First Horizon shares rise on sale of mortgage unit

Financial terms were undisclosed, but several analysts said the deal will help First Horizon's earnings going forward.

Shares advanced 40 cents, or 4.2 percent, to $10.02. Shares have traded between $8.86 and $40.51 in the past 12 months.

The sale, announced Wednesday, includes more than 230 retail and wholesale offices outside of Tennessee, its loan origination and servicing platform, and servicing assets associated with about $20 billion of first lien mortgage loans.

Memphis, Tenn.-based First Horizon will keep its 21 mortgage offices in and around Tennessee and will continue to originate home loans in that area.

The sale is a "positive catalyst" for the stock, said Morgan Keegan & Co. analyst Robert Patten in a note to clients.

"First Horizon's earnings stream should become much more stable and recurring making it easier to assess what the core earnings power of this franchise will be going forward," said Patten, who has an "Outperform" rating on the shares.

Lehman Brothers analyst Jason Goldberg agreed, noting that the sale should free up more than $200 million of tangible capital and reduce earnings volatility. Goldberg rates the shares "Equal Weight."