First Horizon National Corp. (NYSE:FHN) said it expects its mortgage segment to report a pretax loss in Q4. The firm anticipates taking $150 million in loan-loss provisions, triple expectations, amid losses within its residential construction portfolios from suspended construction and higher-risk markets such as Florida, California, Virginia, Georgia and Nevada. The changes in its outlook for Q4 2007 reflect increasing softness and volatility in residential construction lending and mortgage banking. The company also said it plans to cut its real estate exposure by $2 billion in the coming year. Q4 will also include a $19 million settlement related to its part in Visa Inc.'s $2.25 billion settlement last month with American Express Co. and $20 million to $30 million in restructuring charges. First Horizon's home equity portfolio continues to perform within expectations because of strong borrowers, geographic diversity, and a high mix of retail originations, although pressure is anticipated in 2008 as the portfolio matures and the housing market softens.
First Horizon National was upgraded to market perform at Keefe, Bruyette & Woods. It's a valuation call, based on an $18 price target. Shares were higher in mid-day trading Friday by 2.78% to $18.85 (As of 12:50 AM ET).Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.