FB Financial Corp 8-K, filed Aug 18, 2020
FB Financial Corp (FBK)
About this 8-K
FB Financial Corp filed this 8-K on August 18, 2020, reporting on events of August 15, 2020.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 2.03: New debt or off-balance-sheet obligation
- Item 5.02: Director or officer change, or executive pay
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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EXPLANATORY NOTE
On August 15, 2020, FB Financial Corporation, a Tennessee corporation (“FB Financial”) acquired Franklin Financial Network, Inc., a Tennessee corporation (“Franklin”). The acquisition occurred pursuant to a series of mergers provided for in the Agreement and Plan of Merger, dated as of January 21, 2020 (the “Merger Agreement”), by and among FB Financial, Paisley Acquisition Corporation, a Tennessee corporation and direct, wholly-owned subsidiary of FB Financial (“Merger Sub”), and Franklin, as more fully described below.
| Item 1.01. | Entry into a Material Definitive Agreement. |
Effective upon the occurrence of the Merger, FB Financial and U.S. Bank, National Association, as Trustee (the “Trustee”) entered into a second supplemental indenture (the “Second Supplemental Indenture”) to the Indenture, dated as of March 31, 2016, as supplemented by that certain First Supplemental Indenture, dated as of March 31, 2016, by and between Franklin and the Trustee (the “Indenture”), pursuant to which Franklin issued $40,000,000 of its Fixed-to Floating Rate Subordinated Notes due 2026. Pursuant to the Second Supplemental Indenture, FB Financial assumed Franklin’s obligations under the Indenture.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On August 15, 2020, FB Financial completed its previously announced merger with Franklin. Pursuant to the terms of the Merger Agreement, Merger Sub was merged with and into Franklin (the “Merger”) with Franklin surviving the merger as a wholly-owned subsidiary of FB Financial. Immediately following the Merger, Franklin merged with and into FB Financial, with FB Financial continuing as the surviving corporation (the “Upstream Merger”). Immediately following the Upstream Merger, Franklin Synergy Bank, a Tennessee state-chartered bank and a wholly owned subsidiary of Franklin (“Franklin Synergy”), merged with and into FirstBank, a Tennessee state-chartered bank and a wholly owned subsidiary of FB Financial (“FirstBank”), with FirstBank continuing as the surviving bank (the “Bank Merger,” and, together with the Merger and the Upstream Merger, the “Mergers”).
At the Effective Time (as defined in the Merger Agreement), each issued and outstanding share of common stock, no par value, of Franklin (the “Franklin Common Stock”) was converted into the right to receive (i) 0.9650 shares of common stock, par value $1.00 per share, of FB Financial (“FB Financial Common Stock”); and (ii) $2.00 in cash (the “Per Share Cash Consideration” and, collectively with the FB Financial Common Stock issued pursuant to the preceding clause (i), the “Merger Consideration”).
At the Effective Time, (i) each option to purchase shares of Franklin Common Stock (a “Franklin Option”) that was outstanding and unexercised immediately prior to the Effective Time was converted automatically into right to receive the Merger Consideration in respect of each Net Share (as defined in the Merger Agreement) of Franklin Common Stock outstanding under the applicable Franklin Option; (ii) each award of a share of Franklin Common Stock subject to vesting, repurchase or other lapse restriction (a “Franklin Restricted Stock Award”) that was outstanding as of December 31, 2019, and remained outstanding as of immediately prior to the Effective Time vested and converted automatically into the right to receive the Merger Consideration in respect of each share underlying the applicable Franklin Restricted Stock Award; and (iii) each restricted stock unit award in respect of shares of Franklin Common Stock (a “Franklin RSU Award”) that was outstanding as of December 31, 2019, and remained outstanding as of immediately prior to the Effective Time vested and was converted automatically into the right to receive the Merger Consideration in respect of each share underlying the applicable Franklin RSU Award.
Each Franklin RSU Award that was granted on or after December 31, 2019 and was outstanding as of immediately prior to the Effective Time was, at the Effective Time, converted automatically into a restricted stock unit award in respect of a number of shares of FB Financial Common Stock (rounded to the nearest whole share) equal to the product of (a) the total number of shares of Franklin Common Stock subject to the Franklin RSU Award immediately prior to the Effective Time multiplied by (b) the Stock Award Exchange Ratio (as defined in the Merger Agreement), all on the same terms and conditions (including vesting terms) as applied to the corresponding Franklin equity award immediately prior to the Effective Time.
The foregoing description of the Mergers and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Pursuant to the Merger Agreement, the board of directors of FB Financial (the “Board”) agreed to expand the Board by three directors and fill the resulting vacancies at the Effective Time with three directors serving on the Franklin board of directors. As of the Effective Time, the Board approved the expansion of the Board by three directors and appointed Jimmy E. Allen, James W. Cross, IV and Melody J. Sullivan (the “New Directors”) to fill the vacancies created by the expansion. Mr. Allen was appointed to serve on the Nominating and Corporate Governance Committee of the Board; Mr. Cross was appointed to serve on the Compensation Committee of the Board; and Ms. Sullivan was appointed to serve on the Audit Committee of the Board. As non-employee directors, the New Directors will be entitled to receive the same compensation paid by FB Financial to each of its other non-employee directors. A description of the compensation paid by the FB Financial to its non-employee directors is set forth under “Director Compensation” in the Company’s definitive proxy statement for its 2020 annual meeting of stockholders filed with the Securities and Exchange Commission on March 17, 2020, which description is incorporated herein by reference. None of the New Directors has any direct or indirect material interest in any transaction required to be disclosed under Item 404(a) of Regulation S-K.
| Item 8.01 | Other Events. |
On August 17, 2020, FB Financial issued a press release announcing the closing of the Mergers. The press release is attached as Exhibit 99.1 hereto and is incorporated by reference into Item 2.01.
| Item 9.01. | Financial Statements and Exhibits. |
(a) Financial Statements of Businesses Acquired.
FB Financial intends to file the financial statements required by Item 9.01(a) under cover of a Form 8-K/A no later than 71 calendar days after the date this Current Report on Form 8-K was required to be filed.
(b) Pro Forma Financial Information.
FB Financial intends to file the pro forma financial information required by Item 9.01(b) under cover of a Form 8-K/A no later than 71 calendar days after the date this Current Report on Form 8-K was required to be filed.
SIGNATURES
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.
| FB FINANCIAL CORPORATION | ||
| By: | /s/ Michael M. Mettee | |
| Michael M. Mettee | ||
| Interim Chief Financial Officer | ||
Date: August 18, 2020
Exhibit 4.3
SECOND SUPPLEMENTAL INDENTURE
THIS SECOND SUPPLEMENTAL INDENTURE dated as of August 14, 2020, is by and among U.S. Bank National Association, as Trustee (herein, together with its successors in interest, the “Trustee”), FB Financial Corporation, a Tennessee corporation (the “Successor Company”), and Franklin Financial Network, Inc., a Tennessee corporation (the “Company”), under the Indenture referred to below.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the Trustee, the Company, and the Successor Company hereby agree as follows:
PRELIMINARY STATEMENTS
The Trustee and the Company are parties to that certain Indenture, dated as of March 31, 2016, as supplemented by that certain First Supplemental Indenture, dated as of March 31, 2016, by and between the Company and the Trustee (the “Indenture”), pursuant to which the Company issued $40,000,000 of its Fixed-to Floating Rate Subordinated Notes due 2026 (the “Notes”).
As permitted by the terms of the Indenture, the Company, simultaneously with the effectiveness of this Second Supplemental Indenture, shall merge (referred to herein for purposes of Article VIII of the Indenture as the “Merger”) with and into the Successor Company with the Successor Company as the surviving corporation. The parties hereto are entering into this Second Supplemental Indenture pursuant to, and in accordance with, Articles VIII and IX of the Indenture.
SECTION 1. Definitions. All capitalized terms used herein that are defined in the Indenture, either directly or by reference therein, shall have the respective meanings assigned them in the Indenture except as otherwise provided herein or unless the context otherwise requires.
SECTION 2. Interpretation.
| (a) | In this Second Supplemental Indenture, unless a clear contrary intention appears: |
| (i) | the singular number includes the plural number and vice versa; |
| (ii) | reference to any gender includes the other gender; |
| (iii) | the words “herein,” “hereof,” and “hereunder,” and other words of similar import, refer to this Second Supplemental Indenture as a whole and not to any particular Section or other subdivision; |
| (iv) | reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Second Supplemental Indenture or the Indenture, |
| and reference to a Person in a particular capacity excludes such Person in any other capacity or individually provided that nothing in this clause (iv) is intended to authorize any assignment not otherwise permitted by this Second Supplemental Indenture or the Indenture; |
| (v) | reference to any agreement, document, or instrument means such agreement, document, or instrument as amended, supplemented, or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof, as well as any substitution or replacement therefor and reference to any note includes modifications thereof and any note issued in extension or renewal thereof or in substitution or replacement therefor; |
| (vi) | reference to any Section means such Section of this Second Supplemental Indenture; and |
| (vii) | the word “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term. |
| (b) | No provision in this Second Supplemental Indenture shall be interpreted or construed against any Person because that Person or its legal representative drafted such provision. |
SECTION 3. Assumption of Obligations.
| (a) | Pursuant to, and in compliance and accordance with, Section 8.01 and Section 8.02 of the Indenture, the Successor Company hereby expressly assumes all of the obligations of the Company in connection with the Securities issued under the Indenture and the performance of every other covenant of the Indenture on the part of the Company. |
| (b) | Pursuant to, and in compliance and accordance with, Section 8.02 of the Indenture, the Successor Company succeeds to and is substituted for the Company, with the same effect as if the Successor Company had originally been named in the Indenture as the Company. |
SECTION 4. Representations and Warranties. The Successor Company represents and warrants that (a) it has all necessary power and authority to execute and deliver this Second Supplemental Indenture and to perform the Indenture, (b) that it is the successor of the Company pursuant to the Merger effected in accordance with applicable law, (c) that it is a corporation organized and validly existing under the laws of the State of Tennessee, and (d) that this Second Supplemental Indenture is executed and delivered pursuant to Article VIII and Section 9.01(a) of the Indenture and does not require the consent of any Holder.
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SECTION 5. Conditions of Effectiveness. This Second Supplemental Indenture shall become effective simultaneously with the effectiveness of the Merger, provided, however, that:
| (a) | the Trustee shall have executed a counterpart of this Second Supplemental Indenture and shall have received one or more counterparts of this Second Supplemental Indenture executed by the Successor Company and the Company; |
| (b) | the Trustee shall have received an Officer’s Certificate from the Company stating that the Merger complies with Article VIII of the Indenture and that all conditions precedent provided for in the Indenture relating to the Merger and this Second Supplemental Indenture have been complied with; |
| (c) | the Trustee shall have received one or more Opinions of Counsel to the effect that: (i) the Merger and this Second Supplemental Indenture comply with the provisions of Section 8.01 of the Indenture; (ii) all conditions precedent provided for in the Indenture relating to the Merger and this Second Supplemental Indenture have been complied with; (iii) this Second Supplemental Indenture constitutes the legal, valid, and binding obligation of the Company, enforceable in accordance with its terms, subject to customary exceptions; and (iv) the execution of this Second Supplemental Indenture is authorized or permitted by the Indenture; and |
| (d) | the Successor Company and the Company shall have duly executed and filed with the Secretary of the State of the State of Tennessee Articles of Merger in connection with the Merger. |
SECTION 6. Reference to the Indenture.
| (a) | Upon the effectiveness of this Second Supplemental Indenture, each reference in the Indenture to “this Indenture,” “hereunder,” “herein,” or words of like import shall mean and be a reference to the Indenture, as affected, amended, and supplemented hereby. |
| (b) | Upon the effectiveness of this Second Supplemental Indenture, each reference in the Notes to the Indenture including each term defined by reference to the Indenture shall mean and be a reference to the Indenture or such term, as the case may be, as affected, amended, and supplemented hereby. |
| (c) | The Indenture, as amended and supplemented hereby, shall remain in full force and effect and is hereby ratified and confirmed. |
SECTION 7. Execution in Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.
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SECTION 8. Governing Law; Binding Effect. This Second Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York and shall be binding upon the parties hereto and their respective successors and assigns.
SECTION 9. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or the due execution thereof by the Company or the Successor Company. The recitals of fact contained herein shall be taken as the statements solely of the Company or the Successor Company, and the Trustee assumes no responsibility for the correctness thereof.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the day and year first written above.
| FRANKLIN FINANCIAL NETWORK, INC. | ||
| By: | /s/ J. Myers Jones, III | |
| Name: J. Myers Jones, III | ||
| Title: Chief Executive Officer | ||
| FB FINANCIAL CORPORATION | ||
| By: | /s/ Michael Mettee | |
| Name: Michael Mettee | ||
| Title: Interim Chief Financial Officer | ||
| U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity, but solely as Trustee | ||
| By: | /s/ Wally Jones | |
| Name: Wally Jones | ||
| Title: Vice President | ||
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Exhibit 99.1
FB Financial Corporation Completes Merger With Franklin Financial Network, Inc.
Combination creates Tennessee’s premier community bank
August 17, 2020 08:30 AM Eastern Daylight Time
NASHVILLE, Tenn.—(BUSINESS WIRE)—FB Financial Corporation (NYSE: FBK) (“FB Financial”), parent company of FirstBank, completed, effective August 15, 2020, its previously announced merger with Franklin Financial Network, Inc., parent company of Franklin Synergy Bank (collectively referred to as “Franklin”).
FirstBank, the third-largest Tennessee-headquartered bank, now has approximately $11.0 billion in assets, $7.6 billion in loans held for investment and $9.1 billion in deposits on a pro forma basis as of June 30, 2020, following the merger with Franklin.
The combination significantly enhances FirstBank’s operations in the Nashville MSA, specifically in the attractive Williamson and Rutherford counties where Franklin has a strong community presence. Pro forma for the transaction, FirstBank’s deposit market share is #6 in the Nashville MSA, #1 in Williamson County and #2 in Rutherford County.
FB Financial’s President and CEO Chris Holmes stated, “We are very excited to complete this transaction. We have joined forces with the leading community bank in two of the most attractive counties in the Southeast. We look forward to building on the strong customer relationships that Franklin has fostered.”
Franklin’s CEO, J. Myers Jones, III, commented, “We believe that this transaction benefits all of our stakeholders, and we firmly believe that we will be better together. Our focus will remain concentrated on our customers, and our ability to serve their needs will be stronger than ever.”
With the close of the transaction, James W. Cross IV, Melody J. Sullivan, and Jimmy E. Allen join the FB Financial board of directors.
Additionally, Mr. Holmes commented, “This transaction provides meaningful financial benefits for our shareholders. We are now focused on the integration of the combined company; the combined franchise is well-positioned to build on our strong customer relationships and grow our Nashville area presence.”
J.P. Morgan Securities LLC served as financial advisor to FB Financial Corporation, and Wachtell, Lipton, Rosen & Katz served as legal advisor. Evercore served as financial advisor to Franklin Financial Network, Inc., and Alston & Bird LLP served as legal advisor.
ABOUT FB FINANCIAL CORPORATION
FB Financial Corporation (NYSE: FBK) is a bank holding company headquartered in Nashville, Tennessee. FB Financial operates through its wholly owned banking subsidiary, FirstBank, the third largest Tennessee-headquartered bank, with 87 full-service bank branches across Tennessee, South Central Kentucky, North Alabama and North Georgia and a national mortgage business with offices across the Southeast. FirstBank serves five of the largest metropolitan markets in Tennessee and has approximately $11.0 billion in assets.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements relating to the timing, benefits, costs, and synergies of the merger with Franklin Financial Network, Inc. (“Franklin”) (the “Franklin merger”), and FB Financial’s future plans, results, strategies, and expectations. These statements can generally be identified by the use of the words and phrases “may,” “will,” “should,” “could,” “would,” “goal,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target,” “aim,” “predict,” “continue,” “seek,” “projection,” and other variations of such words and phrases and similar expressions.
These forward-looking statements are not historical facts, and are based upon current expectations, estimates, and projections, many of which, by their nature, are inherently uncertain and beyond FB Financial’s control. The inclusion of these forward-looking statements should not be regarded as a representation by FB Financial or any other person that such expectations, estimates, and projections will be achieved. Accordingly, FB Financial cautions shareholders and investors that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements including, without limitation, (1) current and future economic conditions, including the effects of declines in housing and commercial real estate prices, high unemployment rates, and any slowdown in economic growth in the local or regional economies in which we operate and/or the US economy generally, (2) the effects of the COVID-19 pandemic, including the magnitude and duration of the pandemic and its impact on general economic and financial market conditions and on our business and our customers’ business, results of operations, asset quality and financial condition, (3) changes in
government interest rate policies, (4) our ability to effectively manage problem credits, (5) the risk that the cost savings and any revenue synergies from the Franklin merger or another acquisition may not be realized or may take longer than anticipated to be realized, (6) disruption from the Franklin merger with customer, supplier, or employee relationships, (7) the possibility that the costs, fees, expenses, and charges related to the Franklin merger may be greater than anticipated, including as a result of unexpected or unknown factors, events, or liabilities, (8) the risks related to the integrations of the combined businesses following the merger, including the risk that the integration will be materially delayed or will be more costly or difficult than expected, (9) the diversion of management time on issues related to the Franklin merger, (10) the ability of FB Financial to effectively manage the larger and more complex operations of the combined company following the Franklin merger, (11) the risks associated with FB Financial’s pursuit of future acquisitions, (12) reputational risk and the reaction of the parties’ respective customers to the Franklin merger, (13) FB Financial’s ability to successfully execute its various business strategies, including its ability to execute on potential acquisition opportunities, (14) the risk of potential litigation or regulatory action related to the Franklin merger, and (15) general competitive, economic, political, and market conditions. Further information regarding FB Financial and factors which could affect the forward-looking statements contained herein can be found in FB Financial’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, FB Financial’s quarterly reports on Form 10-Q, and its other filings with the Securities and Exchange Commission. Many of these factors are beyond FB Financial’s ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this press release, and FB Financial undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for FB Financial to predict their occurrence or how they will affect the company. FB Financial qualifies all forward-looking statements by these cautionary statements.
Contacts
MEDIA CONTACT:
Jeanie M. Rittenberry
615-313-8328
jrittenberry@firstbankonline.com
www.firstbankonline.com
FINANCIAL CONTACT:
Robert Hoehn
615-564-1212
rhoehn@firstbankonline.com
investorrelations@firstbankonline.com