VOL. 123 | NO. 154 | Thursday, August 7, 2008
First Horizon Shares Fall with Broader Sector
NEW YORK (AP) - Shares of regional bank First Horizon National Corp. tumbled Wednesday morning as the broader financial services sector fell sharply amid renewed concerns about the health of the mortgage and credit markets.
First Horizon shares fell 33 cents, or 3.2 percent, to $10.08 in morning trading. First Horizon shares have traded between $4.52 and $36.96 during the past year.
The broader financial services sector fell after mortgage financier Freddie Mac posted a wider-than-expected loss during the quarter, demonstrating there are still problems in the mortgage market.
In a sign that mortgage delinquencies and defaults are likely to continue rising, Freddie set aside $2.5 billion for loss provisions during the quarter.
Like nearly all other banks, Memphis, Tenn.-based First Horizon is facing mounting losses in its lending portfolios, especially those tied to residential real estate. First Horizon set aside $220 million to cover loan losses during the second quarter.
The news at Freddie is also bad for regional banks because the banks rely on Freddie and sister company Fannie Mae to purchase mortgages from them. If Fannie and Freddie have to begin reducing their portfolios or cut back on purchasing loans, it could lead to a decline in revenue and lending options for banks such as First Horizon as they may not have as much capital to originate new mortgages.
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