First Horizon sells $4.5B mortgage portfolio at discount

Tennessee-based First Horizon Bank agreed to sell about $4.5 billion of residential mortgage loans at roughly a 10% discount in the third quarter as it moves to align its mortgage production more closely with core relationship clients, the bank told analysts Thursday. The portfolio carries a weighted average coupon of 3.85% and only about $200 million of associated deposits, according to the bank. First Horizon entered into a sale agreement in October and expects to settle the sale early in the fourth quarter. The buyer’s name was not disclosed. “This transaction further ensures our balance sheet is aligned with our strategic focus on delivering relationship oriented banking and focusing on safety and soundness, profitability and growth,” Hope Dmuchowski, senior executive vice president and chief financial officer, said on the bank’s earnings call. Chairman, president and CEO Bryan Jordan said during the call that the sale is happening now because it “became clear that we are in a cycle of rising rates.” “We size the portfolio based on trying to extract out or sell what were essentially nonrelationship portfolio assets,” Jordan said. “We looked at the portfolio, tried to exclude an...