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First Horizon Prices Preferred Stock

FHN JPM C GS

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First Horizon National Corporation (FHN - Analyst Report) announced the pricing of a public offering of roughly $100 million worth of depositary shares. Each share represents a 1/4,000th interest in a share of the company’s Series A Non-Cumulative Perpetual Preferred Stock and carries a fixed annual dividend of 6.20%.

The deal is anticipated to be completed somewhere around Jan 31, this year. The proceeds from the offering are aimed to be used for general corporate purposes. We believe that includes maintaining a healthy balance sheet to pursue opportunistic acquisitions.

J.P. Morgan Securities LLC of JPMorgan Chase & Co. (JPM - Analyst Report), Citigroup Global Markets Inc. of Citigroup Inc. (C - Analyst Report) along with The Goldman Sachs Group Inc. (GS - Analyst Report) will serve as the joint book-running managers for First Horizon. Moreover, RBC Capital Markets, LLC, Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. will act as the co-managers.

On Jan 18, First Horizon had reported-fourth earnings per share of 17 cents, in line with the Zacks Consensus Estimate and well ahead of the prior quarter earnings of 10 cents a share. The results were driven by considerably improved credit trends. However, the pressure on revenue growth continued. Rising expenses were also a headwind.

In our viewpoint, First Horizon’s primary objective behind the aforementioned offering is to raise capital as it is currently facing a shrinking revenue base, with pressure on both interest and fee income. For the full-year 2012, First Horizon’s revenue came in at $1.36 billion, down 9% year over year.

First Horizon currently retains a Zacks Rank #3 (Hold).

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