Sunday, January 26, 2014

Seeking Alpha: First Horizon Still Muddling, But Still Holding Upside Too

It has been quite a while since I've written about First Horizon (FHN), but this Tennessee-based regional bank continues to operate under a cloud. The market remains concerned about the impact of the company running off its non-strategic loan book and its as-of-yet-unresolved mortgage repurchase liabilities. With that, the shares have nearly doubled since late 2011, but still significantly lagged regional peers/comps like Regions (RF) and SunTrust (STI).

There aren't a lot of clear bargains left in the banking sector, but I believe First Horizon could be an outperformer as it continues to clean up its business. Not only does First Horizon have additional cost-cutting leverage, but the bank's trading operations and core lending are still in doldrums that I do not believe will persist indefinitely. Moreover, I think the quality of the company's past mortgage loans will serve it well in repurchase settlements. All told, while the performance over the next year is not likely to be scintillating, I'll argue that fair value is around $13 today on the basis of the company's long-term profitability potentia
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First Horizon Still Muddling, But Still Holding Upside Too

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