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Section 1: S-4/A (AMENDMENT NO. 1 TO FORM S-4)

Amendment No. 1 to Form S-4
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As filed with the Securities and Exchange Commission on June 12, 2018

Registration No. 333-224939

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

to

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

WESBANCO, INC.

(Exact name of registrant as specified in its charter)

 

West Virginia   6021   55-0571723
(State or other jurisdiction of   (Primary Standard Industrial   (I.R.S. Employer
incorporation or organization)   Classification Code Number)   Identification No.)

 

1 Bank Plaza

Wheeling, West Virginia 26003

(304) 234-9000

  

Todd F. Clossin

President and Chief Executive Officer

Wesbanco, Inc.

1 Bank Plaza

Wheeling, West Virginia 26003

(304) 234-9000

(Address, including zip code,

and telephone number, including

area code of registrant’s principal executive offices)

  

(Name, address, including zip code,

and telephone number, including

area code, of agent for service)

 

 

With Copies to:

 

James C. Gardill, Esq.   Paul C. Cancilla, Esq.   James J. Barresi, Esq.
Phillips, Gardill, Kaiser &   K&L Gates LLP   Squire Patton Boggs (US) LLP
Altmeyer, PLLC   K&L Gates Center   201 E. Fourth St.
61 Fourteenth Street   210 Sixth Avenue   Suite 1900
Wheeling, West Virginia 26003   Pittsburgh, PA 15222-2613   Cincinnati, Ohio 45202
(304) 232-6810   (412) 355-6500   (513) 361-1260

 

 

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective and upon completion of the merger.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer   ☐  (Do not check if a smaller reporting company)    Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided purchase to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this proxy statement/prospectus is not complete and may be changed. Wesbanco, Inc. may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and Wesbanco, Inc. is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED JUNE 12, 2018

 

LOGO

MERGER PROPOSAL — YOUR VOTE IS VERY IMPORTANT

The board of directors of Wesbanco, Inc., or Wesbanco, and the board of directors of Farmers Capital Bank Corporation, or Farmers Capital, have agreed to a merger of the two companies, which we refer to as the “merger,” under the terms and subject to the conditions of the Agreement and Plan of Merger, dated April 19, 2018, and referred to in this document as the merger agreement by and between Wesbanco, Wesbanco Bank, Inc., Farmers Capital and United Bank & Capital Trust Company (the “merger agreement”). At the effective time of the merger, Farmers Capital will merge with and into Wesbanco with Wesbanco continuing as the surviving corporation (the “merger”). Immediately following the merger, United Bank & Capital Trust Company, Farmers Capital’s wholly owned bank subsidiary, will merge with and into Wesbanco Bank, Inc., Wesbanco’s wholly owned bank subsidiary, which we refer to as the “bank merger,” with Wesbanco Bank, Inc. surviving the bank merger.

If the merger is completed, each share of common stock, $0.125 par value per share, of Farmers Capital (“Farmers Capital common stock”) outstanding immediately prior to the effective time of the merger, will be converted into the right to receive (1) 1.053 shares of common stock, $2.0833 par value per share, of Wesbanco (“Wesbanco common stock”), subject to adjustment as described in the merger agreement, and (2) $5.00 in cash, without interest, which we collectively refer to as the “merger consideration.” Shares of Wesbanco common stock will be unaffected by the merger and the merger will be tax-free to Wesbanco shareholders. Shareholders of Farmers Capital common stock generally will not recognize any gain or loss upon receipt of shares of Wesbanco common stock in exchange for Farmers Capital common stock pursuant to the merger, but will recognize gain (but not loss) in an amount not to exceed any cash received as part of the merger consideration (excluding cash received in lieu of fractional shares of Wesbanco common stock).

This proxy statement/prospectus is being distributed in connection with a special meeting of Farmers Capital shareholders. At that meeting, Farmers Capital shareholders will be asked to consider the following proposals: (1) approval of the merger agreement; (2) approval, in a non-binding advisory vote, of the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and (3) approval of the adjournment of the Farmers Capital special meeting if necessary or appropriate to solicit additional proxies in favor of the approval of the merger agreement.

The number of shares of Wesbanco common stock that Farmers Capital shareholders will receive for the merger consideration is fixed, so that the market value of those shares will fluctuate with the market price of Wesbanco common stock and will not be known at the time Farmers Capital shareholders vote on the merger agreement. Based on the closing price of Wesbanco’s common stock of $44.22 on the NASDAQ Global Select Market on April 19, 2018, the last full trading day immediately prior to the public announcement of the merger agreement, the value of the per share merger consideration payable to Farmers Capital shareholders was $51.56. Based on the $[●] closing price of Wesbanco’s common stock on June [●], 2018, the last practicable full trading day before the date of this proxy statement/prospectus, the value of the per share merger consideration payable to Farmers Capital shareholders was $[●]. We urge you to obtain current market quotations for Wesbanco common stock (NASDAQ: trading symbol “WSBC”) and Farmers Capital common stock (NASDAQ: trading symbol “FFKT”). The estimated maximum number of shares of Wesbanco common stock issuable in the merger is expected to be approximately 7,927,453 shares.

Your vote is very important. Whether or not you plan to attend the Farmers Capital special meeting, please take the time to vote by completing and mailing the enclosed proxy card in accordance with the instructions on the proxy card. Farmers Capital shareholders may also cast their votes over the Internet or by telephone in accordance with the instructions on the proxy card. If you attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. We cannot complete the merger unless Farmers Capital shareholders approve the merger agreement.

The accompanying document is a proxy statement of Farmers Capital and a prospectus of Wesbanco, and provides you with information about Farmers Capital, Wesbanco, the proposed merger and the special meeting of Farmers Capital shareholders. Farmers Capital encourages you to carefully and thoughtfully read this entire document, including all its annexes, and we especially encourage you to read the section entitled Risk Factors beginning on page 22. You also can obtain information about Farmers Capital and Wesbanco from publicly available documents filed with the Securities and Exchange Commission.

After careful consideration, the Farmers Capital board of directors unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement and determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are in the best interests of Farmers Capital and its shareholders. Accordingly, the Farmers Capital board of directors unanimously recommends that Farmers Capital shareholders vote “FOR” the proposal to approve the merger agreement, “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation payable to the named executive officers of Farmers Capital in connection with the merger, and “FOR” the proposal to adjourn the Farmers Capital special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger agreement at the scheduled time of the special meeting.

We thank you for your continued support of Farmers Capital and look forward to the successful completion of the merger.

Sincerely,

 

LOGO

Lloyd C. Hillard, Jr.

President and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The securities Wesbanco is offering through this proxy statement/prospectus are not savings or deposit accounts or other obligations of any bank or savings association, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This document incorporates important business and financial information about Wesbanco and Farmers Capital that is not included in or delivered with this document. This information is available without charge to Farmers Capital shareholders upon written or oral request at the applicable company’s address and telephone number listed in “Additional Information.” To obtain timely delivery, Farmers Capital shareholders must request the information no later than July 16, 2018. Please see “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page 96 for instructions to request this and certain other information regarding Wesbanco and Farmers Capital.

This proxy statement/prospectus is dated [], 2018, and is first being mailed to the Farmers Capital shareholders on or about [], 2018.


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LOGO

202 West Main Street

Frankfort, Kentucky 40601

(502) 227-1668

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held On July 23, 2018

Notice is hereby given that a special meeting of shareholders of Farmers Capital Bank Corporation (“Farmers Capital”), a Kentucky corporation, will be held at United Bank & Capital Trust Company, 125 West Main Street, Frankfort, Kentucky, on Monday, July 23, 2018, at 9:00 a.m. Eastern Daylight Time, to consider and vote upon the following proposals described in the accompanying proxy statement/prospectus:

1. A proposal to approve the Agreement and Plan of Merger, dated as of April 19, 2018, as it may be amended from time to time, by and between Wesbanco, Inc. (“Wesbanco”) a West Virginia corporation, Wesbanco Bank, Inc., a West Virginia banking corporation and a wholly owned subsidiary of Wesbanco, Farmers Capital, and United Bank & Capital Trust Company, a Kentucky state-chartered commercial bank and a wholly owned subsidiary of Farmers Capital (“United Bank”), which provides for, among other things, the merger of Farmers Capital with and into Wesbanco, with Wesbanco as the surviving entity, as more fully described in the attached proxy statement/prospectus.

2. A proposal to approve, in a non-binding advisory vote, the compensation payable to the named executive officers of Farmers Capital in connection with the merger.

3. A proposal to approve the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the Farmers Capital special meeting to approve the proposal to approve the merger agreement.

Only holders of record of Farmers Capital common stock at the close of business on May 31, 2018 will be entitled to notice of, and to vote at, the Farmers Capital special meeting and any adjournment thereof. Provided that a quorum exists for the special meeting, approval of the merger agreement requires the affirmative vote of a majority of the outstanding shares of Farmers Capital common stock entitled to vote thereon. Approval of each of the other proposals to be voted on at the Farmers Capital special meeting requires the affirmative vote of the holders of a majority of the shares of Farmers Capital common stock present in person or by proxy at the special meeting.

Shareholders of Farmers Capital are entitled to dissenters’ rights under Chapter 271B, Subtitle 13 of the Kentucky Business Corporation Act, which we refer to as the “KBCA,” provided they follow the procedures and satisfy the conditions set forth in Chapter 271B, Subtitle 13 of KBCA. For more information regarding dissenters’ rights, see the section entitled “Proposal No. 1 -Dissenters’ Rights of Farmers Capital Shareholders” beginning on page 62 of this proxy statement/prospectus. In addition, a copy of Chapter 271B, Subtitle 13 of the KBCA is attached as Annex C to this proxy statement/prospectus. Failure to strictly comply with Chapter 271B, Subtitle 13 of the KBCA may result in your waiver of, or inability to, exercise dissenters’ rights.

The Farmers Capital board of directors has carefully considered the terms of the merger agreement and believes that the merger is in the best interests of Farmers Capital and its shareholders. The Farmers Capital board of directors has unanimously approved the merger agreement and unanimously recommends that shareholders vote: “FOR” approval of the merger agreement; “FOR” approval, in a non-binding advisory vote, of the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and “FOR” the adjournment of the Farmers Capital special meeting if necessary or appropriate to solicit additional proxies in favor of the approval of the merger agreement. In considering the recommendation of the board of directors of Farmers Capital, you should be aware that certain directors and executive officers of Farmers Capital will have interests in the merger that may be different from, or in addition to, the interests of Farmers Capital shareholders generally. See the section entitled “Interests of Certain Persons the Merger” beginning on page 57 of the accompanying proxy statement/prospectus. In addition, certain of the executive officers and all of the directors of Farmers Capital have entered into voting agreements with Wesbanco in which the officer or director has agreed to vote his or her Farmers Capital shares in favor of approval of the merger agreement. See “Other Material Agreements Relating to the Merger — Voting Agreements.”

Your vote is very important. Whether or not you plan on attending the Farmers Capital special meeting, we urge you to read the proxy statement/prospectus carefully and to please vote your shares as promptly as possible. You may vote your shares by completing and sending in the enclosed proxy card, by submitting a valid proxy by Internet or telephone or by attending the Farmers Capital special meeting and voting in person. You may revoke your proxy at any time before it is voted by signing and returning a later dated proxy card with respect to the same shares, by submitting a new, valid later dated proxy by Internet or telephone, by filing a written revocation bearing a later date with the Secretary of Farmers Capital, or by attending the Farmers Capital special meeting and voting in person. If you fail to submit a proxy or to attend the Farmers Capital special meeting in person or do not provide your bank, brokerage firm or other nominee with instructions as to how to vote your shares, as applicable, your shares of Farmers Capital common stock will not be counted for purposes of determining whether a quorum is present at the Farmers Capital special meeting and will have the same effect as a vote AGAINST the merger agreement.

The enclosed proxy statement/prospectus provides a detailed description of the Farmers Capital special meeting, the merger, the documents related to the merger, and other related matters. We urge you to read carefully and in their entirety the proxy statement/prospectus and its appendices, including any documents incorporated by reference into the proxy statement/prospectus or their appendices carefully and in their entirety.

By Order of the Board of Directors,

 

LOGO

Mark A. Hampton

Executive Vice President, Secretary,

and Chief Financial Officer

Frankfort, Kentucky

[●], 2018

 

YOUR VOTE IS VERY IMPORTANT

TO VOTE YOUR SHARES, PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY CARD PRIOR

TO THE FARMERS CAPITAL SPECIAL MEETING, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.


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ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates by reference important business and financial information about Wesbanco and Farmers Capital that is not included in or delivered with this document. You should refer to “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page 96 for a description of the documents incorporated by reference into this proxy statement/prospectus. You can obtain documents related to Wesbanco and Farmers Capital that are incorporated by reference into this document through the Securities and Exchange Commission’s web site at www.sec.gov, through Wesbanco’s website at www.wesbanco.com and through Farmers Capital’s website at www.farmerscapital.com. Please note that the Internet website addresses of Wesbanco and Farmers Capital are provided as inactive textual references only. The information provided on the Internet websites of Wesbanco and Farmers Capital, other than copies of the documents listed below that have been filed with the SEC, is not part of this proxy statement/prospectus and, therefore, is not incorporated herein by reference. You may also obtain copies of these documents, other than exhibits, unless such exhibits are specifically incorporated by reference into the information that this proxy statement/prospectus incorporates, without charge by requesting them in writing or by telephone from the appropriate company:

 

Wesbanco, Inc.

   Farmers Capital Bank Corporation

Attn: Linda M. Woodfin, Secretary

   Attn: Mark A. Hampton, Secretary

One Bank Plaza

   202 West Main Street

Wheeling, West Virginia 26003

   Frankfort, Kentucky 40601

(304) 234-9000

   (502) 227-1668

You will not be charged for any of these documents that you request. In order to receive timely delivery of the documents in advance of the Farmers Capital special meeting, you should make your request to Wesbanco or Farmers Capital, as the case may be, no later than July 16, 2018, or five trading days prior to the Farmers Capital special meeting. For further information about Wesbanco and Farmers Capital, please see “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page 96.

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus serves two purposes — it is a proxy statement being used by the Farmers Capital board of directors to solicit proxies for use at the Farmers Capital special meeting, and it is also the prospectus of Wesbanco regarding the issuance of Wesbanco common stock to Farmers Capital shareholders if the merger is completed. This proxy statement/prospectus provides you with detailed information about the proposed merger of Farmers Capital with and into Wesbanco. We encourage you to read this entire proxy statement/prospectus carefully. Wesbanco has filed a registration statement on Form S-4 with the Securities and Exchange Commission, and this proxy statement/prospectus is the prospectus filed as part of that registration statement. This proxy statement/prospectus does not contain all of the information in the registration statement, nor does it include the exhibits to the registration statement. Please see “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page 96.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in or incorporated by reference into this proxy statement/prospectus. This proxy statement/prospectus is dated [], 2018. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than the date hereof. You should not assume that the information contained in any document incorporated or deemed to be incorporated by reference herein is accurate as of any date other than the date of that document. Any statement contained in a document incorporated or deemed to be incorporated by reference into this proxy statement/prospectus will be deemed to be modified or superseded to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference into this proxy statement/prospectus modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this proxy statement/prospectus. Neither the mailing of this proxy statement/prospectus to the Farmers Capital shareholders nor the taking of any actions contemplated hereby by Wesbanco or Farmers Capital at any time will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is not lawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding Farmers Capital has been provided by Farmers Capital and information contained in this document regarding Wesbanco has been provided by Wesbanco.


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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS

     1  

SUMMARY

     7  

SHARE INFORMATION AND MARKET PRICES

     15  

SELECTED HISTORICAL FINANCIAL DATA OF WESBANCO

     16  

SELECTED HISTORICAL FINANCIAL DATA OF FARMERS CAPITAL

     17  

NON-GAAP FINANCIAL MEASURES

     18  

RISK FACTORS

     22  

THE SPECIAL MEETING OF FARMERS CAPITAL SHAREHOLDERS

     28  

General

     28  

Date, Time and Place of the Special Meeting

     28  

Record Date; Stock Entitled to Vote; Quorum

     28  

Required Vote

     28  

Beneficial Ownership of Farmers Capital Officers, Directors and Affiliates

     29  

Voting of Proxies

     29  

Revocation of Proxies

     30  

Expenses of Solicitation of Proxies

     30  

Recommendation of Farmers Capital Board of Directors

     30  

PROPOSAL NO. 1 — APPROVAL OF THE MERGER AGREEMENT

     32  

General

     32  

What Farmers Capital Shareholders Will Receive in the Merger

     32  

Effects of the Merger

     32  

Exchange and Payment Procedures

     33  

Benefit Agreements

     34  

Background of the Merger

     35  

Farmers Capital’s Reasons for the Merger and Recommendation of the Board of Directors of Farmers Capital

     39  

Opinion of Farmers Capital’s Financial Advisor

     41  

Certain Wesbanco Prospective Financial Information

     55  

Certain Farmers Capital Prospective Financial Information

     56  

Interests of Certain Persons in the Merger

     57  

Summary of Golden Parachute Arrangements

     60  

Regulatory Approvals

     61  

Dissenters’ Rights of Farmers Capital Shareholders

     62  

Delisting and Deregistration of Farmers Capital Common Stock Following the Merger

     65  

Management Following the Merger

     65  

Accounting Treatment

     66  

Material U.S. Federal Income Tax Consequences of the Merger

     66  

Representations and Warranties

     69  

Conduct of Business Prior to the Merger

     71  

Conditions to the Merger

     76  

Termination of the Merger Agreement

     76  

Expenses

     79  

Termination Fee

     79  

Amendment or Waiver

     80  

Effective Date of the Merger

     80  

OTHER MATERIAL AGREEMENTS RELATING TO THE MERGER

     81  

Voting Agreements

     81  

INFORMATION ABOUT WESBANCO

     83  

INFORMATION ABOUT FARMERS CAPITAL

     84  

 

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COMPARATIVE RIGHTS OF SHAREHOLDERS

     85  

PROPOSAL NO. 2 — ADVISORY (NON-BINDING) VOTE ON GOLDEN PARACHUTE COMPENSATION

     94  

PROPOSAL NO. 3 — ADJOURNMENT PROPOSAL

     95  

WHERE YOU CAN FIND MORE INFORMATION ABOUT WESBANCO AND FARMERS CAPITAL

     96  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     98  

DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS FOR FARMERS CAPITAL

     99  

LEGAL MATTERS

     100  

EXPERTS

     101  

Annex A — Agreement and Plan of Merger

 

Annex B — Opinion of Keefe, Bruyette & Woods, Inc.

 

Annex C — Sections 271B.13-010 through 271B.13-310 of the Kentucky Business Corporation Act

 

 

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QUESTIONS AND ANSWERS

The following are some questions that you, as a shareholder of Farmers Capital, may have regarding the merger and the other matters being considered at the special shareholders’ meeting and the answers to those questions. Wesbanco and Farmers Capital strongly recommend that you carefully read the remainder of this document because the information in this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the special shareholders’ meeting. Additional important information is also contained in the annexes to, and the documents incorporated by reference into, this document.

 

Q: Why have I received this proxy statement/prospectus?

 

A: The boards of directors of Wesbanco and Farmers Capital have each approved a merger agreement, entered into on April 19, 2018, providing for Farmers Capital to be acquired by Wesbanco. A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A, which we encourage you to review.

This proxy statement/prospectus constitutes a proxy statement of Farmers Capital and a prospectus of Wesbanco. It is a proxy statement because the board of directors of Farmers Capital is soliciting proxies from its shareholders. It is a prospectus because, in addition to paying cash, Wesbanco will issue shares of Wesbanco common stock in exchange for shares of Farmers Capital common stock in the merger. This document contains important information about the merger and the special meeting of Farmers Capital shareholders and you should read it carefully. The enclosed voting materials allow Farmers Capital shareholders to vote their shares without attending the Farmers Capital special meeting.

In order to complete the merger, Farmers Capital shareholders must vote to approve the merger agreement. IF FARMERS CAPITAL SHAREHOLDERS FAIL TO APPROVE THE MERGER AGREEMENT, THE MERGER CANNOT BE COMPLETED.

Your vote is very important. The Farmers Capital board of directors encourages you to vote as soon as possible.

 

Q: What matters are to be voted on at the Farmers Capital special meeting?

 

A: At the Farmers Capital special meeting, holders of Farmers Capital common stock as of the close of business on May 31, 2018 (the “record date”) will be asked to consider and vote upon:

 

  1. A proposal to approve the merger agreement, as it may be amended from time to time;

 

  2. A proposal to approve, in a non-binding advisory vote, the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and

 

  3. A proposal to approve the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the Farmers Capital special meeting to approve the proposal to approve the merger agreement.

 

Q: What will Farmers Capital shareholders receive as a result of the merger?

 

A: Farmers Capital shareholders will receive (1) 1.053 shares of Wesbanco common stock, subject to adjustment as described in the merger agreement, and (2) $5.00 in cash, without interest, which we refer to as the merger consideration, in exchange for each share of Farmers Capital common stock. Instead of fractional shares of Wesbanco, Farmers Capital shareholders will receive a check for any fractional shares based on the average closing price of Wesbanco common stock during a specified period before the effective time of the merger.


 

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Because the number of shares of Wesbanco common stock that Farmers Capital shareholders will receive for the merger consideration is fixed, the implied value of the merger consideration will fluctuate as the market price of Wesbanco common stock fluctuates. As a result, the value of the merger consideration that you will receive upon completion of the merger could be greater than, less than or the same as the value of the merger consideration on the date of this proxy statement/prospectus or at the time of the Farmers Capital special meeting. You should obtain current stock price quotations for Wesbanco common stock and Farmers Capital common stock before deciding how to vote with respect to the approval of the merger agreement. Wesbanco common stock is listed for trading on the Nasdaq Global Select Market under the symbol “WSBC.” Farmers Capital common stock is listed for trading on the Nasdaq Global Select Market under the symbol “FFKT.”

 

Q: What does the Farmers Capital board of directors recommend?

 

A: The Farmers Capital board of directors has unanimously determined that the merger is in the best interests of Farmers Capital and Farmers Capital’s shareholders and unanimously recommends that you vote:

 

    FOR approval of the merger agreement, as it may be amended from time to time;

 

    FOR approval, in a non-binding advisory vote, of the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and

 

    FOR approval of the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the Farmers Capital special meeting to approve the proposal to approve the merger agreement.

In making this determination, the Farmers Capital board of directors considered the factors described under “Proposal No. 1 — Approval of the Merger Agreement — Farmers Capital’s Reasons for the Merger.”

 

Q: When and where will the special meeting of Farmers Capital shareholders be held?

 

A: The Farmers Capital special meeting will be held at United Bank & Capital Trust Company, 125 West Main Street, Frankfort, Kentucky, on Monday, July 23, 2018, at 9:00 a.m. Eastern Daylight Time.

 

Q: Who can vote at the special meeting?

 

A: Holders of record of Farmers Capital common stock at the close of business on May 31, 2018, the record date, will be entitled to notice of and to vote at the Farmers Capital special meeting. Each of the shares of Farmers Capital common stock issued and outstanding on the record date is entitled to one vote at the Farmers Capital special meeting with regard to each of the proposals described above.

 

Q: When do you expect to complete the merger?

 

A: We anticipate that we will obtain all necessary regulatory approvals, and be able to consummate the merger, in the second half of 2018. However, we cannot assure you when or if the merger will occur. Among other conditions to Closing, we must first obtain the requisite approval of Farmers Capital shareholders at the Farmers Capital special meeting, and Wesbanco and Farmers Capital must obtain the requisite regulatory approvals to complete the merger.

 

Q: What happens if the merger is not completed?

 

A: If the merger is not completed, holders of Farmers Capital common stock will not receive any consideration for their shares in connection with the merger. Instead, Farmers Capital will remain an independent public company and its common stock will continue to be listed and traded on the Nasdaq Global Select Market.


 

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Q: Why are Farmers Capital shareholders being asked to consider and vote upon a proposal to approve, in a non-binding advisory vote, the compensation payable to the named executive officers of Farmers Capital in connection with the merger?

 

A: Under Securities and Exchange Commission rules, Farmers Capital is required to seek a non-binding, advisory vote with respect to the compensation payable to Farmers Capital’s named executive officers in connection with the merger, which is sometimes referred to as “golden parachute” compensation.

 

Q: What will happen if Farmers Capital shareholders do not approve the golden parachute compensation?

 

A: Approval of the compensation payable to Farmers Capital’s named executive officers in connection with the merger is not a condition to completion of the merger. The vote is an advisory vote and will not be binding on Farmers Capital. Therefore, if the merger agreement is approved by Farmers Capital shareholders and the merger is completed, this compensation, including amounts that Farmers Capital is contractually obligated to pay, would still be payable regardless of the outcome of the advisory vote, subject to applicable conditions.

 

Q: What vote of Farmers Capital shareholders is required to approve each proposal?

 

A: To be approved, proposal no. 1 (approval of the merger agreement) requires the affirmative vote of a majority of the outstanding shares of Farmers Capital common stock entitled to vote thereon. To be approved, proposals no. 2 (advisory vote regarding golden parachute compensation) and no. 3 (adjournment proposal) each require the affirmative vote of the holders of a majority of the shares of Farmers Capital common stock present in person or by proxy at the special meeting.

As of the record date, there were 7,519,814 shares of Farmers Capital common stock outstanding and entitled to vote at the Farmers Capital special meeting, held by approximately 817 holders of record. As of the record date, the directors and executive officers of Farmers Capital controlled approximately 3.2% of the outstanding shares of Farmers Capital common stock entitled to vote at the special meeting. In addition, certain of the executive officers and all of the directors of Farmers Capital have entered into voting agreements with Wesbanco in which each executive officer or director has agreed to vote his or her Farmers Capital shares in favor of approval of the merger agreement.

 

Q: How do I vote?

 

A: If you are a shareholder of record of Farmers Capital as of the record date, you may vote in person by attending the Farmers Capital special meeting or, to ensure your shares are represented at the Farmers Capital special meeting, you may vote by:

 

    accessing the Internet website specified on your proxy card;

 

    calling the toll-free number specified on your proxy card; or

 

    signing and returning the enclosed proxy card in the postage-paid envelope provided.

If you hold your Farmers Capital shares in the name of a bank or broker, please see the discussion below.

 

Q: What is a quorum?

 

A:

In order for business to be conducted at the Farmers Capital special meeting, a quorum must be present. The quorum requirement for holding and transacting business at the Farmers Capital special meeting is that a majority of the shares of Farmers Capital common stock entitled to vote must be present in person or



 

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  represented by proxy. Shares of Farmers Capital common stock represented by properly executed and returned proxies will be treated as present. Shares of Farmers Capital common stock present at the special meeting that abstain from voting or that are the subject of broker non-votes will be counted as present for purposes of determining a quorum.

 

Q: Your shares are held in your broker’s name (also known as “street name”). How do you vote those shares?

 

A: Copies of this proxy statement/prospectus were sent to you by your broker. The broker will request instructions from you as to how you want your shares to be voted, and the broker will vote your shares according to your instructions.

 

Q: If your shares are held in “street name” by a broker, won’t your broker vote those shares for you?

 

A: Not unless you provide your broker with instructions on how to vote your “street name” shares. Under the rules of the New York Stock Exchange which govern brokers, when the beneficial holder of shares held in street name does not provide voting instructions, brokers, banks and other nominees have the discretion to vote those shares only on certain “routine matters.” None of the proposals to be voted upon at the Farmers Capital special meeting are routine matters, so brokers, banks and other nominees holding shares in street name will not be permitted to exercise voting discretion on any of those proposals. Therefore, if a beneficial holder of shares of Farmers Capital common stock does not give the broker, bank or other nominee any voting instructions, the holder’s shares of common stock will not be voted on those proposals. It is important that you be sure to provide your broker with instructions on how to vote your shares held in street name.

Abstentions, if any, and broker non-votes, if any, are counted as present for the purpose of determining whether a quorum is present. Once a quorum for the Farmers Capital special meeting is established, abstentions, broker non-votes, and shares that are not voted will have the effect of a vote “Against” the proposal to approve the merger agreement. Abstentions, broker non-votes, and shares that are not voted will not, however, have any effect on the outcome of the other proposals to be voted on at the Farmers Capital special meeting.

Please check the voting form used by your broker to see if it offers telephone or Internet submission of proxies.

 

Q: What happens if you return your signed proxy card without indicating how to vote?

 

A: If you return your signed proxy card without indicating how to vote on any particular proposal, the Farmers Capital shares represented by your proxy will be voted on each proposal presented at the Farmers Capital special meeting in accordance with the Farmers Capital board’s recommendation on that proposal. Therefore, if you return a signed proxy card without indicating how to vote on any particular proposal, your shares of Farmers Capital common stock will be voted “FOR” approval of the merger agreement; “FOR” approval of the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and “FOR” the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to solicit additional proxies in favor of the approval of the merger agreement.

 

Q: Can you change your vote after you have delivered your proxy card?

 

A: Yes. You may change your vote at any time before your proxy is voted at the Farmers Capital special meeting. You can do this in any of the three following ways:

 

    by sending a written notice to the corporate secretary of Farmers Capital in time to be received before the Farmers Capital special meeting stating that you would like to revoke your proxy;


 

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    by completing, signing and dating another proxy card bearing a later date and returning it by mail in time to be received before the Farmers Capital special meeting; or you can change your vote by submitting a new, valid proxy by Internet or telephone, with a later date, in which case your later submitted proxy will be recorded and your earlier proxy revoked; or

 

    if you are a holder of record, by attending the Farmers Capital special meeting and voting in person.

If your shares are held in an account at a broker or bank, you should contact your broker or bank to change your vote.

 

Q: Will shareholders have dissenters’ rights?

 

A: Yes. Shareholders are entitled to dissenters’ rights under Chapter 271B, Subtitle 13 of the Kentucky Business Corporation Act, which we refer to as the “KBCA,” provided they follow the procedures and satisfy the conditions set forth in Chapter 271B, Subtitle 13 of KBCA. For more information regarding dissenters’ rights, see the section entitled “Proposal No. 1 -Dissenters’ Rights of Farmers Capital Shareholders” beginning on page 62 of this proxy statement/prospectus. In addition, a copy of Chapter 271B, Subtitle 13 of the KBCA is attached as Annex C to this proxy statement/prospectus. Failure to strictly comply with Chapter 271B, Subtitle 13 of the KBCA may result in your waiver of, or inability to, exercise dissenters’ rights.

You must not vote in favor of approval of the merger agreement to be eligible to exercise dissenters’ rights.

 

Q: What do you need to do now?

 

A: After you carefully read and consider the information contained in and incorporated by reference into this document, please respond as soon as possible by completing, signing and dating your proxy card and returning it in the enclosed postage-paid return envelope, or, by submitting your proxy or voting instructions by telephone or through the Internet, so that your shares will be represented and voted at the Farmers Capital special meeting. This will not prevent you from attending the Farmers Capital special meeting and voting in person; however in order to assist us in tabulating the votes at the Farmers Capital special meeting, we encourage you to vote by proxy even if you do plan to attend the special meeting in person.

 

Q: Should you send in your Farmers Capital stock certificates now?

 

A: No. You should not send in your Farmers Capital stock certificates until you receive transmittal materials after the merger is effective.

 

Q: Who will solicit and pay the cost of soliciting proxies?

 

A: Farmers Capital directors, officers and employees may solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies but may be reimbursed for their reasonable out-of-pocket expenses that they incur. Farmers Capital may also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Farmers Capital common stock for their expenses in forwarding soliciting materials to beneficial owners of the Farmers Capital common stock and in obtaining voting instructions from those owners.

 

Q: What are the material United States federal income tax consequences of the merger to Farmers Capital shareholders?

 

A:

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and it is a condition to the completion of the merger that



 

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  each of Wesbanco and Farmers Capital receives a legal opinion to that effect. Accordingly, a shareholder of Farmers Capital common stock generally will recognize gain, but not loss, in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess of the sum of the amount of cash and the fair market value of the Wesbanco common stock received pursuant to the merger over that shareholder’s adjusted tax basis in its shares of Farmers Capital common stock surrendered) and (2) the amount of cash received pursuant to the merger (excluding cash received in lieu of fractional shares of Wesbanco common stock). Further, a shareholder of Farmers Capital common stock generally will recognize gain or loss with respect to cash received instead of fractional shares of Wesbanco common stock that the shareholder of Farmers Capital common stock would otherwise be entitled to receive. You should read “Proposal No. 1 – Approval of the Merger Agreement – Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 66 for a more complete discussion of the United States federal income tax consequences of the merger. Tax matters can be complicated and the tax consequences of the merger to you will depend on your particular tax situation. You should consult your tax advisor to determine the specific tax consequences of the merger to you.

 

Q: Who can help answer any other questions that you might have?

 

A: If you want additional copies of this document, or if you want to ask any questions about the merger, you should contact

Farmers Capital Bank Corporation

Attention: Mark A. Hampton, Secretary

202 West Main Street

Frankfort, Kentucky 40601

(502) 227-1668



 

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus and may not contain all of the information that is important to you. The merger agreement is attached to this proxy statement/prospectus as Annex A. To fully understand the merger and for a more complete description of the terms of the merger, you should carefully read this entire document, including the annexes, and the documents we refer you to under the caption “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page 96. This proxy statement/prospectus, including information included or incorporated by reference in this proxy statement/prospectus, contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, earnings outlook, business and prospects of Wesbanco and Farmers Capital, and the potential combined company, as well as statements applicable to the period following the completion of the merger. You can find some of these statements by looking for words such as “plan,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “potential,” “possible” or other similar expressions. These forward-looking statements involve certain risks and uncertainties. The ability of either Wesbanco or Farmers Capital to predict results or the actual effects of our plans and strategies, particularly after the merger, is inherently uncertain. Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed in or implied by these forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” on page 98.

Unless the context otherwise requires, throughout this proxy statement/prospectus, “we,” “us,” “our” or “Farmers Capital” refers to Farmers Capital Bank Corporation, “Wesbanco” refers to Wesbanco, Inc., and “you” refers to the holders of shares of common stock of Farmers Capital. We refer to the merger between Farmers Capital and Wesbanco as the “merger,” and the Agreement and Plan of Merger dated as of April 19, 2018 between Wesbanco, Wesbanco Bank, Inc. Farmers Capital and United Bank as the “merger agreement.” Also, we refer to the proposed merger of United Bank into Wesbanco Bank, Inc. as the “bank merger.”

The Merger (See page 32)

We propose a merger of Farmers Capital with and into Wesbanco. If the merger is consummated, Wesbanco will continue as the surviving corporation. The articles of incorporation and bylaws of Wesbanco will continue as the articles of incorporation and bylaws of the surviving corporation until amended or repealed in accordance with applicable law. The officers and directors of Wesbanco will continue as the officers and directors of the surviving corporation, except that one current Farmers Capital director, Michael J. Crawford, will be appointed to the board of directors of Wesbanco. After the effective time of the merger and as part of the same overall transaction, United Bank & Capital Trust Company, the wholly owned banking subsidiary of Farmers Capital, for no additional consideration and pursuant to the merger agreement, will merge with and into Wesbanco Bank, Inc., the wholly owned banking subsidiary of Wesbanco, with Wesbanco Bank, Inc. as the surviving entity.

The Companies (See page 83)

Wesbanco, Inc.

One Bank Plaza

Wheeling, West Virginia 26003

(304) 234-9000

Wesbanco, a bank holding company headquartered in Wheeling, West Virginia, offers through its various subsidiaries a full range of financial services including retail banking, corporate banking, personal and corporate trust services, brokerage services, mortgage banking and insurance. Wesbanco’s banking subsidiary Wesbanco



 

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Bank, Inc., operates 177 financial centers in West Virginia, Ohio, Pennsylvania, Kentucky and Indiana. As of March 31, 2018, Wesbanco had approximately $10.2 billion of consolidated total assets, $7.2 billion of deposits, $6.3 billion of loans and $1.4 million of shareholders’ equity.

Farmers Capital Bank Corporation

202 West Main Street

Frankfort, Kentucky 40601

(502) 227-1668

Farmers Capital is a financial holding company headquartered in Frankfort, Kentucky. Farmers Capital is the holding company for United Bank, a Kentucky state-chartered commercial bank. United Bank conducts business at its principal office and four branches in Frankfort, the capital of Kentucky, as well as branches in the following counties in Kentucky: Anderson, Boone, Bullitt, Campbell, Fayette, Hardin, Jessamine, Kenton, Mercer, Scott, and Woodford Counties. The market served by United Bank is diverse, and includes government, commerce, finance, industry, medicine, education, and agriculture. On March 31, 2018, Farmers Capital had approximately $1.7 billion of consolidated total assets, $1.4 billion of deposits, $1.0 billion of loans and $194 million of shareholders’ equity.

What Farmers Capital Shareholders Will Receive in the Merger (See page 32)

If the merger is completed, for each share of Farmers Capital common stock that you own you will receive, (1) 1.053 shares of Wesbanco common stock, subject to adjustment as proscribed in the merger agreement, and (2) $5.00 in cash, without interest. Collectively, we sometimes refer to the 1.053 shares of Wesbanco common stock and the $5.00 in cash to be received as the “merger consideration.” Instead of fractional shares of Wesbanco, Farmers Capital shareholders will receive a check for any fractional shares based on the average closing price of Wesbanco common stock during a specified period before the effective time of the merger.

The exchange ratio is a fixed ratio. Therefore, the number of shares of Wesbanco common stock to be received by holders of Farmers Capital common stock in the merger will not change if the trading price of Wesbanco common stock or Farmers Capital common stock changes between now and the time the merger is completed. However, the exchange ratio is subject to adjustment if Wesbanco completes certain corporate transactions, such as a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other like changes in Wesbanco’s capitalization.

Farmers Capital’s Reasons for the Merger and Recommendation to Shareholders (See page 39)

The Farmers Capital board of directors has unanimously determined that the merger agreement and the merger are in the best interests of Farmers Capital and its shareholders, and accordingly unanimously approved the merger agreement and recommends that Farmers Capital shareholders vote “FOR” the proposal to approve the merger agreement.

In determining whether to approve the merger agreement and recommend approval of the merger agreement to the Farmers Capital shareholders, Farmers Capital’s board considered the factors described under “Proposal No. 1 — Approval of the Merger Agreement — Farmers Capital’s Reasons for the Merger; Recommendation of the Farmers Capital Board of Directors.”

In addition, the Farmers Capital board of directors unanimously recommends that Farmers Capital shareholders vote “FOR” the proposal to approve, in a non-binding advisory vote, of the compensation payable to the named executive officers of Farmers Capital in connection with the merger and “FOR” the proposal to approve of the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the Farmers Capital special meeting to approve the proposal to approve the merger agreement.



 

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Opinion of Farmers Capital’s Financial Advisor (See page 41)

In connection with the merger, Farmers Capital’s financial advisor, Keefe, Bruyette & Woods, Inc. (“KBW”), delivered a written opinion, dated April 19, 2018, to the Farmers Capital board of directors as to the fairness, from a financial point of view and as of the date of the opinion, to the holders of Farmers Capital common stock of the merger consideration in the merger. The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion, is attached as Annex B to this proxy statement/prospectus. The opinion was for the information of, and was directed to, the Farmers Capital board of directors (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion did not address the underlying business decision of Farmers Capital to engage in the merger or enter into the merger agreement or constitute a recommendation to the Farmers Capital board of directors in connection with the merger, and it does not constitute a recommendation to any holder of Farmers Capital common stock or any shareholder of any other entity as to how to vote in connection with the merger or any other matter.

Special Meeting (See page 28)

A special meeting of Farmers Capital’s shareholders will be held at United Bank & Capital Trust Company, 125 West Main Street, Frankfort, Kentucky, on Monday, July 23, 2018, at 9:00 a.m. Eastern Daylight Time. At the Farmers Capital special meeting, Farmers Capital shareholders will be asked to consider and vote upon: (i) a proposal to approve the merger agreement; (ii) a proposal to approve, in a non-binding advisory vote, the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and (iii) a proposal to approve an adjournment of the Farmers Capital special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger agreement at the time of the Farmers Capital special meeting.

Record Date; Voting Power (See page 28)

You may vote at the special meeting only if you owned shares of Farmers Capital common stock at the close of business on May 31, 2018, referred to as the record date. On the record date, there were 7,519,814 shares of Farmers Capital common stock outstanding. You may cast one vote for each share of Farmers Capital common stock you owned on the record date. You can vote your shares by telephone, the Internet or by returning the enclosed proxy by mail, or you may vote in person by appearing at the Farmers Capital special meeting. You can change your vote by submitting a later-dated proxy by telephone, the Internet or by mail, provided that it must be received prior to the Farmers Capital special meeting. You can also change your vote by attending the Farmers Capital special meeting and voting in person.

Vote Required (See page 28)

Merger Agreement Proposal. If a quorum exists, approval of the merger agreement requires the affirmative vote of a majority of the outstanding shares of Farmers Capital common stock entitled to vote thereon. Abstentions, broker non-votes, and unvoted shares will have the effect of a vote “Against” the proposal to approve the merger agreement.

Advisory Vote on Golden Parachute Compensation and Adjournment Proposal. If a quorum exists, the approval of (i) the compensation payable to the named executive officers of Farmers Capital in connection with the merger in a non-binding advisory vote, and (ii) the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger agreement at the time of the Farmers Capital special meeting, each requires the affirmative vote of a majority of the shares of Farmers Capital common stock present in person or by proxy at the special meeting. Abstentions, broker non-votes, and unvoted shares will have no effect on the outcome of either of these proposals.



 

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Voting Agreements (See page 81)

As of the record date, the directors and executive officers of Farmers Capital controlled approximately 239,646 shares of Farmers Capital common stock, or approximately 3.2% of the outstanding shares of Farmers Capital common stock entitled to vote at the Farmers Capital special meeting.

In connection with the merger agreement, Wesbanco entered into voting agreements with all of Farmers Capital’s directors and certain of its executive officers, who are J. Barry Banker, R. Terry Bennett, Michael J. Crawford, E. Bruce Dungan, Mark A. Hampton, Lloyd C. Hillard, Jr., Dr. William C. Nash, David R. O’Bryan, John C. Roach, Fred N. Parker, David Y. Phelps, Marvin E. Strong, Jr., Fred Sutterlin and Judy Worth. In the voting agreements, each of these shareholders has generally agreed to vote all of the shares of Farmers Capital common stock he or she controls to approve the merger agreement.

Quorum; Abstentions and Broker Non-Votes (See page 28)

A quorum must be present to transact business at the Farmers Capital special meeting. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be counted for purposes of calculating whether a quorum is present at the special meeting. A quorum at the Farmers Capital special meeting requires the presence, whether in person or by proxy, of a majority of the outstanding shares of Farmers Capital common stock entitled to vote as of the record date.

An abstention occurs when a shareholder attends a meeting, either in person or by proxy, but abstains from voting. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. None of the proposals to be voted upon at the Farmers Capital special meeting are routine matters, and brokers, banks and other nominees holding shares in street name will not be permitted to vote on any proposal without instructions from the beneficial holder with respect to that specific proposal. If a beneficial holder of shares of Farmers Capital common stock does not give the broker, bank or other nominee any voting instructions, the holder’s shares of common stock will not be voted on any proposal.

At the Farmers Capital special meeting, abstentions and broker non-votes will be counted in determining whether a quorum is present. Abstentions, broker non-votes, and unvoted shares will have the effect of a vote “Against” the proposal to approve the merger agreement. Abstentions, broker non-votes, and unvoted shares will have no effect on the outcome of either the advisory vote on golden parachute compensation proposal or the adjournment proposal. If no instruction as to how to vote is given (including no instruction to abstain) in an executed, duly returned and not revoked proxy, the proxy will be voted “For” the proposals to (i) approve the merger agreement, (ii) approve, in a non-binding advisory vote, of the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and (iii) approve the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger agreement at the time of the Farmers Capital special meeting.

Dissenters’ Rights (See page 62)

Farmers Capital shareholders of record have dissenters’ rights under the KBCA in connection with the merger. Farmers Capital shareholders who do not vote in favor of the approval of the merger agreement and who otherwise comply with the applicable provisions of Chapter 271B, Subtitle 13 of the KBCA will be entitled to exercise dissenters’ rights thereunder. Any shares of Farmers Capital common stock held by a Farmers Capital shareholder as of the record date who has not voted in favor of the approval of the merger agreement and who has demanded payment for such shares in accordance with the KBCA will not be converted into a right to receive



 

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the merger consideration, unless such Farmers Capital shareholder fails to perfect, withdraws or otherwise loses such shareholder’s dissenters’ rights under the KBCA. If, after the consummation of the merger, such holder of Farmers Capital common stock fails to perfect, withdraws or otherwise loses his, her or its dissenters’ rights, each such share will be treated as if it had been converted as of the consummation of the merger into a right to receive the merger consideration. You must not vote in favor of approval of the merger agreement to be eligible to exercise dissenters’ rights.

Shares to be Issued by Wesbanco in the Merger; Ownership of Wesbanco after the Merger (See page 65)

Wesbanco will issue a maximum of approximately 7,927,453 shares of its common stock to Farmers Capital shareholders in connection with the merger, based on the number of shares of Farmers Capital common stock outstanding on the record date and additional shares of Farmers Capital common stock that may be issued prior to the closing, assuming no adjustment to the exchange ratio is made. Assuming that Wesbanco issues that maximum number of shares, those shares would constitute approximately 14.5% of the outstanding stock of Wesbanco after the merger, based on the number of shares of Wesbanco common stock outstanding on the record date. The Wesbanco shares to be issued in the merger will be listed for trading on the Nasdaq Global Select Market under the symbol “WSBC.”

Material U.S. Federal Income Tax Consequences (See page 66)

It is a condition to the completion of the merger, unless waived by the parties in writing, that each of Wesbanco and Farmers Capital receives a legal opinion from their respective tax counsel to the effect that the merger will be treated as a “reorganization” for United States federal income tax purposes within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, we expect the merger generally to be tax-free to shareholders of Farmers Capital common stock for United States federal income tax purposes with respect to the shares of Wesbanco common stock that they receive pursuant to the merger. A shareholder of Farmers Capital common stock generally will recognize gain, but not loss, in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess, if any, of the sum of the cash received and the fair market value of the Wesbanco common stock received pursuant to the merger over that shareholder’s adjusted tax basis in its shares of Farmers Capital common stock surrendered) and (2) the amount of cash received pursuant to the merger (excluding any cash received in lieu of a fractional share). Further, a shareholder of Farmers Capital common stock generally will recognize gain or loss with respect to cash received instead of fractional shares of Wesbanco common stock that the shareholder of Farmers Capital common stock would otherwise be entitled to receive. For further information, please refer to “Proposal No. 1 — Approval of the Merger Agreement — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 66.

You should read the summary under the caption “Proposal No. 1 — Approval of the Merger Agreement — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 66 for a more complete discussion of the U.S. federal income tax consequences of the merger. You should also consult your own tax advisor concerning all U.S. federal, state, local and foreign tax consequences of the merger that may apply to you.

Certain Differences in the Rights of Shareholders (See page 85)

Farmers Capital is a Kentucky corporation governed by Kentucky law, and Wesbanco is a West Virginia corporation governed by West Virginia law. Once the merger occurs, Farmers Capital shareholders will become shareholders of Wesbanco and their rights will be governed by West Virginia law and Wesbanco’s corporate governing documents rather than Kentucky law and Farmers Capital’s governing documents. Because of the differences between the laws of the Commonwealth of Kentucky and the State of West Virginia and the respective corporate governing documents of Farmers Capital and Wesbanco, Farmers Capital’s shareholders’



 

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rights as shareholders will change as a result of the merger. These include, among other things, differences in shareholders’ rights related to notice and adjournment of shareholder meetings, the calling of special meetings of shareholders, dissenters’ rights, the number and term of directors, nomination of directors, removal of directors and filling vacancies on the board of directors, cumulative voting, indemnification of officers and directors, amendment of articles of incorporation and bylaws, and statutory provisions affecting control share acquisitions and business combinations.

Conditions to the Merger (See page 76)

Completion of the merger is subject to the satisfaction or waiver of the conditions specified in the merger agreement, including, among others, those listed below:

 

    the approval of the merger agreement by the shareholders of Farmers Capital;

 

    the absence of a law or injunction prohibiting the merger;

 

    the receipt by Wesbanco and Farmers Capital of all necessary approvals of governmental and regulatory authorities;

 

    the receipt of an opinion from each party’s tax counsel, dated as of the closing date of the merger, to the effect that for federal income tax purposes the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code;

 

    the shares of Wesbanco common stock to be issued in exchange for the shares of Farmers Capital common stock having been approved for listing on the Nasdaq Global Select Market; and

 

    not more than 10% of the outstanding shares of Farmers Capital common stock exercising dissenters’ rights.

Termination of the Merger Agreement (See page 76)

The parties can agree to terminate the merger agreement at any time prior to completion of the merger, and either Wesbanco or Farmers Capital can terminate the merger agreement if, among other reasons, any of the following occurs:

 

    the merger agreement is not approved by the Farmers Capital shareholders;

 

    the merger is not completed by March 31, 2019;

 

    a court or other governmental authority permanently prohibits the merger; or

 

    the other party breaches or materially fails to comply with any of its representations, warranties or obligations under the merger agreement.

Farmers Capital will also have the right to terminate the merger agreement if the average closing price of Wesbanco common stock during a specified period before the effective time of the merger is less than $34.188 and Wesbanco common stock underperforms the Nasdaq Bank Index by more than 20%. Subject to certain conditions, Farmers Capital may also terminate the merger agreement in order to enter into an agreement with respect to an unsolicited proposal that if consummated would be reasonably likely to result in a transaction more favorable to Farmers Capital’s shareholders from a financial point of view, provided that Farmers Capital pays the termination fee described below.

Termination Fee (See page 79)

The merger agreement provides that if the merger agreement is terminated under certain circumstances, described more fully beginning on page 79, Farmers Capital will be required to pay a termination fee of $12,000,000 to Wesbanco.



 

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We May Amend the Terms of the Merger and Waive Rights Under the Merger Agreement (See page 80)

We may jointly amend the terms of the merger agreement, and either party may waive its right to require the other party to adhere to any of those terms, to the extent legally permissible. However, after the approval of the merger agreement by the Farmers Capital shareholders, there may not be, without further approval of Farmers Capital’s shareholders, any amendment of the merger agreement that requires such further approval under applicable law or would alter the amount or kind of the merger consideration to be received by Farmers Capital shareholders.

Effective Date of the Merger (See page 80)

We expect the merger to be completed as soon as practicable after all regulatory approvals and shareholder approvals have been received. We expect this to occur during the second half of 2018.

Regulatory Approvals (See page 61)

In addition to the approval of the Farmers Capital shareholders, the merger is subject to the approval of the Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System (unless a waiver is granted, which occurred on May 30, 2018), the West Virginia Division of Financial Institutions, and the Kentucky Department of Financial Institutions. These governmental authorities may impose conditions for granting approval of the merger. Neither Wesbanco nor Farmers Capital can offer any assurance that all necessary approvals will be obtained or the date when any such approvals will be obtained. As of the date of this proxy statement/prospectus, all required regulatory applications, notices and waiver requests have been filed.

Interests of Certain Persons in the Merger (See page 57)

The directors and executive officers of Farmers Capital have financial and other interests in the merger that differ from, or are in addition to, their interests as shareholders of Farmers Capital. These interests include, but are not limited to:

 

    the continued indemnification of current and former directors and executive officers under the merger agreement and providing these individuals with directors’ and officers’ insurance for six years after the merger;

 

    the receipt of payments by the executive officers of Farmers Capital pursuant to rights granted under agreements with Farmers Capital (concurrently with the execution of the merger agreement, Wesbanco and Farmers Capital entered into certain agreements with each of Lloyd C. Hillard, Jr., Rickey D. Harp, J. David Smith, Jr. and Mark A. Hampton, detailing these payments that will be made upon completion of the merger and other matters);

 

    the continuation of certain benefits for certain officers and directors of Farmers Capital;

 

    the appointment of one current Farmers Capital director, Michael J. Crawford, to the board of directors of Wesbanco and Wesbanco Bank upon completion of the merger;

 

    the appointment of each member of Farmers Capital’s board of directors to an advisory board for the Central and Southern Kentucky markets;

 

    the creation of a retention bonus pool for the purpose of retaining the services of certain key employees of Farmers Capital; and

 

    grants of Wesbanco restricted stock to certain key employees, including some executive officers, of Farmers Capital, effective upon completion of the merger, which would cliff vest after two years, for the purpose of retaining those key employees of Farmers Capital as Wesbanco employees after the merger.


 

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Table of Contents

The Farmers Capital board of directors knew about these additional interests, and considered them when the board approved the merger agreement. See “Proposal No. 1—Approval of the Merger Agreement — Interests of Certain Persons in the Merger” beginning on page 57 for more detailed information about these interests.

Advisory (Non-binding) Vote on Golden Parachute Compensation (See page 94)

In accordance with Securities and Exchange Commission (“SEC”) rules, Farmers Capital shareholders will vote on a proposal to approve on an advisory (non-binding) basis, certain payments that will or may be made to Farmers Capital’s named executive officers in connection with the merger. These payments are reported in the Summary of Golden Parachute Arrangements table on page 61 and the associated narrative discussion.

Adjournment Proposal (See page 95)

Farmers Capital shareholders are being asked to approve a proposal to grant Farmers Capital’s board of directors discretionary authority to adjourn the Farmers Capital special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal if a quorum is present at the Farmers Capital special meeting but there are insufficient votes to approve the merger agreement.

Recommendation of the Farmers Capital Board of Directors (See page 39)

The Farmers Capital board of directors determined that the merger is in the best interests of Farmers Capital shareholders. Accordingly, it has unanimously recommended that Farmers Capital shareholders vote FORthe proposal to approve the merger agreement. See “Proposal No. 1 — Approval of the Merger Agreement — Background of the Merger” beginning on page 35. In addition the Farmers Capital board of directors unanimously recommends that Farmers Capital shareholders vote “FOR” the proposal to approve, in a non-binding, advisory vote, the compensation payable to the named executive officers of Farmers Capital in connection with the merger, and “FOR” the proposal to adjourn the Farmers Capital special meeting if necessary or appropriate to solicit additional proxies in favor of the approval of the merger agreement.

Recent Developments

On April 5, 2018, Wesbanco completed the acquisition of First Sentry Bancshares, Inc. pursuant to the Agreement and Plan of Merger, dated as of November 13, 2017, by and between Wesbanco, Wesbanco Bank, Inc., First Sentry Bancshares, Inc. and First Sentry Bank, Inc. First Sentry Bancshares, Inc., a bank holding company that had total assets of approximately $705 million as of March 31, 2018, and was headquartered in Huntington, West Virginia, conducted its banking operations through its wholly-owned banking subsidiary, First Sentry Bank, Inc.

Under the terms of Wesbanco’s agreement to acquire First Sentry Bancshares, Inc., each outstanding share of First Sentry Bancshares, Inc. common stock was converted into the right to receive 1.5869 shares of Wesbanco common stock. Upon the surrender for exchange of First Sentry Bancshares, Inc. common stock certificates, Wesbanco issued approximately 2,498,761 shares of Wesbanco common stock.



 

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SHARE INFORMATION AND MARKET PRICES

The following table presents the closing market prices for Wesbanco and Farmers Capital common stock on April 19, 2018 and June [●], 2018, respectively. April 19, 2018 was the last full trading day prior to the public announcement of the signing of the merger agreement. June [●], 2018 was the last practicable full trading day for which information was available prior to the date of this proxy statement/prospectus. This table also shows the merger consideration equivalent proposed for each share of Farmers Capital common stock, which was calculated by multiplying the closing price of Wesbanco common stock on those dates by the exchange ratio of 1.053 and adding the cash consideration of $5.00 per share.

 

     Wesbanco      Farmers
Capital
     Farmers Capital
Merger
Consideration
Equivalent
 

April 19, 2018

   $ 44.22      $ 42.25      $ 51.56  

June [●], 2018

   $      $      $  

The above table shows only historical comparisons. These comparisons may not provide meaningful information to Farmers Capital shareholders in determining whether to approve the merger agreement. Farmers Capital shareholders are urged to obtain current market quotations for shares of Wesbanco common stock and Farmers Capital common stock and to review carefully the other information contained in this proxy statement/prospectus or incorporated by reference into this proxy statement/prospectus in considering whether to approve the merger agreement. The market prices of Wesbanco common stock and Farmers Capital common stock will fluctuate between the date of this proxy statement/prospectus and the date of completion of the merger. No assurance can be given concerning the market prices of Farmers Capital common stock or Wesbanco common stock before or after the effective date of the merger. Changes in the market price of Wesbanco common stock prior to the completion of the merger will affect the market value of the merger consideration that Farmers Capital shareholders will receive upon completion of the merger. Wesbanco common stock trades on the Nasdaq Global Select Market under the trading symbol “WSBC.” Farmers Capital common stock trades on the Nasdaq Global Select Market under the trading symbol “FFKT.”

The following table shows, for the periods indicated, the high and low sales prices for Wesbanco common stock and Farmers Capital common stock as reported by the Nasdaq Global Select Market and the cash dividends declared per share.

 

     Wesbanco Common Stock      Farmers Capital Common Stock  
     High      Low      Dividend          High              Low              Dividend      

2016

                 

January-March

   $ 30.36      $ 26.93      $ 0.24      $ 27.31      $ 24.65      $ 0.07  

April-June

     33.47        28.89        0.24        29.00        24.71        0.07  

July-September

     33.09        29.78        0.24        30.98        26.63        0.07  

October-December

     43.77        32.06        0.24        44.65        29.24        0.10  

2017

                 

January-March

     44.19        34.81        0.26        44.25        34.05        0.10  

April-June

     41.77        36.49        0.26        42.80        37.20        0.10  

July-September

     41.42        35.49        0.26        43.45        36.10        0.10  

October-December

     43.09        38.09        0.26        44.30        38.45        0.125  

2018

                 

January-March

     44.78        39.59        0.29        41.80        32.60        0.125  

April-June (through June [●], 2018)

                 

 

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Table of Contents

SELECTED HISTORICAL FINANCIAL DATA OF WESBANCO

The following table sets forth certain historical financial data concerning Wesbanco as of or for the three months ended March 31, 2018 and 2017 and as of or for each of the five fiscal years ended December 31, 2017, which is derived from Wesbanco’s consolidated financial statements. The following information is only a summary, and you should read this information in conjunction with Wesbanco’s audited consolidated financial statements and related notes included in Wesbanco’s Annual Report on Form 10-K for the year ended December 31, 2017, and unaudited interim consolidated financial statements included in Wesbanco’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and 2017, which have been filed with the SEC and are incorporated by reference into this document and from which this information is derived. See “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page 96.

 

(Dollars in thousands, except

per share amounts)

   As of or for the Three
Months Ended
March 31,
    As of or for the years ended December 31,  
   2018     2017     2017     2016     2015     2014     2013  
     (Unaudited)                                

Summary Statements of Income

              

Net interest income

   $ 73,292     $ 70,719     $ 290,295     $ 253,330     $ 236,987     $ 193,228     $ 185,487  

Provision for credit losses

     2,168       2,711       9,986       8,478       8,353       6,405       9,086  

Other income

     23,980       22,884       88,840       81,499       74,466       68,504       69,285  

Other expense

     54,571       54,384       220,860       208,680       193,923       161,633       160,998  

Income tax provision

     7,004       10,622       53,807       31,036       28,415       23,720       20,763  

Net income available to common shareholders

     33,529       25,886       94,482       86,635       80,762       69,974       63,925  

Per Share Information

              

Earnings

              

Basic per common share

     0.76       0.59       2.15       2.16       2.15       2.39       2.18  

Diluted per common share

     0.76       0.59       2.14       2.16       2.15       2.39       2.18  

Dividends per common share

     0.29       0.26       1.04       0.96       0.92       0.88       0.78  

Book value per common share

     31.84       30.92       31.68       30.53       29.18       26.90       25.59  

Tangible common book value per share (1)

     18.56       17.61       18.42       17.19       16.51       16.09       14.68  

Selected Ratios

              

Return on average assets

     1.36     1.07     0.96     0.97     0.99     1.12     1.05

Return on average equity

     9.70     7.73     6.83     7.13     7.62     8.97     8.72

Allowance for loan losses to total loans

     0.73     0.70     0.71     0.70     0.82     1.09     1.22

Allowance for loan losses to total non-performing loans

     1.18x       0.95x       1.04x       1.11x       0.93x       0.88x       0.92x  

Shareholders’ equity to total assets

     13.69     13.87     14.21     13.70     13.25     12.52     12.15

Tangible common equity to tangible assets (1)

     8.46     8.40     8.79     8.20     7.95     7.88     7.35

Tier 1 leverage ratio

     10.56     9.97     10.39     9.81     9.38     9.88     9.27

Tier 1 capital to risk-weighted assets

     14.31     13.21     14.12     13.16     13.35     13.76     13.06

Total capital to risk-weighted assets

     15.35     14.22     15.16     14.18     14.11     14.81     14.19

Common equity tier 1 capital ratio (CET 1)

     12.33     11.28     12.14     11.28     11.66     N/A       N/A  

Selected Balance Sheet Information

              

Assets

   $ 10,245,419     $ 9,800,881     $ 9,816,178     $ 9,790,877     $ 8,470,298     $ 6,296,565     $ 6,144,773  

Securities

     2,748,405       2,290,595       2,284,822       2,316,214       2,422,450       1,511,094       1,532,906  

Net portfolio loans

     6,276,204       6,268,111       6,296,157       6,205,762       5,024,132       4,042,112       3,847,549  

Deposits

     7,226,326       7,145,735       7,043,588       7,040,879       6,066,299       5,048,983       5,062,530  

Shareholders’ equity

     1,403,026       1,359,153       1,395,321       1,341,408       1,122,132       788,190       746,595  

 

(1) See Non-GAAP Financial Measures for additional information relating to the calculation of this ratio.

N/A — Not applicable

 

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SELECTED HISTORICAL FINANCIAL DATA OF FARMERS CAPITAL

The following table sets forth certain historical financial data concerning Farmers Capital as of or for the three months ended March 31, 2018 and 2017 and as of or for each of the five fiscal years ended December 31, 2017, which is derived from Farmers Capital’s consolidated financial statements. The following information is only a summary, and you should read this information in conjunction with Farmers Capital’s audited consolidated financial statements and related notes included in Farmers Capital’s Annual Report on Form 10-K for the year ended December 31, 2017, and unaudited interim consolidated financial statements included in Farmers Capital’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and 2017, which have been filed with the SEC and are incorporated by reference into this document and from which this information is derived. See “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page 96.

 

(Dollars in thousands, except

per share amounts)

   As of or for the Three
Months Ended

March 31,
    As of or for the fiscal years ended December 31,  
   2018     2017     2017     2016     2015     2014     2013  
     (Unaudited)                                

Summary Statements of Income

              

Net interest income

   $ 14,457     $ 13,463     $ 55,776     $ 52,616     $ 52,595     $ 54,199     $ 54,738  

Provision for credit losses

     (261     580       (211     (644     (3,429     (4,364     (2,600

Other income

     5,201       5,251       21,165       31,186       22,211       23,273       22,116  

Other expense

     13,118       13,529       52,823       61,400       57,950       59,278       61,573  

Income tax provision (benefit)

     1,160       1,276       12,641       6,441       5,293       6,099       4,435  

Preferred stock dividends

     —         —         —         —         395       1,927       1,951  

Net income available to common shareholders

     5,641       3,329       11,688       16,605       14,597       14,532       11,495  

Per Share Information

              

Earnings

              

Basic per common share

     0.75       0.44       1.56       2.21       1.95       1.94       1.54  

Diluted per common share

     0.75       0.44       1.56       2.21       1.95       1.94       1.54  

Dividends per common share

     0.125       0.10       0.425       0.31       —         —         —    

Book value per common share

     25.80       24.99       25.72       24.51       23.43       21.75       18.73  

Tangible common book value per share (1)

     25.80       24.99       25.72       24.51       23.43       21.69       18.61  

Selected Ratios

              

Return on average assets

     1.37     0.81     0.70     0.96     0.84     0.92     0.74

Return on average equity

     11.86     7.27     6.07     8.94     8.61     9.30     7.97

Allowance for loan losses to total loans

     0.94     0.96     0.94     0.96     1.08     1.50     2.06

Allowance for loan losses to total non-performing loans

     0.64x       0.34x       0.64x       0.32x       0.32x       0.39x       0.41x  

Shareholders’ equity to total assets

     11.51     11.16     11.55     11.02     9.89     9.70     9.40

Tangible common equity to tangible assets (1)

     11.51     11.16     11.55     11.02     9.89     9.12     7.70

Tier 1 leverage ratio

     13.99     13.36     13.75     13.20     12.46     12.04     11.90

Tier 1 capital to risk-weighted assets

     19.82     19.17     19.30     19.28     19.00     19.75     18.95

Total capital to risk-weighted assets

     20.65     19.99     20.12     20.10     19.89     21.00     20.21

Common equity tier 1 capital ratio (CET 1)

     17.07     16.37     16.56     16.43     14.91     N/A       N/A  

Selected Balance Sheet Information

              

Assets

     1,685,987       1,682,459     $ 1,673,872       1,671,030       1,775,950       1,782,606       1,809,555  

Securities

     407,213       496,381       427,617       484,352       585,813       630,116       613,585  

Net portfolio loans

     1,025,721       980,326       1,025,480       961,631       948,960       917,975       979,306  

Deposits

     1,394,091       1,388,077       1,379,903       1,369,907       1,368,994       1,387,161       1,410,215  

Shareholders’ equity

     194,028       187,740       193,353       184,066       175,698       172,929       170,055  

 

(1) See Non-GAAP Financial Measures for additional information relating to the calculation of this ratio.

N/A — Not applicable

 

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NON-GAAP FINANCIAL MEASURES

The following non-GAAP financial measures used by Wesbanco and Farmers Capital provide information useful to investors in understanding operating performance and trends, and facilitate comparisons with the performance of peers. The following tables summarize the non-GAAP financial measures derived from amounts reported in Wesbanco and Farmers Capital’s financial statements.

Wesbanco, Inc.

 

(unaudited, dollars in
thousands, except per share

amounts)

  March 31,     December 31,  
  2018     2017     2017     2016     2015     2014     2013  

Tangible common book value per share:

             

Total shareholders’ equity

  $ 1,403,026     $ 1,359,153     $ 1,395,321     $ 1,341,408     $ 1,122,132     $ 788,190     $ 746,595  

Less: goodwill and other intangible assets net of deferred tax liability

    (585,316     (585,123     (583,903     (586,403     (487,270     (316,914     (318,161
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity

    817,711       774,030       811,418       755,005       634,862       471,276       428,434  

Common shares outstanding

    44,060,957       43,953,051       44,043,244       43,931,715       38,459,635       29,298,188       29,175,236  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common book value per share

  $ 18.56     $ 17.61     $ 18.42     $ 17.19     $ 16.51     $ 16.09     $ 14.68  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity to tangible assets:

             

Total shareholders’ equity

  $ 1,403,026     $ 1,359,153     $ 1,395,321     $ 1,341,408     $ 1,122,132     $ 788,190     $ 746,595  

Less: goodwill and other intangible assets net of deferred tax liability

    (585,316     (585,123     (593,903     (586,403     (487,270     (316,914     (318,161
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity

    817,711       774,030       811,418       755,005       634,862       471,276       428,434  

Total assets

    10,245,419       9,800,881       9,816,178       9,790,877       8,470,298       6,296,565       6,144,773  

Less: goodwill and other intangible assets net of deferred tax liability

    (585,316     (585,123     (583,903     (586,403     (487,270     (316,914     (318,161
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible assets

  $ 9,660,103     $ 9,215,758     $ 9,232,275     $ 9,204,474     $ 7,983,028     $ 5,979,651     $ 5,826,612  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity to tangible assets

    8.46     8.40     8.79     8.20     7.95     7.88     7.35
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

Non-GAAP Financial Measures (Continued)

 

Farmers Capital Bank Corporation

 

(unaudited, dollars in

thousands, except per share

amounts)

   March 31,     December 31,  
   2018     2017     2017     2016     2015     2014     2013  

Tangible common book value per share:

              

Total common shareholders’ equity

   $ 194,028     $ 187,740     $ 193,353     $ 184,066     $ 175,698     $ 162,929     $ 140,067  

Less: goodwill and other intangible assets

     —         —         —         —         —         449       854  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity

     194,028       187,740       193,353       184,066       175,698       162,480       139,213  

Common shares outstanding

     7,519,445       7,511,555       7,517,446       7,509,444       7,499,748       7,489,388       7,478,706  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common book value per share

   $ 25.80     $ 24.99     $ 25.72     $ 24.51     $ 23.43     $ 21.69     $ 18.61  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity to tangible assets:

              

Total common shareholders’ equity

   $ 194,028     $ 187,740     $ 193,353     $ 184,066     $ 175,698     $ 162,929     $ 140,067  

Less: goodwill and other intangible assets

     —         —         —         —         —         449       854  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity

     194,028       187,740       193,353       184,066       175,698       162,480       139,213  

Total assets

     1,685,987       1,682,459       1,673,872       1,671,030       1,775,950       1,782,606       1,809,555  

Less: goodwill and other intangible assets

     —         —         —         —         —         449       854  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible assets

   $ 1,685,987     $ 1,682,459     $ 1,673,872     $ 1,671,030     $ 1,775,950     $ 1,781,157     $ 1,808,701  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity to tangible assets

     11.51     11.16     11.55     11.02     9.89     9.12     7.70
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma Combined(1)

 

(unaudited, dollars in thousands, except per share amounts)

   March 31,
2018
     December 31,
2017
 

Tangible common book value per share:

     

Total common shareholders’ equity

   $ 1,753,086      $ 1,714,315  

Less: goodwill and other intangible assets net of deferred tax liability

     (790,884      (789,471
  

 

 

    

 

 

 

Tangible common equity

     962,202        924,844  

Common shares outstanding

     54,485,252        54,485,252  
  

 

 

    

 

 

 

Tangible common book value per share

   $ 17.66      $ 16.97  
  

 

 

    

 

 

 

 

(1) See Comparative Per Share Data for additional information relating to the calculation of this ratio.

 

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COMPARATIVE PER SHARE DATA

(Unaudited)

The following tables set forth the basic earnings, diluted earnings, cash dividends and book value per common share data for Wesbanco and Farmers Capital on a historical basis, on a pro forma combined basis, and on a per equivalent Farmers Capital share basis, as of or for the three month period ending March 31, 2018, and as of or for the fiscal year ended December 31, 2017.

The pro forma data was derived by combining the historical consolidated financial information of Wesbanco and Farmers Capital using the acquisition method of accounting for business combinations and assumes the transaction is completed as contemplated. The pro forma and pro forma-equivalent per share information gives effect to the merger as if the transactions had been effective on the dates presented, in the case of the book value data, and as if the transactions had become effective on January 1, 2017, in the case of the earnings per share and dividends declared data. The unaudited pro forma data in the tables assume that the merger is accounted for using the acquisition method of accounting and represent a current estimate based on available information of the combined company’s results of operations. The pro forma financial adjustments record the assets and liabilities of Farmers Capital at their estimated fair values and are subject to adjustment as additional information becomes available and as additional analyses are performed. The information in the following table is based on, and should be read together with, the financial information and financial statements of Wesbanco and Farmers Capital incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information About Wesbanco and Farmers Capital” on page 96.

This information is presented for illustrative purposes only. You should not rely on the pro forma combined or pro forma equivalent amounts as they are not necessarily indicative of the operating results or financial position that would have occurred if the merger had been completed as of the dates indicated, nor are they necessarily indicative of the future operating results or financial position of the combined company. The pro forma information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring and merger-related costs, or other factors that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results.

 

     Wesbanco      Farmers Capital
Bank Corporation
     Pro Forma
Combined
     Per Equivalent
Farmers Capital Bank
Corporation
 

Earnings per share for the three months ended March 31, 2018:

           

Basic

   $ 0.76      $ 0.75      $ 0.75      $ 0.79  

Diluted

     0.76        0.75        0.74        0.78  

Cash dividends per share declared for the three months ended March 31, 2018 (1)

     0.29        0.13        0.29        0.31  

Book value per common share as of March 31, 2018

     31.84        25.80        33.73        35.52  

Tangible common book value per share as of March 31, 2018 (2)

     18.56        25.80        17.66        18.60  

 

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     Wesbanco      Farmers Capital
Bank Corporation
     Pro Forma
Combined
     Per Equivalent
Farmers Capital Bank
Corporation
 

Earnings per share for the fiscal year ended December 31, 2017:

           

Basic

   $ 2.15      $ 1.56      $ 2.02      $ 2.13  

Diluted

     2.14        1.56        2.02        2.12  

Cash dividends per share declared for the fiscal year ended December 31, 2017 (1)

     1.04        0.43        1.04        1.10  

Book value per common share as of the fiscal year ended December 31, 2017

     31.68        25.72        33.02        34.77  

Tangible common book value per share as of the fiscal year ended December 31, 2017 (2)

     18.42        25.72        16.97        17.87  

 

(1) Pro forma dividends per share represent Wesbanco’s historical dividends per share.

(2) See Non-GAAP Financial Measures for additional information relating to the calculation of this ratio.

 

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RISK FACTORS

In addition to the other information included in and incorporated by reference into this proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements,” and the risk factors included in Wesbanco’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and Farmers Capital’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, you should carefully consider the following risk factors before deciding whether to vote to approve the merger agreement. For further discussion of these and other risk factors, please see Wesbanco’s and Farmers Capital’s periodic reports and other documents incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page.  Additional risks and uncertainties not presently known to Wesbanco or Farmers Capital that are not currently believed to be important to you, if they materialize, also may adversely affect the merger and Wesbanco as the surviving corporation in the merger.

Because the market price of Wesbanco common stock may fluctuate, Farmers Capital shareholders cannot be certain of the market value of the Wesbanco common stock that they will receive in the merger.

Upon completion of the merger, each share of Farmers Capital common stock will become the right to receive (1) 1.053 shares of Wesbanco common stock, subject to adjustment as described in the merger agreement, and (2) $5.00 in cash, without interest. Any change in the price of Wesbanco common stock prior to completion of the merger will affect the market value of the stock that Farmers Capital shareholders will receive on the date of the merger. Farmers Capital will not have the right to terminate the merger agreement due to a decline in the trading price of Wesbanco common stock unless both (a) the average closing price of Wesbanco common stock during a specified period before the effective time of the merger is less than $34.188 and (b) Wesbanco common stock underperforms the Nasdaq Bank Index by more than 20%.

Stock price changes may result from a variety of factors, including general market and economic conditions, changes in Wesbanco’s businesses, operations and prospects, and regulatory considerations. We urge Farmers Capital shareholders to obtain current market quotations for Wesbanco and Farmers Capital common stock when deciding how to vote.

If the price of Wesbanco common stock declines, Farmers Capital shareholders may receive less value for their shares upon completion of the merger than the value calculated pursuant to the exchange ratio on the date the merger agreement was executed, on the date of this proxy statement/prospectus or on the date of the Farmers Capital special meeting. For example, based on the range of closing prices of Wesbanco common stock during the period from April 19, 2018, the last full trading day before public announcement of the merger, through June [●], 2018, the last practicable full trading day prior to the date of this proxy statement/prospectus, the exchange ratio represented a value ranging from a high of $[●] on [●], 2018 to a low of $[●] on [●], 2018 for each share of Farmers Capital common stock. Because the date the merger is completed will be later than the date of the Farmers Capital special meeting, Farmers Capital shareholders will not know what the market value of Wesbanco common stock will be upon completion of the merger when voting at the Farmers Capital special meeting.

The opinion of Farmers Capital’s financial advisor delivered to the Farmers Capital board of directors prior to the execution of the merger agreement does not reflect changes in circumstances after the date of the opinion.

The opinion of Farmers Capital’s financial advisor to the Farmers Capital board of directors regarding the merger consideration to be received by the holders of Farmers Capital common stock was delivered on, and dated, April 19, 2018. Subsequent changes in the operation and prospects of Farmers Capital or Wesbanco, general market and economic conditions and other factors that may be beyond the control of Farmers Capital or Wesbanco may significantly alter the value of Farmers Capital or Wesbanco or the prices of the shares of

 

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Farmers Capital common stock or Wesbanco common stock by the time the merger is completed. The opinion does not speak as of the time the merger is completed, or as of any other date other than the date of the opinion. The opinion of Farmers Capital’s financial advisor is attached as Annex B to this proxy statement/prospectus. See “Proposal No. 1—Approval of the Merger Agreement – Opinion of Farmers Capital’s Financial Advisor” beginning on page 41 for a description of the opinion and a summary of the analyses performed by Farmers Capital’s financial advisor in connection with its opinion.

The combined company will incur significant transaction and merger-related costs in connection with the merger.

Wesbanco and Farmers Capital expect to incur costs associated with combining the operations of the two companies. Wesbanco and Farmers Capital have just recently begun collecting information in order to formulate detailed integration plans to deliver planned synergies. Additional unanticipated costs may be incurred in the integration of the businesses of Wesbanco and Farmers Capital. Whether or not the merger is consummated, Wesbanco and Farmers Capital will incur substantial expenses, such as legal, accounting, printing and financial advisory fees, in pursuing the merger. Although Wesbanco and Farmers Capital expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses may offset incremental transaction and merger-related costs over time, this net benefit may not be achieved in the near term, or at all.

If the merger is not completed, Wesbanco and Farmers Capital will have incurred substantial expenses without their shareholders realizing the expected benefits of the merger.

Wesbanco and Farmers Capital have each incurred substantial expenses in connection with the transactions described in this proxy statement/prospectus, which are charged to earnings as incurred. If the merger is not completed, these expenses will still be charged to earnings even though Wesbanco and Farmers Capital would not have realized the expected benefits of the merger. There can be no assurance that the merger will be completed.

Wesbanco may not be able to successfully integrate Farmers Capital or to realize the anticipated benefits of the merger.

The merger involves the combination of two companies that previously have operated independently. A successful combination of the operations of the two entities will depend substantially on Wesbanco’s ability to consolidate operations, systems and procedures and to eliminate redundancies and reduce costs of the combined operations. Wesbanco may not be able to combine the operations of Farmers Capital and Wesbanco without encountering difficulties, such as:

 

    the loss of key employees and customers;

 

    the disruption of operations and business;

 

    the inability to maintain and increase competitive presence;

 

    deposit attrition, customer loss and revenue loss;

 

    possible inconsistencies in standards, control procedures and policies;

 

    unexpected problems with costs, operations, personnel, technology and credit; and/or

 

    problems with the assimilation of new operations, sites or personnel, which could divert resources from regular banking operations.

Additionally, general market and economic conditions or governmental actions affecting the financial industry generally may inhibit the successful integration of Farmers Capital and Wesbanco.

 

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Further, Wesbanco and Farmers Capital entered into the merger agreement with the expectation that the merger will result in various benefits including, among other things, benefits relating to enhanced revenues, a strengthened market position for the combined company, cross selling opportunities, technology, cost savings and operating efficiencies. Achieving the anticipated benefits of the merger is subject to a number of uncertainties, including whether Wesbanco integrates Farmers Capital in an efficient and effective manner, and general competitive factors in the marketplace. Failure to achieve these anticipated benefits could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy and could materially impact Wesbanco’s business, financial condition and operating results. Finally, any cost savings that are realized may be offset by losses in revenues or other charges to earnings.

The merger agreement may be terminated in accordance with its terms, and the merger may not be completed.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. Those conditions include, among others: approval of the merger agreement by Farmers Capital shareholders, regulatory approvals, absence of orders prohibiting the completion of the merger, effectiveness of the registration statement of which this proxy statement/prospectus is a part, approval of the shares of Wesbanco common stock to be issued to Farmers Capital shareholders for listing on the Nasdaq Global Select Market, the continued accuracy of the representations and warranties by both parties, the performance by both parties of their covenants and agreements, and the receipt by both parties of legal opinions from their respective tax counsels. See “Proposal No. 1 — Approval of the Merger Agreement — Termination of the Merger Agreement” beginning on page 76 for a more complete discussion of the circumstances under which the merger agreement could be terminated. Any of these conditions to closing of the merger may not be fulfilled, and as a result the merger may not be completed.

Termination of the merger agreement could negatively affect Farmers Capital.

If the merger agreement is terminated, there may be various consequences, including:

 

    Farmers Capital’s businesses may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger; and

 

    the market price of Farmers Capital common stock might decline to the extent that the current market price reflects a market assumption that the merger will be completed.

If the merger agreement is terminated and Farmers Capital’s board of directors seeks another merger or business combination, Farmers Capital shareholders cannot be certain that Farmers Capital will be able to find a party willing to offer equivalent or more attractive consideration than the consideration Wesbanco has agreed to provide in the merger.

If the merger agreement is terminated, Farmers Capital may be required to pay a break-up fee of $12,000,000 to Wesbanco under certain circumstances. See “Proposal No. 1 — Approval of the Merger Agreement — Termination Fee” beginning on page 79.

The merger agreement limits Farmers Capital’s ability to pursue alternatives to the merger.

The merger agreement contains provisions that, subject to narrow exceptions, limit Farmers Capital’s ability to discuss, facilitate or enter into agreements with third parties to acquire it. If Farmers Capital avails itself of those limited exceptions, it could be obligated to pay Wesbanco a break-up fee of $12,000,000 under certain specified circumstances. These provisions could discourage a potential competing acquiror that might have an interest in acquiring Farmers Capital from proposing or considering such an acquisition even if that potential acquiror were prepared to pay a higher price to shareholders than the merger consideration.

 

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Farmers Capital will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainties about the effect of the merger on employees and customers may have an adverse effect on Farmers Capital and consequently on Wesbanco. These uncertainties may impair Farmers Capital’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with Farmers Capital to seek to change existing business relationships with Farmers Capital. Retention of certain employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, Farmers Capital’s business prior to the merger and the combined company’s business following the merger could be negatively impacted. In addition, the merger agreement restricts Farmers Capital from making certain acquisitions and taking other specified actions before the merger occurs without the consent of Wesbanco. These restrictions may prevent Farmers Capital from pursuing business opportunities that may arise prior to the completion of the merger. See “Proposal No. 1 — Approval of the Merger Agreement — Conduct of Business Prior to the Merger” beginning on page 71 for a description of restrictive covenants applicable to Farmers Capital.

The need for regulatory approvals may delay the date of completion of the merger or may diminish the benefits of the merger.

Wesbanco, Farmers Capital and certain of their subsidiaries are required to obtain the approvals of certain bank regulatory agencies prior to completing the merger and the bank merger. Satisfying any requirements of these regulatory agencies may delay the date of completion of the merger. The requisite regulatory approvals may not be received at all (in which case the merger could not be completed), may not be received in a timely fashion, or may contain conditions or restrictions on completion of the merger that cannot be satisfied. In addition, you should be aware that, as in any transaction, it is possible that, among other things, restrictions on the combined operations of the two companies, including divestitures, may be sought by governmental agencies as a condition to obtaining the required regulatory approvals. This may diminish the benefits of the merger to the combined company or have an adverse effect on the combined company following the merger. See “Proposal No. 1 — Approval of the Merger Agreement — Regulatory Approvals” on page 61.

Farmers Capital shareholders will have less influence as shareholders of Wesbanco than they have as shareholders of Farmers Capital.

Farmers Capital shareholders currently have the right to vote in the election of the board of directors of Farmers Capital and on other matters affecting Farmers Capital. Based upon the number of shares of Farmers Capital common stock outstanding as of the record date, the current shareholders of Farmers Capital as a group will own approximately 14.5% of the voting power of the combined organization immediately after the merger. When the merger occurs, each Farmers Capital shareholder will become a shareholder of Wesbanco with a percentage ownership of the combined organization much smaller than the shareholder’s current percentage ownership of Farmers Capital. Because of this, Farmers Capital shareholders will have less influence on the management and policies of Wesbanco than they now have on the management and policies of Farmers Capital.

 

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Directors and officers of Farmers Capital have interests in the merger that differ from the interests of non-management Farmers Capital shareholders.

The executive officers of Farmers Capital and Wesbanco, with the assistance of the parties’ respective legal counsel and financial advisors, negotiated the terms of the merger agreement. The Farmers Capital and Wesbanco boards of directors have approved the merger agreement, and the Farmers Capital board of directors is recommending that Farmers Capital shareholders vote to approve the merger agreement. In considering these facts and the other information included in this proxy statement/prospectus or incorporated by reference into it, you should be aware that Farmers Capital’s directors and executive officers have economic interests in the merger beyond their interests as shareholders. These include, for example:

 

    One current Farmers Capital director, Michael J. Crawford, will be appointed to the board of directors of Wesbanco upon completion of the merger.

 

    All of Farmers Capital’s current directors will be appointed to a newly-created advisory board for Wesbanco Bank for certain portions of the Kentucky market.

 

    Wesbanco and Farmers Capital entered into agreements with each of Lloyd C. Hillard, Jr., Rickey D. Harp, J. David Smith, Jr. and Mark A. Hampton, pursuant to which certain of such executive officers will receive certain payments upon completion of the merger that they would have generally been entitled to receive under current agreements with Farmers Capital.

 

    Wesbanco has created a retention bonus pool for certain key employees, including some executive officers, to ensure continuity through the conversion of the data processing system of Farmers Capital and made conditional retention grants of Wesbanco restricted stock which will have a two-year cliff-vesting term.

 

    Wesbanco has entered into agreements with certain Farmers Capital key employees, including some executive officers, pursuant to which Wesbanco will grant, immediately after and subject to the occurrence of the effective time, restricted shares of Wesbanco common stock which will cliff-vest on the second anniversary of the grant date if such employee remains employed by Wesbanco or Wesbanco Bank at that time.

 

    The merger agreement provides that Wesbanco will continue the indemnification rights of Farmers Capital’s current and former directors and executive officers and will provide, for six years after completion of the merger, directors’ and officers’ insurance for these individuals.

See “Proposal No. 1 — Approval of the Merger Agreement — Interests of Certain Persons in the Merger” beginning on page 57.

Following the merger, a high percentage of the combined company’s loan portfolio will be concentrated in West Virginia, Ohio, Pennsylvania, Indiana and Kentucky and in commercial and residential real estate. Deteriorations in economic conditions in these areas or in the real estate market generally could be more harmful to the combined company compared to more diversified institutions.

As of March 31, 2018, approximately 21.3%, of Wesbanco’s loan portfolio was comprised of residential real estate loans, and 47.7% was comprised of commercial real estate loans. Assuming the merger had been completed on March 31, 2018, the combined company’s loan portfolio as of that date would have been 23.1% residential real estate loans and 48.8% commercial real estate loans.

Inherent risks of commercial real estate (“CRE”) lending include the cyclical nature of the real estate market, construction risk and interest rate risk. The cyclical nature of real estate markets can cause CRE loans to suffer considerable distress. During these times of distress, a property’s performance can be negatively affected by tenants’ deteriorating credit strength and lease expirations in times of softening demand caused by economic deterioration or over-supply conditions. Even if borrowers are able to meet their payment obligations, they may

 

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find it difficult to refinance their full loan amounts at maturity due to declines in property value. Other risks associated with CRE lending include regulatory changes and environmental liability. Regulatory changes in tax legislation, zoning or similar external conditions including environmental liability may affect property values and the economic feasibility of existing and proposed real estate projects.

The combined company’s CRE loan portfolio will be concentrated in West Virginia, Ohio, Pennsylvania, Indiana and Kentucky. There are a wide variety of economic conditions within the local markets of the five states in which most of the combined company’s CRE loan portfolio will be situated. Rates of employment, consumer loan demand, household formation, and the level of economic activity can vary widely from state to state and among metropolitan areas, cities and towns. Metropolitan markets comprise various submarkets where property values and demand can be affected by many factors, such as demographic makeup, geographic features, transportation, recreation, local government, school systems, utility infrastructure, tax burden, building-stock age, zoning and building codes, and available land for development. Despite the merger, as a result of the continued high concentration of the combined company’s loan portfolio, the combined company may be more sensitive, compared to more diversified institutions, to future disruptions in, and deterioration of, this market, which could lead to losses that could have a material adverse effect on the business, financial condition and results of operations of the combined company.

 

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THE SPECIAL MEETING OF FARMERS CAPITAL SHAREHOLDERS

General

This section contains information about the special shareholder meeting Farmers Capital has called to consider and vote on proposals to (i) approve the merger agreement, (ii) approve, in a non-binding advisory vote, of the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and (iii) approve the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger agreement at the time of the Farmers Capital special meeting. Farmers Capital is mailing this proxy statement/prospectus to you on or about [●], 2018. Together with this proxy statement/prospectus, Farmers Capital is also sending to its shareholders a notice of the Farmers Capital special meeting and a form of proxy that Farmers Capital’s board of directors is soliciting for use at the Farmers Capital special meeting and at any adjournments of the special meeting.

A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A and is incorporated by reference into this document in its entirety. You should read the entire merger agreement carefully.

Date, Time and Place of the Special Meeting

The Farmers Capital special meeting will be held at United Bank & Capital Trust Company, 125 West Main Street, Frankfort, Kentucky, on Monday, July 23, 2018, at 9:00 a.m. Eastern Daylight Time.

Record Date; Stock Entitled to Vote; Quorum

Only holders of record of Farmers Capital common stock on May 31, 2018, which we refer to as the record date, will be entitled to notice of and to vote at the Farmers Capital special meeting and any adjournments of such meeting. On the record date, there were 7,519,814 shares of Farmers Capital common stock outstanding and entitled to vote at the Farmers Capital special meeting. Owners of record of Farmers Capital common stock on the record date are entitled to one vote per share at the Farmers Capital special meeting.

A quorum of Farmers Capital shareholders is necessary to have a valid meeting of Farmers Capital shareholders. The presence, in person or by proxy, of the holders of at least a majority of the shares of Farmers Capital common stock outstanding as of the record date and entitled to vote is necessary to constitute a quorum at the Farmers Capital special meeting. Abstentions and broker non-votes count as present for establishing a quorum. An abstention occurs when a shareholder attends a meeting, either in person or by proxy, but abstains from voting. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. None of the proposals to be voted upon at the Farmers Capital special meeting are routine matters, and brokers, banks and other nominees holding shares in street name will not be permitted to vote on any proposal without instructions from the beneficial holder with respect to that specific proposal. If a beneficial holder of shares of Farmers Capital common stock does not give the broker, bank or other nominee any voting instructions, the holder’s shares of common stock will not be voted on any proposal.

Required Vote

Approval of the Merger Agreement. Approval of the merger agreement requires the affirmative vote of a majority of the outstanding shares of Farmers Capital common stock entitled to vote. Accordingly, we urge you to complete, date and sign the accompanying proxy card and return it promptly in the enclosed postage-paid envelope.

When considering the recommendation of the Farmers Capital board of directors that Farmers Capital shareholders vote in favor of approval of the merger agreement, you should be aware that certain of Farmers

 

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Capital’s executive officers and directors have interests in the merger that may be different from, or in addition to, their interests as shareholders and the interests of Farmers Capital shareholders generally. See “Proposal No. 1 — Approval of the Merger Agreement — Interests of Certain Persons in the Merger” beginning on page 57.

Advisory (Non-binding) Vote Regarding Golden Parachute Compensation. In order to approve on an advisory (non-binding) basis, Farmers Capital’s golden parachute compensation payable to the named executive officers of Farmers Capital in connection with the merger, such proposal must receive the affirmative vote of a majority of the shares of Farmers Capital common stock present in person or by proxy at the Farmers Capital special meeting at which a quorum is present.

Discretionary Authority to Adjourn Our Special Meeting. In order to approve the proposal to grant discretionary authority to adjourn our special meeting if necessary or appropriate to solicit additional proxies from Farmers Capital shareholders in favor of approval of the merger agreement, such proposal must receive the affirmative vote of a majority of the shares of Farmers Capital common stock present in person or by proxy at the Farmers Capital special meeting at which a quorum is present.

Abstentions and Broker Non-Votes.

Approval of the Merger Agreement. Abstentions, broker non-votes, and shares that are not voted will have the effect of a vote “Against” the proposal to approve the merger agreement.

Advisory (Non-binding) Vote Regarding Golden Parachute Compensation. Abstentions, broker non-votes, and shares that are not voted will have no effect on the outcome of the proposal to approve on an advisory (non-binding) basis, Farmers Capital’s golden parachute compensation payable to the named executive officers of Farmers Capital in connection with the merger.

Discretionary Authority to Adjourn Our Special Meeting. Abstentions, broker non-votes, and any shares that are not voted will have no effect on the outcome of the proposal to adjourn the Farmers Capital special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the Farmers Capital special meeting to approve the merger agreement.

Beneficial Ownership of Farmers Capital Officers, Directors and Affiliates

On the record date, the directors, executive officers and affiliates of Farmers Capital owned or controlled the vote of approximately 239,646 shares of Farmers Capital common stock, or approximately 3.2% of the outstanding shares of Farmers Capital common stock. In addition, certain of the executive officers and all of the directors of Farmers Capital have entered into voting agreements with Wesbanco in which each executive officer or director has agreed to vote his or her Farmers Capital shares in favor of approval of the merger agreement. See “Other Material Agreements Relating to the Merger — Voting Agreements.”

Voting of Proxies

Farmers Capital shareholders may submit the accompanying proxy by telephone, the Internet or by mail. We urge you to submit your proxy if you do not expect to attend the Farmers Capital special meeting in person or if you wish to have your Farmers Capital shares voted by proxy even if you attend the Farmers Capital special meeting. All shares of Farmers Capital common stock represented at the Farmers Capital special meeting by properly executed proxies received prior to or at the Farmers Capital special meeting, and not revoked, will be voted at the Farmers Capital special meeting in accordance with the instructions on the proxies. If you properly execute a proxy but include no voting instructions, your shares will be voted “FOR” the proposals to (i) approve the merger agreement, (ii) approve, in a non-binding advisory vote, the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and (iii) approve the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger agreement at the time of the Farmers Capital special meeting.

 

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If your shares are held in “street name” (i.e., in the name of a broker, bank or other record holder), you must direct the record holder how to vote your shares in connection with the merger. Your broker will send you directions explaining how you can direct your broker to vote.

The Farmers Capital board of directors does not know of any matters, other than those described in the notice of the Farmers Capital special meeting, which are to come before the special meeting. If any other matters are properly presented at the special meeting for action, the persons named in the enclosed form of proxy will have the authority to vote on those matters in their discretion.

Revocation of Proxies

If you give a proxy, you have the right to revoke it at any time before it is voted. You may revoke your proxy by (i) filing a written notice of revocation with the Secretary of Farmers Capital that is received prior to the vote at the Farmers Capital special meeting and bears a later date than the proxy, (ii) duly executing a later dated proxy card relating to the same Farmers Capital shares and delivering it to the Secretary of Farmers Capital before the vote at the Farmers Capital special meeting, (iii) submitting a later dated proxy by telephone or the Internet, before the vote at the Farmers Capital special meeting, or (iv) attending the Farmers Capital special meeting and voting in person. Your attendance at the Farmers Capital special meeting will not, in and of itself, revoke your proxy. Any written notice of revocation or subsequent dated proxy should be sent to Farmers Capital Bank Corporation, 202 West Main Street, Frankfort, Kentucky 40601, Attention: Corporate Secretary, or hand delivered to the Farmers Capital Corporate Secretary at that address. For a notice of revocation or later proxy to be valid, it must actually be received by Farmers Capital prior to the vote of the Farmers Capital shareholders.

If your Farmers Capital shares are held by a broker in street name and you wish to change the instructions you have given your broker about how to vote your Farmers Capital shares, or you wish to attend the Farmers Capital special meeting and vote in person, you must follow the instructions provided by your broker.

Expenses of Solicitation of Proxies

Farmers Capital will bear the entire cost of soliciting proxies from Farmers Capital shareholders. In addition to solicitation by use of the mail, proxies may be solicited by directors, officers and employees of Farmers Capital in person or by telephone, telegram or other means of communication. These directors, officers and employees will not receive any additional compensation but may be reimbursed for out-of-pocket expenses they incur in connection with the solicitation. Arrangements will also be made with brokerage houses, custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of Farmers Capital common stock held of record by such persons. Farmers Capital may reimburse these custodians, nominees and fiduciaries for reasonable out-of-pocket expenses they incur.

DO NOT SEND YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD.

Recommendation of Farmers Capital Board of Directors

The Farmers Capital board of directors believes that the merger is in the best interests of Farmers Capital and its shareholders, and unanimously recommends that the shareholders of Farmers Capital vote:

 

    “FOR” the proposal to approve the merger agreement;

 

    “FOR” the proposal to approve, in a non-binding, advisory vote, the compensation payable to the named executive officers of Farmers Capital in connection with the merger; and

 

    “FOR” the proposal to approve the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to solicit additional proxies in favor of the approval of the merger agreement.

 

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For a discussion of the factors considered by the Farmers Capital board of directors in making its recommendation, see “Proposal No. 1 — Approval of the Merger Agreement — Farmers Capital’s Reasons for the Merger.”

 

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PROPOSAL NO. 1 — APPROVAL OF THE MERGER AGREEMENT

The following summarizes material provisions of the merger agreement, a copy of which is attached to this proxy statement/prospectus as Annex A and which we incorporate by reference into this document. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We encourage you to read carefully the merger agreement in its entirety, as the rights and obligations of the parties are governed by the express terms of the merger agreement and not by this summary or any other information contained in this proxy statement. Factual disclosures about Wesbanco and Farmers Capital contained in this proxy statement/prospectus or in the companies’ public reports filed with the SEC may supplement, update or modify the factual disclosures about the companies contained in the merger agreement.

This description of the merger agreement in this proxy statement/prospectus has been included to provide you with information regarding the merger agreement’s terms. The merger agreement contains representations, warranties, covenants and agreements made by Wesbanco and Farmers Capital as of specific dates that were made for purposes of that contract between the parties and are subject to qualifications and limitations, including by information in disclosure schedules that the parties exchanged in connection with the execution of the merger agreement. In addition, certain representations and warranties may be subject to contractual standards of materiality different from those generally applicable to shareholders, or may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the merger agreement. Shareholders are not third-party beneficiaries under the merger agreement.

General

Wesbanco’s and Farmers Capital’s boards of directors have approved the merger agreement. The merger agreement provides that Farmers Capital will merge with and into Wesbanco, with Wesbanco being the surviving corporation. Following the merger, United Bank & Capital Trust Company, a Kentucky state-chartered commercial bank and wholly-owned subsidiary of Farmers Capital, will merge with and into Wesbanco Bank, Inc., a West Virginia banking corporation which is Wesbanco’s main operating subsidiary (the “bank merger”). The Articles of Incorporation and Bylaws of Wesbanco and Wesbanco Bank immediately prior to the merger will constitute the Articles of Incorporation and Bylaws of Wesbanco and Wesbanco Bank following the merger.

What Farmers Capital Shareholders Will Receive in the Merger

If the merger is completed, for each share of Farmers Capital common stock that you own you will receive (1) 1.053 shares of Wesbanco common stock, subject to adjustment as described in the merger agreement, and (2) $5.00 in cash, without interest. Collectively, we refer to the 1.053 shares of Wesbanco common stock and $5.00 in cash, as the “merger consideration.” The merger agreement provides that the exchange ratio will be adjusted if Wesbanco changes the number of shares of Wesbanco common stock issued and outstanding prior to the effective time of the merger as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other like changes in Wesbanco’s capitalization.

Effects of the Merger

The merger will become effective as set forth in the articles of merger that will be filed with the West Virginia Secretary of State and the statement of merger that will be filed with the Kentucky Secretary of State. At that time, the separate existence of Farmers Capital will cease and Wesbanco will be the surviving corporation. The assets, liabilities and capital of Farmers Capital will be merged with those of Wesbanco and those assets, liabilities and capital will then constitute part of the assets, liabilities and capital of Wesbanco. Wesbanco will continue to operate under its articles of incorporation and bylaws effective as of immediately prior to the merger, and the officers and directors of Wesbanco will continue as the officers and directors of the surviving

 

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corporation, except that one current Farmers Capital director, Michael J. Crawford, will be appointed to the board of directors of Wesbanco effective as of the effective time of the merger. See “Proposal No. 1 — Approval of the Merger Agreement — Interests of Certain Persons in the Merger” beginning on page 57. The tenure of the directors and officers of Wesbanco immediately prior to the merger will be unaffected by the merger.

At the effective time of the merger, each share of Farmers Capital common stock issued and outstanding immediately prior to the time the merger becomes effective will be converted automatically into the right to receive the merger consideration. Shares of Farmers Capital common stock held by Farmers Capital in its treasury or beneficially owned by Wesbanco (other than in a fiduciary capacity by them for others) will not be exchanged for the merger consideration in the merger. Instead, these shares will be canceled and will cease to exist.

After the merger becomes effective, each certificate evidencing shares of Farmers Capital common stock will be deemed to evidence only the right to receive the merger consideration and, under certain circumstances, dividends on shares of Farmers Capital common stock with a record date prior to the completion of the merger and dividends on shares of Wesbanco common stock with a record date after the completion of the merger. The holder of an unexchanged certificate will not receive any dividend or other distribution payable by Wesbanco until the certificate has been exchanged.

Exchange and Payment Procedures

At least one business day prior to the effective time of the merger, Wesbanco will deposit with Computershare Investor Services, LLC, the Exchange Agent, (i) book entry shares representing the aggregate number of shares of Wesbanco common stock issuable pursuant to the merger agreement in exchange for all of the shares of Farmers Capital common stock outstanding immediately prior to the effective time of the merger, (ii) immediately available funds equal to the aggregate amount of cash, without interest, payable by Wesbanco pursuant to the merger agreement in exchange for all of the shares of Farmers Capital common stock outstanding immediately prior to the effective time of the merger and (iii) immediately available funds equal to the aggregate amount of cash, payable by Wesbanco pursuant to the merger agreement for fractional shares of Wesbanco common stock.

As soon as practicable after the effective time of the merger and in no event more than seven business days thereafter, Wesbanco will mail or will cause to be mailed to each holder of record of Farmers Capital common stock a letter of transmittal containing instructions for use in surrendering Farmers Capital stock certificates in exchange for the merger consideration, cash in lieu of fractional shares, if any, and any unpaid dividends or distributions that a holder of record of Farmers Capital common stock would be entitled to receive under the terms of the merger agreement. After the effective time of the merger, each holder of a Farmers Capital stock certificate who has surrendered that stock certificate or who has provided customary affidavits and indemnification regarding the loss or destruction of that stock certificate, together with duly executed transmittal materials, to the Exchange Agent, will be entitled to receive the merger consideration for each share of Farmers Capital common stock and, if applicable, any cash in lieu of fractional shares of Wesbanco common stock and any unpaid dividends or distributions. Wesbanco will have no obligation to deliver the merger consideration, any cash in lieu of fractional shares or any unpaid dividends or distributions to any Farmers Capital shareholder until the Farmers Capital shareholder surrenders his Farmers Capital stock certificates.

If a Farmers Capital stock certificate has been lost, stolen or destroyed, the Exchange Agent will issue the merger consideration properly payable under the merger agreement upon receipt of an affidavit of that fact by the shareholder. Wesbanco may require the shareholder to post a bond in a reasonable amount as an indemnity against any claim that may be made against Wesbanco with respect to the shareholder’s lost, stolen or destroyed Farmers Capital stock certificate.

Farmers Capital stock certificates may be exchanged for the merger consideration and cash in lieu of fractional shares of Wesbanco common stock through the Exchange Agent for up to 12 months after the

 

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completion of the merger. At the end of that period, the Exchange Agent will return any Wesbanco shares and cash to Wesbanco. Any holders of Farmers Capital common stock certificates who have not exchanged their certificates for the merger consideration before that date will then be entitled to look only to Wesbanco to seek payment of the merger consideration, any cash in lieu of fractional shares of Wesbanco common stock and any unpaid dividends or distributions payable to the holder, in each case without interest. Neither Farmers Capital nor Wesbanco will be liable to any former holder of Farmers Capital common stock for any merger consideration that is paid to a public official in accordance with any applicable abandoned property, escheat or similar laws.

Following the effective time of the merger, there will be no transfers on the stock transfer books of Farmers Capital other than to settle transfers of Farmers Capital common stock that occurred prior to the effective time of the merger.

Benefit Agreements

401(k) Plan. Pursuant to the terms of the merger agreement, Wesbanco has the option to require Farmers Capital to terminate its 401(k) Plan immediately prior to and conditioned upon the occurrence of the effective time of the merger, or to merge the Farmers Capital 401(k) Plan with and into the Wesbanco 401(k) Plan after the effective time of ther merger. Until the Farmers Capital 401(k) Plan is terminated or merged, Farmers Capital will continue to make contributions to the Farmers Capital 401(k) Plan in accordance with applicable accruals and in the ordinary course of business. If Wesbanco elects to terminate the Farmers Capital 401(k) Plan, then as soon as practicable following the effective time of the merger, at each employee’s option, either the account balances will be distributed to participants or transferred to an eligible tax-qualified retirement plan or individual retirement account as a participant or beneficiary may direct. Wesbanco has agreed to permit Farmers Capital employees who become Wesbanco employees following completion of the merger to rollover their account balances to the Wesbanco Employee Stock Ownership and 401(k) Plan, which is a qualified non-contributory employee stock ownership plan with a deferred savings plan feature under Section 401(k) of the Code.

Severance, Benefits and Outplacement Services for Terminated Farmers Capital Employees. Employees of Farmers Capital (other than employees who are parties to employment, severance or change in control agreements) who are not offered the opportunity to continue as employees of Wesbanco or Wesbanco Bank after the merger, or who are terminated without cause within six months after the merger, will be entitled to receive from Wesbanco or Wesbanco Bank:

 

    severance compensation based on the number of years of service with Farmers Capital and/or its subsidiaries and the employee’s weekly rate of pay, subject to certain minimum and maximum amounts;

 

    accrued benefits, including paid time off, through the date of separation;

 

    any rights to continuation of medical coverage to the extent such rights are required under applicable federal or state law and subject to the employee’s compliance with all applicable requirements for such continuation coverage, including payment of all premiums or other expenses related to such coverage; and

 

    outplacement services with a cost of up to $2,000 for each such employee.

Benefits for Continuing Employees. From and after the effective time of the merger, the employees of Farmers Capital and its subsidiaries who remain with Wesbanco or any Wesbanco subsidiary (“continuing employees”) will be provided with employee benefits that are substantially similar to employee benefits provided to other comparable employees under Wesbanco’s benefit plans (excluding for this purpose any equity-based incentive plans). Additionally, each continuing employee will be credited with years of service with Farmers Capital and/or its subsidiaries for purposes of eligibility, vesting, entitlements to benefits and levels of benefits (but not for benefit accrual purposes under any defined benefit plan or agreement) in the employee benefit plans of Wesbanco, and will retain the paid time-off accrual earned under Farmers Capital’s paid time-off policy as of the effective time so that such continuing employee will receive under Wesbanco’s vacation policy a benefit no

 

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less than what such continuing employees had earned under Farmers Capital’s paid time-off policy as of the effective time of the merger; provided, however, that any future accrual of benefits will be in accordance with Wesbanco’s vacation policy, subject to carryover limitations applicable to such future accruals. In addition, continuing employees who become eligible to participate in Wesbanco’s compensation and benefit plans following the effective time of the merger (i) will receive full credit under such plans for any deductibles, co-payments and out-of-pocket expenses incurred by such employees and their respective dependents under the applicable Farmers Capital compensation and benefit plans during the portion of the applicable plan year prior to such participation, and (ii) will not be subject to any exclusion or penalty for pre-existing conditions that were covered under Farmers Capital compensation and benefit plans immediately prior to the effective time of the merger, or to any waiting period relating to such coverage.

Retention Bonus Pool. Wesbanco will provide a retention bonus pool for the purposes of retaining the services of employees of Farmers Capital and its subsidiaries who are key employees through the end of the month during which the conversion of the data processing system of Farmers Capital occurs. Farmers Capital’s Chief Executive Officer will determine, subject to approval by Wesbanco’s President and Chief Executive Officer, the Farmers Capital employees eligible to receive retention awards from the retention bonus pool and any criteria for payment, and will determine the final allocation of payments from the retention bonus pool.

Retention Restricted Stock Agreements. Wesbanco has entered into agreements with certain Farmers Capital key employees, including some executive officers, pursuant to which Wesbanco will grant, immediately after and subject to the occurrence of the effective time, restricted shares of Wesbanco common stock which will cliff-vest on the second anniversary of the merger date if such key employee remains employed by Wesbanco or Wesbanco Bank at that time. Grants under these retention restricted stock agreements will be made and become effective only upon the applicable key employees becoming employees of Wesbanco or Wesbanco Bank at or after the effective time. No grants under these retention restricted stock agreements will be made if the merger does not occur.

Other Benefit Arrangements. As of the effective time of the merger, Wesbanco will honor and assume the separation agreements, employment agreements, non-competition agreements, consulting agreements and change in control agreements in effect with the senior officers of Farmers Capital and United Bank & Capital Trust Company at the effective time of the merger, as such may be modified by agreements with Wesbanco. See “Interests of Certain Persons in the Merger,” below.

Background of the Merger

The Farmers Capital board of directors periodically reviews with management Farmers Capital’s business strategies, opportunities and challenges as part of its consideration and evaluation of long-term prospects, all with the goal of enhancing value for stockholders. On several occasions, Farmers Capital invited representatives of investments banks, including KBW, to participate in such meetings and to provide additional perspective and market information regarding potential acquisition targets and acquirers.

During the five years preceding March 2015, Farmers Capital undertook actions to substantially reduce non-performing loans and otherwise improve its balance sheet and to resolve regulatory enforcement action that had been taken against Farmers Capital and certain of its bank subsidiaries. Farmers Capital had also begun the process of consolidating its bank subsidiaries into one legal entity, to significantly improve its efficiency and risk management practices and procedures, among other things. By March 2015, Farmers Capital’s board of directors believed that such corrective actions had created substantial stockholder value and that growth would now be required in order to continue adding substantial stockholder value. At that time Farmers Capital engaged KBW to act as its financial advisor. In accordance with Farmers Capital’s directives, KBW contacted several potential acquirers for Farmers Capital. Farmers Capital received several indications of interest from potential acquirers and had extensive discussions with two potential acquirers. However, Farmers Capital was unable to complete a business combination transaction in 2015, in part, because potential acquirers expressed concern about the

 

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regulatory climate and its potential impact on certain of Farmers Capital’s retail operations. As a result of this process, the Farmers Capital board of directors obtained additional insight into the value of Farmers Capital and the level of interest of potential acquirers.

Farmers Capital met with KBW periodically throughout 2015 and 2016 to review its options with respect to strategic initiatives. During this same period, Farmers Capital’s condition and performance continued to improve. On January 30, 2017, Farmers Capital received an unsolicited indication of interest from one of the institutions that had submitted an indication of interest to it in 2015. Farmers Capital’s board of directors evaluated the indication of interest in consultation with KBW and Squire Patton Boggs (US) LLP (“Squire”), which was engaged by Farmers Capital as outside legal counsel. Once again, the potential transaction did not proceed, this time due to disagreements over purchase price. Following the termination of discussions regarding this potential transaction in May 2017, Farmers Capital began to explore other strategic initiatives with KBW’s assistance, including potential acquisitions by Farmers Capital of other depository institutions and the potential financial implications of such potential acquisitions.

On August 22, 2017, Mr. Hillard met with Jim Rickard, the President for Kentucky and Southern Indiana for Wesbanco and the former President and CEO of Your Community Bankshares, Inc., which was acquired by Wesbanco in September 2016. As members of the Kentucky banking community, Mr. Hillard and Mr. Rickard had a history of meeting, at least annually, to discuss their respective institutions, the industry, market conditions generally and potential strategic alternatives in their respective markets. During this meeting, Mr. Rickard explained that he was pleased that Your Community Bancshares, Inc. had merged with Wesbanco, and he asked Mr. Hillard whether Farmers Capital would be interested in discussing strategic opportunities with Wesbanco. Mr. Hillard replied that, at that time, Farmers Capital was considering growth via acquisition rather than sale, but that he would always act in the best interests of Farmers Capital’s stockholders.

After such meeting, Mr. Rickard called Mr. Hillard to invite him to dinner with Todd Clossin, President & CEO of Wesbanco. Mr. Hillard, Mr. Rickard and Mr. Clossin met for dinner on October 11, 2017 and, at that dinner, Mr. Clossin inquired about Farmers Capital’s interest in a potential merger with Wesbanco. Mr. Hillard again indicated that, at that time, Farmers Capital was considering growth via acquisition rather than sale, but that he would always act in the best interests of Farmers Capital’s stockholders. In the wake of that dinner meeting, Mr. Hillard continued to confer with KBW regarding various potential strategic alternatives including potential acquisitions as well as a potential sale to Wesbanco.

On October 18, 2017, KBW updated Mr. Hillard on the current market environment and provided him with additional perspective regarding potential combinations with each of: (i) Wesbanco; and (ii) another institution, referred to as Company A, which the board of Farmers Capital previously identified as a potential acquisition target. The potential acquisition by Farmers Capital of Company A was discussed at the October 23, 2017 meeting of the Farmers Capital board of directors.

By November 21, 2017, Wesbanco began discussing internally the valuation at which it might make an offer to Farmers Capital. On November 27, 2017, Wesbanco engaged Raymond James as its financial advisor for the potential transaction. On November 29, 2017, Wesbanco submitted a non-binding indication of interest to Farmers Capital pursuant to which Wesbanco proposed exchanging all of the outstanding common stock of Farmers Capital for freely tradeable Wesbanco common stock at a valuation between $48.00 and $52.00 per Farmers Capital share, with the actual shares exchanged to be based on a fixed exchange ratio. The proposal represented an aggregate purchase price between $361 million and $391 million or 183% to 198% of Farmers Capital’s September 30, 2017 tangible book value and a 23.0x to 24.9x Farmers Capital’s last twelve-month earnings per share.

On December 4, 2017, the Farmers Capital board of directors met and reviewed with management the potential acquisition by Farmers Capital of Company A. Mr. Hillard also informally advised the board of directors on December 4, 2017 of the Wesbanco indication of interest and the terms thereof. The board of

 

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directors authorized Farmers Capital to pursue the potential acquisition of Company A. On December 21, 2017, Company A informed Farmers Capital that it was unwilling to sell.

Meanwhile, the Wesbanco board of directors was informed as to a potential transaction with Farmers Capital on December 21, 2017. The board was provided with a detailed analysis of the transaction prepared by Raymond James and authorized continued discussions with Farmers Capital.

On January 10, 2018, Mr. Hillard and Mr. Clossin met to discuss Wesbanco’s initial indication of interest. In response to those discussions, Mr. Clossin indicated that Wesbanco would be willing to increase the price floor included in its November 29, 2017 indication of interest. Mr. Clossin also noted that Wesbanco had already performed limited due diligence on Farmers Capital based on publicly available information and that Wesbanco was comfortable with the information it had reviewed to date.

On January 12, 2018, Farmers Capital received another non-binding indication of interest from Wesbanco proposing a merger. The indication of interest proposed that Wesbanco exchange all of the outstanding common stock of Farmers Capital for freely tradeable Wesbanco common stock at a valuation between $50.00 and $52.00, with the actual shares exchanged to be based on a fixed exchange ratio. The proposal represented an aggregate purchase price between $376 million and $391 million or 190% to 198% of Farmers Capital’s September 30, 2017 tangible book value and a 24.0x to 24.9x Farmers Capital’s last twelve-month earnings per share. This indication of interest was presented to the board of directors of Farmers Capital on January 22, 2018. The board of directors of Farmers Capital engaged in an active discussion regarding the indication of interest, including pricing, interest of Wesbanco in the Kentucky market, its prior acquisitions in the Kentucky market and track record with respect to acquisitions generally, Wesbanco’s knowledge of Farmers Capital’s business and the liquidity and quality of Wesbanco’s stock. The board of directors of Farmers Capital also discussed Company A and were informed that Company A was unwilling to sell. Following such discussions, the board of directors of Farmers Capital authorized Mr. Hillard, with the assistance of KBW and Squire, to attempt to negotiate the indication of interest with Wesbanco.

After negotiations between Mr. Hillard and Squire on behalf of Farmers Capital, and Mr. Clossin and Jim Gardill, Chairman of the Board of Wesbanco, on behalf of Wesbanco, Wesbanco presented a revised indication of interest on January 29, 2018, which indication of interest contained additional detail regarding the terms of a definitive merger agreement, but the same pricing terms as the prior indication of interest. This revised indication of interest was presented to the board of directors of Farmers Capital on February 12, 2018, at a meeting where representatives of KBW and Squire were also present. The board of directors of Farmers Capital engaged in robust discussion regarding the proposal with management, KBW and Squire. Following such discussions, the board of directors of Farmers Capital authorized and directed its management to cause Farmers Capital to enter into a nondisclosure agreement and the revised non-binding indication of interest with Wesbanco. Farmers Capital and Wesbanco executed such nondisclosure agreement on February 13, 2018 and the indication of interest on February 14, 2018.

Following the execution of the nondisclosure agreement and the indication of interest, Farmers Capital began performing extensive diligence on Wesbanco and Wesbanco performed due diligence on Farmers Capital. Both Wesbanco and Farmers Capital populated virtual data rooms, which were accessed by Farmers Capital and Wesbanco, respectively, and their respective advisors, throughout the period from February 14, 2018 to April 19, 2018. In addition to documentary due diligence, Wesbanco and Farmers Capital participated in several due diligence telephone calls and a meeting in Frankfort, KY on Saturday, March 3, 2018. During the week of March 5, 2018, Wesbanco performed onsite credit due diligence on Farmers Capital in Versailles, KY. Wesbanco and Farmers Capital also had offsite management meetings on March 22, 2018.

On March 12, 2018, the board of directors of Farmers Capital held a meeting, which representatives of KBW and Squire, as well as representatives of Wesbanco, including its Chairman of the Board and CEO, attended. KBW discussed public information regarding Wesbanco and financial aspects of a potential transaction

 

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between Farmers Capital and Wesbanco with the board of directors of Farmers Capital, including the historic performance and liquidity of Wesbanco’s stock and Wesbanco’s dividend practices. Squire then made a presentation to the Farmers Capital board of directors explaining, again, their fiduciary duties under Kentucky law. Thereafter, Mr. Gardill and Mr. Clossin from Wesbanco were admitted to the meeting and presented Wesbanco and its business to the board of directors of Farmers Capital. The directors of Farmers Capital and Mr. Gardill and Mr. Clossin engaged in a lengthy question and answer session regarding Wesbanco and the proposed transaction. All members of the board of directors of Farmers Capital had the opportunity to ask questions regarding Wesbanco and the proposed transaction and other relevant information.

On March 28, 2018, Wesbanco sent Farmers Capital a draft Merger Agreement, which included 100% stock consideration at an exchange ratio of 1.151 shares of WesBanco for each share of Farmers Capital. From March 28, 2018 through April 19, 2018, Wesbanco and Farmers Capital continued to negotiate the terms of the Merger Agreement and the ancillary documents appearing as exhibits thereto. On April 8, 2018, representatives of Raymond James and KBW discussed adding a 10% cash component to the purchase price, and Wesbanco and Farmers Capital agreed to set the merger consideration at 1.053 shares of Wesbanco plus $5.00 per share in cash for each share of Farmers Capital. On April 11, 2018, Mr. Hillard met Mr. Clossin to discuss: (i) pro forma organizational structure, (ii) restricted stock retention agreements and (iii) roles and responsibilities for key personnel.

On April 12, 2018, the board of directors of Farmers Capital held a meeting, which representatives of KBW and Squire also attended via telephone. The board of directors of Farmers Capital was provided with a draft of the Merger Agreement in advance of the meeting, as well as a summary of the Merger Agreement and a copy of the due diligence memorandum and related exhibits prepared by Squire and Farmers Capital’s management. Squire reminded members of the board of directors of their fiduciary duties, discussed its due diligence findings and explained the Merger Agreement and its terms. KBW then provided the board of directors of Farmers Capital with a process update and discussed financial aspects of the proposed transaction. Members of Farmers Capital’s board of directors discussed the proposed transaction at length and asked numerous questions of each of management, KBW and Squire.

On April 18, 2018, the board of directors of Farmers Capital held another board meeting, which KBW and Squire Patton Boggs also attended. The board of directors of Farmers Capital was provided with a draft of the final Merger Agreement in advance of the meeting, as well as an updated summary of the Merger Agreement. Squire reminded members of the board of directors of their fiduciary duties and provided an update on, and explanation of, the changes to the terms of the Merger Agreement since the April 12, 2018 meeting. Squire also summarized the few remaining open items in the Merger Agreement, which included immaterial items such as finalizing certain employment-related arrangements, including the termination or replacement of certain existing employment agreements and non-competition and non-solicitation provisions, and the completion of a schedule of loans to be considered for sale. Also at this meeting, KBW reviewed with the Board the financial aspects of the proposed merger, including a review on a preliminary basis of the financial analyses performed in connection with the fairness opinion to be delivered by KBW with respect to the merger consideration to be received by the holders of Farmers Capital common stock in the proposed merger. The board of directors of Farmers Capital engaged in robust discussion of the potential transaction and asked numerous questions of each of management, KBW and Squire.

On April 19, 2018, the board of directors of Wesbanco met at a regularly scheduled meeting and addressed, among other matters, the status of the negotiations with Farmers Capital. Representatives of Raymond James and the law firms of Phillips, Gardill, Kaiser & Altmeyer, PLLC and K&L Gates LLP also participated in the meeting. K&L Gates LLP summarized the terms and conditions of the Merger Agreement and Phillips, Gardill, Kaiser & Altmeyer, PLLC provided a summary of its due diligence process as well as an update on proposed employment related agreements, restricted stock and retention agreements. Management of Wesbanco also presented a comprehensive review of its due diligence process and the results thereof. Raymond James conducted a fairness opinion presentation, rendered an oral fairness opinion and subsequently delivered a written fairness

 

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opinion, dated April 19, 2018, to the Wesbanco board of directors. Based upon the review and discussion, the board of directors of Wesbanco unanimously approved the Merger.

On April 19, 2018, the board of directors of Farmers Capital held a telephonic meeting, in which representatives of KBW and Squire also participated. Squire described the resolution of all open items in the Merger Agreement. KBW again reviewed the financial aspects of the proposed merger and rendered to the Farmers Capital board of directors an opinion to the effect that, as of that date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW as set forth in such opinion, the merger consideration was fair, from a financial point of view, to the holders of Farmers Capital common stock. Based upon review and discussion of the Merger Agreement, the board of directors of Farmers Capital unanimously approved the Merger Agreement.

The appropriate officers of Wesbanco, Wesbanco Bank, Farmers Capital and United Bank entered into the Merger Agreement after the closing of the financial markets on April 19, 2018. Wesbanco and Farmers Capital issued a joint press release on April 19, 2018 announcing the execution of the Merger Agreement.

Farmers Capital’s Reasons for the Merger and Recommendation of the Board of Directors of Farmers Capital

After careful consideration, the Farmers Capital board of directors, at a meeting held on April 19, 2018, determined that the merger is in the best interests of Farmers Capital and its shareholders and approved and declared advisable the merger agreement and the business combination and related transactions contemplated thereby, including the merger, and recommended that Farmers Capital’s shareholders vote “FOR” the approval of the merger agreement. In reaching its decision to approve and recommend the approval of the merger agreement, the Farmers Capital board of directors evaluated the merger agreement and the transactions contemplated therein, including the merger, in consultation with Farmers Capital’s management, as well as Farmers Capital’s financial and legal advisors, and considered a number of factors, including, without limitation, the following material factors:

 

    the prospects for continued growth and enhanced performance of the combined company;

 

    the fact that Farmers Capital’s shareholders will receive Wesbanco common stock as partial consideration for the merger, which would allow Farmers Capital’s shareholders to participate in the future performance of the combined entity, and the value to Farmers Capital’s shareholders represented by such partial merger consideration;

 

    the strong historical performance of Wesbanco’s common stock;

 

    the cash dividends historically paid by Wesbanco on its common stock;

 

    the Farmers Capital board of directors’ view that the size of the institution and related economies of scale and geographic diversification was becoming increasingly important to continued success in the current financial services environment and that a merger with a larger bank holding company could provide those economies of scale, increase efficiencies of operations and enhance customer products and services;

 

    the belief that the combined entity will benefit from increased credit portfolio diversity and increased lending capacity;

 

    the fact that the merger consideration represented a premium of approximately 20.2% to Farmers Capital common stockholders, based on the closing price of Wesbanco’s common stock on April 18, 2018;

 

    the anticipated pro forma financial effects of the proposed merger;

 

    the results that Farmers Capital believed it could expect to achieve operating independently, and the likely risks and benefits to shareholders of that course of action, as compared with the value of the merger consideration;

 

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    the impact on succession planning for the CEO of Farmers Capital;

 

    Wesbanco’s successful track record in executing mergers and the likelihood of receipt of regulatory approvals and completion of the merger in a timely manner;

 

    the complementary nature of Wesbanco’s business and operations, including Wesbanco’s presence in the Kentucky banking market and ties to different, but complimentary, metropolitan areas in the Kentucky market;

 

    the low probability of securing a more attractive proposal from another institution capable of consummating the transaction in a timely manner;

 

    the financial presentation, dated April 19, 2018, of KBW to the Farmers Capital board of directors and the opinion, dated April 19, 2018, of KBW to the Farmers Capital board of directors as to the fairness, from a financial point of view, of the merger consideration to be received by holders of Farmers Capital common stock, as more fully described under the section of this proxy statement/prospectus entitled “PROPOSAL NO. 1 – APPROVAL OF THE MERGER AGREEMENT- Opinion of Farmers Capital’s Financial Advisor”; and

 

    the expectation that the stock consideration will be generally tax-free for United States federal income tax purposes to the shareholders of Farmers Capital.

The Farmers Capital board also considered a number of potential conflicts, risks and uncertainties associated with the merger in connection with its deliberation, including, without limitation, the following:

 

    the risk that the value of the merger consideration to be paid to Farmers Capital shareholders would be adversely affected by a decrease in the trading price of Wesbanco common stock during the pendency of the merger;

 

    the risk that the market would react negatively to the announcement of the merger transaction;

 

    the potential risk of diverting management attention and resources from the operation of Farmers Capital’s business and towards the completion of the merger;

 

    that certain terms of the merger agreement impose restrictions on the conduct of Farmers Capital’s business prior to the completion of the merger, which are customary for public company merger agreements involving financial institutions, but which, subject to specific exceptions, could delay or prevent Farmers Capital from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of Farmers Capital absent the pending merger;

 

    the potential risks associated with achieving anticipated cost synergies and savings and successfully integrating Farmers Capital’s business, operations and workforce with those of Wesbanco;

 

    the fact that the interests of certain of Farmers Capital’s directors and executive officers may be different from, or in addition to, the interests of Farmers Capital’s other shareholders as described under the section of this proxy statement/prospectus entitled “PROPOSAL NO. 1 — APPROVAL OF THE MERGER AGREEMENT — Interests of Certain Persons in the Merger”;

 

    that, while Farmers Capital expects that the merger will be consummated, there can be no assurance that all of the conditions to the obligations of Wesbanco and Farmers Capital to complete the merger, as set forth in the merger agreement, will be satisfied, including the risk that the requisite regulatory approvals or waivers, the requisite approval of the Farmers Capital shareholders might not be obtained and, as a result, the merger may not be consummated;

 

    the risk of potential employee attrition and/or adverse effects on business and customer relationships as a result of the merger;

 

   

the fact that other potential buyers may be discouraged from pursing a strategic transaction with Farmers Capital because, under the merger agreement, Farmers Capital would be: (i) prohibited from

 

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soliciting acquisition proposals and, subject to satisfying certain conditions, responding to unsolicited acquisition proposals, in each case, after execution of the merger agreement; and (ii) obligated to pay to Wesbanco the termination fee if the merger agreement is terminated under certain circumstances; and

 

    the possibility of litigation challenging the merger, and its belief that any such litigation would be without merit but may result in substantial cost and/or delay in consummation of the merger.

The discussion of the information and factors considered by Farmers Capital’s board of directors is not exhaustive, but includes the material factors considered by Farmers Capital’s board of directors. In view of the wide variety of factors considered by Farmers Capital’s board of directors in connection with its evaluation of the merger and the complexity of these matters, the Farmers Capital board of directors did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. Farmers Capital’s board of directors evaluated the factors described above and reached consensus that the merger was in the best interests of Farmers Capital and its shareholders. In considering the factors described above, individual members of Farmers Capital’s board of directors may have given different weights to different factors. Farmers Capital’s board of directors considered these factors as a whole, and overall considered them to be favorable to, and to support its determination.

The board of directors of Farmers Capital collectively made its determination with respect to the merger based on the conclusions reached by its members, in light of the factors that each of them considered appropriate, that the merger is in the best interests of Farmers Capital and its shareholders. Accordingly, the board of directors of Farmers Capital recommends that Farmers Capital shareholders vote “FOR” the approval of the merger agreement, as it may be amended from time to time.

Opinion of Farmers Capital’s Financial Advisor

Farmers Capital engaged Keefe, Bruyette & Woods, Inc. (“KBW”) to render financial advisory and investment banking services to Farmers Capital, including an opinion to the Farmers Capital board of directors as to the fairness, from a financial point of view, to the holders of Farmers Capital common stock of the merger consideration to be received by such shareholders in the proposed merger of Farmers Capital with and into WesBanco. Farmers Capital selected KBW because KBW is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger. As part of its investment banking business, KBW is continually engaged in the valuation of financial services businesses and their securities in connection with mergers and acquisitions.

As part of its engagement, representatives of KBW attended the meeting of the Farmers Capital board held on April 19, 2018, at which the Farmers Capital board evaluated the proposed merger. At this meeting, KBW reviewed the financial aspects of the proposed merger and rendered to the Farmers Capital board an opinion to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW as set forth in its opinion, the merger consideration in the proposed merger was fair, from a financial point of view, to the holders of Farmers Capital common stock. The Farmers Capital board approved the merger agreement at this meeting.

The description of the opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached as Annex B to this document and is incorporated herein by reference, and describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion.

KBW’s opinion speaks only as of the date of the opinion. The opinion was for the information of, and was directed to, the Farmers Capital board (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion addressed only the fairness, from a financial point of view,

 

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of the merger consideration in the merger to the holders of Farmers Capital common stock. It did not address the underlying business decision of Farmers Capital to engage in the merger or enter into the merger agreement or constitute a recommendation to the Farmers Capital board in connection with the merger, and it does not constitute a recommendation to any holder of Farmers Capital common stock or any shareholder of any other entity as to how to vote in connection with the merger or any other matter, nor does it constitute a recommendation regarding whether or not any such shareholder should enter into a voting, shareholders’ or affiliates’ agreement with respect to the merger or exercise any dissenters’ rights that may be available to such shareholder.

KBW’s opinion was reviewed and approved by KBW’s Fairness Opinion Committee in conformity with its policies and procedures established under the requirements of Rule 5150 of the Financial Industry Regulatory Authority.

In connection with the opinion, KBW reviewed, analyzed and relied upon material bearing upon the financial and operating condition of Farmers Capital and WesBanco and bearing upon the merger, including, among other things:

 

    a draft of the merger agreement dated April 10, 2018 (the most recent draft then made available to KBW);

 

    the audited financial statements and Annual Reports on Form 10-K for the three fiscal years ended December 31, 2017 of Farmers Capital;

 

    the audited financial statements and Annual Reports on Form 10-K for the three fiscal years ended December 31, 2017 of WesBanco;

 

    certain unaudited quarterly financial results for the quarter ended March 31, 2018 of Farmers Capital (contained in the earnings press release issued by Farmers Capital on April 18, 2018);

 

    certain unaudited quarterly financial results for the period ended March 31, 2018 of WesBanco (contained in the Current Report on Form 8-K filed by WesBanco with the Securities and Exchange Commission on April 17, 2018);

 

    certain regulatory filings of Farmers Capital and WesBanco and their respective subsidiaries, including the quarterly reports on Form Y-9C and the quarterly call reports required to be filed with respect to each quarter during the three-year period ended December 31, 2017;

 

    certain other interim reports and other communications of Farmers Capital and WesBanco provided to their respective shareholders; and

 

    other financial information concerning the businesses and operations of Farmers Capital and WesBanco that was furnished to KBW by Farmers Capital and WesBanco or which KBW was otherwise directed to use for purposes of KBW’s analyses.

KBW’s consideration of financial information and other factors that it deemed appropriate under the circumstances or relevant to its analyses included, among others, the following:

 

    the historical and current financial position and results of operations of Farmers Capital and WesBanco;

 

    the assets and liabilities of Farmers Capital and WesBanco;

 

    the nature and terms of certain other merger transactions and business combinations in the banking industry;

 

    a comparison of certain financial and stock market information for WesBanco and Farmers Capital with similar information for certain other companies the securities of which were publicly traded;

 

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    publicly available consensus “street estimates” of Farmers Capital (as adjusted by Farmers Capital management in the case of 2018 earnings per share), as well as assumed long-term Farmers Capital growth rates that were provided to KBW by Farmers Capital management, all of which information was discussed with KBW by such management and used and relied upon by KBW at the direction of such management and with the consent of the Farmers Capital board;

 

    financial and operating forecasts and projections of WesBanco that were prepared and provided to KBW by WesBanco management, and used and relied upon by KBW at the direction of Farmers Capital management and with the consent of the Farmers Capital board;

 

    pro forma balance sheet and capital data of WesBanco as of March 31, 2018, giving effect to WesBanco’s recently completed acquisition of First Sentry Bancshares, Inc., that were prepared and provided to KBW by WesBanco management, and used and relied upon by KBW at the direction of Farmers Capital management and with the consent of the Farmers Capital board; and

 

    estimates regarding certain pro forma financial effects of the merger on WesBanco (including, without limitation, the cost savings and related expenses expected to result from or be derived from the merger) that were prepared and provided to KBW by WesBanco management, and used and relied upon by KBW at the direction of Farmers Capital management and with the consent of the Farmers Capital board.

KBW also performed such other studies and analyses as it considered appropriate and took into account its assessment of general economic, market and financial conditions and its experience in other transactions, as well as its experience in securities valuation and knowledge of the banking industry generally. KBW also participated in discussions that were held with the respective managements of Farmers Capital and WesBanco regarding the past and current business operations, regulatory relations, financial condition and future prospects of their respective companies and such other matters as KBW deemed relevant to its inquiry. KBW was not requested to, and did not, assist Farmers Capital with soliciting indications of interest from third parties regarding a potential transaction with Farmers Capital.

In conducting its review and arriving at its opinion, KBW relied upon and assumed the accuracy and completeness of all of the financial and other information that was provided to it or that was publicly available and did not independently verify the accuracy or completeness of any such information or assume any responsibility or liability for such verification, accuracy or completeness. KBW relied upon the management of Farmers Capital as to the reasonableness and achievability of the publicly available consensus “street estimates” of Farmers Capital (as adjusted by Farmers Capital management in the case of 2018 earnings per share) and the assumed Farmers Capital long-term growth rates referred to above (and the assumptions and bases therefor), and KBW assumed that all such information was reasonably prepared and represented, or in the case of the Farmers Capital “street estimates” referred to above that such estimates (as adjusted) were consistent with, the best currently available estimates and judgments of such management and that the forecasts, projections and estimates reflected in such information would be realized in the amounts and in the time periods estimated. KBW further relied, with the consent of Farmers Capital, upon WesBanco management as to the reasonableness and achievability of the financial and operating forecasts and projections of WesBanco and the estimates regarding certain pro forma financial effects of the merger on WesBanco, all as referred to above (and the assumptions and bases for all such information, including, without limitation, the cost savings and related expenses expected to result or be derived from the merger), and KBW assumed that all such information was reasonably prepared and represented the best currently available estimates and judgments of WesBanco management and that the forecasts, projections and estimates reflected in such information would be realized in the amounts and in the time periods estimated by such management.

It is understood that the portion of the foregoing financial information of Farmers Capital and WesBanco that was provided to KBW was not prepared with the expectation of public disclosure, that all of the foregoing financial information, including the publicly available consensus “street estimates” of Farmers Capital referred to

 

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above, was based on numerous variables and assumptions that are inherently uncertain, including, without limitation, factors related to general economic and competitive conditions, and that, accordingly, actual results could vary significantly from those set forth in such information. KBW assumed, based on discussions with the respective managements of Farmers Capital and WesBanco and with the consent of the Farmers Capital board, that all such information provided a reasonable basis upon which KBW could form its opinion and KBW expressed no view as to any such information or the assumptions or bases therefor. KBW relied on all such information without independent verification or analysis and did not in any respect assume any responsibility or liability for the accuracy or completeness thereof.

KBW also assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either Farmers Capital or WesBanco since the date of the last financial statements of each such entity that were made available to KBW. KBW is not an expert in the independent verification of the adequacy of allowances for loan and lease losses and KBW assumed, without independent verification and with Farmers Capital’s consent, that the aggregate allowances for loan and lease losses for Farmers Capital and WesBanco are adequate to cover such losses. In rendering its opinion, KBW did not make or obtain any evaluations or appraisals or physical inspection of the property, assets or liabilities (contingent or otherwise) of Farmers Capital or WesBanco, the collateral securing any of such assets or liabilities, or the collectability of any such assets, nor did KBW examine any individual loan or credit files, nor did it evaluate the solvency, financial capability or fair value of Farmers Capital or WesBanco under any state or federal laws, including those relating to bankruptcy, insolvency or other matters. Estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or assets may actually be sold. Because such estimates are inherently subject to uncertainty, KBW assumed no responsibility or liability for their accuracy.

KBW assumed, in all respects material to its analyses:

 

    that the merger and any related transactions (including the bank subsidiary merger) would be completed substantially in accordance with the terms set forth in the merger agreement (the final terms of which KBW assumed would not differ in any respect material to KBW’s analyses from the draft reviewed by KBW and referred to above) with no adjustments to the merger consideration and no other consideration or payments in respect of Farmers Capital common stock;

 

    that the representations and warranties of each party in the merger agreement and in all related documents and instruments referred to in the merger agreement were true and correct;

 

    that each party to the merger agreement and all related documents would perform all of the covenants and agreements required to be performed by such party under such documents;

 

    that there were no factors that would delay or subject to any adverse conditions, any necessary regulatory or governmental approval for the merger or any related transaction (including the subsidiary bank merger) and that all conditions to the completion of the merger and such related transaction would be satisfied without any waivers or modifications to the merger agreement or any of the related documents; and

 

    that in the course of obtaining the necessary regulatory, contractual, or other consents or approvals for the merger and any related transaction (including the subsidiary bank merger), no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, would be imposed that would have a material adverse effect on the future results of operations or financial condition of Farmers Capital, WesBanco or the pro forma entity, or the contemplated benefits of the merger, including without limitation the cost savings and related expenses expected to result or be derived from the merger.

KBW assumed that the merger would be consummated in a manner that complies with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all

 

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other applicable federal and state statutes, rules and regulations. KBW assumed that Farmers Capital relied upon advice from its advisors (other than KBW) or other appropriate sources as to all legal, financial reporting, tax, accounting and regulatory matters with respect to Farmers Capital, WesBanco, the merger and any related transaction (including the subsidiary bank merger), and the merger agreement. KBW did not provide advice with respect to any such matters.

KBW’s opinion addressed only the fairness, from a financial point of view, as of the date of the opinion, to the holders of Farmers Capital common stock of the merger consideration to be received by such holders in the merger. KBW expressed no view or opinion as to any other terms or aspects of the merger or any term or aspect of any related transaction (including the subsidiary bank merger), including without limitation, the form or structure of the merger (including the form of the merger consideration or the allocation thereof between cash and stock) or any such related transaction, any consequences of the merger or any such related transaction to Farmers Capital, its shareholders, creditors or otherwise, or any terms, aspects, merits or implications of any employment, consulting, voting, support, shareholder, escrow or other agreements, arrangements or understandings contemplated or entered into in connection with the merger or otherwise. KBW’s opinion was necessarily based upon conditions as they existed and could be evaluated on the date of such opinion and the information made available to KBW through such date. Developments subsequent to the date of KBW’s opinion may have affected, and may affect, the conclusion reached in KBW’s opinion and KBW did not and does not have an obligation to update, revise or reaffirm its opinion. KBW’s opinion did not address, and KBW expressed no view or opinion with respect to:

 

    the underlying business decision of Farmers Capital to engage in the merger or enter into the merger agreement;

 

    the relative merits of the merger as compared to any strategic alternatives that are, have been or may be available to or contemplated by Farmers Capital or the Farmers Capital board;

 

    the fairness of the amount or nature of any compensation to any of Farmers Capital’s officers, directors or employees, or any class of such persons, relative to the compensation to the holders of Farmers Capital common stock;

 

    the effect of the merger or any related transaction on, or the fairness of the consideration to be received by, holders of any class of securities of Farmers Capital (other than the holders of Farmers Capital common stock, solely with respect to the merger consideration (as described in KBW’s opinion) and not relative to the consideration to be received by holders of any other class of securities) or holders of any class of securities of WesBanco or any other party to any transaction contemplated by the merger agreement;

 

    whether WesBanco has sufficient cash, available lines of credit or other sources of funds to enable it to pay the aggregate cash consideration to the holders of Farmers Capital common stock at the closing of the merger;

 

    the actual value of WesBanco common stock to be issued in the merger;

 

    the prices, trading range or volume at which WesBanco common stock or Farmers Capital common stock would trade following the public announcement of the merger or the prices, trading range or volume at which WesBanco common stock would trade following the consummation of the merger;

 

    any advice or opinions provided by any other advisor to any of the parties to the merger or any other transaction contemplated by the merger agreement; or

 

    any legal, regulatory, accounting, tax or similar matters relating to Farmers Capital, WesBanco, their respective shareholders, or relating to or arising out of or as a consequence of the merger or any related transaction (including the subsidiary bank merger), including whether or not the merger would qualify as a tax-free reorganization for Farmers Capital States federal income tax purposes.

In performing its analyses, KBW made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, which are beyond the control of KBW,

 

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Farmers Capital and WesBanco. Any estimates contained in the analyses performed by KBW are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. In addition, the KBW opinion was among several factors taken into consideration by the Farmers Capital board in making its determination to approve the merger agreement and the merger. Consequently, the analyses described below should not be viewed as determinative of the decision of the Farmers Capital board with respect to the fairness of the merger consideration. The type and amount of consideration payable in the merger were determined through negotiation between Farmers Capital and WesBanco and the decision of Farmers Capital to enter into the merger agreement was solely that of the Farmers Capital board.

The following is a summary of the material financial analyses presented by KBW to the Farmers Capital board in connection with its opinion. The summary is not a complete description of the financial analyses underlying the opinion or the presentation made by KBW to the Farmers Capital board, but summarizes the material analyses performed and presented in connection with such opinion. The financial analyses summarized below includes information presented in tabular format. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex analytic process involving various determinations as to appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, KBW did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, KBW believes that its analyses and the summary of its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion.

For purposes of the financial analyses described below, KBW utilized an implied value of the merger consideration of $50.31 per share of Farmers Capital common stock, consisting of the sum of (i) the implied value of the stock consideration of 1.053 shares of WesBanco common stock based on the closing price of WesBanco common stock on April 18, 2018, and (ii) the cash consideration of $5.00. In addition to the financial analyses described below, KBW reviewed with the Farmers Capital board of directors for informational purposes, among other things, an implied transaction multiple for the proposed merger (based on the implied value of the merger consideration of $50.31 per share of Farmers Capital common stock) of 17.0x the 2019 earnings per share (“EPS”) consensus “street estimate” for Farmers Capital.

Farmers Capital Selected Companies Analysis. Using publicly available information, KBW compared the financial performance, financial condition and market performance of Farmers Capital to 18 selected major exchange-traded banks and thrifts which were headquartered in Kentucky, Indiana or Ohio and which had total assets between $1.0 billion and $5.0 billion. Targets of publicly announced merger transactions and mutual holding companies were excluded from the selected companies.

The selected companies were as follows:

 

Civista Bancshares, Inc.

   Lakeland Financial Corporation

Community Trust Bancorp, Inc.

Farmers & Merchants Bancorp, Inc.

  

LCNB Corp.

Merchants Bancorp

Farmers National Banc Corp.

   Middlefield Banc Corp.

First Defiance Financial Corp.

   MutualFirst Financial, Inc.

 

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First Financial Corporation

First Internet Bancorp

German American Bancorp, Inc.

Horizon Bancorp

  

Ohio Valley Banc Corp.

Peoples Bancorp Inc.

Stock Yards Bancorp, Inc.

United Community Financial Corp.

To perform this analysis, KBW used profitability and other financial information as of or for the latest 12 months (“LTM”) ended December 31, 2017 (and, in the case of Farmers Capital, also as of or for the latest 12 months ended March 31, 2018) and market price information as of April 18, 2018. KBW also used 2018 and 2019 EPS estimates taken from publicly available consensus “street estimates” of Farmers Capital (as adjusted by Farmers Capital management in the case of 2018) and the 17 selected companies for which consensus “street estimates” were available. Where consolidated holding company level financial data for the selected companies was unreported, subsidiary bank level data was utilized to calculate ratios. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in Farmers Capital’s historical financial statements as a result of the different periods, assumptions and methods used by KBW to compute the financial data presented.

KBW’s analysis showed the following concerning the financial performance of Farmers Capital and the selected companies:

 

                 Selected Companies  
     Farmers
Capital
12/31/2017
    Farmers
Capital
3/31/2018
    25th
Percentile
    Median     Average     75th
Percentile
 

LTM GAAP Return on Average Assets

     0.70     0.84     0.91     1.07     1.08     1.23

LTM GAAP Return on Average Tangible Common Equity

     6.07     7.20     9.12     11.70     11.72     12.89

LTM Core Return on Average Assets(1)

     1.05     1.19     1.05     1.14     1.15     1.24

LTM Core Pre-tax, pre-Provision Return on Average Assets

     1.43     1.51     1.41     1.69     1.69     1.83

LTM Core Return on Average Tangible Common Equity(1)

     9.05     10.12     10.23     11.99     12.24     13.45

LTM Net Interest Margin

     3.67     —         3.43     3.66     3.60     3.86

LTM Fee Income / Total Revenue(2)

     27.2     26.8     21.3     23.5     24.1     26.4

LTM Efficiency Ratio

     66.4     65.5     59.9     59.9     58.2     56.4

 

(1) LTM core income excluded extraordinary items, non-recurring items, gains/losses on sale of securities and amortization of intangibles as calculated by SNL Financial. Results were adjusted for one-time charges related to corporate tax reform in the fourth quarter of 2017.
(2) Excluded gains/losses on sale of securities

KBW’s analysis also showed the following concerning the financial condition of Farmers Capital and the selected companies:

 

                 Selected Companies  
     Farmers
Capital
12/31/2017
    Farmers
Capital
3/31/2018
    25th
Percentile
    Median     Average     75th
Percentile
 

Tangible Common Equity / Tangible Assets

     11.55     11.51     9.31     9.42     9.85     10.18

Total Capital Ratio

     20.12     —         13.33     13.68     14.50     15.48

Loans / Deposits

     75.0     74.3     86.9     95.5     90.8     98.3

Loan Loss Reserve / Gross Loans

     0.94     0.94     0.74     0.90     0.87     1.05

Nonperforming Assets / Loans + OREO

     2.00     1.94     1.56     0.75     1.11     0.44

LTM Net Charge-Offs / Average Loans

     (0.07 %)      —         0.12     0.06     0.10     0.04

 

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In addition, KBW’s analysis showed the following concerning the market performance of Farmers Capital and, to the extent publicly available, the selected companies:

 

      Selected Companies  
     Farmers
        Capital        
    25th
Percentile
    Median     Average     75th
Percentile
 

One-Year Stock Price Change

     6.6     8.4     11.5     17.2     19.0

One-Year Total Return

     7.9     10.6     16.7     20.6     27.2

Year-To-Date Stock Price Change

     8.7     (3.3 %)      (0.2 %)      2.6     9.5

Stock Price / Tangible Book Value per Share

     1.63x/1.62x (1)      1.72x       1.98x       2.03x       2.32x  

Stock Price / 2018E EPS

     14.6x       12.9x       14.0x       14.5x       15.7x  

Stock Price / 2019E EPS

     14.2x       12.2x       12.7x       13.3x       14.0x  

Dividend Yield

     1.2     1.8     2.0     2.0     2.3

2018 Dividend Payout

     17.4     27.6     29.8     28.9     32.5

 

(1) Multiple of 1.62x based on tangible book value per share of Farmers Capital as of March 31, 2018.

No company used as a comparison in the above selected companies analysis is identical to Farmers Capital. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

WesBanco Selected Companies Analysis. Using publicly available information, KBW compared the financial performance, financial condition and market performance of WesBanco to 21 selected major exchange-traded banks which were headquartered in the Midwest U.S., West Virginia or Pennsylvania and which had total assets between $5.0 billion and $20.0 billion. Targets of publicly announced merger transactions and mutual holding companies were excluded from the selected companies.

The selected companies were as follows:

 

1st Source Corporation

   Flagstar Bancorp, Inc.

Beneficial Bancorp, Inc.

   Great Western Bancorp, Inc.

Capitol Federal Financial, Inc.

   Heartland Financial USA, Inc.

Chemical Financial Corporation

   Meta Financial Group, Inc.

Customers Bancorp, Inc.

   Northwest Bancshares, Inc.

Enterprise Financial Services Corp

   Old National Bancorp

First Busey Corporation

   Park National Corporation

First Commonwealth Financial Corporation

   Republic Bancorp, Inc.

First Financial Bancorp

   S&T Bancorp, Inc.

First Merchants Corporation

   United Bankshares, Inc.

First Midwest Bancorp, Inc.

  

To perform this analysis, KBW used profitability and other financial information as of or for the latest 12 months ended December 31, 2017 or, in the case of WesBanco, March 31, 2018 and market price information as of April 18, 2018. KBW also used 2018 and 2019 EPS estimates taken from financial forecasts and projections of WesBanco provided by WesBanco management and publicly available consensus “street estimates” of the selected companies. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in WesBanco’s historical financial statements as a result of the different periods, assumptions and methods used by KBW to compute the financial data presented.

 

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KBW’s analysis showed the following concerning the financial performance of WesBanco and the selected companies:

 

           Selected Companies  
     WesBanco     25th
Percentile
    Median     Average     75th
Percentile
 

LTM GAAP Return on Average Assets

     1.03     0.77     0.95     0.90     1.09

LTM GAAP Return on Tangible Common Equity

     13.08     9.09     10.96     10.82     12.33

LTM Core Return on Average Assets (1)

     1.19     0.94     1.10     1.11     1.25

LTM Core Return on Tangible Common Equity(1)

     14.61     10.10     12.98     12.80     14.63

LTM Net Interest Margin

     3.43     3.48     3.57     3.48     3.87

LTM Fee Income / Total Revenue(2)

     23.4     18.7     22.1     25.2     25.9

LTM Efficiency Ratio

     55.4     63.9     59.1     57.9     51.6

 

(1) LTM core income excludes extraordinary items, non-recurring items, gains/losses on sale of securities and amortization of intangibles as calculated by SNL Financial. Results adjusted for one-time charges related to corporate tax reform in the fourth quarter of 2017.
(2) Excluded gains/losses on sale of securities

KBW’s analysis showed the following concerning the financial condition of WesBanco and the selected companies:

 

      Selected Companies  
     WesBanco (1)     25th
Percentile
    Median     Average     75th
Percentile
 

Tangible Common Equity / Tangible Assets

     8.19     8.16     8.70     9.30     9.68

Total Capital Ratio

     14.98     12.34     13.69     14.88     14.90

Loans / Deposits

     86.7     90.1     95.3     95.4     99.5

Loan Loss Reserve / Gross Loans

     0.68     0.65     0.90     0.87     1.04

Nonperforming Assets / Loans + OREO

     0.68     1.05     0.73     0.89     0.59

LTM Net Charge-Offs / Average Loans

     0.11     0.24     0.15     0.17     0.07

 

(1) Balance sheet data of WesBanco was pro forma for recently completed acquisition of First Sentry Bancshares, Inc.

In addition, KBW’s analysis showed the following concerning the market performance of WesBanco and the selected companies:

 

           Selected Companies  
     WesBanco     25th
Percentile
    Median     Average     75th
Percentile
 

One-Year Stock Price Change

     13.9     (0.5 %)      9.0     7.4     15.7

One-Year Total Return

     17.1     3.5     10.2     9.8     17.2

Year-To-Date Stock Price Change

     5.9     (1.7 %)      0.8     1.4     2.9

Stock Price / Tangible Book Value per Share

     2.33x (1)      1.93x       2.25x       2.14x       2.43x  

Stock Price / 2018 Estimated EPS

     15.2x       13.6x       14.0x       14.8x       15.1x  

Stock Price / 2019 Estimated EPS

     14.1x       12.3x       12.6x       13.5x       13.4x  

Dividend Yield

     2.7     1.6     2.0     2.0     2.6

2018 Dividend Payout

     41.0     24.0     30.4     30.6     41.9

 

(1) Tangible book value per share of WesBanco was pro forma for recently completed acquisition of First Sentry Bancshares, Inc.

 

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No company used as a comparison in the above selected companies analysis is identical to WesBanco. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Selected Transactions Analysis — Nationwide. KBW reviewed publicly available information related to 18 selected U.S. whole bank transactions announced since January 1, 2017 with announced transaction values between $200 million and $500 million and involving acquired companies with latest 12 months return on average assets less than 1.50%. Merger-of-equals transactions and terminated transactions were excluded from the selected transactions.

The selected transactions were as follows:

 

Acquiror

  

Acquired Company

Renasant Corporation

   Brand Group Holdings, Inc.

Ameris Bancorp

   Hamilton State Bancshares, Inc.

TriCo Bancshares

   FNB Bancorp

Kearny Financial Corp.

   Clifton Bancorp Inc.

IBERIABANK Corporation

   Gibraltar Private Bank & Trust Co.

Arvest Bank Group, Inc.

   Bear State Financial, Inc.

CenterState Bank Corporation

   HCBF Holding Company, Inc.

Pacific Premier Bancorp, Inc.

   Plaza Bancorp

Old National Bancorp

   Anchor Bancorp, Inc.

Associated Banc-Corp

   Bank Mutual Corporation

Southside Bancshares, Inc.

   Diboli State Bancshares, Inc.

Berkshire Hills Bancorp, Inc.

   Commerce Bancshares Corp.

Sandy Spring Bancorp, Inc.

   WashingtonFirst Bankshares, Inc.

TowneBank

   Paragon Commercial Corporation

First Merchants Corporation

   Independent Alliance Banks, Inc.

Heartland Financial USA, Inc.

   Citywide Banks of Colorado, Inc.

First Busey Corporation

   First Community Financial Partners, Inc.

Simmons First National Corporation

   First Texas BHC, Inc.

For each selected transaction, KBW derived the following implied transaction statistics, in each case based on the transaction consideration value paid for the acquired company and using financial data based on the acquired company’s then latest publicly available financial statements and, to the extent then publicly available, EPS consensus “street estimates” prior to the announcement of the respective transaction:

 

    Price per common share to tangible book value per share of the acquired company (in the case of selected transactions involving a private acquired company, this transaction statistic was calculated as total transaction consideration divided by total tangible common equity);

 

    Price per common share to core tangible book value per share of the acquired company (in the case of selected transactions involving a private acquired company, this transaction statistic was calculated as total transaction consideration divided by core total tangible common equity), which core tangible book value per share or core total tangible common equity reflected a normalized tangible common equity to tangible asset ratio of 9.08% equal to the median tangible common equity to tangible asset ratio of the selected transactions;

 

    Tangible equity premium to core deposits (total deposits less time deposits greater than $100,000) of the acquired company, referred to as core deposit premium;

 

    Price per common share to LTM EPS of the acquired company (in the case of selected transactions involving a private acquired company, this transaction statistic was calculated as total transaction consideration divided by LTM net income); and

 

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    Price per common share to estimated EPS of the acquired company in the five selected transactions in which consensus “street estimates” for the acquired company were then available.

KBW also reviewed the price per common share paid for the acquired company in the nine selected transactions involving publicly traded acquired companies as a premium to the closing price of the acquired company one day prior to the announcement of the acquisition (expressed as a percentage and referred to as the one-day market premium). The above transaction statistics for the selected transactions were compared with the corresponding transaction statistics for the proposed merger based on the implied value of the merger consideration of $50.31 per share of Farmers Capital common stock and using historical financial information for Farmers Capital as of and for the twelve month period ended December 31, 2017 or March 31, 2018, the 2018 EPS consensus “street estimate” for Farmers Capital (as adjusted by Farmers Capital management) and the closing price of Farmers Capital common stock on April 18, 2018.

The results of the analysis are set forth in the following table (excluding the impact of the LTM EPS multiples for three of the selected transactions and the estimated EPS multiple for one of the selected transactions, which multiples were considered to be not meaningful because they was greater than 35.0x):

 

                 Selected Transactions  
     Farmers
Capital
12/31/2017
    Farmers
Capital
3/31/2018
    25th Percentile     Median     Average     75th Percentile  

Transaction Value / Tangible Book Value (x)

     1.96x       1.95x       1.83x       2.02x       2.07x       2.40x  

Transaction Value / Core Tangible Book Value(1) (x)

     2.22x       2.20x       1.82x       2.16x       2.14x       2.42x  

Core Deposit Premium (%)

     13.8     —         11.7     14.8     14.8     18.0

Transaction Value / LTM EPS (%)

     21.5x (2)      19.0x (2)      18.3x       20.4x       21.3x       24.6x  

Transaction Value / Est. EPS (%)

     17.5x       —         19.6x       22.5x       22.4x       25.2x  

One-Day Market Premium(%)

     20.2     —         10.4     12.2     18.7     15.5

 

(1) Core tangible book values of Farmers Capital and the acquired companies reflected a normalized tangible common equity to tangible asset ratio of 9.08% equal to the median tangible common equity to tangible asset ratio of the selected transactions.
(2) Results were adjusted for one-time charges related to corporate tax reform in the fourth quarter of 2017.

No company or transaction used as a comparison in the above selected transaction analysis is identical to Farmers Capital or the proposed merger. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Selected Transactions Analysis — Midwest. KBW reviewed publicly available information related to 4 selected Midwest whole bank transactions announced since January 1, 2017 with announced transaction values between $200 million and $500 million and involving acquired companies with latest 12 months return on average assets less than 1.50%. Merger-of-equals transactions and terminated transactions were excluded from the selected transactions.

The selected transactions were as follows:

 

Acquiror

  

Acquired Company

Old National Bancorp

   Anchor Bancorp, Inc.

Associated Banc-Corp

   Bank Mutual Corporation

First Merchants Corporation

   Independent Alliance Banks, Inc.

First Busey Corporation

   First Community Financial Partners, Inc.

 

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For each selected transaction, KBW derived the following implied transaction statistics, in each case based on the transaction consideration value paid for the acquired company and using financial data based on the acquired company’s then latest publicly available financial statements and, to the extent then publicly available, EPS consensus “street estimates” prior to the announcement of the respective transaction:

 

    Price per common share to tangible book value per share of the acquired company (in the case of selected transactions involving a private acquired company, this transaction statistic was calculated as total transaction consideration divided by total tangible common equity);

 

    Price per common share to core tangible book value per share of the acquired company (in the case of selected transactions involving a private acquired company, this transaction statistic was calculated as total transaction consideration divided by core total tangible common equity), which core tangible book value per share or core total tangible common equity reflected a normalized tangible common equity to tangible asset ratio of 9.45% equal to the median tangible common equity to tangible asset ratio of the selected transactions;

 

    Tangible equity premium to core deposits (total deposits less time deposits greater than $100,000) of the acquired company, referred to as core deposit premium;

 

    Price per common share to LTM EPS of the acquired company (in the case of selected transactions involving a private acquired company, this transaction statistic was calculated as total transaction consideration divided by LTM net income); and

 

    Price per common share to estimated EPS of the acquired company in the two selected transactions in which consensus “street estimates” for the acquired company were then available.

KBW also reviewed the price per common share paid for the acquired company in the three selected transactions involving publicly traded acquired companies as a premium to the closing price of the acquired company one day prior to the announcement of the acquisition (expressed as a percentage and referred to as the one-day market premium). The above transaction statistics for the selected transactions were compared with the corresponding transaction statistics for the proposed merger based on the implied value of the merger consideration of $50.31 per share of Farmers Capital common stock and using historical financial information for Farmers Capital as of and for the twelve month period ended December 31, 2017 or March 31, 2018, the 2018 EPS consensus “street estimate” for Farmers Capital (as adjusted by Farmers Capital management) and the closing price of Farmers Capital common stock on April 18, 2018.

The results of the analysis are set forth in the following table:

 

                 Selected Transactions  
     Farmers
Capital
12/31/2017
    Farmers
Capital
3/31/2018
    25th
Percentile
    Median     Average     75th
Percentile
 

Transaction Value / Tangible Book Value (x)

     1.96x       1.95x       1.84x       1.95x       2.05x       2.16x  

Transaction Value / Core Tangible Book Value(1) (x)

     2.17x       2.16x       1.79x       1.94x       2.10x       2.24x  

Core Deposit Premium (%)

     13.8     —         10.9     13.2     14.5     16.9

Transaction Value / LTM EPS (%)

     21.5x (2)      19.0x (2)      19.6x       24.1x       23.6x       28.1x  

Transaction Value / Est. EPS (%)

     17.5x (5)      —         19.7x       22.3x       22.3x       24.8x  

One-Day Market Premium(%)

     20.2 %(6)      —         11.3     12.2     32.3     43.3

 

(1) Core tangible book values of Farmers Capital and the acquired companies reflected a normalized tangible common equity to tangible asset ratio of 9.45% equal to the median tangible common equity to tangible asset ratio of the selected transactions.
(2) Results were adjusted for one-time charges related to corporate tax reform in the fourth quarter of 2017.

 

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No company or transaction used as a comparison in the above selected transaction analysis is identical to Farmers Capital or the proposed merger. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Relative Contribution Analysis. KBW analyzed the relative standalone contribution of WesBanco and Farmers Capital to various pro forma balance sheet and income statement items and the pro forma market capitalization of the combined entity. This analysis did not include purchase accounting adjustments or cost savings. To perform this analysis, KBW used (i) historical balance sheet data for WesBanco and Farmers Capital as of March 31, 2018, (ii) publicly available EPS consensus “street estimates” of Farmers Capital (as adjusted by Farmers Capital management in the case of 2018), (iii) financial and operating forecasts and projections of WesBanco provided by WesBanco management, and (iv) market capitalization data as of April 18, 2018. The results of KBW’s analysis are set forth in the following table, which also compares the results of KBW’s analysis with the implied pro forma ownership percentages of WesBanco and Farmers Capital shareholders in the combined company based on the stock consideration of 1.053 shares of WesBanco common stock and also based on a hypothetical exchange ratio assuming 100% stock consideration in the proposed merger for illustrative purposes:

 

     WesBanco as a
% of Total
    Farmers Capital
as a % of Total
 

Ownership

    

Based on Stock Consideration of 1.053 Shares of WesBanco Common Stock

     85     15

Based on Hypothetical 100% Stock Consideration

  

 

84

 

 

16

Balance Sheet

    

Total Assets

     87     13

Gross Loans Held For Investment

     87     13

Deposits

     85     15

Tangible Common Equity

     81     19

Income Statement

    

2017 GAAP Net Income

     86 %(2)      14 %(2) 

2018 Estimated Net Income

     86 %(3)      14 %(4) 

2019 Estimated Net Income

     87 %(3)      13 %(4) 

Market Capitalization(5)

     86     14

Forecasted Pro Forma Financial Impact Analysis. KBW performed a pro forma financial impact analysis that combined projected income statement and balance sheet information of WesBanco and Farmers Capital. Using (i) closing balance sheet estimates as of September 30, 2018 for WesBanco and Farmers Capital provided by WesBanco management, (ii) publicly available EPS consensus “street estimates” of Farmers Capital and an assumed long term EPS growth rate for Farmers Capital provided by WesBanco management, (iii) financial and operating forecasts and projections of WesBanco provided by WesBanco management and (iv) pro forma assumptions (including, without limitation, the cost savings and related expenses expected to result from the merger and certain accounting adjustments and a restructuring charge assumed with respect thereto) provided by WesBanco management, KBW analyzed the potential financial impact of the merger on certain projected financial results of WesBanco. This analysis indicated the merger could be accretive to WesBanco’s estimated 2019 EPS and estimated 2020 EPS, and dilutive to WesBanco’s estimated tangible book value per share as of September 30, 2018. Furthermore, the analysis indicated that each of WesBanco’s tangible common equity to tangible assets ratio, leverage ratio, Common Equity Tier 1 Ratio, Tier 1 Risk-Based Capital Ratio and Total Risk Based Capital Ratio as of September 30, 2018 could be lower. For all of the above analysis, the actual results achieved by WesBanco following the merger may vary from the projected results, and the variations may be material.

 

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Farmers Capital Discounted Cash Flow Analysis. KBW performed a discounted cash flow analysis of Farmers Capital to estimate a range for the implied equity value of Farmers Capital. In this analysis, KBW used publicly available consensus “street estimates” of Farmers Capital (as adjusted by Farmers Capital management in the case of 2018), as well as assumed long-term net income and asset growth rates of Farmers Capital provided by Farmers Capital management, and KBW assumed discount rates ranging from 10.0% to 14.0%. A range of values was derived by adding (i) the present value of the estimated excess cash flows that Farmers Capital could generate over the five-year period from 2018 to 2022 as a standalone company, and (ii) the present value of Farmers Capital’s implied terminal value at the end of such period. KBW assumed that Farmers Capital would maintain a tangible common equity to tangible asset ratio of 9.50% and would retain sufficient earnings to maintain that level. In calculating the terminal value of Farmers Capital, KBW applied a range of 12.0x to 16.0x to Farmers Capital’s estimated 2023 net income. This discounted cash flow analysis resulted in a range of implied values per share of Farmers Capital stock of approximately $34.97 to $48.14 per share.

The discounted cash flow analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, dividend payout rates, and discount rates. The foregoing discounted cash flow analyses did not purport to be indicative of the actual values of Farmers Capital.

WesBanco Discounted Cash Flow Analysis. KBW performed a discounted cash flow analysis of WesBanco to estimate a range for the implied equity value of WesBanco. In this analysis, KBW used financial forecasts and projections relating to the net income and assets of WesBanco provided by WesBanco management, and KBW assumed discount rates ranging from 10.0% to 14.0%. A range of values was derived by adding (i) the present value of the estimated excess cash flows that WesBanco could generate over the five-year period from 2018 to 2022 as a standalone company, and (ii) the present value of WesBanco’s implied terminal value at the end of such period. KBW assumed that WesBanco would maintain a tangible common equity to tangible asset ratio of 8.50% and would retain sufficient earnings to maintain that level. In calculating the terminal value of WesBanco, KBW applied a range of 12.0x to 16.0x to WesBanco’s estimated 2023 net income. This discounted cash flow analysis resulted in a range of implied values per share of WesBanco common stock of approximately $32.89 to $46.78 per share.

The discounted cash flow analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, dividend payout rates, and discount rates. The foregoing discounted cash flow analyses did not purport to be indicative of the actual values of WesBanco or the pro forma combined company.

Miscellaneous. KBW acted as financial advisor to Farmers Capital and not as an advisor to or agent of any other person. As part of its investment banking business, KBW is continually engaged in the valuation of bank and bank holding company securities in connection with acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for various other purposes. As specialists in the securities of banking companies, KBW has experience in, and knowledge of, the valuation of banking enterprises. KBW and its affiliates, in the ordinary course of its and their broker-dealer businesses (and further to existing sales and trading relationships between a KBW broker-dealer affiliate and each of WesBanco and United Bank), may from time to time purchase securities from, and sell securities to, Farmers Capital and WesBanco. In addition, as market makers in securities, KBW and its affiliates may from time to time have a long or short position in, and buy or sell, debt or equity securities of Farmers Capital and WesBanco for its and their own accounts and for the accounts of its and their respective customers and clients.

Pursuant to the KBW engagement agreement, Farmers Capital agreed to pay KBW a cash fee equal to 0.99% of the aggregate merger consideration, $175,000 of which became payable upon the rendering of KBW’s opinion and the balance of which is contingent upon the consummation of the merger. Farmers Capital also agreed to reimburse KBW for reasonable out-of-pocket expenses and disbursements incurred in connection with its retention and to indemnify KBW against certain liabilities relating to or arising out of KBW’s engagement or

 

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KBW’s role in connection therewith. In addition to this present engagement, during the two years preceding the date of its opinion, KBW has provided investment banking and financial advisory services to Farmers Capital, but did not receive compensation for such services. In April 2017, KBW was engaged by Farmers Capital to act as financial advisor to Farmers Capital in connection with its consideration of a potential strategic transaction that was not consummated. During the two years preceding the date of its opinion, KBW provided investment banking and financial advisory services to WesBanco, but did not receive compensation for such services. In February 2017, KBW was engaged by WesBanco to act as financial advisor to WesBanco in connection with its consideration of a separate potential strategic transaction that was not consummated. KBW may in the future provide investment banking and financial advisory services to Farmers Capital or WesBanco and receive compensation for such services.

Certain Wesbanco Prospective Financial Information

Wesbanco does not make public disclosure of forecasts or projections of its expected financial performance because of, among other things, the inherent difficulty of predicting financial performance for future periods and the inherent uncertainty of the underlying assumptions and estimates. In connection with the merger, however, Wesbanco management provided certain limited unaudited prospective financial information for Wesbanco on a stand-alone basis, without giving effect to the merger, to Farmers Capital for purposes of considering and evaluating the merger and also to Farmers Capital’s financial advisor for purposes of the financial analyses performed by Farmers Capital’s financial advisor in connection with its opinion to the Farmers Capital board of directors.

The prospective financial information for Wesbanco reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to Wesbanco’s business, all of which are inherently uncertain and difficult to predict and many of which are beyond Wesbanco’s control. The prospective financial information is subjective in many respects and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. The prospective financial information may also be affected by Wesbanco’s ability to achieve strategic goals, objectives and targets over the applicable periods. As such, the prospective financial information constitutes forward-looking information and is subject to risks and uncertainties, including the various risks set forth in the sections of this proxy statement/prospectus entitled “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors” and in Wesbanco’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and the other reports filed by Wesbanco with the SEC.

The prospective financial information for Wesbanco was generally not prepared with a view toward public disclosure or complying with GAAP, the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither Wesbanco’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the prospective financial information included below, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the prospective financial information. Furthermore, the prospective financial information does not take into account any circumstances or events occurring after the date prepared.

You are strongly cautioned not to place undue reliance on the prospective financial information set forth below. The inclusion of the prospective financial information in this proxy statement/prospectus should not be regarded as an indication that any of Wesbanco, Farmers Capital or their affiliates, advisors or representatives considered or consider the prospective financial information to be necessarily predictive of actual future events, and the prospective financial information should not be relied upon as such. None of Wesbanco, Farmers Capital or their respective affiliates, advisors, officers, directors or representatives can give any assurance that actual results will not differ from the prospective financial information, and none of them undertakes any obligation to

 

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update or otherwise revise or reconcile the prospective financial information to reflect circumstances existing after the date such information was prepared or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the prospective financial information are shown to be in error. None of Wesbanco, Farmers Capital or their respective affiliates, advisors or representatives makes any representation to any shareholder regarding the projections. The prospective financial information is not being included in this proxy statement/prospectus to influence a shareholder’s decision regarding how to vote on any given proposal, but because the prospective financial information was provided to Farmers Capital and its financial advisor.

In light of the foregoing, and considering that the Farmers Capital special meeting will be held several months after the prospective financial information was prepared, as well as the uncertainties inherent in any forecasted information, Farmers Capital shareholders are cautioned not to place unwarranted reliance on such information, and Wesbanco urges all Farmers Capital shareholders to review Wesbanco’s most recent SEC filings for a description of Wesbanco’s reported financial results. See “Where You Can Find More Information” on page 96 of this proxy statement/prospectus.

Wesbanco provided Farmers Capital and its financial advisor with a projected EPS for Wesbanco for each of the following fiscal years as follows:

2018 — $2.83

2019 — $3.05

2020 — $3.12

For fiscal years after 2020, Wesbanco provided an estimated long-term EPS growth rate for Wesbanco of 5%.

Certain Farmers Capital Prospective Financial Information

Farmers Capital does not make public disclosure of forecasts or projections of its expected financial performance because of, among other things, the inherent difficulty of predicting financial performance for future periods and the inherent uncertainty of the underlying assumptions and estimates.

In connection with the merger, however, Farmers Capital management provided certain limited unaudited prospective financial information for Farmers Capital on a stand-alone basis, without giving effect to the merger, to KBW, Farmers Capital’s financial advisor, for purposes of the financial analyses performed by KBW in connection with its opinion to the Farmers Capital board of directors.

The prospective financial information for Farmers Capital reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to Farmers Capital’s business, all of which are inherently uncertain and difficult to predict and many of which are beyond Farmers Capital’s control. The prospective financial information is subjective in many respects and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. The prospective financial information may also be affected by Farmers Capital’s ability to achieve strategic goals, objectives and targets over the applicable periods. As such, the prospective financial information constitutes forward-looking information and is subject to risks and uncertainties, including the various risks set forth in the sections of this proxy statement/prospectus entitled “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors” and in Farmers Capital’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and the other reports filed by Farmers Capital with the SEC.

The prospective financial information for Farmers Capital was generally not prepared with a view toward public disclosure or complying with GAAP, the published guidelines of the SEC regarding projections or the

 

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guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither Farmers Capital’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the prospective financial information included below, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the prospective financial information. Furthermore, the prospective financial information does not take into account any circumstances or events occurring after the date prepared.

You are strongly cautioned not to place undue reliance on the prospective financial information set forth below. The inclusion of the prospective financial information in this proxy statement/prospectus should not be regarded as an indication that any of Farmers Capital, Wesbanco or their affiliates, advisors or representatives considered or consider the prospective financial information to be necessarily predictive of actual future events, and the prospective financial information should not be relied upon as such. None of Farmers Capital, Wesbanco or their respective affiliates, advisors, officers, directors or representatives can give any assurance that actual results will not differ from the prospective financial information, and none of them undertakes any obligation to update or otherwise revise or reconcile the prospective financial information to reflect circumstances existing after the date such information was prepared or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the prospective financial information are shown to be in error. None of Farmers Capital, Wesbanco or their respective affiliates, advisors or representatives makes any representation to any shareholder regarding the projections. The prospective financial information is not being included in this proxy statement/prospectus to influence a shareholder’s decision regarding how to vote on any given proposal, but because the prospective financial information was provided to KBW.

In light of the foregoing, and considering that the Farmers Capital special meeting will be held several months after the prospective financial information was prepared, as well as the uncertainties inherent in any forecasted information, Farmers Capital shareholders are cautioned not to place unwarranted reliance on such information.

Farmers Capital provided KBW with a projected 2018 EPS for Farmers Capital of $2.87, which represented the 2018 consensus “street estimate” for Farmers Capital as adjusted by Farmers Capital management. Farmers Capital provided KBW with a projected 2019 EPS for Farmers Capital of $2.95. For fiscal years after 2019, Farmers Capital provided an estimated long-term EPS growth rate for Farmers Capital of 5%.

Interests of Certain Persons in the Merger

In considering the recommendation of the Farmers Capital board of directors with respect to the merger agreement, you should be aware that certain persons, including the directors and executive officers of Farmers Capital, have interests in the merger in addition to their interests as shareholders of Farmers Capital generally. The Farmers Capital board of directors was aware of these interests and considered them in approving the merger agreement and the transactions contemplated thereby. As described in more detail below, these interests include certain payments and benefits that may be provided to certain executive officers upon completion of the merger. The dates used below to quantify these interests have been selected for illustrative purposes only and do not necessarily reflect the dates on which certain events will occur.

Executive Officer Agreements. As described in more detail below, concurrently with the execution of the merger agreement, Farmers Capital, Wesbanco and, in certain instances, Wesbanco Bank, entered into agreements with each of the following Farmers Capital executive officers: (i) Lloyd C. Hillard, Jr., President and Chief Executive Officer of Farmers Capital; (ii) Mark A. Hampton, EVP, Secretary & Chief Financial Officer of Farmers Capital; (iii) J. David Smith, Jr., Sr. EVP & Chief Operating Officer of Farmers Capital; and (iv) Rickey D. Harp, EVP, Chief Trust Officer & Market President for Farmers Capital. In addition, Rickey D. Harp, Mark A. Tranbarger and Michael E. Schornick, Jr. entered into a Restricted Stock Award Agreement with Wesbanco. All of the agreements will be effective as of the effective time of the merger.

 

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Lloyd C. Hillard, Jr. On April 19, 2018, Lloyd C. Hillard, Jr. entered into an Agreement Terminating Employment Agreement with Farmers Capital and Wesbanco (the “Hillard Agreement”). Pursuant to the Hillard Agreement, at the effective time of the merger Wesbanco will make a single cash payment to Mr. Hillard in the amount of $1,665,430, which is the amount Mr. Hillard would have been entitled to receive under his current employment agreement with Farmers Capital by reason of the merger. In addition, the Hillard Agreement provides that after the effective time of the merger, Mr. Hillard may, with a 180 day prior written notice to Wesbanco, retire and be provided during the longer of his life and his spouse’s life such health, hospitalization, medical, and dental insurance policy or plan or Medicare supplement plan which Wesbanco makes available to Wesbanco’s highest ranking executives. This is substantially identical to the benefit provided Mr. Hillard under his current employment agreement with Farmers Capital. Upon retirement, Mr. Hillard will also be entitled to purchase the automobile then provided to him by Wesbanco Bank for a purchase price of $100, which is substantially the same automobile purchase on retirement right contained in Mr. Hillard’s employment agreement with Farmers Capital. The Hillard Agreement also terminates Mr. Hillard’s employment agreement with Farmers Capital as of the effective time of the merger. Finally, the Hillard Agreement contains certain confidentiality, non-compete and non-solicitation restrictive covenants. These restrictive covenants are substantially similar to the restrictive covenants in Mr. Hillard’s employment agreement with Farmers Capital, although the non-compete covenants are less restrictive in geographic scope and are limited in duration to one year following termination of employment, as opposed to three years following the termination of employment under Mr. Hillard’s employment agreement with Farmers Capital.

In addition, on April 19, 2018 Mr. Hillard entered into an Employment Agreement with Wesbanco and Wesbanco Bank pursuant to which, as of the effective time of the merger, Mr. Hillard will be employed by Wesbanco and Wesbanco Bank as Chairman, Cental and Southern Kentucky market. Under this employment agreement, Mr. Hillard will be entitled to an annual salary in an amount to be determined by the board of directors of Wesbanco Bank, which amount will be no less than $275,000 per year. Mr. Hillard will also be entitled to such other miscellaneous benefits and perquisites as Wesbanco Bank provides to its executive employees generally, including cell phone reimbursement. The term of the employment agreement begins on the effective date of the merger and ends on September 30, 2020. The employment agreement also provides that Mr. Hillard will be entitled to receive a retention bonus in the amount of $250,000 if he is an active employee of Wesbanco Bank on September 30, 2020. If Mr. Hillard is terminated without cause prior to September 30, 2020, Mr. Hillard (or his personal representative if he dies after he is terminated without cause, but before September 30, 2020) will be entitled to receive the bonus as soon as administratively feasible after September 30, 2020. Mr. Hillard will not be entitled to the bonus if, prior to September 30, 2020, he becomes disabled, voluntarily resigns from his employment, his employment is terminated by reason of his death, or Mr. Hillard’s employment is terminated by Wesbanco Bank for cause. The employment agreement also contains confidentiality and non-solicitation restrictive covenants. If Wesbanco Bank terminates Mr. Hillard’s employment other than for cause, in addition to the retention bonus he may be entitled to receive discussed above, Mr. Hillard would be entitled to receive an amount equal to the greater of (i) six (6) months of base salary at his then current base rate, or (ii) the base salary Mr. Hillard would have received had he continued to be employed through the end of the then existing term of employment under the employment agreement.

Mark A. Hampton. On April 19, 2018, Mark A. Hampton entered into an Agreement Terminating Employment Agreement with Farmers Capital, Wesbanco and Wesbanco Bank (the “Hampton Agreement”). Pursuant to the Hampton Agreement, at the effective time of the merger Wesbanco will make a single cash payment to Mr. Hampton in the amount of $425,000, which is the amount Mr. Hampton would have been entitled to receive under his current employment agreement with Farmers Capital by reason of the merger. The Hampton Agreement also terminates Mr. Hampton’s employment agreement with Farmers Capital as of the effective time of the merger. Effective at the effective time of the merger, the Hampton Agreement provides that Mr. Hampton will become an employee-at-will of Wesbanco Bank with such salary and bonus opportunities as determined by the Chief Executive Officer of Wesbanco Bank from time to time and will be provided with the employee benefits as are customarily provided to employees of Wesbanco Bank. Finally, the Hampton Agreement contains certain confidentiality and non-solicitation restrictive covenants. These restrictive covenants

 

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are substantially similar to the restrictive covenants in Mr. Hampton’s employment agreement with Farmers Capital, although the non-compete provisions have been eliminated and the non-solicit provisions have been reduced in duration from three years to one year.

Rickey D. Harp Agreement. On April 19, 2018, Rickey D. Harp entered into an Agreement of Non-Renewal and Expiration of Employment Agreement with Farmers Capital, Wesbanco and Wesbanco Bank (the “Harp Agreement”). Pursuant to the Harp Agreement, Mr. Harp’s employment agreement with Farmers will not be renewed and will expire in accordance with its terms on December 31, 2018. For the period between the effective time of the merger and December 31, 2018, if any, Mr. Harp will be an employee of Wesbanco Bank under the terms and conditions of his employment agreement with Farmers Capital. The Harp Agreement further provides that effective January 1, 2019 and assuming the effective time of the merger occurs before such date, Mr. Harp will become an employee-at-will of Wesbanco Bank with such salary, bonus opportunities and other compensation and terms and conditions of employment as determined by the Chief Executive Officer of Wesbanco Bank from time to time and will be provided with the employee benefits as are customarily provided to employees of Wesbanco Bank. Finally, the Harp Agreement contains certain confidentiality, non-compete and non-solicitation restrictive covenants. These restrictive covenants are substantially similar to the restrictive covenants in Mr. Harp’s employment agreement with Farmers Capital, although the non-compete covenants are less restrictive in geographic scope and are limited in duration to one year following termination of employment, as opposed to three years following the termination of employment under Mr. Harp’s employment agreement with Farmers Capital.

In addition, on April 19, 2018 Mr. Harp entered into a Restricted Stock Award Agreement with Wesbanco pursuant to which Wesbanco will grant, immediately after and subject to the occurrence of the effective time of the merger, 2,111 restricted shares of Wesbanco common stock, which will cliff-vest on the second anniversary of the grant date if Mr. Harp remains employed by Wesbanco or Wesbanco Bank at that time. This grant will not be made if the merger does not occur.

J. David Smith, Jr. On April 19, 2018, J. David Smith entered into an Agreement Terminating Employment Agreement with Farmers Capital, Wesbanco and Wesbanco Bank (the “Smith Agreement”). Pursuant to the Smith Agreement, at the effective time of the merger Wesbanco will make a single cash payment to Mr. Smith in an amount which will be the amount of base salary Mr. Smith would have been entitled to receive throughout the remaining term of his current employment agreement with Farmers Capital which is December 31, 2019. His current base salary is $330,000. The Smith Agreement also terminates Mr. Smith’s employment with Farmers Capital and Wesbanco as of the effective time of the merger and terminates Mr. Smith’s employment agreement with Farmers Capital. Mr. Smith will not become an employee of Wesbanco or Wesbanco Bank after the effective time of the merger. The Smith Agreement also provides that, for the period equal to the shorter of eighteen months or until Mr. Smith is eligible for comparable coverage from a subsequent employer, Wesbanco will provide health, dental and vision coverage under the Wesbanco employee welfare benefit plan that provides health, dental and vision coverage to executives of Wesbanco on the same terms and conditions and with the same employee contribution rates as are applicable to Wesbanco executives participating in that plan. Finally, the Smith Agreement contains certain confidentiality, non-compete and non-solicitation restrictive covenants. These restrictive covenants are substantially similar to the restrictive covenants in Mr. Smith’s employment agreement with Farmers Capital, although the non-compete covenants are less restrictive in geographic scope and contain certain carve-outs and are limited in duration to one year following termination of employment, as opposed to three years following the termination of employment under Mr. Smith’s employment agreement with Farmers Capital. He also will be permitted to purchase his current company car for the sum of $1.00 and be paid for his accrued and unused paid time off. He will also receive a payment for any forfeitures required under the Farmers Capital 401(k) Plan by reason of his early depature.

Board of Directors Appointment; Advisory Board. One current Farmers Capital director, Michael J. Crawford, will be appointed to the board of directors of Wesbanco and Wesbanco Bank at the effective time of the merger. The director appointee will serve until the next meeting of Wesbanco’s shareholders and will be

 

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nominated for election to the Wesbanco board at that shareholder meeting and subsequent shareholder meetings until he or she has served a three-year term. In addition, each member of the Farmers Capital board of directors at the effective time of the merger, will be appointed to a newly-created advisory board for the Central and Southern Kentucky markets. Each advisory board member will serve for at least one year and, to the extent not otherwise employed by Wesbanco, will receive the same annual compensation they received for service on the Farmers Capital board of directors for the fiscal year ended December 31, 2017.

Indemnification. Wesbanco has agreed that, following the effective time of the merger, it will indemnify, defend and hold harmless the current and former directors and officers of Farmers Capital against all costs, expenses, claims, damages or liabilities arising out of actions or omissions occurring at or prior to the effective time of the merger to the fullest extent permitted by applicable law, including provisions relating to advances of expenses. The merger agreement further provides that Wesbanco will obtain six years of extended liability insurance to provide for continued coverage of Farmers Capital’s directors and officers with respect to matters occurring prior to the effective time of the merger, subject to a cap that limits the annual amount that Wesbanco must expend for such liability insurance to no more 150% of the annual amount expended by Farmers Capital prior to the effective time of the merger.

Ownership by Farmers Capital Officers and Directors. As of the record date, the directors and executive officers of Farmers Capital beneficially owned, in the aggregate, approximately 239,646 shares of Farmers Capital common stock, representing approximately 3.2% of the outstanding shares of Farmers Capital common stock. Directors and executive officers of Farmers Capital will be treated the same as other Farmers Capital shareholders with respect to their ownership of outstanding Farmers Capital common stock.

Please see the discussion under “Benefit Agreements” above for information regarding Employee Severence Benefits, Retention Bonus Pools, and Retention Restricted Stock Agreements.

Summary of Golden Parachute Arrangements

The information set forth in the table below is intended to comply with Item 402(t) of the SEC’s Regulation S-K, which requires disclosure of information about certain compensation for each named executive officer of Farmers Capital that is based on, or otherwise relates to, the merger (which we refer to as “merger-related compensation”).

The merger-related compensation described below payable by Wesbanco or Farmers Capital, as applicable, upon the effective time of the merger is based on rights granted under existing agreements with Farmers Capital and certain agreements with Wesbanco terminating or not renewing those employment agreements with Farmers Capital and addressing certain other matters. As described above in “Interests of Certain Persons in the Merger,” Lloyd Hillard entered into an Employment Agreement with Wesbanco and Wesbanco Bank effective as of the effective time of the merger. In addition, Rickey Harp entered into a Restricted Stock Award Agreement with Wesbanco pursuant to which Wesbanco will grant, immediately after and subject to the occurrence of the effective time of the merger, 2,111 restricted shares of Wesbanco common stock to Mr. Harp. The merger-related compensation described below does not include amounts payable under Mr. Hillard’s new Employment Agreement with Wesbanco and Wesbanco Bank or Mr. Harp’s Restricted Stock Award Agreement. Nor does it include any continued payments under Mr. Harp’s employment agreement assumed by Wesbanco in the merger until it expires on December 31, 2018. Finally, the merger-related compensation described below also does not include any post-merger salary, bonus or other amounts that may be paid by Wesbanco to Mark Hampton if he becomes an employee at will of Wesbanco after the effective time of the merger. For additional details regarding the terms Mr. Hillard’s Employment Agreement with Wesbanco and Mr. Harp’s Restricted Stock Award Agreement with Wesbanco, see the discussion under the heading “Interests of Certain Persons in the Merger” above.

 

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None of the named executive officers of Farmers Capital hold any unvested equity awards of Farmers Capital. Accordingly, no equity is subject to accelerated vesting by reason of the merger and none is included in the table below.

The table below sets forth the amount of payments and benefits that each of the named executive officers of Farmers Capital would receive in connection with the merger, based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described below and in the footnotes to the table. For purposes of calculating such amounts, in addition to the assumptions described in the footnotes to the table below, the table below assumes that the effective time of the merger occurs on September 30, 2018 solely for purposes of the disclosure in this section, and each named executive officer is assumed to experience a qualifying termination on such date. All amounts in the table below are attributable to a single-trigger arrangement.

Golden Parachute Compensation

 

Name

   Cash($)(1)      Perquisites/
Benefits($)
    Total($)  

Lloyd C. Hillard, Jr.

     1,665,430        —         1,665,430  

Mark A. Hampton

     425,000        —         425,000  

Rickey D. Harp

     —          —         0  

J. David Smith, Jr.

     418,750        39,831 (2)      458,581  

James L. Grubbs (3)

     —          —         0  

 

1. Represents lump sum cash payments to be made at the effective time of the merger.
2. $11,000 of this amount comprise the estimated value of unvested Farmers Capital matching contributions to voluntarily deferred salary contributions into Mr. Smith’s 401(k) plan, the vesting of which will be accelerated by the merger assuming termination of the Farmers Capital 401(k) plan at the effective time of the merger. $20,831 of this amount represents the estimated aggregate value of continued health, dental and vision benefits for 18 months, which is the maximum length Wesbanco could be required to pay for such benefits under the Smith Agreement. Also includes the $8,000 estimated fair market value of a company automobile provided to Mr. Smith by Farmers Capital which may be purchased by him for $1.00 at the effective time of the merger under the terms of the Smith Agreement.
3. On May 24, 2018, James L. Grubbs resigned as Executive Vice President, Chief Commercial Banking Officer of United Bank, a subsidiary of Farmers Capital. Mr. Grubbs is no longer employed by Farmers Capital or United Bank.

Regulatory Approvals

Completion of the merger and the bank merger are each subject to certain federal and state bank regulatory agency filings and approvals. Wesbanco and Farmers Capital and their banking subsidiaries cannot complete the merger and the bank merger unless and until Wesbanco and Farmers Capital and their banking subsidiaries receive all necessary prior approvals from the applicable bank regulatory authorities. Wesbanco and Farmers Capital have agreed to use their reasonable best efforts to obtain all such necessary prior approvals required to consummate the transactions contemplated by the merger agreement. Neither Wesbanco nor Farmers Capital can predict whether or when Wesbanco and Farmers Capital will obtain the required regulatory approvals, waivers or exemptions necessary for the merger of Wesbanco with Farmers Capital and the merger of United Bank & Capital Trust Company with and into Wesbanco Bank. As of the date of this proxy statement/prospectus, we have not yet received the required regulatory approvals.

Federal Deposit Insurance Corporation. The bank merger is subject to the approval by the Federal Deposit Insurance Corporation (“FDIC”) under the Bank Merger Act. In granting its approval under the Bank Merger Act, the FDIC must consider, among other factors, the competitive effect of the merger, the managerial and

 

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financial resources and future prospects of the merging banks, the effect of the merger on the convenience and needs of the communities to be served, including the records of performance of the merging banks in meeting the credit needs of the communities under the Community Reinvestment Act, the effectiveness of the merging banks in combating money laundering activities, and the risk that would be posed by the merger to the stability of the United States banking or financial system. Applicable regulations require publication of notice of the application and an opportunity for the public to comment on the application in writing. Wesbanco filed the requisite bank merger application with the FDIC on May 16, 2018.

The bank merger (the completion of which is not a condition to the merger) may not be consummated until 30 days after the approval of the FDIC (or such shorter period as the FDIC may prescribe with the concurrence of the United States Department of Justice, but not less than 15 days), during which time the Department of Justice may challenge the bank merger on antitrust grounds.

Federal Reserve Board. The merger requires the approval of the Federal Reserve Board pursuant to the Bank Holding Company Act of 1956, as amended, unless the Federal Reserve Board is willing to grant a waiver pursuant to its regulations allowing for such waivers. On May 30, 2018 the Federal Reserve Board granted such a waiver.

West Virginia Division of Financial Institutions. Both the merger and the bank merger require the approval of the West Virginia Division of Financial Institutions. Wesbanco is in the process of filing an application for approval of the merger and bank merger with the West Virginia Division of Financial Institutions. Wesbanco filed the requisite application for approval of the merger with the West Virginia Division of Financial Institutions on May 16, 2018.

Kentucky Department of Financial Institutions. The acquisition of control of United Bank & Capital Trust Company through the merger of Farmers Capital into Wesbanco must also be approved by the Kentucky Department of Financial Institutions (“KDFI”). The KDFI will review the acquisition to determine, among other things, whether the public convenience and advantage will be served by the transaction. Wesbanco filed the requisite notice of bank merger application with the Kentucky Department of Financial Institutions on May 16, 2018.

Other Requisite Approvals, Notices and Consents. Neither Farmers Capital nor Wesbanco is aware of any other regulatory approvals, notices or consents required for completion of the merger other than those we describe above. Should any other approvals, notices or consents be required, Farmers Capital and Wesbanco presently contemplate both of us would seek to obtain such approvals or consents and give such notices. There can be no assurance, however, that Wesbanco and Farmers Capital can obtain any other approvals or consents, if required.

There can be no assurance that the regulatory authorities described above will approve the merger or the bank merger, and if such mergers are approved, there can be no assurance as to the date on which Wesbanco and Farmers Capital will receive such approvals. The mergers cannot proceed in the absence of the receipt of all requisite regulatory approvals.

The approval of any application merely implies the satisfaction of regulatory criteria for approval. Any such approval does not include review of the merger from the standpoint of the adequacy of the merger consideration our shareholders will receive upon the merger. Further, regulatory approvals do not constitute an endorsement or recommendation of the merger.

Dissenters’ Rights of Farmers Capital Shareholders

Kentucky law provides certain rights to shareholders who dissent from certain corporate actions, including the proposed merger. The following is a summary of the material provisions of Kentucky law relating to the

 

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dissenters’ rights of shareholders and is qualified in its entirety by reference to the provisions of Sections 271B.13-010 through 271B.13-310 of the KBCA, which are attached in full as Annex C to this proxy statement. You are urged to read Annex C in its entirety. Under the provisions of the KBCA, if the merger agreement is approved at the special meeting and the proposed merger is consummated, any shareholder of Farmers Capital who objects to the proposed merger and who fully complies with Sections 271B.13-010 through 271B.13-310 of the KBCA will be entitled to demand and receive payment in cash of an amount equal to the fair value of the shareholder’s shares of Farmers Capital common stock.

Only a shareholder of record may assert dissenters’ rights. A beneficial owner of shares held in a voting trust or by a nominee as the record shareholder (as in the case of shares held in a brokerage account) must direct the shareholder of record to assert dissenters’ rights on behalf of the beneficial owner unless the right to dissent is granted to the beneficial owner by a nominee certificate on file with a corporation.

A shareholder of record may assert dissenters’ rights as to fewer than all of the shares registered in the shareholder’s name only if the shareholder dissents with respect to all shares beneficially owned by any one beneficial owner and notifies Farmers Capital in writing of the name and address of each person on whose behalf he or she asserts dissenters’ rights. A beneficial owner may assert dissenters’ rights only if the beneficial owner submits to Farmers Capital the record shareholder’s written consent to the dissent not later than the time the beneficial owner asserts dissenters’ rights, and does so with respect to all shares of Farmers Capital common stock of which he or she is the beneficial owner or over which he or she has power to direct the vote.

For the purpose of determining the amount to be received in connection with the exercise of statutory dissenters’ rights, the fair value of a dissenting shareholder’s common stock will equal the value of the shares immediately before consummation of the proposed merger, excluding any appreciation or depreciation in anticipation of the merger, unless such exclusion would be inequitable. Investment banker opinions as to the fairness from a financial point of view of the consideration payable in a transaction such as the merger are not opinions as to, and do not address in any respect, fair value under the KBCA.

Any shareholder desiring to assert dissenters’ rights and receive payment of the fair value of such shareholder’s shares of Farmers Capital common stock must deliver to Farmers Capital, prior to the shareholder vote at the special meeting of shareholders, a written notice of intent to demand payment for his or her shares if the merger is effectuated, must not vote his or her shares in favor of the merger agreement at the special meeting of the shareholders of Farmers Capital, and must comply with the payment demand and other procedural requirements of the KBCA described below.

All written communications from shareholders with respect to the assertion of dissenters’ rights should be mailed to Farmers Capital at: 202 West Main Street, Frankfort, Kentucky 40601, Attention: Corporate Secretary. Voting against, abstaining from voting or failing to vote on the proposal to approve the merger agreement is not enough to satisfy the requirements to assert dissenters’ rights under the KBCA. You must also comply with all of the conditions relating to the separate written notice of intent to demand payment described above and the separate written demand for payment of the fair value of shares of Farmers Capital common stock and the other procedural provisions described below.

Within 10 days after the approval of the merger agreement at the special meeting, Farmers Capital will send a dissenters’ notice to all shareholders who have timely provided a notice of intent to demand payment in accordance with the procedures described above and who did not vote his or her shares in favor of the merger agreement at the Farmers Capital special meeting of the shareholders. The dissenters’ notice will state the dates and place for receipt of the payment demand and the deposit of Farmers Capital stock certificates, inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received, supply a form for demanding payment that includes the date of the first announcement to the news media or shareholders of the terms of the proposed merger and requires that the person asserting dissenters’ rights certify whether or not he or she acquired beneficial ownership of his or her shares before that date, set a

 

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date by which Farmers Capital must receive the payment demand, which date may not be fewer than 30 nor more than 60 days after the dissenters’ notice is delivered, and be accompanied by a copy of the dissenters’ rights provisions of the KBCA.

In order to receive the payment contemplated by the dissenters’ rights provisions of the KBCA, shareholders who receive a dissenters’ notice must demand payment, certify whether the holder acquired beneficial ownership of shares before the date of the first announcement to the news media or to shareholders of the terms of the proposed merger, and deposit their stock certificates with Farmers Capital according to the terms of the dissenters’ notice.

Farmers Capital may restrict the transfer of uncertificated shares from the date the demand for their payment is received until the proposed merger is consummated. However, the person for whom dissenters’ rights are asserted as to uncertificated shares shall retain all other rights of a shareholder until these rights are canceled or modified by the consummation of the proposed merger.

If the consummation of the proposed merger does not occur within 60 days after the date set for demanding payment and depositing share certificates, Farmers Capital will be required to return the deposited certificates and release any transfer restrictions imposed on uncertificated shares. If the merger then later occurs, Farmers Capital will be required to send a new dissenters’ notice, and the payment demand procedures outlined above must be repeated.

As soon as the merger occurs and Wesbanco, as successor in interest to Farmers Capital, receives a payment demand from a dissenting shareholder who has complied with the statutory requirements, Wesbanco, as successor in interest to Farmers Capital, will pay the dissenter the amount it estimates to be the fair value of his or her shares, plus accrued interest. The payment will be accompanied by the balance sheet of Farmers Capital as of the end of a fiscal year ended not more than 16 months before the date of payment; an income statement for that year; a statement of changes in shareholders’ equity for that year and the latest available interim financial statements, if any; a statement of Farmers Capital’s estimate of the fair value of the shares; an explanation of how the interest was calculated; and a statement of the dissenter’s right to demand payment under Section 271B.13-280 of the KBCA.

After consummation of the merger, Wesbanco, as successor in interest to Farmers Capital, may elect to withhold payment from a dissenter unless the dissenter was the beneficial owner of the shares before the date of the first announcement to the news media or Farmers Capital shareholders of the terms of the proposed merger. If Wesbanco, as successor in interest to Farmers Capital, makes such an election, we will estimate the fair value of the shares, plus accrued interest, and send an offer to each such dissenter that includes the estimate of the fair value, an explanation of how the interest was calculated and a statement of the dissenter’s right to demand payment under Section 271B.13-280 of the KBCA. Wesbanco, as successor in interest to Farmers Capital, will pay the offer amount to each such dissenting shareholder who agrees to accept it in full satisfaction of his or her demand.

Under Section 271B.13-280 of the KBCA, a dissenting shareholder who is dissatsifed with the payment or offer from Wesbanco, as successor in interest to Farmers Capital, may notify Wesbanco, as successor in interest to Farmers Capital, in writing of the dissenter’s own estimate of the fair value of the dissenter’s shares and amount of interest due and demand payment of the dissenter’s estimate or reject the corporation’s offer under Section 271B.13-270 of the KBCA and demand payment of the fair value of his or her shares and interest due, if:

 

  (i) the dissenter believes the amount Farmers Capital paid or offered is less than the fair value of the dissenter’s shares or that the interest due is incorrectly calculated;

 

  (ii) Farmers Capital fails to make payment within 60 days after the date set for demanding payment; or

 

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  (iii) Farmers Capital, having failed to consummate the merger, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within 60 days after the date set for demanding payment.

A dissenter waives the right to demand payment under Section 271B.13-280 of the KBCA unless he or she notifies Farmers Capital of his or her demand in writing within 30 days after payment is made or offered for the dissenter’s shares.

If the demand for payment under Section 271B.13-280 of the KBCA remains unsettled, then Wesbanco, as successor in interest to Farmers Capital, within 60 days after receiving the payment demand of a different amount from the dissenting shareholder, must petition the circuit court in Franklin County, Kentucky, to determine the fair value of the shares and accrued interest. Wesbanco, as successor in interest to Farmers Capital, must make all dissenting shareholders whose demands remain unsettled parties to the proceeding, and all parties must be served with a copy of the petition. Each dissenter made a party to the proceeding will be entitled to judgment for the amount, if any, by which the court finds the fair value of his shares, plus interest, exceeds the amount paid by the Wesbanco, as successor in interest to Farmers Capital, or for the fair value, plus accrued interest, of his or her after-acquired shares for which Wesbanco, as successor in interest to Farmers Capital, elected to withhold payment under Section 271B.13-270 of the KBCA. If Farmers Capital does not begin the proceeding within the 60-day period, it will be required to pay the amount demanded by each dissenting shareholder whose demand remains unsettled.

Shareholders should note that dissenting shareholders will recognize gain or loss for federal income tax purposes on cash paid to them in satisfaction of the fair value of their shares, and should consult their tax advisors accordingly. See “Material United States Federal Income Tax Consequences” beginning on page 66 of this proxy statement/prospectus.

Failure by any shareholder to follow the complex steps required by the KBCA for properly asserting dissenters’ rights may result in the loss of those rights. If you are considering dissenting from the approval of the merger agreement and asserting your dissenters’ rights under the KBCA, you should consult your legal advisor.

Delisting and Deregistration of Farmers Capital Common Stock Following the Merger

If the merger is completed, Farmers Capital common stock will be delisted from the Nasdaq Global Select Market and will be deregistered under the Securities Exchange Act of 1934, as amended. It is a condition to closing that the shares of Wesbanco common stock to be issued to Farmers Capital shareholders in the merger must have been approved for listing on the Nasdaq Global Select Market.

Shares to be Issued by Wesbanco in the Merger; Ownership of Wesbanco after the Merger

Wesbanco will issue a maximum of approximately 7,927,453 shares of its common stock to Farmers Capital shareholders in connection with the merger, based on the number of shares of Farmers Capital common stock outstanding on the record date and additional shares of Farmers Capital common stock that may be issued prior to the closing, assuming no adjustment to the exchange ratio is made. Assuming that Wesbanco issues that maximum number of shares, those shares would constitute approximately 14.5% of the outstanding stock of Wesbanco after the merger, based on the number of shares of Wesbanco common stock outstanding on the record date. The Wesbanco shares to be issued in the merger will be listed for trading on the Nasdaq Global Select Market under the symbol “WSBC.”

Management Following the Merger

Each of the current directors and executive officers of Wesbanco will continue to serve in those capacities following the merger. Additionally, Michael J. Crawford, currently a director of Farmers Capital, will be

 

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appointed to the board of directors of Wesbanco. For information as to the identities, backgrounds, compensation and certain other matters relating to Wesbanco’s and Farmers Capital’s directors and executive officers, please refer to Wesbanco’s proxy statement for its 2018 annual meeting of shareholders and Farmers Capital’s proxy statement for its 2018 annual meeting of shareholders, as applicable, which are incorporated by reference herein. See “Where You Can Find More Information about Wesbanco and Farmers Capital.”

Accounting Treatment

In accordance with Financial Accounting Standards Board, Accounting Standards Codification 805, Business Combinations, Wesbanco will account for the merger as an “acquisition.” Under acquisition accounting, Farmers Capital’s assets, including identifiable intangible assets, and liabilities, including executory contracts and other commitments, as of the effective time of the merger will be recorded at their respective fair values and added to the balance sheet of Wesbanco. Any excess of the purchase price over the fair values of net assets acquired will be recorded as goodwill. Financial statements of Wesbanco issued after the merger will include these initial fair values (adjusted for subsequent amortization or accretion) and Farmers Capital’s results of operations from the effective time of the merger.

Material U.S. Federal Income Tax Consequences of the Merger

The following discussion sets forth the anticipated material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) of Farmers Capital common stock that exchange their shares of Farmers Capital common stock for shares of Wesbanco common stock and cash pursuant to the merger. This discussion is based on the Code, Treasury regulations promulgated thereunder, administrative rulings and practice, and judicial decisions, all as currently in effect and all of which are subject to change (possibly with retroactive effect) and to differing interpretations. Any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion applies only to Farmers Capital shareholders that hold Farmers Capital common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal taxation that may be relevant to a particular shareholder in light of personal circumstances or to shareholders subject to special treatment under U.S. federal income tax laws, including:

 

    banks, financial institutions or trusts;

 

    tax-exempt organizations;

 

    insurance companies;

 

    dealers in securities or foreign currencies;

 

    traders in securities who elect to apply a mark-to-market method of accounting;

 

    pass-through entities and investors in such entities;

 

    real estate investment trusts;

 

    regulated investment companies;

 

    foreign persons;

 

    persons whose functional currency is not the U.S. dollar;

 

    U.S. expatriates;

 

    shareholders who received their Farmers Capital common stock through the exercise of employee stock options, holders of options to acquire Farmers Capital common stock, or holders who acquired their Farmers Capital common stock through a tax-qualified retirement plan or otherwise as compensation; and

 

    shareholders who hold Farmers Capital common stock as part of a hedge, straddle, constructive sale, conversion transaction or other integrated investment.

 

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In addition, this discussion does not address any alternative minimum tax or any state, local, foreign, or non-income tax consequences of the merger.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Farmers Capital common stock that is for U.S. federal income tax purposes (i) an individual citizen or resident of the United States; (ii) a corporation, or entity treated as a corporation, organized in or under the laws of the United States or any state thereof or the District of Columbia; (iii) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) such trust has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes; or (iv) an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source.

If a partnership or other entity taxed as a partnership for U.S. federal income tax purposes holds Farmers Capital common stock, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners in such a partnership should consult their tax advisors regarding the tax consequences of the merger to them.

Each holder of Farmers Capital common stock should consult his, her or its tax advisor with respect to the particular tax consequences of the merger to such shareholder.

The merger is conditioned upon receipt at closing by Farmers Capital of a legal opinion from Squire Patton Boggs (US) LLP and upon receipt at closing by Wesbanco of a legal opinion from K&L Gates LLP, in each case, dated the closing date of the merger and to the effect that the merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code. Neither of these opinions will be binding on the Internal Revenue Service (the “IRS”) or the courts, and neither Farmers Capital nor Wesbanco intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the merger. Consequently, we cannot provide assurance that the IRS will not assert, or that a court would not sustain, a position contrary to any of those set forth below.

The opinions of Squire Patton Boggs (US) LLP and K&L Gates LLP to be issued at closing will rely on certain assumptions that customarily are made with respect to transactions of this kind. The opinions also will rely on representations and covenants, including certain factual representations contained in officers’ certificates of Farmers Capital and Wesbanco. Squire Patton Boggs (US) LLP and K&L Gates LLP will assume such representations to be true, correct and complete. If any such representation cannot be made on the effective date of the merger, or any such representation or assumption upon which the opinions are based is inconsistent with the actual facts or incorrect, then Squire Patton Boggs (US) LLP and K&L Gates LLP may be unable to render the opinions upon which the closing is conditioned, and the U.S. federal income tax consequences of the merger could be adversely affected.

Receipt of Wesbanco Common Stock and Cash

Provided that the merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, the exchange of Farmers Capital common stock for Wesbanco common stock and cash (other than cash received in lieu of a fractional share) generally will result in the recognition of gain (but not loss) in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess of the sum of the amount of cash and the fair market value of the Wesbanco common stock received pursuant to the merger over the adjusted tax basis in the shares of Farmers Capital common stock surrendered) and (2) the amount of cash received pursuant to the merger (excluding any cash received in lieu of a fractional share). If a shareholder of Farmers Capital common stock acquired different blocks of Farmers Capital common stock at different times or at different prices, such shareholder should consult his, her or its tax advisor regarding the manner in which gain or loss should be determined. Any gain recognized generally will be long-term capital gain if, as of the effective date of the merger, the holding period with respect to the Farmers Capital common stock surrendered exceeds one year. If,

 

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however, the cash received has the effect of the distribution of a dividend, the gain will be treated as a dividend to the extent of the holder’s ratable share of accumulated earnings and profits as calculated for U.S. federal income tax purposes. See “—Possible Treatment of Cash as a Dividend” below.

The aggregate tax basis in the shares of Wesbanco common stock received in the merger, including any fractional share interests deemed received and redeemed as described below, will equal the aggregate adjusted tax basis in the Farmers Capital common stock surrendered, reduced by the amount of cash received (excluding any cash received in lieu of a fractional share) and increased by the amount of gain, if any, recognized (excluding any gain recognized with respect to cash received in lieu of a fractional share) on the exchange. The holding period for the shares of Wesbanco common stock received in the merger (including a fractional share interest deemed received and redeemed as described below) will include the holding period for the shares of Farmers Capital common stock surrendered in the exchange.

Possible Treatment of Cash as a Dividend

In general, the determination of whether the gain recognized in the exchange will be treated as capital gain or has the effect of a distribution of a dividend depends upon whether and to what extent the exchange reduces the holder’s deemed percentage stock ownership of Wesbanco. For purposes of this determination, the holder is treated as if he, she or it first exchanged all of his, her or its shares of Farmers Capital common stock solely for Wesbanco common stock and then Wesbanco immediately redeemed a portion of the Wesbanco common stock in exchange for the cash the holder actually received. The gain recognized in the deemed redemption will be treated as capital gain, and not as a dividend equivalent, if the deemed redemption is (1) “substantially disproportionate” with respect to the holder, or (2) “not essentially equivalent to a dividend” (i.e., the deemed redemption results in a “meaningful reduction” in the Farmers Capital shareholder’s interest in Wesbanco common stock).

The deemed redemption will generally be “substantially disproportionate” with respect to a holder if the holder’s percentage interest in Wesbanco common stock (including stock constructively owned by the holder) immediately after the merger is less than 80% of what the percentage interest would have been if, hypothetically, the holder had received solely Wesbanco common stock in exchange for all Farmers Capital common stock owned or constructively owned by the holder before the merger. Whether an exchange would result in a meaningful reduction depends on the particular shareholder’s facts and circumstances. The IRS has ruled that a shareholder in a publicly-held corporation whose relative stock interest is minimal (e.g., less than 1%) and who exercises no control with respect to corporate affairs is generally considered to have a “meaningful reduction” if that shareholder has a relatively minor reduction in its percentage stock ownership in the deemed redemption. Accordingly, the gain recognized in the exchange by such shareholder would be treated as capital gain.

These rules are complex and dependent upon the specific factual circumstances particular to each holder. Consequently, each holder that may be subject to these rules should consult his, her or its tax advisor as to the application of these rules to the particular facts relevant to such holder.

Cash Received in Lieu of a Fractional Share of Wesbanco Common Stock

If a shareholder of Farmers Capital common stock receives cash instead of a fractional share of Wesbanco common stock, the holder will generally be treated as having received such fractional share and then as having received such cash in redemption of that fractional share by Wesbanco. Unless the receipt of such cash is treated as a dividend under the principles discussed above under “—Possible Treatment of Cash as a Dividend,” a holder generally will recognize gain or loss equal to the difference between the amount of cash received and the basis allocable to the fractional share of Wesbanco common stock. Such gain or loss will be long-term capital gain or loss if, as of the effective date of the merger, the holding period for such shares is more than one year. The deductibility of capital losses is subject to limitations.

 

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Net Investment Income Tax

A holder who is an individual is subject to a 3.8% tax on the lesser of: (i) his or her “net investment income” for the relevant taxable year, or (ii) the excess of his or her modified adjusted gross income for the taxable year over certain thresholds (between $125,000 and $250,000 depending on the individual’s U.S. federal income tax filing status). Estates and trusts are subject to similar rules. Net investment income generally would include any capital gain recognized in connection with the merger (including any gain treated as a dividend), as well as, among other items, other interest, dividends, capital gains and rental or royalty income received by such individual. Holders should consult their tax advisors as to the application of this additional tax to their circumstances.

Backup Withholding and Information Reporting

A non-corporate shareholder may be subject to backup withholding (currently at a rate of 24%) on any cash received in the merger, including cash received in lieu of a fractional Wesbanco common stock share. Backup withholding generally will not apply, however, to such shareholders that:

 

    furnish a correct taxpayer identification number, certify that they are not subject to backup withholding on an IRS Form W-9 or successor form and otherwise comply with all the applicable requirements of the backup withholding rules; or

 

    provide proof that they are otherwise exempt from backup withholding.

Any amounts withheld under the backup withholding rules will generally be allowed as a refund or credit against the shareholder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

A shareholder of Farmers Capital common stock who receives Wesbanco common stock as a result of the merger will be required to retain records pertaining to the merger. Each shareholder of Farmers Capital common stock that is required to file a U.S. federal income tax return and who is a “significant holder” that receives Wesbanco common stock in the merger will be required to file a statement with the shareholder’s U.S. federal income tax return in accordance with Treasury Regulation Section 1.368-3 setting forth such shareholder’s basis in the Farmers Capital common stock surrendered (determined immediately prior to the exchange) and the fair market value of the Farmers Capital common stock which is exchanged by that significant holder (determined immediately prior to the exchange). A “significant holder” is a shareholder of Farmers Capital common stock that, immediately before the merger, owned at least 5% of the outstanding stock of Farmers Capital or securities of Farmers Capital with a basis for U.S. federal income taxes of at least $1.0 million.

The foregoing discussion is intended only as a summary and does not purport to be a complete analysis of all potential U.S. federal income tax consequences of the merger. Shareholders are urged to consult their tax advisors concerning the U.S. federal, state, local and foreign tax consequences of the merger to the particular circumstances relevant to each holder.

Representations and Warranties

The merger agreement contains representations and warranties made by Farmers Capital and Wesbanco. These include, among other things, representations relating to:

 

    corporate organization, power and existence;

 

    capitalization;

 

    subsidiaries;

 

    authority to enter into the merger and the binding nature of the merger agreement;

 

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    no breach of organizational documents, law or other agreements as a result of the merger;

 

    financial statements;

 

    SEC filings;

 

    absence of undisclosed liabilities;

 

    third party consents and approvals;

 

    filing of necessary reports with regulatory authorities;

 

    brokers/finder fees;

 

    loans and loan documentation;

 

    internal controls over financial reporting and disclosure controls and procedures;

 

    operation in the ordinary course of business consistent with past practice and absence of material adverse changes since December 31, 2017;

 

    title to real property, ownership and sufficiency of assets;

 

    involvement in litigation and orders issued by governmental authorities;

 

    certain tax matters;

 

    certain regulatory matters;

 

    absence of certain legal proceedings;

 

    employee benefit plans;

 

    takeover laws;

 

    governmental licenses and permits;

 

    insurance;

 

    insider transactions; and

 

    compliance with applicable laws.

Farmers Capital makes additional representations and warranties to Wesbanco in the merger agreement relating to, among other things:

 

    intellectual property rights;

 

    employment agreements; and

 

    vote required.

Some of the representations and warranties contained in the merger agreement are qualified by as to “materiality” or by a “material adverse effect” or “material adverse change” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct is material or would result in a material adverse effect or material adverse change to the company making such representation or warranty). In addition, certain of the representations and warranties in the merger agreement are subject to knowledge qualifications, which means that those representations and warranties would not be deemed untrue, inaccurate or incorrect as a result of matters of which certain officers of the party making the representation did not have actual knowledge. For purposes of the merger agreement, a “material adverse effect” or “material adverse change” with respect to Farmers Capital, Wesbanco or the surviving corporation, as the case may be, generally means a material adverse effect on (i) the financial condition, properties, assets, liabilities, businesses or results of operations of such party and its subsidiaries taken as a whole or (ii) the ability of such party to perform its material obligations under the merger agreement or the transactions contemplated thereby, all subject to certain specified exceptions.

 

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Conduct of Business Prior to the Merger

Pursuant to the merger agreement, Wesbanco and Farmers Capital have agreed that, until the merger becomes effective or the merger agreement is terminated, whichever occurs first, each will, among other things and with some exceptions:

 

    except for the use of information in preparing this proxy statement/prospectus and in connection with other required governmental filings, hold all information relating to the transactions contemplated by the merger agreement in the strictest confidence and not use or disclose any of such information except after such information (A) otherwise is or becomes generally available to the public, (B) was already known to the party receiving the information on a nonconfidential basis prior to the disclosure or (C) is subsequently disclosed to the party receiving the information on a nonconfidential basis by a third party having no obligation of confidentiality to the party disclosing the Information;

 

    use its reasonable best efforts to take, or cause to be taken, all necessary actions required to consummate the transactions contemplated by the merger agreement;

 

    not make any press release or other public announcement concerning the transactions contemplated by the merger agreement without the consent of the other party, except to the extent that such a press release or public announcement may be required by law;

 

    cooperate in furnishing information for the preparation and filing of the proxy statement/prospectus;

 

    cooperate and use its reasonable best efforts to prepare all documentation, to timely effect all filings and to obtain all permits, consents, approvals and authorizations of all third parties and governmental and regulatory authorities that are necessary to consummate the transactions contemplated in the merger agreement;

 

    to the extent practicable, each will consult with the other, in each case subject to applicable laws relating to the exchange of information, with respect to, and will be provided in advance so as to reasonably exercise its right to review in advance, all material written information submitted to any third party or any governmental or regulatory authority in connection with the transactions contemplated by the merger agreement;

 

    consult with the other party with respect to the obtaining of all material permits, consents, approvals and authorizations of all third parties and governmental and regulatory authorities necessary or advisable to consummate the transactions contemplated by the merger agreement and each party will keep the other apprised of the status of material matters relating to completion of the transactions contemplated by the merger agreement;

 

    upon request, furnish the other party with all information concerning itself, its subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with any filing, notice or application made by or on behalf of such other party or of its subsidiaries to any third party or governmental or regulatory authority;

 

    not knowingly take any action that would, or would be reasonably expected to, prevent or impede the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;

 

    not knowingly take any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in the merger agreement being or becoming untrue in any material respect, (ii) any of the conditions of the merger, as set forth in the merger agreement, not being satisfied, or (iii) a material violation of any provision of the merger agreement, except, in each case, as may be required by applicable law;

 

   

must promptly notify the other party in writing if the party becomes aware of any fact or condition that causes or constitutes a breach in any material respect of any of such party’s representations and warranties or would (except as expressly contemplated by the merger agreement) cause or constitute a breach in any material respect of any such representation or warranty had such representation or

 

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warranty been made as of the time of occurrence or discovery of such fact or condition. Should any such fact or condition require any change in the breaching party’s disclosure schedule, that party must promptly deliver to the other party a supplement to its disclosure schedule specifying such change. During the same period, each party must promptly notify the other party of (A) the occurrence of any breach in any material respect of any of the party’s or its subsidiaries’ covenants contained in the merger agreement, (B) the occurrence of any event that may make the satisfaction of the conditions in the merger agreement impossible or unlikely in any material respect or (C) the occurrence of any event that is reasonably likely, individually or taken with all other facts, events or circumstances known to the disclosing party, to result in a material adverse effect with respect to the disclosing party;

 

    coordinate the payment of any dividends and the record date and payment dates relating thereto, such that Farmers Capital shareholders (who will become Wesbanco shareholders after the merger) will not receive two dividends, or fail to receive one dividend, from Farmers Capital and/or Wesbanco for any single calendar quarter; and

 

    assist each other in preparing for the integration of Farmers Capital’s business with the business of Wesbanco after the effective time of the merger, including preparing for the conversionof Farmers Capital’s data processing and information technology systems to those of Wesbanco after the effective time of the merger.

In addition, except as otherwise provided for in the merger agreement, as may be approved in writing by Wesbanco or is otherwise required by law, Farmers Capital has agreed that,:

 

    it will conduct and cause each of its subsidiaries to conduct their respective businesses only in the ordinary and usual course consistent with past practice and in a manner that would not be inconsistent with any representation or warranty contained in the merger agreement;

 

    it will not sell, transfer, mortgage, pledge, or subject to a lien or other encumbrance, any of its material assets except for:

 

  ¡    internal reorganizations or consolidations involving existing subsidiaries that would not be reasonably expected to present a material risk of any material delay in the receipt of any required regulatory approval;

 

  ¡    securitization activities in the ordinary course of business;

 

  ¡    sales of loans, loan participations or real estate owned in the ordinary course of business;

 

  ¡    pledging assets in connection with advances or borrowings from the FHLB in the ordinary course of business and consistent with past practice in amount and frequency; and

 

  ¡    other dispositions of assets, including subsidiaries, if the fair market value of the total consideration received therefrom does not exceed in the aggregate, $150,000;

 

    it will not make any capital expenditures, additions or betterments which exceed $150,000 in the aggregate;

 

    it will not enter into any material contract, commitment or transaction, that would be reasonably expected to have a material adverse effect on Farmers Capital, materially impair Farmers Capital’s ability to perform its obligations under the merger agreement, or prevent or materially delay the consummation of the transactions contemplated by the merger agreement;

 

    it will not declare, pay or set aside any dividends or other distributions on any shares of Farmers Capital common stock other than (A) Farmers Capital’s regular quarterly cash dividend for each fiscal quarter ending on or after June 30, 2018 in an amount not to exceed $0.125 per share; provided, however, that for fiscal quarters ending on or after December 31, 2018, such cash dividend amount shall not exceed $0.15 per share, (B) dividends from any Farmers Capital subsidiary to Farmers Capital, and (C) in connection with and as required by the terms of any trust preferred securities issued by a Farmers Capital subsidiary;

 

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    it will not purchase, redeem or otherwise acquire any shares of Farmers Capital capital stock other than pursuant to repurchase rights of Farmers Capital or in settlement of any withholding obligation in connection with any Farmers Capital stock option plans;

 

    it will not issue or grant any options or other rights to acquire shares of Farmers Capital capital stock;

 

    it will not effect, directly or indirectly, any share split or share dividend, recapitalization, combination, exchange of shares, readjustment or other reclassification;

 

    it will not amend or propose to amend its articles of incorporation, bylaws or other government documents except as expressly contemplated by the merger agreement;

 

    it will not merge or consolidate with any other person or otherwise reorganize except as permitted by the merger agreement;

 

    it will not acquire any portion of the assets, business or properties of any other entity other than:

 

  ¡    by way of foreclosures;

 

  ¡    acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary and usual course of business consistent with past practice; and

 

  ¡    internal reorganizations or consolidations involving existing subsidiaries that would not be reasonably expected to present a material risk of any material delay in the receipt of any required regulatory approval;

 

    other than in the ordinary course of business consistent with past practice and except as required by law or certain existing contractual obligations, it will not enter into, establish, adopt or amend any pension, retirement, stock option, stock purchase, savings, profit-sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement (or similar arrangement) related thereto, in respect of any director, officer or employee of Farmers Capital, or take any action to accelerate the vesting or exercisability of stock options, restricted stock or other compensation or benefits payable thereunder;

 

    except as required by law or certain existing contractual obligations, it will not announce or pay any general wage or salary increase or bonus, other than normal wage or salary increases not to exceed an average of 3% for all Farmers Capital employees, and year-end bonuses for the 2018 fiscal year substantially consistent with past practices, but not in excess of $1,600,000 in the aggregate, or enter into or amend or renew any employment, consulting, severance or similar agreements or arrangements with any officer, director or employee of Farmers Capital;

 

    it will not incur or guarantee any long-term indebtedness for borrowed money or issue or sell any long-term debt securities other than in replacement of existing or maturing debt, certain inter-company indebtedness of its subsidiaries, or in the ordinary course of business consistent with past practice;

 

    it will not materially change its accounting principles, practices or methods, other than as may be required GAAP or any governmental authority;

 

    it will not materially change its existing deposit policy or incur deposit liabilities, other than deposit liabilities incurred in the ordinary course of business consistent with past practice, or accept any brokered deposit having a maturity longer than 365 days, other than in the ordinary course of business;

 

    it will not sell, purchase, enter into a lease, relocate, open or close any banking or other office, or file any application pertaining to such action with any regulatory authority;

 

    it will not change any of its commercial or consumer loan policies in any material respect, including credit underwriting criteria, or make any material exceptions thereto, unless so required by applicable law or any governmental authority;

 

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    it will not purchase mortgage loan servicing rights and, other than in the ordinary course of business, sell any mortgage loan servicing rights;

 

    it will not commence or settle any material claim, action or proceeding, except settlements involving only monetary remedies in amounts, in the aggregate, that are not material to Farmers Capital;

 

    it will not adopt a plan of complete or partial liquidation or dissolution, restructuring, recapitalization or reorganization or resolutions providing for or authorizing such a liquidation or dissolution, restructuring, recapitalization or reorganization;

 

    it will not make or change any material tax election, file any amended tax return, fail to timely file any tax return, enter into any closing agreement, settle or compromise any material liability with respect to taxes, agree to any material adjustment of any tax attribute, file any claim for a refund of taxes, or consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment;

 

    it will, and will cause its subsidiaries to, use their commercially reasonable efforts to maintain and keep their respective properties and facilities in their present condition and working order, ordinary wear and tear excepted, except with respect to such properties and facilities, the loss of which would not reasonably be expected to have a material adverse effect on Farmers Capital;

 

    it will, and will cause its subsidiaries to, perform all of their obligations under all agreements relating to or affecting their respective properties, rights and businesses, except where nonperformance would not have a material adverse effect on Farmers Capital;

 

    it will, and will cause its subsidiaries to, use their commercially reasonable efforts to maintain and preserve their respective business organizations intact, to retain present key employees and to maintain the respective relationships of customers, suppliers and others having business relationships with them;

 

    it will maintain its insurance at existing levels with reputable insurers and upon renewal or termination of such insurance, and Farmers Capital and its subsidiaries will use commercially reasonable efforts to renew or replace such insurance coverage with reputable insurers in respect of the amounts, premiums, types and risks insured or maintained on December 31, 2017;

 

    upon reasonable advance notice, it will, and will cause its subsidiaries to, afford to Wesbanco and to Wesbanco’s officers, employees, investment bankers, attorneys, accountants and other advisors reasonable and prompt access during normal business hours, until the merger becomes effective or the merger agreement is terminated, to all their respective properties, assets, books, contracts, commitments, officers, employees, attorneys, accountants, auditors, other advisors and representatives and records;

 

    except as excluded in the merger agreement, it will, and will cause its subsidiaries to, make available to Wesbanco on a prompt basis (A) a copy of each report, schedule, form, statement and other document filed or received by it, until the merger becomes effective or the merger agreement is terminated, pursuant to the requirements of domestic or foreign laws and (B) all other information concerning its business, properties and personnel as Wesbanco may reasonably request; provided, however, that Wesbanco will not unreasonably interfere with Farmers Capital’s business operations;

 

    it will not, and will not permit any person acting on its behalf to, solicit, initiate or knowingly encourage or participate in any discussions or furnish any information or enter into any agreement or letter of intent with respect to any proposal that is reasonably likely to lead to the acquisition of assets or businesses constituting 20% or more of the total consolidated assets of Farmers Capital and its subsidiaries or 20% or more of the outstanding Farmers Capital’s common stock; provided that the Farmers Capital board of directors does not determine in good faith, after consulting with legal counsel, that the failure to take any such action would violate its fiduciary duties;

 

    it will promptly provide Wesbanco with a list of certain loans after the end of each quarter, at other times after reasonably requested by Wesbanco, and upon closing of the merger;

 

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    it will use commercially reasonable efforts to enter into contracts for the sale of certain loans, identified by Wesbanco and Farmers Capital in the schedules to the merger agreement, conditioned on the consummation of the merger in accordance with the merger agreement; and

 

    if Wesbanco determines in its sole discretion to terminate the Farmers Capital 401(k) plan, Farmers Capital will terminate the Farmers Capital 401(k) plan effective immediately prior to and conditioned upon the occurrence of the effective time of the merger, and the accounts of all participants and beneficiaries in the Farmers Capital 401(k) plan as of the effective time of the merger will become fully vested upon termination of the Farmers Capital 401(k) plan.

In addition, Wesbanco has further agreed that:

 

    it will provide certain benefits to employees of Farmers Capital and its subsidiaries whose employment is not continued or terminated without cause within certain time periods after the merger;

 

    it will use commercially reasonable efforts to cause the shares of Wesbanco common stock to be issued in the merger to be approved for listing on the Nasdaq Global Select Market;

 

    it will honor the terms of certain Farmers Capital benefit plans and agreements;

 

    it will create a retention bonus pool for certain Farmers Capital employees to incentivize those employees to remain employed by Farmers Capital or Wesbanco through the end of the month during which the conversion of Farmers Capital’s data processing system occurs;

 

    it will enter into retention restricted stock agreements with certain Farmers Capital employees pursuant to which Wesbanco will grant, immediately after and subject to the occurrence of the effective time of the merger, restricted shares of Wesbanco common stock which will cliff-vest on the second anniversary of the grant date if such employee remains employed by Wesbanco Bank at that time;

 

    it will provide continued indemnification and, for six years after the effective time of the merger, it will provide related insurance for the directors and officers of Farmers Capital and its subsidiaries subject to a maximum premium expenditure cap;

 

    it will cause one current Farmers Capital director to be appointed to the board of directors of Wesbanco until the next meeting of Wesbanco shareholders and will nominate such director for election at such meeting and until he or she has served at least a full three-year term on the Wesbanco board of directors;

 

    it will create an advisory board for certain Kentucky markets to which each Farmers Capital director will be appointed for at least one year;

 

    it will, and will cause its subsidiary to, vote or cause to be voted all shares of Famers Capital common stock owned by them directly or indirectly or for which they have voting authority as of the record date for the Farmers Capital special meeting in favor of the merger agreement and the merger;

 

    it will, prior to the effective time of the merger, approve, pursuant to SEC rules and interpretations, any acquisition of equity securities of Wesbanco resulting from the transactions contemplated by by the merger agreement by each officer and director of Farmers Capital who becomes an officer or director of Wesbanco as of or following the effective time of the merger and who is subject to Section 16 of the Exchange Act; and

 

    it will conduct, and cause its subsidiaries to conduct, its business in the ordinary and usual course consistent with past practice and will not take any action that would have a materially adverse effect on the surviving corporation without Farmers Capital’s written consent.

 

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Conditions to the Merger

The respective obligations of Wesbanco and Farmers Capital to complete the merger are subject to the following conditions, among others:

 

    the approval of the merger agreement by the shareholders of Farmers Capital;

 

    the absence of any order to restrain, enjoin, or otherwise prevent the consummation of the merger entered by any court or administrative body which remains in effect on the date the merger closes;

 

    the effectiveness of the registration statement relating to the shares of Wesbanco common stock to be issued in the merger on the date the merger closes;

 

    the absence of a pending or threatened stop order or proceedings seeking a stop order suspending the effectiveness of the registration statement;

 

    the receipt of all approvals of governmental authorities and regulatory authorities required to consummate the merger, such approvals remaining in full force and effect and all statutory waiting periods in respect thereof having expired;

 

    that the merger will not violate any non-appealable final order, decree or judgment of any court or governmental body having competent jurisdiction;

 

    the receipt, on or before the date the merger closes, of an opinion from each party’s tax counsel to the effect that for federal income tax purposes the merger will be treated as a tax-free reorganization within the meaning of Section 368(a) of the Code, and regarding certain other tax matters;

 

    the accuracy in all material respects of the representations and warranties of the parties and the performance by the parties in all material respects of all of their obligations set forth in the merger agreement, and written certification to that effect from an appropriate officer; and

 

    the shares of Wesbanco common stock to be issued in the merger will have been approved for listing on the Nasdaq Global Select Market.

In addition to the conditions discussed above, Wesbanco’s obligation to consummate the merger is conditioned upon (i) the receipt of all consents and approvals required to be obtained by Wesbanco (other than from governmental authorities and regulatory authorities) and (ii) shareholders holding not more than 10% of the outstanding shares of Farmers Capital common stock shall have exercised dissenters’ rights under Kentucky law.

Termination of the Merger Agreement

The merger agreement may be terminated at any time prior to the closing of the merger:

 

    by mutual written consent of Farmers Capital and Wesbanco;

 

    by either Wesbanco or Farmers Capital if the other party has breached any of its representations or warranties in a manner that would have a material adverse effect or if the other party has failed to comply in any material respect with any of its covenants or agreements under the merger agreement and which breach or non-compliance is not cured within thirty calendar days of notice thereof;

 

    by either Wesbanco or Farmers Capital if the merger has not closed by March 31, 2019, and such failure to close is not caused by a breach of the merger agreement by the terminating party;

 

    by either Wesbanco or Farmers Capital if the Farmers Capital shareholders do not approve the merger agreement;

 

    by either Wesbanco or Farmers Capital if the governmental approvals required to consummate the merger are denied by a final non-appealable action; or

 

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Wesbanco may terminate the merger agreement:

 

    if Farmers Capital’s board of directors:

 

  (A) fails to recommend in this proxy statement/prospectus that Farmers Capital shareholders approve the merger agreement, or withdraws, modifies or qualifies such recommendation in a manner adverse to Wesbanco, or resolves to do so, or fails to publicly reaffirm such recommendation within three (3) business days after Wesbanco requests in writing that such action be taken,

 

  (B) fails to recommend against acceptance of a tender offer or exchange offer for outstanding shares of Farmers Capital common stock that has been publicly disclosed (other than by Wesbanco) within ten (10) business days after the announcement or commencement of such tender or exchange offer, in any such case whether or not otherwise permitted by the merger agreement,

 

  (C) recommends or endorses an acquisition proposal, or fails to issue a press release announcing its opposition to such acquisition proposal within ten (10) business days after an acquisition proposal is publicly announced,

 

  (D) breaches its obligations to call and hold a special meeting of Farmers Capital shareholders to vote on the merger agreement within 60 days after the Registration Statement on Form S-4 is declared effective, or

 

  (E) breaches Farmers Capital’s covenant not to solicit competing offers in any material respect,

provided, that if the Farmers Capital special meeting is scheduled for a date that is within the ten (10) business day time periods set forth in (D) above, then such time periods shall be reduced to end on the day immediately preceding the scheduled date of the Farmers Capital special meeting or Farmers Capital may postpone or adjourn its special meeting for up to, but no more than, twenty nine (29) calendar days.

In addition, Farmers Capital may terminate the merger agreement:

 

    in order to enter into an agreement with respect to an unsolicited proposal that if consummated would be reasonably likely to result in a transaction more favorable to Farmers Capital’s shareholders from a financial point of view, provided that certain other terms and conditions contained in the merger agreement are also complied with, and Farmers Capital pays the termination fee described below; or

 

    if there is a substantial decline in Wesbanco’s stock price that is not generally experienced by comparable banks, as described in detail below.

The operation of the conditions permitting Farmers Capital to terminate the merger agreement based on a decrease in the market price of Wesbanco common stock reflects the parties’ agreement that Farmers Capital shareholders will assume:

 

    the risk of a decline in value of the Wesbanco common stock to $34.188 per share under any circumstances, and

 

    the risk of a more significant decline in value of Wesbanco common stock unless the percentage decline from $42.735 to the average value of Wesbanco common stock during the fifteen (15) consecutive trading day period ending on the Determination Date is more than 20% greater than the percentage decrease, if any, in the closing value of the Nasdaq Bank Index from April 18, 2018 to the Determination Date.

The purpose of this provision is that a decline in the value of Wesbanco’s common stock which is comparable to the decline in the value of an index of comparable publicly-traded stocks is indicative of a broad-based change in market and economic conditions affecting the financial services industry generally rather than factors which affect the value of the Wesbanco common stock in particular.

Specifically, Farmers Capital may terminate the merger agreement during the five-day period (“Election Period”) beginning on the later of (i) the first date on which all necessary bank regulatory approvals or

 

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non-objections have been received (disregarding any waiting period) or (ii) the date on which the Farmers Capital’s shareholders approve the merger agreement (the “Determination Date”) if all of the following occur:

 

  (i) the average daily closing price of a share of Wesbanco common stock during the fifteen (15) consecutive trading days ending on the Determination Date (the “Wesbanco Ending Price”) is less than $34.188; and

 

  (ii) the quotient obtained by dividing the Wesbanco Ending Price by $42.735 (the “Wesbanco Starting Price”) is less than the difference obtained by subtracting 0.20 from the quotient obtained by dividing the closing value of the Nasdaq Bank Index on the Determination Date by 4,038.86, which was the closing value of the Nasdaq Bank Index on April 18, 2018 (the “Index Ratio”); and

 

  (iii) Farmers Capital notifies Wesbanco in writing of Farmers Capital’s intention to terminate the merger agreement during the Election Period.

Even if the first two conditions described above are met, the Farmers Capital board of directors may elect not to terminate the merger agreement. Any decision to terminate the merger agreement will be made by the Farmers Capital board of directors in light of all of the circumstances existing at the time. Prior to making any decision to terminate the merger agreement, the Farmers Capital board of directors would consult with its financial and other advisors and would consider all financial and other information it deemed relevant to its decision, including whether the then current consideration to be received in the merger would deliver more value to Farmers Capital shareholders than the value that could be expected if Farmers Capital were to continue as an independent company. In addition, the Farmers Capital board of directors would consider whether, in light of market and other industry conditions at the time of such decision, the exchange ratio continued to be fair from a financial point of view to Farmers Capital’s shareholders. If Farmers Capital elected not to terminate the merger agreement, which it could do without any action on the part of Farmers Capital shareholders, the exchange ratio of Wesbanco common stock would remain 1.053.

The operation and effect of the provisions of the merger agreement dealing with a decline in the market price of Wesbanco’s common stock may be illustrated by the following three scenarios:

(1) One scenario is that the Wesbanco Ending Price is above $34.188. In this event, Farmers Capital would not have the right to terminate the merger agreement pursuant to these provisions.

(2) A second scenario is that the Wesbanco Ending Price is less than $34.188, but the percentage decline in the price of the Wesbanco common stock from the initial measurement price of $42.735 is not more than 20% greater than the percentage decline in the closing value of the Nasdaq Bank Index. Under this scenario, Farmers Capital would not have the right to terminate the merger agreement.

(3) A third scenario is that the Wesbanco Ending Price is less than $34.188 and the percentage decline in the price of Wesbanco common stock from the initial measurement price is more than 20% greater than the decline in the closing value of the Nasdaq Bank Index. Under this scenario, Farmers Capital would have the right, but not the obligation, to terminate the merger agreement.

If, between April 18, 2018 and the Determination Date, Wesbanco declares or effects a stock dividend, reclassification, recapitalization, split-up, combination, exchange of shares or similar transaction, the prices for the common stock of Wesbanco will be appropriately adjusted for purposes of the termination provision discussed above.

If either Farmers Capital or Wesbanco terminates the merger agreement as provided above, all further obligations of Farmers Capital and Wesbanco under the merger agreement, except with respect to specified matters, will terminate.

 

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Expenses

Whether or not the merger is completed, each party will pay all legal and accounting fees and other costs and expenses it incurs in connection with the merger agreement and the transactions contemplated by the merger agreement. Wesbanco will pay all governmental and regulatory authority fees incurred in connection with the transactions contemplated by the merger agreement.

Termination Fee

The merger agreement provides that Farmers Capital may be required to pay a termination fee to Wesbanco of $12,000,000 in the following circumstances:

 

    If Wesbanco terminates the merger agreement because Farmers Capital’s board of directors:

 

  ¡    fails to recommend in this proxy statement/prospectus that Farmers Capital shareholders approve the merger agreement, or withdraws, modifies or qualifies such recommendation in a manner adverse to Wesbanco, or resolves to do so, or fails to publicly reaffirm such recommendation within three (3) business days after Wesbanco requests in writing that such action be taken,

 

  ¡    fails to recommend against acceptance of a tender offer or exchange offer for outstanding shares of Farmers Capital common stock that has been publicly disclosed (other than by Wesbanco) within ten (10) business days after the announcement or commencement of such tender or exchange offer, in any such case whether or not otherwise permitted by the merger agreement,

 

  ¡    recommends or endorses an acquisition proposal, or fails to issue a press release announcing its opposition to such acquisition proposal within ten (10) business days after an acquisition proposal is publicly announced,

 

  ¡    breaches its obligations to call and hold a special meeting of Farmers Capital shareholders to vote on the merger agreement within 60 days after the Registration Statement on Form S-4 is declared effective, or

 

  ¡    breaches Farmers Capital’s covenant not to solicit competing offers in any material respect,

provided, that if the Farmers Capital special meeting is scheduled for a date that is within the ten (10) business day time periods set forth above, then such time periods shall be reduced to end on the day immediately preceding the scheduled date of the Farmers Capital special meeting or Farmers Capital may postpone or adjourn its special meeting for up to, but no more than, twenty nine (29) calendar days;

 

    If Farmers Capital terminates the merger agreement in order to enter into an agreement with respect to an unsolicited proposal that if consummated would be reasonably likely to result in a transaction more favorable to Farmers Capital’s shareholders from a financial point of view;

 

    If the merger agreement is terminated by either party (A) after the March 31, 2019 outside termination date without the shareholders of Farmers Capital having approved the merger agreement, or (B) because the shareholders of Farmers Capital voted against approval of the merger agreement; and (i) an acquisition proposal with respect to Farmers Capital was publicly announced, disclosed or otherwise communicated to the Farmers Capital board or directors prior to March 31, 2019 or prior to the special meeting of the shareholders of Farmers Capital, as applicable, and (ii) within 12 months of such termination, Farmers enters into an agreement with respect to, or Farmers shall have consummated, an acquisition transaction with anyone other than Wesbanco; or

 

   

If (A) prior to the effective date of the merger Farmers Capital had committed a material breach of any of its representations, warranties, covenants or agreements, and (B) an acquisition proposal with respect to Farmers Capital was publicly announced, disclosed or communicated to Farmers Capital’s board of directors prior to such breach by Farmers Capital or during the 30-day cure period resulting in

 

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termination of the merger agreement by Wesbanco, and (C) within 12 months of such termination, Farmers Capital consummates an acquisition transaction or enters into any definitive agreement with respect to an acquisition transaction.

As used in the foregoing and as defined in the merger agreement, “acquisition proposal” means any inquiry, offer or proposal (other than an inquiry offer or proposal from Wesbanco), whether or not in writing, contemplating, relating to, or that could reasonably be expected to lead to, an acquisition transaction. An “acquisition transaction” means:

 

    any transaction or series of transactions involving any merger, consolidation, recapitalization, share exchange, liquidation, dissolution or similar transaction involving Farmers Capital or any of its subsidiaries;

 

    any transaction pursuant to which any third party or group acquires or would acquire (whether through sale, lease or other disposition), directly or indirectly, any assets of Farmers Capital or any of its subsidiaries representing, in the aggregate, 20% or more of the assets of Farmers Capital and its subsidiaries on a consolidated basis;

 

    any issuance, sale or other disposition of (including by way of merger, consolidation, share exchange or any similar transaction) securities (or options, rights or warrants to purchase or securities convertible into, such securities) representing 20% or more of the votes attached to the outstanding securities of Farmers Capital or any of its subsidiaries;

 

    any tender offer or exchange offer that, if consummated, would result in any third party or group beneficially owning 20% or more of any class of equity securities of Farmers Capital or any of its subsidiaries; or

 

    any transaction that is similar in form, substance or purpose to one or more of the transactions listed in the preceding paragraphs.

Amendment or Waiver

The provisions of the merger agreement may be waived at any time by the party that is entitled to the benefit of those provisions, which requires action be taken by the board of directors of that party. Any of the terms of the merger agreement may be amended or modified in writing before the special meeting of the Farmers Capital shareholders. The merger agreement may be amended after the special meeting and prior to the closing of the merger only to the extent permitted by applicable laws and to the extent the amendment does not alter or change the amount or kind of the merger consideration to be received by Farmers Capital shareholders in the merger.

Effective Date of the Merger

We expect the merger to be completed as soon as practicable after all regulatory approvals and shareholder approvals have been received. We expect this to occur during the second half of 2018.

 

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OTHER MATERIAL AGREEMENTS RELATING TO THE MERGER

Voting Agreements

The following summary of the voting agreements is qualified by reference to the complete text of the form of voting agreement, which is Exhibit B to the merger agreement, which is attached to this document as Annex A and incorporated into this document by reference.

In connection with the merger agreement, Wesbanco entered into voting agreements with all of Farmers Capital’s directors and certain of its executive officers, who are J. Barry Banker, R. Terry Bennett, Michael J. Crawford, E. Bruce Dungan, Mark A. Hampton, Lloyd C. Hillard, Jr., Dr. William C. Nash, David R. O’Bryan, John C. Roach, Fred N. Parker, David Y. Phelps, Jr., Marvin E. Strong, Jr., Fred Sutterlin and Judy Worth. In the voting agreements, each of these shareholders has agreed to vote all of his or her shares of Farmers Capital common stock:

 

    in favor of approval of the merger agreement and the transactions described in the merger agreement, including the merger;

 

    against any action or agreement that could reasonably be expected to result in a breach of any covenant, representation or warranty, or any other obligation or agreement of Farmers Capital contained in the merger agreement, or of the shareholder contained in the voting agreement, or that could reasonably be expected to impede, interfere with, delay, discourage, adversely affect, inhibit or preclude the timely consummation of the merger or the fulfillment of a condition under the merger agreement to Farmers Capital’s and Wesbanco’s respective obligations to consummate the merger or change in any manner the voting rights of any class of shares of Farmers Capital; and

 

    against any Acquisition Proposal, or any agreement or transaction that is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, discourage or adversely affect the consummation of the merger or any of the other transactions described in the merger agreement.

Under the voting agreements, each of Farmers Capital’s executive officers and directors also agreed not to, and not to permit any of his or her affiliates, to:

 

    initiate, solicit, induce or knowingly encourage, or take any action to facilitate the making of, any inquiry, offer or proposal which constitutes, or could reasonably be expected to lead to, an Acquisition Proposal;

 

    participate in any discussions or negotiations regarding an Acquisition Proposal;

 

    enter into any agreement with respect to an Acquisition Proposal;

 

    solicit proxies or become a participant in a solicitation with respect to an Acquisition Proposal or otherwise encourage or assist any party in taking or planning any action that would compete with, restrain or otherwise serve to interfere with or inhibit the timely consummation of the merger in accordance with the terms of the merger agreement;

 

    initiate a shareholders’ vote or action by consent of Farmers Capital shareholders with respect to an Acquisition Proposal; or

 

    except by reason of the voting agreement, become a member of a group with respect to any Farmers Capital voting securities that takes any action in support of an Acquisition Proposal.

In addition, each of Farmers Capital’s executive officers and directors also agreed not to dispose of or encumber his or her shares of Farmers Capital common stock, except under limited circumstances, before Farmers Capital’s shareholders approve the merger agreement. The voting agreements terminate immediately upon the earlier of the effective time of the merger or the termination of the merger agreement in accordance with its terms.

 

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As of the record date, there were approximately 228,243 shares of Farmers Capital common stock subject to the voting agreements, which represent approximately 3.0% of the outstanding shares of Farmers Capital common stock as of that date.

 

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INFORMATION ABOUT WESBANCO

Wesbanco is a bank holding company headquartered in Wheeling, West Virginia. Wesbanco provides a full range of financial services including retail banking, corporate banking, personal and corporate trust services, brokerage services, mortgage banking and insurance. Wesbanco offers these services through two reportable segments, community banking and trust and investment services. As of March 31, 2018, Wesbanco had approximately $10.2 billion of consolidated total assets, $7.2 billion of deposits, $6.3 billion of loans and $1.4 million of shareholders’ equity. As of March 31, 2018, Wesbanco operated through 172 financial centers in West Virginia, Ohio, Indiana, Kentucky and Pennsylvania. Wesbanco’s main office is located at One Bank Plaza, Wheeling, West Virginia, 26003 and its telephone number is (304) 234-9000.

Wesbanco’s community banking segment offers services traditionally offered by full-service commercial banks, including commercial demand, individual demand and time deposit accounts, as well as commercial, mortgage and individual installment loans, and certain non-traditional offerings, such as insurance and securities brokerage services. The trust and investment services segment offers trust services as well as various alternative investment products including mutual funds. The market value of assets managed or held in custody by the trust and investment services segment was approximately $4.0 billion at March 31, 2018. These assets are held by Wesbanco in fiduciary or agency capacities for their customers.

Wesbanco offers additional services through its non-banking subsidiaries, Wesbanco Insurance Services, Inc., a multi-line insurance agency specializing in property, casualty and life insurance, and benefit plan sales and administration for personal and commercial clients; and Wesbanco Securities, Inc., a full service broker-dealer, which also offers discount brokerage services. Wesbanco Asset Management, Inc., which was incorporated in 2002, holds certain investment securities and loans in a Delaware-based subsidiary. Wesbanco Properties, Inc. holds certain commercial real estate properties. The commercial property is leased to Wesbanco Bank and to non-related third parties. Wesbanco Bank’s Investment Department also serves as investment adviser to a family of mutual funds, namely the “WesMark Funds”. The fund family is composed of the WesMark Growth Fund, the WesMark Balanced Fund, the WesMark Small Company Growth Fund, the WesMark Government Bond Fund, the WesMark West Virginia Municipal Bond Fund and the WesMark Tactical Opportunity Fund.

No material portion of the deposits of Wesbanco Bank has been obtained from a single or small group of customers, and the loss of any customer’s deposits or a small group of customers’ deposits would not have a material adverse effect on the business of Wesbanco.

As part of its operations, Wesbanco regularly evaluates the potential acquisition of, and holds discussions with, various financial institutions and other businesses of a type eligible for financial holding company investment. In addition, Wesbanco regularly analyzes the values of, and submits bids for, the acquisition of customer-based funds and other liabilities and assets of such financial institutions and other businesses. As a general rule, Wesbanco publicly announces such material acquisitions when a definitive agreement has been reached.

For further information about Wesbanco, please see “Where You Can Find More Information About Wesbanco and Farmers Capital.”

 

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INFORMATION ABOUT FARMERS CAPITAL

Farmers Capital is a financial holding company which has one wholly-owned subsidiary bank, United Bank & Capital Trust Company (“United Bank”) in Frankfort, KY. Farmers Capital was originally formed as a bank holding company under the Bank Holding Company Act of 1956, as amended, on October 28, 1982 under the laws of the Commonwealth of Kentucky. During 2016, Farmers Capital elected financial holding company status. Farmers Capital’s bank subsidiary, United Bank, provides a wide range of banking and bank-related services to customers throughout Central and Northern Kentucky. In February 2017, Farmers Capital merged three of its subsidiary banks (United Bank & Trust Company in Versailles, KY; First Citizens Bank, Inc. in Elizabethtown, KY; and Citizens Bank of Northern Kentucky, Inc. in Newport, KY) and its data processing subsidiary (FCB Services, Inc. in Frankfort, KY) into its subsidiary bank Farmers Bank & Capital Trust Company in Frankfort, KY, the name of which was immediately changed under the merger to United Bank & Capital Trust Company.

Farmers Capital provides a broad range of financial services at its 34 locations in 21 communities throughout Central and Northern Kentucky to individual, business, agriculture, governmental, and educational customers. Its primary deposit products are checking, savings, and term certificate accounts. Its primary lending products are residential mortgage, commercial lending, and consumer installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Other services provided by Farmers Capital include, but are not limited to, cash management services, issuing letters of credit, safe deposit box rental, and providing funds transfer services. Farmers Capital has other financial instruments, including deposit accounts in other financial institutions and federal funds sold, which could potentially represent a concentration of credit risk.

Farmers Capital’s offices are located at 202 West Main Street Frankfort, Kentucky 40601 and its phone number is (502) 227-1668.

As of March 31, 2018, Farmers Capital had approximately $1.7 billion of consolidated total assets, $1.4 billion of deposits, $1.0 billion of loans and $194 million of shareholders’ equity.

For further information about Farmers Capital, please see “Where You Can Find More Information About Wesbanco and Farmers Capital.”

 

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COMPARATIVE RIGHTS OF SHAREHOLDERS

After the merger, you will become a shareholder of Wesbanco and your rights will be governed by Wesbanco’s articles of incorporation, Wesbanco’s bylaws and the West Virginia Business Corporations Act, which we refer to as WVBCA. The following summary discusses differences between Wesbanco’s articles of incorporation and bylaws and Farmers Capital’s articles of incorporation and bylaws and the differences between the Kentucky Business Corporation Act, which we refer to as KBCA, and the WVBCA. For information as to how to get the full text of each party’s respective articles of incorporation or bylaws, see “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page 96.

We do not intend for the following summary to be a complete statement of the differences affecting the rights of Farmers Capital’s shareholders who become Wesbanco shareholders, but rather as a summary of the more significant differences and certain important similarities between the rights of the shareholders of Farmers Capital and Wesbanco. We qualify the following summary in its entirety by reference to the articles of incorporation and bylaws of Wesbanco, Farmers Capital’s articles of incorporation and bylaws and applicable laws and regulations. We urge you to read Wesbanco’s articles of incorporation and bylaws, Farmers Capital’s articles of incorporation and bylaws, and the relevant provisions of the WVBCA, the KBCA and federal law governing bank holding companies in their entirety.

 

Wesbanco

  

Farmers Capital

Capital Stock

Authorized Shares. Wesbanco is authorized to issue 100,000,000 shares of Wesbanco common stock, $2.0833 par value per share, and 1,000,000 shares of preferred stock, without par value. There were 46,568,911 shares of Wesbanco common stock issued and outstanding as of April 23, 2018 and no shares were held in treasury.

 

Preferred Stock. There were no shares of Wesbanco preferred stock issued and outstanding as of March 31, 2018.

 

The Wesbanco common stock is traded on the NASDAQ Global Select Market.

  

Authorized Shares. Farmers Capital is authorized to issue 15,608,000 shares, comprised of 14,608,000 shares of common stock, $0.125 par value per share, and 1,000,000 shares of preferred stock, without par value. There were 7,519,814 shares of Farmers Capital common stock issued and outstanding as of May 1, 2018 and no shares were held in treasury.

 

Preferred Stock. There were no shares of Farmers Capital preferred stock issued and outstanding as of March 31, 2018.

 

The Farmers Capital common stock is traded on the NASDAQ Capital Market

Voting Rights

Common Stock. Pursuant to Wesbanco’s articles of incorporation, holders of Wesbanco common stock are generally entitled to one vote for each share of common stock.

 

Preferred Stock. Wesbanco’s board of directors is authorized to determine the voting rights of preferred stock.

  

Common Stock. Each holder of Farmers Capital’s common stock generally has the right to cast one vote for each share of Farmers Capital common stock held of record on all matters submitted to a vote of shareholders.

 

Preferred Stock. Farmers Capital’s board of directors is authorized to determine the voting rights of preferred stock.

Dissenters’ Rights
Under the WVBCA, shareholders are entitled to appraisal rights with respect to corporate actions    The KBCA generally provides shareholders of a Kentucky corporation that is involved in certain

 

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involving certain mergers, share exchanges, asset dispositions, and certain article amendments that reduce the shares of a shareholder to a fraction of a share where the corporation has an obligation to repurchase the share fraction.

 

No appraisal rights exist in the case of a merger, however, if (i) the stock of the acquiring corporation is listed on a national securities exchange or designated as a national market system security by the NASD, or (ii) the stock has at least 2,000 shareholders and the outstanding shares of a class or series has a market value of at least $20 million, exclusive of the value of the shares held by subsidiaries, senior executives, directors, and beneficial shareholders owning more than 10% of the shares.

   mergers, share exchanges, sales or exchanges of all or substantially all of its property, conversions, and article amendments, the right to dissent from that action and obtain payment of the fair value of their shares.
Distributions

Wesbanco’s board of directors may declare dividends upon the shares of Wesbanco at any regular or special meeting of the board of directors. Dividends may be paid in cash, property, or shares of Wesbanco’s capital stock.

 

The WVBCA allows a corporation to make distributions to its shareholders so long as the corporation would be able to pay its debts as they become due in the usual course of business or the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.

  

The KBCA allows a corporation to make distributions to its shareholders so long as the corporation would be able to pay its debts as they become due in the usual course of business or the corporation’s total assets would not be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution to shareholders whose preferential rights are superior to those receiving the distribution.

 

Farmers Capital’s board of directors may declare dividends on shares of common stock and preferred stock, if applicable, out of funds legally available therefor. The payment of dividends on common stock is subject to certain limitations imposed by law. Under Federal Reserve policy, a bank holding company such as Farmers Capital generally should not declare a cash dividend unless the available net income of the bank holding company is sufficient to fully fund the dividend. Further, the prospective rate of earnings retention should appear to be consistent with its capital needs, asset quality and overall financial condition. In addition, Farmers Capital may not pay dividends that would render it insolvent.

Notice and Adjournment of Shareholder Meetings
Wesbanco’s bylaws provide that written notice must be served, either personally, by mail, or by electronic transmission, upon each shareholder of record entitled to vote at such meeting, not less than five days prior to the meeting. Wesbanco’s bylaws provide that shareholders    Farmers Capital’s bylaws provide that written or printed notice must be delivered, either personally or by mail, at least 10 and not more than 60 days prior to a meeting of the shareholders, to any shareholder entitled to vote at such meeting. The KBCA provides

 

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may adjourn a meeting at which a quorum is not present without notice other than announcement at the meeting.    that, unless a corporation’s bylaws provide otherwise, a corporation is not required to provide notice of an adjourned meeting, other than announcement at the meeting, except if a new record date is fixed. If a new record date is fixed notice of the adjournment must be given to each shareholder who will be entitled to vote at the adjourned meeting as of the new record date.
Call of Special Meeting of Shareholders
Wesbanco’s bylaws provide that special meetings of the shareholders may be called by the board of directors, the President, or any number of shareholders owning in the aggregate at least 10% of the number of shares outstanding.    A special meeting of shareholders may be called by the board of directors of Farmers Capital or by the holders of not less than one third (33 1/3 %) of all of the outstanding shares of common stock entitiled to vote at such special meeting, who have demanded such special meeting in writing delivered to Farmers Capital’s Secretary.
Director Number and Term
Wesbanco’s bylaws provide it has a classified board of directors, which is divided into three classes as nearly equal as possible, with each director having a staggered, three-year term. The board of directors will consist of not less than 15 nor more than 35 members, with the number to be set by the board of directors at the annual meeting. The board of directors has the power to vary this number at any meeting. Currently, the Wesbanco board of directors has 16 members.   

Authority to direct the management of Farmers Capital’s business and affairs is vested in its board of directors. Farmers Capital’s articles of incorporation provide for a board of directors consisting of not fewer than 9 nor more than 15 members, with the exact number to be fixed by Farmers Capital’s bylaws from time to time. Currently, Farmers Capital’s bylaws provide for a board of directors consisting of 12 members.

 

Farmers Capital’s board of directors is divided into three classes as nearly equal in number as possible. Each class of directors serves a three-year term, with one class of directors elected at each annual meeting of shareholders.

Nomination of Directors
Wesbanco’s bylaws provide that nominations of candidates for election as directors at any meeting of shareholders may be made only (a) by or at the direction of the board of directors, or (b) by any shareholder entitled to vote for the election of directors who complies with the procedures in the bylaws. A nomination by a shareholder must be made pursuant to a notice to the secretary of Wesbanco no later than (i) with respect to an election to be held at an annual meeting, 90 days prior to the anniversary of the previous year’s annual meeting of shareholders, or (ii) with respect to an election to be held at a special meeting of shareholders, the close of business on the tenth day following the date on which notice of such meeting is    Farmers Capital’s nominating committee of the board of directors nominates candidates for election as directors at meetings of the shareholders. Farmers Capital’s bylaws do not contain any requirement for shareholders to provide advance notice of director nominations they intend to present at an annual or special meeting of the shareholders to elect directors.

 

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first given to the shareholders. The notice must state (a) as to the nominee: (i) the name, age, address (business and residence), and principal occupation or employment and any directorships of such person; (ii) a description of any involvement in legal proceedings; (iii) the number of shares such person beneficially owns and any other ownership interest in the shares of Wesbanco; and (iv) any other information that would be required to be disclosed in a definitive proxy statement; and (b) as to the shareholder: (i) the name and address of the shareholder; (ii) the class and number of shares beneficially owned by the shareholder and any other ownership interest in the shares of Wesbanco; (iii) any relationship between the shareholder and the proposed nominee; (iv) a representation that the person sending the notice is a shareholder of record on the record date and will remain such through the meeting date; and (v) a representation that the shareholder intends to appear in person or by proxy at such meeting to move the nomination. Moreover, Wesbanco may require additional information to determine the qualifications of the nominee.   
Removal of Directors; Filling of Vacancies on the Board of Directors
Under the WVBCA, the shareholders may remove one or more directors with or without cause, but only at a meeting called for the purpose of removing the director(s) and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director(s). The director(s) may be removed by the shareholders only by the affirmative vote of a majority of all of the votes entitled to be cast. However, a director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against his or her removal. Wesbanco’s bylaws provide that the shareholders may remove any elected director for cause and fill the vacancy created. Any vacancy not caused by a shareholder removal may be filled by the remaining board members.    Pursuant to Farmers Capital’s articles of incorporation and bylaws, shareholders may remove a director only at a meeting of the shareholders called for that purpose (a) with cause upon the affirmative vote of a majority of shares entitled to vote at an election of directors, and (b) without cause upon the affirmative vote of the holders of at least 80% of the outstanding shares entitled to vote at an election of directors. Farmers Capital’s articles of incorporation and bylaws provide that vacancies in the Farmers Capital board of directors will be filled by vote of a majority vote of the whole board of directors then in office, whether or not a quorum.
Voting for Directors
Under the WVBCA and Wesbanco’s articles of incorporation, Wesbanco shareholders are entitled to cumulative voting in the election of directors.    Under the KBCA and Farmers Capital’s bylaws, directors are elected by a plurality of shares voted and shareholders are not permitted to cumulate their votes. A plurality means that the nominees with the largest number of votes are elected as directors up to the maximum number of directors to be elected.

 

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Indemnification of Officers and Directors

Under the WVBCA, a corporation is generally permitted to indemnify a director if the director conducted himself or herself in good faith, he or she reasonably believed the conduct to be in the best interests of the corporation (or, in all other cases, at least not opposed to the best interests of the corporation), and, in the case of any criminal proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful. In addition, the WVBCA permits a corporation to include broader indemnification in its articles of incorporation so long as the provision does not limit the liability for (i) receipt of a financial benefit to which he or she is not entitled, (ii) an intentional infliction of harm on the corporation or its shareholders, (iii) certain unlawful distributions, or (iv) an intentional violation of criminal law. The articles of incorporation may also contain a provision (the “elimination provision”) eliminating or limiting the personal liability of a director to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director so long as the provision does not eliminate or limit the liability of a director for (i) any breach of the director’s duty of loyalty to the corporation or its shareholders, (ii) acts or omissions not in good faith or which involve intentional misconduct of a knowing violation of law, (iii) certain unlawful distributions, or (iv) any transaction from which the director derived an improper personal benefit. The elimination provision may not apply to conduct occurring prior to the provision’s adoption. The WVBCA requires a corporation to indemnify a director, who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because he or she was a director of the corporation, against reasonable expenses incurred by him or her in connection with the proceeding.

 

The WVBCA permits a corporation to advance funds to pay for or reimburse the reasonable expenses incurred by a director, prior to the final disposition of a proceeding, who is a party to a proceeding because he or she is a director, if he or she delivers to the corporation:

 

•  a written affirmation of his or her good faith belief that he or she has met the relevant standard of conduct described in the first sentence of the preceding paragraph or that the proceeding involves conduct for which liability has been eliminated under the elimination provision; and

  

Under the KBCA, a Kentucky corporation may indemnify an individual made a party to a proceeding because the individual is or was a director or officer against liability incurred in the proceeding if (i) the individual’s conduct was in good faith, (ii) the individual honestly believed, in the case of conduct in the individual’s official capacity with the corporation, that the individual’s conduct was in the best interests of the corporation, and in all other cases, that the individual’s conduct was at least not opposed to the corporation’s best interests, and (iii) in the case of any criminal proceeding, the individual had no reasonable cause to believe that the individual’s conduct was unlawful.

 

Additionally, Farmers Capital must indemnify a director or officer who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he is or was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding.

 

Farmers Capital may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if: (i) the director furnishes the corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct; and (ii) a determination is made that the facts then known to those making the determination would not preclude indemnification. A director or officer may apply for court-ordered indemnification under certain circumstances.

 

Notwithstanding the foregoing, Farmers Capital may agree by contract, resolution of the board or shareholders or otherwise to indemnify any officer or director and hold him harmless against any judgments, penalties, fines, settlements and reasonable expenses actually incurred or reasonably anticipated in connection with any proceeding in which any officer or director is a party, provided that the officer or director was made a party to such proceeding by reason of the fact that he is or was an officer or director of the corporation or by reason of any inaction, nondisclosure, action or statement made, taken or omitted by or on behalf of the officer

 

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•  a written undertaking to repay any funds advanced if he or she is not entitled to mandatory indemnification and it is ultimately determined that he or she has not met the relevant standard of conduct.

 

The WVBCA provides that a corporation may indemnify its officers to the same extent as a director and, if the officer is not a director or if the officer is a party to the proceeding solely in his capacity as an officer, to a further extent as may be provided in the articles of incorporation, the bylaws, a resolution of the board of directors, or a contract, except that such additional indemnification may not be provided for liability in connection with a proceeding by or in the right of the corporation other than for reasonable expenses incurred in connection with the proceeding or liability arising out of conduct that constitutes (i) receipt by him or her of a financial benefit to which he or she is not entitled, (ii) an intentional infliction of harm on the corporation or the shareholders, or (iii) an intentional violation of criminal law. The WVBCA mandates indemnification of officers that are not directors to the same extent as directors.

 

Wesbanco’s bylaws provide that Wesbanco will indemnify each of its directors and officers, whether or not then in office, against all liability incurred in connection with any suit to which he is a party by reason of having been an officer or director of Wesbanco or another company which he served at the request of Wesbanco to the maximum extent permitted under the WVBCA

 

Wesbanco bylaws provide that a director or officer cannot receive a “prohibited indemnification payment,” which is defined as any payment or agreement to make a payment or reimburse such director or officer for any liability or legal expenses in any administrative proceeding brought by the appropriate federal banking agency that results in a final order or settlement in which the director or officer is assessed a civil monetary penalty, is removed or prohibited from conducting the business of banking, or is required to cease an action or take any affirmative action, including making restitution, with respect to Wesbanco Bank, Inc. or Wesbanco. Finally, Wesbanco’s bylaws provide that a reasonable indemnification payment will be made only if all of the following conditions are met: (i) the board of directors investigates and determines in writing that the director or officer acted in good faith and in the best

 

or director with respect to the corporation or by or on behalf of the officer or director in his capacity as an officer or director.

 

The KBCA permits Farmers Capital to purchase insurance on behalf of its directors, officers, employees and agents against liabilities arising out of their positions with Farmers Capital, whether or not such liabilities would be within the above indemnification provisions. Pursuant to this authority, Farmers Capital maintains such insurance for the directors, officers and employees of Farmers Capital and any subsidiary of Farmers Capital .

 

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interest of Wesbanco Bank, Inc. or Wesbanco; (ii) the board of directors investigates and determines that the payment will not materially adversely affect the safety and soundness of Wesbanco Bank, Inc. or Wesbanco; (iii) the payment does not fall within the definition of a prohibited indemnification payment; and (iv) the director or officer agrees in writing to reimburse Wesbanco, to the extent not covered by permissible insurance, for advanced indemnification payments that subsequently become prohibited indemnification payments.  
Wesbanco’s bylaws provide that Wesbanco may purchase commercial insurance to cover certain costs that Wesbanco incurs under the indemnification provisions. Costs that may be covered include legal expenses and restitution that an individual may be ordered to make to Wesbanco. Such insurance may not pay or reimburse a director or officer for any final judgment or civil money penalty assessed against such individual. Partial indemnification for legal expenses is permitted in connection with a settlement when there is a formal and final finding that the director or officer has not breached a fiduciary duty, engaged in unsafe or unsound practices, and is not subject to a final prohibition order.  
Amendment of Articles of Incorporation
Pursuant to the WVBCA, the Wesbanco articles of incorporation and bylaws may generally be amended by the affirmative vote of a majority of all votes of shareholders entitled to be cast on the matter amendment and a majority of the outstanding stock of each class entitled to vote on the amendment, unless a greater number is specified in the articles of incorporation. The Wesbanco articles of incorporation provide that the affirmative vote of the holders of not less than 75% of the outstanding shares of the voting stock is required to amend, alter, change, or repeal the article section dealing with the classes of directors.  

In general, Farmers Capital’s articles of incorporation may be amended only pursuant to a resolution adopted by the affirmative vote of a majority of the directors then in office which is thereafter approved by the holders of a majority of the shares of Farmers Capital entitled to vote, as provided by the KBCA.

 

The following provisions of Farmers Capital ’s articles of incorporation may only be repealed or amended by the affirmative vote of the holders of not less than 80% of the outstanding shares of Farmers Capital common stock:

 

•  Article IV (relating to capital stock),

 

•  Article VI (relating to the board of directors),

 

 

•  Article X (relating to certain business combinations with “related persons”), and

 

•  Article XI (relating to amendments to the articles of incorporation).

 

However, a vote of 80% will not be required if (i) at the time such repeal or amendment is approved by the board

 

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of directors and voted on by the shareholders, there is no “related person” of the corporation, or (ii) in the event there is a “related person” at such time, the repeal or amendment is or has been approved by a majority of “prior directors”.

Amendment of Bylaws
Wesbanco’s bylaws require the affirmative vote of the holders of not less than 75% of the outstanding shares of the capital stock to amend or repeal the bylaw provisions dealing with the composition of the board of directors. The other bylaw provisions may be amended, altered, or repealed (i) at any duly called and constituted shareholders’ meeting on the affirmative vote of the majority of the stock represented at such meeting, or (ii) at any meeting of the board of directors upon the affirmative vote of the majority of the whole of the board, provided that each member of the board of directors is served with written notice of the proposed amendment at least two days in advance of such meeting.   The Farmers Capital board of directors has the power to alter, amend or repeal bylaws upon the affirmative vote of a majority of the directors at any regular or special meeting at which a quorum is present, subject to the power of the shareholders to change or repeal such bylaws under the KBCA. The KBCA provides that a corporation’s shareholders also may amend or repeal the corporation’s bylaws and have the exclusive power to amend or repeal bylaws originally adopted by the shareholders only.
Provisions Affecting Business Combinations
Pursuant to the WVBCA, no contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation in which one or more of its directors or officers are directors or officers, or have a financial interest, is void or voidable solely for this reason or solely because the director or officer participates is present or participates in a board meeting which authorizes the contract or transaction or solely because any director’s or officer’s votes are counted for the purpose if (i) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed to either (a) the board of directors or (b) the members entitled to vote on such contract or transaction and the contract is specifically approved in good faith by vote of the board or such members entitled to vote or (ii) the contract or transaction is fair to the corporation at the time it is authorized by the board of directors or the members.  

In general, in order for a merger or share exchange to be approved, the affirmative vote of a majority of Farmers Capital’s shares of common stock is required. However, if the transaction involves a “related person” other approval requirements are necessary under Farmers Capital’s articles of incorporation.

 

Farmers Capital’s articles of incorporation require that certain business combinations between Farmers Capital or any of its subsidiaries and any “related person” be approved by the holders of 80% or more of the shares of common stock. A “business combination” may include:

 

•  a merger or consolidation with a related person;

 

•  the sale, lease, exchange, transfer or other disposition of all or a substantial part of Farmers Capital’s or its subsidiaires’ assets to a related person;

The WVBCA provides that interested directors may be counted in determining the presence of a quorum at the meeting which authorizes the contract or transaction.

 

Neither Wesbanco’s articles of incorporation nor bylaws contain any provisions addressing interested shareholder transactions.

 

 

•  the issuance of securities to a related person;

 

•  a recapitalization that would increase the voting power of a related person;

 

•  the purchase, exchange, lease or other acquisition by Farmers Capital or its subsidiaries’ of all or a substantial part of the assets of a related person; or

 

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•  the dissolution or liquidation of Farmers Capital at a time when there is a related person.

 

A “related person” is one who: (1) owns 10% or more of Farmers Capital’s outstanding common stock, or (2) controls, is controlled by, or is under common control with, a person who owns or controls 10% or more of Farmers Capital’s outstanding common stock.

 

However, a vote of 80% is not required for the approval of a business combination if such business combination solely involves the merger of a subsidiary of Farmers Capital into Farmers Capital, or the business combination is approved by a majority of Farmers Capital’s “continuing directors”. ‘‘Continuing directors’’ means a member of the board of directors who: (i) is a member of the board of directors at the time the director vote with respect to the business combination is taken; and (ii) was (a) a member of the board of directors on May 1, 1986, (b) a member of the board of directors prior to the time that the related person involved in the business combination became a related person, or (c) designated as a continuing director by a majority of the then continuing directors within 90 days after the date upon which the member was first elected to the board of directors.

 

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PROPOSAL NO. 2 —

ADVISORY (NON-BINDING) VOTE ON GOLDEN PARACHUTE COMPENSATION

The Golden Parachute Proposal

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Section 14A of the Securities Exchange Act of 1934 as amended, and Rule 14a-21(c) promulgated thereunder, Farmers Capital is required to submit a proposal to its shareholders for an advisory (non-binding) vote to approve certain compensation that may become payable to Farmers Capital’s named executive officers in connection with the completion of the merger. This proposal gives Farmers Capital shareholders the opportunity to vote, on an advisory (non-binding) basis, on the compensation that may be paid or become payable to Farmers Capital’s named executive officers in connection with the merger. This compensation is summarized in the table entitled “Golden Parachute Compensation” that begins on page 61, including the associated narrative disclosure.

The Farmers Capital board of directors unanimously recommends that Farmers Capital’s shareholders approve the following resolution:

“RESOLVED, that the compensation that may be paid or become payable to the Farmers Capital named executive officers in connection with the merger, as disclosed in the table entitled “Golden Parachute Compensation” that begins on page 61, together with the accompanying footnotes and narrative discussion relating to the named executive officers’ golden parachute compensation and the agreements or understandings pursuant to which such compensation may be paid or become payable, as set forth in the section of this proxy statement/prospectus titled “Proposal No. 1—Approval of the Merger Agreement — Summary of Golden Parachute Arrangements” is hereby APPROVED.”

The vote on this Proposal 2 by Farmers Capital shareholders is a vote separate and apart from the vote on Proposal 1 by Farmers Capital shareholders to approve the merger agreement. Accordingly, Farmers Capital shareholders may vote to approve this Proposal 2 and not to approve Proposal 1, and vice versa. Because the vote is advisory in nature only, it will not be binding on Wesbanco, Wesbanco Bank, Farmers Capital or United Bank whether or not the merger agreement is approved. Accordingly, as the compensation to be paid in connection with the merger is contractual with the executives, regardless of the outcome of this advisory vote, that compensation will be paid, subject only to the satisfaction of the applicable conditions to payment and the merger being completed.

The named executive officers of Farmers Capital for which this advisory vote is being taken are Lloyd C. Hillard, Jr., J. David Smith, Jr., Rickey D. Harp and Mark A. Hampton. This vote is not intended to address any specific item of compensation, but rather the overall compensation that may become payable to Farmers Capital’s named executive officers in connection with the completion of the merger transaction. Such compensation will not be payable if the merger is not completed.

Recommendation of Farmers Capital Board of Directors

Farmers Capital’s board of directors unanimously recommends that Farmers Capital shareholders vote “FOR” approval, on an advisory (non-binding) basis, of the golden parachute compensation payable to the named executive officers of Farmers Capital in connection with the merger.

 

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PROPOSAL NO. 3 —

ADJOURNMENT PROPOSAL

The Adjournment Proposal

If a quorum is present at the Farmers Capital special meeting but there are insufficient votes to approve the merger agreement, the merger proposal will fail unless Farmers Capital adjourns the Farmers Capital special meeting in order to solicit additional proxies from Farmers Capital’s shareholders. An adjournment under such circumstances will allow Farmers Capital extra time to solicit additional proxies. In order to allow shares present in person or by proxy at the Farmers Capital special meeting to vote FOR approval of the adjournment of the Farmers Capital special meeting, if necessary or appropriate, Farmers Capital is submitting a proposal to adjourn the Farmers Capital special meeting to Farmers Capital shareholders as a separate matter for consideration. Farmers Capital will vote properly submitted proxy cards “FOR” approval of the Farmers Capital adjournment proposal, unless otherwise instructed on the proxy. If Farmers Capital shareholders approve the Farmers Capital adjournment proposal, Farmers Capital is not required to give any further notice of the time and place of the adjourned Farmers Capital meeting other than an announcement of the time and place to be provided at the Farmers Capital special meeting.

If a quorum is not present at the meeting, the meeting will be adjourned to a later time without a vote.

Recommendation of Farmers Capital’s Board of Directors

Farmers Capital’s board of directors recommends that Farmers Capital shareholders vote “FOR” the proposal to approve of the adjournment of the Farmers Capital special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the time of the Farmers Capital special meeting to approve the merger agreement proposal.

 

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WHERE YOU CAN FIND MORE INFORMATION ABOUT WESBANCO AND FARMERS CAPITAL

Wesbanco and Farmers Capital each file annual, quarterly and special reports, proxy statements and other information with the SEC. These filings are available over the Internet from the SEC’s web site at www.sec.gov. You may read and copy any reports, statements or other information filed by Wesbanco or Farmers Capital at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for further information on the public reference room.

Wesbanco maintains an Internet site that contains information about Wesbanco and its subsidiaries at www.Wesbanco.com. Farmers Capital also maintains an Internet site that contains information about Farmers Capital and its subsidiaries at www.farmerscapital.com. The reports and other information filed by Wesbanco and Farmers Capital with the SEC are available through their respective Internet websites. The Internet website addresses of Wesbanco and Farmers Capital are provided as inactive textual references only. The information provided on the Internet websites of Wesbanco and Farmers Capital, other than copies of the documents listed below that have been filed with the SEC, is not part of this proxy statement/prospectus and, therefore, is not incorporated herein by reference.

This proxy statement/prospectus is part of a Registration Statement on Form S-4 that Wesbanco has filed with the SEC with respect to the Wesbanco common stock to be issued in the merger. This proxy statement/prospectus constitutes a prospectus of Wesbanco and a proxy statement of Farmers Capital for the Farmers Capital special meeting. As permitted by the SEC, this proxy statement/prospectus does not contain all of the information contained in the Registration Statement. You may obtain copies of the Registration Statement on Form S-4 and any amendments thereto, in the manner described above.

The SEC allows the “incorporation by reference” of information into this proxy statement/prospectus, which means that Wesbanco and Farmers Capital can disclose important information to you by referring you to another document filed separately with the SEC by Wesbanco or Farmers Capital. The information incorporated by reference is deemed to be part of this proxy statement/prospectus, except for any information that is superseded by information in this proxy statement/prospectus. This proxy statement/prospectus incorporates by reference the documents set forth below that Wesbanco and Farmers Capital have previously filed with the SEC. These documents contain important information about Wesbanco and Farmers Capital.

Wesbanco. The following documents, which have been filed with the SEC by Wesbanco, are hereby incorporated by reference into this proxy statement/prospectus:

 

    Wesbanco’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017;

 

    Wesbanco’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018;

 

    Wesbanco’s Current Reports on Form 8-K filed on February 12, 2018, February 16, 2018, February 22, 2018, April 19, 2018 and April 20, 2018 (in each case, except to the extent furnished but not filed); and

 

    Wesbanco’s Definitive Proxy Statement on Schedule 14A filed on March 13, 2018.

 

    the description of Wesbanco common stock contained in Wesbanco’s registration statement on Form 8-A filed by Wesbanco pursuant to Section 12 of the Exchange Act, including any amendment or report filed for purpose of updating the description, as filed on May 2, 1977.

All documents filed by Wesbanco pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this document and before the date of the special meeting of Farmers Capital’s shareholders are incorporated by reference into and are deemed to be a part of this document from the date of filing of those documents (other than the portions of those documents not deemed to be filed).

Farmers Capital. The following documents, which have been filed with the SEC by Farmers Capital, are hereby incorporated by reference into this proxy statement/prospectus:

 

    Farmers Capital’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017;

 

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    Farmers Capital’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018; and

 

    Farmers Capital’s Current Reports on Form 8-K filed on January 23, 2018, April 20, 2018, April 24, 2018, May 9, 2018 and May 24, 2018 (in each case, except to the extent furnished but not filed).

 

    Farmers Capital’s Definitive Proxy Statement on Schedule 14A filed on April 2, 2018.

All documents filed by Farmers Capital pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this document and before the date of the special meeting of Farmers Capital shareholders are incorporated by reference into and are deemed to be a part of this document from the date of filing of those documents (other than the portions of those documents not deemed to be filed).

You should rely only on the information contained in this proxy statement/prospectus or on information to which we have referred you. We have not authorized any person to give any information or to make any representations that are different from those in this document.

If you would like to receive a copy of any of the documents incorporated by reference, please contact Wesbanco or Farmers Capital, as applicable, at the address or telephone number listed under the heading “Additional Information.”

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Matters set forth in this filing contain certain forward-looking statements, including certain plans, expectations, goals, and projections, and including statements about the benefits of the proposed merger between Wesbanco and Farmers Capital, which are subject to numerous assumptions, risks, and uncertainties. Actual results could differ materially from those contained or implied by such statements for a variety of factors including: the businesses of Wesbanco and Farmers Capital may not be integrated successfully or such integration may take longer to accomplish than expected; the expected cost savings and any revenue synergies from the proposed Merger may not be fully realized within the expected timeframes; disruption from the proposed merger may make it more difficult to maintain relationships with clients, associates, or suppliers; the required governmental approvals of the proposed Merger may not be obtained on the expected terms and schedule; Farmers Capital’s shareholders may not approve the proposed merger; changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of other business strategies; the nature, extent, and timing of governmental actions and reforms; and extended disruption of vital infrastructure; and other factors described in the section of this proxy statement/prospectus titled “Risk Factors” and Wesbanco’s and Farmers Capital’s annual and quarterly reports and other filings with the SEC that are incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information About Wesbanco and Farmers Capital” beginning on page 96. All forward-looking statements included in this filing are based on information available at the time of the release. Neither Wesbanco nor Farmers Capital assumes any obligation to update any forward-looking statement.

 

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DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS FOR FARMERS CAPITAL

Any shareholder of Farmers Capital who wants Farmers Capital to consider including a proposal in next year’s proxy statement, must deliver it in writing no later than December 3, 2018 (the date 120 days prior to the first anniversary of the date of the 2018 annual meeting proxy statement) to: Farmers Capital Bank Corporation, 202 West Main Street, Frankfort, Kentucky 40601, Attention: Mark A. Hampton, Secretary. We recommend that you send any proposals by certified mail, return receipt requested.

Any shareholder of Farmers Capital who wants to present a proposal at next year’s Annual Meeting of Farmers Capital but does not wish to have it included in Farmers Capital’s proxy statement, does not need to contact Farmers Capital in advance. Farmers Capital’s bylaws do not contain any requirement for shareholders to provide advance notice of proposals or nominations they intend to present at a shareholder meeting. However, if you do not notify Farmers Capital on or before February 16, 2019 of any matter that you wish to present at next year’s annual meeting, then the shareholders’ proxies that Farmers Capital solicits in connection with its 2019 Annual Meeting of Shareholders will confer on the proxyholders discretionary authority to vote on the matter that you present at Farmers Capital’s 2019 Annual Meeting.

 

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LEGAL MATTERS

Certain matters relating to the validity of the Wesbanco common stock issuable in connection with the merger will be passed upon for Wesbanco by its counsel, Phillips, Gardill, Kaiser & Altmeyer, PLLC, 61 Fourteenth Street, Wheeling, West Virginia 26003. As of June 12, 2018, the members of Phillips, Gardill, Kaiser & Altmeyer, PLLC participating in the preparation of this proxy statement/prospectus owned an aggregate of 55,054 shares of Wesbanco common stock. In addition, James C. Gardill and Denise Knouse-Snyder are members of Phillips, Gardill, Kaiser & Altmeyer, PLLC and are also on the board of directors of Wesbanco, with Mr. Gardill serving as Chairman. K&L Gates LLP, as tax counsel to Wesbanco, and Squire Patton Boggs (US) LLP, as tax counsel to Farmers Capital, each will pass upon certain tax consequences related to the merger.

 

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EXPERTS

The consolidated financial statements of Wesbanco, Inc. appearing in Wesbanco, Inc.’s Annual Report (Form 10-K) for the year ended December 31, 2017, and the effectiveness of Wesbanco, Inc.’s internal control over financial reporting as of December 31, 2017, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in auditing and accounting.

The consolidated financial statements of Farmers Capital Bank Corporation as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017 and the effectiveness of Farmers Capital’s internal control over financial reporting as of December 31, 2017, have been audited by BKD, LLP, independent registered public accounting firm, as set forth in their report thereon included in Farmers Capital’s Annual Report on Form 10-K for the year ended December 31, 2017, which is incorporated herein by reference. Such consolidated financial statements have been so incorporated in reliance upon the report of such firm, given on their authority as experts in auditing and accounting.

 

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Annex A

Execution Version

AGREEMENT AND PLAN OF MERGER

dated as of

April 19, 2018

by and between

WESBANCO, INC.,

WESBANCO BANK, INC.,

FARMERS CAPITAL BANK CORPORATION

and

UNITED BANK & CAPITAL TRUST COMPANY


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TABLE OF CONTENTS

 

     Page  

ARTICLE ONE — THE MERGER

     A-2  

1.01. Merger; Surviving Corporation

     A-2  

1.02. Bank Merger; Surviving Bank Corporation

     A-2  

1.03. Effective Time

     A-2  

1.04. Effects of the Merger

     A-2  

1.05. Effects of the Bank Merger

     A-3  

1.06. Tax Consequences

     A-3  

1.07. Possible Alternative Structures

     A-3