First Horizon to close its downtown lending office
First Horizon National Corp. is discontinuing its national homebuilder and commercial real estate lending through its First Horizon Construction Lending offices -- a move that includes closing its downtown Orlando location.
About 160 of its 10,000 employees will be laid off nationwide during the next 12 months, beginning in March,including 28 in Florida, says Dick Powell, executive vice president of Construction Lending for Memphis, Tenn.-based First Horizon (NYSE: FHN), a national financial services firm with hundreds of offices.
The local First Horizon Home Loans office -- in the Fifth Third building at 200 E. Robinson St. -- currently has seven workers.
That's down from 13 in recent months, once employees caught wind of the decision and started seeking work elsewhere, according to a former employee who wished to remain anonymous.
Officials say the firm's Maitland office won't be affected.
First Horizon is making the cuts to reduce its national real estate portfolio by $2 billion through 2008, says its fourth-quarter earnings report. The firm lost $170.1 million, or $1.35 per share, last year, compared with a $462.9 million profit, or $3.62 per share, in 2006.
"We are reducing our mortgage and national real estate exposure," said company CEO Jerry Baker in a Jan. 17 fourth-quarter earnings conference call. "Despite our competitive advantages, we continue to downsize these businesses which we view as lower return and more volatile, where we see market conditions remaining difficult in 2009."
But the firm says it will continue to do construction lending in Tennessee and the Southeast through its First Tennessee Bank. In addition, the company will work with its First Horizon Construction Lending customers through the completion of construction projects under way, says Baker.
Such cuts are not uncommon in the industry at this time, thanks to the housing market slowdown, says Craig E. Polejes, president of Florida Bank of Commerce. "Certainly in the residential mortgage business, we're seeing a lot of companies cutting overhead."
First Horizon, like other out-of-market companies, entered this area with a loan production office, says Polejes. "When you don't have long-term commitments in terms of assets, it's easy to cut back if conditions are not favorable."
And conditions currently aren't favorable, says Terry Delahunty, an attorney with Foley & Lardner who represents a number of lenders in town. "I have seen a significant curtailment in banks' interest in lending for residential projects."
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