FHN Posts Profit, Increases Share Buyback to $200M

By Andy Meek

The Memphis-based parent company of First Tennessee Bank reported a 12-cent per share profit for the first quarter before the stock market’s opening bell Thursday, April 19.

First Horizon National Corp. missed Wall Street’s Q1 earnings forecast for the company by one penny. The 12 cents per share reflected net income of $30.5 million, and that profit was down 13 percent from the $40.2 million the company earned during the same quarter last year.

Along with the news of the drop in profit, though, came First Horizon’s simultaneous announcement that it’s returning more capital to shareholders.

The company is increasing its stock buyback to $200 million worth of shares. The board also has approved payment of a 1-cent per share dividend on its common stock.

The dividend is payable on July 1 to the common shareholders of record on June 15.

Regarding the stock buyback, First Horizon is extending the timeframe through January 2013 in which it will repurchase its common stock in the open market or in privately negotiated transactions.

A stock repurchase of up to $100 million worth of shares that was to have been completed by August was originally announced by First Horizon in October.

The news comes only a few days after First Horizon chairman and CEO Bryan Jordan said at the company’s annual meeting this week that First Horizon is a leaner and more flexible company than it’s been in the recent past.

“We continue to invest in our businesses and people to improve the customer experience,” Jordan said. “We are also working to improve service and control costs by simplifying processes and operations. And we’re continuing to return capital to our shareholders through our increased share buyback.”

As part of an earnings presentation to analysts Thursday, First Horizon reported a 9 percent increase in loans in its banking unit, equivalent to an additional $1 billion. And First Horizon’s capital markets unit increased revenue 18 percent.

“It was an OK quarter,” said Kevin Reynolds, a banking analyst with Wunderlich Securities Inc. “It was a little disappointing when you just look at the (earnings per share) numbers. They, like a lot of banks, continue to face margin compression because of the low interest rate environment.”

He noted, though, that the first quarter is seasonally the worst quarter a bank typically experiences.

“So I don’t think you can read much into that as a trend,” Reynolds said. “There’s nothing here that changes our view in terms of the overall investment outlook for the company.”

As part of keeping costs down, First Horizon has trimmed its employee headcount by 11 percent from Q1 2011 compared to Q1. The number of full-time-equivalent employees dropped from 5,159 to 4,597 during that period.

First Tennessee Bank has more than 170 locations in and around the state. First Horizon’s capital markets unit, FTN Financial, has 18 offices in the U.S. and abroad.

First Tennessee has the dominant market share in four out of five of Tennessee’s largest market areas.