Key facts
- The sale of $4.5 billion in residential mortgage loans occurred at a discount of approximately 10%.
- The portfolio has a weighted average coupon of 3.85% and associated deposits of about $200 million.
- The transaction is expected to improve First Horizon's loan-to-deposit ratio to approximately 88%.
- First Horizon recorded a $473 million impact to other noninterest income related to the sale.
- The bank reported a net loss of about $79 million for the quarter.
First Horizon Bank has agreed to sell approximately $4.5 billion of its residential mortgage loans at a discount of about 10% during the third quarter. The move is part of the bank's strategy to focus on relationship-oriented banking and strengthen its balance sheet. The portfolio, which carries a weighted average coupon of 3.85%, had about $200 million in associated deposits. The buyer's identity was not disclosed. The transaction is expected to settle in the fourth quarter. Management anticipates the deal will be accretive over time, projecting a 4% benefit to 2027 earnings per share and a 150 basis point improvement in return on tangible common equity, while also strengthening its liquidity position by moving the loan-to-deposit ratio to approximately 88%. The bank recorded a $473 million impact to other noninterest income related to the sale, contributing to a net loss of about $79 million for the quarter.