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VOL. 123 | NO. 73 | Monday, April 14, 2008

First Horizon In Spotlight at Tues. Shareholders Mtg.

By Andy Meek

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Shareholders of First Horizon National Corp. will put the Memphis-based financial services company under close scrutiny this week.

The first big opportunity comes Tuesday, when the company's 2008 annual meeting of shareholders convenes in the auditorium of the First Tennessee Building at 165 Madison Ave. Several things are on the agenda for that meeting, including the election of four Class III directors and one Class II director and a vote to approve the declassification of the company's board of directors.

Shareholders also will vote on eliminating a required supermajority vote for certain charter and bylaw amendments, as well as the appointment of KPMG LLP as the company's independent auditor for 2008.

All First Horizon shareholders of record as of the close of business Feb. 22 are entitled to vote at the company meeting.

New directors on the horizon

The four Class III directors nominated by the board of directors and whose appointment will be voted on Tuesday include Simon Cooper, an executive officer of Marriott International Inc. and an FHN director since 2005; James Haslam III, CEO of Pilot Travel Centers LLC and an FHN director since 1996; Colin Reed, chairman of the board, president and CEO of Gaylord Entertainment Co. and an FHN director since 2006; and Mary Sammons, president and CEO of Rite Aid Corp. and an FHN director since 2003.

The terms for those Class III directors, if appointed, would expire at the company's 2011 annual meeting.

The Class II director nominated by the board for approval at Tuesday's meeting is Robert Carter, chief information officer of FedEx Corp. and an FHN director since 2007. That term would expire at the 2010 annual meeting.

In other business at the annual meeting, FHN's board of directors will recommend approval of amendments to the company charter that would phase in an elimination of the staggered nature of the company's board. Elections would be held annually for directors, beginning with those whose terms expire next year.

Awaiting news

Shareholders wanting news of the company's first quarter performance, meanwhile, will have to wait until a few days after Tuesday's annual meeting. First Horizon will announce its first quarter earnings results Thursday morning via a statement made public by 6 a.m. before the markets open that morning.

Company management will review the earnings results and performance trends in a conference call at 8 a.m. Thursday.

Year to date, First Horizon's share price is down about 26 percent, according to Chicago-based investment research firm Morningstar Inc.

Management contends a turnabout is slowly but surely on the horizon.

"In 2007, we refocused our business strategy to improve long-term shareholder value," said Jerry Baker, president and CEO of First Horizon National Corp. and First Tennessee Bank, in a video message to shareholders last month.

The company's most recent 10-K annual report filed with the U.S. Securities and Exchange Commission shows that over the past year, 71 percent of FHN's consolidated revenue was attributed to its retail/commercial banking segment, 9 percent to its mortgage banking segment and 18 percent to capital markets.

That regulatory filing also shows the company saw a slight drop in total assets and deposits. The bank had $37 billion in total assets, $17 billion in total deposits and $21.8 billion in total net loans, according to the 10-K. One year earlier, the bank had $37.6 billion in total assets, $20.2 billion in total deposits and $21.9 billion in total net loans.

As of Dec. 31, the company and its subsidiaries had 10,130 employees, down from 12,398 as of Dec. 31, 2006.

"We've seen continued deterioration in the housing market, which means the company's large residential construction portfolio as well as its home equity lines and its mortgage lines are probably going to continue to suffer," said Jaime Peters, an equity analyst for Morningstar.

"Besides that, the story's still going to be all about credit quality, and First Horizon's probably going to suffer, which means they're going to continue to probably have to recognize fairly meaningful provisions for loan losses and objects like that."

PROPERTY SALES 51 334 9,936
MORTGAGES 41 330 10,946
BUILDING PERMITS 348 1,216 22,173
BANKRUPTCIES 43 348 6,311