First Horizon to book big 3Q gain from selling Visa stock

First Horizon National in Memphis, Tenn., expects to book a one-time gain of $160 million from the sale of Visa shares.

The $40.9 billion-asset company said in a regulatory filing Monday that it had agreed to sell about 1 million class B shares of Visa stock. The sale should add $160 million in after-tax net income during the third quarter, or about 49 cents a share.

The move should increase First Horizon's common equity Tier 1 capital ratio by 47 basis points.

First Horizon received about 2.4 million class B shares in conjunction with Visa’s initial public offering in March 2008. With the sale, First Horizon will shed its last remaining shares from the IPO.

First Horizon previously sold Visa stock in December 2010 and September 2011.

With each sale, First Horizon entered into a derivative transaction with the buyers. The company will make, or receive, cash payments whenever the conversion of the class B shares into class A shares is adjusted. The conversion ratio is adjusted down when Visa deposits funds into the escrow account and increased when funds are withdrawn.

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