Bryan Jordan, the president and CEO of First Tennessee Bank’s parent company, told his audience at an industry conference a few days ago in New York City that his company has been out of the mortgage business for three years now.

And it won’t have trouble absorbing the costs of mortgage-related litigation and mortgage repurchases.

“As we stand here today, this risk feels very manageable to us as an earnings headwind,” Jordan said at the Barclays Capital 2011 Global Financial Services Conference Tuesday, Sept. 13.

His remarks came a little more than a week after the federal agency that oversees Fannie Mae and Freddie Mac sued First Tennessee’s parent, Memphis-based First Horizon National Corp., along with 16 other major U.S. banks as part of an effort to recoup losses the government-sponsored entities allegedly faced because of misrepresentations by the banks.

The lawsuit against First Horizon that was filed in federal court in New York says that between Sept. 30, 2005, and April 30, 2007, Fannie Mae and Freddie Mac bought $883 million in residential mortgage-backed securities issued in connection with five First Horizon-sponsored and First Horizon-underwritten securitizations.

The picture it paints is of a bank that allegedly grew fast – and either didn’t pay enough attention to monitoring loan quality along the way or was negligent in fully disclosing risks associated with those loans.

“First Horizon was well-established in the mortgage-backed securitization market,” the federal lawsuit reads. “In an effort to increase revenue and profits in a rapidly expanding market, First Horizon National increased the volume of mortgages it securitized through its subsidiaries First Tennessee and First Horizon Home Loan. In 2005, First Horizon securitized $892.66 million of mortgage loans. In 2006, that figure nearly doubled, to $1.74 billion.”

The 16 other defendants being sued leave First Horizon in somewhat lopsided company. Every other defendant is a recognizable name and national player in financial circles, including Ally Financial Inc., Bank of America Corp., Citigroup Inc. and General Electric Co.

The rest are Barclays Bank PLC; Countrywide Financial Corp.; Credit Suisse Holdings (USA) Inc.; Deutsche Bank AG; Goldman Sachs & Co.; HSBC North America Holdings Inc.; JPMorgan Chase & Co.; Merrill Lynch & Co./First Franklin Financial Corp.; Morgan Stanley; Nomura Holding America Inc.; Royal Bank of Scotland Group PLC; and Societe Generale.

And for what it’s worth, the lawsuit – along with any broader concerns about the risk of having to absorb costs associated with mortgage repurchases – hasn’t apparently had an effect on the market’s perception of First Horizon. On Thursday, Sept. 15, the company’s stock price closed at $6.79, almost exactly where it was on Sept. 1 ($6.77), which was the day before the federal lawsuit was filed.

Wunderlich Securities Inc. bank analyst Kevin Reynolds published a research report two days before Jordan’s remarks basically making the same case, saying that First Horizon’s exposure to the federal lawsuit has been overblown.

He pegged the lawsuit’s worst-case scenario for First Horizon as a cost of less than $125 million, which includes $34 million in cumulative losses to Fannie and Freddie plus a write-down of $79 million in nonperforming balances.

The week prior to Jordan’s comments, Fitch Ratings in a press release said its ratings for First Horizon reflect optimism about the company’s future.

“Fitch anticipates that FHN may be subject to unexpected mortgage-related litigation charges as well, but the ratings assume that any potential charges would be manageable in light of FHN’s capital base,” Fitch wrote. “If FHN were to report an outsized charge or fails to improve profitability metrics under a more normalized environment, the company’s ratings would likely be downgraded.”