Filed Pursuant to Rule 424(b)(3)
Registration No. 333-219052

 

 

 

 

PROXY STATEMENT

 

PROSPECTUS

 

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Shareholder:

On May 3, 2017, First Horizon National Corporation (which we refer to as “First Horizon”), and Capital Bank Financial Corp. (which we refer to as “Capital Bank Financial”), entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) that provides for the combination of the two companies. Under the merger agreement, a wholly-owned subsidiary of First Horizon will merge with and into Capital Bank Financial, with Capital Bank Financial remaining as the surviving entity and becoming a wholly-owned subsidiary of First Horizon (which we refer to as the “merger”). This surviving entity will, as soon as reasonably practicable following the merger and as part of a single integrated transaction, merge with and into First Horizon (which we refer to as the “second step merger” and, together with the merger, as the “mergers”), with First Horizon as the surviving corporation in the second step merger (which we sometimes refer to in such capacity as the “surviving corporation”). Immediately following the completion of the second step merger or at such later time as First Horizon may determine in its sole discretion, Capital Bank Corporation, a North Carolina state chartered bank and a wholly-owned subsidiary of Capital Bank Financial, will merge with and into First Tennessee Bank National Association, a national bank and subsidiary of First Horizon, with First Tennessee Bank National Association as the surviving bank.

In the merger, each outstanding share of Capital Bank Financial common stock (except for specified shares of Capital Bank Financial common stock held by Capital Bank Financial or First Horizon and shares of Capital Bank Financial common stock held by shareholders who properly exercise dissenters’ rights) will be converted into the right to receive, either

 

(i)

 

an amount in cash (which we refer to as the “per share cash consideration”) equal to the sum of (A) $7.90 plus (B) the product of 1.75 multiplied by the average of the closing sale prices of a share of First Horizon common stock, par value $0.625 per share (which we refer to as the “First Horizon common stock”), on the New York Stock Exchange (which we refer to as the “NYSE”), for the ten full trading days ending on the day preceding the closing date of the merger (which we refer to as the “First Horizon share closing price”), or

 

(ii)

 

the number of shares of First Horizon common stock (which we refer to as the “per share stock consideration”) equal to the quotient (which we refer to as the “exchange ratio”) of (A) the per share cash consideration divided by (B) the First Horizon share closing price,

in each case at the election of the applicable Capital Bank Financial common stockholder, subject to procedures applicable to oversubscription and undersubscription for cash consideration. The merger agreement provides that aggregate amount of cash consideration will equal $410,535,300 (the “cash component”). Accordingly, the number of shares of Capital Bank Financial common stock that will convert into the right to receive the per share cash consideration will equal the quotient of (i) the cash component divided by (ii) the per share cash consideration.

Based on the closing sale price of a share of First Horizon common stock on the NYSE on July 25, 2017, which was $18.06, the per share cash consideration would have been $39.505 and the exchange ratio would have been 2.1874 and accordingly, based on 52,090,197 shares of Capital Bank Financial common stock outstanding, approximately 19.95% of the shares of Capital Bank common stock would have been converted into the right to receive the cash consideration and approximately 80.05% of such shares would have been converted into the right to receive the stock consideration. The aggregate number of shares of First Horizon common stock to be issued as stock consideration would have been 91,210,673 and, accordingly, approximately 28.03% of outstanding First Horizon common stock following the merger would have been held by stockholders that were Capital Bank Financial common stockholders immediately prior to the effectiveness of the merger. In addition to the First Horizon share closing price, an increase or decrease in the number of outstanding shares of Capital Bank Financial common stock prior to the completion of the merger could cause the actual number of shares of First Horizon common stock issued upon completion of the merger to change. We urge you to obtain current market quotations for First Horizon (trading symbol “FHN”) and Capital Bank Financial (trading symbol “CBF”).


 

In connection with the mergers, Capital Bank Financial will hold a special meeting of its holders of shares of Class A voting common stock (which we refer to as the “Capital Bank Financial special meeting”) and First Horizon will hold a special meeting of the holders of its common stock (which we refer to as the “First Horizon special meeting”). Holders of Capital Bank Financial’s Class A voting common stock (which we refer to as “Capital Bank Financial Class A common stockholders”), par value $0.01 per share (which we refer to as the “Class A common stock”) will be asked to vote to adopt the merger agreement and approve related matters, as described in the attached joint proxy statement/ prospectus. Adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Capital Bank Financial’s Class A common stock. First Horizon has entered into agreements with certain stockholders of Capital Bank Financial who beneficially own in the aggregate approximately 16.04% of the Class A common stock outstanding on July 24, 2017, pursuant to which these stockholders agreed to vote all shares of Class A common stock beneficially owned by them in favor of approval of the adoption of the merger agreement. Holders of shares of First Horizon common stock (which we refer to as “First Horizon shareholders”) will be asked to vote to approve the issuance of the shares of First Horizon common stock in connection with the merger. Approval of the issuance of the shares of First Horizon common stock in connection with the merger requires the affirmative vote of a majority of the votes cast at the First Horizon special meeting.

Holders of shares of Capital Bank Financial’s Class B non-voting common stock are not entitled to and are not requested to vote at the Capital Bank Financial special meeting. Holders of First Horizon’s depositary shares (representing a 1/4000th interest in a share of non-cumulative perpetual preferred stock, series A), are not entitled to and are not requested to vote at the First Horizon special meeting.

The Capital Bank Financial special meeting will be held on September 7, 2017 at the DoubleTree Suites by Hilton Hotel, 6300 Morrison Blvd., Charlotte, North Carolina 28211, at 4:00 p.m. local time. The First Horizon special meeting will be held on September 7, 2017 at the M-Level Auditorium, First Tennessee Building, 165 Madison Avenue, Memphis, Tennessee 38103, at 3:00 p.m. local time.

The Capital Bank Financial board of directors recommends that Capital Bank Financial Class A common stockholders vote “FOR” the adoption of the merger agreement and “FOR” the other matters to be considered at the Capital Bank Financial special meeting.

The First Horizon board of directors recommends that First Horizon shareholders vote “FOR” the issuance of shares of First Horizon common stock in connection with the merger.

The attached joint proxy statement/prospectus describes the Capital Bank Financial special meeting, the First Horizon special meeting, the mergers, the documents related to the mergers, and other related matters. Please carefully read the entire joint proxy statement/prospectus, including “Risk Factors,” for a discussion of the risks relating to the proposed mergers. You also can obtain information about First Horizon and Capital Bank Financial from documents that each has filed with the Securities and Exchange Commission.

 

 

 

 

D. Bryan Jordan
Chairman of the Board,
President and Chief Executive Officer

First Horizon National Corporation

 

R. Eugene Taylor
Chairman and Chief Executive Officer

Capital Bank Financial Corp.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the mergers or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The securities to be issued in the mergers are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either First Horizon or Capital Bank Financial, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this joint proxy statement/prospectus is July 28, 2017, and it is first being mailed or otherwise delivered to the First Horizon shareholders and Capital Bank Financial common stockholders on or about August 4, 2017.


 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders of First Horizon National Corporation:

First Horizon National Corporation (which we refer to as “First Horizon”) will hold a special meeting of holders of common stock of First Horizon (which we refer to as “First Horizon shareholders”) on September 7, 2017 at the M-Level Auditorium, First Tennessee Building, 165 Madison Avenue, Memphis, Tennessee 38103, at 3:00 p.m. local time (which we refer to as the “First Horizon special meeting”) to consider and vote upon the following matters:

 

 

a proposal to approve the issuance of shares of First Horizon common stock in connection with the merger contemplated by the Agreement and Plan of Merger, dated as of May 3, 2017, as such agreement may be amended from time to time (which we refer to as the “merger agreement”), by and among First Horizon, Capital Bank Financial Corp. and Firestone Sub, Inc., a copy of which is attached to the enclosed joint proxy statement/prospectus as Annex A (which we refer to as the “First Horizon stock issuance proposal”); and

 

 

a proposal to approve one or more adjournments of the First Horizon special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the First Horizon stock issuance proposal (which we refer to as the “First Horizon adjournment proposal”).

We have fixed the close of business on July 24, 2017 as the record date for the First Horizon special meeting. Only First Horizon shareholders of record at that time are entitled to notice of, and to vote at, the First Horizon special meeting, or any postponement or adjournment of the First Horizon special meeting. Approval of each of the First Horizon stock issuance proposal and the First Horizon adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast.

The First Horizon board of directors has approved the merger, the stock issuance and the merger agreement, has determined that the merger agreement and the transactions contemplated thereby, including the merger and the stock issuance, are advisable and in the best interests of First Horizon, and unanimously recommends that First Horizon shareholders vote “FOR” the First Horizon stock issuance proposal and “FOR” the First Horizon adjournment proposal.

Your vote is very important. We cannot complete the merger unless First Horizon’s shareholders approve the issuance of shares of First Horizon common stock as contemplated by the merger agreement.

Regardless of whether you plan to attend the First Horizon special meeting, please vote as soon as possible. If you hold stock in your name as a shareholder of record of First Horizon, please vote telephonically, vote using the internet or complete, sign, date, and return the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.

The enclosed joint proxy statement/prospectus provides a detailed description of the First Horizon special meeting, the mergers, the documents related to the mergers, and other related matters. We urge you to read carefully the joint proxy statement/prospectus, including any documents incorporated in the joint proxy statement/prospectus by reference, in their entirety.

BY ORDER OF THE BOARD OF DIRECTORS,

D. Bryan Jordan
Chairman of the Board,
President and Chief Executive Officer

First Horizon National Corporation


 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the holders of Class A voting common stock of Capital Bank Financial Corp.:

Capital Bank Financial Corp. (which we refer to as “Capital Bank Financial”) will hold a special meeting of holders of Class A voting common stock (which we refer to as “Capital Bank Financial Class A common stockholders”) on September 7, 2017 at the DoubleTree Suites by Hilton Hotel, 6300 Morrison Blvd., Charlotte, North Carolina 28211, at 4:00 p.m. local time (which we refer to as the “Capital Bank Financial special meeting”) to consider and vote upon the following matters:

 

 

a proposal to adopt the Agreement and Plan of Merger, dated as of May 3, 2017, by and among First Horizon National Corporation (which we refer to as “First Horizon”), Capital Bank Financial and Firestone Sub, Inc. (which we refer to as “Merger Sub”), as such agreement may be amended from time to time, pursuant to which Merger Sub will merge with and into Capital Bank Financial and then with and into First Horizon, with First Horizon as the surviving corporation in the mergers, a copy of which is attached as Annex A and as more fully described in the attached joint proxy statement/prospectus (which we refer to as the “Capital Bank Financial merger proposal”);

 

 

a proposal to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of Capital Bank Financial may receive in connection with the Capital Bank Financial merger proposal pursuant to existing agreements or arrangements with Capital Bank Financial (which we refer to as the “Capital Bank Financial compensation proposal”); and

 

 

a proposal to approve one or more adjournments of the Capital Bank Financial special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the Capital Bank Financial merger proposal (which we refer to as the “Capital Bank Financial adjournment proposal”).

The Capital Bank Financial board of directors has fixed the close of business on July 24, 2017 as the record date for the Capital Bank Financial special meeting. Only holders of record of shares of Capital Bank Financial Class A common stock at that time are entitled to notice of, and to vote at, the Capital Bank Financial special meeting, or any adjournment or postponement of the Capital Bank Financial special meeting. Approval of the Capital Bank Financial merger proposal requires the affirmative vote of holders of a majority of the outstanding shares of Capital Bank Financial Class A common stock. Approval of each of the Capital Bank Financial compensation proposal and the Capital Bank Financial adjournment proposal requires a majority of the votes cast at the Capital Bank Financial special meeting to be voted in favor of such proposal.

Capital Bank Financial’s board of directors has unanimously approved the merger agreement, has determined that the merger, on the terms and conditions set forth in the merger agreement, is advisable and in the best interests of Capital Bank Financial and its stockholders, and unanimously recommends that Capital Bank Financial Class A common stockholders vote “FOR” the Capital Bank Financial merger proposal, “FOR” the Capital Bank Financial compensation proposal and “FOR” the Capital Bank Financial adjournment proposal.

Your vote is very important. We cannot complete the merger unless Capital Bank Financial’s Class A common stockholders adopt the merger agreement.

Regardless of whether you plan to attend the Capital Bank Financial special meeting, please vote as soon as possible. If you hold stock in your name as a shareholder of record of Capital Bank Financial, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.

The enclosed joint proxy statement/prospectus provides a detailed description of the Capital Bank Financial special meeting, the mergers, the documents related to the mergers, and other related matters. We urge you to read the joint proxy statement/prospectus, including any documents incorporated in the joint proxy statement/prospectus by reference, and its annexes carefully and in their entirety.

BY ORDER OF THE BOARD OF DIRECTORS,

R. Eugene Taylor
Chairman and Chief Executive Officer

Capital Bank Financial Corp.


 

REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about First Horizon and Capital Bank Financial from documents filed with the Securities and Exchange Commission (which we refer to as the “SEC”) that are not included in or delivered with this joint proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by First Horizon and/or Capital Bank Financial at no cost from the SEC’s website at http://www.sec.gov. You may also request copies of these documents, including documents incorporated by reference into this joint proxy statement/prospectus, at no cost by contacting the appropriate company at the following address:

 

 

 

First Horizon National Corporation
165 Madison Avenue
Memphis, Tennessee 38103
Attention: Clyde A. Billings, Jr.
Telephone: (901) 523-4444

 

Capital Bank Financial Corp.
4725 Piedmont Row Drive, Suite 110
Charlotte, North Carolina 28210
Attention: Investor Relations
Telephone: (704) 554-5901

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five business days before the date of the applicable special meeting. This means that First Horizon shareholders requesting documents must do so by August 30, 2017, in order to receive them before the First Horizon special meeting, and Capital Bank Financial common stockholders requesting documents must do so by August 30, 2017, in order to receive them before the Capital Bank Financial special meeting.

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC by First Horizon (File No. 333-219052), constitutes a prospectus of First Horizon under Section 5 of the Securities Act of 1933, as amended (which we refer to as the “Securities Act”), with respect to First Horizon common stock to be issued to Capital Bank Financial common stockholders pursuant to the Agreement and Plan of Merger, dated as of May 3, 2017, by and among First Horizon, Capital Bank Financial and Firestone Sub, Inc. (which we refer to as “Merger Sub”), as it may be amended from time to time. This document also constitutes a joint proxy statement of Capital Bank Financial and First Horizon under Section 14(a) of the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”). It also constitutes a notice of meeting with respect to the Capital Bank Financial special meeting, at which Capital Bank Financial Class A common stockholders will be asked to consider and vote upon the approval of the merger agreement, and a notice of meeting with respect to the First Horizon special meeting, at which First Horizon shareholders will be asked to consider and vote upon the issuance of First Horizon common stock in connection with the merger.

You should rely only on the information contained in, or incorporated by reference into, this joint 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 joint proxy statement/ prospectus. This joint proxy statement/prospectus is dated July 28, 2017, and you should assume that the information in this document is accurate only as of such date. The information contained in, or incorporated by reference into, this joint proxy statement/prospectus speaks only as of the date of this joint proxy statement/prospectus unless the information specifically indicates that another date applies. Neither the mailing of this joint proxy statement/prospectus to Capital Bank Financial common stockholders or First Horizon shareholders, nor the issuance by First Horizon of shares of common stock in connection with the merger, will create any implication to the contrary.

This document 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 to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding Capital Bank Financial has been provided by Capital Bank Financial and information contained in this document regarding First Horizon has been provided by First Horizon.

See “Where You Can Find More Information” for more details.


 

TABLE OF CONTENTS

 

 

 

QUESTIONS AND ANSWERS

 

 

 

1

 

SUMMARY

 

 

 

12

 

SELECTED HISTORICAL FINANCIAL DATA OF FIRST HORIZON

 

 

 

24

 

SELECTED HISTORICAL FINANCIAL DATA OF CAPITAL BANK FINANCIAL

 

 

 

27

 

UNAUDITED SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION

 

 

 

30

 

UNAUDITED COMPARATIVE PER COMMON SHARE DATA

 

 

 

31

 

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

 

 

 

32

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

 

 

33

 

RISK FACTORS

 

 

 

35

 

THE CAPITAL BANK FINANCIAL SPECIAL MEETING

 

 

 

43

 

CAPITAL BANK FINANCIAL PROPOSALS

 

 

 

47

 

THE FIRST HORIZON SPECIAL MEETING

 

 

 

49

 

FIRST HORIZON PROPOSALS

 

 

 

53

 

INFORMATION ABOUT THE COMPANIES

 

 

 

54

 

THE MERGERS

 

 

 

56

 

Terms of the Mergers

 

 

 

56

 

Background of the Merger

 

 

 

56

 

First Horizon’s Reasons for the Merger; Recommendation of the First Horizon Board of Directors

 

 

 

61

 

Capital Bank Financial’s Reasons for the Merger; Recommendation of the Capital Bank Financial Board of Directors

 

 

 

63

 

Opinion of Capital Bank Financial’s Financial Advisor

 

 

 

66

 

Opinions of First Horizon’s Financial Advisors

 

 

 

78

 

The First Horizon Board of Directors After the Mergers

 

 

 

96

 

Interests of Capital Bank Financial’s Directors and Executive Officers in the Merger

 

 

 

96

 

Merger-Related Compensation for Capital Bank Financial’s Named Executive Officers

 

 

 

101

 

Dissenters’ Rights in the Merger

 

 

 

102

 

Regulatory Approvals Required for the Merger

 

 

 

107

 

Litigation Relating to the Merger

 

 

 

109

 

THE MERGER AGREEMENT

 

 

 

111

 

Explanatory Note Regarding the Merger Agreement

 

 

 

111

 

Structure of the Mergers

 

 

 

111

 

Merger Consideration

 

 

 

112

 

Exchange of Shares; Elections as to Form of Consideration

 

 

 

114

 

Treatment of Capital Bank Financial Compensatory Equity Awards

 

 

 

116

 

Closing and Effective Time

 

 

 

116

 

Closing and Effective Time of the Second Step Merger

 

 

 

116

 

Governing Documents; Directors and Officers; Governance Matters

 

 

 

117

 

Representations and Warranties

 

 

 

117

 

Covenants and Agreements

 

 

 

118

 

Conditions to Complete the Merger

 

 

 

127

 

Termination of the Merger Agreement

 

 

 

128

 

Effect of Termination

 

 

 

129

 

Termination Fee

 

 

 

129

 

Expenses and Fees

 

 

 

130

 

Amendment, Waiver, and Extension of the Merger Agreement

 

 

 

130

 

i


 

 

 

 

Governing Law; Jurisdiction

 

 

 

130

 

SUPPORT AGREEMENTS

 

 

 

131

 

ACCOUNTING TREATMENT

 

 

 

132

 

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS

 

 

 

133

 

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION

 

 

 

136

 

COMPARISON OF SHAREHOLDERS’ RIGHTS

 

 

 

146

 

LEGAL MATTERS

 

 

 

159

 

EXPERTS

 

 

 

160

 

CHANGE IN ACCOUNTANTS

 

 

 

161

 

DEADLINES FOR SUBMITTING SHAREHOLDER PROPOSALS

 

 

 

162

 

WHERE YOU CAN FIND MORE INFORMATION

 

 

 

164

 

ANNEX A—Agreement and Plan of Merger

 

 

 

A-1

 

ANNEX B—Form of Support Agreement

 

 

 

B-1

 

ANNEX C—Opinion of Barclays Capital Inc.

 

 

 

C-1

 

ANNEX D—Opinion of Morgan Stanley & Co. LLC

 

 

 

D-1

 

ANNEX E—Opinion of Sandler O’Neill & Partners, L.P.

 

 

 

E-1

 

ANNEX F—Delaware General Corporation Law § 262

 

 

 

F-1

 

ii


 

QUESTIONS AND ANSWERS

The following are some questions that you may have about the mergers and the First Horizon special meeting or the Capital Bank Financial special meeting, and brief answers to those questions. We urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the mergers, the First Horizon special meeting or the Capital Bank Financial special meeting. Additional important information is also contained in the documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

 

Q:

 

What are the mergers?

 

A:

 

First Horizon, Capital Bank Financial and Merger Sub have entered into an Agreement and Plan of Merger, dated as of May 3, 2017, as such agreement may be amended from time to time. Under the merger agreement, Merger Sub will merge with and into Capital Bank Financial, with Capital Bank Financial remaining as the surviving entity and becoming a wholly-owned subsidiary of First Horizon. Such surviving entity will, as soon as reasonably practicable following the merger and as part of a single integrated transaction, merge with and into First Horizon. Immediately following the completion of the second step merger, or at such later time as First Horizon may determine in its sole discretion, Capital Bank Corporation (which we refer to as “Capital Bank Sub”), a North Carolina state chartered bank and wholly-owned bank subsidiary of Capital Bank Financial, will merge with and into First Tennessee Bank National Association (which we refer to as “FTBNA”), a national bank and direct subsidiary of First Horizon, with FTBNA continuing as the surviving bank (which we refer to as the “bank merger”). A copy of the merger agreement is included in this joint proxy statement/ prospectus as Annex A.

      The merger cannot be completed unless, among other things, Capital Bank Financial Class A common stockholders approve the proposal to adopt the merger agreement and First Horizon shareholders approve the proposal for issuance of shares of First Horizon common stock in connection with the merger, as described below under “—What will Capital Bank Financial common stockholders receive in the merger?”

 

 

Q:

 

Why am I receiving this joint proxy statement/prospectus?

 

A:

 

We are delivering this document to you because it is a joint proxy statement being used by both Capital Bank Financial’s and First Horizon’s boards of directors to solicit proxies of their respective Class A common stockholders and common shareholders in connection with the adoption of the merger agreement, the issuance of shares of First Horizon common stock, and related matters.

     

In order to approve the issuance of shares of First Horizon common stock, First Horizon has called a special meeting of its shareholders. This document serves as a proxy statement for the First Horizon special meeting and describes the proposals to be presented at the First Horizon special meeting. Holders of First Horizon’s depositary shares (representing a 1/4000th interest in a share of non-cumulative perpetual preferred stock, series A), are not entitled to, and are not requested to, vote at the First Horizon special meeting.

     

Capital Bank Financial has also called a special meeting of its Class A common stockholders to adopt the merger agreement and approve related matters. This document serves as a proxy statement for the Capital Bank Financial special meeting and describes the proposals to be presented at the Capital Bank Financial special meeting. Holders of Capital Bank Financial Class B common stock are not entitled to, and are not requested to, vote at the Capital Bank Financial meeting.

     

Finally, this document is also a prospectus that is being delivered to all holders of Capital Bank Financial Class A or Class B common stock (which we refer to as the “Capital Bank Financial common stockholders”) because, in connection with the mergers, First Horizon is offering, in addition to cash consideration, shares of its common stock to Capital Bank Financial common stockholders.

1


 

      This joint proxy statement/prospectus contains important information about the mergers and the other proposals being voted on at the First Horizon and Capital Bank Financial special meetings and important information to consider in connection with an investment in First Horizon common stock. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares of common stock voted by proxy without attending the applicable special meeting. Your vote is important and we encourage you to submit your proxy as soon as possible.

 

 

Q:

 

What are First Horizon shareholders being asked to vote on at the First Horizon special meeting?

 

A:

 

First Horizon is soliciting proxies from its shareholders with respect to the following proposals:

 

 

a proposal to approve the issuance of shares of First Horizon common stock in connection with the merger as contemplated by the merger agreement (which we refer to as the “First Horizon stock issuance proposal”); and

 

 

a proposal to adjourn the First Horizon special meeting, if necessary or appropriate, to solicit additional proxies in favor of the First Horizon stock issuance proposal (which we refer to as the “First Horizon adjournment proposal”).

 

Q:

  What are Capital Bank Financial Class A common stockholders being asked to vote on at the Capital Bank Financial special meeting?

 

A:

  Capital Bank Financial is soliciting proxies from its Class A common stockholders with respect to the following proposals:

 

 

a proposal to adopt the merger agreement (which we refer to as the “Capital Bank Financial merger proposal”);

 

 

a proposal to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of Capital Bank Financial may receive in connection with the merger pursuant to existing agreements or arrangements with Capital Bank Financial (which we refer to as the “Capital Bank Financial compensation proposal”); and

 

 

a proposal to adjourn the Capital Bank Financial special meeting, if necessary or appropriate, to solicit additional proxies in favor of the Capital Bank Financial merger proposal (which we refer to as the “Capital Bank Financial adjournment proposal”).

 

Q:

 

What will Capital Bank Financial common stockholders receive in the merger?

 

A:

 

If the merger is completed, each share of Class A common stock and each share of Class B non-voting common stock, par value $0.01 per share, of Capital Bank Financial (which we refer to as the “Class B common stock” and, together with the Class A common stock, the “Capital Bank Financial common stock”) will be converted into the right to receive, either

 

(i)

 

an amount in cash (which we refer to as the “per share cash consideration”) equal to the sum of (A) $7.90 plus (B) the product of 1.75 multiplied by the average of the closing sale prices of a share of First Horizon common stock, on the New York Stock Exchange (which we refer to as the “NYSE”), as reported by The Wall Street Journal, for the ten full trading days ending on the day preceding the closing date of the merger (which we refer to as the “First Horizon share closing price”), or

 

(ii)

 

the number of shares of First Horizon common stock (which we refer to as the “per share stock consideration”) equal to the quotient (which we refer to as the “exchange ratio”) of (A) the per share cash consideration divided by (B) the First Horizon share closing price,

     

in each case at the election of the applicable Capital Bank Financial common stockholder, subject to procedures applicable to oversubscription and undersubscription for cash consideration described below. We refer to the cash consideration and the stock consideration as the “merger consideration.” Although the per share cash consideration as calculated pursuant to clause (i) above is intended to equal the value of the per share stock consideration as calculated pursuant to clause (ii), because the calculations are based on an average of First Horizon’s stock

2


 

 

 

 

price during the 10-day period ending on the day preceding the closing date of the merger, the values of the two forms of consideration at the closing of the merger are not likely to be the same.

     

First Horizon will not issue any fractional shares of First Horizon common stock in the merger. In lieu of fractional shares of First Horizon common stock, First Horizon will pay to each former Capital Bank Financial common stockholder who holds fractional shares an amount in cash equal to the fractional share that such shareholder would otherwise be entitled to receive (rounded to the nearest cent), determined by multiplying the First Horizon share closing price by the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of First Horizon common stock that such shareholder would otherwise be entitled to receive.

     

The merger agreement provides that the cash component will equal $410,535,300.

     

The First Horizon share closing price will not be known at the time of the First Horizon and Capital Bank Financial special meetings and may be less than the current price or the price at the time of the applicable special meeting. Based on the closing sale price of a share of First Horizon common stock on the NYSE on May 2, 2017, which was $18.56 and the number of shares of Capital Bank Financial common stock outstanding on that date (which was 51,966,497), the per share consideration would have been $40.38 and the exchange ratio would have been 2.1756 and accordingly, approximately 20% of the shares of Capital Bank Financial common stock would have been converted into the right to receive the cash consideration and approximately 80% of such shares would have been converted into the right to receive the stock consideration. Based on the closing sale price of $18.06 for a share of First Horizon common stock on the NYSE on July 25, 2017, the last date before the date of this joint proxy statement/prospectus for which it was practicable to obtain this information, and 52,090,197 shares of Capital Bank Financial common stock outstanding, the per share cash consideration would have been $39.505 and the exchange ratio would have been 2.1874 and accordingly, approximately 19.95% of the shares of Capital Bank Financial common stock would have been converted into the right to receive the cash consideration and approximately 80.05% of such shares would have been converted into the right to receive the stock consideration. Based on information as of such date, the aggregate number of First Horizon common stock to be issued as stock consideration would have been 91,210,673 and, accordingly, approximately 71.97% of outstanding First Horizon common stock following the merger would have been held by stockholders that were holders of First Horizon common stock immediately prior to the effectiveness of the merger and approximately 28.03% of outstanding First Horizon common stock would have been held by shareholders that were Capital Bank Financial common stockholders immediately prior to the effectiveness of the merger.

     

We urge you to obtain current market quotations for First Horizon (trading symbol “FHN”) and Capital Bank Financial (trading symbol “CBF”).

 

 

Q:

 

Will Capital Bank Financial common stockholders receive the form of consideration they elect?

 

A:

 

A Capital Bank Financial common stockholder may not receive the form of consideration that such stockholder elects in the merger. The proration and adjustment procedures in the merger agreement will result, regardless of the elections made, in the total cash consideration being equal to the cash component. Accordingly, the number of shares of Capital Bank Financial common stock to be converted into the right to receive the cash consideration (which we refer to as the “cash conversion number”) will be determined by dividing the cash component by the per share cash consideration, and the balance of the shares will be converted into the right to receive the stock consideration. Pursuant to proration and adjustment procedures in the merger agreement, if the number of shares of Capital Bank Financial common stock for which a cash election has been made exceeds the cash conversion number, a pro rata portion of all those shares for which a cash election has been made will instead be converted into the right to receive the stock consideration. Similarly, if the number of shares of Capital Bank Financial common stock for which a cash election has been made is less than the cash conversion number, a pro rata portion of all the shares of Capital Bank Financial common stock for which a stock

3


 

   

  election has been made will instead be converted into the right to receive the cash consideration. In each case, outstanding shares of Capital Bank Financial common stock with respect to which no election has been made will be converted to the undersubscribed form of merger consideration first. The allocation of the consideration payable to Capital Bank Financial common stockholders in the merger will not be known until the results of the merger consideration elections made by Capital Bank Financial common stockholders are tallied, which will not occur until near or after the closing of the merger. See “The Merger Agreement—Merger Consideration” beginning on page 112.

 

Q:

 

How will Capital Bank Financial common stockholders make their election to receive either the cash consideration or the stock consideration in the merger?

 

A:

 

An election form will be mailed to each holder of record of Capital Bank Financial common stock as of the business day immediately preceding the mailing. The mailing will occur at least 20 business days prior to the anticipated election deadline, which is expected to be 5:00 p.m. local time on the date First Horizon and Capital Bank Financial expect to be two business days before the closing date. First Horizon will also make an election form available to each Capital Bank Financial common stockholder who requests such form before the election deadline. Each Capital Bank Financial common stockholder should complete and return the election form, along with Capital Bank Financial stock certificate(s) (or a properly completed notice of guaranteed delivery), according to the instructions included with the form. The election form will be provided to Capital Bank Financial common stockholders under separate cover and is not being provided with this document.

     

If you own shares of Capital Bank Financial common stock in “street name” through a bank, broker or other nominee and you wish to make an election, you should seek instructions from the bank, broker or other nominee holding your shares concerning how to make an election. If you do not send in the election form with your stock certificate(s) by the election deadline, you will be treated as though you had not made an election.

 

Q:

 

What happens if a Capital Bank Financial common stockholder does not make a valid election to receive either the cash consideration or the stock consideration?

 

A:

 

If a Capital Bank Financial common stockholder does not return a properly completed election form by the election deadline specified in the election form, such stockholder’s shares of Capital Bank Financial common stock will be considered “non-election” shares and will be converted into the right to receive the per share stock consideration or the per share cash consideration according to the allocation procedures specified in the merger agreement. Generally, in the event one form of merger consideration (i.e., cash or shares of First Horizon common stock) is undersubscribed, shares of Capital Bank Financial common stock for which no election was validly made will be allocated to that form of merger consideration before shares of Capital Bank Financial common stock electing the oversubscribed form of merger consideration will be allocated to the undersubscribed form of merger consideration pursuant to the proration and adjustment procedures. Accordingly, although electing one form of merger consideration will not guarantee you will receive that form of merger consideration for all of your shares of Capital Bank Financial common stock, in the event proration is necessary, electing shares will be allocated the undersubscribed form of consideration only after such consideration is allocated to “non-election” shares.

 

Q:

 

What will First Horizon shareholders receive in the merger?

 

A:

 

If the merger is completed, First Horizon shareholders will not receive any merger consideration and will continue to hold the shares of First Horizon stock that they currently hold. Following the merger, shares of First Horizon common stock will continue to be traded on the NYSE under the symbol “FHN.”

4


 

 

Q:

 

Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed?

 

A:

 

Yes. Because the merger consideration includes a component based on the First Horizon share closing price, any changes in the market price of First Horizon common stock will have a corresponding effect on the amount of per share cash consideration. However, such changes will not affect the aggregate amount of cash consideration, which is fixed at $410,535,300. In addition, any change in the market price of First Horizon common stock prior to the completion of the merger will affect the value of the per share stock consideration.

 

Q:

 

How does the First Horizon board of directors recommend that I vote at the First Horizon special meeting?

 

A:

 

The First Horizon board of directors recommends that you vote “FOR” the First Horizon stock issuance proposal and “FOR” the First Horizon adjournment proposal.

 

Q:

 

How does the Capital Bank Financial board of directors recommend that I vote at the Capital Bank Financial special meeting?

 

A:

 

The Capital Bank Financial board of directors recommends that you vote “FOR” the Capital Bank Financial merger proposal, “FOR” the Capital Bank Financial compensation proposal, and “FOR” the Capital Bank Financial adjournment proposal.

 

Q:

 

When and where are the meetings?

 

A:

 

The First Horizon special meeting will be held on September 7, 2017 at the M-Level Auditorium, First Tennessee Building, 165 Madison Avenue, Memphis, Tennessee 38103, at 3:00 p.m. local time.

     

The Capital Bank Financial special meeting will be held on September 7, 2017 at the DoubleTree Suites by Hilton Hotel, 6300 Morrison Blvd., Charlotte, North Carolina 28211, at 4:00 p.m. local time.

 

Q:

 

What do I need to do now?

 

A:

 

After you have carefully read this joint proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly so that your shares are represented and voted at the First Horizon special meeting and/or Capital Bank Financial special meeting, as applicable. If you are both a shareholder of First Horizon and a stockholder of Capital Bank Financial, you will need to vote your First Horizon and Capital Bank Financial shares separately and to submit a separate proxy card to each company. If you hold your shares in your name as a stockholder of record, you must complete, sign, date, and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. Alternatively, you may vote through the Internet or by telephone. Information and applicable deadlines for voting through the Internet or by telephone are set forth in the enclosed proxy card instructions. If you hold your shares in “street name” through a bank, broker or other holder of record, you must direct your bank, broker or other holder of record how to vote in accordance with the instructions you have received from your bank, broker or other holder of record. “Street name” holders who wish to vote in person at the First Horizon special meeting or Capital Bank Financial special meeting will need to obtain a legal proxy from the institution that holds their shares.

 

Q:

 

What constitutes a quorum for the First Horizon special meeting?

 

A:

 

The presence at the First Horizon special meeting, in person or by proxy, of holders of a majority of the outstanding shares of First Horizon common stock entitled to vote at the First Horizon special meeting will constitute a quorum for the transaction of business. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

5


 

 

Q:

 

What constitutes a quorum for the Capital Bank Financial special meeting?

 

A:

 

The presence at the Capital Bank Financial special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Capital Bank Financial Class A common stock entitled to vote at the Capital Bank Financial special meeting will constitute a quorum for the transaction of business. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

Q:

 

What is the vote required to approve each proposal at the First Horizon special meeting?

 

A:

 

First Horizon stock issuance proposal:

 

 

Standard: Approval of the First Horizon stock issuance proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the First Horizon special meeting.

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the First Horizon special meeting, or fail to instruct your bank or broker how to vote with respect to the First Horizon stock issuance proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

      First Horizon adjournment proposal:

 

 

Standard: Approval of the First Horizon adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the First Horizon special meeting.

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the First Horizon special meeting, or fail to instruct your bank or broker how to vote with respect to the First Horizon adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

     

Holders of First Horizon’s depositary shares (representing a 1/4000th interest in a share of non-cumulative perpetual preferred stock, series A), are not entitled to, and are not requested to, vote at the First Horizon special meeting.

 

Q:

 

What is the vote required to approve each proposal at the Capital Bank Financial special meeting?

 

A:

 

Capital Bank Financial merger proposal:

 

 

Standard: Approval of the Capital Bank Financial merger proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of Capital Bank Financial Class A common stock.

 

 

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy, or fail to instruct your bank or broker with respect to the Capital Bank Financial merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

      Capital Bank Financial compensation proposal:

 

 

Standard: Approval of the Capital Bank Financial compensation proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Capital Bank Financial special meeting.

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Capital Bank Financial special meeting, or fail to instruct your bank or broker how to vote with respect to the Capital Bank Financial compensation proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

      Capital Bank Financial adjournment proposal:

 

  Standard: Approval of the Capital Bank Financial adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Capital Bank Financial special meeting.

6


 

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Capital Bank Financial special meeting, or fail to instruct your bank or broker how to vote with respect to the Capital Bank Financial adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

     

First Horizon has entered into agreements (which we refer to as the “support agreements”) with (1) Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. (which we refer to collectively as “Oak Hill Capital Partners”), (2) Crestview NAFH, LLC and Crestview Advisors, L.L.C. (which we refer to collectively as “Crestview Partners”) and (3) R. Eugene Taylor, Capital Bank Financial’s Chairman and Chief Executive Officer, pursuant to which each of Oak Hill Capital Partners, Crestview Partners and Mr. Taylor (which we refer to collectively as the “supporting stockholders”) has agreed, subject to certain exceptions, to vote all shares of Class A common stock beneficially owned by them in favor of approval of the Capital Bank Financial merger proposal. See “Support Agreements.”

     

As of the record date, the supporting stockholders beneficially owned, in the aggregate, 5,687,272 shares of Capital Bank Financial Class A common stock.

 

Q:

 

Why is my vote important?

 

A:

 

If you do not vote, it will be more difficult for First Horizon or Capital Bank Financial to obtain the necessary quorum to hold their special meetings. In addition, if you are a holder of shares of Capital Bank Financial Class A common stock, your failure to submit a proxy or vote in person, or failure to instruct your bank or broker how to vote will have the same effect as a vote “AGAINST” the Capital Bank Financial merger proposal.

 

Q:

 

What will happen if Capital Bank Class A common stockholders do not approve the Capital Bank Financial compensation proposal?

 

A:

 

Approval of the Capital Bank Financial compensation proposal is not a condition to completion of the merger, and the vote with respect to this proposal is advisory only and will not be binding on First Horizon or Capital Bank Financial. If the merger is completed, the merger-related compensation may be paid to Capital Bank Financial’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if Capital Bank Financial Class A common stockholders fail to approve the Capital Bank Financial compensation proposal.

 

Q:

 

Are there any risks that I should consider in deciding whether to vote for the approval of the merger agreement?

 

A:

 

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 35 of this joint proxy statement/prospectus. You also should read and carefully consider the risk factors of First Horizon and Capital Bank Financial included in the documents that are incorporated by reference into this joint proxy statement/prospectus.

 

Q:

 

If my shares of common stock are held in “street name” by my bank or broker, will my bank or broker automatically vote my shares for me?

 

A:

 

No. Your bank or broker cannot vote your shares without instructions from you. If your shares are held in “street name” through a bank, broker, or other holder of record, you must provide the record holder of your shares with instructions on how to vote the shares. Please follow the voting instructions provided by the bank or broker. You may not vote shares held in street name by returning a proxy card directly to First Horizon or Capital Bank Financial, or by voting in person at the First Horizon special meeting or the Capital Bank Financial special meeting, unless you provide a “legal proxy,” which you must obtain from your broker, bank, or other holder of record. Further, brokers, banks, or other holders of record who hold shares of First Horizon common stock or shares of Capital Bank Financial Class A common stock on behalf of their customers may not give a proxy to First Horizon or Capital Bank Financial to vote those shares

7


 

 

 

  with respect to any of the proposals without specific instructions from their customers, as brokers, banks, and other holders of record do not have discretionary voting power on these matters. If you are a Capital Bank Financial “street name” stockholder, failure to instruct your bank, broker, or other holder of record how to vote will have the same effect as a vote “AGAINST” the Capital Bank Financial merger proposal.

 

Q:

 

Can I attend the First Horizon and Capital Bank Financial special meetings and vote my shares in person?

 

A:

 

Yes. All holders of First Horizon common stock and Capital Bank Financial Class A common stock, including holders of record and holders who hold their shares through banks, brokers or any other holder of record, are invited to attend their respective special meetings. Holders of record of First Horizon common stock and Capital Bank Financial Class A common stock can vote in person at the First Horizon special meeting and Capital Bank Financial special meeting, respectively. If you are not a holder of record (i.e., if your shares are held for you in “street name”), you must obtain a legal proxy, executed in your favor, from the record holder of your shares, such as a broker, bank, or other holder of record, to be able to vote in person at the meetings. If you plan to attend a meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted to the meeting. First Horizon and Capital Bank Financial reserve the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. Whether or not you intend to be present at the First Horizon special meeting or the Capital Bank Financial special meeting, you are urged to sign, date, and return your proxy card, or to vote via the Internet or by telephone, promptly. If you are then present and wish to vote your shares in person, your original proxy may be revoked by voting by ballot at the First Horizon special meeting or the Capital Bank Financial special meeting, as applicable.

 

Q:

 

Can I change my vote?

 

A:

 

First Horizon shareholders: Yes. If you are a holder of record of First Horizon common stock, you may change your vote at any time before your shares of First Horizon common stock are voted at the First Horizon special meeting by: (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to First Horizon’s corporate secretary, (3) attending the First Horizon special meeting in person, notifying the corporate secretary and voting by ballot at the First Horizon special meeting, or (4) voting by telephone or the Internet at a later time. Attendance at the First Horizon special meeting will not automatically revoke your proxy. A revocation or later-dated proxy received by First Horizon after the vote will not affect the vote. First Horizon’s corporate secretary’s mailing address is: Corporate Secretary, First Horizon National Corporation, P.O. Box 84, Memphis, Tennessee, 38101. If you hold your shares in “street name” through a bank or broker, you should contact your bank or broker to change your vote.

     

Capital Bank Financial Class A common stockholders: Yes. If you are a holder of record of Capital Bank Financial Class A common stock, you may change your vote at any time before your shares of Capital Bank Financial Class A common stock are voted at the Capital Bank Financial special meeting by: (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to Capital Bank Financial’s corporate secretary, (3) attending the Capital Bank Financial special meeting in person, notifying the corporate secretary and voting by ballot at the Capital Bank Financial special meeting, or (4) voting by telephone or the Internet at a later time. Attendance at the Capital Bank Financial special meeting will not automatically revoke your proxy. A revocation or later-dated proxy received by Capital Bank Financial after the vote will not affect the vote. Capital Bank Financial’s corporate secretary’s mailing address is: Secretary, Capital Bank Financial Corp., 4725 Piedmont Row Drive, Suite 110, Charlotte, North Carolina 28210. If you hold your shares in “street name” through a bank or broker, you should contact your bank or broker to change your vote.

8


 

 

Q:

 

Will Capital Bank Financial be required to submit the proposal to adopt the merger agreement to its stockholders even if the Capital Bank Financial board of directors has withdrawn, modified, or qualified its recommendation?

 

A:

 

Yes. Unless the merger agreement is terminated before the Capital Bank Financial special meeting, Capital Bank Financial is required to submit the proposal to adopt the merger agreement to its stockholders even if the Capital Bank Financial board of directors has withdrawn or modified its recommendation. Such a decision by the Capital Bank Financial board of directors would be disclosed.

 

Q:

 

What are the U.S. federal income tax consequences of the mergers to Capital Bank Financial common stockholders?

 

A:

 

The mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and it is a condition to the respective obligations of First Horizon and Capital Bank Financial to complete the merger that each of First Horizon and Capital Bank Financial receives a legal opinion to that effect. Assuming the receipt and accuracy of these opinions, the tax consequences of the mergers to U.S. Capital Bank Financial common stockholders are as follows:

 

 

a holder who receives solely cash for shares of Capital Bank Financial common stock will recognize gain or loss equal to the difference between the amount of cash received by a holder of Capital Bank Financial common stock and such holder’s tax basis in such holder’s shares of Capital Bank Financial common stock;

 

 

a holder who receives solely shares of First Horizon common stock (or receives First Horizon common stock and cash solely in lieu of a fractional share) in exchange for shares of Capital Bank Financial common stock generally will not recognize any gain or loss upon the merger, except with respect to the cash received in lieu of fractional share of First Horizon common stock;

 

 

a holder who receives a combination of First Horizon common stock and cash (other than cash received instead of a fractional share of First Horizon common stock) in exchange for shares of Capital Bank Financial common stock generally will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount by which the sum of the fair market value of the First Horizon common stock and cash received by a holder pursuant to the merger exceeds such holder’s tax basis in its shares of Capital Bank Financial common stock, and (2) the amount of cash received by such holder pursuant to the merger (excluding any cash received in lieu of a fractional share of First Horizon common stock, as discussed below).

Gain or loss that Capital Bank Financial common stockholders recognize in connection with the mergers will generally constitute capital gain or loss and will constitute long-term capital gain or loss if such holders have held their Capital Bank Financial common stock for more than one year as of the effective date of the merger.

For more detailed information, please refer to “Material U.S. Federal Income Tax Consequences of the Mergers.”

The United States federal income tax consequences described above may not apply to all Capital Bank Financial common stockholders. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.

 

Q:

 

Are Capital Bank Financial common stockholders entitled to dissenters’ rights?

 

A:

 

Yes. Capital Bank Financial common stockholders are expected to be entitled to dissenters’ rights. For further information, see “The Mergers—Dissenters’ Rights in the Merger.”

9


 

 

Q:

 

If I am a Capital Bank Financial common stockholder, should I send in my Capital Bank Financial stock certificate(s) now?

 

A:

 

No. Please do not send in your Capital Bank Financial stock certificates with your proxy. You should submit your Capital Bank Financial stock certificates with your election form. Any Capital Bank Financial common stockholder who has not submitted their physical stock certificate(s) with a form of election will be sent materials after the merger closes to effect the exchange of their Capital Bank Financial common stock for the merger consideration. See “The Merger Agreement—Exchange of Shares; Elections as to Form of Consideration.”

 

Q:

 

Whom may I contact if I cannot locate my Capital Bank Financial stock certificate(s)?

 

A:

 

If you are unable to locate your original Capital Bank Financial stock certificate(s), you should contact American Stock Transfer & Trust Company, LLC, Capital Bank Financial’s transfer agent, at 3rd Floor, 6201 15th Avenue, Brooklyn, New York, NY 11219 or by telephone at (718) 921-8124.

 

Q:

 

What should I do if I receive more than one set of voting materials?

 

A:

 

First Horizon shareholders and Capital Bank Financial Class A common stockholders may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares of First Horizon common stock and/or shares of Capital Bank Financial Class A common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of First Horizon common stock or Capital Bank Financial Class A common stock and your shares are registered in more than one name, you will receive more than one proxy card. In addition, if you are a holder of both First Horizon common stock and Capital Bank Financial Class A common stock, you will receive one or more separate proxy cards or voting instruction cards for each company. Please complete, sign, date, and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this joint proxy statement/prospectus to ensure that you vote every share of First Horizon common stock and/or Capital Bank Financial Class A common stock that you own.

 

Q:

 

Where can I find the voting results of the First Horizon and Capital Bank Financial special meetings?

 

A:

 

The preliminary voting results will be announced at the applicable special meeting. In addition, within four business days following certification of the final voting results, First Horizon and Capital Bank Financial will each file the final voting results with the SEC on a Current Report on Form 8-K.

 

Q:

 

When do you expect to complete the merger?

 

A:

 

First Horizon and Capital Bank Financial expect to complete the merger in the fourth quarter of 2017. However, neither First Horizon nor Capital Bank Financial can assure you of when or if the merger will be completed. First Horizon must obtain the approval of First Horizon shareholders for the issuance of shares of First Horizon common stock at its special meeting, and Capital Bank Financial must obtain the approval of Capital Bank Financial Class A common stock holders to adopt the merger agreement at its special meeting. First Horizon and Capital Bank Financial must also obtain necessary regulatory approvals in addition to satisfying certain other closing conditions.

 

Q:

 

What happens if the merger is not completed?

 

A:

 

If the merger is not completed, Capital Bank Financial common stockholders will not receive any consideration for their shares of Capital Bank Financial common stock in connection with the merger. Instead, Capital Bank Financial will remain an independent, public company and Capital Bank Financial common stock will continue to be listed and traded on the NASDAQ Global

10


 

 

 

  Select Market (which we refer to as the “NASDAQ”). In addition, if the merger agreement is terminated in certain circumstances, Capital Bank Financial may be required to pay a termination fee. See “The Merger Agreement—Termination Fee” for a complete discussion of the circumstances under which a termination fee will be required to be paid.

 

Q:

 

Whom should I call with questions?

 

A:

 

First Horizon shareholders: If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus, or need help voting your shares of First Horizon common stock, please contact First Horizon’s proxy solicitor, Morrow Sodali LLC, at 470 West Avenue, Stamford, Connecticut 06902, or toll-free at (800) 662-5200.

     

Capital Bank Financial common stockholders: If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus, or need help voting your shares of Capital Bank Financial Class A common stock, please contact Capital Bank Financial’s proxy solicitor, Alliance Advisors, at 200 Broadacres Drive, 3rd Floor, Bloomfield, New Jersey 07003, or toll-free at (833) 501-4704.

11


 

SUMMARY

This summary highlights selected information from this joint proxy statement/prospectus. It may not contain all of the information that is important to you. We urge you to read carefully the entire joint proxy statement/prospectus, including the annexes, and the other documents to which we refer in order to fully understand the mergers. Additional important information is also contained in the documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.” Each item in this summary refers to the page of this joint proxy statement/prospectus on which that subject is discussed in more detail.

In the Merger, Capital Bank Financial Common Stockholders Will Receive Either First Horizon Common Stock or Cash (page 56)

First Horizon and Capital Bank Financial are proposing a strategic merger. If the merger is completed, each then-outstanding share of Capital Bank Financial common stock, with certain limited exceptions, will be converted into the right to receive either (i) an amount in cash equal to the sum of (A) $7.90 plus (B) the product of 1.75 multiplied by the First Horizon share closing price, or (ii) the number of shares of First Horizon common stock equal to the quotient of (A) the per share cash consideration divided by (B) the First Horizon share closing price, in each case at the election of the applicable Capital Bank Financial common stockholder, subject to procedures applicable to oversubscription and undersubscription for cash consideration. The aggregate amount of the cash consideration is fixed at $410,535,300.

As a result of the foregoing, based on the closing sale price of $18.06 for a share of First Horizon common stock on the NYSE on July 25, 2017, the last date before the date of this joint proxy statement/prospectus for which it was practicable to obtain this information, and 52,090,197 shares of Capital Bank Financial common stock outstanding, the per share cash consideration would have been $39.505 and the exchange ratio would have been 2.1874 and accordingly, approximately 19.95% of the shares of Capital Bank Financial common stock would have been converted into the right to receive the cash consideration and approximately 80.05% of such shares would have been converted into the right to receive the stock consideration. Based on information as of such date, the aggregate number of shares of First Horizon common stock to be issued as stock consideration would have been 91,210,673 and, accordingly, approximately 28.03% of outstanding shares of First Horizon common stock would have been held by shareholders that were Capital Bank Financial common stockholders immediately prior to the effectiveness of the merger.

No fractional shares of First Horizon common stock will be issued in connection with the merger. Capital Bank Financial common stockholders who would otherwise be entitled to a fraction of a share of First Horizon common stock upon completion of the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent) based on the First Horizon share closing price, as further discussed in this joint proxy statement/prospectus.

First Horizon common stock is listed on the NYSE under the symbol “FHN” and Capital Bank Financial Class A common stock is listed on the NASDAQ under the symbol “CBF.” The following table shows the closing sale prices of First Horizon common stock and Capital Bank Financial Class A common stock as reported on the NYSE and NASDAQ, respectively, on March 14, 2017, the last full trading day before rumors of a transaction by Capital Bank Financial were reported by Bloomberg, on May 3, 2017, the last full trading day before the public announcement of the signing of the merger agreement, and on July 25, 2017, the last trading day before the date of this joint proxy statement/prospectus for which it was practicable to obtain information. The table also shows the implied value of the merger consideration payable for each share of Capital Bank Financial common stock on March 14, 2017, May 3, 2017 and July 25, 2017, calculated by multiplying the First Horizon share closing price by 1.75 and adding $7.90 in cash.

12


 

 

 

 

 

 

 

 

 

 

First
Horizon
Common
Stock

 

Capital
Bank
Financial
Common
Stock

 

Implied Value
of One Share
of Capital
Bank
Financial
Common
Stock

March 14, 2017

 

 

$

 

19.34

 

 

 

$

 

40.90

 

 

 

$

 

41.75

 

May 3, 2017

 

 

$

 

18.82

 

 

 

$

 

42.05

 

 

 

$

 

40.84

 

July 25, 2017

 

 

$

 

18.06

   

 

$

 

39.10

   

 

$

 

39.51

 

The merger agreement governs the mergers. The merger agreement is included in this joint proxy statement/prospectus as Annex A. All descriptions in this summary and elsewhere in this joint proxy statement/prospectus of the terms and conditions of the mergers are qualified by reference to the merger agreement. Please read the merger agreement carefully for a more complete understanding of the mergers.

The Capital Bank Financial Board of Directors Recommends that Capital Bank Financial Class A Common Stockholders Vote “FOR” the Adoption of the Merger Agreement and the Other Proposals Presented at the Capital Bank Financial Special Meeting (page 63)

The Capital Bank Financial board of directors has determined that the mergers, the merger agreement, and the transactions contemplated by the merger agreement are advisable and in the best interests of Capital Bank Financial and its stockholders, and has approved the merger agreement. The Capital Bank Financial board of directors recommends that Capital Bank Financial Class A common shareholders vote “FOR” the Capital Bank Financial merger proposal and “FOR” the other proposals presented at the Capital Bank Financial special meeting. For the factors considered by the Capital Bank Financial board of directors in reaching its decision to approve the merger agreement, see “The Mergers—Capital Bank Financial’s Reasons for the Merger; Recommendation of the Capital Bank Financial Board of Directors.”

The First Horizon Board of Directors Recommends that First Horizon Shareholders Vote “FOR” the First Horizon Stock Issuance Proposal at the First Horizon Special Meeting (page 61)

The First Horizon board of directors has approved the mergers, the stock issuance and the merger agreement, has determined that the merger agreement and the transactions contemplated thereby, including the mergers and the stock issuance, are advisable and in the best interests of First Horizon and its shareholders, and recommends that First Horizon shareholders vote “FOR” the First Horizon stock issuance proposal. For the factors considered by the First Horizon board of directors in reaching its decision to approve the merger agreement, see “The Mergers—First Horizon’s Reasons for the Merger; Recommendation of the First Horizon Board of Directors.”

Opinions of First Horizon’s Financial Advisors (page 78 and Annexes C and D)

Barclays Capital Inc. (page 78)

First Horizon engaged Barclays Capital Inc. (which we refer to as “Barclays”) to act as a financial advisor with respect to a possible purchase of Capital Bank Financial, pursuant to an engagement letter dated April 21, 2017. In deciding to approve the proposed merger, First Horizon’s board of directors considered the oral opinion of Barclays, confirmed by delivery of a written opinion, dated May 3, 2017, to First Horizon’s board of directors to the effect that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the merger consideration to be paid by First Horizon in the proposed merger was fair to First Horizon, from a financial point of view.

The full text of Barclays’ written opinion, dated as of May 3, 2017, is attached as Annex C to this joint proxy statement/prospectus. Barclays’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review

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undertaken by Barclays in rendering its opinion. You are encouraged to read the opinion carefully in its entirety.

Morgan Stanley & Co. LLC (page 88)

In connection with the merger, First Horizon retained Morgan Stanley & Co. LLC (which we refer to as “Morgan Stanley”) as one of its financial advisors to provide it with financial advisory services in connection with a possible acquisition of Capital Bank Financial, and, if requested by First Horizon, a financial opinion with respect thereto. Morgan Stanley rendered to the First Horizon board of directors at its special meeting on May 3, 2017, its oral opinion, confirmed by delivery of a written opinion dated May 3, 2017, that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth therein, the merger consideration to be paid by First Horizon pursuant to the merger agreement was fair, from a financial point of view, to First Horizon.

The full text of the written opinion of Morgan Stanley, dated May 3, 2017, is attached as Appendix D and incorporated by reference into this joint proxy statement/prospectus. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. Shareholders are urged to, and should, read the opinion carefully and in its entirety. Morgan Stanley’s opinion is directed to the First Horizon board of directors and addresses only the fairness, from a financial point of view, to First Horizon of the merger consideration to be paid by First Horizon pursuant to the merger agreement as of the date of the opinion. Morgan Stanley’s opinion does not address any other aspect of the transactions contemplated by the merger agreement and does not constitute a recommendation to shareholders of First Horizon or stockholders of Capital Bank Financial as to how to vote at any shareholders meetings held with respect to the merger or any other matter or whether to take any other action with respect to the merger. In addition, the opinion does not in any manner address the price at which First Horizon common stock will trade following the consummation of the merger or at any time. The summary of Morgan Stanley’s opinion and the methodology that Morgan Stanley used to render its opinion set forth in this joint proxy statement/prospectus under the caption entitled “The Mergers—Opinions of First Horizon’s Financial Advisors—Morgan Stanley & Co. LLC” is qualified in its entirety by reference to the full text of Morgan Stanley’s opinion.

Opinion of Capital Bank Financial’s Financial Advisor (page 66 and Annex E)

At the May 3, 2017 meeting at which Capital Bank Financial’s board of directors considered and approved the merger agreement, Sandler O’Neill & Partners, L.P. (which we refer to as “Sandler O’Neill”) delivered to the Capital Bank Financial board of directors its oral opinion, which was subsequently confirmed in writing on May 3, 2017, to the effect that, as of such date, the merger consideration was fair to the holders of Capital Bank Financial common stock from a financial point of view.

The full text of Sandler O’Neill’s opinion is attached as Annex E to this joint proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. Capital Bank Financial common stockholders are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.

Sandler O’Neill’s opinion speaks only as of the date of the opinion. The opinion was directed to Capital Bank Financial’s board of directors in connection with its consideration of the merger agreement and the merger and does not constitute a recommendation to any shareholder of Capital Bank Financial as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the approval of the merger agreement and the merger or what election to make regarding the per share stock consideration, the per share cash consideration or any combination thereof. Sandler O’Neill’s opinion was directed only to the fairness, from a financial

14


 

point of view, of the merger consideration to the holders of Capital Bank Financial common stock, without regard to differences between Capital Bank Financial Class A common stock and Capital Bank Financial Class B common stock, and did not address the relative fairness of the merger consideration between holders of Capital Bank Financial Class A common stock and holders of Capital Bank Financial Class B common stock, the allocation of the merger consideration between cash and First Horizon common stock or the relative fairness of the per share stock consideration and the per share cash consideration. Sandler O’Neill did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the merger by any officer, director or employee of Capital Bank Financial or First Horizon, or any class of such persons, if any, relative to the compensation to be received in the merger by any other shareholder.

Treatment of Capital Bank Financial Compensatory Equity Awards (page 116)

Options. At the effective time of the merger, each outstanding option to purchase shares of Capital Bank Financial common stock will fully vest (to the extent unvested) and be assumed by First Horizon and converted into an option to purchase a number of shares of First Horizon common stock (rounded down to the nearest whole share) equal to the number of shares of Capital Bank Financial common stock underlying the Capital Bank Financial option multiplied by the exchange ratio, with an exercise price per share (rounded up to the nearest whole cent) equal to the exercise price per share of the Capital Bank Financial stock option divided by the exchange ratio. Except as described in the preceding sentence, each such First Horizon stock option will continue to have the same terms and conditions as applied to the corresponding Capital Bank Financial stock option immediately prior to the effective time of the merger.

Restricted Stock. At the effective time of the merger, each outstanding share of restricted stock of Capital Bank Financial will fully vest and be cancelled and converted into the right to receive an amount in cash equal to the per share cash consideration, less applicable tax withholdings.

For further information, see “The Merger Agreement—Treatment of Capital Bank Financial Compensatory Equity Awards.”

Capital Bank Financial Will Hold Its Special Meeting on September 7, 2017 (page 43)

The Capital Bank Financial special meeting will be held on September 7, 2017 at the DoubleTree Suites by Hilton Hotel, 6300 Morrison Blvd., Charlotte, North Carolina 28211, at 4:00 p.m. local time. At the Capital Bank Financial special meeting of Class A common stockholders, you will be asked to consider and vote upon the following matters:

 

 

the Capital Bank Financial merger proposal;

 

 

the Capital Bank Financial compensation proposal; and

 

 

the Capital Bank Financial adjournment proposal.

Only holders of record of Capital Bank Financial Class A common stock at the close of business on July 24, 2017 (which we refer to as the “Capital Bank Financial record date”) will be entitled to vote at the Capital Bank Financial special meeting. As of the record date, there were 35,456,768 shares of Capital Bank Financial Class A common stock outstanding and entitled to vote at the Capital Bank Financial special meeting, held by approximately 4,442 holders of record. Each share of Capital Bank Financial Class A common stock entitles the holder to one vote at the Capital Bank Financial special meeting on each proposal to be considered at the Capital Bank Financial special meeting.

Each of R. Eugene Taylor, the Chairman and Chief Executive Officer of Capital Bank Financial, who as of the Capital Bank Financial record date had the right to vote approximately 621,253, or approximately 1.75%, of the outstanding shares of Capital Bank Financial Class A common stock, Crestview Partners, which as of the Capital Bank Financial record date had the right to vote approximately 2,583,760, or approximately 7.29%, of the outstanding shares of Capital Bank Financial Class A common stock and Oak Hill Capital Partners, which as of the Capital Bank

15


 

Financial record date had the right to vote approximately 2,482,259, or approximately 7%, of the outstanding shares of Capital Bank Financial Class A common stock, has agreed, subject to certain exceptions, to vote his or its shares of Capital Bank Financial Class A common stock in favor of approval of the Capital Bank Financial merger proposal.

For further information, see “The Capital Bank Financial Special Meeting” and “Support Agreements.”

First Horizon Will Hold Its Special Meeting on September 7, 2017 (page 49)

The special meeting of First Horizon shareholders will be held on September 7, 2017 at the M-Level Auditorium, First Tennessee Building, 165 Madison Avenue, Memphis, Tennessee 38103, at 3:00 p.m. local time. At the First Horizon special meeting, First Horizon shareholders will be asked to approve the First Horizon stock issuance proposal and the First Horizon adjournment proposal.

Only holders of record of First Horizon common stock at the close of business on July 24, 2017 (which we refer to as the “First Horizon record date”) are entitled to receive notice of and to vote at the First Horizon special meeting. As of the First Horizon record date, there were 234,145,714 shares of First Horizon common stock outstanding and entitled to vote at the First Horizon special meeting, held by approximately 5,050 holders of record. Each share of First Horizon common stock entitles the holder to one vote at the First Horizon special meeting on each proposal to be considered at the First Horizon special meeting.

For further information, see “The First Horizon Special Meeting.”

Capital Bank Special Meeting Proposals: Required Vote; Treatment of Abstentions and Failure to Vote Required; Treatment of Abstentions and Failure to Vote (page 43)

Capital Bank Financial merger proposal:

 

 

Standard: Approval of the Capital Bank Financial merger proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of Capital Bank Financial Class A common stock.

 

 

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy, or fail to instruct your bank or broker with respect to the Capital Bank Financial merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

Capital Bank Financial compensation proposal:

 

 

Standard: Approval of the Capital Bank Financial compensation proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Capital Bank Financial special meeting.

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Capital Bank Financial special meeting, or fail to instruct your bank or broker how to vote with respect to the Capital Bank Financial compensation proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

Capital Bank Financial adjournment proposal:

 

 

Standard: Approval of the Capital Bank Financial adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Capital Bank Financial special meeting.

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Capital Bank Financial special meeting, or fail to instruct your bank or broker how to vote with respect to the Capital Bank Financial adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

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For further information, see “The Capital Bank Financial Special MeetingVote Required; Treatment of Abstentions and Failure to Vote.”

First Horizon Special Meeting Proposal: Required Vote; Treatment of Abstentions and Failure to Vote (page 49)

First Horizon stock issuance proposal:

 

 

Standard: Approval of the First Horizon stock issuance proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the First Horizon special meeting.

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the First Horizon special meeting, or fail to instruct your bank or broker how to vote with respect to the First Horizon stock issuance proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

First Horizon adjournment proposal:

 

 

Standard: Approval of the First Horizon adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the First Horizon special meeting.

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the First Horizon special meeting, or fail to instruct your bank or broker how to vote with respect to the First Horizon adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

For further information, see “The First Horizon Special MeetingVote Required; Treatment of Abstentions and Failure to Vote.”

Material U.S. Federal Income Tax Consequences of the Mergers (page 133)

The mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and it is a condition to the respective obligations of First Horizon and Capital Bank Financial to complete the merger that each of First Horizon and Capital Bank Financial receives a legal opinion to that effect. Assuming the receipt and accuracy of these opinions, the tax consequences of the mergers to U.S. Capital Bank Financial common stockholders are as follows:

 

 

a holder who receives solely cash for shares of Capital Bank Financial common stock will recognize gain or loss equal to the difference between the amount of cash received by a holder of Capital Bank Financial common stock and such holder’s tax basis in such holder’s shares of Capital Bank Financial common stock;

 

 

a holder who receives solely shares of First Horizon common stock (or receives First Horizon common stock and cash solely in lieu of a fractional share) in exchange for shares of Capital Bank Financial common stock generally will not recognize any gain or loss upon the merger, except with respect to the cash received in lieu of fractional share of First Horizon common stock;

 

 

a holder who receives a combination of First Horizon common stock and cash (other than cash received instead of a fractional share of First Horizon common stock) in exchange for shares of Capital Bank Financial common stock generally will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount by which the sum of the fair market value of the First Horizon common stock and cash received by a holder pursuant to the merger exceeds such holder’s tax basis in its shares of Capital Bank Financial common stock, and (2) the amount of cash received by such holder pursuant to the merger (excluding any cash received in lieu of a fractional share of First Horizon common stock, as discussed below).

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Gain or loss that Capital Bank Financial common stockholders recognize in connection with the mergers will generally constitute capital gain or loss and will constitute long-term capital gain or loss if such holders have held their Capital Bank Financial common stock for more than one year as of the effective date of the merger.

For more detailed information, please refer to “Material U.S. Federal Income Tax Consequences of the Mergers.”

The United States federal income tax consequences described above may not apply to all Capital Bank Financial common stockholders. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.

Capital Bank Financial’s Directors and Executive Officers Have Financial Interests in the Merger that Differ from Your Interests (page 96)

Capital Bank Financial’s Class A common stockholders should be aware that Capital Bank Financial’s directors and executive officers have interests in the merger that are different from, or in addition to, interests of Capital Bank Financial Class A common stockholders generally. These interests include, among others, the treatment of outstanding Capital Bank Financial equity awards pursuant to the merger agreement, certain payments and benefits payable under employment or change in control agreements entered into with executive officers, and rights to ongoing indemnification and insurance coverage by the surviving corporation for acts or omissions occurring prior to the merger. These interests also include First Horizon’s agreement to appoint two then-current directors of Capital Bank Financial to the board of directors of the surviving corporation. The Capital Bank Financial board of directors was aware of and considered those interests, among other matters, in reaching its decisions to approve the merger agreement and the transactions contemplated thereby and to recommend the adoption of the merger agreement to Capital Bank Financial Class A common stockholders.

For a more detailed description of these interests, see “The Mergers—Interests of Capital Bank Financial’s Directors and Executive Officers in the Merger” beginning on page 96.

Capital Bank Financial Common Stockholders Are Expected to Be Entitled to Assert Dissenters’ Rights (page 102 and Annex F)

If the merger agreement is adopted by Capital Bank common shareholders, Capital Bank Financial common stockholders who do not vote in favor of the adoption of the merger agreement and who properly demand appraisal of their shares will be entitled to appraisal rights in connection with the merger under Section 262 of the Delaware General Corporation Law (which we refer to as the “DGCL”).

Specifically, under Section 262 of the DGCL, Capital Bank Financial common stockholders who (1) do not vote in favor of the Capital Bank Financial merger proposal, (2) are the record holders of such shares on the date on which they make a demand for appraisal and continue to hold such shares through the effective time of the merger, and (3) otherwise follow exactly the procedures set forth in Section 262 of the DGCL, will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of such shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest to be paid upon the amount determined to be fair value, if any, as determined by the Delaware Court of Chancery.

Each Capital Bank Financial common stockholder wishing to exercise the right to seek an appraisal of shares of Capital Bank Financial common stock must deliver to Capital Bank Financial a written demand for appraisal before the vote on the Capital Bank Financial merger proposal at the Capital Bank Financial special meeting and file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares within 120 days after the effective time of the merger.

18


 

The full text of Section 262 of the DGCL is attached to this joint proxy statement/prospectus as Annex F. In connection with the merger, any holder of shares of Capital Bank Financial common stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s right to do so, should review Annex F carefully. Failure to strictly comply with the requirements of Section 262 of the DGCL in a timely and proper manner will result in the loss of appraisal rights under the DGCL. A stockholder who loses his, her, or its appraisal rights will be entitled to receive the merger consideration described in the merger agreement. Because of the complexity of the procedures for exercising appraisal rights, Capital Bank Financial believes that if a stockholder considers exercising such rights with respect to shares of Capital Bank Financial common stock, such stockholder should seek the advice of legal counsel.

Capital Bank Financial common stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as, or less than the consideration they would receive pursuant to the merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and does not in any manner address, fair value under Section 262 of the DGCL. Although Capital Bank Financial believes that the merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the merger consideration. Neither Capital Bank Financial nor First Horizon anticipate offering more than the merger consideration to any stockholder of Capital Bank Financial exercising appraisal rights, and each of Capital Bank Financial and First Horizon reserves the right to assert, in any appraisal proceeding, that for purposes of Section 262 of the DGCL, the “fair value” of a share of Capital Bank Financial common stock is less than the merger consideration.

For more information, see “The Mergers—Dissenters’ Rights in the Merger.”

Regulatory Approvals Required for the Merger (page 107)

Subject to the terms of the merger agreement, First Horizon and Capital Bank Financial have agreed to cooperate with each other and use their reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, and to obtain as promptly as practicable all regulatory approvals necessary or advisable to complete the transactions contemplated by the merger agreement. These approvals include, among others, approval from the Federal Reserve Board (which we refer to as the “Federal Reserve”) and the Office of the Comptroller of the Currency (which we refer to as the “OCC”). On June 16, 2017, First Horizon and FTBNA, respectively, filed applications and notifications to obtain regulatory approvals from the Federal Reserve and the OCC.

Although neither First Horizon nor Capital Bank Financial knows of any reason why First Horizon cannot obtain these regulatory approvals in a timely manner, Capital Bank Financial and First Horizon cannot be certain when or if they will be obtained. For more information, see “The Mergers—Regulatory Approvals Required for the Merger.”

Conditions that Must Be Satisfied or Waived for the Merger to Occur (page 127)

First Horizon’s and Capital Bank Financial’s respective obligations to complete the merger are subject to the satisfaction or waiver of certain conditions, including: (1) the approval of the Capital Bank Financial merger proposal; (2) the approval of the First Horizon stock issuance proposal; (3) authorization for listing on the NYSE of the shares of First Horizon common stock to be issued in connection with the merger; (4) effectiveness of the registration statement on Form S-4 of which this joint proxy statement/prospectus is a part; (5) the absence of any order, injunction, decree by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the completion of the merger or the bank merger or making the consummation of the merger illegal; (6) the receipt of all required regulatory approvals and expiration or termination of all

19


 

statutory waiting periods in respect thereof; (7) subject to certain exceptions, the accuracy of the representations and warranties of the other party contained in the merger agreement as of the date on which the merger agreement was entered into and as of the date on which the merger is completed (and the receipt by each party of an officer’s certificate from the other party to such effect); (8) performance in all material respects by the other party of its obligations under the merger agreement (and the receipt by each party of an officer’s certificate from the other party to such effect); and (9) receipt by each of First Horizon and Capital Bank Financial of an opinion from its outside legal counsel to the effect that the mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

Neither First Horizon nor Capital Bank Financial can provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived by the appropriate party. As of the date of this joint proxy statement/prospectus, neither First Horizon nor Capital Bank Financial has reason to believe that any of these conditions will not be satisfied. For more information, see “The Merger Agreement—Conditions to Complete the Merger.”

Termination of the Merger Agreement (page 128)

The merger agreement can be terminated at any time prior to completion of the merger by mutual written consent of First Horizon and Capital Bank Financial or by either First Horizon or Capital Bank Financial in the following circumstances:

 

 

if any governmental entity issues a final and nonappealable denial of approval of the mergers or the bank merger or issues a final and nonappealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the consummation of the mergers or the bank merger, unless the failure to obtain such approval is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement;

 

 

if the merger has not been completed on or before May 3, 2018 (which we refer to as the “termination date”), unless the failure of the merger to be consummated by that date is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement; and

 

 

subject to cure rights, if there is a breach of any of the covenants or agreements or any of the representations or warranties (or any such representation or warranty ceases to be true) set forth in the merger agreement on the part of the other party which, either individually or in the aggregate, would constitute, if occurring or continuing on the date the merger is completed, the failure of a closing condition of the terminating party.

In addition, the merger agreement may be terminated by First Horizon if, (x) prior to approval of the Capital Bank Financial merger proposal, Capital Bank Financial or the Capital Bank Financial board of directors effects an adverse recommendation change, or materially breaches its obligations to hold a meeting of its stockholders to adopt and approve the merger agreement or not to solicit alternative acquisition proposals; or (y) a tender offer or exchange offer for 20% or more of the outstanding shares of Capital Bank Financial common stock is commenced, and the Capital Bank Financial board of directors recommends that the stockholders of Capital Bank Financial tender their shares in such tender or exchange offer or otherwise fails to recommend that such stockholders reject such tender offer or exchange offer within the 10 business day period specified in Rule 14e-2(a) under the Exchange Act.

For more information, see “The Merger Agreement—Termination of the Merger Agreement.”

Termination Fee (page 129)

If the merger agreement is terminated under certain circumstances, including circumstances involving alternative acquisition proposals and adverse recommendation changes made by the Capital Bank Financial board of directors, Capital Bank Financial may be required to pay to First Horizon a termination fee equal to $85 million. This termination fee might discourage a potential competing

20


 

acquirer that might have an interest in acquiring all or a significant part of Capital Bank Financial from considering or proposing such an acquisition. For more information, see “The Merger Agreement—Termination Fee.”

The Rights of Capital Bank Financial Common Stockholders Will Change as a Result of the Mergers (page 146)

The rights of Capital Bank Financial common stockholders will change as a result of the mergers due to differences in First Horizon’s and Capital Bank Financial’s governing documents. The rights of Capital Bank Financial common stockholders are governed by Delaware law and by the Capital Bank Financial certificate of incorporation and bylaws. Upon the completion of the mergers, Capital Bank Financial common stockholders will become common shareholders of First Horizon, and their rights will therefore be governed by Tennessee law and the First Horizon charter and bylaws.

See “Comparison of Shareholders’ Rights,” for a description of the material differences in shareholders’ rights under each of the First Horizon and Capital Bank Financial governing documents.

Information About the Companies (page 54)

First Horizon

First Horizon National Corporation
165 Madison Avenue
Memphis, Tennessee 38103
Phone: (901) 523-4444

First Horizon is a Tennessee corporation headquartered in Memphis, Tennessee, with $29.6 billion in total assets as of March 31, 2017. First Horizon provides diversified financial services primarily through its principal subsidiary, FTBNA, and its other subsidiaries. FTBNA, a national banking association with principal offices in Memphis, Tennessee, received its charter in 1864. First Horizon’s subsidiaries have over 200 business locations in 21 U.S. states, excluding off-premises ATMs. Almost all of those locations are bank financial centers and FTN Financial offices.

First Horizon’s common stock is traded on the NYSE under the symbol “FHN.” Additional information about First Horizon and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus.

For more information, see “Where You Can Find More Information.”

Capital Bank Financial

Capital Bank Financial Corp.
4725 Piedmont Row Drive, Suite 110
Charlotte, NC 28210
Telephone: (704) 554-5901

Capital Bank Financial is a bank holding company incorporated in late 2009 with the goal of creating a regional banking franchise in the southeastern region of the United States through organic growth and acquisitions of other banks, including failed, underperforming and undercapitalized banks. Capital Bank Financial raised $955.6 million to make acquisitions through a series of private placements and an initial public offering of its common stock. Since its inception, Capital Bank Financial has acquired eight depository institutions, including certain assets and certain deposits of three failed banks from the FDIC. Capital Bank Financial has integrated its eight acquired institutions and combined them all onto a single scalable processing platform. As of March 31, 2017, Capital Bank Financial operates 193 branches in Florida, North and South Carolina, Tennessee and Virginia. Through its branches, Capital Bank Financial offers a wide range of commercial and consumer loans and deposits, as well as ancillary financial services.

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Capital Bank Financial Class A common stock is currently listed on the NASDAQ under the symbol “CBF.” Additional information about Capital Bank Financial and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus.

For more information, see “Where You Can Find More Information.”

Merger Sub

Firestone Sub, Inc.
165 Madison Avenue
Memphis, Tennessee 38103
Phone: (901) 523-4444

Merger Sub is a Delaware corporation and a direct wholly-owned subsidiary of First Horizon. Merger Sub was incorporated on April 27, 2017, for the sole purpose of effecting the merger. As of the date of this joint proxy statement/prospectus, Merger Sub has not conducted any activities other than those incidental to its formation, the execution of the merger agreement and the transactions contemplated by the merger agreement.

For more information, see “Where You Can Find More Information.”

Litigation Relating to the Merger (page 109)

On July 14, 2017, a complaint was filed on behalf of a putative class of First Horizon shareholders against First Horizon, its directors, and Capital Bank Financial in the Court of Chancery of Shelby County, Tennessee (30th Judicial District), in connection with the merger. The complaint alleges, among other things, that the First Horizon director defendants breached their fiduciary duties by approving the merger, that Capital Bank Financial aided and abetted such breaches, and that First Horizon, its directors and Capital Bank Financial failed to disclose material information in connection with the merger. For relief the plaintiffs seek to enjoin the shareholder vote on the merger until the alleged disclosure issues are cured and unspecified damages.

In addition, Capital Bank Financial and the individual members of the Capital Bank Financial board of directors have been named as defendants in three substantially similar putative derivative and class action lawsuits filed by alleged shareholders of Capital Bank Financial in the Western District of North Carolina (with one complaint also naming First Horizon and Merger Sub as defendants). The three complaints allege that the registration statement on Form S-4 filed on June 29, 2017 omits and/or misrepresents material information which renders it false and misleading. For relief the plaintiffs seek to enjoin the shareholder vote on the merger until the alleged disclosure issues are cured and unspecified damages.

For more information, see “The Mergers—Litigation Relating to the Merger.”

Risk Factors (page 35)

You should consider all the information contained in or incorporated by reference into this joint proxy statement/prospectus in deciding how to vote for the proposals presented in this joint proxy statement/prospectus. In particular, you should consider the factors described under “Risk Factors.”

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Use of Non-GAAP Measures and Regulatory Measures that are not GAAP

Certain measures are included in this joint proxy statement/prospectus that are “non-GAAP,” meaning (under U.S. financial reporting rules) they are not presented in accordance with generally accepted accounting principles (“GAAP”) in the U.S. and also are not codified in U.S. banking regulations currently applicable to First Horizon. Although other entities may use calculation methods that differ from those used by First Horizon for non-GAAP measures, First Horizon’s management believes such measures are relevant to understanding the financial condition, capital position, and financial results of First Horizon and its business segments. Non-GAAP measures are reported to First Horizon’s management and board of directors through various internal reports.

Presentation of regulatory measures, some of which follow regulatory definitions rather than GAAP, provides a meaningful base for comparability to other financial institutions subject to the same regulations as First Horizon. Such measures are used by the various banking regulators in reviewing the performance, stability, and capital adequacy of financial institutions they regulate. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. The regulatory measure used in this joint proxy statement/prospectus is common equity tier 1 ratio, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions divided by risk weighted assets (“RWA”), which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk.

The non-GAAP measure presented in this joint proxy statement/prospectus is tangible common equity (“TCE”) to tangible assets (“TA”).

Refer to the tabular reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items on page 26 of this joint proxy statement/prospectus.

23


 

SELECTED HISTORICAL FINANCIAL DATA OF FIRST HORIZON

The following table presents selected historical consolidated financial data for First Horizon as of and for the years ended December 31, 2016, 2015, 2014, 2013 and 2012. This information has been derived from First Horizon’s audited consolidated financial statements. The historical consolidated financial data as of and for the three months ended March 31, 2017 and 2016 has been derived from First Horizon’s unaudited consolidated condensed financial statements.

Financial data as of and for the three months ended March 31, 2017 and 2016 are unaudited (and are not necessarily indicative of the results of operations for the full year or any other interim period). Management of First Horizon believes that such data reflect all adjustments necessary for a fair presentation of its results of operations and financial position as of the dates and for the periods indicated. You should not assume the results of operations for past periods and for the three months ended March 31, 2017 and 2016 indicate results for any future periods.

The following information should be read in conjunction with the historical audited consolidated financial statements of First Horizon and the related notes, including those contained in its Annual Report on Form 10-K for the year ended December 31, 2016 and the historical unaudited consolidated financial statements of First Horizon and the related notes, including those contained in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for each such Annual Report and Quarterly Report, each of which is incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions, except per share data)

 

As of or for the
Three Months Ended
March 31,
(unaudited)

 

As of or for the Years ended December 31,

 

2017

 

2016

 

2016

 

2015

 

2014

 

2013

 

2012

Income/(loss) from continuing operations

 

 

$

 

58.4

 

 

 

$

 

52.2

 

 

 

$

 

238.5

 

 

 

$

 

97.3

 

 

 

$

 

234.0

 

 

 

$

 

37.8

 

 

 

$

 

(15.5

)

 

Income/(loss) from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.5

 

 

 

 

0.1

 

Net Income/(loss)

 

 

 

58.4

 

 

 

 

52.2

 

 

 

 

238.5

 

 

 

 

97.3

 

 

 

 

234.0

 

 

 

 

38.4

 

 

 

 

(15.4

)

 

Income/(loss) available to common shareholders

 

 

 

54.0

 

 

 

 

47.8

 

 

 

 

220.8

 

 

 

 

79.7

 

 

 

 

216.3

 

 

 

 

21.1

 

 

 

 

(26.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings/(loss) per common share from continuing operations

 

 

$

 

0.23

 

 

 

$

 

0.20

 

 

 

$

 

0.95

 

 

 

$

 

0.34

 

 

 

$

 

0.92

 

 

 

$

 

0.09

 

 

 

$

 

(0.11

)

 

Earnings/(loss) per common share

 

 

 

0.23

 

 

 

 

0.20

 

 

 

 

0.95

 

 

 

 

0.34

 

 

 

 

0.92

 

 

 

 

0.09

 

 

 

 

(0.11

)

 

Diluted earnings/(loss) per common share from continuing operations

 

 

 

0.23

 

 

 

 

0.20

 

 

 

 

0.94

 

 

 

 

0.34

 

 

 

 

0.91

 

 

 

 

0.09

 

 

 

 

(0.11

)

 

Diluted earnings/(loss) per common share

 

 

 

0.23

 

 

 

 

0.20

 

 

 

 

0.94

 

 

 

 

0.34

 

 

 

 

0.91

 

 

 

 

0.09

 

 

 

 

(0.11

)

 

Cash dividend declared per common share

 

 

 

0.09

 

 

 

 

0.07

 

 

 

 

0.28

 

 

 

 

0.24

 

 

 

 

0.20

 

 

 

 

0.20

 

 

 

 

0.04

 

Book value per common share

 

 

 

10.05

 

 

 

 

9.68

 

 

 

 

9.90

 

 

 

 

9.42

 

 

 

 

9.35

 

 

 

 

8.87

 

 

 

 

9.05

 

Closing price of common stock per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High

 

 

 

20.76

 

 

 

 

14.19

 

 

 

 

20.61

 

 

 

 

16.20

 

 

 

 

13.91

 

 

 

 

12.55

 

 

 

 

10.89

 

Low

 

 

 

17.90

 

 

 

 

11.62

 

 

 

 

11.62

 

 

 

 

12.31

 

 

 

 

11.18

 

 

 

 

9.72

 

 

 

 

7.55

 

Year-End

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

20.01

 

 

 

 

14.52

 

 

 

 

13.58

 

 

 

 

11.65

 

 

 

 

9.91

 

Cash dividend per common share/year-end closing price

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

1.4

%

 

 

 

 

1.7

%

 

 

 

 

1.5

%

 

 

 

 

1.7

%

 

 

 

 

0.4

%

 

Cash dividends per common share/diluted earnings per common share

 

 

 

39.1

%

 

 

 

 

35.0

%

 

 

 

 

29.8

%

 

 

 

 

70.6

%

 

 

 

 

22.0

%

 

 

 

 

222.2

%

 

 

 

 

(36.4

)%

 

Price/earnings ratio

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

21.3

x

 

 

 

 

42.7

x

 

 

 

 

14.9

x

 

 

 

 

129.4

x

 

 

 

 

NM

 

Market capitalization

 

 

$

 

4,326.8

 

 

 

$

 

3,046.4

 

 

 

$

 

4,674.8

 

 

 

$

 

3,464.3

 

 

 

$

 

3,180.7

 

 

 

$

 

2,753.7

 

 

 

$

 

2,414.1

 

Average shares (thousands)

 

 

 

233,076

 

 

 

 

234,651

 

 

 

 

232,700

 

 

 

 

234,189

 

 

 

 

234,997

 

 

 

 

237,972

 

 

 

 

248,349

 

Average diluted shares (thousands)

 

 

 

236,855

 

 

 

 

236,666

 

 

 

 

235,292

 

 

 

 

236,266

 

 

 

 

236,735

 

 

 

 

239,794

 

 

 

 

248,349

 

Period-end shares outstanding (thousands)

 

 

 

233,883

 

 

 

 

232,547

 

 

 

 

233,624

 

 

 

 

238,587

 

 

 

 

234,220

 

 

 

 

236,370

 

 

 

 

243,598

 

Volume of shares traded (thousands)

 

 

 

152,689

 

 

 

 

175,581

 

 

 

 

574,196

 

 

 

 

562,553

 

 

 

 

592,399

 

 

 

 

787,295

 

 

 

 

1,221,242

 

24


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions, except per share data)

 

As of or for the
Three Months Ended
March 31,
(unaudited)

 

As of or for the Years ended December 31,

 

2017

 

2016

 

2016

 

2015

 

2014

 

2013

 

2012

Selected Average Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

$

 

28,806.1

 

 

 

$

 

26,618.7

 

 

 

$

 

27,427.2

 

 

 

$

 

25,636.0

 

 

 

$

 

23,993.0

 

 

 

$

 

24,399.9

 

 

 

$

 

25,045.2

 

Total loans, net of unearned income

 

 

 

18,813.4

 

 

 

 

17,293.9

 

 

 

 

18,303.9

 

 

 

 

16,624.4

 

 

 

 

15,521.0

 

 

 

 

15,726.4

 

 

 

 

16,205.4

 

Securities available-for-sale

 

 

 

3,922.2

 

 

 

 

3,977.8

 

 

 

 

4,002.1

 

 

 

 

3,692.3

 

 

 

 

3,548.4

 

 

 

 

3,180.4

 

 

 

 

3,145.5

 

Earnings assets

 

 

 

26,616.3

 

 

 

 

24,403.6

 

 

 

 

25,180.1

 

 

 

 

23,456.2

 

 

 

 

21,825.2

 

 

 

 

21,772.0

 

 

 

 

22,224.8

 

Total deposits

 

 

 

22,819.3

 

 

 

 

19,936.8

 

 

 

 

20,898.8

 

 

 

 

18,753.7

 

 

 

 

16,401.7

 

 

 

 

16,340.2

 

 

 

 

16,212.0

 

Total term borrowings

 

 

 

1,039.7

 

 

 

 

1,310.4

 

 

 

 

1,130.2

 

 

 

 

1,557.2

 

 

 

 

1,591.0

 

 

 

 

1,942.3

 

 

 

 

2,323.7

 

Common equity

 

 

 

2,331.6

 

 

 

 

2,253.3

 

 

 

 

2,300.4

 

 

 

 

2,190.1

 

 

 

 

2,200.9

 

 

 

 

2,135.6

 

 

 

 

2,307.4

 

Total equity

 

 

 

2,722.7

 

 

 

 

2,644.4

 

 

 

 

2,691.5

 

 

 

 

2,581.2

 

 

 

 

2,592.0

 

 

 

 

2,518.8

 

 

 

 

2,602.5

 

Selected Period-End Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

$

 

29,618.6

 

 

 

$

 

26,963.7

 

 

 

$

 

28,555.2

 

 

 

$

 

26,192.6

 

 

 

$

 

25,665.4

 

 

 

$

 

23,782.4

 

 

 

$

 

25,322.0

 

Total loans, net of unearned income

 

 

 

19,090.1

 

 

 

 

17,575.0

 

 

 

 

19,589.5

 

 

 

 

17,686.5

 

 

 

 

16,230.2

 

 

 

 

15,389.1

 

 

 

 

16,708.6

 

Securities available-for-sale

 

 

 

3,939.3

 

 

 

 

4,014.4

 

 

 

 

3,943.5

 

 

 

 

3,929.8

 

 

 

 

3,556.6

 

 

 

 

3,398.5

 

 

 

 

3,061.8

 

Earnings assets

 

 

 

27,289.8

 

 

 

 

24,700.0

 

 

 

 

26,280.2

 

 

 

 

23,971.5

 

 

 

 

23,470.9

 

 

 

 

21,168.4

 

 

 

 

22,424.8

 

Total deposits

 

 

 

23,479.8

 

 

 

 

20,327.8

 

 

 

 

22,672.4

 

 

 

 

19,967.5

 

 

 

 

18,068.9

 

 

 

 

16,735.0

 

 

 

 

16,629.7

 

Total term borrowings

 

 

 

1,035.0

 

 

 

 

1,323.7

 

 

 

 

1,040.7

 

 

 

 

1,312.7

 

 

 

 

1,877.3

 

 

 

 

1,737.8

 

 

 

 

2,223.7

 

Common equity

 

 

 

2,349.4

 

 

 

 

2,251.9

 

 

 

 

2,314.0

 

 

 

 

2,248.5

 

 

 

 

2,190.5

 

 

 

 

2,097.3

 

 

 

 

2,204.4

 

Total equity

 

 

 

2,740.5

 

 

 

 

2,642.9

 

 

 

 

2,705.1

 

 

 

 

2,639.6

 

 

 

 

2,581.6

 

 

 

 

2,488.4

 

 

 

 

2,499.5

 

Selected Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average common equity(a)(d)

 

 

 

9.40

%

 

 

 

 

8.53

%

 

 

 

 

9.60

%

 

 

 

 

3.64

%

 

 

 

 

9.83

%

 

 

 

 

0.99

%

 

 

 

 

(1.16

)%

 

Return on average assets(b)(d)

 

 

 

0.82

 

 

 

 

0.79

 

 

 

 

0.87

 

 

 

 

0.38

 

 

 

 

0.98

 

 

 

 

0.16

 

 

 

 

(0.06

)

 

Net interest margin(c)(d)

 

 

 

2.92

 

 

 

 

2.88

 

 

 

 

2.94

 

 

 

 

2.83

 

 

 

 

2.92

 

 

 

 

2.96

 

 

 

 

3.13

 

Allowance for loan losses to loans

 

 

 

1.06

 

 

 

 

1.16

 

 

 

 

1.03

 

 

 

 

1.19

 

 

 

 

1.43

 

 

 

 

1.65

 

 

 

 

1.66

 

Net charge-offs to average loans(d)

 

 

 

NM

 

 

 

 

0.21

 

 

 

 

0.10

 

 

 

 

0.19

 

 

 

 

0.31

 

 

 

 

0.50

 

 

 

 

1.14

 

Total period-end equity to period-end assets

 

 

 

9.25

 

 

 

 

9.80

 

 

 

 

9.47

 

 

 

 

10.08

 

 

 

 

10.06

 

 

 

 

10.46

 

 

 

 

9.87

 

Tangible common equity to tangible assets(e)

 

 

 

7.27

 

 

 

 

7.61

 

 

 

 

7.42

 

 

 

 

7.82

 

 

 

 

7.91

 

 

 

 

8.19

 

 

 

 

8.14

 

Common equity tier 1 ratio

 

 

 

10.20

 

 

 

 

10.33

 

 

 

 

9.94

 

 

 

 

10.45

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

N/A-not applicable

NM-not meaningful

 

 

(a)

 

Calculated using net income/(loss) available to common shareholders divided by average common equity.

 

(b)

 

Calculated using net income/(loss) divided by average assets.

 

(c)

 

Calculated using total net interest income adjusted for fully taxable equivalent assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

 

(d)

 

For the three months periods presented, each ratio is calculated using annualized year-to-date amounts.

 

(e)

 

Represents a non-GAAP measure. Reconciliation to total equity to total assets (GAAP) appears below.

     

Certain numbers may not add to total due to rounding.

25


 

Non-GAAP to GAAP Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions)

 

As of March 31,
(unaudited)

 

As of December 31,

 

2017

 

2016

 

2016

 

2015

 

2014

 

2013

 

2012

(A) Total equity (GAAP)

 

 

 

2,740.5

 

 

 

 

2,642.9

 

 

 

 

2,705.1

 

 

 

 

2,639.6

 

 

 

 

2,581.6

 

 

 

 

2,488.4

 

 

 

 

2,499.5

 

Less: Noncontrolling interest(a)

 

 

 

295.4

 

 

 

 

295.4

 

 

 

 

295.4

 

 

 

 

295.4

 

 

 

 

295.4

 

 

 

 

295.4

 

 

 

 

295.2

 

Less: Preferred Stock(a)

 

 

 

95.6

 

 

 

 

95.6

 

 

 

 

95.6

 

 

 

 

95.6

 

 

 

 

95.6

 

 

 

 

95.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total common equity

 

 

 

2,349.4

 

 

 

 

2,251.9

 

 

 

 

2,314.0

 

 

 

 

2,248.5

 

 

 

 

2,190.5

 

 

 

 

2,097.3

 

 

 

 

2,204.4

 

Less: Intangible assets (GAAP)(b)

 

 

 

211.2

 

 

 

 

216.2

 

 

 

 

212.4

 

 

 

 

217.5

 

 

 

 

175.5

 

 

 

 

163.9

 

 

 

 

156.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(B) Tangible common equity (Non-GAAP)

 

 

 

2,138.2

 

 

 

 

2,035.7

 

 

 

 

2,101.6

 

 

 

 

2,031.0

 

 

 

 

2,015.1

 

 

 

 

1,933.4

 

 

 

 

2,047.4

 

(C) Total assets (GAAP)

 

 

 

29,618.6

 

 

 

 

26,963.7

 

 

 

 

28,555.2

 

 

 

 

26,192.6

 

 

 

 

25,665.4

 

 

 

 

23,782.4

 

 

 

 

25,322.0

 

Less: Intangible assets (GAAP)(b)

 

 

 

211.2

 

 

 

 

216.2

 

 

 

 

212.4

 

 

 

 

217.5

 

 

 

 

175.5

 

 

 

 

163.9

 

 

 

 

156.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(D) Tangible assets (Non-GAAP)

 

 

 

29,407.4

 

 

 

 

26,747.5

 

 

 

 

28,342.8

 

 

 

 

25,975.1

 

 

 

 

25,490.0

 

 

 

 

23,618.5

 

 

 

 

25,165.1

 

(A)/(C) Total equity to total assets (GAAP)

 

 

 

9.25

%

 

 

 

 

9.80

%

 

 

 

 

9.47

%

 

 

 

 

10.08

%

 

 

 

 

10.06

%

 

 

 

 

10.46

%

 

 

 

 

9.87

%

 

(B)/(D) Tangible common equity to tangible assets (Non-GAAP)

 

 

 

7.27

%

 

 

 

 

7.61

%

 

 

 

 

7.42

%

 

 

 

 

7.82

%

 

 

 

 

7.91

%

 

 

 

 

8.19

%

 

 

 

 

8.14

%

 

 

 

(a)

 

Included in Total equity on the Consolidated Statements of Condition.

 

(b)

 

Includes goodwill and other intangible assets, net of amortization.

Certain numbers may not add to total due to rounding.

26


 

SELECTED HISTORICAL FINANCIAL DATA OF CAPITAL BANK FINANCIAL

The following table presents selected historical consolidated financial data for Capital Bank Financial as of and for the years ended December 31, 2016, 2015, 2014, 2013 and 2012. This information has been derived from Capital Bank Financial’s audited consolidated financial statements. The historical consolidated financial data as of and for the three months ended March 31, 2017 and 2016 has been derived from Capital Bank Financial’s unaudited consolidated financial statements.

Financial data as of and for the three months ended March 31, 2017 and 2016 are unaudited (and are not necessarily indicative of the results of operations for the full year or any other interim period). Management of Capital Bank Financial believes that such data reflect all adjustments necessary for a fair presentation of its results of operations and financial position as of the dates and for the periods indicated. You should not assume the results of operations for past periods and for the three months ended March 31, 2017 and 2016 indicate results for any future periods.

The selected historical consolidated financial information in the following tables as of and for the years ended December 31, 2016, 2015, 2014 and 2013, and the three months ended March 31, 2017 and 2016 include Capital Bank Financial’s results, including First National Bank, Metro Bank, Turnberry Bank, TIB Financial, Capital Bank Corp., Green Bankshares and Southern Community Financial, as well as the results of CommunityOne subsequent to October 26, 2016. The selected historical consolidated financial information in the following tables as of and for the year ended December 31, 2012 includes Capital Bank Financial’s results, including First National Bank, Metro Bank, Turnberry Bank, TIB Financial, Capital Bank Corp., Green Bankshares and Southern Community Financial, subsequent to October 1, 2012.

Because substantially all of Capital Bank Financial’s business is composed of acquired operations and because the operations of each acquired business were substantially changed in connection with its acquisition, Capital Bank Financial’s results of operations for the year ended December 31, 2012 reflect different operations in different periods (or portions of periods) and therefore cannot be meaningfully compared to later years. In addition, results of operations for these periods reflect, among other things, the acquisition method of accounting. Under the acquisition method of accounting, all of the assets acquired and liabilities assumed were initially recorded on Capital Bank Financial’s consolidated balance sheet at their estimated fair values as of the dates of acquisition. These estimated fair values differed substantially from the carrying amounts of the assets acquired and liabilities assumed as reflected in the financial statements of First National Bank, Metro Bank, Turnberry Bank, TIB Financial, Capital Bank Corp., Green Bankshares, Southern Community Financial and CommunityOne.

The following information should be read in conjunction with the historical audited consolidated financial statements of Capital Bank Financial and the related notes, including those contained in its Annual Report on Form 10-K for the year ended December 31, 2016 and the historical unaudited consolidated financial statements of Capital Bank Financial and the related notes, including those contained in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for each such Annual Report and Quarterly Report, each of which is incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

27


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

As of or for the
Quarter Ended
(unaudited)

 

As of or for the Year Ended

 

March 31,
2017

 

March 31,
2016

 

December 31,
2016

 

December 31,
2015

 

December 31,
2014

 

December 31,
2013

 

December 31,
2012

Summary Results of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

$

 

92,937

 

 

 

$

 

69,472

 

 

 

$

 

297,726

 

 

 

$

 

271,628

 

 

 

$

 

270,782

 

 

 

$

 

293,756

 

 

 

$

 

294,280

 

Interest expense

 

 

 

10,821

 

 

 

 

8,105

 

 

 

 

34,398

 

 

 

 

27,499

 

 

 

 

24,722

 

 

 

 

30,181

 

 

 

 

39,056

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

82,116

 

 

 

 

61,367

 

 

 

 

263,328

 

 

 

 

244,129

 

 

 

 

246,060

 

 

 

 

263,575

 

 

 

 

255,224

 

Provision (reversal) for loan and lease losses

 

 

 

3,392

 

 

 

 

1,375

 

 

 

 

5,113

 

 

 

 

2,346

 

 

 

 

(589

)

 

 

 

 

14,118

 

 

 

 

24,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan and lease losses

 

 

 

78,724

 

 

 

 

59,992

 

 

 

 

258,215

 

 

 

 

241,783

 

 

 

 

246,649

 

 

 

 

249,457

 

 

 

 

230,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income

 

 

 

15,852

 

 

 

 

2,566

 

 

 

 

43,874

 

 

 

 

42,298

 

 

 

 

43,807

 

 

 

 

52,966

 

 

 

 

62,708

 

Non-interest expense

 

 

 

62,703

 

 

 

 

46,938

 

 

 

 

212,998

 

 

 

 

198,251

 

 

 

 

208,847

 

 

 

 

236,209

 

 

 

 

259,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

 

31,873

 

 

 

 

15,620

 

 

 

 

89,091

 

 

 

 

85,830

 

 

 

 

81,609

 

 

 

 

66,214

 

 

 

 

33,483

 

Income tax expense (benefit)

 

 

 

10,990

 

 

 

 

5,780

 

 

 

 

30,927

 

 

 

 

31,109

 

 

 

 

30,691

 

 

 

 

27,370

 

 

 

 

(21,542

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income before attribution of noncontrolling interests

 

 

 

20,883

 

 

 

 

9,840

 

 

 

 

58,164

 

 

 

 

54,721

 

 

 

 

50,918

 

 

 

 

38,844

 

 

 

 

55,025

 

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Capital Bank Financial Corp.

 

 

$

 

20,883

 

 

 

$

 

9,840

 

 

 

$

 

58,164

 

 

 

$

 

54,721

 

 

 

$

 

50,918

 

 

 

$

 

38,844

 

 

 

$

 

50,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

 

0.40

 

 

 

$

 

0.23

 

 

 

$

 

1.30

 

 

 

$

 

1.21

 

 

 

$

 

1.05

 

 

 

$

 

0.74

 

 

 

$

 

1.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

$

 

0.39

 

 

 

$

 

0.22

 

 

 

$

 

1.28

 

 

 

$

 

1.18

 

 

 

$

 

1.02

 

 

 

$

 

0.73

 

 

 

$

 

1.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

 

160,547

 

 

 

$

 

182,020

 

 

 

$

 

309,055

 

 

 

$

 

144,696

 

 

 

$

 

188,135

 

 

 

$

 

164,441

 

 

 

$

 

734,874

 

Investment securities

 

 

 

1,604,666

 

 

 

 

1,127,826

 

 

 

 

1,380,000

 

 

 

 

1,112,847

 

 

 

 

995,265

 

 

 

 

1,156,887

 

 

 

 

1,006,744

 

Loans held for sale

 

 

 

4,980

 

 

 

 

8,070

 

 

 

 

12,874

 

 

 

 

10,569

 

 

 

 

5,516

 

 

 

 

8,012

 

 

 

 

11,276

 

Loans receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-covered by FDIC loss sharing agreements

 

 

 

7,506,975

 

 

 

 

5,626,887

 

 

 

 

7,393,318

 

 

 

 

5,548,645

 

 

 

 

4,797,056

 

 

 

 

4,258,661

 

 

 

 

4,324,204

 

Covered by FDIC loss sharing agreements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73,502

 

 

 

 

197,647

 

 

 

 

285,356

 

 

 

 

400,010

 

Less: Allowance for loan and lease losses

 

 

 

43,891

 

 

 

 

45,263

 

 

 

 

43,065

 

 

 

 

45,034

 

 

 

 

50,211

 

 

 

 

56,851

 

 

 

 

57,262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net

 

 

 

7,463,084

 

 

 

 

5,581,624

 

 

 

 

7,350,253

 

 

 

 

5,577,113

 

 

 

 

4,944,492

 

 

 

 

4,487,166

 

 

 

 

4,666,952

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other real estate owned

 

 

 

51,050

 

 

 

 

48,505

 

 

 

 

53,482

 

 

 

 

52,776

 

 

 

 

77,626

 

 

 

 

129,396

 

 

 

 

154,093

 

FDIC indemnification asset

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,725

 

 

 

 

16,762

 

 

 

 

33,610

 

 

 

 

49,417

 

Receivable from FDIC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

678

 

 

 

 

3,661

 

 

 

 

7,624

 

 

 

 

8,486

 

Goodwill and intangible assets, net

 

 

 

265,711

 

 

 

 

148,688

 

 

 

 

268,870

 

 

 

 

149,622

 

 

 

 

153,419

 

 

 

 

155,352

 

 

 

 

160,623

 

Other assets

 

 

 

548,004

 

 

 

 

383,065

 

 

 

 

556,123

 

 

 

 

394,453

 

 

 

 

446,534

 

 

 

 

475,073

 

 

 

 

514,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

$

 

10,098,042

 

 

 

$

 

7,479,798

 

 

 

$

 

 9,930,657

 

 

 

$

 

 7,449,479

 

 

 

$

 

6,831,410

 

 

 

$

 

6,617,561

 

 

 

$

 

7,306,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

8,092,607

 

 

 

 

5,939,733

 

 

 

 

7,880,628

 

 

 

 

5,860,210

 

 

 

 

5,255,100

 

 

 

 

5,185,063

 

 

 

 

5,872,868

 

Federal Home Loan Bank advances

 

 

 

490,650

 

 

 

 

400,849

 

 

 

 

545,701

 

 

 

 

460,898

 

 

 

 

296,091

 

 

 

 

96,278

 

 

 

 

1,460

 

Borrowings

 

 

 

138,397

 

 

 

 

102,528

 

 

 

 

135,613

 

 

 

 

98,187

 

 

 

 

163,088

 

 

 

 

163,411

 

 

 

 

221,938

 

Accrued expenses and other liabilities

 

 

 

68,457

 

 

 

 

39,695

 

 

 

 

76,668

 

 

 

 

43,919

 

 

 

 

53,557

 

 

 

 

60,021

 

 

 

 

55,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

8,790,111

 

 

 

 

6,482,805

 

 

 

 

8,638,610

 

 

 

 

6,463,214

 

 

 

 

5,767,836

 

 

 

 

5,504,773

 

 

 

 

6,151,610

 

Total shareholders’ equity

 

 

 

1,307,931

 

 

 

 

996,993

 

 

 

 

1,292,047

 

 

 

 

986,265

 

 

 

 

1,063,574

 

 

 

 

1,112,788

 

 

 

 

1,155,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

 

$

 

10,098,042

 

 

 

$

 

7,479,798

 

 

 

$

 

9,930,657

 

 

 

$

 

7,449,479

 

 

 

$

 

6,831,410

 

 

 

$

 

6,617,561

 

 

 

$

 

7,306,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

As of or for the
Quarter Ended
(unaudited)

 

As of or for the Year Ended December 31,

 

March 31,
2017

 

March 31,
2016

 

2016

 

2015

 

2014

 

2013

 

2012

Performance Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

3.58

%

 

 

 

 

3.50

%

 

 

 

 

3.49

%

 

 

 

 

3.71

%

 

 

 

 

4.09

%

 

 

 

 

4.27

%

 

 

 

 

4.27

%

 

Net interest margin

 

 

 

3.73

%

 

 

 

 

3.64

%

 

 

 

 

3.63

%

 

 

 

 

3.85

%

 

 

 

 

4.21

%

 

 

 

 

4.40

%

 

 

 

 

4.42

%

 

Return on average assets

 

 

 

0.84

%

 

 

 

 

0.53

%

 

 

 

 

0.73

%

 

 

 

 

0.78

%

 

 

 

 

0.77

%

 

 

 

 

0.57

%

 

 

 

 

0.83

%

 

Return on average shareholders’ equity

 

 

 

6.43

%

 

 

 

 

3.96

%

 

 

 

 

5.46

%

 

 

 

 

5.25

%

 

 

 

 

4.70

%

 

 

 

 

3.43

%

 

 

 

 

5.25

%

 

Return on average assets attributable to CBF

 

 

 

0.84

%

 

 

 

 

0.53

%

 

 

 

 

0.73

%

 

 

 

 

0.78

%

 

 

 

 

0.77

%

 

 

 

 

0.57

%

 

 

 

 

0.76

%

 

Return on average shareholders’ equity attributable to CBF

 

 

 

6.43

%

 

 

 

 

3.96

%

 

 

 

 

5.46

%

 

 

 

 

5.25

%

 

 

 

 

4.70

%

 

 

 

 

3.43

%

 

 

 

 

4.82

%

 

Efficiency ratio

 

 

 

64.00

%

 

 

 

 

73.42

%

 

 

 

 

69.33

%

 

 

 

 

69.22

%

 

 

 

 

72.05

%

 

 

 

 

74.62

%

 

 

 

 

81.77

%

 

Average interest-earning assets to average interest-bearing liabilities

 

 

 

129.53

%

 

 

 

 

129.54

%

 

 

 

 

130.58

%

 

 

 

 

131.69

%

 

 

 

 

131.10

%

 

 

 

 

126.44

%

 

 

 

 

122.30

%

 

Average loans receivable to average deposits

 

 

 

93.41

%

 

 

 

 

95.66

%

 

 

 

 

96.21

%

 

 

 

 

95.59

%

 

 

 

 

90.92

%

 

 

 

 

83.44

%

 

 

 

 

82.72

%

 

Yield on interest-earning assets

 

 

 

4.21

%

 

 

 

 

4.11

%

 

 

 

 

4.10

%

 

 

 

 

4.28

%

 

 

 

 

4.64

%

 

 

 

 

4.91

%

 

 

 

 

5.09

%

 

Cost of interest-bearing liabilities

 

 

 

0.63

%

 

 

 

 

0.62

%

 

 

 

 

0.61

%

 

 

 

 

0.57

%

 

 

 

 

0.55

%

 

 

 

 

0.64

%

 

 

 

 

0.82

%

 

Asset and Credit Quality Ratios-Total Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans

 

 

$

 

13,608

 

 

 

$

 

8,526

 

 

 

$

 

11,449

 

 

 

$

 

8,945

 

 

 

$

 

9,484

 

 

 

$

 

11,810

 

 

 

$

 

14,011

 

Nonperforming loans

 

 

$

 

57,969

 

 

 

$

 

56,041

 

 

 

$

 

63,667

 

 

 

$

 

59,194

 

 

 

$

 

121,137

 

 

 

$

 

253,816

 

 

 

$

 

352,070

 

Nonperforming loans to loans receivable

 

 

 

0.95

%

 

 

 

 

1.15

%

 

 

 

 

1.01

%

 

 

 

 

1.21

%

 

 

 

 

2.61

%

 

 

 

 

5.84

%

 

 

 

 

7.73

%

 

Nonperforming assets to total assets

 

 

 

1.22

%

 

 

 

 

1.51

%

 

 

 

 

1.30

%

 

 

 

 

1.63

%

 

 

 

 

3.05

%

 

 

 

 

5.98

%

 

 

 

 

7.13

%

 

Loans covered by FDIC loss sharing agreements to total gross loans

 

 

 

%

 

 

 

 

%

 

 

 

 

%

 

 

 

 

1.30

%

 

 

 

 

3.95

%

 

 

 

 

6.27

%

 

 

 

 

8.45

%

 

ALLL to nonperforming assets

 

 

 

35.73

%

 

 

 

 

39.97

%

 

 

 

 

33.45

%

 

 

 

 

37.13

%

 

 

 

 

24.09

%

 

 

 

 

14.36

%

 

 

 

 

11.00

%

 

ALLL to total gross loans

 

 

 

0.58

%

 

 

 

 

0.80

%

 

 

 

 

0.58

%

 

 

 

 

0.80

%

 

 

 

 

1.00

%

 

 

 

 

1.25

%

 

 

 

 

1.21

%

 

Net charge-offs to average loans

 

 

 

0.14

%

 

 

 

 

0.08

%

 

 

 

 

0.12

%

 

 

 

 

0.14

%

 

 

 

 

0.13

%

 

 

 

 

0.32

%

 

 

 

 

0.05

%

 

Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total average shareholders’ equity to total average assets

 

 

 

13.11

%

 

 

 

 

13.35

%

 

 

 

 

13.37

%

 

 

 

 

14.81

%

 

 

 

 

16.36

%

 

 

 

 

16.52

%

 

 

 

 

15.84

%

 

Tier 1 leverage ratio

 

 

 

11.63

%

 

 

 

 

12.49

%

 

 

 

 

12.22

%

 

 

 

 

12.67

%

 

 

 

 

14.28

%

 

 

 

 

14.95

%

 

 

 

 

13.65

%

 

Tier 1 common equity capital ratio

 

 

 

12.20

%

 

 

 

 

13.38

%

 

 

 

 

12.40

%

 

 

 

 

13.63

%

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

Tier 1 risk-based capital ratio

 

 

 

13.45

%

 

 

 

 

14.58

%

 

 

 

 

13.49

%

 

 

 

 

14.73

%

 

 

 

 

18.00

%

 

 

 

 

19.74

%

 

 

 

 

19.92

%

 

Total risk-based capital ratio

 

 

 

13.98

%

 

 

 

 

15.32

%

 

 

 

 

14.02

%

 

 

 

 

15.47

%

 

 

 

 

19.05

%

 

 

 

 

21.00

%

 

 

 

 

21.18

%

 

29


 

UNAUDITED SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION

The following table shows unaudited pro forma financial information about the financial condition and results of operations, including per share data, after giving effect to the merger between First Horizon and Capital Bank Financial as well as the purchase of assets and assumption of liabilities of Coastal Securities (“Coastal”) by First Horizon and other pro forma adjustments. The unaudited pro forma financial information assumes that the Capital Bank Financial merger and the Coastal purchase are accounted for under the acquisition method of accounting, and the assets and liabilities of Capital Bank Financial and Coastal will generally be recorded by First Horizon at their respective fair values as of the date the transactions were or are (as applicable) completed. The unaudited pro forma condensed combined balance sheet gives effect to the transactions as if the transactions had occurred on March 31, 2017. The unaudited pro forma condensed combined income statements for the three months ended March 31, 2017, and the year ended December 31, 2016, give effect to the transactions as if the transactions had become effective at January 1, 2016. The unaudited selected pro forma combined financial information has been derived from and should be read in conjunction with the consolidated financial statements and related notes of First Horizon, which are incorporated in this joint proxy statement/prospectus by reference, the consolidated financial statements and related notes of Capital Bank Financial, which are incorporated in this joint proxy statement/prospectus by reference, and the more detailed unaudited pro forma condensed combined financial information, including the notes thereto, appearing elsewhere in this joint proxy statement/prospectus. See “Where You Can Find More Information” and “Unaudited Pro Forma Condensed Combined Consolidated Financial Information” beginning on page 164 and 136.

The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined at the beginning of each period presented, nor the impact of possible business model changes. The unaudited pro forma condensed combined financial information also does not consider any potential effects of changes in market conditions on revenues, expense efficiencies, asset dispositions, and share repurchases, among other factors, including those discussed in the section entitled “Risk Factors” beginning on page 35. In addition, as explained in more detail in the accompanying notes to the “Unaudited Pro Forma Condensed Combined Consolidated Financial Information” beginning on page 136, the preliminary allocation of the pro forma purchase prices reflected in the unaudited pro forma condensed combined financial information are subject to adjustment and may vary significantly from the actual purchase price allocations that will be recorded upon completion of the merger and asset purchase.

 

 

 

 

 

(Dollars in thousands)

 

Three Months Ended
March 31, 2017

 

Year Ended
December 31, 2016

Statements of Income

 

 

 

 

Net interest income

 

 

$

 

276,458

 

 

 

$

 

1,014,357

 

Provision for loan losses

 

 

 

2,392

 

 

 

 

16,113

 

 

 

 

 

 

Net interest income after provision for loan losses

 

 

 

274,066

 

 

 

 

998,244

 

Noninterest income

 

 

 

145,050

 

 

 

 

638,493

 

Noninterest expense

 

 

 

298,884

 

 

 

 

1,197,791

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

 

120,232

 

 

 

 

438,946

 

Income taxes

 

 

 

39,160

 

 

 

 

139,472

 

Income from continuing operations

 

 

$

 

81,072

 

 

 

$

 

299,474

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2017

Balance Sheet

 

 

Investment securities

 

 

$

 

5,555,158

 

Loans, net of unearned income

 

 

 

26,497,122

 

Total assets

 

 

 

40,381,149

 

Deposits

 

 

 

31,559,365

 

Term borrowings

 

 

 

1,210,636

 

Shareholders’ equity

 

 

 

4,050,823

 

30


 

UNAUDITED COMPARATIVE PER COMMON SHARE DATA

The following table sets forth the basic earnings, diluted earnings, cash dividend, and book value per common share data for First Horizon and Capital Bank Financial on a historical basis and on a pro forma combined basis (inclusive of the pro forma impact of the Coastal purchase), for the three months ended March 31, 2017, and the basic earnings, diluted earnings and cash dividend per common share for the year ended December 31, 2016. The unaudited pro forma data was derived by combining the historical financial information of First Horizon, Coastal, and Capital Bank Financial using the acquisition method of accounting for business combinations, assumes the transactions are completed as contemplated and represents current estimates based on available information of the combined company’s results of operations. The unaudited pro forma data and equivalent per share information gives effect to the transactions 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, 2016, in the case of the earnings per share and dividends declared data. The pro forma financial adjustments record the assets and liabilities of Capital Bank Financial and Coastal at their estimated fair values and are subject to adjustment as additional information becomes available and as additional analysis is performed.

The unaudited pro forma data below should be read in conjunction with First Horizon’s and Capital Bank Financial’s audited financial statements for the year ended December 31, 2016 and their respective unaudited financial statements for the three months ended March 31, 2017. This information is presented for illustrative purposes only. You should not rely on the unaudited pro forma data or equivalent amounts presented below 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 merger and integration-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. The information below should be read in conjunction with “Unaudited Pro Forma Condensed Combined Consolidated Financial Information” beginning on page 136.

 

 

 

 

 

 

 

 

 

 

 

 

 

First
Horizon
(As reported)

 

Pro Forma
First
Horizon
including
Coastal
(a)

 

Capital Bank
Financial
(As reported)

 

Pro Forma
First
Horizon
including
Coastal and
Capital Bank
Financial
(a)

 

Per
Equivalent
Capital Bank
Financial
Share
(b)

For the Three Months Ended March 31, 2017:

 

 

 

 

 

 

 

 

 

 

Basic earnings per share from continuing operations

 

 

$

 

0.23

 

 

 

$

 

0.25

 

 

 

$

 

0.40

 

 

 

$

 

0.24

 

 

 

$

 

0.42

 

Diluted earnings per share from continuing operations

 

 

 

0.23

 

 

 

 

0.24

 

 

 

 

0.39

 

 

 

 

0.23

 

 

 

 

0.40

 

Cash dividends(c)

 

 

 

0.09

 

 

 

 

0.09

 

 

 

 

0.12

 

 

 

 

0.09

 

 

 

 

0.16

 

Book value at March 31, 2017(d)

 

 

 

10.45

 

 

 

 

10.45

 

 

 

 

25.17

 

 

 

 

12.49

 

 

 

 

21.86

 

For the Year Ended December 31, 2016:

 

 

 

 

 

 

 

 

 

 

Basic earnings per share from continuing operations

 

 

$

 

0.95

 

 

 

$

 

1.00

 

 

 

$

 

1.30

 

 

 

$

 

0.87

 

 

 

$

 

1.52

 

Diluted earnings per share from continuing operations

 

 

 

0.94

 

 

 

 

0.99

 

 

 

 

1.28

 

 

 

 

0.86

 

 

 

 

1.51

 

Cash dividends(c)

 

 

 

0.28

 

 

 

 

0.28

 

 

 

 

0.42

 

 

 

 

0.28

 

 

 

 

0.49

 

 

 

(a)

 

Pro forma earnings per share are based on pro forma combined net income and pro forma combined weighted average common shares outstanding at the end of the period.

 

(b)

 

Pro forma per equivalent Capital Bank Financial share information is calculated based on pro forma combined information multiplied by the applicable exchange ratio of 1.75.

 

(c)

 

Pro forma dividends per share represents First Horizon’s historical dividends per share.

 

(d)

 

Book value per common share is calculated based on pro forma combined equity and pro forma combined common shares outstanding at the end of the period.

31


 

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

The table below sets forth, for the calendar quarter indicated, the high and low reported sales prices, as well as the dividend paid, per share of First Horizon common stock, which trades on the NYSE under the symbol “FHN,” and per share of Capital Bank Financial Class A common stock, which trades on the NASDAQ under the symbol “CBF.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Horizon Common Stock

 

Capital Bank Financial
Class A Common Stock

 

High

 

Low

 

Dividend

 

High

 

Low

 

Dividend

2015

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

 

$

 

14.86

 

 

 

$

 

12.17

 

 

 

$

 

0.06

 

 

 

$

 

28.33

 

 

 

$

 

23.41

 

 

 

$

 

 

Second Quarter

 

 

 

16.00

 

 

 

 

13.95

 

 

 

 

0.06

 

 

 

 

30.50

 

 

 

 

26.65

 

 

 

 

 

Third Quarter

 

 

 

16.35

 

 

 

 

13.28

 

 

 

 

0.06

 

 

 

 

32.60

 

 

 

 

27.92

 

 

 

 

 

Fourth Quarter

 

 

 

15.47

 

 

 

 

11.97

 

 

 

 

0.06

 

 

 

 

35.95

 

 

 

 

28.73

 

 

 

 

0.10

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

 

$

 

14.27

 

 

 

$

 

11.51

 

 

 

$

 

0.07

 

 

 

$

 

31.98

 

 

 

$

 

27.12

 

 

 

$

 

0.10

 

Second Quarter

 

 

 

14.77

 

 

 

 

12.46

 

 

 

 

0.07

 

 

 

 

32.24

 

 

 

 

28.28

 

 

 

 

0.10

 

Third Quarter

 

 

 

15.50

 

 

 

 

12.86

 

 

 

 

0.07

 

 

 

 

32.31

 

 

 

 

27.71

 

 

 

 

0.10

 

Fourth Quarter

 

 

 

20.76

 

 

 

 

14.60

 

 

 

 

0.07

 

 

 

 

40.00

 

 

 

 

29.22

 

 

 

 

0.12

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

 

$

 

20.84

 

 

 

$

 

17.36

 

 

 

$

 

0.09

 

 

 

$

 

45.00

 

 

 

$

 

37.60

 

 

 

$

 

0.12

 

Second Quarter

 

 

$

 

19.21

   

 

$

 

16.64

   

 

$

 

0.09

   

 

$

 

43.40

   

 

$

 

36.65

   

 

$

 

0.12

 

The following table shows the closing sale prices of First Horizon common stock and Capital Bank Financial Class A common stock as reported on the NYSE and NASDAQ, respectively, on March 14, 2017, the last full trading day before rumors of a transaction by Capital Bank Financial were reported by Bloomberg, on May 3, 2017, the last full trading day before the public announcement of the signing of the merger agreement, and on July 25, 2017, the last trading day before the date of this joint proxy statement/prospectus for which it was practicable to obtain information. The table also shows the implied value of the merger consideration payable for each share of Capital Bank Financial common stock on March 14, 2017, May 3, 2017 and July 25, 2017.

 

 

 

 

 

 

 

 

 

First
Horizon
Common
Stock

 

Capital
Bank
Financial
Common
Stock

 

Implied Value
of One Share
of Capital
Bank
Financial
Common
Stock
(1)

March 14, 2017

 

 

$

 

19.34

 

 

 

$

 

40.90

 

 

 

$

 

41.75

 

May 3, 2017

 

 

$

 

18.82

 

 

 

$

 

42.05

 

 

 

$

 

40.84

 

July 25, 2017

 

 

$

 

18.06

   

 

$

 

39.10

   

 

$

 

39.51

 

 

 

(1)

  Calculated by multiplying the First Horizon share closing price by 1.75 and adding $7.90 in cash. See “The Merger Agreement—Merger Consideration.”

32


 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our beliefs, plans, goals, expectations, and estimates. Forward-looking statements are not a representation of historical information, but instead pertain to future operations, strategies, financial results or other developments. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “should,” “is likely,” “will,” “going forward,” and other expressions that indicate future events and trends identify such forward-looking statements.

Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, operational, economic and competitive uncertainties and contingencies, many of which are beyond the control of First Horizon and Capital Bank Financial, and many of which, with respect to future business decisions and actions, are subject to change. Examples of uncertainties and contingencies include, among other important factors:

 

 

the possibility that the proposed mergers will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, including the emergence of compliance issues at First Horizon or Capital Bank Financial that could delay or preclude regulatory approval;

 

 

the possibility that the anticipated benefits of the transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the state of the economy and competitive factors in the areas where First Horizon and Capital Bank Financial do business;

 

 

potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction;

 

 

the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

 

 

diversion of management’s attention from ongoing business operations and opportunities;

 

 

First Horizon’s potential exposure to unknown or contingent liabilities of Capital Bank Financial;

 

 

changes in First Horizon’s stock price before closing, including as a result of the financial performance of Capital Bank Financial;

 

 

the outcome of pending or threatened litigation, or of matters before regulatory agencies, whether currently existing or commencing in the future, including litigation related to the merger;

 

 

global, general, and local economic and business conditions, including economic recession or depression;

 

 

expectations of and actual timing and amount of interest rate movements, including the slope and shape of the yield curve, which can have a significant impact on a financial services institution;

 

 

market and monetary fluctuations, including fluctuations in mortgage markets;

 

 

inflation or deflation;

 

 

demand for First Horizon’s and Capital Bank Financial’s product offerings;

 

 

the actions of the SEC, the Financial Accounting Standards Board (FASB), the OCC, the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), the Financial Industry Regulatory Authority (FINRA), the U.S. Department of the Treasury (Treasury), the Municipal Securities Rulemaking Board (MSRB), the Consumer Financial Protection Bureau (CFPB), the Financial Stability Oversight Council (Council), the Public Company Accounting Oversight Board (PCAOB), and other regulators and agencies, including in connection with the regulatory approval process associated with the merger;

33


 

 

 

pending, threatened, or possible future regulatory, administrative, and judicial outcomes, actions, and proceedings;

 

 

current or future Executive Orders;

 

 

changes in laws and regulations applicable to First Horizon and Capital Bank Financial;

 

 

First Horizon’s and Capital Bank Financial’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing;

 

 

customer, investor, competitor, regulatory, and legislative responses to any or all of these conditions; and

 

 

other factors that may affect future results of First Horizon and Capital Bank, including factors previously disclosed in First Horizon’s and Capital Bank Financial’s reports filed with the SEC.

For any forward-looking statements made in this joint proxy statement/prospectus or in any documents incorporated by reference into this joint proxy statement/prospectus, First Horizon and Capital Bank Financial claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this joint proxy statement/prospectus or the date of the applicable document incorporated by reference into this joint proxy statement/prospectus. Except to the extent required by applicable law, neither First Horizon nor Capital Bank Financial undertakes to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. All written and oral forward-looking statements concerning the mergers or other matters addressed in this joint proxy statement/prospectus are expressly qualified in their entirety by the cautionary statements contained or referred to in this joint proxy statement/prospectus.

34


 

RISK FACTORS

In addition to general investment risks and the other information contained or incorporated by reference in this joint proxy statement/prospectus, including First Horizon’s Annual Report on Form 10-K for the year ended December 31, 2016 and Capital Bank Financial’s Annual Report on Form 10-K for the year ended December 31, 2016 as well as the matters addressed under the section “Cautionary Statement Regarding Forward-Looking Statements,” First Horizon and Capital Bank Financial shareholders should carefully consider the following risk factors in deciding how to vote for the proposals presented in this joint proxy statement/prospectus. You should also consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Additional risks and uncertainties not presently known to First Horizon or Capital Bank Financial or that are not currently believed to be important to their respective shareholders, if they materialize, also may adversely affect the mergers and First Horizon as the surviving entity of the mergers.

Risks Related to the Mergers and First Horizon’s Business Upon Completion of the Mergers

The price of First Horizon common stock might increase or decline prior to the completion of the merger, which could change the merger consideration and value of the stock consideration to be received by Capital Bank Financial common stockholders pursuant to the merger agreement. Further, at the First Horizon and Capital Bank Financial special meetings, neither First Horizon shareholders nor Capital Bank Financial Class A common stockholders will know the exact value of First Horizon common stock that will determine the merger consideration and that will be issued as stock consideration.

In the merger, each outstanding share of Capital Bank Financial common stock (except for specified shares of Capital Bank Financial common stock held by Capital Bank Financial or First Horizon and shares of Capital Bank Financial common stock held by shareholders who properly exercise dissenters’ rights) will be converted into the right to receive, either (i) an amount in cash equal to the sum of (A) $7.90 plus (B) the product of 1.75 multiplied by the First Horizon share closing price, or (ii) the number of shares of First Horizon common stock equal to the quotient of (A) the per share cash consideration divided by (B) the First Horizon share closing price, in each case at the election of the applicable Capital Bank Financial common stockholder, subject to procedures applicable to oversubscription and undersubscription for cash consideration.

The market price of First Horizon common stock at the time the merger is completed may vary significantly from the price on the date of the merger agreement, on the date this joint proxy statement/prospectus is mailed to Capital Bank Financial common stockholders, on the respective dates of the First Horizon special meeting and Capital Bank Financial special meeting, the election deadline by which Capital Bank Financial shareholders may elect to receive the cash consideration or the stock consideration and the date the merger is completed. Because the merger consideration includes a component based on the First Horizon share closing price, any changes in the market price of First Horizon common stock will have a corresponding effect on the amount of per share cash consideration. In addition, any change in the market price of First Horizon common stock prior to the completion of the merger will affect the value of the stock consideration, and there will be no adjustment to the merger consideration for changes in the market price of either shares of First Horizon common stock or shares of Capital Bank Financial common stock. See “Comparative Per Share Market Price and Dividend Information” for information about the prices of First Horizon common stock in prior periods.

In addition, because the date when the proposed mergers will be completed will be later than the date of the First Horizon and Capital Bank Financial special meetings, neither First Horizon shareholders nor Capital Bank Financial Class A common stockholders will know at the time they vote in the applicable special meeting the exact value of the First Horizon common stock that will determine the merger consideration and be issued as stock consideration. Accordingly, if the First Horizon share closing price is lower than the market price of First Horizon common stock on the date of the Capital Bank Financial special meeting, the merger consideration will be lower than

35


 

what the merger consideration would have been at the time the Capital Bank Financial Class A common stockholders vote on the merger agreement proposal.

Stock price changes may result from a variety of factors that are beyond the control of First Horizon and Capital Bank Financial, including general market and economic conditions, regulatory considerations, changes in the industry, changes in First Horizon’s and Capital Bank Financial’s respective businesses, operations and prospects and market sentiment regarding banks generally and First Horizon’s entry into the merger agreement in particular. These factors may include:

 

 

operating results that vary from the expectations of First Horizon management or of securities analysts and investors;

 

 

developments in First Horizon’s business or in the financial services sector generally;

 

 

regulatory or legislative changes affecting First Horizon’s industry generally, including tax reform, or its business and operations or investor expectations regarding those changes;

 

 

operating and securities price performance of companies that investors consider to be comparable to First Horizon;

 

 

changes in estimates or recommendations by securities analysts or rating agencies;

 

 

announcements of strategic developments, acquisitions, dispositions, financings, and other material events by First Horizon or its competitors; and

 

 

changes in global financial markets and economies and general market conditions, such as interest or foreign exchange rates, stock, commodity, credit or asset valuations or volatility.

Holders are urged to obtain current market quotations for shares of First Horizon common stock and for shares of Capital Bank common stock.

The market price of First Horizon common stock after the mergers may be affected by factors different from those affecting the Capital Bank Financial common stock or First Horizon common stock currently.

Upon completion of the merger, Capital Bank Financial common stockholders who receive the stock consideration (either because they elect to receive stock consideration or because of proration) will become holders of First Horizon common stock. First Horizon’s business differs from that of Capital Bank Financial and, accordingly, the results of operations of First Horizon and the market price of First Horizon common stock after the completion of the mergers may be affected by factors different from those currently affecting the independent results of operations of each of First Horizon and Capital Bank Financial. For example, the effects of changes in the economic and interest rate environment on the operating results of First Horizon’s fixed income business could differ significantly from the effects of such changes on Capital Bank Financial’s (or First Horizon’s) traditional banking businesses. For a discussion of the businesses of First Horizon and Capital Bank Financial and of some important factors to consider in connection with those businesses, see the documents incorporated by reference into this joint proxy statement/prospectus and referred to under “Where You Can Find More Information.”

Capital Bank Financial common stockholders may receive a form of merger consideration different from what they elect.

Although each Capital Bank Financial common stockholder may elect to receive either the cash consideration or the stock consideration in the merger, the aggregate amount of cash consideration will be fixed and equal $410,535,300. Accordingly, depending on the elections made by other Capital Bank Financial common stockholders, a Capital Bank Financial common stockholder might receive a portion of the merger consideration in the form such holder did not elect. See “The Merger Agreement—Merger Consideration.”

If a Capital Bank Financial common stockholder does not submit a properly completed and signed form of election to the exchange agent by the election deadline, then such holder will have no control over the type of merger consideration such holder may receive. Generally, in the event

36


 

one form of merger consideration is undersubscribed, shares of Capital Bank Financial common stock for which no election has been validly made will be allocated to that form of merger consideration before shares of Capital Bank Financial common stock electing the oversubscribed form of merger consideration will be allocated the undersubscribed form of merger consideration pursuant to the proration and adjustment procedures set forth in the merger agreement. Accordingly, while electing one form of merger consideration will not guarantee a Capital Bank Financial common stockholder will receive that form of merger consideration for all of such holder’s shares of Capital Bank Financial common stock, in the event proration is necessary, electing shares will have a priority over “non-election” shares.

No fractional shares of First Horizon common stock will be issued in the merger, and Capital Bank Financial common stockholders will receive cash in lieu of any fractional shares of First Horizon common stock.

If you deliver shares of Capital Bank Financial common stock to make an election, you will not be able to sell those shares unless you revoke your election prior to the election deadline.

If you are a holder of Capital Bank Financial common stock and want to elect to receive the cash consideration or stock consideration in the merger, you will have to deliver your stock certificate(s), if any, and a properly completed form of election by the election deadline. Following the delivery of a completed form of election, you will not be able to transfer such shares unless you revoke your election before the election deadline by providing written notice to the exchange agent. If you do not revoke your election before the election deadline, you will not be able to liquidate your investment in Capital Bank Financial common stock for any reason until you receive the merger consideration. In the time between the election deadline and the closing of the merger, the trading price of First Horizon common stock or Capital Bank Financial common stock may decrease, and you might otherwise want to sell your shares of Capital Bank Financial common stock to gain access to cash, make other investments, or reduce the potential for a decrease in the value of your investment. The date that you will receive your merger consideration depends on the completion date of the merger, which is uncertain. The completion date of the merger might be later than expected due to events not within the control of First Horizon or Capital Bank Financial, such as delays in obtaining regulatory approvals.

Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on First Horizon following the mergers.

Before the mergers and the bank merger may be completed, First Horizon and Capital Bank Financial must obtain approvals from the Federal Reserve and the OCC. Other approvals, waivers, or consents from regulators may also be required. In determining whether to grant these approvals, the relevant governmental entities consider a variety of factors, including the regulatory standing of each party, the effect of the mergers and the bank merger on competition and the factors described under “The Mergers—Regulatory Approvals Required for the Merger.” An adverse development in either party’s regulatory standing or these factors could result in an inability to obtain approval or delay receipt of approval. The relevant governmental entities may impose conditions, limitations, obligations or restrictions on the conduct of First Horizon’s business following the mergers or require branch divestitures. There can be no assurance that relevant government entities will not impose conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of the mergers or the bank merger, or reduce the anticipated benefits of the mergers or the bank merger. Additionally, the completion of the mergers and the bank merger is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the completion of the mergers or bank merger.

The processing time for obtaining regulatory approvals for bank mergers, particularly for larger institutions and protested applications, has increased since the financial crisis.

37


 

In a recent approval order, the Federal Reserve has stated that if material weaknesses or other significant issues are identified by examiners during processing of an application, a banking organization will be required to withdraw its application pending resolution of any related supervisory concerns. Accordingly, if there is an adverse development in either party’s regulatory standing, First Horizon may be required to withdraw the application for approval of the proposed mergers and, if possible, resubmit it after the applicable supervisory concerns have been resolved. In such an event, it may not be possible to obtain regulatory approval before May 3, 2018, which is the termination date of the merger. See “The Mergers—Regulatory Approvals Required for the Merger” and “The Merger Agreement—Termination of the Merger Agreement.”

The success of the mergers and the bank merger and integration of First Horizon and Capital Bank Financial will depend on a number of uncertain factors.

The success of the mergers and the bank merger will depend on a number of factors, including, without limitation:

 

 

First Horizon’s ability to integrate the business acquired from Capital Bank Sub in the merger (which we refer to as the “acquired business”) into FTBNA’s current operations;

 

 

First Horizon’s ability to limit the outflow of deposits held by its new customers in the acquired business and to successfully retain and manage interest-earning assets and relationships (i.e., loans) acquired in the mergers;

 

 

First Horizon’s ability to control the incremental non-interest expense from the acquired business in a manner that enables it to maintain a favorable overall efficiency ratio;

 

 

First Horizon’s ability to retain and attract the key employees and other personnel of Capital Bank Financial;

 

 

First Horizon’s ability to earn acceptable levels of interest and non-interest income, including fee income, from the acquired business; and

 

 

First Horizon’s ability to retain the customer relationships from the acquired business.

Integrating the acquired business will be an operation of substantial scope and expense, and may be affected by general market and economic conditions or government actions affecting the financial industry generally. Integration efforts will also divert First Horizon’s management’s attention and resources for a time. No assurance can be given that First Horizon will be able to integrate the acquired business successfully. First Horizon may also encounter unexpected difficulties or costs during the integration that could adversely affect its earnings and financial condition, perhaps materially. Additionally, no assurance can be given that the operation of the acquired business will not adversely affect First Horizon’s existing profitability, that First Horizon will be able to achieve results in the future similar to those achieved by its existing banking business, or that First Horizon will be able to manage any growth resulting from the mergers effectively.

Combining First Horizon and Capital Bank Financial may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the mergers and the bank merger may not be realized.

First Horizon and Capital Bank Financial have operated and, until the completion of the mergers, will continue to operate, independently. The success of the mergers and the bank merger, including anticipated benefits and cost savings, will depend, in part, on First Horizon’s ability to successfully combine and integrate the businesses of First Horizon and Capital Bank Financial. It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses, or inconsistencies in standards, controls, procedures, and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors, and employees or to achieve the anticipated benefits and cost savings of the mergers and the bank merger. The loss of key employees could adversely affect First Horizon’s ability to successfully conduct its business, which could have an adverse effect on First Horizon’s financial results and the value of its common stock. If First Horizon experiences difficulties with the

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integration process and attendant systems conversion, the anticipated benefits of the mergers and the bank merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause First Horizon and/or Capital Bank Financial to lose customers or cause customers to remove their accounts from First Horizon and/or Capital Bank Financial and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Capital Bank Financial and First Horizon during this transition period and for an undetermined period after completion of the mergers and the bank merger on First Horizon. In addition, the actual cost savings of the mergers and the bank merger could be less than anticipated.

The unaudited pro forma financial statements included in this document are preliminary and the actual financial condition and results of operations of First Horizon after the mergers may differ materially.

The unaudited pro forma financial statements included in this document are presented for illustrative purposes only and are not necessarily indicative of what First Horizon’s actual financial condition or results of operations would have been had the mergers been completed on the dates indicated. The unaudited pro forma condensed combined consolidated financial statements reflect adjustments, which are based upon preliminary estimates, to generally record the Capital Bank Financial identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this document is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the valuations of the assets and liabilities of Capital Bank Financial as of the date of the completion of the mergers. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this document. For more information, see “Unaudited Pro Forma Condensed Combined Consolidated Financial Statements.”

Capital Bank Financial’s directors and executive officers have interests in the merger that may differ from the interests of Capital Bank Financial’s common stockholders.

Capital Bank Financial’s common stockholders should be aware that certain of Capital Bank Financial’s directors and executive officers have agreements or arrangements that provide them with interests in the merger, including financial interests, that may be different from, or in addition to, the interests of the other Capital Bank Financial common stockholders. Capital Bank Financial’s board of directors was aware of these interests during its deliberations of the merits of the merger and in determining to recommend to Capital Bank Financial’s Class A common stockholders that they vote for the Capital Bank Financial merger proposal and thereby approve the transactions contemplated by the merger agreement, including the merger. For a more complete description of these interests, see “The Mergers—Interests of Capital Bank Financial’s Directors and Executive Officers in the Merger.”

Termination of the merger agreement could negatively affect Capital Bank Financial or First Horizon.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the mergers and the bank merger. Those conditions include, but are not limited to, the following: the approval of the merger agreement proposal by Capital Bank Financial Class A common stockholders, the approval of the First Horizon stock issuance proposal by First Horizon shareholders, the receipt of all required regulatory approvals, the accuracy (at the effective time) of representations and warranties under the merger agreement (subject to the materiality standards set forth in the merger agreement), First Horizon’s and Capital Bank Financial’s performance of their respective obligations under the merger agreement in all material respects and each of First Horizon’s and Capital Bank Financial’s receipt of an opinion to the effect that the mergers will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code.

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These or other conditions to the mergers may not be satisfied or waived and, accordingly, the mergers may not be completed.

In addition, if the merger is not completed by the termination date designated in the merger agreement, either First Horizon or Capital Bank Financial may choose to terminate the merger agreement, and the parties can mutually decide to terminate the merger agreement at any time. In addition, First Horizon and Capital Bank Financial may elect to terminate the merger agreement in certain other circumstances. If the merger agreement is terminated, there may be various consequences. For example, Capital Bank Financial’s or First Horizon’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the mergers, without realizing any of the anticipated benefits of completing the mergers. Additionally, if the merger agreement is terminated, the market price of Capital Bank Financial’s or First Horizon’s common stock could decline to the extent that the current market prices reflect a market assumption that the mergers will be completed. If the merger agreement is terminated under certain circumstances, Capital Bank Financial may be required to pay to First Horizon a termination fee of $85 million.

Capital Bank Financial and First Horizon will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the mergers on employees and customers may have an adverse effect on Capital Bank Financial or First Horizon. These uncertainties may impair Capital Bank Financial’s or First Horizon’s ability to attract, retain, and motivate key personnel until the mergers are completed, and could cause customers and others that deal with Capital Bank Financial or First Horizon to seek to change existing business relationships with Capital Bank Financial or First Horizon. Retention of certain employees by Capital Bank Financial or First Horizon may be challenging while the mergers are pending, as certain employees may experience uncertainty about their future roles with the combined company. If key employees depart because of issues relating to the uncertainty and difficulty of integration, or a desire not to remain with Capital Bank Financial or First Horizon, Capital Bank Financial’s business or First Horizon’s business could be harmed. In addition, subject to certain exceptions, Capital Bank Financial has agreed to operate its business in the ordinary course prior to closing. See “The Merger Agreement—Covenants and Agreements” for a description of the restrictive covenants applicable to Capital Bank Financial and First Horizon.

If the mergers are not completed, First Horizon and Capital Bank Financial will have incurred substantial expenses without realizing the expected benefits of the mergers.

Each of First Horizon and Capital Bank Financial has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement (including regulatory applications), as well as the costs and expenses of filing, printing, and mailing this joint proxy statement/prospectus, and all fees paid to the SEC in connection with the mergers. If the mergers are not completed, First Horizon and Capital Bank Financial would have to recognize these expenses without realizing the expected benefits of the mergers.

The merger agreement limits Capital Bank Financial’s ability to pursue acquisition proposals and requires Capital Bank Financial to pay a termination fee of $85 million under limited circumstances, including circumstances relating to acquisition proposals.

The merger agreement prohibits Capital Bank Financial from initiating, soliciting, knowingly encouraging, or knowingly facilitating certain third-party acquisition proposals. See “The Merger Agreement—Covenants and Agreements—Agreement Not to Solicit Other Offers.” The merger agreement also provides that Capital Bank Financial will be required to pay to First Horizon a termination fee in the amount of $85 million in the event that the merger agreement is terminated under certain circumstances, including a change of recommendation by the Capital Bank Financial board of directors. See “The Merger Agreement—Termination Fee.” These provisions might

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discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Capital Bank Financial from considering or proposing such an acquisition.

The shares of First Horizon common stock to be received by Capital Bank Financial common stockholders as a result of the merger will have different rights from the shares of Capital Bank Financial common stock.

Upon completion of the merger, Capital Bank Financial common stockholders will become First Horizon shareholders and their rights as shareholders will be governed by the Tennessee Business Corporation Act and the First Horizon corporate charter and bylaws. The rights associated with Capital Bank Financial common stock are different from the rights associated with First Horizon common stock. See “Comparison of Shareholders’ Rights” for a discussion of the different rights associated with First Horizon common stock.

Capital Bank Financial common stockholders and First Horizon shareholders will have a reduced ownership and voting interest in First Horizon after the merger and will exercise less influence over management.

Capital Bank Financial Class A common stockholders and First Horizon shareholders currently have the right to vote in the election of the board of directors and on other matters affecting Capital Bank Financial and First Horizon, respectively. Upon completion of the merger, each Capital Bank Financial common shareholder who receives shares of First Horizon common stock will become a shareholder of First Horizon, with a percentage ownership of First Horizon that is smaller than the shareholder’s percentage ownership of Capital Bank Financial. Based on a First Horizon share closing price of $18.06 on July 25, 2017, the last date before the date of this joint proxy statement/prospectus for which it was practicable to obtain this information, and based on the number of shares of First Horizon and Capital Bank Financial common stock outstanding, the Capital Bank Financial common stockholders, as a group, will receive in the merger shares of First Horizon common stock constituting approximately 28.03% of the outstanding shares of First Horizon common stock immediately after the merger. As a result, current First Horizon shareholders, as a group, will own approximately 71.97% of the outstanding shares of First Horizon common stock immediately after the merger. Because of this, Capital Bank Financial Class A common stockholders may have less influence on the management and policies of First Horizon than they now have on the management and policies of Capital Bank Financial, and current First Horizon shareholders may have less influence than they now have on the management and policies of First Horizon.

Sales of shares of First Horizon common stock after the completion of the transaction may cause the market price of First Horizon common stock to fall.

Based on a First Horizon share closing price of $18.06 on July 25, 2017, the last date before the date of this joint proxy statement/prospectus for which it was practicable to obtain this information, and based on the number of shares of First Horizon and Capital Bank Financial common stock outstanding, First Horizon would issue approximately 91,210,673 shares of First Horizon common stock in connection with the merger. Capital Bank Financial common stockholders may decide not to hold the shares of First Horizon common stock they receive in the merger. Other Capital Bank Financial common stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell shares of First Horizon common stock that they receive in the merger. Such sales of First Horizon common stock could have the effect of depressing the market price for First Horizon common stock and may take place promptly following the merger.

The opinions of First Horizon’s and Capital Bank Financial’s financial advisors to the parties’ respective boards of directors were delivered prior to the signing of the merger agreement and do not reflect changes in circumstances since such opinions were delivered.

The opinions of First Horizon’s and Capital Bank Financial’s financial advisors to the parties’ respective boards of directors were delivered prior to the signing of the merger agreement. Changes in the operations and prospects of First Horizon or Capital Bank Financial, general market and economic conditions and other factors that may be beyond the control of First Horizon or Capital

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Bank Financial may significantly alter the value or prices of Capital Bank Financial or First Horizon shares of common stock by the time the merger is completed. The opinions do not speak as of the date of this joint proxy statement/prospectus, as of the time the merger will be completed, or as of any date other than the date of such opinions.

Capital Bank Financial common stockholders are expected to have appraisal rights in the merger.

If the merger agreement is adopted by Capital Bank common shareholders, Capital Bank Financial common stockholders who do not vote in favor of the adoption of the merger agreement and who properly demand appraisal of their shares will be entitled to appraisal rights in connection with the merger under Section 262 of the DGCL. Neither Capital Bank Financial nor First Horizon can predict the number of Capital Bank Financial common stockholders who will seek appraisal of their shares. For more information, see “The Mergers—Dissenters’ Rights in the Merger.”

Litigation relating to the merger could delay and/or enjoin the merger.

On July 14, 2017, a complaint was filed on behalf of a putative class of First Horizon shareholders against First Horizon, its directors, and Capital Bank Financial in the Court of Chancery of Shelby County, Tennessee (30th Judicial District), in connection with the merger. The complaint alleges, among other things, that the First Horizon director defendants breached their fiduciary duties by approving the merger, that Capital Bank Financial aided and abetted such breaches, and that First Horizon, its directors and Capital Bank Financial failed to disclose material information in connection with the merger. In addition, Capital Bank Financial and the individual members of the Capital Bank Financial board of directors have been named as defendants in three substantially similar putative derivative and class action lawsuits filed by alleged shareholders of Capital Bank Financial in the Western District of North Carolina (with one complaint also naming First Horizon and Merger Sub as defendants). The three complaints allege that the registration statement on Form S-4 filed on June 29, 2017 omits and/or misrepresents material information which renders it false and misleading. Additional lawsuits against First Horizon, Capital Bank Financial, and/or the directors and officers of either company in connection with the merger may be filed. The outcome of the pending and any additional future litigation is uncertain. If any case is not resolved, the lawsuit(s) could prevent or delay completion of the merger and result in substantial costs to First Horizon and Capital Bank Financial, including any costs associated with the indemnification of directors and officers. One of the conditions to the closing of the merger is that no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger or the bank merger shall be in effect. As such, if plaintiffs are successful in obtaining an injunction prohibiting the completion of the merger or the bank merger on the agreed-upon terms, then such injunction may prevent the merger from being completed, or from being completed within the expected timeframe. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect First Horizon’s business, financial condition, results of operations and cash flows. See “The Mergers—Litigation Relating to the Merger.”

Risks Relating to First Horizon’s Business

You should read and consider risk factors specific to First Horizon’s business that will also affect First Horizon after the mergers. These risks are described in the sections entitled “Risk Factors” in First Horizon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Risks Relating to Capital Bank Financial’s Business

You should read and consider risk factors specific to Capital Bank Financial’s business that will also affect First Horizon after the mergers. These risks are described in the sections entitled “Risk Factors” in Capital Bank Financial’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

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THE CAPITAL BANK FINANCIAL SPECIAL MEETING

Date, Time, and Place of Meeting

The Capital Bank Financial special meeting will be held on September 7, 2017 at the DoubleTree Suites by Hilton Hotel, 6300 Morrison Blvd., Charlotte, North Carolina 28211, at 4:00 p.m. local time.

Matters to Be Considered

At the Capital Bank Financial special meeting of Class A common stockholders, you will be asked to consider and vote upon the following matters:

 

 

the Capital Bank Financial merger proposal;

 

 

the Capital Bank Financial compensation proposal; and

 

 

the Capital Bank Financial adjournment proposal.

Recommendation of Capital Bank Financial’s Board of Directors

Capital Bank Financial’s board of directors has unanimously approved the merger agreement, has determined that the merger, on the terms and conditions set forth in the merger agreement, is advisable and in the best interests of Capital Bank Financial and its stockholders. Capital Bank Financial’s board of directors unanimously recommends that Capital Bank Financial Class A common stockholders vote “FOR” the Capital Bank Financial merger proposal, “FOR” the Capital Bank Financial compensation proposal, and “FOR” the Capital Bank Financial adjournment proposal. See “The Mergers—Capital Bank Financial’s Reasons for the Merger; Recommendation of the Capital Bank Financial Board of Directors” for a more detailed discussion of the Capital Bank Financial board of directors’ recommendation.

Capital Bank Financial Record Date and Quorum

Capital Bank Financial’s board of directors has fixed the close of business on July 24, 2017 as the record date for determining the Capital Bank Financial Class A common stockholders entitled to receive notice of and to vote at the Capital Bank Financial special meeting.

As of the record date, there were 35,456,768 shares of Capital Bank Financial Class A common stock outstanding and entitled to vote at the Capital Bank Financial special meeting, held by approximately 4,442 holders of record. Each share of Capital Bank Financial Class A common stock entitles the holder to one vote at the Capital Bank Financial special meeting on each proposal to be considered at the Capital Bank Financial special meeting.

The presence at the Capital Bank Financial special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Capital Bank Financial Class A common stock entitled to vote at the Capital Bank Financial special meeting will constitute a quorum for the transaction of business. All shares of Capital Bank Financial Class A common stock present in person or represented by proxy, including abstentions, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the Capital Bank Financial special meeting.

Vote Required; Treatment of Abstentions and Failure to Vote

Capital Bank Financial merger proposal:

 

 

Standard: Approval of the Capital Bank Financial merger proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of Capital Bank Financial Class A common stock.

 

 

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy, or fail to instruct your bank or broker with respect to the Capital Bank Financial merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

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Capital Bank Financial compensation proposal:

 

 

Standard: Approval of the Capital Bank Financial compensation proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Capital Bank Financial special meeting.

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Capital Bank Financial special meeting, or fail to instruct your bank or broker how to vote with respect to the Capital Bank Financial compensation proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

Capital Bank Financial adjournment proposal:

 

 

Standard: Approval of the Capital Bank Financial adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Capital Bank Financial special meeting.

 

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Capital Bank Financial special meeting, or fail to instruct your bank or broker how to vote with respect to the Capital Bank Financial adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

Support Agreements

Each of R. Eugene Taylor, the Chairman and Chief Executive Officer of Capital Bank Financial, who as of the Capital Bank Financial record date had the right to vote approximately 621,253, or approximately 1.75%, of the outstanding shares of Capital Bank Financial Class A common stock, Crestview Partners, which as of the Capital Bank Financial record date had the right to vote approximately 2,583,760, or approximately 7.29%, of the outstanding shares of Capital Bank Financial Class A common stock and Oak Hill Capital Partners, which as of the Capital Bank Financial record date had the right to vote approximately 2,482,259, or approximately 7%, of the outstanding shares of Capital Bank Financial Class A common stock, has agreed, subject to certain exceptions, to vote his or its shares of Capital Bank Financial Class A common stock in favor of approval of the Capital Bank Financial merger proposal.

Shares Held by Officers and Directors

As of the Capital Bank Financial record date, the directors and executive officers of Capital Bank Financial and their affiliates beneficially owned and were entitled to vote approximately 1,423,225 shares of Capital Bank Financial Class A common stock representing approximately 4.01% of the shares of Capital Bank Financial Class A common stock outstanding on that date. As of the Capital Bank Financial record date, excluding shares held in fiduciary or agency capacity, First Horizon and its subsidiaries did not own any shares of Capital Bank Financial Class A common stock.

Voting of Proxies; Incomplete Proxies

Each copy of this joint proxy statement/prospectus mailed to Capital Bank Financial common stockholders is accompanied by a form of proxy card with instructions for voting. If you hold stock in your name as a stockholder of record, you should complete and return the proxy card accompanying this joint proxy statement/prospectus, regardless of whether you plan to attend the Capital Bank Financial special meeting. You may also vote your shares through the Internet or by telephone. Information and applicable deadlines for voting through the Internet or by telephone are set forth in the enclosed proxy card instructions.

If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker.

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All shares represented by valid proxies that Capital Bank Financial receives through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the Capital Bank Financial merger proposal, “FOR” the Capital Bank Financial compensation proposal and “FOR” the Capital Bank Financial adjournment proposal. No matters other than the matters described in this joint proxy statement/prospectus are anticipated to be presented for action at the Capital Bank Financial special meeting or at any adjournment or postponement of the Capital Bank Financial special meeting. However, if other business properly comes before the Capital Bank Financial special meeting, the proxy agents will, in their discretion, vote upon such matters in their best judgment.

Shares Held in “Street Name”; Broker Non-Votes

Under stock exchange rules, banks, brokers, and other nominees who hold shares of Capital Bank Financial common stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers, and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine,” without specific instructions from the beneficial owner. Broker non-votes are shares held by a broker, bank, or other nominee that are represented at the Capital Bank Financial special meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and the broker does not have discretionary voting power on such proposal. If your broker, bank, or other nominee holds your shares of Capital Bank Financial Class A common stock in “street name,” your broker, bank, or other nominee will vote your shares of Capital Bank Financial Class A common stock only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker, bank, or other nominee with this joint proxy statement/prospectus. Capital Bank Financial believes that the Capital Bank Financial merger proposal, the Capital Bank Financial compensation proposal and Capital Bank Financial adjournment proposal are “non-routine” proposals and your broker, bank, or other nominee can vote your shares of Capital Bank Financial Class A common stock only with your specific voting instructions.

Revocability of Proxies and Changes to a Capital Bank Financial Class A Common Stockholder’s Vote

If you hold your shares of Capital Bank Financial Class A common stock in your name as a stockholder of record, you may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to Capital Bank Financial’s corporate secretary, (3) attending the Capital Bank Financial special meeting in person, notifying the corporate secretary, and voting by ballot at Capital Bank Financial the special meeting, or (4) voting by telephone or the Internet at a later time.

Any Capital Bank Financial Class A common stockholder entitled to vote in person at the Capital Bank Financial special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying Capital Bank Financial’s corporate secretary) of a stockholder at the Capital Bank Financial special meeting will not constitute revocation of a previously given proxy.

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Written notices of revocation and other communications about revoking your proxy card should be addressed to:

Capital Bank Financial Corp.
4725 Piedmont Row Drive, Suite 110
Charlotte, North Carolina 28210
Attention: Investor Relations
Telephone: (704) 554-5901

If your shares of Capital Bank Financial Class A common stock are held in “street name” by a bank or broker, you should follow the instructions of your bank or broker regarding the revocation of proxies.

Solicitation of Proxies

Capital Bank Financial is soliciting your proxy in conjunction with the merger. Capital Bank Financial will bear the cost of soliciting proxies from you. In addition to solicitation of proxies by mail, Capital Bank Financial will request that banks, brokers, and other record holders send proxies and proxy material to the beneficial owners of Capital Bank Financial Class A common stock and secure their voting instructions. Capital Bank Financial has also made arrangements with Alliance Advisors to assist it in soliciting proxies and has agreed to pay Alliance Advisors approximately $17,500 plus reasonable expenses for these services.

Attending the Capital Bank Financial Special Meeting

All Capital Bank Financial Class A common stockholders, including holders of record and stockholders who hold their shares through banks, brokers, nominees, or any other holder of record, are invited to attend the Capital Bank Financial special meeting. Stockholders of record can vote in person at the Capital Bank Financial special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank, or other nominee, to be able to vote in person at the Capital Bank Financial special meeting. If you plan to attend the Capital Bank Financial special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted. Capital Bank Financial reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification. The use of cameras, sound recording equipment, communications devices, or any similar equipment during the Capital Bank Financial special meeting is prohibited without Capital Bank Financial’s express written consent.

Delivery of Proxy Materials to Stockholders Sharing an Address

As permitted by the Securities Exchange Act of 1934, as amended, only one copy of this joint proxy statement/prospectus is being delivered to multiple Capital Bank Financial common stockholders sharing an address unless Capital Bank Financial has previously received contrary instructions from one or more such stockholders. This is referred to as “householding.” Stockholders who hold their shares in “street name” can request further information on householding through their banks, brokers, or other holders of record. On written or oral request to Capital Bank Financial’s proxy solicitor, Alliance Advisors, at 200 Broadacres Drive, 3rd Floor, Bloomfield, New Jersey 07003, or toll-free at (833) 501-4704. Capital Bank Financial will deliver promptly a separate copy of this document to a stockholder at a shared address to which a single copy of the document was delivered.

Assistance

If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus, or need help voting your shares of Capital Bank Financial Class A common stock, please contact Capital Bank Financial Investor Relations at 4725 Piedmont Row Drive, Suite 110, Charlotte, North Carolina 28210 or call (704) 554-5901, or Capital Bank Financial’s proxy solicitor, Alliance Advisors, at the following address or phone number: 200 Broadacres Drive, 3rd Floor, Bloomfield, New Jersey 07003, or toll-free at (833) 501-4704.

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CAPITAL BANK FINANCIAL PROPOSALS

PROPOSAL NO. 1: CAPITAL BANK FINANCIAL MERGER PROPOSAL

Capital Bank Financial is asking its stockholders to adopt the merger agreement and the transactions contemplated thereby, including the mergers and the bank merger. Capital Bank Financial Class A common stockholders should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

After careful consideration, the Capital Bank Financial board of directors unanimously determined that the merger, on the terms and conditions set forth in the merger agreement, is in the best interests of Capital Bank Financial and its stockholders. See “The Mergers—Capital Bank Financial’s Reasons for the Merger; Recommendation of the Capital Bank Financial Board of Directors” included elsewhere in this joint proxy statement/prospectus for a more detailed discussion of the Capital Bank Financial board of directors’ recommendation.

The Capital Bank Financial board of directors unanimously recommends that Capital Bank Financial Class A common stockholders vote “FOR” the Capital Bank Financial merger proposal.

PROPOSAL NO. 2: CAPITAL BANK FINANCIAL COMPENSATION PROPOSAL

Pursuant to the Dodd-Frank Act and Rule 14a-21(c) under the Exchange Act, Capital Bank Financial is seeking non-binding, advisory approval from its Class A common stockholder of the compensation of Capital Bank Financial’s named executive officers that is based on or otherwise relates to the merger, as disclosed in “The Mergers—Merger-Related Compensation for Capital Bank Financial’s Named Executive Officers.” The proposal gives Capital Bank Financial Class A common stockholders the opportunity to express their views on the merger-related compensation of Capital Bank Financial’s named executive officers. Accordingly, Capital Bank Financial is requesting its Class A common stockholders to adopt the following resolution, on a non-binding, advisory basis:

“RESOLVED, that the compensation that may be paid or become payable to Capital Bank Financial’s named executive officers in connection with the merger, and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “The Mergers—Merger-Related Compensation for Capital Bank Financial’s Named Executive Officers,” are hereby APPROVED.”

Approval of this proposal is not a condition to completion of the merger, and the vote with respect to this proposal is advisory only and will not be binding on First Horizon or Capital Bank Financial. If the merger is completed, the merger-related compensation may be paid to Capital Bank Financial’s named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements even if Capital Bank Financial Class A common stockholders fail to approve the advisory vote regarding merger-related compensation.

The Capital Bank Financial board of directors unanimously recommends that Capital Bank Financial Class A common stockholders vote “FOR” the Capital Bank Financial compensation proposal.

PROPOSAL NO. 3: CAPITAL BANK FINANCIAL ADJOURNMENT PROPOSAL

The Capital Bank Financial special meeting may be adjourned to another time or place, if necessary or appropriate, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the Capital Bank Financial merger proposal.

If, at the Capital Bank Financial special meeting, the number of shares of Capital Bank Financial Class A common stock present or represented and voting in favor of the Capital Bank Financial merger proposal is insufficient to approve such proposal, Capital Bank Financial intends to move to adjourn the Capital Bank Financial special meeting in order to solicit additional proxies for the approval of the merger agreement. In accordance with the Capital Bank Financial bylaws, a vote to approve the proposal to adjourn the Capital Bank Financial special meeting, if necessary or

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appropriate, to solicit additional proxies if there are insufficient votes at the time of the Capital Bank Financial special meeting to approve the Capital Bank Financial merger proposal may be taken in the absence of a quorum.

In this proposal, Capital Bank Financial is asking its stockholders to authorize the holder of any proxy solicited by the Capital Bank Financial board of directors on a discretionary basis to vote in favor of adjourning the Capital Bank Financial special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from Capital Bank Financial Class A common stockholders who have previously voted.

The Capital Bank Financial board of directors unanimously recommends that Capital Bank Financial Class A common stockholders vote “FOR” the Capital Bank Financial adjournment proposal.

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THE FIRST HORIZON SPECIAL MEETING

Date, Time, and Place of Meeting

The special meeting of First Horizon shareholders will be held on September 7, 2017 at the M-Level Auditorium, First Tennessee Building, 165 Madison Avenue, Memphis, Tennessee 38103, at 3:00 p.m. local time.

Matters to Be Considered

At the First Horizon special meeting, First Horizon shareholders will be asked to consider and vote upon the First Horizon stock issuance proposal and the First Horizon adjournment proposal.

Recommendation of the First Horizon Board of Directors

The First Horizon board of directors unanimously recommends that you vote “FOR” the First Horizon stock issuance proposal and “FOR” the First Horizon adjournment proposal.

First Horizon Record Date and Quorum

The Executive & Risk Committee of First Horizon’s board of directors has fixed the close of business on July 24, 2017 as the record date for determining the holders of First Horizon common stock entitled to receive notice of and to vote at the First Horizon special meeting.

As of the First Horizon record date, there were 234,145,714 shares of First Horizon common stock outstanding and entitled to vote at the First Horizon special meeting, held by approximately 5,050 holders of record. Each share of First Horizon common stock entitles the holder to one vote at the First Horizon special meeting on each proposal to be considered at the First Horizon special meeting.

The presence, in person or by proxy, of holders of a majority of the outstanding shares of First Horizon common stock entitled to vote at the First Horizon special meeting constitutes a quorum for transacting business at the First Horizon special meeting. All shares of First Horizon common stock, whether present in person or represented by proxy, including abstentions, if any, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the First Horizon special meeting.

Vote Required; Treatment of Abstentions and Failure to Vote

First Horizon stock issuance proposal:

 

1)

 

Standard: Approval of the First Horizon stock issuance proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the First Horizon special meeting.

 

2)

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the First Horizon special meeting, or fail to instruct your bank or broker how to vote with respect to the First Horizon stock issuance proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

First Horizon adjournment proposal:

 

3)

 

Standard: Approval of the First Horizon adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the First Horizon special meeting.

 

4)

 

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the First Horizon special meeting, or fail to instruct your bank or broker how to vote with respect to the First Horizon adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

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Holders of First Horizon’s depositary shares (representing a 1/4000th interest in a share of non-cumulative perpetual preferred stock, series A), are not entitled to, and are not requested to, vote at the First Horizon special meeting.

Shares Held by Officers and Directors

As of the First Horizon record date, the directors and executive officers of First Horizon and their affiliates owned, and were entitled to vote, 3,504,088 shares of First Horizon common stock, representing approximately 1.5% of the shares of First Horizon common stock outstanding on that date. As of the First Horizon record date, excluding shares held in fiduciary or agency capacity, Capital Bank Financial and its subsidiaries did not own any shares of First Horizon common stock.

Voting of Proxies; Incomplete Proxies

Each copy of this joint proxy statement/prospectus mailed to First Horizon shareholders is accompanied by a form of proxy card with instructions for voting. If you hold stock in your name as a shareholder of record, you should complete and return the proxy card accompanying this joint proxy statement/prospectus, regardless of whether you plan to attend the First Horizon special meeting. You may also vote your shares through the Internet or by telephone. Information and applicable deadlines for voting through the Internet or by telephone are set forth in the enclosed proxy card instructions.

If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker.

All shares represented by valid proxies that First Horizon receives through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the First Horizon stock issuance proposal and “FOR” the First Horizon adjournment proposal. No matters other than the matters described in this joint proxy statement/prospectus are anticipated to be presented for action at the First Horizon special meeting or at any adjournment or postponement of the First Horizon special meeting. However, if other business properly comes before the First Horizon special meeting, the proxies will, in their discretion, vote upon such matters in their best judgment.

Shares Held in “Street Name”; Broker Non-Votes

Under stock exchange rules, banks, brokers, and other nominees who hold shares of First Horizon common stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers, and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine,” without specific instructions from the beneficial owner. Broker non-votes are shares held by a broker, bank, or other nominee that are represented at the First Horizon special meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and the broker does not have discretionary voting power on such proposal. If your broker, bank, or other nominee holds your shares of First Horizon common stock in “street name,” your broker, bank, or other nominee will vote your shares of First Horizon common stock only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker, bank, or other nominee with this joint proxy statement/prospectus. First Horizon believes that the First Horizon stock issuance proposal and First Horizon adjournment proposal are “non-routine” proposals and your broker, bank, or other nominee can vote your shares of First Horizon common stock only with your specific voting instructions.

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Revocability of Proxies and Changes to a First Horizon Shareholder’s Vote

If you are a holder of record of First Horizon common stock, you may change your vote at any time before your shares of First Horizon common stock are voted at the First Horizon special meeting by: (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to First Horizon’s corporate secretary, (3) attending the First Horizon special meeting in person, notifying the corporate secretary and voting by ballot at the First Horizon special meeting, or (4) voting by telephone or the Internet at a later time.

Any shareholder entitled to vote in person at the First Horizon special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying First Horizon’s corporate secretary) of a shareholder at the First Horizon special meeting will not constitute revocation of a previously given proxy.

Written notices of revocation and other communications about revoking your proxy card should be addressed to:

First Horizon National Corporation
P.O. Box 84
Memphis, Tennessee 38101
Attention: Corporate Secretary

If you have instructed a bank, broker, or other holder of record to vote your shares of First Horizon common stock, you must follow the directions you receive from your bank, broker, or other holder of record in order to change or revoke your vote.

Solicitation of Proxies

First Horizon is soliciting your proxy in conjunction with the mergers. First Horizon will bear the cost of soliciting proxies from you. In addition to solicitation of proxies by mail, First Horizon will request that banks, brokers, and other record holders send proxies and proxy material to the beneficial owners of First Horizon common stock and secure their voting instructions. First Horizon has also made arrangements with Morrow Sodali LLC to assist it in soliciting proxies and has agreed to pay Morrow Sodali LLC approximately $15,000 plus reasonable expenses for these services.

Attending the First Horizon Special Meeting

All First Horizon shareholders, including holders of record and shareholders who hold their shares of First Horizon common stock through banks, brokers, nominees, or any other holder of record, are invited to attend the First Horizon special meeting. Shareholders of record can vote in person at the First Horizon special meeting. If you are not a shareholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank, or other nominee, to be able to vote in person at the First Horizon special meeting. If you plan to attend the First Horizon special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted. First Horizon reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification. The use of cameras, sound recording equipment, communications devices, or any similar equipment during the First Horizon special meeting is prohibited without First Horizon’s express written consent.

Delivery of Proxy Materials to Shareholders Sharing an Address

As permitted by the Securities Exchange Act of 1934, as amended, only one copy of this joint proxy statement/prospectus is being delivered to multiple First Horizon shareholders sharing an address unless First Horizon has previously received contrary instructions from one or more such shareholders. This is referred to as “householding.” Shareholders who hold their shares in “street name” can request further information on householding through their banks, brokers, or other

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holders of record. On written or oral request to First Horizon’s proxy solicitor, Morrow Sodali LLC, at 470 West Avenue, Stamford, Connecticut 06902, or toll-free at (800) 662-5200. First Horizon will deliver promptly a separate copy of this document to a shareholder at a shared address to which a single copy of the document was delivered.

Assistance

If you have any questions concerning the mergers, including the First Horizon stock issuance proposal, or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus, or need help voting your shares of First Horizon common stock, please contact Clyde A. Billings, Jr., First Horizon National Corporation, 165 Madison, 13th Floor, Memphis, TN 38103, telephone (901) 523-5679, or First Horizon’s proxy solicitor, Morrow Sodali LLC, at the following address or phone number: 470 West Avenue, Stamford, Connecticut 06902, or toll-free at (800) 662-5200.

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FIRST HORIZON PROPOSALS

PROPOSAL NO. 1: FIRST HORIZON STOCK ISSUANCE PROPOSAL

First Horizon is asking its shareholders to approve the issuance of shares of First Horizon common stock in the merger pursuant to the merger agreement. Holders of First Horizon common stock should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

After careful consideration, the First Horizon board of directors unanimously approved the mergers, stock issuance and the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the mergers, the bank merger, and the issuance of First Horizon common stock in the merger pursuant to the merger agreement, to be advisable and in the best interests of First Horizon and its shareholders. See “The Mergers—First Horizon’s Reasons for the Merger; Recommendation of the First Horizon Board of Directors” included elsewhere in this joint proxy statement/prospectus for a more detailed discussion of the recommendation of the First Horizon board of directors.

The First Horizon board of directors unanimously recommends that First Horizon shareholders vote “FOR” the First Horizon stock issuance proposal.

PROPOSAL NO. 2: FIRST HORIZON ADJOURNMENT PROPOSAL

The First Horizon special meeting may be adjourned to another time or place, if necessary or appropriate, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the First Horizon stock issuance proposal.

If, at the First Horizon special meeting, the number of shares of First Horizon common stock present or represented and voting in favor of the First Horizon stock issuance proposal is insufficient to approve such proposal, First Horizon intends to move to adjourn the First Horizon special meeting in order to solicit additional proxies for the approval of the First Horizon stock issuance proposal. Additionally, in accordance with First Horizon’s bylaws, if a quorum is not present or represented at a meeting of shareholders, the chairman of the meeting or the holders of a majority of the shares entitled to vote at the meeting who are present or represented at the meeting may adjourn the meeting until a quorum is obtained.

In this proposal, First Horizon is asking its shareholders to authorize the holder of any proxy solicited by the First Horizon board of directors on a discretionary basis to vote in favor of adjourning the First Horizon special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from First Horizon shareholders who have previously voted.

The First Horizon board of directors unanimously recommends that the First Horizon shareholders vote “FOR” the First Horizon adjournment proposal.

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INFORMATION ABOUT THE COMPANIES

First Horizon

First Horizon National Corporation
165 Madison Avenue
Memphis, Tennessee 38103
Phone: (901) 523-4444

First Horizon is a Tennessee corporation headquartered in Memphis, Tennessee, with $29.6 billion in total assets as of March 31, 2017. First Horizon is registered as a bank holding company under the Bank Holding Company Act of 1956, and as a financial holding company under the provisions of the Gramm-Leach-Bliley Act and is supervised and regulated by the Federal Reserve. First Horizon provides diversified financial services primarily through its principal subsidiary, FTBNA, and its other subsidiaries. FTBNA, a national banking association with principal offices in Memphis, Tennessee, received its charter in 1864. First Horizon’s subsidiaries have over 200 business locations in 21 U.S. states, excluding off-premises ATMs. Almost all of those locations are bank financial centers and FTN Financial offices. As a national banking association, FTBNA is subject to supervision, regulation and examination by the OCC, its primary regulator. In addition, the deposits of FTBNA are insured up to allowable limits by, and FTBNA is subject to regulation by, the FDIC.

First Horizon’s common stock is traded on the NYSE under the symbol “FHN.” Additional information about First Horizon and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Capital Bank Financial

Capital Bank Financial Corp.
4725 Piedmont Row Drive, Suite 110
Charlotte, NC 28210
Telephone: (704) 554-5901

Capital Bank Financial is a bank holding company incorporated in late 2009 with the goal of creating a regional banking franchise in the southeastern region of the United States through organic growth and acquisitions of other banks, including failed, underperforming and undercapitalized banks. Capital Bank Financial raised $955.6 million to make acquisitions through a series of private placements and an initial public offering of its common stock. Since its inception, Capital Bank Financial has acquired eight depository institutions, including certain assets and certain deposits of three failed banks from the FDIC. As of March 31, 2017, Capital Bank Financial operates 193 branches in Florida, North and South Carolina, Tennessee and Virginia. Through its branches, Capital Bank Financial offers a wide range of commercial and consumer loans and deposits, as well as ancillary financial services.

Capital Bank Financial’s banking operations commenced on July 16, 2010, when it purchased $1.2 billion of assets and assumed $960.1 million of deposits of three failed banks from the FDIC. Capital Bank Financial did not pay the FDIC a premium for the deposits of the failed banks. In connection with these acquisitions, Capital Bank Financial entered into loss sharing agreements with the FDIC covering approximately $796.1 million of outstanding loans balances and real estate of the failed banks that it acquired. Under the loss sharing agreements, the FDIC agreed to absorb 80% of all credit losses and workout expenses on these assets which occurred prior to the expiration of the loss sharing agreements. On September 30, 2010, Capital Bank Financial invested $175.0 million in TIB Financial Corp., a publicly held financial services company that had total assets of $1.7 billion and operated 28 branches in southwest Florida and the Florida Keys. On January 28, 2011, Capital Bank Financial invested $181.1 million in Capital Bank Sub, a publicly held financial services company that had $1.7 billion in assets and operated 32 branches in central and western North Carolina. On September 7, 2011, Capital Bank Financial invested $217.0 million in Green Bankshares, Inc., a publicly held financial services company that had $2.4 billion in assets and operated 63 branches across East and middle Tennessee in addition to one branch in each of

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Virginia and North Carolina. In addition, on October 1, 2012, Capital Bank Financial invested approximately $99.3 million in Southern Community Financial Corporation, a publicly held financial services company that had approximately $1.4 billion in assets and operated 22 branches in North Carolina. On October 26, 2016, Capital Bank Financial invested $340.5 million in CommunityOne Bancorp, a publicly held financial services company that had $2.4 billion in assets and operated 45 branches in North Carolina. Capital Bank Financial has integrated its eight acquired institutions and combined them all onto a single scalable processing platform.

Capital Bank Financial Class A common stock is currently listed on the NASDAQ under the symbol “CBF.” Additional information about Capital Bank Financial and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Merger Sub

Firestone Sub, Inc.
165 Madison Avenue
Memphis, Tennessee 38103
Phone: (901) 523-4444

Merger Sub is a Delaware corporation and a direct wholly-owned subsidiary of First Horizon. Merger Sub was incorporated on April 27, 2017, for the sole purpose of effecting the merger. As of the date of this joint proxy statement/prospectus, Merger Sub has not conducted any activities other than those incidental to its formation, the execution of the merger agreement and the transactions contemplated by the merger agreement.

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THE MERGERS

The following discussion contains certain information about the mergers. The discussion is subject, and qualified in its entirety by reference, to the merger agreement attached as Annex A to this joint proxy statement/prospectus and incorporated herein by reference. We urge you to read carefully this entire joint proxy statement/prospectus, including the merger agreement attached as Annex A, for a more complete understanding of the mergers.

Terms of the Mergers

Each of First Horizon’s and Capital Bank Financial’s respective boards of directors has approved the merger agreement and the transactions contemplated thereby. The merger agreement provides for the merger of Merger Sub with and into Capital Bank Financial, with Capital Bank Financial remaining as the surviving entity. Such surviving entity will, as soon as reasonably practicable following the merger and as part of a single integrated transaction, merge with and into First Horizon in a second step merger, with First Horizon as the surviving entity. Immediately following the completion of the second step merger or at such later time as First Horizon may determine in its sole discretion, Capital Bank Sub will merge with and into FTBNA, with FTBNA continuing as the surviving bank.

Each share of Capital Bank Financial common stock issued and outstanding immediately prior to the completion of the merger (except for shares of Capital Bank Financial common stock that are held by stockholders who are entitled to and properly exercise appraisal rights in accordance with Section 262 of the DGCL and shares of Capital Bank Financial common stock held by Capital Bank Financial or First Horizon, with certain limited exceptions) will be converted into the right to receive either (i) an amount in cash equal to the sum of (A) $7.90 plus (B) the product of 1.75 multiplied by the First Horizon share closing price, or (ii) the number of shares of First Horizon common stock equal to the quotient of (A) the per share cash consideration divided by (B) the First Horizon share closing price, in each case at the election of the applicable Capital Bank Financial common stockholder, subject to procedures applicable to oversubscription and undersubscription for cash consideration. The aggregate amount of the cash consideration is fixed at $410,535,300.

No fractional shares of First Horizon common stock will be issued in connection with the merger. Capital Bank Financial common stockholders who would otherwise be entitled to a fraction of a share of First Horizon common stock upon completion of the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent) based on the First Horizon share closing price. For a discussion of the treatment of awards outstanding under Capital Bank Financial’s equity incentive plans as of the effective time, see “The Merger Agreement—Treatment of Capital Bank Financial Compensatory Equity Awards.”

Capital Bank Financial Class A common stockholders are being asked to adopt the merger agreement and First Horizon shareholders are being asked to approve the issuance of First Horizon common stock in connection with the merger. See “The Merger Agreement” for additional and more detailed information regarding the legal documents that govern the mergers, including information about conditions to the completion of the merger and provisions for terminating or amending the merger agreement.

Background of the Merger

Each of Capital Bank Financial’s and First Horizon’s board of directors and senior management has considered and has regularly reviewed its strategic direction and business objectives, including by evaluating strategic growth opportunities, as part of its continuous efforts to enhance value for its shareholders and other constituencies. These considerations have focused on, among other things, prospects and developments in the regulatory environment, in the economy generally and in financial markets, for financial institutions generally and Capital Bank Financial and First Horizon, respectively, in particular, as well as conditions and ongoing consolidation in the financial services industry, and the benefits and risks to shareholders of strategic combinations compared to the

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benefits and risks of continued operation as a stand-alone bank, including the risks associated with competition, regulation, unpredictable market and credit risk, and rapid changes in technology.

From time to time, Capital Bank Financial has had general discussions with other financial institutions regarding the possibility of a potential future strategic transaction and has discussed this topic with representatives of Sandler O’Neill, UBS and other investment banking institutions. These discussions included reviews of the banking market, as well as industry trends and developments in mergers and acquisitions. During the fall and winter of 2016 – 2017, the Capital Bank Financial board of directors and management began more regularly discussing the potential for a strategic combination with a larger financial institution. After receiving feedback from a number of investment banking institutions regarding possible strategic alternatives, the Capital Bank Financial board of directors tasked the Nominating and Governance Committee of the Capital Bank Financial board of directors with making a recommendation to the Capital Bank Financial board of directors as to which investment banking institution or institutions would be best suited to assist in such a review.

On February 3, 2017, the Nominating and Governance Committee met to discuss the retention of a financial advisor to assist the Capital Bank Financial board of directors in its consideration of strategic alternatives and unanimously determined to recommend the engagement of Sandler O’Neill and UBS to explore strategic alternatives for the Capital Bank Financial board of directors.

On February 6, 2017, the Capital Bank Financial board of directors met and discussed with members of Capital Bank Financial’s senior management the financial institutions believed by senior management, after consultation with representatives of Sandler O’Neill and UBS, to have a greater likelihood of serious interest in pursuing a combination transaction with Capital Bank Financial. Also at its meeting on February 6, 2017, the Capital Bank Financial board of directors approved retaining Sandler O’Neill and UBS as financial advisors to Capital Bank Financial to assist Capital Bank Financial’s board of directors in exploring strategic alternatives for Capital Bank Financial. The Capital Bank Financial board of directors determined to retain Sandler O’Neill and UBS to act as Capital Bank Financial’s financial advisors in connection with a possible transaction based on, among other factors, Sandler O’Neill and UBS’s familiarity with Capital Bank Financial and Capital Bank Financial’s strategic goals as well as Sandler O’Neill and UBS’s reputation and experience generally in mergers and acquisitions, valuations, financing and capital markets and familiarity with the industry in which Capital Bank Financial competes, and their respective relationships with potential strategic partners for Capital Bank Financial.

Following the February 6, 2017 meeting of the Capital Bank Financial board of directors, and in accordance with Capital Bank Financial’s instructions based on extensive consideration of the banking industry and the factors that would make a transaction with Capital Bank Financial strategically and financially attractive, representatives of Sandler O’Neill and UBS contacted seven financial institutions (including First Horizon) regarding their potential interest in pursuing a business combination transaction with Capital Bank Financial.

All seven of the financial institutions contacted expressed interest in discussing a potential business combination. Beginning on February 16, 2017 and in the weeks that followed, members of senior management of Capital Bank Financial management and representatives of Sandler O’Neill and UBS engaged in confidential preliminary exploratory discussions with representatives of each of the seven financial institutions that had been contacted (including First Horizon) regarding their potential interest in pursuing a business combination transaction with Capital Bank Financial. This included an in-person meeting on February 22, 2017 between representatives of Capital Bank Financial and First Horizon, including, among others, R. Eugene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial, Christopher Marshall, Chief Financial Officer of Capital Bank Financial, D. Bryan Jordan, Chairman, President and Chief Executive Officer of First Horizon, William C. Losch III, Chief Financial Officer of First Horizon and David T. Popwell, President - Banking of First Horizon.

Between February 14, 2017 and February 23, 2017, Capital Bank Financial entered into mutual confidentiality agreements with five (including First Horizon) of the seven financial institutions that had been contacted. Each party that entered into a mutual confidentiality agreement was granted

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access to certain non-public information relating to Capital Bank Financial and its business, operations and employees for the purpose of commencing more comprehensive documentary due diligence review of Capital Bank Financial. Subsequently, one of the five parties elected to pursue another transaction and discussions with that party ceased.

In early March, in accordance with Capital Bank Financial’s instructions, representatives of Sandler O’Neill and UBS contacted the four (including First Horizon) remaining financial institutions that had executed mutual confidentiality agreements to formally request that each such party submit a non-binding preliminary indication of interest with respect to its proposed terms for a potential business combination transaction. In accordance with Capital Bank Financial’s instructions, representatives of Sandler O’Neill and UBS also continued to discuss with the two financial institutions that had not entered into mutual confidentiality agreements the possibility of doing so and submitting a non-binding preliminary indication of interest.

On March 15, 2017, Bloomberg LP published a report stating that Capital Bank Financial was working with advisers to explore a sale after receiving an unsolicited approach (although no such unsolicited approach had been received) and that Capital Bank Financial had begun reaching out to potential buyers. The trading price of Capital Bank Financial Class A common stock, which on March 14, 2017 had closed at $40.90, on March 15, 2017 closed at $43.70. Following this media report, no additional indications of interest were received by Capital Bank Financial or its financial advisors.

On March 27, 2017, First Horizon submitted to Capital Bank Financial a written non-binding indication of interest proposing a merger transaction in which Capital Bank Financial common stockholders would receive a combination of cash and shares of First Horizon common stock. The stock component of the merger consideration was proposed to be based on a fixed exchange ratio in a range of 1.694 – 1.727 shares of First Horizon common stock per share of Capital Bank Financial common stock, and the cash component of the merger consideration was proposed to be in a range of $7.70 – $7.85 in cash per share of Capital Bank Financial common stock. Based on First Horizon’s closing price on March 24, 2017, First Horizon indicated that its proposal equated to a total value of $38.50 – $39.25 per share of Capital Bank Financial common stock. In its non-binding indication of interest, First Horizon proposed that Mr. Taylor join First Horizon’s board of directors following the merger and agree to render services to First Horizon for two years following the merger. In its non-binding indication of interest, First Horizon also requested that Capital Bank Financial agree to enter into a thirty-day period of exclusivity.

On March 30, 2017, the Capital Bank Financial board of directors held a special meeting at which representatives of Wachtell, Lipton, Rosen & Katz, Capital Bank Financial’s legal counsel, were present. At the meeting, members of Capital Bank Financial senior management updated the Capital Bank Financial board of directors on the results of the discussions with each of the seven financial institutions that had been contacted and, in particular, that following the preliminary exploratory discussions, Capital Bank Financial had received a preliminary oral indication of interest (from one of the parties that had declined to enter into a mutual confidentiality agreement, which party is referred to as Party A) that did not give a specific price or range of prices it would be willing to pay in a merger transaction and one written indication of interest from First Horizon, a copy of which had been shared with the Capital Bank Financial board of directors and that no other party had submitted an indication of interest. The Capital Bank Financial board of directors discussed First Horizon’s indication of interest as well as the impact of the recent price fluctuations in the trading prices of Capital Bank Financial’s stock and First Horizon’s stock on First Horizon’s indication of interest. The Capital Bank Financial board of directors also discussed First Horizon’s request for a thirty-day exclusivity period to conduct additional due diligence on Capital Bank Financial. Members of Capital Bank Financial’s senior management informed the Capital Bank Financial board of directors that Party A had been repeatedly asked to submit a specific proposal to Capital Bank Financial but that Party A had not done so. After discussion, the Capital Bank Financial board of directors instructed Capital Bank’s advisors to again request a specific proposal from Party A. The Capital Bank Financial board of directors also instructed Capital Bank’s advisors to attempt to improve the First Horizon indication of interest. The Board authorized providing First

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Horizon with exclusivity for a thirty-day period from acceptance of the non-binding indication of interest if Party A did not submit a proposal and First Horizon improved their indication of interest.

Following the March 30, 2017 meeting of the Capital Bank Financial board of directors, representatives of Sandler O’Neill and UBS discussed with representatives of Barclays, First Horizon’s financial advisor, First Horizon’s non-binding indication of interest and the request for exclusivity. In accordance with Capital Bank Financial’s instructions, representatives of Sandler O’Neill and UBS requested that First Horizon improve the financial terms of its proposal, agree to add a second member of the Capital Bank Financial board of directors to the combined company’s board of directors and agree to a collar mechanism relating to the exchange ratio for the stock component of the merger consideration.

Although Party A continued to express to Capital Bank Financial’s financial advisors interest in a transaction, Party A declined to submit a written non-binding indication of interest, including the specific terms pursuant to which it would be willing to proceed with a transaction.

On April 4, 2017, First Horizon submitted an updated indication of interest providing for the stock component of the merger consideration to be based on a fixed exchange ratio in a range of 1.72 – 1.74 First Horizon shares per share of Capital Bank Financial common stock and for the cash component of the merger consideration to be in a range of $7.70 – $7.90 in cash per share of Capital Bank Financial common stock. Based on First Horizon’s closing price on April 3, 2017, First Horizon’s updated proposal equated to a total value of $39.33 – $39.90 per share of Capital Bank Financial common stock. First Horizon also confirmed that it would appoint two members of the Capital Bank Financial board of directors to the combined company’s board of directors following the merger. On April 5, 2017 Capital Bank Financial and First Horizon entered into an exclusivity agreement providing for an exclusive negotiation period through May 5, 2017.

Thereafter, Capital Bank Financial made available to First Horizon additional due diligence materials relating to Capital Bank Financial on a confidential basis. First Horizon’s due diligence investigation of Capital Bank Financial continued over the next several weeks, with Capital Bank Financial providing detailed non-public information and making select executives and other employees available to First Horizon to facilitate its evaluation.

Capital Bank Financial also requested certain “reverse” due diligence information concerning First Horizon and its business, operations and regulatory relationships. During the month of April, Capital Bank Financial conducted a “reverse” due diligence review of non-public information regarding First Horizon, including in-person meetings in Memphis on April 26, 2017.

First Horizon management reviewed the status of the transaction with First Horizon’s board of directors and with representatives of Barclays and Morgan Stanley, First Horizon’s financial advisors.

On April 17, 2017, Sullivan & Cromwell LLP, First Horizon’s legal counsel, provided Wachtell Lipton a draft merger agreement and the parties began to negotiate transaction documentation simultaneously with the ongoing due diligence investigations. Subsequently, on April 23, 2017, Wachtell Lipton provided Sullivan & Cromwell a revised draft merger agreement which, among other things, provided for an election between cash consideration and stock consideration.

On April 21, 2017, Sullivan & Cromwell provided Wachtell Lipton a draft support agreement that First Horizon proposed to require Mr. Taylor and certain affiliates of each of Crestview Partners and Oak Hill Capital Partners, which were among the largest stockholders of Capital Bank Financial and which had representatives serving on Capital Bank Financial’s board of directors, to execute in connection with a proposed transaction. The draft support agreement would require each signatory to, among other things, vote in favor of the adoption of the merger agreement. The parties began to negotiate the support agreements simultaneously with the merger agreement.

On April 24 and 25, 2017, during regular quarterly board meetings, First Horizon management updated First Horizon’s board of directors regarding the status of negotiations with Capital Bank Financial. First Horizon’s financial advisors participated in these discussions.

On April 28, 2017, First Horizon submitted, in writing, an affirmation of its proposal for a business combination with Capital Bank Financial in which Capital Bank Financial common stockholders would receive 1.74 shares of First Horizon common stock and $7.90 in cash per share

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of Capital Bank Financial common stock. However, First Horizon declined to provide a collar based on its view that the merger consideration provisions, and in particular the fixed cash component, operate as a collar.

On April 30, 2017, the Capital Bank Financial board of directors held a special meeting to review and consider the First Horizon proposal. Representatives of Sandler O’Neill, UBS and Wachtell Lipton were at the meeting. At the meeting, representatives of Wachtell Lipton and members of Capital Bank Financial management reviewed with the Capital Bank Financial board of directors the reverse diligence that had been conducted on First Horizon, including with respect to financial, credit, legal, regulatory, compliance and other matters. Representatives of Sandler O’Neill discussed the recent market volatility and financial aspects of Capital Bank Financial, First Horizon and the pro forma combined company, and reviewed the financial terms of the potential transaction. Representatives of Sandler O’Neill also discussed with the Capital Bank Financial board of directors the environment for other strategic alternatives available to Capital Bank Financial. Representatives of Sandler O’Neill discussed on a preliminary basis the delivery of a fairness opinion to the Capital Bank Financial board of directors if requested to do so by Capital Bank Financial. The Capital Bank Financial board of directors instructed Mr. Taylor to seek an improvement in the exchange ratio for the stock component of the merger consideration from 1.74 to 1.76 shares of First Horizon common stock per share of Capital Bank Financial common stock and to continue negotiating and finalizing the transaction documentation.

Following the Capital Bank Financial board of directors meeting on April 30, 2017, Mr. Taylor contacted Mr. Jordan and proposed that the stock component of the merger consideration be based on a fixed exchange ratio of 1.76 shares of First Horizon common stock per share of Capital Bank Financial common stock.

On May 1, 2017, Mr. Jordan contacted Mr. Taylor to inform him that First Horizon would agree to increase the stock component of the merger consideration by roughly $9.5 million, by increasing the fixed exchange ratio to 1.75 shares of First Horizon common stock per share of Capital Bank Financial common stock, midway between First Horizon’s earlier proposal of 1.74 and Capital Bank Financial’s most recent counter of 1.76.

First Horizon earlier had indicated to Capital Bank Financial that First Horizon desired for Mr. Taylor to have a significant role with the combined company. They decided to defer serious discussions regarding Mr. Taylor’s employment until the corporate negotiations were substantially complete. On May 1, 2017, Sullivan & Cromwell provided Wachtell Lipton a draft employment agreement between First Horizon and Mr. Taylor providing for the terms of Mr. Taylor’s employment by First Horizon following the completion of a transaction. The parties and their respective advisors discussed and negotiated the terms of the draft agreement.

On May 3, 2017, the First Horizon board of directors held a special meeting to consider the terms of the proposed transaction with Capital Bank Financial. Representatives of the First Horizon management team and of Barclays and Morgan Stanley, First Horizon’s financial advisors, and Sullivan & Cromwell were also in attendance. Prior to the meeting, the directors received copies of an updated draft merger agreement and an updated summary of merger agreement from Sullivan & Cromwell, as well as materials prepared by Barclays and Morgan Stanley. At the meeting, a representative of First Horizon management reviewed the terms of the merger agreement and a representative from Sullivan & Cromwell reviewed the fiduciary duties of the First Horizon board of directors in connection with the approval of the merger agreement and other legal considerations. In addition, representatives of each of Barclays and Morgan Stanley reviewed their financial analyses of the proposed transaction, which are summarized under “—Opinions of First Horizon’s Financial Advisors—Barclays Capital Inc.” and “—Opinions of First Horizon’s Financial Advisors—Morgan Stanley & Co. LLC,” and rendered to the First Horizon board of directors their oral opinions, subsequently confirmed in writing, to the effect that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken in preparing their respective opinions, the merger consideration to be paid by First Horizon pursuant to the merger agreement was fair from a financial point of view to First Horizon. See “—Opinions of First Horizon’s Financial Advisors—Barclays Capital Inc.”

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and “—Opinions of First Horizon’s Financial Advisors—Morgan Stanley & Co. LLC.” Following these discussions, the First Horizon board of directors unanimously determined that the merger agreement, and the transactions contemplated thereby, were advisable, fair to, and in the best interests of, First Horizon and its shareholders, and adopted and approved the merger agreement and the transactions contemplated thereby.

On May 3, 2017, the Capital Bank Financial board of directors held another special meeting to review and consider the final proposal from First Horizon. Representatives of Sandler O’Neill, UBS and Wachtell Lipton attended the meeting. Prior to the meeting, the directors received copies of an updated draft merger agreement and a summary of the terms of the merger agreement and related matters from Wachtell Lipton, as well as materials prepared by Sandler O’Neill. At the meeting, representatives of Wachtell Lipton reviewed with the Capital Bank Financial board of directors its fiduciary duties in connection with a potential strategic business combination transaction and reviewed the process the Capital Bank Financial board of directors had conducted to date. Members of Capital Bank Financial’s management team updated the Capital Bank Financial board of directors on the progression of negotiations with First Horizon since the last meeting of the Capital Bank Financial board of directors. Representatives of Wachtell Lipton reviewed the terms of the draft merger agreement, including the treatment of equity awards and the payments to which members of senior management would be entitled, with the Capital Bank Financial board of directors.

Also at the May 3, 2017 meeting and at the request of Capital Bank Financial, Sandler O’Neill reviewed with the Capital Bank Financial board of directors the financial aspects of the proposed transaction and Sandler O’Neill’s financial analysis of the per share merger consideration and rendered to the Capital Bank Financial board of directors an oral opinion, which was subsequently confirmed in writing, to the effect that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken in preparing its opinion, the per share merger consideration to be received by the holders of Capital Bank Financial common stock in the merger was fair to such holders from a financial point of view. See “—Opinion of Capital Bank Financial’s Financial Advisor.” Following these discussions, the Capital Bank Financial board of directors unanimously determined that the merger agreement, and the transactions contemplated thereby, were advisable, fair to, and in the best interests of, Capital Bank Financial and its shareholders, and approved the merger agreement and the transactions contemplated thereby, including the mergers and the bank merger, and resolved to recommend that the merger agreement be adopted by Capital Bank Financial’s shareholders at a shareholders’ meeting duly called and held for such purpose.

Following the meetings of the Capital Bank Financial and First Horizon boards of directors, Capital Bank Financial and First Horizon executed the merger agreement on the evening of May 3, 2017. On the morning of May 4, 2017, Capital Bank Financial and First Horizon announced the execution of the merger agreement.

First Horizon’s Reasons for the Merger; Recommendation of the First Horizon Board of Directors

In reaching its decision to adopt and approve the merger agreement, the mergers and the other transactions contemplated by the merger agreement, including the stock issuance, and to recommend that First Horizon’s shareholders approve the issuance of First Horizon common stock in connection with the merger, the First Horizon board of directors consulted with First Horizon management, as well as its independent financial and legal advisors, and considered a number of factors, including the following material factors:

 

 

each of First Horizon’s and Capital Bank Financial’s business, operations, financial condition, asset quality, earnings and prospects. In reviewing these factors, the First Horizon board of directors considered its view that Capital Bank Financial’s business and operations complement those of First Horizon, and that the merger and the other transactions contemplated by the merger agreement would result in a larger market presence, a strengthened business mix and increased core deposit funding. The board of directors further considered that Capital Bank Financial’s earnings and prospects, and the synergies potentially available in the proposed merger, create the opportunity for First Horizon to have enhanced

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future earnings and prospects following the merger compared to First Horizon’s earnings and prospects on a stand-alone basis. In particular, the First Horizon board of directors considered the following:

 

 

the enhanced economies of scale that may be achieved by the combined company and its expected pro forma position as the fourth largest regional bank in the Southeast following the merger;

 

 

the complementary nature of First Horizon’s business and operations, including First Horizon’s longstanding presence in Tennessee, and Capital Bank Financial’s strong presence in the Carolinas and Florida, that would provide meaningful enhancement to First Horizon’s existing customer base;

 

 

the expanded possibilities, including organic growth and future acquisitions, that would be available to the combined company, given its larger size, asset base, capital, and footprint;

 

 

management’s views regarding Capital Bank Financial’s underwriting standards and processes as well as its lending relationships;

 

 

the enhanced organic growth opportunities through the potential to offer the full First Horizon product set to Capital Bank Financial’s customers and prospective customers;

 

 

the expectation that the bank merger will accelerate First Horizon’s realization of its “bonefish” financial targets, improving return, profitability, and efficiency ratio profile;

 

 

Capital Bank Financial’s operations in the Carolinas and Florida banking markets, which enhances First Horizon’s footprint and deposit gathering opportunities in these fast growing markets;

 

 

the expectation that the mergers will result in significant annual cost savings;

 

 

the anticipated pro forma impact of the merger on the combined company, including the expected impact on financial metrics, including earnings, dividends, return on equity, tangible book value dilution (and earn-back period), asset quality, liquidity and regulatory capital levels;

 

 

the participation of two of Capital Bank Financial’s directors in the combined company, which may enhance the likelihood that the strategic benefits that First Horizon expects to achieve as a result of the merger will be realized;

 

 

First Horizon’s past record of integrating acquisitions and of realizing projected financial goals and benefits of acquisitions;

 

 

the current and prospective environment in which First Horizon and Capital Bank Financial operate, including national and local economic conditions, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance mandates, the competitive environment for financial institutions generally, and the likely effect of these factors on First Horizon both with and without the merger;

 

 

the terms of the merger agreement;

 

 

its review and discussions with First Horizon’s management concerning the due diligence examination of Capital Bank Financial’s business;

 

 

the fact that First Horizon’s shareholders will have the opportunity to vote on the stock issuance in connection with the merger;

 

 

the oral opinion of Barclays Capital Inc. and Morgan Stanley & Co. LLC, First Horizon’s financial advisors, to the First Horizon board of directors, subsequently confirmed in writing, to the effect that, as of the date of the opinion and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken in preparing their respective opinions, the merger consideration to be paid by First Horizon pursuant to the merger agreement was fair from a financial point of view to First Horizon, as more fully described below in the sections entitled “—Opinions of First Horizon’s Financial Advisors—Barclays Capital Inc.” and “—Opinions of First Horizon’s Financial Advisors—Morgan Stanley & Co. LLC”; and

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its review with its financial advisors of the financial terms of the merger agreement and its review with its legal advisors of the other terms of the merger agreement, including the tax treatment, deal protection and termination provisions.

The First Horizon board of directors also considered the potential risks related to the merger but concluded that the anticipated benefits of the merger were likely to substantially outweigh these risks. These potential risks include:

 

 

the possibility of encountering difficulties in achieving anticipated cost synergies and savings in the amounts estimated or in the time frame contemplated;

 

 

the possibility of encountering difficulties in successfully integrating Capital Bank Financial’s business, operations, and workforce with those of First Horizon;

 

 

certain anticipated merger-related costs;

 

 

the potential diversion of management attention and resources from the operation of First Horizon’s business towards the completion of the merger;

 

 

the regulatory and other approvals required in connection with the merger and the bank merger and the risk that such regulatory approvals will not be received in a timely manner or may impose unacceptable conditions;

 

 

the possibility that divestitures may be required by regulatory authorities in one or more markets in which First Horizon and Capital Bank Financial compete;

 

 

the potential for legal claims challenging the merger; and

 

 

the merger’s effect on First Horizon’s regulatory capital levels.

The foregoing discussion of the information and factors considered by the First Horizon board of directors is not intended to be exhaustive, but includes the material factors considered by the First Horizon board of directors. In reaching its decision to approve the merger agreement, the mergers, and the other transactions contemplated by the merger agreement, including the stock issuance, the First Horizon board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The First Horizon board of directors considered all these factors as a whole, including discussions with, and questioning of, First Horizon’s management and First Horizon’s independent financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.

For the reasons set forth above, the First Horizon board of directors determined that the mergers, the merger agreement and the transactions contemplated by the merger agreement, including the stock issuance, are advisable and in the best interests of First Horizon, and adopted and approved the merger agreement and the transactions contemplated by it.

The First Horizon board of directors recommends that First Horizon shareholders vote “FOR” the approval of the First Horizon stock issuance proposal and “FOR” the First Horizon adjournment proposal.

It should be noted that the explanation of the First Horizon board of directors’ reasoning in this section contains information that is forward-looking in nature, and therefore should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements.”

Capital Bank Financial’s Reasons for the Merger; Recommendation of the Capital Bank Financial Board of Directors

After careful consideration, the Capital Bank Financial board of directors, at a meeting held on May 3, 2017, determined that the merger with First Horizon is in the best interests of Capital Bank Financial and its common stockholders and approved and declared advisable the merger agreement and the transactions contemplated therein, including the merger, and recommends that Capital Bank Financial’s common stockholders vote “FOR” the adoption of the Capital Bank Financial merger proposal. In reaching its decision to approve and recommend the adoption of the merger agreement, the Capital Bank Financial board of directors evaluated the merger in consultation with Capital

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Bank Financial’s management, as well as Capital Bank Financial’s financial and legal advisors, and considered a number of factors, including the following material factors:

 

 

each of Capital Bank Financial’s, First Horizon’s and the combined company’s business, operations, financial condition, asset quality, earnings and prospects;

 

 

the complementary nature of First Horizon’s business and operations, including First Horizon’s longstanding presence in Tennessee, and Capital Bank Financial’s strong presence in the Carolinas and Florida, each of which represents growth markets for the combined company;

 

 

the fact that the combined company intends to operate in all of its markets outside of Tennessee under the Capital Bank brand name, which is expected to facilitate a smooth transaction for Capital Bank Financial’s customers and other stakeholders;

 

 

the enhanced organic growth opportunities through the potential to offer the full First Horizon product set to Capital Bank Financial’s customers and prospective customers;

 

 

the enhanced economies of scale that may be achieved by the combined company and its expected pro forma position as the fourth largest regional bank in the Southeast following the merger as well as the expanded possibilities that would be available to the combined company given its larger size, asset base and capital;

 

 

First Horizon’s legacy of operating in the banking industry for over a hundred and fifty years;

 

 

the anticipated pro forma impact of the merger on the combined company, including the expected impact on financial metrics, including earnings, dividends, return on equity, tangible book value dilution (and earn-back period) and regulatory capital levels;

 

 

the fact that the merger would enable Capital Bank Financial common stockholders, who will own approximately 28% of the combined company, to participate in the future earnings and growth of the combined company;

 

 

the current and prospective environment in which Capital Bank Financial and First Horizon operate, including national and local economic conditions, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance mandates, including in Capital Bank Financial’s case as a result of its total assets having recently grown to $10 billion, the competitive environment for financial institutions generally, and the likely effect of these factors on Capital Bank Financial both with and without the proposed transaction;

 

 

First Horizon’s assurance to Capital Bank Financial that First Horizon was unaware of any meaningful regulatory or other obstacle to closing the transaction on a reasonably timely basis;

 

 

its consideration that the transaction with First Horizon was more favorable to Capital Bank Financial common stockholders than the potential value that might result from other alternatives reasonably available to Capital Bank Financial, including

 

 

its consideration, in consultation with Capital Bank Financial’s management and with Capital Bank Financial’s financial and legal advisors, of the prospects of Capital Bank Financial as an independent company,

 

 

the fact that Capital Bank Financial and its financial advisors had contacted multiple financial institutions believed by Capital Bank Financial to have a significant likelihood of having a serious interest in a business combination with Capital Bank Financial and

 

 

the likelihood of an alternative transaction in light of the fact that rumors of a transaction were reported by Bloomberg on March 15, 2017 and that no unsolicited indications of interest in combining with or acquiring Capital Bank Financial were received after the publication of those media reports;

 

 

the form of consideration, including the cash consideration, which would ensure that a portion of the value of the merger consideration would not be subject to potential downward fluctuations in the price of First Horizon common stock, and the fact that a substantial

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majority of the merger consideration would be in stock, which would allow Capital Bank Financial’s shareholders to participate in the future performance of the combined company;

 

 

the fact that Capital Bank Financial’s shareholders would have the right to elect to receive the merger consideration either in cash or First Horizon common stock, subject to adjustment;

 

 

its belief that First Horizon common stock represented an attractive form of consideration for Capital Bank Financial common stockholders, both because of its expectation that Capital Bank Financial common stockholders would benefit from holding such consideration and benefiting from the strategic value of the combination over the long term and because of the greater market liquidity of First Horizon common stock, based on its average daily trading volumes, as compared to Capital Bank Financial common stock;

 

 

its review and discussions with Capital Bank Financial’s management concerning the due diligence examination of the business of First Horizon;

 

 

the soundness of First Horizon’s capital position and management’s expectation that the combined company will have a strong capital position upon completion of the transaction;

 

 

the fact that the merger agreement provides that two members of the Capital Bank Financial board of directors, including Chairman and Chief Executive Officer, R. Eugene Taylor, would join the board of First Horizon following the merger;

 

 

the anticipated continued participation of certain of Capital Bank Financial’s employees in the combined company, which may enhance the likelihood that the expected strategic benefits of the merger will be realized;

 

 

the expectation that the mergers, taken together, will qualify as a “reorganization” for United States federal income tax purposes;

 

 

the written opinion of Sandler O’Neill, dated May 3, 2017, delivered to the Capital Bank Financial board of directors to the effect that, as of that date, and subject to and based on the various assumptions, considerations, qualifications and limitations set forth in the opinion, the merger consideration to be received by the holders of Capital Bank Financial common stock in the merger was fair, from a financial point of view, to the holders of Capital Bank Financial common stock; and

 

 

the terms and conditions of the merger agreement and their comparability to those in other recent merger transactions in the banking industry.

The board of directors of Capital Bank Financial also considered the potential risks related to the merger but concluded that the anticipated benefits of the merger were likely to substantially outweigh these risks. These potential risks included:

 

 

the fact that the implied value of the merger consideration, based on First Horizon’s stock price on May 2, 2017, represented a discount of approximately 3.2% to the closing price of Capital Bank Financial common stock on May 2, 2017, and risk that the market would react negatively to the announcement of the merger transaction;

 

 

the potential risks associated with integrating Capital Bank Financial’s and First Horizon’s operations, including integrating their workforces, and the ability to achieve anticipated synergies;

 

 

the transaction-related restructuring charges and other merger-related costs;

 

 

with most of the merger consideration consisting of First Horizon common stock, the potential for the consideration to be paid to Capital Bank Financial common stockholders to be adversely affected by a decrease in the trading price of First Horizon common stock;

 

 

the nature and amount of payments to be received by Capital Bank Financial’s management in connection with the merger;

 

 

the fact that the merger agreement includes certain provisions that prohibit Capital Bank Financial from soliciting alternative transactions and from taking certain actions in response to unsolicited proposals for alternative transactions;

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Capital Bank Financial’s obligation to pay First Horizon a termination fee of $85 million in certain circumstances;

 

 

the potential for diversion of management and employee attention from the operation of Capital Bank Financial’s business and towards the completion of the merger as well as the potential for employee attrition and the potential effect on Capital Bank Financial’s relationships with customers, service providers and other stakeholders during the pendency of the merger;

 

 

the potential that as a result of the allocation and proration provisions of the merger agreement, designed to ensure that a fixed cash component be paid as merger consideration, an election of the form of merger consideration might not be honored and a common stockholder may not receive the form of consideration elected;

 

 

the regulatory and other approvals required in connection with the merger and the possibility that such regulatory approvals will not be received in a timely manner or may impose unacceptable conditions; and

 

 

the potential for legal claims challenging the merger.

The foregoing discussion of the information and factors considered by the Capital Bank Financial board of directors is not intended to be exhaustive, but includes the material factors considered by the Capital Bank Financial board of directors. In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Capital Bank Financial board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Capital Bank Financial board of directors considered all these factors as a whole and overall considered the factors to be favorable to, and to support, its determination.

Opinion of Capital Bank Financial’s Financial Advisor

Capital Bank Financial retained Sandler O’Neill to act as financial advisor to Capital Bank Financial in connection with Capital Bank Financial’s consideration of a possible business combination. Sandler O’Neill is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Sandler O’Neill is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.

Sandler O’Neill acted as financial advisor to Capital Bank Financial in connection with the proposed merger and participated in certain of the negotiations leading to the execution of the merger agreement. At the May 3, 2017 meeting at which Capital Bank Financial’s board of directors considered and approved the merger agreement, Sandler O’Neill delivered to the Capital Bank Financial board of directors its oral opinion, which was subsequently confirmed in writing on May 3, 2017, to the effect that, as of such date, the merger consideration was fair to the holders of Capital Bank Financial common stock from a financial point of view. The full text of Sandler O’Neill’s opinion is attached as Annex E to this joint proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Capital Bank Financial common stockholders are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.

Sandler O’Neill’s opinion speaks only as of the date of the opinion. The opinion was directed to Capital Bank Financial’s board of directors in connection with its consideration of the merger agreement and the merger and does not constitute a recommendation to any shareholder of Capital Bank Financial as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the approval of the merger agreement and the merger or what election to make regarding the per share stock consideration, the per share cash consideration or any combination thereof. Sandler O’Neill’s opinion was directed only to the fairness, from a financial point of view, of the merger consideration to the holders of Capital Bank Financial common stock,

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without regard to differences between Capital Bank Financial Class A common stock and Capital Bank Financial Class B common stock, and did not address the relative fairness of the merger consideration between holders of Capital Bank Financial Class A common stock and holders of Capital Bank Financial Class B common stock, the allocation of the merger consideration between cash and First Horizon common stock or the relative fairness of the per share stock consideration and the per share cash consideration. Sandler O’Neill’s opinion does not address the underlying business decision of Capital Bank Financial to engage in the merger, the form or structure of the merger or any other transactions contemplated in the merger agreement, the relative merits of the merger as compared to any other alternative transactions or business strategies that might exist for Capital Bank Financial or the effect of any other transaction in which Capital Bank Financial might engage. Sandler O’Neill did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the merger by any officer, director or employee of Capital Bank Financial or First Horizon, or any class of such persons, if any, relative to the compensation to be received in the merger by any other shareholder. Sandler O’Neill’s opinion was approved by Sandler O’Neill’s fairness opinion committee.

In connection with its opinion, Sandler O’Neill reviewed and considered, among other things:

 

 

An execution version of the merger agreement, dated May 3, 2017;

 

 

Certain publicly available financial statements and other historical financial information of Capital Bank Financial that Sandler O’Neill deemed relevant;

 

 

Certain publicly available financial statements and other historical financial information of First Horizon that Sandler O’Neill deemed relevant;

 

 

Publicly available mean analyst earnings per share estimates for Capital Bank Financial for the years ending December 31, 2017 and December 31, 2018, and estimated long-term annual earnings per share growth rate and dividend assumptions for Capital Bank Financial, as provided by the senior management of Capital Bank Financial;

 

 

Publicly available mean analyst earnings per share estimates for First Horizon for the years ending December 31, 2017 and December 31, 2018, as provided by the senior management of First Horizon, and a publicly available mean analyst estimated long-term annual earnings per share growth rate for First Horizon, as directed by the senior management of Capital Bank Financial;

 

 

The pro forma financial impact of the merger on First Horizon based on certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses, as provided by the senior management of First Horizon;

 

 

The publicly reported historical price and trading activity for Capital Bank Financial Class A common stock and First Horizon common stock, including a comparison of certain stock market information for Capital Bank Financial Class A common stock and First Horizon common stock and certain stock indices as well as publicly available information for certain other similar companies, the securities of which were publicly traded;

 

 

A comparison of certain financial information for Capital Bank Financial and First Horizon with similar institutions for which information was publicly available;

 

 

The financial terms of certain recent business combinations in the bank and thrift industry (on a nationwide basis), to the extent publicly available;

 

 

The current market environment generally and the banking environment in particular; and

 

 

Such other information, financial studies, analyses and investigations and financial, economic and market criteria as Sandler O’Neill considered relevant.

Sandler O’Neill also discussed with certain members of the senior management of Capital Bank Financial the business, financial condition, results of operations and prospects of Capital Bank Financial and held similar discussions with certain members of the senior management of First Horizon regarding the business, financial condition, results of operations and prospects of First Horizon.

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In performing its review, Sandler O’Neill relied upon the accuracy and completeness of all of the financial and other information that was available to and reviewed by Sandler O’Neill from public sources, that was provided to Sandler O’Neill by Capital Bank Financial or First Horizon or their respective representatives or that was otherwise reviewed by Sandler O’Neill, and Sandler O’Neill assumed such accuracy and completeness for purposes of rendering its opinion without any independent verification or investigation. Sandler O’Neill relied on the assurances of the respective managements of Capital Bank Financial and First Horizon that they were not aware of any facts or circumstances that would make any of such information inaccurate or misleading. Sandler O’Neill was not asked to undertake, and did not undertake, an independent verification of any of such information and Sandler O’Neill did not assume any responsibility or liability for the accuracy or completeness thereof. Sandler O’Neill did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of Capital Bank Financial or First Horizon or any of their respective subsidiaries, nor was Sandler O’Neill furnished with any such evaluations or appraisals. Sandler O’Neill rendered no opinion or evaluation on the collectability of any assets or the future performance of any loans of Capital Bank Financial or First Horizon. Sandler O’Neill did not make an independent evaluation of the adequacy of the allowance for loan losses of Capital Bank Financial or First Horizon, or of the combined entity after the merger, and Sandler O’Neill did not review any individual credit files relating to Capital Bank Financial or First Horizon. Sandler O’Neill assumed, with Capital Bank Financial’s consent, that the respective allowances for loan losses for both Capital Bank Financial and First Horizon are adequate to cover such losses and would be adequate on a pro forma basis for the combined entity.

In preparing its analyses, Sandler O’Neill used publicly available mean analyst earnings per share estimates for Capital Bank Financial for the years ending December 31, 2017 and December 31, 2018, and estimated long-term annual earnings per share growth rate and dividend assumptions for Capital Bank Financial, as provided by the senior management of Capital Bank Financial, as well as publicly available mean analyst earnings per share estimates for First Horizon for the years ending December 31, 2017 and December 31, 2018, as provided by the senior management of First Horizon. Sandler O’Neill also received and used in its pro forma analyses certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses, as provided by the senior management of First Horizon. With respect to the foregoing information, the respective senior managements of Capital Bank Financial and First Horizon confirmed to Sandler O’Neill that such information reflected (or, in the case of the publicly available mean analyst earnings per share estimates referred to above, was consistent with) the best currently available estimates and judgments of those respective senior managements as to the future financial performance of Capital Bank Financial and First Horizon, respectively, and the other matters covered thereby. With respect to the publicly available mean analyst estimated long-term annual earnings per share growth rate for First Horizon referred to above used by Sandler O’Neill as directed by the senior management of Capital Bank Financial, Sandler O’Neill was advised by such senior management and assumed that such growth rate reflected a reasonable estimate as to the future financial performance of First Horizon. Sandler O’Neill assumed that the future financial performance reflected in all of the foregoing information used by Sandler O’Neill would be achieved, and Sandler O’Neill expressed no opinion as to such information, or the assumptions on which such information was based. Sandler O’Neill also assumed that there has been no material change in the respective assets, financial condition, results of operations, business or prospects of Capital Bank Financial or First Horizon since the date of the most recent financial statements made available to Sandler O’Neill. Sandler O’Neill has assumed in all respects material to its analysis that Capital Bank Financial and First Horizon would remain as going concerns for all periods relevant to Sandler O’Neill’s analysis.

Sandler O’Neill also assumed, with Capital Bank Financial’s consent, that (i) each of the parties to the merger agreement would comply in all material respects with all material terms and conditions of the merger agreement and all related agreements, that all of the representations and warranties contained in such agreements were true and correct in all material respects, that each of the parties to such agreements would perform in all material respects all of the covenants and other

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obligations required to be performed by such party under such agreements and that the conditions precedent in such agreements were not and would not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on Capital Bank Financial, First Horizon or the merger or any related transaction, (iii) the merger and related transactions (including, without limitation, the second step merger and the bank merger) will be consummated in accordance with the terms of the merger agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements, and (iv) the mergers would qualify as a tax-free reorganization for federal income tax purposes. Sandler O’Neill expressed no opinion as to any of the legal, accounting or tax matters relating to the merger or any other transactions contemplated by the merger agreement.

Sandler O’Neill’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Sandler O’Neill as of, the date of its opinion. Events occurring after the date of the opinion could materially affect Sandler O’Neill’s opinion. Sandler O’Neill did not undertake to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date of its opinion. Sandler O’Neill expressed no opinion as to the trading values of Capital Bank Financial Class A common stock or First Horizon common stock at any time or what the value of First Horizon common stock would be once shares of First Horizon common stock are actually received by the Capital Bank Financial common stockholders.

In rendering its opinion, Sandler O’Neill performed a variety of financial analyses. The summary below is not a complete description of the analyses underlying Sandler O’Neill’s opinion or the presentation made by Sandler O’Neill to Capital Bank Financial’s board of directors, but is a summary of all material analyses performed and presented by Sandler O’Neill. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler O’Neill believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Sandler O’Neill’s comparative analyses described below is identical to Capital Bank Financial or First Horizon and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of Capital Bank Financial and First Horizon and the companies to which they are being compared. In arriving at its opinion, Sandler O’Neill did not attribute any particular weight to any analysis or factor that it considered. Rather, Sandler O’Neill made qualitative judgments as to the significance and relevance of each analysis and factor. Sandler O’Neill did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion; rather, Sandler O’Neill made its determination as to the fairness of the merger consideration on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole.

In performing its analyses, Sandler O’Neill also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of Capital Bank Financial, First Horizon and Sandler O’Neill. The analyses performed by Sandler O’Neill are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Sandler O’Neill prepared its analyses solely for purposes of rendering its opinion and

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provided such analyses to Capital Bank Financial’s board of directors at its May 3, 2017 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty, and actual values may be materially different. Accordingly, Sandler O’Neill’s analyses do not necessarily reflect the value of Capital Bank Financial common stock or the prices at which Capital Bank Financial common stock or First Horizon common stock may be sold at any time. The analyses of Sandler O’Neill and its opinion were among a number of factors taken into consideration by Capital Bank Financial’s board of directors in making its determination to approve the merger agreement, and the analyses described below should not be viewed as determinative of the decision of Capital Bank Financial’s board of directors or management with respect to the fairness of the merger.

Summary of Proposed Merger Consideration and Implied Transaction Metrics. Sandler O’Neill reviewed the financial terms of the proposed transaction. Sandler O’Neill calculated an implied transaction price per share of $40.38, or an aggregate implied transaction value of approximately $2.16 billion, consisting of the sum of (i) $7.90 plus (ii) the implied value of 1.75 shares of First Horizon common stock based on the closing price of First Horizon common stock on May 2, 2017. Based upon financial information for Capital Bank Financial as of or for the last twelve months (“LTM”) ended March 31, 2017 and publicly available mean analyst earnings per share estimates for Capital Bank Financial for the years ending December 31, 2017 and December 31, 2018, Sandler O’Neill calculated the following implied transaction metrics:

 

 

 

Implied Transaction Price / LTM Earnings Per Share

 

 

 

27.8

x

 

Implied Transaction Price / 2017E Earnings Per Share

 

 

 

21.1

x

 

Implied Transaction Price / 2018E Earnings Per Share

 

 

 

18.2

x

 

Implied Transaction Price / March 31, 2017 Book Value Per Share

 

 

 

160

%

 

Implied Transaction Price / March 31, 2017 Tangible Book Value Per Share

 

 

 

201

%

 

Implied Transaction Price / March 31, 2017 Adjusted Tangible Book Value Per Share(1)

 

 

 

219

%

 

Tangible Book Premium / Core Deposits(2)

 

 

 

15.6

%

 

Market Premium as of May 2, 2017

 

 

 

(3.2

%)

 

Market Premium as of March 14, 2017(3)

 

 

 

(1.3

%)

 

 

 

(1)

 

Reflects multiple paid on “normalized” tangible common equity/tangible assets ratio of 9.0% and dollar for dollar on all excess capital

 

(2)

 

Core deposits equal total deposits less CDs greater than $100,000; information on jumbo deposits provided by Capital Bank Financial management

 

(3)

 

Based on the closing price on the trading day prior to the March 15, 2017 news report regarding rumors of a possible sale of Capital Bank Financial

Stock Trading History. Sandler O’Neill reviewed the historical share price performance of Capital Bank Financial common stock and First Horizon common stock for both the one-year and three-year periods ended May 2, 2017. Sandler O’Neill then compared the relationship between the share price performance of Capital Bank Financial Class A common stock and First Horizon common stock, respectively, to stock price movements in their respective peer groups (as described below) as well as certain share indices.

Capital Bank Financial One-Year Stock Price Performance

 

 

 

 

 

 

 

Beginning
May 2, 2016

 

Ending
May 2, 2017

Capital Bank Financial

 

 

 

100

%

 

 

 

 

136.4

%

 

Capital Bank Financial Regional Peer Group

 

 

 

100

%

 

 

 

 

126.0

%

 

Capital Bank Financial Capitalization Peer Group

 

 

 

100

%

 

 

 

 

127.2

%

 

SNL U.S. Bank Index

 

 

 

100

%

 

 

 

 

129.7

%

 

S&P 500 Index

 

 

 

100

%

 

 

 

 

114.9

%

 

70


 

Capital Bank Financial Three-Year Stock Price Performance

 

 

 

 

 

 

 

Beginning
May 2, 2014

 

Ending
May 2, 2017

Capital Bank Financial

 

 

 

100

%

 

 

 

 

175.9

%

 

Capital Bank Financial Regional Peer Group

 

 

 

100

%

 

 

 

 

152.8

%

 

Capital Bank Financial Capitalization Peer Group

 

 

 

100

%

 

 

 

 

148.3

%

 

SNL U.S. Bank Index

 

 

 

100

%

 

 

 

 

136.6

%

 

S&P 500 Index

 

 

 

100

%

 

 

 

 

127.1

%

 

First Horizon One-Year Stock Price Performance

 

 

 

 

 

 

 

Beginning
May 2, 2016

 

Ending
May 2, 2017

First Horizon

 

 

 

100

%

 

 

 

 

130.3

%

 

First Horizon Peer Group

 

 

 

100

%

 

 

 

 

134.4

%

 

SNL U.S. Bank Index

 

 

 

100

%

 

 

 

 

129.7

%

 

S&P 500 Index

 

 

 

100

%

 

 

 

 

114.9

%

 

First Horizon Three-Year Stock Price Performance

 

 

 

 

 

 

 

Beginning
May 2, 2014

 

Ending
May 2, 2017

First Horizon

 

 

 

100

%

 

 

 

 

160.7

%

 

First Horizon Peer Group

 

 

 

100

%

 

 

 

 

142.4

%

 

SNL U.S. Bank Index

 

 

 

100

%

 

 

 

 

136.6

%

 

S&P 500 Index

 

 

 

100

%

 

 

 

 

127.1

%

 

Comparable Company Analyses. Sandler O’Neill used publicly available information to compare selected financial information for Capital Bank Financial with two groups of financial institutions selected by Sandler O’Neill. One group consisted of 12 banks publicly traded on the NYSE or NASDAQ and headquartered in the Southeast U.S. with assets between $8.0 billion and $15.0 billion (the “Capital Bank Financial Regional Peer Group”). The Capital Bank Financial Regional Peer Group excluded targets of announced merger transactions and United Bankshares, Inc. due to the increase in its asset size following the closing of acquisition of Cardinal Financial Corporation. The other group of financial institutions selected by Sandler O’Neill consisted of 18 publicly traded banks headquartered in the continental U.S. with assets between $5.0 billion and $15.0 billion and tangible common equity/tangible assets ratios greater than 10.0% (the “Capital Bank Financial Capitalization Peer Group”). The Capital Bank Financial Capitalization Peer Group excluded targets of announced merger transactions.

The Capital Bank Financial Regional Peer Group consisted of the following companies:

 

 

 

BancorpSouth, Inc.

 

WesBanco, Inc.

Trustmark Corporation

 

FCB Financial Holdings, Inc.

Pinnacle Financial Partners, Inc.

 

Renasant Corporation

South State Corporation

 

Union Bankshares Corporation

United Community Banks, Inc.

 

Simmons First National Corporation

Home BancShares, Inc.

 

TowneBank

The analysis compared publicly available financial information for Capital Bank Financial with corresponding data for the Capital Bank Financial Regional Peer Group as of or for the twelve months ended March 31, 2017 (unless otherwise noted), with pricing data as of May 2, 2017. The table below sets forth the data for Capital Bank Financial and the high, low, mean, and median data for the Capital Bank Financial Regional Peer Group.

71


 

Capital Bank Financial Comparable Company Analysis: Regional Peer Group

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital
Bank
Financial

 

Regional
Peer
Group
High

 

Regional
Peer
Group
Low

 

Regional
Peer
Group
Mean

 

Regional
Peer
Group
Median

Total assets (in millions)

 

 

 

10,098

 

 

 

 

14,866

 

 

 

 

8,175

 

 

 

 

10,521

 

 

 

 

10,259

 

Loans/Deposits(1)

 

 

 

92.8

%

 

 

 

 

105.6

%

 

 

 

 

79.6

%

 

 

 

 

90.4

%

 

 

 

 

89.9

%

 

Non-performing assets(2)/Total assets(3)

 

 

 

1.22

%

 

 

 

 

1.48

%

 

 

 

 

0.39

%

 

 

 

 

0.72

%

 

 

 

 

0.67

%

 

Tangible common equity/Tangible assets

 

 

 

10.60

%

 

 

 

 

10.37

%

 

 

 

 

8.34

%

 

 

 

 

9.31

%

 

 

 

 

9.26

%

 

Leverage ratio(4)

 

 

 

11.63

%

 

 

 

 

10.94

%

 

 

 

 

8.60

%

 

 

 

 

10.12

%

 

 

 

 

10.15

%

 

Total risk-based capital ratio(5)

 

 

 

13.96

%

 

 

 

 

15.11

%

 

 

 

 

12.30

%

 

 

 

 

13.46

%

 

 

 

 

13.30

%

 

CRE/Total risk based capital(6)

 

 

 

149.8

%

 

 

 

 

331.7

%

 

 

 

 

168.5

%

 

 

 

 

231.2

%

 

 

 

 

216.8

%

 

LTM Return on average assets

 

 

 

0.81

%

 

 

 

 

1.87

%

 

 

 

 

0.86

%

 

 

 

 

1.14

%

 

 

 

 

1.02

%

 

LTM Return on average equity

 

 

 

6.07

%

 

 

 

 

14.06

%

 

 

 

 

7.06

%

 

 

 

 

8.99

%

 

 

 

 

8.24

%

 

LTM Net interest margin

 

 

 

3.65

%

 

 

 

 

4.77

%

 

 

 

 

3.36

%

 

 

 

 

3.76

%

 

 

 

 

3.53

%

 

LTM Efficiency ratio

 

 

 

57.0

%

 

 

 

 

67.7

%

 

 

 

 

36.4

%

 

 

 

 

57.2

%

 

 

 

 

59.2

%

 

Price/Tangible book value

 

 

 

208

%

 

 

 

 

366

%

 

 

 

 

195

%

 

 

 

 

240

%

 

 

 

 

223

%

 

Price/LTM Earnings per share

 

 

 

28.8

x

 

 

 

 

27.1

x

 

 

 

 

17.5

x

 

 

 

 

20.1

x

 

 

 

 

19.4

x

 

Price/2017 Est. Earnings per share(7)

 

 

 

21.8

x

 

 

 

 

21.8

x

 

 

 

 

16.1

x

 

 

 

 

18.2

x

 

 

 

 

18.4

x

 

Price/2018 Est. Earnings per share(7)

 

 

 

18.8

x

 

 

 

 

17.4

x

 

 

 

 

12.9

x

 

 

 

 

15.4

x

 

 

 

 

15.2

x

 

Current Dividend Yield

 

 

 

1.2

%

 

 

 

 

2.8

%

 

 

 

 

0.0

%

 

 

 

 

1.6

%

 

 

 

 

1.6

%

 

Market value (in millions)

 

 

 

2,167

 

 

 

 

3,656

 

 

 

 

1,489

 

 

 

 

2,266

 

 

 

 

1,990

 

 

 

(1)

 

Financial data as of December 31, 2016 for South State Corporation and Home BancShares, Inc.

 

(2)

 

Nonperforming assets defined as nonaccrual and renegotiated loans and leases, and real estate owned

 

(3)

 

Financial data as of December 31, 2016 for Trustmark Corporation, South State Corporation, Home BancShares, Inc., FCB Financial Holdings, Inc., Renasant Corporation, and Simmons First National Corporation

 

(4)

 

Financial data as of December 31, 2016 for Home BancShares, Inc.

 

(5)

 

Financial data as of December 31, 2016 for Home BancShares, Inc.

 

(6)

 

CRE defined as total non-owner-occupied CRE loans (including construction, land and development loans), as defined in the 2006 Federal Reserve guidance; most recent regulatory data available used

 

(7)

 

Multiples based on publicly available mean analyst earnings per share estimates

The Capital Bank Financial Capitalization Peer Group consisted of the following companies:

 

 

 

Washington Federal, Inc.

 

FCB Financial Holdings, Inc.

Cathay General Bancorp

 

Capitol Federal Financial, Inc.

Hope Bancorp, Inc.

 

CVB Financial Corp.

Central Bancompany, Inc.

 

TowneBank

Hilltop Holdings Inc.

 

Eagle Bancorp, Inc.

International Bancshares Corporation

 

First Financial Bankshares, Inc.

Pinnacle Financial Partners, Inc.

 

Farmers & Merchants Bank of Long Beach

Banner Corporation

 

Beneficial Bancorp, Inc.

Glacier Bancorp, Inc.

 

1st Source Corporation

The analysis compared publicly available financial information for Capital Bank Financial with corresponding data for the Capital Bank Financial Capitalization Peer Group as of or for the twelve months ended March 31, 2017 (unless otherwise noted), with pricing data as of May 2, 2017. The table below sets forth the data for Capital Bank Financial and the high, low, mean, and median data for the Capital Bank Financial Capitalization Peer Group.

72


 

Capital Bank Financial Comparable Company Analysis: Capitalization Peer Group1

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital
Bank
Financial

 

Capital.
Peer
Group
High

 

Capital.
Peer
Group
Low

 

Capital.
Peer
Group
Mean

 

Capital.
Peer
Group
Median

Total assets (in millions)

 

 

 

10,098

 

 

 

 

14,961

 

 

 

 

5,502

 

 

 

 

9,920

 

 

 

 

9,544

 

Loans/Deposits(2)

 

 

 

92.8

%

 

 

 

 

136.7

%

 

 

 

 

61.3

%

 

 

 

 

89.1

%

 

 

 

 

91.6

%

 

Non-performing assets(3)/Total assets(4)

 

 

 

1.22

%(9)

 

 

 

 

2.14

%

 

 

 

 

0.11

%

 

 

 

 

0.65

%

 

 

 

 

0.50

%

 

Tangible common equity/Tangible assets

 

 

 

10.60

%

 

 

 

 

15.07

%

 

 

 

 

10.01

%

 

 

 

 

11.63

%

 

 

 

 

10.94

%

 

Leverage ratio(5)

 

 

 

11.63

%