First Tennessee Bank National Association, a subsidiary of First Horizon, agreed to sell much of its mortgage unit to the nation’s largest life insurance company, MetLife Bank.
As part of the deal, First Horizon will part with more than 230 retail and wholesale offices throughout the nation, along with its loan origination and servicing platform.
However, First Horizon said it will retain 21 mortgage offices on its home turf in and around Tennessee, and will continue to originate home loans in those areas.
Additionally, the Tennessee bank and mortgage lender has agreed to sell roughly $20 billion in first-lien mortgage loans to MetLife Bank and enter into a sub-servicing agreement for the remainder (roughly $65 billion) of its first mortgages.
First Horizon also plans to reduce its remaining mortgage holdings via natural portfolio run-off and further bulk sales, depending on market conditions and other factors.
Along with these plans, First Horizon intends to shrink its warehouse mortgage holdings 90 percent by year-end, reducing its total mortgage assets by at least $3 billion and freeing up $200 in tangible capital in the process.
First Horizon expects the transaction to result in pre-tax charges of approximately $50-$70 million throughout the rest of 2008, and intends to close the deal in the third quarter.
It is unclear how many of the 10,000 First Horizon employees nationwide will be deemed redundant as a result of the sale.
Shares of First Horizon were up 43 cents, or 4.47%, to $10.05 in early afternoon trading on Wall Street.