UPDATE 1-First Horizon shares soar on co's efforts to cut losses
(Recasts, adds analysts' comments, share movement)
By Sweta Singh and Supantha Mukherjee
BANGALORE, July 15 (Reuters) - First Horizon National Corp (FHN.N: Quotazione) shares jumped as much as 37 percent Tuesday, despite a quarterly loss, as investors cheered the company's efforts to reduce credit losses and build its capital ratio.
The largest bank in Tennessee expects improved capital ratios to build further through 2008, helped by a $4 billion reduction in assets due to contraction in real estate loans in second half of 2008, it said in a conference call.
First Horizon had slashed its dividend and raised $600 million of capital in April, a move which sent its shares plunging. But the extra capital helped boost its capital ratios, widely watched by regulators and investors alike to gauge a company's financial strength.
The company is near a turnaround in terms of dealing with credit issues in its portfolio, Morgan Keegan & Co analyst Robert Patten told Reuters.
"They have better capital ratio so the market is becoming more confident that this is not a bank that has to go back to the market for more capital," Patten said.
Despite the bank's much wider-than-expected second-quarter loss of 11 cents a share, investors were encouraged by the company's outlook of improved capital ratio and stable book value per share.
First Horizon's Tier-1 capital ratio, a measure of a bank's ability to cover losses, was 10.4 percent for the second quarter, up from 8.1 percent in the first quarter. Continua...