UPDATE 1-First Horizon swings to profit on lower provisions

Fri Jan 20, 2012 7:32am EST

* Q4 EPS $0.13 vs loss/shr $0.20 a year ago

* Bad loan provisions down 78 percent

* Total loans, net of unearned income, down 2 percent

Jan 20 (Reuters) - First Horizon National Corp swung to a quarterly profit, as it set aside less money to cover bad loans, but the regional lender reported a decline in total loans, hurting interest income.

For the fourth quarter, net income available to the shareholders was $34.9 million, or 13 cents a share, compared with a loss of $48.7 million, or 20 cents a share, a year earlier.

Provisions for credit losses fell 78 percent to $10 million, as the bank's efforts to clean up its balance sheet pay off.

However, total loans, net of unearned income, fell 2 percent to $16.40 billion.

The decrease in outstanding loans and the low interest rate environment caused the bank's net interest income -- the difference between the amount earned on loans and paid out on deposits -- to fall 2 percent to $178.9 million.

Banks have been facing pressure on margins as the Federal Reserve has kept interest rates low to stimulate the U.S. economy.

The company's shares, which have gained over 60 percent in the last four months, closed at $8.77 on Thursday on the New York Stock Exchange.

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