouse were positive $2.3 million and $.5 million in 2012 and 2011, respectively.
Pre-tax income in the capital markets segment increased from $2.1 million in 2011 to $51.8 million in 2012, due to a reduction in expenses combined with an increase in fixed income sales revenue. Total revenue in 2012 increased to $193.0 million from $179.0 million in 2011 as fixed income sales revenue was $166.7 million in 2012 compared to $154.4 million in 2011. Fixed income average daily revenue improved to $1.3 million during 2012 compared to $1.2 million in 2011 reflecting more favorable market conditions in early 2012 resulting in elevated trading volume from both depository and nondepository customers. Other product revenue increased to $15.0 million from $13.6 million in 2011. Noninterest expense was $141.2 million compared to $176.9 million in 2011. A $14.9 million increase in personnel costs is primarily due to higher variable compensation costs associated with the increase in fixed income sales revenues in 2012 relative to 2011. Legal and professional fees decreased $12.3 million compared to 2011 as the prior year included costs associated with a litigation matter that was settled in third quarter 2011. 2011 also included a $36.7 million loss accrual related to the litigation settlement.
The non-strategic segments pre-tax loss was $319.3 million in 2012 compared to $36.6 million in 2011 due to an increase in expenses combined with a decline in revenue. Total revenue in 2012 was $90.6 million compared to $124.8 million in 2011 with net interest income declining to $48.9 million in 2012 from $64.6 million in the prior year. The decline in net interest income is primarily due to a 19 percent reduction in average loans from 2011. The provision for loan losses decreased $2.6 million in 2012 to $25.6 million due to stabilization and runoff of the non-strategic portfolios.
FHN continues to refine its business mix in order to focus on higher-return core businesses and explore opportunities to reduce operating costs. The net charge from restructuring, repositioning, and efficiency activities was $3.8 million in second quarter 2012 compared to $16.2 million in 2011. For the six months ended June 30, 2012 and 2011, the net charges were $3.6 million and $29.7 million, respectively. Significant charges recognized during 2012 include a $2.3 million adjustment related to prior servicing sales recorded in second quarter and $2.0 million of severance related costs for the six months ended June 30, 2012 related to efficiency initiatives throughout the organization. Significant charges recognized during 2011 were primarily associated with the sale of FHI which resulted in a $.8 million pre-tax gain on sale in second quarter 2011 and a $10.1 million goodwill impairment in first quarter 2011. Severance related costs were $9.8 million for the six months ended June 30, 2011 and primarily relate to efficiency initiatives throughout the organization. Additionally in second quarter 2011, FHN recognized a $9.0 million charge related to the termination of a technology services contract.
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