First Tennessee Bank, whose parent ownership resides with First Horizon National Corporation, is among the nations biggest banks with the worst ratings. First Tennessee Bank also does the servicing for their mortgage company, First Horizon Home Loans.

First Tennessee Bank Rating

Martin Weiss of Weiss Research compiled some research on the nations banks to determine which of them are at risk of failing. They looked at’s financial strength rating, exposure to credit derivatives, and exposure to the mortgage market on which to base their decisions.

Reuters reported about two months ago how First Tennessee Bank agreed to sell it’s servicing sans any subprime or Alt-A mortgages to MetLife Bank. This cherry-picking deal leaves the riskiest loans on the books keeping them exposed to the worst loans in the mortgage market.

First Tennessee Bank made the list at 10 in the top 10 Weakest US Banks citing a D+ rating, no derivatives risk, but significant mortgage market risk.

What Does A Poor Rating Mean?

For the average bank depositor if you have faith in the FDIC to make good on the insurance, a poor bank rating means virtually nothing. Since the insurance covers up to $100,000, simply don’t put more than that into any one bank and you’re fine.

Of course, this is prudent advice regardless of the bank’s strengths or weaknesses. I don’t care how “big” a bank is…never exceed the $100,000 deposits into any one bank. They can all fail at any time. All that has to happen to fail is have depositor lose faith in the bank. A run on the bank will occur, and the bank fails.

If you’re a shareholder in First Horizon National Corporation you’ve got some decisions to make. A weak bank is not a safe place to invest. If the bank fails, the stock drops like a stone and there is usually no time to get out once you hear the news. Even if the bank is resold or merged immediately with another bank, shareholders value is still wiped out.

Why risk it?

Good Luck!

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