-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SrP2iHBSzr32z9L+fOkXhFUELIOOkiLC54TqzGEXY5qQyzPRfR7tu4o5OwmiqSvy G2GqwUVM08pBKlgm/Ew7jg== 0001171843-08-000670.txt : 20080904 0001171843-08-000670.hdr.sgml : 20080904 20080904170018 ACCESSION NUMBER: 0001171843-08-000670 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20080630 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080904 DATE AS OF CHANGE: 20080904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST HORIZON NATIONAL CORP CENTRAL INDEX KEY: 0000036966 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 620803242 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15185 FILM NUMBER: 081056902 BUSINESS ADDRESS: STREET 1: 165 MADISON AVENUE CITY: MEMPHIS STATE: TN ZIP: 38103 BUSINESS PHONE: 9018186232 MAIL ADDRESS: STREET 1: 165 MADISON AVENUE CITY: MEMPHIS STATE: TN ZIP: 38103 FORMER COMPANY: FORMER CONFORMED NAME: FIRST TENNESSEE NATIONAL CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FIRST TENNESSEE BANKS INC DATE OF NAME CHANGE: 19600201 8-K 1 f8k_090408.htm FORM 8-K Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

_______________________________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  August 31, 2008

First Horizon National Corporation
(Exact Name of Registrant as Specified in Charter)

TN
001-15185
62-0803242
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
 
(IRS Employer
Identification No.)
 
165 MADISON AVENUE
MEMPHIS, TENNESSEE
38103
(Address of Principal Executive Office)
(Zip Code)

Registrant's telephone number, including area code - (901) 523-4444

(Former name or former address, if changed from last report)

_____________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
□
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
□
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
ITEM 2.01.          Completion of Acquisition or Disposition of Assets.

Background Information for Sale of Certain Mortgage Business Assets to MetLife Bank

On June 3, 2008, First Tennessee Bank National Association (“First Tennessee Bank”), a subsidiary of First Horizon National Corporation (collectively with First Tennessee Bank, “First Horizon”), entered into an Asset Purchase Agreement (“APA”) with MetLife Bank, National Association (“MetLife Bank”), a subsidiary of MetLife, Inc. Under the APA First Horizon agreed to sell to MetLife Bank certain assets, and MetLife Bank agreed to assume certain liabilities, related to First Horizon’s mortgage origination franchise and servicing platform (the “National Mortgage Business”) but excluding locations and personnel associated with First Horizon’s Tennessee-footprint production offices. The parties also entered into a Servicing Rights Purchase and Sale Agreement (“MSR Sale Agreement”) providing for the sale by First Horizon to MetLife Bank of mortgage servicing rights (“MSR”) related to first lien mortgage loans with associated unpaid principal balance of approximately $20 billion as of that date, and a Mortgage Loan Subservicing Agreement (“Subservicing Agreement”) providing for servicing by MetLife Bank for up to three years of First Horizon’s entire remaining MSR portfolio currently serviced on First Horizon’s MSR platform and not otherwise sold to MetLife Bank or other third parties. The MSR Sale Agreement and Subservicing Agreement together are referred to as the “MSR Agreements,” and the MSR Agreements together with the APA are referred to as the “Agreements.”

The Agreements were the subject of, and were filed as exhibits to, First Horizon’s Current Report on Form 8-K dated June 3, 2008 (the “Item 1.01 Report”). This item of this Report hereby incorporates by reference the descriptions of the Agreements and their respective transactions contained in Item 1.01 of the Item 1.01 Report, except to the extent the information in this Report may supersede any portion of such prior descriptions. Capitalized terms used in this Report that are not otherwise defined have the meanings given in the Item 1.01 Report. In the Agreements, each party makes representations and warranties to other parties. Those representations and warranties are made only to and for the benefit of those other parties in the context of a business agreement. Exceptions to such representations and warranties may be partially or fully waived by such parties, or not enforced by such parties, in their discretion. No such representation or warranty may be relied upon by any other person for any purpose.

Closing

The asset sale transactions contemplated by the APA and MSR Sale Agreement closed effective August 31, 2008.

Purchase Price Information

Generally, MetLife Bank agreed to pay net book value (based on generally accepted accounting principles consistently applied) for the National Mortgage Business, including the MSRs being sold to MetLife Bank.  The purchase price was subject to a reduction of up to $10 million.  To the extent that prior to the closing date FHN incurred certain specified costs, then the purchase price adjustment decreased by the amount of such costs.  Certain intangible assets, including third party non-compete covenants in favor of First Horizon, are included in the assets to be sold but are excluded from the purchase price calculation. The purchase price was based on elements of First Horizon’s unaudited balance sheet, updated as of the closing date. The purchase price is subject to a post-closing true-up mechanism in a manner prescribed in the APA. The true-up process has not yet been completed. Therefore, the purchase price paid to date in connection with closing is an estimate of the final price. The estimated purchase price paid was approximately $383 million in the aggregate, net of non-deposit liabilities and the adjustment.

In addition, approximately $301 million of custodial deposits primarily related to the MSRs sold were transferred to MetLife Bank at book value, all in connection with closing. MetLife Bank has assumed First Horizon’s obligations associated with those deposits.
 
All purchase price and deposit amounts were paid in cash.

ITEM 9.01.          Financial Statements and Exhibits

(b)       Pro Forma Financial Information

Filed herewith as exhibit 99.1 are unaudited condensed consolidated pro forma statements of income as of the fiscal year 2007 and for the six months ended June 30, 2008, and unaudited pro forma condensed consolidated statement of condition as of June 30, 2008. The unaudited condensed consolidated pro forma statements of income have been prepared to present First Horizon’s results of operations as if the sale of certain mortgage business assets occurred as of the beginning of the 2007 annual period. The unaudited pro forma condensed consolidated statement of condition as of June 30, 2008 has been prepared to present First Horizon’s financial position as if the sale of certain mortgage business assets occurred on June 30, 2008.  The pro forma financial statements do not purport to be indicative of the financial position or results of operations of First Horizon as of such dates or for such periods, nor are they necessarily indicative of future results.

(d)       Exhibits
 
Exhibit #
Description
 
99.1
Pro Forma Financial Information

*  *  *  *  *
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
First Horizon National Corporation
(Registrant)
 
Date: September 4, 2008
 
By: ________________________________________
Executive Vice President, Chief Accounting Officer


EXHIBIT INDEX

 
Pro Forma Financial Information
 

 
 EX-99 2 exh_991.htm EXHIBIT 99.1 Unassociated Document
Exhibit 99.1
 
FIRST HORIZON NATIONAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
 
   
Year Ended December 31, 2007
  
   
First Horizon
        
 
  
   
National
  
 
    
Pro Forma
  
   
Corporation
  
Pro Forma
  
Financial
  
   
Historical
  
Adjustments (a)
  
Statement
  
(Dollars in thousands except per share data)/(Unaudited)
                  
Interest income:
                  
Interest and fees on loans
   $ 1,621,881     $ -     $ 1,621,881  
Interest on investment securities
     188,733       -       188,733  
Interest on loans held for sale
     253,587       (168,820 )     84,767  
Interest on trading securities
     174,188       (38,578 )     135,610  
Interest on other earning assets
     67,570       (1,253 )     66,317  
    Total interest income
     2,305,959       (208,651 )     2,097,308  
Interest expense:
                        
Interest on deposits:
                        
    Savings
     115,954       -       115,954  
    Time deposits
     136,571       -       136,571  
    Other interest-bearing deposits
     25,852       -       25,852  
    Certificates of deposit $100,000 and more
     369,313       -       369,313  
Interest on trading liabilities
     51,516       -       51,516  
Interest on short-term borrowings
     294,074       (156,389 )     137,685  
Interest on long-term debt
     372,037       -       372,037  
    Total interest expense
     1,365,317       (156,389 )     1,208,928  
Net interest income
     940,642       (52,262 )     888,380  
Provision for loan losses
     272,765       -       272,765  
Net interest income after provision for loan losses
     667,877       (52,262 )     615,615  
Noninterest income:
                        
Capital markets
     334,371       -       334,371  
Deposit transactions and cash management
     175,271       -       175,271  
Mortgage banking
     69,454       (83,652 )     (14,198 )
Trust services and investment management
     40,335       -       40,335  
Insurance commissions
     31,739       -       31,739  
Revenue from loan sales and securitizations
     23,881       -       23,881  
Equity securities losses, net
     (7,475 )     -       (7,475 )
Debt securities gains, net
     6,292       -       6,292  
Gains on divestitures
     15,695       -       15,695  
All other income and commissions
     170,386       (18,030 )     152,356  
    Total noninterest income
     859,949       (101,682 )     758,267  
Adjusted gross income after provision for loan losses
     1,527,826       (153,944 )     1,373,882  
Noninterest expense:
                        
Employee compensation, incentives and benefits
     968,122       (154,539 )     813,583  
Occupancy
     131,173       (39,815 )     91,358  
Equipment rentals, depreciation and maintenance
     72,926       (16,921 )     56,005  
Operations services
     74,200       (7,272 )     66,928  
Communications and courier
     43,909       (9,222 )     34,687  
Amortization of intangible assets
     10,959       (2,627 )     8,332  
Goodwill impairment
     84,084       (62,742 )     21,342  
All other expense
     458,060       (53,968 )     404,092  
    Total noninterest expense
     1,843,433       (347,106 )     1,496,327  
Loss before income taxes
     (315,607 )     193,162       (122,445 )
Benefit  for income taxes
     (140,731 )     74,367       (66,364 )
Loss from continuing operations
     (174,876 )     118,795       (56,081 )
Income from discontinued operations, net of tax
     4,765       -       4,765  
Net loss
   $ (170,111 )   $ 118,795     $ (51,316 )
Loss per common share from continuing operations
   $ (1.39 )           $ (0.45 )
Earnings per common share from discontinued operations, net of tax
     .04               .04  
Loss per common share
   $ (1.35 )           $ (0.41 )
Diluted loss per common share from continuing operations
   $ (1.39 )           $ (0.45 )
Diluted earnings per common share from discontinued operations,
                        
  net of tax
     .04               .04  
Diluted loss per common share
   $ (1.35 )           $ (0.41 )
Weighted average common shares
     125,843               125,843  
Diluted average common shares
     125,843               125,843  
 
See Endnotes.
 
FIRST HORIZON NATIONAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
 
   
Six Months Ended June 30, 2008
  
   
First Horizon
        
 
  
   
National
        
Pro Forma
  
   
Corporation
  
Pro Forma
  
Financial
  
   
Historical
  
Adjustments (a)
  
Statement
  
(Dollars in thousands except per share data)/(Unaudited)
                  
Interest income:
                  
Interest and fees on loans
   $ 617,095     $ -     $ 617,095  
Interest on investment securities
     79,947       -       79,947  
Interest on loans held for sale
     112,655       (83,987 )     28,668  
Interest on trading securities
     66,078       (17,303 )     48,775  
Interest on other earning assets
     16,153       (318 )     15,835  
    Total interest income
     891,928       (101,608 )     790,320  
Interest expense:
                        
Interest on deposits:
                        
    Savings
     44,250       -       44,250  
    Time deposits
     57,042       -       57,042  
    Other interest-bearing deposits
     9,462       -       9,462  
    Certificates of deposit $100,000 and more
     48,429       -       48,429  
Interest on trading liabilities
     19,015       -       19,015  
Interest on short-term borrowings
     119,474       (58,358 )     61,116  
Interest on long-term debt
     127,269       -       127,269  
    Total interest expense
     424,941       (58,358 )     366,583  
Net interest income
     466,987       (43,250 )     423,737  
Provision for loan losses
     460,000       -       460,000  
Net interest income/(loss) after provision for loan losses
     6,987       (43,250 )     (36,263 )
Noninterest income:
                        
Capital markets
     253,795       -       253,795  
Deposit transactions and cash management
     89,350       -       89,350  
Mortgage banking
     331,130       (232,268 )     98,862  
Trust services and investment management
     17,992       -       17,992  
Insurance commissions
     14,966       -       14,966  
Revenue from loan sales and securitizations
     (11,081 )     -       (11,081 )
Equity securities gains, net
     64,043       -       64,043  
Debt securities gains, net
     931       -       931  
Gains on divestitures
     (1,424 )     -       (1,424 )
All other income and commissions
     88,420       (13,102 )     75,318  
    Total noninterest income
     848,122       (245,370 )     602,752  
Adjusted gross income after provision for loan losses
     855,109       (288,620 )     566,489  
Noninterest expense:
                        
Employee compensation, incentives and benefits
     564,548       (149,924 )     414,624  
Occupancy
     58,609       (19,646 )     38,963  
Equipment rentals, depreciation and maintenance
     33,279       (7,247 )     26,032  
Operations services
     38,088       (3,826 )     34,262  
Communications and courier
     22,481       (6,813 )     15,668  
Amortization of intangible assets
     4,622       (1,013 )     3,609  
All other expense
     182,493       (50,066 )     132,427  
    Total noninterest expense
     904,120       (238,535 )     665,585  
Loss before income taxes
     (49,011 )     (50,085 )     (99,096 )
Benefit for income taxes
     (36,967 )     (19,283 )     (56,250 )
Loss from continuing operations
     (12,044 )     (30,802 )     (42,846 )
Income from discontinued operations, net of tax
     883       -       883  
Net loss
   $ (11,161 )   $ (30,802 )   $ (41,963 )
Loss per common share from continuing operations
   $ (0.08 )           $ (0.29 )
Earnings per common share from discontinued operations, net of tax
     .01               .01  
Loss per common share
   $ (0.07 )           $ (0.28 )
Diluted loss per common share from continuing operations
   $ (0.08 )           $ (0.29 )
Diluted earnings per common share from discontinued operations,                        
  net of tax
     .01               .01  
Diluted loss per common share
   $ (0.07 )           $ (0.28 )
Weighted average common shares
     148,898               148,898  
Diluted average common shares
     148,898               148,898  
 
See Endnotes.
 
FIRST HORIZON NATIONAL CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF CONDITION
 
   
June 30, 2008
  
   
First Horizon
  
  Reversal of
  
 
      
Pro Forma
  
   
National
  
  Divestiture
  
Pro Forma
  
Financial
  
   
Corporation
  
  Accounts (b)
  
Adjustments
  
Statement
  
(Dollars in thousands)/(Unaudited)
                          
Assets:
                          
Cash and due from banks
   $ 838,376     $ -     $ (24,606 )
(c)
   $ 986,030  
              -       172,260  
(d)
        
Federal funds sold and securities
             -                    
  purchased under agreements to resell
     1,166,982       -       -         1,166,982  
    Total cash and cash equivalents
     2,005,358       -       147,654         2,153,012  
Interest-bearing deposits with other financial institutions
     39,829       -       -         39,829  
Trading securities
     1,473,815       89,239       (92,482 )
(c)
     1,470,572  
Trading securities-divestiture
     89,239       (89,239 )     -         -  
Loans held for sale
     2,554,030       -       -         2,554,030  
Securities available for sale
     2,896,688       -       -         2,896,688  
Securities held to maturity
     240       -       -         240  
Loans, net of unearned income
     22,225,232       -       -         22,225,232  
  Less:  Allowance for loan losses
     575,149       -       -         575,149  
    Total net loans
     21,650,083       -       -         21,650,083  
Mortgage servicing rights, net
     903,634       235,761       (233,162 )
(c)
     906,233  
Mortgage servicing rights-divestiture
     235,761       (235,761 )     -         -  
Goodwill
     192,408       -       -         192,408  
Other intangible assets, net
     48,615       -       -         48,615  
Capital markets receivables
     994,571       -       -         994,571  
Premises and equipment, net
     344,410       31,994       (29,691 )
(c)
     346,713  
Real estate acquired by foreclosure
     141,857       -       -         141,857  
Other assets
     1,908,795       38,634       (59,361 )
(c)
     1,890,004  
                      1,936  
(f)
        
Other assets-divestiture
     70,628       (70,628 )     -         -  
Total assets
   $ 35,549,961     $ -     $ (265,106 )     $ 35,284,855  
                                   
Liabilities and shareholders' equity:
                                  
Deposits:
                                  
  Savings
   $ 4,041,352     $ -     $ -       $ 4,041,352  
  Time deposits
     2,468,521       -       -         2,468,521  
  Other interest-bearing deposits
     1,880,678       -       -         1,880,678  
  Certificates of deposit $100,000 and more
     1,953,432       -       -         1,953,432  
     Interest-bearing
     10,343,983       -       -         10,343,983  
  Noninterest-bearing
     4,453,332       296,632       (231,971 )
(c)
     4,517,993  
  Noninterest-bearing-divestiture
     296,632       (296,632 )     -         -  
     Total deposits
     15,093,947       -       (231,971 )       14,861,976  
Federal funds purchased and securities
                                  
  sold under agreements to repurchase
     2,620,014       -       -         2,620,014  
Trading liabilities
     464,225       -       -         464,225  
Commercial paper and other short-term borrowings
     5,998,810       -       -         5,998,810  
Term borrowings
     5,783,407       -       -         5,783,407  
Other collateralized borrowings
     767,010       -       -         767,010  
  Total long-term debt
     6,550,417       -       -         6,550,417  
Capital markets payables
     868,883               -         868,883  
Other liabilities
     959,476       1,466       (25,946 )
(c)
     942,253  
                      (9,043 )
(e)
        
                      16,300  
(f)
        
Other liabilities-divestiture
     1,466       (1,466 )     -         -  
    Total liabilities
     32,557,238       -       (250,660 )       32,306,578  
Preferred stock of subsidiary
     295,277       -       -         295,277  
Shareholders' equity
                                  
Preferred stock - no par value
   (5,000,000 shares authorized, but unissued)
     -       -       -         -  
Common stock
     122,345       -       -         122,345  
Capital surplus
     980,428       -       -         980,428  
Undivided profits
     1,646,272       -       (14,446 )
(g)
     1,631,826  
Accumulated other comprehensive (loss)/income, net
     (51,599 )     -       -         (51,599 )
    Total shareholders' equity
     2,697,446       -       (14,446 )       2,683,000  
Total liabilities and shareholders' equity
   $ 35,549,961     $ -     $ (265,106 )     $ 35,284,855  
 
First Horizon National Corporation
Endnotes to the Pro Forma Financial Statements
 
(a)
Represents the carve out of origination activities and servicing platform sold to MetLife, the
 
associated subservicing agreement, and the sale of servicing rights related to first lien mortgage loans.
 
The associated unpaid principal balance was approximately $20 billion as of June 30, 2008.
   
(b)
Divestiture account balances as of June 30, 2008 were based on the best estimates of assets and
 
liabilities expected to be transferred.  Amounts are reversed to the original accounts so that the
 
pro forma adjustments will reflect the actual assets and liabilities being transferred as if the
 
transaction occurred on June 30, 2008.
   
(c)
Adjustment reflects the assets and liabilities being transferred to MetLife as if the transaction
 
occurred on June 30, 2008.
   
(d)
Reflects cash that would have been received for net assets transferred to MetLife as if the
 
transaction occurred on June 30, 2008.
   
(e)
Reflects the net tax effect of the transaction, determined using the statutory rate, as if the
 
sale occurred on June 30, 2008.
   
(f)
Reflects assets and liabilities recognized related to the transaction.
   
(g)
Represents the loss on sale, net of related tax effect determined at the statutory rate, that would
 
have been recognized had the sale occurred on June 30, 2008.
 
 
 -----END PRIVACY-ENHANCED MESSAGE-----