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First Horizon posts a loss as mortgage sale reshapes its balance sheet

First Horizon reported a 94 million dollar quarterly loss available to common shareholders as preparations to sell lower-yielding mortgages weighed on its accounts. The planned portfolio sale covers roughly 4.5 billion dollars of loans. Adjusted earnings remained positive, and the US bank expects the sale to create room for new lending as client deposits increase.

Economics & Markets··Evening
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Mortgage-sale charges push reported earnings below zero

First Horizon, a US banking group based in Memphis, reported a third-quarter loss while preparing to sell lower-yielding consumer mortgages. The proposed sale covers roughly 4.5 billion dollars of loans. Accounting effects associated with the transaction weighed on reported earnings, while adjusted earnings remained positive.[1], [2]

The net loss available to common shareholders was 94 million dollars, or 0.20 dollars per diluted share. Notable items totalled 347 million dollars after tax, primarily reflecting the transfer of mortgages targeted for sale into the held-for-sale category.[1]

Agreement follows the quarterly portfolio review

The bank began evaluating a sale during the third quarter and entered into an agreement in early October. It expected settlement early in the fourth quarter. Management said the disposal should increase future earnings and create balance-sheet flexibility for new lending. Those expectations accompanied the reported accounting charges.[1]

Adjusted profit stays positive as deposits rise

Excluding notable items, adjusted earnings were 0.53 dollars per share, 0.01 dollars below the preceding quarter and 0.02 dollars above a year earlier. Chief executive Bryan Jordan said average client deposits rose by 1.3 billion dollars during the quarter. The bank operates in 12 states concentrated in the southern United States.[1]

References

  1. News sourceFirst Horizon CorporationFirst Horizon reports $94 million loss ahead of mortgage sale↩1↩2↩3↩4
  2. News source24/7 Wall St.First Horizon mortgage sale brings a quarterly loss↩
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