<PAGE>
As filed with the Securities and Exchange
Commission on February 4, 1994
Registration No. 33-49749
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
BB&T FINANCIAL CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1056232
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
BB&T Financial Corporation
223 West Nash Street
Wilson, North Carolina 27893
919/399-4291
(Name, address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
Scott E. Reed
Senior Executive Vice President and Treasurer
BB&T Financial Corporation
223 West Nash Street
Wilson, North Carolina 27893
919/399-4291
(Address, including zip code, and telephone
number, including area code,
of agent for service)
Please address a copy of all communications to:
L. Stevenson Parker, Esq. Gary R. Bronstein, Esq.
Beth S. DeSimone, Esq. James C. Stewart, Esq.
Arnold & Porter Housley, Goldberg & Kantarian, P.C.
1200 New Hampshire Avenue, N.W. Suite 700
Washington, D.C. 20036 1220 19th Street, N.W.
202/872-6986 Washington, D.C. 20036
202/822-9611
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of
the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
/ /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.
/x/
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 4, 1994.
PROSPECTUS/PROXY STATEMENT
BB&T FINANCIAL CORPORATION
AN ESTIMATED 1,000,000 SHARES OF COMMON STOCK
BB&T Financial Corporation ("BB&T Financial") is hereby offering an
estimated 1,000,000 shares of its common stock, par value $2.50 per share
("BB&T Financial Common Stock"), for sale in a Subscription Offering
("Subscription Offering"), first to an Employee Stock Ownership Plan and Trust
("Asheville Savings ESOP") to be established for the benefit of employees of
Asheville Savings Bank, S.S.B. ("Asheville Savings") and then to Eligible
Member Subscribers (account holders of Asheville Savings who had deposits
aggregating $50 or more and borrowers, each at the close of business on
February 28, 1993 ("Eligibility Record Date")) and Voting Members (all persons
who held deposit accounts or borrowings at Asheville Savings on January 14,
1994 ("Voting Record Date") and continue to hold such deposit accounts or
borrowings on the date of the Special Meeting (as defined herein) ("Voting
Members")) of Asheville Savings. See "THE OFFERINGS--The Subscription
Offering." Shares offered but not sold in the Subscription Offering are hereby
offered in a Community Offering ("Community Offering") to (a) natural persons
residing in Buncombe, Henderson, Madison and McDowell counties, North Carolina
("Community Offering Area"), (b) IRA, Keogh and similar retirement accounts
established by or for the benefit of natural persons residing in the Community
Offering Area and (c) corporations, partnerships and similar entities
headquartered in the Community Offering Area ("Community Offering Residents").
See "THE OFFERINGS--The Community Offering."
Asheville Savings is a North Carolina chartered mutual savings bank
headquartered in Asheville, North Carolina, which has agreed to be acquired by
BB&T Financial in a "Conversion Merger" transaction, subject to approval of
Asheville Savings' members pursuant to an Agreement and Plan of
Reorganization, dated as of June 22, 1993 ("Reorganization Agreement"), and a
Plan of Conversion adopted by the Board of Directors of Asheville Savings on
June 22, 1993 and amended on January 19, 1994 ("Plan of Conversion"). See "THE
PLAN OF CONVERSION AND THE REORGANIZATION AGREEMENT" in Annex I attached
hereto.
This Prospectus/Proxy Statement, together with Annex I hereto, also
constitutes a Proxy Statement for the Voting Members of Asheville Savings at
the Special Meeting of Voting Members of Asheville Savings to be held at 5.30
p.m. North Carolina time on March 15, 1994 ("Special Meeting") at the main
office of Asheville Savings, 11 Church Street, Asheville, North Carolina. The
purpose of the Special Meeting is to consider and vote upon the Plan of
Conversion. Approval of the Plan of Conversion at the Special Meeting is a
condition to consummation of the Subscription Offering and the Community
Offering (together, the "Offerings"). See "THE OFFERINGS--Conditions to
Completion of the Offerings and Termination of the Offerings." Annex I herein
contains important information you should consider if you are a Voting Member.
Annex I is not part of the Prospectus for the shares offered hereby.
The subscription rights being provided to the Asheville Savings ESOP,
Eligible Member Subscribers and Voting Members in the Subscription Offering
("Subscription Rights") are scheduled to expire, if not exercised, at 5:00
p.m., North Carolina time, on March 15, 1994 unless the Subscription Offering
is otherwise extended to a date which may not be later than
("Subscription Expiration Date"). The Community Offering will expire at 5:00
p.m., North Carolina time, on March 15, 1994. However, the Community Offering
may be extended and close at any date thereafter, but not later than
("Community Expiration Date"), assuming maximum extension of the Subscription
Expiration Date. The Offerings are being managed on a best efforts basis by
Trident Securities, Inc. ("Trident Securities") as sales agent. Trident
Securities is not purchasing any shares of BB&T Financial Common Stock in the
Offerings and has no obligation to purchase any such shares.
(Cover page continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"), ANY STATE SECURITIES COMMISSION, THE
ADMINISTRATOR OF THE SAVINGS INSTITUTIONS DIVISION OF THE NORTH CAROLINA
DEPARTMENT OF COMMERCE ("ADMINISTRATOR"), THE FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC") OR ANY OTHER GOVERNMENTAL AGENCY, NOR HAS THE SEC,
ANY STATE SECURITIES COMMISSION, THE ADMINISTRATOR, THE FDIC OR ANY
OTHER GOVERNMENTAL AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SHARES OF BB&T FINANCIAL COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS AND
ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
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<TABLE>
<CAPTION>
ESTIMATED ESTIMATED
GROSS ESTIMATED NET PROCEEDS
PROCEEDS EXPENSES(2) TO BB&T FINANCIAL
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share... Estimated Minimum(1) $25.50 $1.34 $24.16
Estimated Maximum(1) $25.50 $1.10 $24.40
- -------------------------------------------------------------------------------
Total....... Estimated Minimum $21,675,000(3) $1,140,000 $20,535,000
Estimated Maximum $29,325,000(3) $1,260,000 $28,065,000
</TABLE>
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- -------------------------------------------------------------------------------
(1) Estimated Minimum Per Share Price and Estimated Maximum Per Share Price
are the 85% Price, assuming that the BB&T Market Price is $30.00 (in which
case the 95% Price would be $28.50). The 85% Price, the 95% Price and the
BB&T Market Price will be determined after the Offerings are concluded.
Completion of the Offerings is not conditioned on a minimum or maximum
price, and the price per share is only an estimate. See "THE OFFERINGS--
General--Purchase Price."
(2) Consists of estimated expenses which will be incurred by BB&T Financial in
connection with the Offerings, assuming all shares offered are sold in the
Subscription Offering at the 85% Price.
(3) Minimum and maximum gross proceeds are based on the minimum and maximum of
the Estimated Valuation Range, as defined below (see "THE OFFERINGS--
Appraised Value of Asheville Savings"), assuming that all shares offered
hereby are sold in the Subscription Offering at the 85% Price. Proceeds
are determined by dividing the Estimated Valuation Range, as defined
below, by the estimated BB&T Market Price ($30.00) and multiplying that
result by the 85% Price ($25.50) See "THE OFFERINGS--The Subscription
Offering--Number of Shares Offered." The actual number of shares and the
BB&T Market Price may vary. The Plan of Conversion does not require a
minimum number of shares to be sold in the Offerings in order to
consummate the Conversion Merger, and it is possible that substantially
fewer shares would be sold and that gross proceeds to BB&T Financial would
be substantially lower. The Administrator, however, may condition his
final approval of the Conversion Merger on a minimum number of shares
being sold in the Conversion Merger. It is possible that unsold shares
would be sold in a public offering. See "USE OF PROCEEDS."
TRIDENT SECURITIES, INC.
THE DATE OF THIS PROSPECTUS/PROXY STATEMENT IS FEBRUARY , 1994.
<PAGE>
(Continued from previous page)
Subject to certain purchase limitations, Eligible Member Subscribers may
elect to purchase BB&T Financial Common Stock at a price (the "85% Price")
equal to 85% of the last sale price of a share of BB&T Financial Common Stock
quoted on the National Association of Securities Dealers Automated Quotation
System National Market System ("Nasdaq NMS") on the Community Expiration Date
("BB&T Market Price"). BB&T FINANCIAL COMMON STOCK PURCHASED AT THE 85% PRICE
WILL BE SUBJECT TO A FOUR-MONTH TRANSFER RESTRICTION AS DESCRIBED IN THE NEXT
PARAGRAPH. In addition, or alternatively, Eligible Member Subscribers may,
subject to purchase limitations, elect to purchase BB&T Financial Common Stock
at a price (the "95% Price") equal to 95% of the BB&T Market Price. In certain
circumstances, Eligible Member Subscribers also may purchase BB&T Financial
Common Stock at the BB&T Market Price in the Subscription Offering. BB&T
Financial Common Stock purchased at the 95% Price and the BB&T Market Price
will not be subject to any transfer restriction. See "THE OFFERINGS--General--
Purchase Price." On February , 1994, the last sale price of BB&T Financial
Common Stock quoted on the Nasdaq NMS was $ per share. If that price were
the BB&T Market Price, the 85% Price would be $ per share and the 95%
Price would be $ per share. Voting Members who are not also Eligible
Member Subscribers also are eligible to purchase shares (subject to certain
limitations) in the Subscription Offering at the BB&T Market Price with a
priority in the event of oversubscription in either of the Offerings over
persons subscribing for shares in the Community Offering.
Shares purchased by Eligible Member Subscribers in the Subscription Offering
at the 85% Price will be subject to the restriction that such shares may not
be sold or transferred, by sale, gift or otherwise, for a period of four
months following the date of this Prospectus/Proxy Statement, except in the
event of the death of the person who subscribed ("Subscriber") for the shares.
See "CERTAIN CONSIDERATIONS RELATING TO THE OFFERINGS--Four-Month Transfer
Restriction" and "THE OFFERINGS--The Subscription Offering--Four-Month
Transfer Restriction." Under regulations issued by the Administrator, no
person may transfer or enter into any agreement or understanding to transfer
the legal or beneficial ownership of Subscription Rights or the underlying
shares of BB&T Financial Common Stock to the account of any other person prior
to completion of the Conversion.
Subject to the availability of shares, BB&T Financial Common Stock is being
offered in the Community Offering at the 95% Price. See "THE OFFERINGS--
General--Purchase Price." No sale or transfer restriction will apply to shares
purchased in the Community Offering. Those persons who are both Eligible
Member Subscribers (or Voting Members) and Community Offering Residents may
elect to purchase shares of BB&T Financial Common Stock in either the
Subscription Offering or, subject to availability, the Community Offering or
both, but before making such an election, should review the information
contained in and referred to in "THE OFFERINGS--General--Participation in the
Offerings by Eligible Member Subscribers or Voting Members Who Also Are
Community Offering Residents" and "--Certain Federal Income Tax Consequences."
No sales commission will be paid by Subscribers for shares of BB&T Financial
Common Stock purchased in either the Subscription Offering or the Community
Offering.
Eligible Member Subscribers who purchase in the Subscription Offering at the
85% Price should recognize that there are risks associated with the
requirement that shares purchased in the Subscription Offering at the 85%
Price may not be transferred for four months after the date of this
Prospectus/Proxy Statement (other than upon the death of the Subscriber).
Among other things, such Subscribers will not be able to realize, through a
sale, any profit they may have in the shares until after that time. Moreover,
potential fluctuations in the market price of shares of BB&T Financial Common
Stock between the date of subscription and the date Subscribers are permitted
to sell shares purchased in the Offerings could be significant. THUS, THOSE
WHO PURCHASE SHARES IN THE SUBSCRIPTION OFFERING AT THE 85% PRICE MAY NOT BE
ABLE TO SELL THEIR SHARES AT A PRICE EQUAL TO OR GREATER THAN THE 85% PRICE.
Purchasers of shares at the 95% Price or at the BB&T Market Price also should
consider that, while such shares will not be subject to the four-month
transfer restriction, delays may occur between the date the Stock Order Form
is submitted and delivery of certificates for shares, and until such
certificates are received, such purchasers may not be able to sell their
shares. The 95% Price and the BB&T Market Price could be greater than the
market price for the BB&T Financial Common Stock on the dates Subscribers
receive certificates for shares. See "CERTAIN CONSIDERATIONS RELATING TO THE
OFFERINGS--The Purchase Price," "THE OFFERINGS--General--Purchase Price" and
"--Delivery of Stock Certificates" for additional discussion about these
factors and related considerations. Eligible Member Subscribers, Voting
Members and Community Offering Residents (collectively referred to herein as
"Eligible Subscribers") also should consider carefully the other information
set forth in "CERTAIN CONSIDERATIONS RELATING TO THE OFFERINGS." This
information relates to the discounts provided to Subscribers in the
Subscription Offering and Community Offering, certain federal income tax
considerations, certain proposed legislation relating to conversion mergers
and the potential effects of extensions of the Offerings.
Stock Order Forms for the Offerings are being provided with this
Prospectus/Proxy Statement for use by those Eligible Subscribers who wish to
subscribe for BB&T Financial Common Stock. Subscribers should send or deliver
the Stock Order Form, together with full payment for the BB&T Financial Common
Stock, in cash (if delivered by hand), by check or money order, or with
appropriate instructions authorizing withdrawal from a Asheville Savings
deposit account (but not a demand deposit account or Negotiable Order of
Withdrawal ("NOW") account, on which a Subscriber must write a check) so that
the Stock Order Form and payment are received by the Subscription Expiration
Date or the Community Expiration Date, as applicable (currently expected to be
5:00 p.m., North Carolina time, on March 15, 1994). Asheville Savings reserves
the right to reject orders submitted by facsimile transmission or payment
submitted by wire transfer. NO PERSON IS REQUIRED TO SUBSCRIBE FOR SHARES IN
THE SUBSCRIPTION OFFERING OR THE COMMUNITY OFFERING. For additional
information about how to subscribe for shares in the Offerings, see "THE
OFFERINGS--The Subscription Offering--How to Subscribe" and "--The Community
Offering--How to Subscribe."
(Cover page continued on next page)
<PAGE>
(Continued from previous page)
Eligible Subscribers who wish to subscribe for shares of BB&T Financial
Common Stock in either the Subscription Offering or the Community Offering
must specify a minimum purchase of $500 on their Stock Order Forms. The
maximum number of shares of BB&T Financial Common Stock for which each
Eligible Member Subscriber may subscribe at the 85% Price and/or the 95% Price
is that number of whole shares which when multiplied by the 85% Price, and/or
the 95% Price, as appropriate, does not exceed $150,000 (or $250,000 in the
case of Eligible Member Subscribers with a single deposit account with a
balance of at least $25,000 or with an additional account relationship--which
may include a loan account or an IRA, Keogh and other similar retirement
account, if the Eligible Member Subscriber is the beneficiary of such account,
in either case at Asheville Savings at the close of business on the
Eligibility Record Date). An Eligible Member Subscriber with a single deposit
account of less than $25,000 at Asheville Savings or only a loan account, each
on the Eligibility Record Date may purchase additional shares at the BB&T
Market Price in the Subscription Offering, provided that the aggregate
purchase price of shares purchased at the BB&T Market Price, the 85% Price and
the 95% Price does not exceed $250,000. Voting Members who are not Eligible
Member Subscribers may purchase in the Subscription Offering, at the BB&T
Market Price (and without a four-month transfer restriction), that number of
shares of BB&T Financial Common Stock which, when multiplied by the BB&T
Market Price, would not exceed $250,000. The maximum amount of BB&T Financial
Common Stock for which any person may subscribe in the Community Offering at
the 95% Price is that number of shares of BB&T Financial Common Stock, which
together with any shares subscribed for in the Subscription Offering, would
have an aggregate purchase price equal to $250,000. In addition, no person
(other than the Asheville Savings ESOP), together with any associate or group
of persons acting in concert with such person, may acquire, through the
exercise of Subscription Rights in the Subscription Offering and/or the
Community Offering, beneficial ownership of more than 5% of the outstanding
BB&T Financial Common Stock in the aggregate (taking into account shares that
may be held by such person) at the opening of business on the day following
the Closing Date ("Outstanding BB&T Financial Common Stock"). Each Subscriber
will receive, subject to these limitations, as many whole shares of BB&T
Financial Common Stock as can be purchased at the 85% Price, the 95% Price
and/or the BB&T Market Price, as applicable, with the amount of funds
submitted by the Subscriber, subject to reduction in the event of
oversubscription. No fractional shares will be issued, and Asheville Savings
will refund to Subscribers any funds received in lieu of the issuance of
fractional shares. See "THE OFFERINGS--The Subscription Offering--Maximum and
Minimum Purchase Limitations" and "--The Community Offering--Maximum and
Minimum Purchase Limitations."
All amounts received for the purchase of shares in the Subscription Offering
(other than by designation for withdrawal from an eligible deposit account)
will be placed in a special segregated Asheville Savings account for the
Offerings. Interest will be paid on funds received at Asheville Savings'
passbook rate, currently % per annum, from the date payment is received,
and funds in deposit accounts for which withdrawal is authorized will continue
to accrue interest at the account rate, until the date on which the Offerings
either are consummated or terminated. See "THE OFFERINGS--The Subscription
Offering--Method of Payment" and "--The Community Offering--Method of
Payment." If the Offerings are terminated, all funds received from
Subscribers, together with accrued interest, if any, will be promptly remitted
to such Subscribers, and any funds authorized by Subscribers for withdrawal
from Asheville Savings deposit accounts for the payment for shares of BB&T
Financial Common Stock (pursuant to the procedures described herein) will be
released. See "THE OFFERINGS--The Subscription Offering--Refunds" and "--The
Community Offering--Refunds."
The number of shares of BB&T Financial Common Stock being offered in the
Offerings, as reflected above, is based on an estimate. The actual number of
shares of BB&T Financial Common Stock to be offered in the Subscription
Offering will be determined by dividing the appraised value of Asheville
Savings, as determined by an independent appraiser ("Appraised Value"), as
updated, by the BB&T Market Price. The Appraised Value was determined, as of
January 18, 1994, to be $30 million, and will be updated promptly following
the expiration of the Offerings. The number of shares to be offered in the
Community Offering will equal the number of shares actually offered in the
Subscription Offering, minus the number of shares actually purchased in the
Subscription Offering. The total number of shares of BB&T Financial Common
Stock to be offered, currently estimated to be 1,000,000, may increase or
decrease without a resolicitation of Subscribers as a result of changes in the
Appraised Value and/or changes in the market price of BB&T Financial Common
Stock. However, if the final Appraised Value is lower than $25.5 million or
higher than $34.5 million ("Estimated Valuation Range"), approval of the
Administrator will be required in order to complete the Offerings. Such
approval may, but would not necessarily, be conditioned upon a resolicitation
of Subscribers. In such case, the subscription of any Subscriber who does not
respond to the resolicitation may be automatically rescinded. The Plan of
Conversion does not require a minimum number of shares to be sold in the
Offerings in order to consummate the transactions contemplated by the Plan of
Conversion. The Administrator, however, may condition his final approval of
the Conversion and the Acquisition on a minimum number of shares being sold in
the Offerings. It is possible that unsold shares would be sold in an
underwritten public offering. See "THE OFFERINGS--The Subscription Offering--
Appraised Value of Asheville Savings" and "USE OF PROCEEDS."
The Offerings are being conducted pursuant to the Plan of Conversion and the
Reorganization Agreement, which provide for the conversion ("Conversion") of
Asheville Savings from a North Carolina chartered mutual savings bank to a
North Carolina chartered stock savings bank and the simultaneous acquisition
("Acquisition") by BB&T Financial of all of the stock of Asheville Savings
issued in the Conversion for cash in an amount equal to the Appraised Value of
Asheville Savings less expenses incurred in the Conversion and the Acquisition
(but in no event less than the current net worth of Asheville Savings). The
Plan of Conversion further provides that some time after the Conversion and
the Acquisition, Asheville Savings will be merged or otherwise combined
("Merger") with BB&T Financial's lead commercial bank subsidiary, Branch
Banking and Trust Company ("BB&T"). The Conversion, the Acquisition and the
Merger are collectively referred to herein as the "Conversion Merger."
Completion of the Conversion Merger and the Offerings is subject to the
receipt of approval of Asheville Savings' Voting Members at the Special
Meeting, certain regulatory approvals, the satisfaction or waiver of certain
other conditions and the rights of BB&T Financial and Asheville Savings to
terminate the Conversion Merger in certain circumstances. See "THE OFFERINGS--
Conditions to Completion of the Offerings and Termination of the Offerings."
3
<PAGE>
[A MAP WILL SHOW THE STATES OF NORTH CAROLINA AND SOUTH CAROLINA
AND BB&T BRANCH LOCATIONS]
4
<PAGE>
AVAILABLE INFORMATION
This Prospectus/Proxy Statement omits certain of the information contained in
a registration statement ("Registration Statement") covering the shares offered
hereby, which is on file with the SEC. BB&T Financial is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
("Exchange Act"), and in accordance therewith files reports and other
information with the SEC. Information as of particular dates concerning BB&T
Financial's executive officers and directors, their remuneration, options
granted to them, the amount of BB&T Financial Common Stock owned by BB&T
Financial's directors and the principal holders of securities of BB&T Financial
is disclosed in proxy statements distributed to the shareholders of BB&T
Financial and filed with the SEC. Reports, proxy statements and other
information filed by BB&T Financial or concerning BB&T Financial can be
inspected and copied at the public reference facilities maintained by the SEC
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at its regional offices at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and 14th Floor, 75 Park Place,
New York, New York 10007. Copies of such materials also can be obtained from
the SEC's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates.
Information contained in this Prospectus/Proxy Statement regarding Asheville
Savings and its subsidiaries has been furnished by Asheville Savings and
information herein regarding BB&T Financial and its subsidiaries has been
furnished by BB&T Financial. Annex I hereto is not part of the Registration
Statement or Prospectus used to solicit purchases in the Offerings and is
provided solely for the solicitation of proxies by management of Asheville
Savings from Voting Members for use at the Special Meeting.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the SEC by BB&T Financial are
hereby incorporated by reference:
(i) BB&T Financial's Annual Report on Form 10-K for the year ended
December 31, 1992;
(ii) BB&T Financial's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1993, June 30, 1993 and September 30, 1993;
(iii) BB&T Financial's Amendment to Application or Report on Form 8 dated
January 15, 1993, BB&T Financial's Amendment to Application or Report on
Form 8 dated February 1, 1993 and BB&T Financial's Amendment to Application
or Report on Form 8 dated March 30, 1993 (Amendment Nos. 2, 3 and 4,
respectively, to BB&T Financial's Current Report on Form 8-K dated December
14, 1992);
(iv) BB&T Financial's Current Reports on Form 8-K dated August 6, 1993
(filed August 9, 1993), October 29, 1993, December 10, 1993, January 10,
1994 and February 4, 1994.
All reports subsequently filed by BB&T Financial pursuant to Section 13(a)
and 13(c) of the Exchange Act prior to the consummation of the Conversion
Merger, any definitive proxy or information statements filed pursuant to
Section 14 of the Exchange Act in connection with any subsequent shareholders'
meeting and any reports filed pursuant to Section 15 of the Exchange Act prior
to completion or termination of the Subscription Offering and the Community
Offering, are deemed to be incorporated by reference in this Prospectus/Proxy
Statement and are deemed to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus/Proxy Statement to the extent that a
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed to constitute a
part of this Prospectus/Proxy Statement, except as so modified or superseded.
BB&T Financial will provide without charge to each person to whom a copy of
this Prospectus/Proxy Statement is delivered, upon the written or oral request
of any such person, a copy of any or all of the documents herein incorporated
by reference (other than exhibits to such documents unless such exhibits are
specifically incorporated therein by reference). Written requests should be
directed to the Secretary of BB&T Financial Corporation, 223 West Nash Street,
Wilson, North Carolina 27893. Requests also may be directed to the Conversion
Information Center, P.O. Box 652, Asheville, North Carolina 28802 (telephone
no. (704) ).
5
<PAGE>
SUMMARY
The following is a summary of certain information relating to the offering by
BB&T Financial of shares of BB&T Financial Common Stock in the Subscription
Offering and the Community Offering and to the solicitation of proxies by
management of Asheville Savings for use in connection with the vote on the Plan
of Conversion at the Special Meeting. This summary does not purport to be
complete and is qualified in its entirety by the more detailed information
appearing elsewhere or incorporated by reference in this Prospectus/Proxy
Statement.
Information contained in this Prospectus/Proxy Statement regarding Asheville
Savings and its subsidiaries has been furnished by Asheville Savings and
information regarding BB&T Financial and its subsidiaries has been furnished by
BB&T Financial.
A glossary of defined terms is included as Annex III to this Prospectus/Proxy
Statement.
THE SPECIAL MEETING
Completion of the Conversion Merger and the Offerings is subject to the
approval of the Voting Members of Asheville Savings (who are those who held
deposit accounts or borrowings or were obligated on a loan from Asheville
Savings as of January 14, 1994 and continue to hold such accounts or borrowings
or be obligated on such loan through the date of the Special Meeting) at the
Special Meeting, scheduled to be held on March 15, 1994. Voting Members are not
required to vote to be eligible to participate in the Offerings and Voting
Members are not required to purchase shares to be eligible to vote.
Annex I hereto contains information concerning the Special Meeting and
Asheville Savings, including a description of Asheville Savings' reasons for
the Conversion Merger and benefits to be provided by BB&T Financial to the
directors, officers and employees of Asheville Savings. Annex I hereto is not
part of the Registration Statement or the Prospectus used to solicit purchases
in the Offerings and is provided solely for the solicitation of proxies by
management of Asheville Savings from Voting Members for use at the Special
Meeting.
BB&T FINANCIAL CORPORATION
BB&T Financial, a North Carolina corporation headquartered in Wilson, North
Carolina, is a bank holding company registered under the Bank Holding Company
Act of 1956, as amended ("BHCA"). At September 30, 1993, BB&T Financial's total
consolidated assets were approximately $8.09 billion, total deposits were
approximately $6.1 billion and total consolidated shareholders' equity was
approximately $698.4 million.
BB&T Financial owns and operates two commercial bank subsidiaries: (i) BB&T,
a North Carolina chartered commercial bank headquartered in Wilson, North
Carolina, which had assets of approximately $7.62 billion, deposit liabilities
of approximately $5.81 billion and shareholders' equity of approximately $662.1
million at September 30, 1993; and (ii) through BB&T Financial Corporation of
South Carolina (which is a wholly owned subsidiary of BB&T Financial), Branch
Banking and Trust Company of South Carolina ("BB&T-SC"), a South Carolina
chartered commercial bank headquartered in Greenville, South Carolina, which
had assets of approximately $501.0 million, deposit liabilities of
approximately $449.2 million and shareholders' equity of approximately $42.3
million at September 30, 1993. The deposits of BB&T and BB&T-SC are insured by
the FDIC. BB&T Financial also owns and operates Mutual Savings Bank of
Rockingham County, Inc., S.S.B., Reidsville, North Carolina ("Mutual Savings"),
Citizens Savings Bank, S.S.B., Inc., Newton, North Carolina ("Citizens of
Newton"), Old Stone Bank of North Carolina, A Federal Savings Bank, High Point,
North Carolina ("Old Stone") and Citizens Savings Bank of Mooresville, S.S.B.,
Mooresville, North Carolina ("Citizens of Mooresville"). Citizens of Newton,
Mutual Savings and Citizens of Mooresville are North Carolina chartered savings
banks. Old Stone is a federally chartered savings bank. Together, these four
institutions had assets of $957 million and deposit liabilities of $849 million
at September 30, 1993. These institutions are expected to be merged or
otherwise consolidated into BB&T in the future.
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In the last three years, BB&T Financial has acquired fourteen savings
institutions with aggregate assets of $3.1 billion. Seven of the institutions
acquired were mutual institutions acquired in "conversion merger" transactions,
and the other seven institutions were stock institutions. All but four of these
fourteen institutions (Citizens of Newton, Mutual Savings, Citizens of
Mooresville and Old Stone) have been merged into BB&T. BB&T Financial also has
acquired several branches of a fifteenth savings institution having $185
million in deposits.
BB&T Financial has pending as of the date of this Prospectus/Proxy Statement
the acquisition, through conversion mergers, of two savings institutions with
aggregate assets of $480 million at September 30, 1993, including its pending
acquisition of Asheville Savings. BB&T Financial also has pending the
acquisition of L.S.B. Bancshares, Inc. of South Carolina, Lexington, South
Carolina ("LSB"), a South Carolina chartered bank holding company with total
assets of $646 million at September 30, 1993. These acquisitions are expected
to be consummated in the first half of 1994. See "DESCRIPTION OF BB&T
FINANCIAL--Savings Institution Acquisitions and Operations" and "--BB&T
Financial's Commercial Bank Acquisitions and Operations."
BB&T Financial continues to evaluate the possibility of acquiring additional
mutual and stock savings institutions, commercial banks and other financial
services companies located in North Carolina, South Carolina and Virginia. BB&T
Financial expects to enter into acquisition agreements with one or more of such
institutions after the date of this Prospectus/Proxy Statement.
BB&T Financial's executive offices are located at 223 West Nash Street,
Wilson, North Carolina 27893 and its telephone number is (919) 399-4291.
For further information concerning BB&T Financial, see "DESCRIPTION OF BB&T
FINANCIAL."
ASHEVILLE SAVINGS BANK, S.S.B.
Asheville Savings is a North Carolina chartered mutual savings bank
headquartered in Asheville, North Carolina. As a "mutual" institution,
Asheville Savings has no stockholders. Asheville Savings had assets of $322.5
million, deposit liabilities of $274.7 million and retained income of $25.3
million as of September 30, 1993. The deposits of Asheville Savings are insured
by the Savings Association Insurance Fund ("SAIF") of the FDIC. Asheville
Savings' principal business consists of soliciting deposit accounts from the
general public and making mortgage loans to finance the acquisition and
construction of residential dwellings and consumer loans and mortgage banking.
THE OFFERINGS
Purchase Price and Transfer Restriction for Shares Purchased at the 85%
Price. Shares are being offered to Eligible Member Subscribers in the
Subscription Offering (subject to certain purchase limitations) at either the
85% Price, which is equal to 85% of the BB&T Market Price, and/or the 95%
Price, which is equal to 95% of the BB&T Market Price, and to Voting Members
who are not also Eligible Member Subscribers at the BB&T Market Price. Under
certain circumstances, shares subscribed for by Eligible Member Subscribers in
excess of specified purchase limitations in the Subscription Offering may be
purchased at the BB&T Market Price. See "--Additional Information About The
Subscription Offering--Subscription Limitations" and "THE OFFERINGS--The
Subscription Offering--Maximum and Minimum Purchase Limitations."
SHARES PURCHASED AT THE 85% PRICE IN THE SUBSCRIPTION OFFERING WILL BE
SUBJECT TO THE RESTRICTION THAT SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED BY
SALE, GIFT OR OTHERWISE, FOR A PERIOD OF FOUR MONTHS FOLLOWING THE DATE OF THIS
PROSPECTUS/PROXY STATEMENT, EXCEPT IN THE EVENT OF THE DEATH OF THE SUBSCRIBER.
See "CERTAIN CONSIDERATIONS RELATING TO THE OFFERINGS--Four-Month Transfer
Restriction" and "THE OFFERINGS--The Subscription Offering--Four-Month Transfer
Restriction." Shares purchased at the 95% Price and the BB&T Market Price will
not be subject to any transfer restriction.
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The price of any shares offered in the Community Offering (subject to certain
purchase limitations) is the 95% Price. No sale or transfer restriction will
apply to shares purchased in the Community Offering. See "THE OFFERINGS--
General--Purchase Price."
No sales commmissions will be paid by Subscribers for shares of BB&T
Financial Common Stock purchased in either the Subscription Offering or the
Community Offering.
Although the 85% Price and the 95% Price will be set at a discount to the
market price of the BB&T Financial Common Stock at the time the 85% Price and
95% Price are established, for a variety of reasons, Subscribers may be unable
to sell the shares for which they subscribe at a price equal to or greater than
the 85% Price or the 95% Price. This is particularly true for purchasers who
subscribe in the Subscription Offering at the 85% Price, and who therefore may
not sell or otherwise transfer their shares until four months after the date of
this Prospectus/Proxy Statement. See "CERTAIN CONSIDERATIONS RELATING TO THE
OFFERINGS--Four-Month Transfer Restriction," "--The Purchase Price," and "THE
OFFERINGS--General--Purchase Price."
Eligibility. Eligible Member Subscribers are eligible to participate in the
Subscription Offering. Eligible Member Subscribers are borrowers and account
holders of Asheville Savings who had loans outstanding or deposits aggregating
$50 or more, each as of the close of business on the Eligibility Record Date
(February 28, 1993). Such account holders may include trusts that hold eligible
accounts, including IRA, Keogh and similar retirement accounts. Voting Members
who are not also Eligible Member Subscribers also are eligible to participate
in the Subscription Offering. Voting Members are all persons who held deposit
accounts or borrowings at, or were obligated on a loan from, Asheville Savings
on the Voting Record Date and who continue to hold such accounts or borrowings,
or be obligated on such a loan, through the date of the Special Meeting
scheduled for March 15, 1994. No person is required to subscribe for any shares
of BB&T Financial Common Stock in the Subscription Offering, and Voting Members
may vote at the Special Meeting whether or not they purchase shares. Under the
Administrator's regulations, no person may transfer or enter into any agreement
or understanding to transfer the legal or beneficial ownership of Subscription
Rights or the underlying shares of BB&T Financial Common Stock to the account
of any other person prior to completion of the Conversion. Additional
information concerning the Subscription Offering can be found below under "--
Additional Information About The Subscription Offering" and "THE OFFERINGS--The
Subscription Offering."
Community Offering Residents are eligible to participate in the Community
Offering. Community Offering Residents are (a) natural persons residing in the
Community Offering Area, (b) IRA, Keogh and similar retirement accounts
established by or for the benefit of natural persons residing in the Community
Offering Area and (c) corporations, partnerships and similar entities
headquartered in the Community Offering Area. Additional information concerning
the Community Offering can be found below under "--Additional Information About
The Community Offering" and "THE OFFERINGS--The Community Offering."
An Eligible Member Subscriber or Voting Member who also is a Community
Offering Resident is eligible to participate in either the Subscription
Offering, the Community Offering or both. Before deciding whether to purchase
in the Subscription Offering or the Community Offering, persons eligible for
each of the Offerings should review carefully the information contained or
referred to below in "--Certain Federal Income Tax Consequences" and in "THE
OFFERINGS--General--Participation in the Offerings by Eligible Member
Subscribers or Voting Members Who Also Are Community Offering Residents" and
"--Certain Federal Income Tax Consequences."
Settlement for Shares. Each Subscriber generally may subscribe for as many
whole shares of BB&T Financial Common Stock as can be purchased at the 85%
Price, the 95% Price and/or the BB&T Market Price, as applicable, with the
amount of funds submitted by the Subscriber (or, in the case of Subscribers who
designate funds for withdrawal from certain eligible Asheville Savings deposit
accounts, the amount designated for withdrawal from such accounts), subject to
the purchase limitations described under "THE
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OFFERINGS--The Subscription Offering--Maximum and Minimum Purchase Limitations"
and "--The Community Offering--Maximum and Minimum Purchase Limitations." No
fractional shares will be issued and any excess amount of funds for fractional
shares will be refunded or, with respect to any funds designated for withdrawal
from deposit accounts, released. Refunds (or release of funds designated for
withdrawal from eligible deposit accounts) also will be made in the event and
to the extent of oversubscription or termination of the Offerings, and the
interest earned on funds remitted will be paid in cash, or released to the
deposit accounts of such Subscribers. See "THE OFFERINGS--The Subscription
Offering--Refunds" and "--The Community Offering--Refunds."
BB&T Financial will notify each Subscriber of the 85% Price, the 95% Price
and the BB&T Market Price and will cause the certificates representing the BB&T
Financial Common Stock purchased by each Subscriber to be mailed as promptly as
practicable after the consummation of the Conversion and the Acquisition
("Closing Date"). Any refund and/or any interest earned on the amount remitted
other than by authorized withdrawal also will be mailed by check to each
Subscriber promptly after the Closing Date.
Number of Shares Offered. The total number of shares of BB&T Financial Common
Stock to be offered in the Subscription Offering, currently estimated to be
1,000,000 shares, will be determined by dividing the Appraised Value of
Asheville Savings, as it will be updated, by the BB&T Market Price. See "THE
OFFERINGS--Appraised Value of Asheville Savings." The total number of shares of
BB&T Financial Common Stock to be offered in the Community Offering will equal
the number of shares offered but not subscribed for in the Subscription
Offering. See "THE OFFERINGS--The Community Offering."
Trident Financial Corporation ("Trident Financial") has determined the
Appraised Value of Asheville Savings to be $30 million as of January 18, 1994.
Trident Financial will update the Appraised Value immediately following the
expiration of the Offerings. See "THE OFFERINGS--Appraised Value of Asheville
Savings." The Appraised Value is not intended and must not be construed as a
recommendation as to the advisability of purchasing the shares of BB&T
Financial Common Stock being offered hereby or as any form of assurance that
such shares may be resold at the price paid by the Subscriber. Trident
Financial also acted as financial advisor to Asheville Savings in connection
with the Conversion Merger.
Sales Agent. BB&T Financial has retained Trident Securities to act as sales
agent for the sale of shares in the Offerings. Trident Securities is an
affiliate of Trident Financial, which is responsible for determining the
Appraised Value of Asheville Savings. See "THE OFFERINGS--Plan of
Distribution."
Conditions to Completion of Offerings. Completion of the Offerings is subject
to receipt of required regulatory approvals and satisfaction of certain other
conditions contained in the Reorganization Agreement, including approval of the
Plan of Conversion by Voting Members at the Special Meeting scheduled to be
held on March 15, 1994. The Reorganization Agreement may be terminated under
certain circumstances prior to the Closing Date. See "THE OFFERINGS--Timing of
Completion of the Conversion Merger and Sale of Shares" and "--Conditions to
Completion of the Offerings and Termination of the Offerings."
ADDITIONAL INFORMATION ABOUT THE SUBSCRIPTION OFFERING
How to Subscribe. Stock Order Forms, together with full payment or
instructions for payment for the BB&T Financial Common Stock subscribed for
may, be sent by mail in the postage-paid return envelope accompanying this
Prospectus/Proxy Statement, or returned by hand to the Conversion Information
Center, P.O. Box 652, 11 Church Street, Asheville, North Carolina 28802
(telephone no. (704) ) or to any of the Asheville Savings offices or to
any BB&T office in the Community Offering Area. Such Stock Order Forms must be
received, whether mailed or hand delivered, at any of the above locations by
the Subscription Expiration Date (currently expected to be 5:00 p.m., North
Carolina time, on March 15, 1994, unless extended). Asheville Savings reserves
the right to reject orders submitted by facsimile transmission. Stock Order
Forms, once received by Asheville Savings, may not be amended, modified or
rescinded by Eligible Member Subscribers or Voting Members unless permitted in
Asheville Savings' discretion to correct immaterial irregularities. See "THE
OFFERINGS--The Subscription Offering--How to Subscribe."
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Payment for Shares. Payment for shares of BB&T Financial Common Stock may be
made in cash (if made in person), by check or money order or by including
instructions on the Stock Order Form for withdrawal from a Asheville Savings
deposit account (other than a demand deposit account or NOW account, on which a
Subscriber must write a check). Asheville Savings reserves the right to reject
orders submitted by wire transfer. Asheville Savings will pay interest on the
funds received at Asheville Savings' passbook rate, currently % per annum,
and interest on funds in deposit accounts for which withdrawal is authorized at
the account rate, from the date payment is received or withdrawal is authorized
until the Offerings are either completed or terminated. The amount of interest
earned will NOT be applied toward the purchase of BB&T Financial Common Stock
and will be paid or released to each Subscriber following either consummation
or termination of the Offerings. See "THE OFFERINGS--The Subscription
Offering--How to Subscribe" and "--Method of Payment."
Special procedures must be followed for subscriptions by IRA, Keogh and
similar retirement accounts. See "THE OFFERINGS--The Subscription Offering--
Subscriptions by Beneficial Owners of IRA, Keogh or Similar Retirement
Accounts" and "--Certain Federal Income Tax Consequences."
Asheville Savings will permit an Eligible Member Subscriber or Voting Member
to pay for any shares of BB&T Financial Common Stock subscribed for by
withdrawal from a Asheville Savings certificate of deposit account without the
assessment of an early withdrawal penalty. See "THE OFFERINGS--The Subscription
Offering--Method of Payment."
Subscription Limitations. Eligible Member Subscribers or Voting Members who
wish to subscribe for BB&T Financial Common Stock in the Subscription Offering
must specify a minimum purchase of $500 on the Stock Order Form. Subject to the
oversubscription procedures described herein (see "THE OFFERINGS--The
Subscription Offering--Oversubscription Procedures"), the maximum number of
shares of BB&T Financial Common Stock for which each Eligible Member Subscriber
may subscribe at the 85% Price and/or the 95% Price is that number of whole
shares which when multiplied by the 85% Price and/or the 95% Price would equal
$150,000 (or $250,000 in the case of an Eligible Member Subscriber with a
single deposit account with a balance of at least $25,000 or with an additional
account at Asheville Savings (which may include a loan), in either case at the
close of business on the Eligibility Record Date). In addition, an Eligible
Member Subscriber holding only a loan account or a single deposit account with
a balance of less than $25,000 on the Eligibility Record Date may purchase
additional shares at the BB&T Market Price, provided that the aggregate
purchase price of shares purchased in the Offerings does not exceed $250,000.
Voting Members may purchase in the Subscription Offering at the BB&T Market
Price that number of shares of BB&T Financial Common Stock which, when
multiplied by the BB&T Market Price, would not exceed $250,000. An Eligible
Member Subscriber or Voting Member who also is a Community Offering Resident
may purchase shares in both the Subscription Offering and the Community
Offering, provided that the aggregate purchase price of shares purchased does
not exceed $250,000. See "THE OFFERINGS--The Subscription Offering--Maximum and
Minimum Purchase Limitations."
The Asheville Savings ESOP. BB&T Financial has agreed to establish the
Asheville Savings ESOP for the benefit of the full-time employees of Asheville
Savings. It currently is expected that the Asheville Savings ESOP will
subscribe for approximately 10% of the shares (currently estimated to be
100,000) of BB&T Financial Common Stock actually offered in the Subscription
Offering at the 85% Price. The Asheville Savings ESOP is established for the
benefit of all Asheville Savings employees regularly scheduled to work at least
1,000 hours a year, and will not benefit non-employee directors of Asheville
Savings. The Asheville Savings ESOP will receive priority over Eligible Member
Subscribers and Voting Members in the case of an oversubscription for shares in
the Subscription Offering. See "THE OFFERINGS--The Subscription Offering--The
Asheville Savings ESOP," "--Oversubscription Procedures" and "DESCRIPTION OF
CAPITAL STOCK OF BB&T FINANCIAL--Certain Provisions Which May Have an Anti-
Takeover Effect--Employee Stock Ownership Plans."
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ADDITIONAL INFORMATION ABOUT THE COMMUNITY OFFERING
How to Subscribe. Stock Order Forms, together with full payment or
instructions for payment for the BB&T Financial Common Stock subscribed for,
may be sent by mail in the postage-paid return envelope accompanying this
Prospectus/Proxy Statement to the Conversion Information Center, P.O. Box 652,
Asheville, North Carolina 28802 (telephone no. (704) ) or by hand delivery
to any of Asheville Savings' offices or to any BB&T office in the Community
Offering Area. Such Stock Order Forms must be received, whether mailed or hand
delivered, at any of the above locations by the Community Expiration Date
(currently expected to be 5:00 p.m., North Carolina time, on March 15, 1994).
Asheville Savings reserves the right to reject orders submitted by facsimile
transmission. Stock Order Forms, once received by Asheville Savings, may not be
amended, modified or rescinded by Community Offering Residents, unless
permitted in Asheville Savings' discretion to correct immaterial
irregularities. See "THE OFFERINGS--The Community Offering--How to Subscribe."
Payment for Shares. Payment for shares of BB&T Financial Common Stock may be
made in cash (if made in person), by check or money order or by including
instructions on the Stock Order Form for withdrawal from a Asheville Savings
deposit account (other than a demand deposit account or NOW account, on which a
Subscriber must write a check). Asheville Savings reserves the right to reject
payment submitted by wire transfer. Asheville Savings will pay interest on the
funds received at Asheville Savings' passbook rate, currently % per annum, and
interest on funds in deposit accounts for which withdrawal is authorized at the
account rate, from the date payment is received or withdrawal is authorized
until the Offerings are either completed or terminated. The amount of interest
earned will NOT be applied toward the purchase of additional shares of BB&T
Financial Common Stock and will be paid or released to each Subscriber
following either consummation or termination of the Offerings. See "THE
OFFERINGS--The Community Offering--How to Subscribe" and "--Method of Payment."
Special procedures must be followed for subscriptions by IRA, Keogh and
similar accounts. See "THE OFFERINGS--The Community Offering--Subscription by
Beneficial Owners of IRA, Keogh or Similar Retirement Accounts" and "--Certain
Federal Income Tax Consequences."
Asheville Savings will permit a Community Offering Resident to pay for any
shares of BB&T Financial Common Stock subscribed for by withdrawal from a
Asheville Savings certificate of deposit account without the assessment of an
early withdrawal penalty. See "THE OFFERINGS--The Community Offering--Method of
Payment."
Subscription Limitations. Community Offering Residents who wish to subscribe
for BB&T Financial Common Stock must specify a minimum purchase of $500 on
their Stock Order Form. Subject to the oversubscription procedures described
herein (see "THE OFFERINGS--The Community Offering--Oversubscription
Procedures"), the maximum number of shares of BB&T Financial Common Stock for
which any person may subscribe in the Community Offering is that number of
whole shares of BB&T Financial Common Stock which when multiplied by the 95%
price would not exceed $250,000. An Eligible Member Subscriber or Voting Member
who also is a Community Offering Resident may purchase shares in both the
Subscription Offering and the Community Offering, provided that the aggregate
purchase price of shares purchased does not exceed $250,000. See "THE
OFFERINGS--The Community Offering--Maximum and Minimum Purchase Limitations."
SUMMARY OF PURCHASE OPTIONS
The following briefly summarizes, by category of Subscriber, the purchase
options in the Subscription Offering and the Community Offering. The summary
should be read in conjunction with "THE OFFERINGS--The Subscription Offering--
Maximum and Minimum Purchase Limitations," "--The Community Offering--Maximum
and Minimum Purchase Limitations" and "--General--Purchase Price".
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(1) Eligible Member Subscribers who had a single deposit account with a
balance of less than $25,000 or only a loan account on the Eligibility Record
Date and who are also Community Offering Residents may subscribe for up to:
. $150,000 at the 85% Price and/or the 95% Price in the Subscription
Offering (with shares purchased at the 85% Price being subject to the
four-month transfer restriction), and
. $150,000 at the BB&T Market Price in the Subscription Offering, and/or
. $250,000 at the 95% Price in the Community Offering.
In all cases, the total amount subscribed for together in the Subscription
Offering and the Community Offering cannot exceed $250,000.
(2) Eligible Member Subscribers who had a single deposit account with a
balance of less than $25,000 or only a loan account on the Eligibility Record
Date and who are NOT also Community Offering Residents may subscribe in the
Subscription Offering for up to:
. $150,000 at the 85% Price and/or the 95% Price (with shares purchased at
the 85% Price being subject to the four-month transfer restriction), and
. $150,000 at the BB&T Market Price.
In all cases, the total amount subscribed for cannot exceed $250,000.
(3) Eligible Member Subscribers who had a single deposit account with a
balance of at least $25,000 or who had an additional (second) account (which
may be a loan) on the Eligibility Record Date who are also Community Offering
Residents may subscribe for up to:
. $250,000 at the 85% Price and/or the 95% Price in the Subscription
Offering (with shares purchased at the 85% Price being subject to the
four-month transfer restriction), and/or
. $250,000 at the 95% Price in the Community Offering.
In all cases, the total amount subscribed for together in the Subscription
Offering and the Community Offering cannot exceed $250,000.
(4) Eligible Member Subscribers who had a single deposit account with a
balance of at least $25,000 or who had an additional (second) account (which
may be a loan) on the Eligibility Record Date who are NOT also Community
Offering Residents may subscribe for up to:
. $250,000 at the 85% Price and/or the 95% Price in the Subscription
Offering (with shares purchased at the 85% Price being subject to the
four-month transfer restriction).
(5) Voting Members who are also Community Offering Residents but who are not
Eligible Member Subscribers may subscribe for up to:
. $250,000 at the 95% Price in the Community Offering, and/or
. $250,000 at the BB&T Market Price in the Subscription Offering.
In all cases, the total amount subscribed for together in the Subscription
Offering and the Community Offering cannot exceed $250,000.
(6) Voting Members who are neither Community Offering Residents nor Eligible
Member Subscribers may subscribe for up to:
. $250,000 at the BB&T Market Price in the Subscription Offering.
(7) Community Offering Residents who are neither Eligible Member Subscribers
nor Voting Members may subscribe for up to:
. $250,000 at the 95% Price in the Community Offering.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
BB&T Financial and Asheville Savings have received an opinion of KPMG Peat
Marwick, BB&T Financial's tax advisor, to the effect that consummation of the
Conversion and the Acquisition will not be taxable to Asheville Savings or its
members, except for taxable income attributable to bonus interest received by
Eligible Member Subscribers and taxable gain attributable to the receipt of
Subscription Rights by Eligible Member Subscribers and Voting Members.
Under the general rules that have developed in recent years, gain, if any,
realized by recipients of Subscription Rights, as a result of the Conversion,
must be recognized. The amount of such gain required to be recognized by an
Eligible Member Subscriber or Voting Member will not exceed the sum of (i) the
fair market value, if any, of the interest in the liquidation account received
by an Eligible Member Subscriber, and (ii) the fair market value of the
Subscription Rights received pursuant to the Plan of Conversion.
In several recent private letter rulings, the Internal Revenue Service
("IRS") has concluded that an interest in a liquidation account has only
nominal, if any, fair market value. Private letter rulings, while potentially
instructive, however, may not be relied upon in the present situation as any
expression of the policy of the IRS or as any expression of the present state
of the law in this area.
Recipients of Subscription Rights in the Subscription Offering will be
required to recognize gain, if any, with respect to the receipt of Subscription
Rights, whether or not such Subscription Rights are exercised, because the 85%
Price and/or 95% Price in the Subscription Offering may be less than the fair
market value of the BB&T Financial Common Stock purchased. It is unclear as to
how the Subscription Rights should be valued (particularly in the case of
shares issued with the four-month transfer restriction) or how to determine the
number of Subscription Rights issued to each Eligible Member Subscriber for
this purpose. Under one approach, all Eligible Member Subscribers will
recognize gain attributable to the receipt of Subscription Rights in some
amount regardless of whether they exercise any or all of their Subscription
Rights. In this case, the recipient of Subscription Rights will be able to
claim a loss upon the expiration of any unexercised Subscription Rights.
Alternatively, an Eligible Member Subscriber may be able to claim that gain
should be recognized with respect to such Subscription Rights only to the
extent of the fair market value, if any, of any Subscription Rights actually
exercised. See "CERTAIN CONSIDERATIONS RELATING TO THE OFFERINGS--Receipt of
Taxable Gain by Subscribers in the Subscription Offering" and "THE OFFERINGS--
Certain Federal Income Tax Consequences."
ELIGIBLE MEMBER SUBSCRIBERS AND VOTING MEMBERS ARE URGED, THEREFORE, TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE
CONVERSION MERGER TO THEM, AND ANY PURCHASE OF BB&T FINANCIAL COMMON STOCK
PURSUANT TO THE SUBSCRIPTION OFFERING, INCLUDING, WITHOUT LIMITATION, TAX
RETURN REPORTING REQUIREMENTS, THE APPLICATION AND EFFECT OF FEDERAL, FOREIGN,
STATE, LOCAL AND OTHER TAX LAWS AND THE IMPLICATIONS OF ANY PROPOSED CHANGES IN
THE TAX LAWS.
No income, gain or loss will be recognized by a purchaser of BB&T Financial
Common Stock in the Community Offering. A purchaser of BB&T Financial Common
Stock in the Community Offering will have a tax basis in such stock equal to
the purchase price thereof and will have a holding period for such stock
commencing on the day following the date on which such stock is purchased.
USE OF PROCEEDS
The net proceeds from the sale of BB&T Financial Common Stock in the
Offerings, assuming all shares offered are purchased in the Subscription
Offering at the 85% Price, are estimated to range from $20.5 million to $28.1
million. The Plan of Conversion does not require that a minimum number of
shares be sold in the Offerings in order to consummate the Conversion Merger.
Net proceeds from the Offerings thus could be substantially less than the range
indicated above, depending on the number of shares purchased in the Offerings.
However, the Administrator may condition his final approval on a minimum number
of shares being sold in the Conversion Merger. It is possible that shares not
sold in the Offerings may be sold in a public offering. The net proceeds from
the sale of the BB&T Financial Common Stock will be used by BB&T
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Financial (along with additional funds of BB&T Financial from other sources) to
acquire the stock of Asheville Savings issued in the Conversion. It is
possible, however, that BB&T Financial will use the proceeds from the Offerings
for general corporate purposes in the event that the FDIC takes certain actions
under legislation proposed in the U.S. Congress. See "CERTAIN CONSIDERATIONS
RELATING TO THE OFFERINGS--Potential Effects of Pending Legislation." The
purchase price for the stock to be issued to BB&T Financial by Asheville
Savings in the Conversion will equal the Appraised Value of Asheville Savings
less expenses incurred in the Conversion and the Acquisition, but will in no
event be less than the current net worth of Asheville Savings. See "USE OF
PROCEEDS."
CERTAIN CONSIDERATIONS RELATING TO THE OFFERINGS
For a discussion of certain important factors relating to the four-month
transfer restriction imposed on shares purchased at the 85% Price, certain
other factors relating to the 85% Price, the 95% Price, certain tax
consequences of purchasing in the Subscription Offering, the potential effects
on the Conversion Merger of legislation pending in the U.S. Congress and the
effects of extensions in the expiration of the Offerings, see "CERTAIN
CONSIDERATIONS RELATING TO THE OFFERINGS."
INTERESTS OF THE DIRECTORS, OFFICERS AND EMPLOYEES OF ASHEVILLE SAVINGS IN THE
CONVERSION MERGER
Following the Conversion and the Acquisition, the directors of Asheville
Savings will continue to serve (consistent with Asheville Savings' mandatory
retirement policy) on the Asheville Savings Board of Directors, and following
the Merger, they will serve on an advisory board established by BB&T. In
consideration of such service, BB&T initially will pay each outside director
fees equal to approximately 20% more than the fees they received in fiscal
1993, with subsequent increases of 10% per year in each of the following five
years. Moreover, the outside directors of Asheville Savings will be granted, as
a group, options to purchase a total of 55,385 shares (which is a number equal
to approximately 5.54% of the shares offered in the Subscription Offering) of
BB&T Financial Common Stock and awarded a total of 23,538 shares (approximately
2.35% of the shares offered in the Subscription Offering) of restricted stock
of BB&T Financial. Mr. Dickson will be granted options to purchase 25,846
shares (which is a number equal to approximately 2.58% of the shares offered in
the Subscription Offering) of BB&T Financial Common Stock and awarded 7,846
shares (approximately .78% of the shares offered in the Subscription Offering)
of restricted stock of BB&T Financial. The directors also will be entitled to
participate in a BB&T Financial director retirement plan. See "BENEFITS TO BE
OFFERED BY BB&T FINANCIAL TO DIRECTORS AND OFFICERS OF ASHEVILLE SAVINGS--
Director Benefits" in Annex I.
Mr. Dickson and four other executive officers of Asheville Savings are
expected to become parties to employment agreements with BB&T Financial and
Asheville Savings (and after the Merger, BB&T), providing for employment terms
of five years (subject to annual extension at the option of BB&T Financial or,
after the Merger, BB&T, beginning on the fourth anniversary until the officers
attain age 65), specified minimum salaries which will be approximately 15%
higher than their salaries (and, in the case of Mr. Dickson his salary,
performance award and directors fees) at January 1, 1994 signed, and certain
other benefits. In addition, these four executive officers (other than Mr.
Dickson) will be granted, as a group, options to purchase a total of 11,169
shares (which equals approximately 1.21% of the shares being offered to
Eligible Member Subscribers in the Subscription Offering) of BB&T Financial
Common Stock and awarded a total of 7,846 shares (which equals approximately
.79% of the shares being offered to Eligible Member Subscribers in the
Subscription Offering) of restricted stock of BB&T Financial. Seven other
officers will be awarded, as a group, a total of 6,923 shares (which is a
number equal to approximately .69% of the shares being offered to Eligible
Member Subscribers in the Subscription Offering) of BB&T Financial Common
Stock. Shares of restricted stock of BB&T Financial and options for shares of
BB&T Financial Common Stock awarded to directors and officers of Asheville
Savings are in addition to, and are not a part of, the estimated 1,000,000
shares being offered to Eligible Member Subscribers in the Subscription
Offering. Those directors and officers receiving restricted stock also will be
given cash bonuses to compensate them for a portion of the tax liability
14
<PAGE>
associated with the receipt of restricted stock. Certain additional benefits
will be provided to employees of Asheville Savings following the Acquisition,
including participation in the Asheville Savings ESOP, which will hold
approximately 10% of the shares (currently estimated to be 100,000) of BB&T
Financial Common Stock actually offered in the Subscription Offering and a one-
time cash bonus equal to one month's salary. For a more detailed description of
the benefits to be offered to the Asheville Savings directors, officers and
employees, see "BENEFITS TO BE OFFERED BY BB&T FINANCIAL TO DIRECTORS AND
OFFICERS OF ASHEVILLE SAVINGS--Officer Benefits" and "ADDITIONAL BENEFITS TO BE
OFFERED BY BB&T FINANCIAL--Benefits to All Employees" in Annex I.
The directors and executive officers of Asheville Savings (and their
affiliates) anticipate subscribing for a total of $430,000 of BB&T Financial
Common Stock in the Subscription Offering. The subscriptions of the directors
and executive officers of Asheville Savings are subject to the same terms and
limitations as the subscriptions of all other Eligible Members Subscribers,
except that any shares of BB&T Financial Common Stock purchased in the
Offerings by directors and executive officers shall be subject to the
restriction that such shares shall not be sold without the prior written
permission of the Administrator for a period of one year following the Closing
Date, except in the event of the death of the director or executive officer.
See "ANTICIPATED SUBSCRIPTIONS FOR SHARES OF BB&T FINANCIAL COMMON STOCK BY
ASHEVILLE SAVINGS' DIRECTORS AND EXECUTIVE OFFICERS IN THE OFFERINGS."
BENEFITS OFFERED TO CERTAIN DEPOSITORS OF ASHEVILLE SAVINGS AND THE ASHEVILLE
SAVINGS COMMUNITY IN THE CONVERSION MERGER
BB&T Financial will pay to each Eligible Member Subscriber a one-time bonus
equal to 2.5% of such Eligible Member Subscriber's balances in any deposit
accounts (including certificates of deposit, money market deposit accounts and
individual retirement accounts) outstanding with Asheville Savings on the
Eligibility Record Date (February 28, 1993). The total bonus paid to Eligible
Member Subscribers will be approximately $6.9 million based on the amount on
deposit at Asheville Savings at September 30, 1993. This one-time bonus will be
paid to Eligible Member Subscribers within 30 days of the consummation of the
Conversion and the Acquisition. This cash bonus may not be applied toward the
purchase of BB&T Financial Common Stock in the Offerings.
BB&T Financial also anticipates establishing and immediately funding a
charitable trust in an amount equal to $3.0 million to be administered by
Community Foundation of Western North Carolina. The trust would make charitable
contributions out of the principal and accrued interest in the trust, with the
beneficiaries of the trust to be designated initially by the current members of
the Asheville Savings Board of Directors and later by members of the BB&T
advisory board serving the Asheville area. See "ADDITIONAL BENEFITS TO BE
OFFERED BY BB&T FINANCIAL--Community Benefits" in Annex I.
THE SHARES OF BB&T FINANCIAL COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS AND
ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
15
<PAGE>
BB&T FINANCIAL SUMMARY FINANCIAL INFORMATION
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth summary historic financial data of BB&T
Financial at or for the nine-month periods ended September 30, 1993 and 1992
and at or for the fiscal years ended December 31, 1992, 1991 and 1990. This
information is derived from the historical consolidated financial statements of
BB&T Financial. The information set forth below should be read in conjunction
with the historical consolidated financial statements and the notes thereto of
BB&T Financial, which are incorporated by reference herein. See "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE."
The data at or for the nine-month periods ended September 30, 1993 and 1992
are unaudited, but have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and reflect all
adjustments, consisting of only normal recurring adjustments, which in the
opinion of BB&T Financial's management, are necessary for a fair presentation
of the results for such interim periods. All performance ratios for such
interim periods have been annualized. The results of operations and the ratios
for the nine-month period ended September 30, 1993 are not necessarily
indicative of the results to be expected for the full fiscal year ending
December 31, 1993 or for any other interim period.
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS AT OR FOR THE FISCAL YEARS
ENDED SEPTEMBER 30, ENDED DECEMBER 31,
---------------------- ----------------------------------
1993 1992 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
EARNINGS AND DIVIDENDS
Net income.............. $69,815 $ 59,087 $ 76,076 $ 60,172 $ 53,615
Per share data:
Primary net income.... $ 2.31 $ 2.14 $ 2.89 $ 2.57 $ 2.49
Fully diluted net
income............... 2.26 2.05 2.75 2.44 2.37
Cash dividends
declared............. .75 .66 .91 .85 .81
Average primary shares
outstanding (in
thousands)............. 30,249 27,574 26,313 23,427 21,493
BALANCE SHEET ITEMS
Assets................ $8,089,293 $7,037,159 $6,691,484 $6,229,014 $5,158,726
Securities(1)......... 1,999,655 1,880,399 1,725,014 1,585,935 1,257,751
Loans................. 5,558,878 4,734,747 4,524,665 4,233,429 3,423,810
Deposits.............. 6,084,242 5,620,620 5,346,320 5,203,499 4,406,442
Shareholders' equity.. 698,370 581,010 560,908 486,502 373,506
Book value per share,
end of period........ 22.62 20.96 21.32 19.19 17.51
RATIOS
Performance Ratios(3):
Return on average
assets............... 1.24% 1.18% 1.18% 1.06% 1.05%
Return on average
equity............... 14.29 14.47 14.50 14.11 15.01
Net interest margin,
taxable equivalent... 4.63 4.64 4.69 4.48 4.40
Capital Ratios:
Average equity to
average assets....... 8.71% 8.17% 8.15% 7.52% 6.97%
Equity to assets
(period-end)......... 8.63 8.26 8.38 7.81 7.24
Risk-based capital
ratios(2):
Tier 1 capital...... 12.80 12.36 12.35 11.13 9.72
Total capital....... 14.80 15.42 15.24 14.33 13.04
Leverage ratio(2)..... 8.64 8.56 8.24 7.76 7.06
Asset Quality Ratios:
Allowance for loan
losses to loans
outstanding.......... 1.51% 1.53% 1.56% 1.46% 1.25%
Nonperforming assets
to total assets...... .50 .89 .70 1.29 .93
Net charge-offs to
average loans
outstanding(3)....... .17 .44 .48 .66 .40
Allowance for loan
losses times
nonperforming loans.. 3.24x 1.85x 2.61x 1.08x 1.12x
</TABLE>
- --------
(1) Includes investment securities and securities available for sale.
(2) Calculated in accordance with applicable regulations of the Board of
Governors of the Federal Reserve System ("Federal Reserve"). See
"SUPERVISION AND REGULATION OF BB&T FINANCIAL--Capital Adequacy Guidelines
for Bank Holding Companies."
(3) Annualized for interim periods.
16
<PAGE>
RECENT FINANCIAL DATA OF BB&T FINANCIAL
For the three months ended December 31, 1993, net income for BB&T Financial
was $25.4 million or $.78 per share (on a fully-diluted basis), compared to
$14.6 million or $.48 per share (on a fully-diluted basis) for the same period
in 1992. For the year ended December 31, 1993, net income for BB&T Financial
increased to $98.2 million, or $3.05 per share (on a fully-diluted basis) from
$76.5 million or $2.54 per share (on a fully-diluted basis) for the same period
in 1992. As of December 31, 1993 and 1992, BB&T Financial had total assets of
$9.17 billion and $7.28 billion, respectively. Total loans were $6.31 billion
at December 31, 1993, as compared to $4.95 billion at December 31, 1992.
Deposits at December 31, 1993 were $8.60 billion as compared to $6.82 billion a
year earlier.
The following tables set forth certain unaudited financial data for BB&T
Financial at and for three months and years ended December 31, 1993 and 1992.
In the opinion of the management of BB&T Financial, all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of the
financial position and results of operations for such unaudited periods have
been included.
17
<PAGE>
BB&T FINANCIAL CORPORATION
RECENT FINANCIAL HIGHLIGHTS (1)
($ IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE
THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- -----------------------
1993 1992 1993 1992
---------------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income, taxable
equivalent............. $ 150,411 137,119 573,134 560,220
Interest expense........ 60,286 57,841 230,408 254,472
---------------- --------------- ----------- -----------
Net interest income,
taxable equivalent..... 90,125 79,278 342,726 305,748
Taxable equivalent ad-
justment............... 3,606 3,954 14,183 16,329
---------------- --------------- ----------- -----------
Net interest income..... 86,519 75,324 328,543 289,419
Provision for loan loss-
es..................... 3,893 6,760 17,500 30,447
Noninterest income...... 31,105 20,767 111,709 89,585
Noninterest expense..... 75,111 62,997 276,678 232,656
Income tax expense...... 13,171 11,736 47,838 39,419
---------------- --------------- ----------- -----------
Net income............ $ 25,449 14,598 98,236 76,482
================ =============== =========== ===========
PER SHARE DATA
Net income:
Primary............... $ .78 .50 3.10 2.65
Fully diluted......... .78 .48 3.05 2.54
Cash dividends paid..... .27 .25 1.02 .91
Book value.............. 22.89 21.05 22.89 21.05
Closing market price.... 33.25 31.88 33.25 31.88
SELECTED PERIOD END BAL-
ANCES
Assets.................. $9,173,117 7,280,282
Investment securi-
ties(2)................ 2,200,813 1,842,097
Loans................... 6,306,443 4,946,608
Earning assets.......... 8,596,469 6,817,010
Deposits................ 6,995,121 5,841,837
Interest-bearing liabil-
ities.................. 7,543,405 5,880,016
Shareholders' equity.... 743,512 606,381
RATIOS
Performance Ratios:
Return on average as-
sets................. 1.16% .79 1.23 1.09
Return on average eq-
uity................. 13.81 9.63 14.27 13.34
Net interest margin,
taxable equivalent... 4.36 4.56 4.55 4.60
Capital Ratios:
Risk-based capital
ratios:
Tier 1 capital....... 11.85% 12.48
Total capital........ 13.61 15.27
Equity to assets...... 8.11 8.33
Asset Quality Ratios:
Allowance for loan
losses to loans out-
standing............. 1.40% 1.48 1.40 1.48
Nonperforming assets
to total assets...... .47 .67 .47 .67
Net charge-offs to av-
erage loans outstand-
ing.................. .42 .53 .23 .45
Allowance for loan
losses times
nonperforming loans.. 2.88x 2.63 2.88 2.63
</TABLE>
- --------
(1) BB&T Financial completed the acquisitions of Peoples Federal Savings Bank
of Thomasville, Thomasville, NC; First Fincorp, Inc., Kinston, NC; Carolina
Savings Bank, Wilmington, NC; Edenton Savings and Loan Association,
Edenton, NC; Mutual Savings Bank of Rockingham County, S.S.B., Reidsville,
NC; Old Stone Bank of North Carolina, High Point, NC; and Citizens Savings
Bank, S.S.B., Mooresville, NC on June 26, 1992, February 24, 1993, May 18,
1993, May 18, 1993, October 29, 1993, November 24, 1993 and December 23,
1993, respectively, in transactions accounted for as purchases. BB&T
acquired Security Financial Holding Company, Durham, NC on February 25,
1993 and Citizens Savings Bank, S.S.B., Inc., Newton, NC on October 25,
1993 in transactions accounted for as poolings-of-interests.
(2) Includes securities available for sale.
18
<PAGE>
CERTAIN CONSIDERATIONS RELATING TO THE OFFERINGS
Eligible Subscribers should consider the following factors before electing to
purchase in the Subscription Offering or the Community Offering:
Four-Month Transfer Restriction. As described more fully below (see "THE
OFFERINGS--The Subscription Offering--Four-Month Transfer Restriction"), shares
purchased in the Subscription Offering at the 85% Price generally may not be
transferred until four months after the date of this Prospectus/Proxy
Statement. (Shares purchased in the Subscription Offering at the 95% Price or
the BB&T Market Price and shares purchased in the Community Offering at the 95%
Price will not be subject to the four-month transfer restriction.) Purchasers
of shares at the 85% Price thus will not be able to sell such shares for this
period and thus will not be able to realize any profit that may exist by virtue
of the discount reflected in the 85% Price during this period. The four-month
delay imposed on any transfer potentially decreases the chance that the market
price of the BB&T Financial Common Stock will exceed the 85% Price on the date
the Subscriber finally is able to sell the shares. Subscribers seeking
liquidity should consider the effect of the four-month transfer restriction
before subscribing for shares in the Subscription Offering at the 85% Price.
Subscribers also should consider what, if any, effect the restriction might
have on the ability to borrow against shares subject to the restriction.
Receipt of Taxable Gain by Subscribers in the Subscription Offering. Eligible
Member Subscribers who elect to purchase shares in the Subscription Offering at
the 85% Price and/or the 95% Price will recognize gain attributable to the
receipt of Subscription Rights in the year in which the shares are purchased.
It is unclear as to how the Subscription Rights should be valued or how to
determine the number of Subscription Rights issued to each Eligible Member
Subscriber for this purpose.
Under one approach, all Eligible Member Subscribers will recognize gain
attributable to the receipt of Subscription Rights in some amount regardless of
whether they exercise any or all of their Subscription Rights. In this case, a
recipient of Subscription Rights will be able to claim a loss upon the
expiration of any unexercised Subscription Rights. Under another approach, only
Eligible Member Subscribers who actually exercise Subscription Rights will
recognize gain attributable to the receipt of Subscription Rights, and the
value of Subscription Rights received will be determined based on the actual
number of shares acquired pursuant to Subscription Rights.
BB&T Financial is uncertain as to whether it will be required to file
information returns with the IRS related to the value of Subscription Rights
received by Eligible Member Subscribers and, if required, how the value will be
determined for purposes of the information returns (particularly in light of
the four-month restriction imposed on shares purchased at the 85% Price).
Accordingly, Eligible Member Subscribers are urged to consult their own tax
advisors as to the specific tax consequences to them of purchasing BB&T
Financial Common Stock in either the Subscription Offering or the Community
Offering. See "THE OFFERINGS--Certain Federal Income Tax Consequences" for
further discussion.
The Purchase Price. Although Subscribers may purchase BB&T Financial Common
Stock at a discount to the BB&T Market Price, because of potential fluctuations
in the market price of BB&T Financial Common Stock, there can be no assurance
that the 85% Price or the 95% Price actually will be less than, or equal to,
the market price for BB&T Financial Common Stock on the date the Offerings are
consummated and/or on the date Subscribers receive certificates for their
shares or are entitled to sell their shares. Subscribers thus should consider
carefully the volatility of the market for equity securities in determining
whether to subscribe for shares of BB&T Financial Common Stock in the
Subscription Offering and/or the Community Offering. The market price for BB&T
Financial Common Stock may be affected by, among other things, BB&T Financial's
earnings and capital, changes in interest rates, general economic conditions
and other factors affecting the banking industry and the stock market in
general.
Subscribers purchasing in the Subscription Offering at the 85% Price in
particular should consider the potential for price fluctuation in the context
of the four-month transfer restriction. See "THE OFFERINGS--The Subscription
Offering--Four-Month Transfer Restriction." Moreover, while certificates for
shares of BB&T Financial Common Stock will be mailed as soon as practicable
after the Closing Date, until such stock
19
<PAGE>
certificates are delivered to Subscribers, Subscribers in the Subscription
Offering who purchase shares at the 95% Price and the BB&T Market Price and
Subscribers in the Community Offering (i.e., those who purchase shares without
the transfer restriction) may not be able to sell the shares of BB&T Financial
Common Stock for which they have subscribed. See "THE OFFERINGS--General--
Delivery of Stock Certificates."
In addition, because the 85% Price and the 95% Price initially may be less
than the market price for BB&T Financial Common Stock, some Subscribers (as
well as purchasers of BB&T Financial Common Stock in other similar acquisitions
at a similar discount) may be inclined immediately to sell their shares (in the
case of purchases at the 95% Price) or after the expiration of the four-month
transfer restriction (in the case of purchases in the Subscription Offering at
the 85% Price) or effect other transactions in an attempt to realize any profit
between the 85% Price and/or the 95% Price and the then-market price for the
BB&T Financial Common Stock. Depending upon their timing and volume, such
transactions by themselves conceivably could cause the market price for BB&T
Financial Common Stock to decline.
For these and other reasons, Subscribers may be unable to sell the shares for
which they have subscribed in the Subscription Offering and/or the Community
Offering at a price equal to or greater than the 85% Price and/or the 95%
Price.
Moreover, because the market price of the BB&T Financial Common Stock could
increase between now and the date the 85% Price, the 95% Price and/or the BB&T
Market Price are determined, Eligible Subscribers might be able to purchase
BB&T Financial Common Stock in the open market prior to that date at a price
lower than the 85% Price, the 95% Price and/or the BB&T Market Price. Any such
open market purchase would permit the purchaser to obtain the shares
immediately, which would not be the case if the Eligible Subscriber purchased
the shares in the Offerings, with the attendant delay in receipt of the shares
from the date the Stock Order Form is submitted.
Potential Effects of Pending Legislation and Regulatory Action. On November
22, 1993, the Chairman and ranking minority member of the House Banking
Committee introduced a bill in the U.S. House of Representatives, H.R. 3615,
which if enacted would permit state savings banks like Home Savings to convert
from mutual to stock form on or after November 22, 1993 only in accordance with
regulations adopted by the FDIC which do not now exist. If H.R. 3615 is enacted
into law in its present form, the FDIC would be required to adopt regulations
governing conversions of state savings banks which are substantially similar to
the current regulations and policies of the OTS governing conversions of
federal savings banks and savings and loan associations.
The apparent intent of H.R. 3615 is to create a uniform standard for
conversions, applied nationwide under rules imposed by the federal government.
It is possible that if H.R. 3615 is enacted into law in its current form, the
FDIC would require lower levels of compensation to the directors, officers and
employees, as well as lower levels of benefits to depositors and communities,
because the OTS generally has approved transactions with lower levels of such
benefits than are proposed in this transaction. Any precise determination,
however, is difficult to make because the OTS has historically approved
benefits on a case by case basis.
On January 27, 1994, the Chairman and ranking minority member of the Senate
Banking Committee introduced a bill in the U.S. Senate, S. 1801, which, if
enacted, would allow state savings banks like Home Savings to convert from
mutual to stock form after January 26, 1994 only in accordance with regulations
adopted by the OTS which do not now exist that conform to certain requirements
contained in the bill described further below. If S. 1801 is enacted into law
in its present form, the OTS would be required to adopt regulations governing
conversions of state savings banks which may be substantially more restrictive
with respect to the compensation that may be offered to directors, officers and
employees in a conversion than the current OTS regulations and policies
governing conversions of federal savings banks and savings and loan
associations.
As with H.R. 3615, the apparent intent of the proposed legislation is to
create a uniform standard for conversions, applied nationwide under rules
imposed by the federal government. However, S. 1801 is much more specific about
the compensation that directors, officers and employees would be permitted to
receive in a conversion. Among other things, S. 1801 would permit officers,
directors and employees to receive
20
<PAGE>
conversion stock only in the same amounts and under the same terms and
conditions as conversion stock is made available to members. In addition, S.
1801 would prohibit any increases in direct or indirect compensation to
officers, directors and employees, in excess of their compensation levels prior
to the date of the conversion, during the one year period following the date of
the conversion. It is possible that if S. 1801 is enacted into law in its
current form, the OTS would require that the stock-based compensation and
proposed salary increases to the directors, officers and employees be
eliminated and some of the benefits to depositors and the communities be
reduced.
As drafted, H.R. 3615 or S. 1801, whichever might be applicable, would apply
to the Conversion Merger of Home Savings, even though the Plan of Conversion
was adopted by the Home Savings Board of Directors well before H.R. 3615 and S.
1801 were introduced.
If H.R. 3615 were enacted in its current form, the FDIC could take the
position that the Conversion Merger was not consummated in accordance with FDIC
standards under the new law. Alternatively, if S. 1801 were enacted in its
current form, the OTS could take the position that the Conversion Merger was
not consummated in accordance with OTS standards under the new law. BB&T
Financial and Home Savings, along with other banks and savings institutions,
are opposing the bills and are seeking to, at a minimum, have H.R. 3615 and S.
1801 modified to "grandfather" (i.e., exempt from compliance with the statute)
certain pending conversion merger transactions, including the Conversion Merger
of Home Savings. If this effort is not successful, if H.R. 3615 or S. 1801 is
voted into law in its current from and its current retroactivity provisions,
and if it is determined that the Conversion Merger was not in compliance with
the FDIC or OTS regulations, whichever would be applicable, it is possible that
the FDIC or the OTS, whichever would have authority, would pursue remedies
against BB&T Financial and Home Savings, which conceivably could include
efforts to unwind the transaction. BB&T Financial and Home Savings would resist
any such actions vigorously.
On January 24, 1994, the FDIC issued a proposed policy statement setting
forth guidance with respect to the conversions from mutual to stock ownership
of state chartered savings banks and the FDIC's supervisory concerns on the
matter. Among other things, the proposed policy statement generally calls for
the correct pricing of shares, an equitable apportionment of stock subscription
rights and the adequate and timely disclosure of all relevant and pertinent
information needed to make an informed investment decision in such conversions.
It also provides for regional FDIC review of and comment on all relevant terms
and conditions, financial information and documents inherent in a stock
conversion. The proposed FDIC review would include consideration of whether the
directors and management of the converting institutions have fairly and
effectively discharged their fiduciary duties of due care and loyalty to the
institution. Such review and comment may result in modifications in the terms
and conditions of the proposed conversion or stronger enforcement measures, if
appropriate. By press release issued the same day as the proposed policy
statement, the Comptroller of the Currency, who is a member of the Board of
Directors of the FDIC, harshly criticized the proposed policy statement as not
being sufficiently responsive to concerns about the level of compensation being
provided to officers and directors in conversions from mutual to stock form. By
press release dated January 28, 1994, which, among other things, summarizes the
contents of the proposed policy statement, the Chairman of the FDIC Board
announced that the FDIC regional offices are being instructed to review each
pending conversion transaction involving state-chartered banks supervised by
the FDIC and, where appropriate, to ask a bank for modifications in these
plans.
On January 31, 1994, the OTS suspended the acceptance of applications
involving merger conversions of healthy mutual savings associations under its
supervision pending a review of its regulations governing such conversions. The
stated purpose of the review is to consider ways to increase the opportunity
for depositors to benefit in a merger conversion. The OTS moratorium does not
apply to the Conversion Merger. However, it is possible that the FDIC may take
further action that may affect the Conversion Merger. BB&T Financial and Home
Savings cannot predict what further actions the FDIC may take that may have an
affect on the Conversion Merger.
21
<PAGE>
It is not possible at this time to predict the effect of legislation, if any,
resulting from H.R. 3615 or S. 1801, the effect of the FDIC proposed policy
statement, if adopted in final form prior to the completion of the Conversion
Merger or the effect of any FDIC review of the terms of the Conversion Merger.
If, for example, the FDIC or the OTS sought to unwind the Conversion Merger,
one possible consequence would be the return of Home Savings to its mutual
form. In that event, BB&T Financial would no longer own the stock of Home
Savings and the issuance of its stock to subscribers could be challenged. The
employment contracts, the stock awards and stock option grants to Home Savings'
directors and officers, charitable contributions and other components of the
Conversion Merger could be reversed, although it is impossible at this stage to
predict what action the applicable federal regulator would take. On the other
hand, BB&T Financial may take the position that the sales of BB&T Financial
Common Stock to Subscribers would not be rescinded and that, instead of using
the proceeds of the Offerings for the purchase of Home Savings, BB&T Financial
would use the proceeds for its general corporate purposes. Accordingly,
regardless of whether the Conversion Merger is undone, Subscribers would (if
BB&T Financial were successful in taking that position, which cannot be
assured) own the BB&T Financial Common Stock that they purchased at the 85%
Price, the 95% Price or the BB&T Market Price in the Subscription Offering and
Community Offering. For further information on how the proceeds from the
Offerings would be used, see "USE OF PROCEEDS."
Potential Effects of Extensions of the Expiration of the Offerings. The
Subscription Offering and the Community Offering are currently scheduled to
expire on March 15, 1994. It is possible, however, that, up until 5:00 p.m. on
March 15, 1994, the Subscription Offering could be extended to a date no later
than , 1994 and that the Community Offering could be extended to a date no
later than , 1994. The Offerings could be extended for a variety of
reasons, including adverse market conditions, the results of the Offerings,
Congressional or regulatory action in connection with H.R. 3615 (see "--
Potential Effects of Pending Legislation") or other developments affecting the
Conversion Merger. Subscribers whose subscription decision might be affected by
the per share purchase price should consider the possibility that the price of
BB&T Financial Common Stock will fluctuate between March 15, 1994 and the date
of any extension of the Offerings.
DESCRIPTION OF BB&T FINANCIAL
BB&T Financial was chartered under North Carolina law in 1973 for the purpose
of holding the stock of BB&T. Primarily through BB&T, BB&T Financial
concentrates on attracting deposits and on lending to middle-market businesses
in the Carolinas. In the 1970s and 1980s, BB&T Financial expanded into new
markets throughout the state through mergers and acquisitions of other North
Carolina commercial banks. In 1987, BB&T Financial acquired a bank holding
company and its subsidiary commercial bank in South Carolina. In 1989, BB&T
Financial began to focus on further expanding its markets in North Carolina
through acquisitions of healthy thrift institutions, as discussed below under
"--Savings Institution Acquisitions and Operations."
BB&T Financial continues to evaluate the possibility of acquiring additional
mutual and stock institutions, commercial banks, insurance agencies and other
financial services companies and it currently anticipates, after the date of
this Prospectus/Proxy Statement, entering into acquisition agreements with one
or more of such institutions. The institutions, banks and companies being
evaluated are located in North Carolina, South Carolina and Virginia.
BB&T FINANCIAL CORPORATION
BB&T Financial is a bank holding company, the principal assets of which are
all of the outstanding shares of common stock of BB&T and BB&T Financial
Corporation of South Carolina (which in turn owns all of the outstanding shares
of capital stock of BB&T-SC). BB&T Financial also includes among its assets the
shares of Citizens of Newton, Mutual Savings, Citizens of Mooresville and Old
Stone and interest-bearing bank balances with, and loans to, BB&T. BB&T
Financial's principal sources of revenue are interest, dividends and management
fees received from its subsidiaries. There are limitations on the subsidiaries'
ability to pay dividends to BB&T Financial. See "SUPERVISION AND REGULATION OF
BB&T FINANCIAL--BB&T and BB&T-SC" and "MARKET PRICE AND DIVIDENDS." At
September 30, 1993, BB&T Financial had consolidated assets of approximately
$8.09 billion and consolidated shareholders' equity of approximately $698.4
million.
22
<PAGE>
BB&T FINANCIAL'S COMMERCIAL BANK ACQUISITIONS AND OPERATIONS
Branch Banking and Trust Company. BB&T is a North Carolina chartered
commercial bank and is the fourth largest bank in the state. As of September
30, 1993, BB&T operated 223 offices in 118 cities and towns in North Carolina
and had approximately 3,832 full-time and part-time employees. BB&T provides a
wide range of commercial banking, consumer banking, trust and investment
services primarily through its branch network. BB&T also operates an insurance
department and a travel department and is a broker dealer in government and
municipal securities. As of September 30, 1993, BB&T had assets of
approximately $7.62 billion and deposit liabilities of $5.81 billion. As of
that date, its tangible capital was $649.8 million, or 8.51% of assets, and its
total risk-based capital was $735.8 million, or 14.91% of risk-weighted assets.
BB&T's net income was $64.2 million, $69.7 million and $51.5 million for the
nine month period ended September 30, 1993 and the years ended December 31,
1992 and 1991, respectively.
Branch Banking and Trust Company of South Carolina. BB&T-SC, a South Carolina
chartered commercial bank, is among the ten largest banks in South Carolina. As
of September 30, 1993, BB&T-SC operated 17 offices in five counties in the
Piedmont region of South Carolina and had approximately 185 employees. BB&T-SC
provides a full range of commercial banking, consumer banking, trust and
investment services through its branch network. As of September 30, 1993, BB&T-
SC had assets of $501.0 million and deposit liabilities of $449.2 million. As
of that date, its tangible capital was $42.3 million, or 8.44% of assets, and
its total risk-based capital was $47.2 million, or 11.95% of risk-weighted
assets. BB&T-SC's net income was $5.7 million, $5.7 million and $4.6 million
for the nine month period ended September 30, 1993 and the years ended December
31, 1992 and 1991, respectively.
On December 7, 1993, BB&T Financial agreed to acquire all of the outstanding
shares of LSB, a South Carolina chartered bank holding company with 23 offices
in South Carolina, in exchange for approximately 3,834,625 shares of BB&T
Financial Common Stock (subject to adjustment). As of September 30, 1993, LSB
had total assets of $646 million, deposits of $545 million and shareholders
equity of $45 million. The transaction is intended to qualify as a tax-free
exchange and to be accounted for as a pooling of interests. LSB also granted
BB&T Financial an option, exercisable under certain circumstances, to acquire
771,894 shares of LSB common stock (subject to adjustment) at a price of $30
per share.
SAVINGS INSTITUTION ACQUISITIONS AND OPERATIONS
BB&T Financial believes that many savings institutions (which include savings
and loan associations and savings banks) will be acquired by, merged or
otherwise consolidated into, bank holding companies and commercial banks over
the next several years. There are a number of healthy, well-managed savings
institutions located in BB&T Financial's market area. Although no assurance can
be provided that its goals will be realized, BB&T Financial has determined that
the acquisition of what it believes are financially sound, well-managed savings
institutions within North Carolina, South Carolina and possibly Virginia could
improve BB&T Financial's market share, enhance BB&T Financial's ability to
compete with other financial institutions by expanding and improving the
efficiency of BB&T Financial's branch network, and, it is hoped, ultimately
increase earnings and book value per share. The primary focus of its
acquisition strategy has been and is expected to continue to be the acquisition
of such financially sound savings institutions, although BB&T Financial is
considering the acquisition of commercial banks and may, under certain
circumstances, acquire an undercapitalized savings institution or certain of
its assets or liabilities, perhaps with government assistance.
BB&T Financial primarily has focused its business and strategy on meeting the
commercial banking needs of the retail and small and middle market commercial
customer through an extensive branch network. The acquisitions by BB&T
Financial of savings institutions, such as Asheville Savings, are designed to
complement BB&T Financial's branch expansion and branching strategy. BB&T
Financial generally intends to merge or otherwise consolidate these entities
with and into either BB&T or BB&T-SC, as appropriate. Following any such
mergers, BB&T Financial expects to seek to reorient the focus of the business
of acquired savings institutions to include a higher percentage of consumer and
business loans and to offer services that
23
<PAGE>
produce noninterest income, such as insurance, trust and safe deposit services,
while maintaining such institutions' mortgage origination and servicing
capacities.
Since it began acquiring savings institutions in August 1990, BB&T Financial
has acquired fourteen savings institutions in North Carolina with aggregate
assets of $3.1 billion, and several branches of a fifteenth savings
institution. Seven of the institutions acquired were mutual institutions and
were acquired in "conversion merger" transactions, and the other seven were
stock institutions. BB&T Financial currently has pending the acquisition of two
additional savings institutions, including Asheville Savings, with total assets
of $480 million at September 30, 1993. A third pending acquisition of a mutual
savings institution was terminated by the savings institution on January 18,
1994. See "PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS" and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
BB&T FINANCIAL." BB&T Financial continues to pay assessments to the SAIF on the
portion of deposits attributable to its savings institution acquisitions, which
assessments may in the future be higher than the deposit insurance assessments
on deposits insured by the Bank Insurance Fund ("BIF") which insures deposits
of commercial banks. See "SUPERVISION AND REGULATION OF BB&T FINANCIAL--
Acquisitions of Savings Institutions."
Savings institution acquisitions have accounted for a significant percentage
of BB&T Financial's growth during the past several years. Although BB&T
Financial believes that there continue to be a number of thrift institutions
that meet its acquisition criteria in the Carolinas and possibly Virginia, no
assurance can be given that BB&T Financial can continue to make savings
institution acquisitions at the same rate or on the same terms as previously.
For example, the regulatory standards for approval of conversion mergers may
change. See "CERTAIN CONSIDERATIONS RELATING TO THE OFFERINGS--Potential
Effects of Pending Legislation" for a discussion of pending legislation which
could affect conversion mergers of state chartered mutual savings institutions.
In addition, other bank holding companies in the Carolinas have begun to
acquire mutual savings institutions, which has increased the competition for
attractive acquisition candidates and resulted in conversion mergers on less
favorable terms to the acquirors.
ACQUISITION OF INSURANCE AGENCIES AND OTHER INSTITUTIONS
In the last three years, BB&T Financial has acquired, in exchange for 497,440
shares of BB&T Financial Common Stock, the operations of eight insurance
agencies with operations in several cities throughout North Carolina. The
agencies write commercial and personal insurance policies as agents on behalf
of various insurance underwriters. The insurance operations have been merged
into BB&T and are conducted through a department of BB&T in the communities
where the acquired agencies operated. BB&T Financial has pending the
acquisition of two additional insurance agencies and anticipates acquiring
additional agencies after the date of this Prospectus/Proxy Statement.
MANAGEMENT OF BB&T FINANCIAL
The following tables set forth the current directors and executive officers
of BB&T Financial and certain information concerning their backgrounds.
<TABLE>
<CAPTION>
DIRECTOR OF
AGE AS OF PRINCIPAL OCCUPATION(S) BB&T FINANCIAL
NAME 12/31/93 DURING LAST FIVE YEARS SINCE
---- --------- ----------------------- --------------
<S> <C> <C> <C>
DIRECTORS
Joseph B. Alala, Jr. ... 60 Senior Partner, Alala, Mullen, Holland 1983
and Cooper, P.A. (Attorneys),
Gastonia, N.C.
John A. Allison IV...... 45 Chairman of the Board and Chief 1986
Executive Officer, BB&T Financial
Corporation and Branch Banking and
Trust Company, Wilson, N.C.
W. Watson Barnes........ 57 President, Wilson Petroleum Company, 1981
Inc. (Distributor of petroleum
products), Wilson, N.C.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR OF
AGE AS OF PRINCIPAL OCCUPATION(S) BB&T FINANCIAL
NAME 12/31/93 DURING LAST FIVE YEARS SINCE
---- --------- ----------------------- --------------
<S> <C> <C> <C>
Paul B. Barringer....... 63 President and Chief Executive Officer, 1975
Coastal Lumber Company (Dealer in
lumber products), Weldon, N.C.
Robert L. Brady......... 63 Senior Vice President, Branch Banking 1991
and Trust Company, Greensboro, N.C.
Prior to April 1992, President, Gate
City Federal Savings & Loan
Association, Greensboro, N.C.
W.G. Clark III.......... 60 President, Clark Industries, Inc. 1981
(Farming), Tarboro, N.C.
Jesse W. Corbett, Jr. .. 57 Personal Investments, Morehead City, 1981
N.C. Prior to June 1988, President,
Corbett Motor Company, Inc.
(Automobile dealership), Wilson, N.C.
W.R. Cuthbertson, Jr. .. 63 Senior Vice President, Branch Banking 1983
and Trust Company, Charlotte, N.C.
Fred H. Deaton, Jr...... 62 Personal Investments, Statesville, 1974
N.C.
Joe L. Dudley, Sr. ..... 56 President and Chief Executive Officer, 1992
Dudley Products, Inc. (Hair care
products), Greensboro, N.C.
Tom D. Efird............ 54 President, Standard Distributors, Inc. 1982
(Beverage wholesaler), Gastonia, N.C.
O. William Fenn, Jr. ... 67 Personal Investments, High Point, N.C. 1991
Prior to April 1992, Vice Chairman,
LADD Furniture Company (Furniture
manufacturer), High Point, N.C.
James E. Heins.......... 63 Telecommunications Consultant, 1985
Pinehurst, N.C. Prior to August,
1991, Vice President of Government
Relations, ALLTEL Corporation
(Telecommunications), Sanford, N.C.
Raymond A. Jones, Jr. .. 69 Personal Investments, Charlotte, N.C. 1975
Kelly S. King........... 45 Senior Executive Vice President, BB&T 1991
Financial Corporation, and President,
Branch Banking and Trust Company,
Wilson, N.C.
David R. LaFar III...... 64 Chairman, LaFar Industries, Inc. 1990
(Textile manufacturer), Gastonia,
N.C.
J. Ernest Lathem, M.D... 60 Urologist, The Willow Practice, P.A., 1987
Greenville, S.C.
James H. Maynard........ 54 Chairman, Investors Management 1985
Corporation (Restaurants), Raleigh,
N.C.
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR OF
AGE AS OF PRINCIPAL OCCUPATION(S) BB&T FINANCIAL
NAME 12/31/93 DURING LAST FIVE YEARS SINCE
---- --------- ----------------------- ---------------
<S> <C> <C> <C>
Dorothy G. Owen......... 59 Chairman of Board of Directors, Owen 1992
Steel Co., Inc. (Steel fabricator),
Columbia, S.C.
W.H. Parks.............. 55 President, Branch Banking and Trust 1987
Company of South Carolina,
Greenville, S.C.
A. Winniett Peters...... 67 Chairman of the Board, Standard 1977
Commercial Tobacco Company (Tobacco
processors and exporters), Wilson,
N.C.
Richard L. Player, Jr. . 59 President, Player, Inc. (Commercial 1990
and industrial general contractor),
Fayetteville, N.C.
S.B. Tanner III......... 66 Chairman of the Board, Tanner 1982
Companies, Inc. (Manufacturer of
ladies' apparel), Rutherfordton, N.C.
Larry J. Waggoner....... 58 Real Estate Development and 1985
Investments, Naples, Fla. Prior to
August 1991, President, Rental Towel
& Uniform Services, Inc. (Rental
services), Graham, N.C.
Henry G. Williamson, 46 President and Chief Operating Officer, 1986
Jr. ................... BB&T Financial Corporation and Chief
Operating Officer, Branch Banking and
Trust Company, Wilson, N.C.
William B. Young, M.D... 68 Retired Specialist in Internal 1974
Medicine, Wilson, N.C.
EXECUTIVE OFFICERS
<CAPTION>
EMPLOYEE OF
BB&T SINCE
-----------
<S> <C> <C> <C>
John A. Allison IV...... 45 Chairman of the Board and Chief 1971
Executive Officer, BB&T Financial
Corporation and Branch Banking and
Trust Company
Henry G. Williamson, 46 President and Chief Operating Officer, 1972
Jr. ................... BB&T Financial Corporation and Chief
Operating Officer, Branch Banking and
Trust Company
Kelly S. King........... 45 Senior Executive Vice President, BB&T 1972
Financial Corporation and President,
Branch Banking and Trust Company
W. Kendall Chalk........ 48 Senior Executive Vice President, BB&T 1975
Financial Corporation and Branch
Banking and Trust Company
Scott E. Reed........... 45 Senior Executive Vice President and 1972
Treasurer, BB&T Financial Corporation
and Senior Executive Vice President,
Branch Banking and Trust Company
</TABLE>
26
<PAGE>
THE OFFERINGS
GENERAL
The Offerings are being made pursuant to the terms of the Plan of Conversion
and the Reorganization Agreement. The following discussion does not purport to
be complete and is subject to and is qualified in its entirety by reference to
all of the provisions of the Plan of Conversion, which is attached hereto as
Annex II, and the Reorganization Agreement, which has been filed as an exhibit
to the Registration Statement. See "AVAILABLE INFORMATION."
Purchase Price. Shares are being offered in the Subscription Offering to
Eligible Member Subscribers at three different prices. Eligible Member
Subscribers may elect to purchase shares either at the 85% Price, which will
be a price equal to 85% of the BB&T Market Price, and/or at the 95% Price,
which will be a price equal to 95% of the BB&T Market Price. Shares are also
being offered in the Subscription Offering at the BB&T Market Price (without
any four-month transfer restriction) to (i) Voting Members who are not also
Eligible Member Subscribers and (ii) Eligible Member Subscribers who had a
single deposit account with a balance of less than $25,000 on deposit or only
a loan account, each at Asheville Savings as of the Eligibility Record Date,
if they subscribe for more than $150,000 of BB&T Financial Common Stock.
Shares offered but not sold in the Subscription Offering will be offered in
the Community Offering to Community Offering Residents at the 95% Price
(subject to maximum and minimum purchase limitations), see "--The Community
Offering--Maximum and Minimum Purchase Limitations."
SHARES PURCHASED IN THE SUBSCRIPTION OFFERING AT THE 85% PRICE WILL BE
SUBJECT TO THE RESTRICTION THAT SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED, BY
SALE, GIFT OR OTHERWISE, FOR A PERIOD OF FOUR MONTHS FOLLOWING THE DATE OF
THIS PROSPECTUS/PROXY STATEMENT, EXCEPT IN THE EVENT OF THE DEATH OF THE
SUBSCRIBER. Shares purchased in the Subscription Offering at the 95% Price or
the BB&T Market Price and in the Community Offering at the 95% Price will not
be subject to any transfer restriction.
Although the 85% Price and the 95% Price will be set at a discount to the
market price of the BB&T Financial Common Stock at the time the 85% Price and
the 95% Price are established, Subscribers may be unable to sell the shares
for which they subscribe at a price equal to or greater than the 85% Price or
the 95% Price. Moreover, because shares purchased in the Subscription Offering
at the 85% Price may not be transferred for a period of four months, the
market price of BB&T Financial Common Stock on the date that such shares may
be sold could be substantially different than the market price of such shares
on the dates on which they are subscribed for and received. See "CERTAIN
CONSIDERATIONS RELATING TO THE OFFERINGS--Four-Month Transfer Restriction" and
"--the Purchase Price."
Participation in the Offerings by Eligible Member Subscribers or Voting
Members Who Also Are Community Offering Residents. An Eligible Member
Subscriber or Voting Member who also is a Community Offering Resident is
eligible to participate in either the Subscription Offering, the Community
Offering or both. Eligible Member Subscribers who elect to subscribe for
shares in the Subscription Offering at the 85% Price will be entitled to a
lower purchase price than in the Community Offering, but, unlike the shares
purchased at the 95% Price in the Subscription Offering or in the Community
Offering, shares purchased in the Subscription Offering at the 85% Price are
subject to the four-month transfer restriction. See "--The Subscription
Offering--Four-Month Transfer Restriction." However, Voting Members who are
not Eligible Member Subscribers and who subscribe in the Subscription Offering
will pay the BB&T Market Price rather than the lower 95% Price they would be
entitled to pay in the Community Offering if they are Community Offering
Residents.
In the event of an oversubscription for the shares of BB&T Financial Common
Stock in the Subscription Offering and/or the Community Offering, Eligible
Member Subscribers and Voting Members who subscribe in the Subscription
Offering will be entitled to priority over Subscribers in the Community
Offering. Thus, in the event of an oversubscription, shares may not be
available to fill subscriptions of those Eligible Member Subscribers and
Voting Members subscribing in the Community Offering. BB&T Financial cannot
predict the extent to which Eligible Member Subscribers and Voting Members
will subscribe for shares in the Subscription Offering or the likelihood of an
oversubscription. See "THE OFFERINGS--The Subscription Offering--
Oversubscription Procedures."
27
<PAGE>
There also may be certain important differences in the tax consequences
between participating in the Subscription Offering and participating in the
Community Offering, including the fact that Eligible Member Subscribers and
Voting Members who are also Community Offering Residents should not recognize
taxable gain as a result of purchasing shares in the Community Offering,
whereas Eligible Member Subscribers and Voting Members who elect to purchase
shares in the Subscription Offering will recognize taxable gain attributable to
the receipt and exercise of Subscription Rights. However, under one theory even
those Eligible Member Subscribers who elect not to exercise their Subscription
Rights may be required to recognize taxable gain due to the receipt of these
Subscription Rights, although in most cases such Eligible Member Subscribers
would be entitled to recognize offsetting losses when the unexercised
Subscription Rights expire. See "CERTAIN CONSIDERATIONS RELATING TO THE
OFFERINGS--Receipt of Taxable Gain by Subscribers in the Subscription Offering"
and "--Certain Federal Income Tax Consequences." Those who are eligible to
participate in both the Subscription Offering and the Community Offering and
who wish to subscribe should consider these factors and the other information
concerning the Offerings contained herein before deciding whether to elect to
participate in the Subscription Offering, the Community Offering or both. For a
discussion of purchase limitations for such persons, see "--The Subscription
Offering--Maximum and Minimum Purchase Limitations" and "--The Community
Offering--Maximum and Minimum Purchase Limitations."
Delivery of Stock Certificates. Stock certificates representing shares of
BB&T Financial Common Stock purchased in the Offerings will be mailed by BB&T
Financial's transfer agent to the persons entitled thereto at the address noted
on the Stock Order Form as soon as practicable after the completion of the
Offerings. Any certificates returned as undeliverable will be held by BB&T
Financial until claimed by the persons legally entitled thereto or otherwise
disposed of in accordance with applicable law. Subscribers should note that
there may be delays from the date the Stock Order Form is submitted until
Subscribers receive their stock certificates. See "CERTAIN CONSIDERATIONS
RELATING TO THE OFFERINGS--The Purchase Price."
THE SUBSCRIPTION OFFERING
BB&T Financial and Asheville Savings have caused this Prospectus/Proxy
Statement and Annexes hereto, a Stock Order Form and additional information
concerning the Subscription Offering to be mailed or otherwise delivered to
each Eligible Member Subscriber and Voting Member of Asheville Savings.
Additional copies of any of these documents are available upon request from the
Conversion Information Center, P.O. Box 652, Asheville, North Carolina 28802
(telephone no. (704) - ). Any questions or requests for additional
information regarding the Conversion Merger or the Offerings may be directed to
the Conversion Information Center.
Eligible Member Subscribers and Voting Members may subscribe for shares of
BB&T Financial Common Stock in the Subscription Offering. Eligible Member
Subscribers are holders of Asheville Savings deposit accounts aggregating $50
or more or loan accounts, each on the Eligibility Record Date (which is
February 28, 1993). Voting Members consist of holders of deposit accounts or
borrowings at, and persons obligated on a loan from, Asheville Savings on the
Voting Record Date (which is January 14, 1994) who continue to hold such
accounts or borrowings or be obligated on such loan through the date of the
Special Meeting, scheduled to be held March 15, 1994.
Under the Administrator's regulations, no person may transfer or enter into
any agreement or understanding to transfer the legal or beneficial ownership of
Subscription Rights or the underlying shares of BB&T Financial Common Stock to
the account of any other person prior to completion of the Conversion. No
person is required to subscribe for any shares of BB&T Financial Common Stock.
Voting Members may vote at the Special Meeting whether or not they purchase
shares.
Four-Month Transfer Restriction. SHARES PURCHASED IN THE SUBSCRIPTION
OFFERING AT THE 85% PRICE ARE SUBJECT TO THE RESTRICTION THAT SUCH SHARES MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED, BY SALE, GIFT OR OTHERWISE, FOR A PERIOD
OF FOUR MONTHS FOLLOWING THE DATE OF THIS PROSPECTUS/PROXY STATEMENT, EXCEPT IN
THE EVENT OF THE DEATH OF THE SUBSCRIBER. Any shares purchased in the
Subscription Offering at the 95% Price or the BB&T
28
<PAGE>
Market Price will not be subject to this restriction. Each certificate
representing any shares subject to the four-month transfer restriction will
bear an appropriate notice of such restriction. Shares issued as a dividend,
stock split or otherwise with respect to any such restricted shares will be
subject to the same restriction for the remainder of such four-month period.
See "CERTAIN CONSIDERATIONS RELATING TO THE OFFERINGS--Four-Month Transfer
Restriction."
Number of Shares Offered. The total number of shares of BB&T Financial Common
Stock to be offered in the Subscription Offering will be determined by dividing
(i) the Appraised Value of Asheville Savings as it will be updated after the
Offerings are completed (see "--Appraised Value of Asheville Savings") by (ii)
the BB&T Market Price. No fractional shares will be issued.
How to Subscribe. Eligible Member Subscribers and Voting Members may
subscribe for shares of BB&T Financial Common Stock by properly completing and
signing the Stock Order Form and hand delivering it to any Asheville Savings
office or to any BB&T office in the Community Offering Area or by mailing it in
the postage-paid return envelope accompanying this Prospectus/Proxy Statement
to the Conversion Information Center, in each case accompanied by full payment,
or instructions for payment, for the subscribed shares by the Subscription
Expiration Date (currently anticipated to be 5:00 p.m., North Carolina time, on
March 15, 1994, although the Subscription Offering may be extended to a date
not later than , 1994).
Asheville Savings reserves the right to reject orders submitted by facsimile
transmission. Failure of Asheville Savings for any reason to receive from any
Eligible Member Subscriber or Voting Member a properly completed and executed
Stock Order Form and payment or withdrawal instructions by such time will be
deemed a waiver and release by such Eligible Member Subscriber or Voting Member
of any rights that such Eligible Member Subscriber or Voting Member may have in
the Subscription Offering. A Stock Order Form, once received by Asheville
Savings, cannot be amended, modified or rescinded by the Subscriber. Asheville
Savings may, but is not required to, waive any immaterial irregularities in any
Stock Order Form or require the submission of a corrected Stock Order Form or
the remittance of full payment for subscribed shares by such date as Asheville
Savings may specify.
Method of Payment. Full payment or instructions for withdrawal from a
Asheville Savings deposit account (other than a demand deposit account or NOW
account, on which a Subscriber must write a check) of the Eligible Member
Subscriber or Voting Member for the amount of the BB&T Financial Common Stock
for which the Subscriber has subscribed must accompany each properly executed
Stock Order Form for subscriptions to be valid. The actual number of shares
issued to each such Eligible Member Subscriber or Voting Member will be equal
to the amount received from such Eligible Member Subscriber or Voting Member,
subject to adjustment for maximum purchase limitations (see "--Maximum and
Minimum Purchase Limitations") and oversubscriptions (see "--Oversubscription
Procedures"), divided by the 85% Price, the 95% Price and/or the BB&T Market
Price, as applicable. Because no fractional shares will be issued, the Eligible
Member Subscriber or Voting Member will receive as a refund an amount equal to
(i) the total dollar amount for which each person subscribed minus (ii) the
product of the number of whole shares to be received by such Eligible Member
Subscriber or Voting Member and the applicable purchase price or prices.
All shares of BB&T Financial Common Stock purchased in the Subscription
Offering (other than by the Asheville Savings ESOP) may be paid for in cash (if
delivered in person), or by check or money order. Asheville Savings reserves
the right to reject payment submitted by wire transfer. If an Eligible Member
Subscriber or Voting Member has a deposit account with Asheville Savings (other
than a demand deposit account or NOW account, on which a Subscriber must write
a check), such Subscriber may pay for the shares subscribed for by authorizing
and directing Asheville Savings on the Stock Order Form to make a withdrawal
from such deposit account in an amount equal to the aggregate dollar amount for
which such Subscriber wishes to subscribe. In the case of withdrawal requests,
funds for which such withdrawal is authorized will remain in the Subscriber's
account until withdrawn by Asheville Savings on the Closing Date, and may not
be withdrawn by such Subscriber unless and until the Subscription Offering has
been completed or terminated. Prior to such withdrawal by Asheville Savings,
any interest payable on such accounts will continue to be paid in accordance
with the account's contractual rate of interest.
29
<PAGE>
All amounts received for the purchase of shares in the Subscription Offering
(other than by designation for withdrawal from an eligible deposit account)
will be placed in a special segregated Asheville Savings account for the
Offerings. Asheville Savings will pay interest to the Subscriber on funds
deposited in this account at Asheville Savings' passbook rate, currently %
per annum, from the date payment is received until the Offerings are either
completed or terminated. The amount of interest earned will be paid to each
Subscriber and will NOT be applied toward the purchase of additional shares of
BB&T Financial Common Stock.
Asheville Savings will permit an Eligible Member Subscriber or Voting Member
to pay for any shares of BB&T Financial Common Stock subscribed for by
withdrawal from a Asheville Savings certificate of deposit account (including
withdrawal from an IRA invested in a certificate of deposit account if the
procedures described in the next paragraph are followed) without the
assessment of an early withdrawal penalty. If the authorized withdrawal is
from a certificate account and the remaining balance does not meet the
applicable minimum balance requirement, the entire certificate will be
cancelled at the time of the withdrawal and the remaining balance will earn
interest thereafter at Asheville Savings' passbook rate, currently % per
annum.
Subscriptions by Beneficial Owners of IRA, Keogh or Similar Retirement
Accounts. Beneficial owners of IRA, Keogh or similar retirement accounts are
not themselves Eligible Member Subscribers or Voting Members by virtue of
owning such accounts, but the account itself may be an Eligible Member
Subscriber or Voting Member. Payment for the BB&T Financial Common Stock may
be made with funds from an IRA, Keogh or similar retirement account only if
the beneficial owner of such account(s) authorizes and directs Asheville
Savings to transfer such account(s) to a self-directed account at an
independent trustee that permits the account to hold stock. The independent
trustee then must be directed by the beneficial owner to complete a Stock
Order Form for such shares and to deliver such Stock Order Form, together with
funds from such account, in an amount equal to the aggregate dollar amount of
shares subscribed for. Any shares so subscribed for and purchased would become
part of the IRA, Keogh or other retirement account. Those who are interested
in utilizing IRA, Keogh or similar retirement account funds to subscribe for
shares of BB&T Financial Common Stock should contact the Conversion
Information Center prior to the Subscription Expiration Date for appropriate
instructions.
For purposes of determining compliance with maximum purchase limitations,
purchases by the beneficial owner of any IRA, Keogh or similar retirement
account will be aggregated with purchases by such retirement account. See "--
Maximum and Minimum Purchase Limitations."
Refunds. Refunds to Subscribers in the Subscription Offering will be
remitted (and funds designated by Subscribers for withdrawal from deposit
accounts released) (a) in lieu of the issuance of fractional shares in the
Subscription Offering, (b) in the event and to the extent of an
oversubscription in the Subscription Offering (see "--Oversubscription
Procedures") and (c) in the event that the Subscription Offering is
terminated. In addition, any interest payable to a Subscriber on funds
delivered as payment for shares will be remitted. Any refunds and/or interest
due to Subscribers on funds remitted will be mailed to the Subscriber at the
address designated on the Stock Order Form promptly after the Closing Date or
the termination of the Conversion Merger, as the case may be.
The Asheville Savings ESOP. BB&T Financial has agreed to cause BB&T to
establish the Asheville Savings ESOP for the benefit of all employees of
Asheville Savings who are regularly scheduled to work 1,000 hours a year. The
purchase of the shares of BB&T Financial Common Stock by the Asheville Savings
ESOP will be funded by a five-year loan from BB&T Financial to the Asheville
Savings ESOP, which will be repaid through contributions each year to the
Asheville Savings ESOP by BB&T Financial on behalf of the Asheville Savings
ESOP participants. It currently is expected that the Asheville Savings ESOP
will subscribe for approximately 10% of the shares (currently estimated to be
100,000) of BB&T Financial Common Stock actually offered in the Subscription
Offering at the 85% Price. The Asheville Savings ESOP will receive priority
over Eligible Member Subscribers and Voting Members in the case of an
oversubscription for shares in the Subscription Offering. See "--
Oversubscription Procedures." For additional information concerning the voting
and tendering of shares in the Asheville Savings ESOP, see "DESCRIPTION OF
CAPITAL STOCK OF BB&T FINANCIAL--Certain Provisions Which May Have an Anti-
Takeover Effect--Employee Stock Ownership Plans."
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Maximum and Minimum Purchase Limitations. The Plan of Conversion provides for
certain limitations to be placed on the purchase of shares in the Subscription
Offering:
(a) Each Eligible Member Subscriber or Voting Member who wishes to
subscribe for BB&T Financial Common Stock in the Subscription Offering must
specify a minimum purchase of $500 on the Stock Order Form. An Eligible
Member Subscriber or Voting Member who also is a Community Offering
Resident and who wishes to subscribe for shares of BB&T Financial Common
Stock in both the Subscription Offering and the Community Offering must
specify a minimum purchase of $500 in each Offering.
(b) Each Eligible Member Subscriber with a single deposit account with a
balance of at least $25,000 at Asheville Savings or with an additional
account relationship (including a loan) at Asheville Savings, in each case
on the Eligibility Record Date (February 28, 1993), may subscribe at the
85% Price and/or the 95% Price for that number of whole shares of BB&T
Financial Common Stock which, when multiplied by the 85% Price and/or the
95% Price, as applicable, would not exceed $250,000. An additional account
relationship may consist of a demand deposit account, savings account,
certificate of deposit, IRA, Keogh and/or similar retirement account or a
loan at Asheville Savings. Asheville Savings will require any Eligible
Member Subscriber claiming an additional account relationship or a deposit
balance of at least $25,000 with Asheville Savings to provide evidence
satisfactory to Asheville Savings of the existence of such additional
account relationship or deposits as of the Eligibility Record Date. All
determinations as to whether such Eligible Member Subscriber has submitted
sufficient evidence of such additional account relationship or deposits
shall be made by Asheville Savings in its sole discretion and shall be
final and conclusive. If sufficient evidence of such additional account
relationship or deposits is not provided, Asheville Savings in its sole
discretion may reject orders received in the Subscription Offering by such
Eligible Member Subscriber in excess of the limit set forth in paragraph
(c).
(c) Each Eligible Member Subscriber with only a loan account or with a
single deposit account with a balance of less than $25,000 with Asheville
Savings at the Eligibility Record Date may purchase at the 85% Price and/or
the 95% Price that number of whole shares of BB&T Financial Common Stock
which, when multiplied by the 85% Price and/or the 95% Price, as
applicable, would not exceed $150,000. Additional shares may be purchased
by such persons at the BB&T Market Price, provided that the aggregate
purchase price of shares purchased at the 85% Price, the 95% Price and/or
the BB&T Market Price does not exceed $250,000 in the aggregate.
(d) Voting Members (who are not also Eligible Member Subscribers) may
purchase in the Subscription Offering at the BB&T Market Price, that number
of whole shares of BB&T Financial Common Stock which, when multiplied by
the BB&T Market Price, would not exceed $250,000.
(e) An Eligible Member Subscriber or Voting Member who also is a
Community Offering Resident may subscribe in the Community Offering at the
95% Price for that number of whole shares of BB&T Financial Common Stock
which, when added to the amount subscribed for in the Subscription
Offering, would not exceed $250,000.
(f) The Asheville Savings ESOP may subscribe at the 85% Price and/or the
95% Price for a number of shares of BB&T Financial Common Stock equal to
10% of the shares actually offered in the Subscription Offering. It
currently is estimated that the Asheville Savings ESOP will subscribe for
approximately 100,000 shares of BB&T Financial Common Stock at the 85%
Price.
(g) No Subscriber may acquire, through the purchase of BB&T Financial
Common Stock in the Subscription Offering and/or the Community Offering,
beneficial ownership in the aggregate (taking into account shares that may
be held by such person) of more than 5% of the Outstanding BB&T Financial
Common Stock, except that the number of shares of BB&T Financial Common
Stock owned in the aggregate by the Asheville Savings ESOP and any other
employee stock ownership plan which BB&T Financial has established or may
establish may not exceed 10% of the Outstanding BB&T Financial Common
Stock.
(h) For purposes of determining compliance with maximum subscription
limitations, purchases by the beneficial owner of any IRA, Keogh or similar
retirement account will be aggregated with purchases by such retirement
account.
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Oversubscription Procedures. In the event of an oversubscription for the
shares of BB&T Financial Common Stock in the Subscription Offering, shares will
first be allocated to the Asheville Savings ESOP (see "--The Asheville Savings
ESOP"). Remaining shares then will be allocated among Eligible Member
Subscribers and Voting Members as follows:
(a) Shares subscribed for at the 85% Price and/or the 95% Price will be
allocated among subscribing Eligible Member Subscribers who qualified as
such by virtue of deposit account(s) held on the Eligibility Record Date so
as to permit each such Eligible Member Subscriber to purchase the lesser of
(x) the number of whole shares for which such Eligible Member Subscriber
subscribed for at the 85% Price and/or the 95% Price, and (y) the number of
shares equal to the proportion that the amount held in Asheville Savings
qualifying deposit accounts by each such Eligible Member Subscriber at the
close of business on the Eligibility Record Date bears to the total amount
held in Asheville Savings qualifying deposit accounts by all Eligible
Member Subscribers whose subscriptions remain unsatisfied. If the amount so
allocated exceeds the amount subscribed for by any one or more such
Eligible Member Subscriber, the excess shall be reallocated (one or more
times as necessary) among such Eligible Member Subscribers whose
subscriptions still are not fully satisfied on the same principle described
above until all available shares have been allocated or all subscriptions
satisfied.
(b) Any shares remaining after the allocation described in (a) above will
be allocated among subscriptions at the BB&T Market Price, if any, by
Eligible Member Subscribers who qualified as such by virtue of deposit
account(s) held on the Eligibility Record Date, so as to permit each such
Eligible Member Subscriber to purchase the lesser of (x) the number of
shares subscribed for at the BB&T Market Price or (y) the number of shares
equal to the proportion that the amount of qualifying deposits of each such
Eligible Member Subscriber bears to the total amount of qualifying deposits
of all such Eligible Member Subscribers who subscribe for shares at the
BB&T Market Price. If the amount so allocated exceeds the amount subscribed
for by any one or more such Eligible Member Subscriber, the excess shall be
reallocated (one or more times as necessary) among such Eligible Member
Subscribers whose subscriptions still are not fully satisfied on the same
principle described above until all available shares have been allocated or
all subscriptions satisfied.
(c) Any shares remaining after the allocations described in (a) and (b)
above will be allocated among subscriptions of Voting Members who are not
Eligible Member Subscribers so as to permit each such Voting Member to
purchase the proportion that the amount of shares subscribed for by such
Voting Member bears to the total amount of shares subscribed for by all
such Voting Members. If the amount so allocated exceeds the amount
subscribed for by any one or more such Voting Member, the excess shall be
reallocated (one or more times as necessary) among those Voting Members
whose subscriptions still are not fully satisfied on the same principle
described above until all available shares have been allocated or all
subscriptions satisfied.
(d) Any shares remaining after the allocations described in (a), (b) and
(c) above will be allocated among subscriptions at the 85% price and/or the
95% price of Eligible Member Subscribers who qualified as such only by
virtue of borrowing(s) held on the Eligibility Record Date so as to permit
each such Eligible Member Subscriber to purchase the proportion that the
amount of shares subscribed for by such Eligible Member Subscriber bears to
the total amount subscribed for by all such Eligible Member Subscribers. If
the amount so allocated exceeds the amount subscribed for by any one or
more such Eligible Member Subscriber, the excess shall be reallocated (one
or more times as necessary) among such Eligible Member Subscribers whose
subscriptions still are not fully satisfied on the same principle described
above until all available shares have been allocated or all subscriptions
satisfied.
(e) Any shares remaining after the allocation described in (a), (b), (c)
and (d) above will be allocated among subscriptions at the BB&T Market
Price of Eligible Member Subscribers who qualified as such only by virtue
of borrowing(s) held on the Eligibility Record Date, if any, so as to
permit each such Eligible Member Subscriber to purchase the proportion that
the amount of shares subscribed for by such Eligible Member Subscriber
bears to the total amount subscribed for by all such Eligible Member
Subscribers. If the amount so allocated exceeds the amount subscribed for
by any one or more such Eligible Member Subscriber, the excess shall be
reallocated (one or more times as necessary) among such Eligible Member
Subscribers whose subscriptions still are not fully satisfied on the same
principle described above until all available shares have been allocated or
all subscriptions satisfied.
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Eligible Member Subscribers or Voting Members who also are Community Offering
Residents who elect to subscribe in the Subscription Offering will receive
priority over Community Offering Residents who subscribe in the Community
Offering in the event of an oversubscription in the Subscription Offering.
Otherwise, if such persons subscribe for shares in the Community Offering, they
will receive any shares remaining after allocations among those who subscribe
in the Subscription Offering. See "--The Community Offering--Oversubscription
Procedures."
Persons in Non-Qualified States or Foreign Jurisdictions. BB&T Financial will
make reasonable efforts to comply with the securities laws of all jurisdictions
in the United States in which Eligible Member Subscribers and Voting Members
reside. However, Subscription Rights may not be offered to any person who
resides in a foreign country, or who resides in any jurisdiction in the United
States if any of the following apply: (i) a small number of persons otherwise
eligible to subscribe for shares of BB&T Financial Common Stock under the Plan
of Conversion reside in such jurisdiction; (ii) the issuance of Subscription
Rights or the offer or sale of BB&T Financial Common Stock to such persons
would require BB&T Financial, under the securities laws of such jurisdiction,
to register as a broker or a dealer or otherwise qualify the BB&T Financial
Common Stock for sale in such jurisdiction; or (iii) such registration or
qualification would be impracticable for reasons of cost or otherwise. No
payments will be made in lieu of the granting of Subscription Rights.
THE COMMUNITY OFFERING
Any shares of BB&T Financial Common Stock not subscribed for in the
Subscription Offering may be subscribed for in the Community Offering by
Community Offering Residents. If all shares of BB&T Financial Common Stock
being offered are subscribed for in the Subscription Offering, no shares of
BB&T Financial Common Stock will be available for sale in the Community
Offering and all funds submitted by Community Offering Residents in the
Community Offering will be refunded with interest. See "--Refunds" and "--
Oversubscription Procedures." The Community Offering will be completed at the
Community Expiration Date (currently expected to be 5:00 p.m., North Carolina
time, on March 15, 1994, although it could be extended and close at any date
thereafter, but not later than , 1994).
Community Offering Residents consist of (a) natural persons residing in the
Community Offering Area, (b) IRA, Keogh and similar retirement accounts
established by or for the benefit of natural persons residing in the Community
Offering Area, and (c) corporations, partnerships and similar entities
headquartered in the Community Offering Area. Asheville Savings may require a
Community Offering Resident to provide satisfactory evidence that such
purchaser qualifies as a Community Offering Resident. All such determinations
will be made by Asheville Savings in its sole discretion and will be final and
conclusive. Moreover, the right to purchase BB&T Financial Common Stock in the
Community Offering is subject to the right of Asheville Savings in its sole
discretion to accept or reject, in whole or in part, orders received in the
Community Offering.
This Prospectus/Proxy Statement, a Stock Order Form and additional
information concerning the Community Offering are being provided to certain
Community Offering Residents. Additional copies of any of these documents are
available to Community Offering Residents upon request from the Conversion
Information Center, P.O. Box 652, Asheville, North Carolina 28802 (telephone
no. (704) - ). Asheville Savings reserves the right not to send copies of
documents to persons whose only address in the Community Offering Area is a
post office box. Any questions or requests for additional information regarding
the Conversion Merger and the Offerings may be directed to the Conversion
Information Center.
How to Subscribe. A Community Offering Resident may subscribe for shares of
BB&T Financial Common Stock by properly completing and signing the Stock Order
Form and mailing it in the postage-paid return envelope accompanying this
Prospectus/Proxy Statement, to the Conversion Information Center at the address
noted above or by hand delivering it to any Asheville Savings office,
accompanied by full payment, or instructions for payment, for the subscribed
shares by the Community Expiration Date (currently expected
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to be 5:00 p.m., North Carolina time, on March 15, 1994, although the deadline
may be extended and close at a date thereafter, but not later than ,
1994).
The failure for any reason to receive from a Community Offering Resident a
properly completed and executed Stock Order Form and payment by such time will
be deemed a waiver and release by such Community Offering Resident of any right
to subscribe for shares of BB&T Financial Common Stock in the Community
Offering. Asheville Savings reserves the right to reject orders submitted by
facsimile transmission. A completed Stock Order Form, once received, cannot be
amended, modified or rescinded by the Community Offering Resident. Asheville
Savings may, but is not required to, waive any immaterial irregularities in any
Stock Order Form or require the submission of a corrected Stock Order Form or
the remittance of full payment for subscribed shares by such date as Asheville
Savings may specify.
Method of Payment. Full payment (or instructions for withdrawal from such
deposit account if the Community Offering Resident has a deposit account at
Asheville Savings--other than a demand deposit account or NOW account, on which
a Subscriber must write a check) for the amount of the BB&T Financial Common
Stock for which the Community Offering Resident has subscribed must accompany
each properly executed Stock Order Form for subscriptions to be valid. The
actual number of shares issued to each Community Offering Resident will equal
the dollar amount received from such Community Offering Resident, subject to
adjustment for maximum purchase limitations (see "--Maximum and Minimum
Purchase Limitations") and oversubscriptions (see "--Oversubscription
Procedures"), divided by the 95% Price. Because no fractional shares will be
issued, Community Offering Residents will receive as a refund an amount equal
to (i) the total dollar amount for which each such Subscriber subscribed minus
(ii) the product of the number of whole shares to be received by such
Subscriber and the 95% Price, as described above.
All shares of BB&T Financial Common Stock purchased in the Community Offering
may be paid for in cash (if delivered in person), or by check or money order.
Asheville Savings reserves the right to reject payment submitted by wire
transfer. If a Community Offering Resident has a deposit account with Asheville
Savings (other than a demand deposit account or NOW account, on which the
Subscriber must write a check), such Subscriber may pay for the shares
subscribed for by authorizing and directing Asheville Savings on the Stock
Order Form to make a withdrawal from such deposit account in an amount equal to
the aggregate dollar amount of shares of BB&T Financial Common Stock for which
such Subscriber wishes to subscribe. In the case of withdrawal requests, funds
for which such withdrawal is authorized will remain in the Subscriber's account
until withdrawn by Asheville Savings on the Closing Date, and may not be
withdrawn by such Subscriber unless and until the Community Offering has been
completed or terminated. Prior to such withdrawal by Asheville Savings, any
interest payable on such accounts will continue to be paid in accordance with
the account's contractual rate of interest.
All amounts received for the purchase of shares in the Community Offering
(other than by designation for withdrawal from an eligible deposit account at
Asheville Savings) will be placed in a special segregated Asheville Savings
account for the Offerings. Asheville Savings will pay interest to the
Subscriber on funds deposited in this account at Asheville Savings passbook
rate, currently % per annum, from the date payment is received until the
Offerings are either completed or terminated. The amount of interest earned
will be paid to each Subscriber and will NOT be applied toward the purchase of
additional shares of BB&T Financial Common Stock.
Asheville Savings will permit a Community Offering Resident to pay for any
shares of BB&T Financial Common Stock subscribed for by withdrawal from a
certificate of deposit account established at Asheville Savings (including an
IRA invested in a certificate of deposit account if the procedures described in
the next paragraph are followed) without the assessment of an early withdrawal
penalty. If the authorized withdrawal is from a certificate account and the
remaining balance does not meet the applicable minimum balance requirement, the
entire certificate will be cancelled at the time of the withdrawal and the
remaining balance will earn interest thereafter at Asheville Savings' passbook
rate, currently % per annum.
Subscriptions by Beneficial Owners of IRA, Keogh or Similar Retirement
Accounts. IRA, Keogh and similar retirement accounts established by or for the
benefit of natural persons residing in the Community
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Offering Area also are Community Offering Residents and may subscribe for
shares of BB&T Financial Common Stock in the Community Offering. In the case of
subscriptions by IRA, Keogh or similar retirement deposit accounts established
at Asheville Savings, BB&T or BB&T-SC, the beneficial owner of the account
first must authorize and direct such institution to transfer the account(s) to
a self-directed account at an independent trustee that permits the account to
hold stock. In such a case, the independent trustee then must be directed by
the beneficial owner to complete and deliver a Stock Order Form together with
full payment for the shares from such account. Any shares so subscribed for and
purchased would become part of the IRA, Keogh or other retirement account.
Those who are interested in utilizing IRA, Keogh or similar retirement account
funds to subscribe for shares of BB&T Financial Common Stock should contact the
Conversion Information Center prior to the Community Expiration Date for
appropriate instructions.
For purposes of determining compliance with maximum purchase limitations,
purchases by the beneficial owner of any IRA, Keogh or similar retirement
account will be aggregated with purchases by such retirement account. See "--
Maximum and Minimum Purchase Limitations."
Refunds. Refunds to Subscribers in the Community Offering will be remitted
(and funds designated by Subscribers for withdrawal from eligible deposit
accounts at Asheville Savings released) (a) if no shares of BB&T Financial
Common Stock remain available for sale after completion of the Subscription
Offering, (b) in the event and to the extent of an oversubscription in the
Community Offering (see "--Oversubscription Procedures"), (c) in lieu of the
issuance of fractional shares in the Community Offering, and (d) in the event
that the Community Offering is terminated. In addition, any interest payable to
a Subscriber in the Community Offering on funds delivered as payment for shares
will be remitted. Any refunds and/or interest due to such Subscriber on funds
remitted will be mailed to the Subscriber at the address designated on the
Stock Order Form promptly upon the completion or termination of the Offerings.
Oversubscription Procedures. If the BB&T Financial Common Stock offered in
the Subscription Offering is fully subscribed, then no shares of BB&T Financial
Common Stock will be available for purchase in the Community Offering and all
funds submitted pursuant to the Community Offering will be refunded, with
interest (and funds designated by subscribers for withdrawal from eligible
deposit accounts at Asheville Savings, released). See "--Refunds." If Community
Offering Residents order more in the Community Offering than is available for
purchase, shares shall be allocated among Community Offering Residents as
follows:
(a) Shares first will be allocated among the subscriptions of Community
Offering Residents who are natural persons so as to permit each such
Community Offering Resident to purchase the same proportion that the amount
of shares subscribed for by such Community Offering Resident bears to the
total amount of shares subscribed for by all such Community Offering
Residents.
(b) Any shares remaining after the allocation described in paragraph (a)
above will be allocated among the subscriptions of Community Offering
Residents who are not natural persons so as to permit each such Community
Offering Resident to purchase the same proportion that the amount of shares
subscribed for by such Community Offering Resident bears to the total
amount of shares subscribed for by all such Community Offering Residents.
Eligible Member Subscribers or Voting Members who also are Community Offering
Residents who purchase shares of BB&T Financial Common Stock in the Community
Offering will, in the event of an oversubscription in the Community Offering,
be subject to the oversubscription procedures described in the preceding
paragraphs.
Maximum and Minimum Purchase Limitations. The Plan of Conversion provides for
certain limitations to be placed on the purchase of shares in the Community
Offering:
(a) Each Community Offering Resident who wishes to subscribe for BB&T
Financial Common Stock in the Community Offering must specify a minimum
purchase of $500 on the Stock Order Form.
(b) An Eligible Member Subscriber or Voting Member who also is a
Community Offering Resident and who wishes to subscribe for shares of BB&T
Financial Common Stock in both the Subscription Offering and the Community
Offering must specify a minimum purchase of $500 in each Offering.
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(c) Each Community Offering Resident may subscribe at the 95% Price for
an amount of shares of BB&T Financial Common Stock which, when multiplied
by the 95% Price, would not exceed $250,000.
(d) An Eligible Member Subscriber or Voting Member who also is a
Community Offering Resident may subscribe at the 95% Price in the Community
Offering for an amount of shares of BB&T Financial Common Stock which, when
multiplied by the 95% Price and added to the dollar amount subscribed for
in the Subscription Offering, would not exceed $250,000.
(e) No Eligible Subscriber may acquire, through the purchase of BB&T
Financial Common Stock in the Subscription Offering and/or the Community
Offering, beneficial ownership in the aggregate (taking into account shares
that may be held by such person) of more than 5% of the Outstanding BB&T
Financial Common Stock, except that the number of shares of BB&T Financial
Common Stock owned in the aggregate by the Asheville Savings ESOP and any
other employee stock ownership plan which BB&T Financial has established or
may establish may not exceed 10% of the Outstanding BB&T Financial Common
Stock.
(f) For purposes of determining compliance with the maximum purchase
limitations, purchases by the beneficial owner of any IRA, Keogh or similar
retirement account will be aggregated with purchases by such retirement
account.
APPRAISED VALUE OF ASHEVILLE SAVINGS
Under the Plan of Conversion, the number of shares of BB&T Financial Common
Stock that must be offered in connection with the Conversion Merger is based on
the Appraised Value of Asheville Savings. As of January 18, 1994, Trident
Financial determined the Appraised Value to be $30 million. The estimate of
1,000,000 shares being offered hereby has been determined by dividing the
Appraised Value by an assumed last sale price on the Nasdaq NMS of a share of
BB&T Financial Common Stock on the Community Expiration Date of $30.00 per
share. In accordance with the Administrator's regulations, and as provided for
in the Plan of Conversion, Trident Financial will update the Appraised Value
promptly following the expiration of the Offerings. If the Appraised Value is
higher or lower than $30 million, the aggregate dollar amount of shares offered
in the Subscription Offering will be correspondingly adjusted without a
resolicitation of Subscribers, as long as the Appraised Value as finally
determined by Trident Financial remains within the Estimated Valuation Range of
$25.5 million to $34.5 million. If Trident Financial determines that the
Appraised Value must be adjusted to an amount that is not within the Estimated
Valuation Range, the Administrator's approval must be obtained before such
Appraised Value may be used as a basis for determining the actual number of
shares of BB&T Financial Common Stock offered in the Subscription Offering.
Such approval may be conditioned upon a resolicitation of Subscribers. In the
event resolicitation is required, Subscribers will be given the opportunity to
have their subscription funds returned and will be provided updated information
upon which to base a decision whether to continue their subscriptions. In such
case, the subscriptions of any Subscriber who does not respond to the
resolicitation may be automatically rescinded.
In determining the Appraised Value, Trident Financial reviewed, among other
factors, Asheville Savings' audited financial statements for the five years
ended December 31, 1992, as well as other financial information, some of which
is contained in Asheville Savings' application to the Administrator to effect
the Conversion Merger. Trident Financial also reviewed conditions in the
securities markets in general and for financial institution stocks in
particular. In addition, Trident Financial considered the prices paid in
mergers and acquisitions of other thrift institutions. Trident Financial also
examined the economy in Asheville Savings' primary market area and compared it
with the state and national economy. Further, Trident Financial examined the
competitive environment in which Asheville Savings operates, assessed its
relative strengths and weaknesses and compared its operating performance with
that of other thrift institutions. Trident Financial also considered the market
value of Asheville Savings' assets and liabilities as well as Asheville
Savings' prospects for the future in determining the Appraised Value. When
Trident Financial updates the Appraised Value following the expiration of the
Offerings, it intends to consider, among other things, any new developments or
changes in Asheville Savings' financial performance and condition, management
policies, conditions in the equity markets for financial institution stocks,
conditions in the markets for mergers
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and acquisitions of thrift institutions and the results of the Offerings. In
conducting its appraisal, Trident Financial has relied on, and assumed the
accuracy and completeness of, the financial information provided by Asheville
Savings. Trident Financial did not independently verify the financial
statements and other information provided by Asheville Savings, nor did Trident
Financial independently value the assets or liabilities of Asheville Savings.
Copies of Trident Financial's appraisal of Asheville Savings and the detailed
memorandum setting forth the methods and assumptions for such appraisals are on
file and available for inspection at the Office of the Administrator at 1110
Navaho Drive, Suite 301, Raleigh, North Carolina, 27609.
Trident Financial will receive an aggregate fee for its services of $25,000.
BB&T Financial and Asheville Savings have agreed to indemnify Trident Financial
against certain liabilities arising out of or based upon its performance of
services, except where Trident Financial is determined to have been negligent
or to have failed to exercise due diligence in the preparation of its
appraisal. Trident Financial also acted as financial advisor to Asheville
Savings in connection with the Conversion Merger and received a fee for such
services of $7,500. Trident Financial is an affiliate of Trident Securities,
which is acting as a sales agent in connection with the Offerings. See "THE
OFFERINGS--Plan of Distribution."
THE APPRAISAL OF ASHEVILLE SAVINGS IS NOT INTENDED, AND MUST NOT BE
CONSTRUED, AS A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING
SHARES OF BB&T FINANCIAL COMMON STOCK. THE APPRAISAL CONSIDERS ASHEVILLE
SAVINGS ONLY AND SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION
VALUE OF ASHEVILLE SAVINGS OR ITS VALUE FOLLOWING THE ACQUISITION. IN ADDITION,
THE APPRAISED VALUE IS NOT INTENDED, AND MUST NOT BE CONSTRUED, TO EXPRESS AN
OPINION AS TO THE VALUE OF BB&T FINANCIAL COMMON STOCK TO BE OFFERED IN THE
SUBSCRIPTION OFFERING OR THE COMMUNITY OFFERING.
TIMING OF COMPLETION OF THE CONVERSION MERGER AND SALE OF SHARES
The Administrator's regulations require that the sale of the BB&T Financial
Common Stock offered in connection with the Conversion Merger be completed
within 45 calendar days after the expiration of the Subscription Offering. In
the event the sale of BB&T Financial Common Stock cannot be completed within
the required 45-day period, one or more extensions of time to complete the sale
may be granted by the Administrator, but no single extension of time may exceed
90 days. No assurance can be given that an extension will be granted if
requested. In the event of such an extension, BB&T Financial will distribute to
each Subscriber a notice of the extension of time. In the event of an
extension, Subscribers will be given the right to increase, decrease or rescind
their subscriptions at any time prior to 20 days before the end of the
extension period and will be provided updated information upon which to base a
decision whether to continue their subscriptions. The subscription of any
Subscriber who does not affirmatively respond may be automatically rescinded.
If the Appraised Value of Asheville Savings is required to be revised as a
result of any such extension, no assurance can be given that such Appraised
Value, as revised, will be approved by the Administrator. Therefore, it is
possible that if the Conversion Merger cannot be completed within the requisite
period, it will be terminated. In such event, or in the event no extension is
granted, all funds will be returned to Subscribers promptly after the date the
Conversion Merger is terminated, together with accrued interest, if any, and
all withdrawal authorizations will be terminated.
After the expiration of the Offerings but prior to the Closing Date, upon the
occurrence of any event, circumstance or change of circumstance which would be
material to the investment decision of a Subscriber, BB&T Financial will
request the Administrator's approval of a notice to be delivered to
Subscribers. Any such notice will grant to each Subscriber the right to
increase, decrease or rescind his or her subscription for a period of not less
than the greater of 20 days from the date of the mailing of such notice or the
period remaining in an extension of time granted by the Administrator. The
subscription of any Subscriber who does not respond to the notice may be
automatically rescinded.
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<PAGE>
The Plan of Conversion and the regulations of the Administrator require that
the Conversion be completed within 12 months from the date on which the Plan of
Conversion is approved by the Voting Members of Asheville Savings (the Special
Meeting to consider the Plan of Conversion is scheduled to be held on March 15,
1994). The Reorganization Agreement provides, however, that either BB&T
Financial or Asheville Savings may terminate the Reorganization Agreement if
the Conversion and the Acquisition are not completed by the close of business
on September 30, 1994. The Conversion and the Acquisition will be consummated
on the Closing Date, which will be as soon as practicable after the
Subscription Offering and the Community Offering expire.
CONDITIONS TO COMPLETION OF THE OFFERINGS AND TERMINATION OF THE OFFERINGS
The respective obligations of BB&T Financial and Asheville Savings to
consummate the transactions contemplated by the Reorganization Agreement,
including the Offerings, are subject to the satisfaction (or, in some cases,
waiver) of certain conditions, including (a) receipt of certain required
regulatory approvals, (b) approval of the Plan of Conversion (which will be
considered at the Special Meeting) by the Voting Members of Asheville Savings
(c) an opinion from KPMG Peat Marwick with respect to certain tax matters (see
"--Certain Federal Income Tax Consequences"), (d) material performance by
Asheville Savings of all obligations and compliance with all covenants required
by the Reorganization Agreement, (e) that BB&T Financial shall not have
determined in good faith that there has been a material adverse change in the
condition or operations of Asheville Savings since December 31, 1992 and (f)
that the average closing price of the BB&T Financial Common Stock reported on
the Nasdaq NMS for the ten trading days prior to the Closing Date not be less
than $25.00 per share.
The Administrator has approved mailing of the Prospectus/Proxy Statement and
related materials, and conditioned final approval of the Conversion and the
Acquisition upon the receipt of certain additional materials. An application
for approval of the Acquisition has been filed with the Federal Reserve.
Various other regulation approvals will be required for the Merger. BB&T
Financial anticipates effecting the Merger sometime after the Acquisition and
will consummate the Acquisition whether or not any approvals required to effect
the Merger have been received. BB&T Financial has not yet determined the means
by which it will effect the Merger.
The Plan of Conversion may be amended or terminated by the Board of Directors
of Asheville Savings with the concurrence of the Administrator until the
Closing Date, provided that BB&T Financial concurs in the amendment. See "--
Timing of Completion of the Conversion Merger and Sale of Shares." The
Reorganization Agreement may be terminated at any time prior to the Closing
Date by the mutual consent in writing of BB&T Financial and Asheville Savings.
Either party may terminate the Reorganization Agreement at the Closing Date if
the required conditions to such party's obligations have not been satisfied or
waived. In addition, either party may terminate the Reorganization Agreement at
any time if the other party has materially breached the Reorganization
Agreement (and such breach is not cured by the earlier of 30 days after the
date on which written notice of such breach is given to the party committing
the breach or the Closing Date), or if the required regulatory approvals are
not obtained and the time periods for appeals and requests for reconsideration
have run. The Reorganization Agreement also may be terminated by either party
if the Closing Date has not occurred by the close of business on September 30,
1994.
In the event of a termination, all Subscribers in the Offerings will receive
refunds for amounts remitted for their subscriptions (or funds designated for
withdrawal will be released) plus any interest that may be due. See "--The
Subscription Offering--Refunds" and "--The Community Offering--Refunds."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following is a summary discussion of the material federal income
tax consequences of the Conversion and the Acquisition and the purchase by
Eligible Member Subscribers and Voting Members of BB&T Financial Common Stock
pursuant to the Offerings. The summary is based on the law as currently
constituted and is subject to change in the event of changes in the law,
including amendments to applicable statutes or regulations or changes in
judicial or administrative rulings, some of which could be given retroactive
effect. The summary does not address any foreign, state or local tax
consequences, except for
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<PAGE>
certain North Carolina income tax consequences, nor does it address all aspects
of federal income taxation that may apply to the Conversion and the
Acquisition. The tax consequences to a particular Eligible Member Subscriber or
Voting Member, for example, likely will depend on his or her particular
circumstances or status (e.g., a foreign person, tax-exempt entity, etc.),
which may not be addressed in this summary. Eligible Member Subscribers and
Voting Members are urged, therefore, to consult their own tax advisors as to
the specific tax consequences to them of the Conversion Merger, and any
purchase of BB&T Financial Common Stock pursuant to the Subscription Offering,
including, without limitation, tax return reporting requirements, the
application and effect of federal, foreign, state, local and other tax laws and
the implications of any proposed changes in the tax laws.
A recipient of Subscription Rights will be required to recognize gain with
respect to the receipt of Subscription Rights to the extent of the fair market
value of the Subscription Rights received. An Eligible Member Subscriber or
Voting Member will be able to claim a loss upon the expiration of any
unexercised Subscription Rights to the extent of the gain recognized on the
receipt of such Subscription Rights. An Eligible Member Subscriber or Voting
Member may be able to claim that the Subscription Rights received have a fair
market value only to the extent of the fair market value, if any, of any
Subscription Rights actually exercised by the Eligible Member Subscriber or
Voting Member. See "--Certain Income Tax Consequences of the Conversion Merger
to Recipients of Subscription Rights" for further discussion.
BB&T Financial and Asheville Savings have received an opinion of KPMG Peat
Marwick (the "Tax Opinion"), tax advisors to BB&T Financial, which reaches
certain conclusions with respect to certain federal and North Carolina income
tax consequences of the Conversion and the Acquisition and the purchase of BB&T
Financial Common Stock pursuant to the Subscription and Community Offerings.
Where appropriate or useful, this discussion will refer to the Tax Opinion and
particular conclusions expressed therein. However, such an opinion represents
only that advisor's best judgment as to the matters expressed therein and has
no binding effect on the IRS or official status of any kind. There can be no
assurance that the IRS could not successfully contest in the courts an opinion
expressed by the advisor as set forth in the Tax Opinion or that legislative,
administrative or judicial decisions or interpretations may not be forthcoming
that would significantly change the opinions set forth in the Tax Opinion. The
IRS will not currently issue private letter rulings concerning a transaction's
qualification under certain types of reorganizations or certain federal income
tax consequences resulting from such qualification. Accordingly, no private
letter ruling has been, nor is it anticipated that such a ruling will be,
requested from the IRS with respect to the Conversion Merger.
Reorganization Status and Certain Other Tax Effects. The Tax Opinion states
that the Conversion and the Acquisition will qualify as one or more tax-free
reorganizations under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that the Conversion and the Acquisition will result
in the following federal income tax consequences, among others: (i) no gain or
loss will be recognized to Asheville Savings in either its mutual or its stock
form; (ii) no gain or loss will be recognized to Asheville Savings upon the
receipt of money from BB&T Financial in exchange for shares of its common
stock; (iii) no gain or loss will be recognized by Eligible Member Subscribers
or Voting Members upon the deemed issuance to them of deposit accounts in the
stock savings bank following the Conversion in the same dollar amount as their
deposit accounts with Asheville Savings prior to the Conversion; (iv) the
Eligible Member Subscribers and Voting Members of Asheville Savings will
realize gain, if any, upon the exchange of their membership interests in
Asheville Savings for interests in the liquidation account and Subscription
Rights; however, any such gain will be recognized only in an amount not in
excess of the fair market value of the Subscription Rights and the interests in
the liquidation account received; (v) the tax basis of deposit account holders
of Asheville Savings in their deposit accounts with the stock savings bank will
be the same as their tax basis in their deposit accounts with Asheville Savings
immediately prior to the Conversion and their tax basis in their interests in
the liquidation account will be zero increased by the amount of gain, if any,
recognized on their receipt; (vi) the tax basis of the Subscription Rights will
be zero, increased by the amount of gain, if any, recognized on their receipt;
(vii) no gain or loss will be recognized to a holder of Subscription Rights
upon the exercise of such rights; (viii) no income, gain or loss will be
recognized by the purchasers of BB&T Financial Common Stock in the Community
Offering; (ix) the tax basis for shares of BB&T Financial Common Stock
purchased (pursuant to either the Subscription Offering or the Community
Offering) will be
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<PAGE>
the amount paid therefor increased by the basis, if any, of the Subscription
Rights exercised; and (x) the holding period for BB&T Financial Common Stock
acquired in the Subscription Offering will commence on the date the
Subscription Rights are exercised and the holding period for BB&T Financial
Common Stock acquired in the Community Offering will commence on the day
following the date said stock is purchased.
The Tax Opinion states that the consummation of the Conversion and the
Acquisition will be treated in substantially the same manner for North Carolina
income tax purposes as for federal income tax purposes.
Certain Income Tax Consequences of the Conversion Merger to Recipients of
Subscription Rights. The Tax Opinion states that gain, if any, realized by
recipients of Subscription Rights, as a result of the Conversion Merger, must
be recognized, but the amount of such gain required to be recognized by an
Eligible Member Subscriber or Voting Member will not exceed the sum of (i) the
fair market value of the Subscription Rights received pursuant to the
Conversion, and (ii) the fair market value, if any, of the interest in the
liquidation account received by the Eligible Member Subscriber.
The application of these rules to the Conversion Merger is complicated by the
fact that the Eligible Member Subscribers will receive Subscription Rights to
purchase BB&T Financial Common Stock at a price which may be less that than the
fair market value of the BB&T Financial Common Stock. In the past, taxpayers
have taken the position that rights to purchase stock offered at fair market
value in conversions of mutual thrifts (such as, arguably, the rights to
purchase shares in the Subscription Offering at the BB&T Market Price) do not
have independent value. This analysis may not apply to the Subscription Rights
to purchase BB&T Financial Common Stock in the Subscription Offering at the 85%
Price and/or the 95% Price because those Subscription Rights enable Eligible
Member Subscribers to purchase shares at less than fair market value. The
determination of whether the Subscription Rights received have a determinable
fair market value could be affected by a number of factors including, without
limitation, the nontransferability of the Subscription Rights, the excess, if
any, of the market price of the BB&T Financial Common Stock over the actual
purchase price, the four-month transfer restriction placed on shares of BB&T
Financial Common Stock acquired in the Subscription Offering at the 85% Price,
and the period of time during which the Subscription Rights will be outstanding
and exercisable, as well as other possible factors. Accordingly, it is unclear
as to how the Subscription Rights should be valued or how to determine the
number of Subscription Rights issued to each Eligible Member Subscriber for
this purpose. The Tax Opinion does not address the determination of fair market
value of the Subscription Rights. No tax opinion was sought on this issue
because of the particular factual circumstances of the transaction.
In recent years, the IRS has indicated in several private letter rulings that
any gain realized as a result of the receipt of subscription rights with a fair
market value must be recognized by the subscription rights holder regardless of
whether or not such subscription rights are exercised. However, in a private
letter ruling issued by the IRS to BB&T Financial in connection with its 1991
acquisitions of Gate City Federal Savings & Loan Association ("Gate City") and
Albemarle Savings & Loan Association ("Albemarle"), the IRS concluded, under
circumstances substantially similar to the Conversion Merger, that a
subscription rights recipient realized gain from receipt of subscription rights
only if the subscription rights are exercised. Subsequent to issuing the
private letter ruling in Gate City and Albemarle, the IRS decided to review its
policy regarding the proper tax treatment of the receipt of subscription rights
and has indicated that no more private letter rulings on this issue will be
granted until such review is completed. Regardless, private letter rulings,
while potentially instructive, may not be relied upon in the present situation
as any expression of the policy of the IRS or as any expression of the present
state of the law in this area and, due to the existence of conflicting private
letter rulings it is uncertain as to the conclusion the IRS would reach with
regard to the Subscription Rights received by the Eligible Member Subscribers
in this transaction. Furthermore, the existence of conflicting rulings makes it
unclear as to how to determine the number of Subscription Rights issued to each
Eligible Member Subscriber or Voting Member. The Tax Opinion does not opine as
to whether gain will be recognized by a Subscription Rights holder who does not
exercise Subscription Rights. No tax opinion was sought on this issue because
of the existence of conflicting private letter rulings and the uncertainty as
to the conclusion that the IRS would reach with regard to this issue.
The Tax Opinion states that if a recipient of Subscription Rights is required
to recognize gain upon receipt of Subscription Rights and does not exercise
some or all of the Subscription Rights received, the
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<PAGE>
recipient of such rights will be entitled to claim, for the year in which the
Subscription Rights expire, a loss in an amount equal to the recipient's tax
basis in such Subscription Rights. See "--Basis in Subscription Rights and
Interests in Liquidation Account." Such loss will be a capital loss provided
the BB&T Financial Common Stock that would have been acquired upon the exercise
of such Subscription Rights would have constituted a capital asset in the hands
of the Eligible Member Subscriber. Although the loss will be equal in amount to
the gain recognized upon receipt of such Subscription Rights, the character of
the loss as a capital loss may not necessarily be the same as the character of
the gain required to be recognized upon receipt of such Subscription Rights,
certain additional tax forms may have to be filed with regard to such loss, and
under certain circumstances the year in which a holder of Subscription Rights
is entitled to deduct the loss may be later than the year in which the gain
from receipt of such Subscription Rights is recognized. For most recipients of
Subscription Rights, any gain recognized with regard to the Subscription Rights
received will be treated as capital gain.
BB&T Financial is uncertain as to whether it will be required to file
information returns with the IRS related to the value of Subscription Rights
received by Eligible Member Subscribers and, if required, how the value will be
determined for purposes of the information returns (particularly in light of
the four-month restriction imposed on shares purchased at the 85% Price).
Accordingly, Eligible Member Subscribers are urged to consult their own tax
advisors as to the specific tax consequences to them of purchasing BB&T
Financial Common Stock in either the Subscription Offering or the Community
Offering.
In several recent private letter rulings, the IRS has concluded that an
interest in a liquidation account has only nominal, if any, fair market value.
Private letter rulings, while potentially instructive, however, may not be
relied upon in the present situation as any expression of the policy of the IRS
or as any expression of the present state of the law in this area.
Basis in Subscription Rights and Interests in Liquidation Account. The Tax
Opinion states that a person who receives, as part of the Conversion Merger,
Subscription Rights in the Subscription Offering will have a tax basis in such
Subscription Rights equal to zero, increased by the amount of gain, if any,
recognized by such Subscription Rights holder with regard to such Subscription
Rights. A Subscription Rights holder's tax basis in the interest in the
liquidation account received by such Subscription Rights holder will be equal
to the fair market value of the interest in the liquidation account received.
If the interest in the liquidation account is determined to have no fair market
value, the Subscription Rights holder's basis therein will be zero.
Exercise of Subscription Rights Received in the Subscription Offering. The
Tax Opinion states that a Subscription Rights holder who receives Subscription
Rights in the Conversion (i) will not recognize any additional taxable income
as a result of the purchase of BB&T Financial Common Stock pursuant to the
exercise of such Subscription Rights, (ii) will have a tax basis in the BB&T
Financial Common Stock so purchased equal to the purchase price paid therefor
increased by the tax basis, if any, of the Subscription Rights exercised, and
(iii) will have a holding period for such BB&T Financial Common Stock
commencing on the date the Subscription Rights are exercised.
Purchase of BB&T Financial Common Stock Pursuant to the Community
Offering. The Tax Opinion states that no income, gain or loss will be
recognized by a purchaser of BB&T Financial Common Stock pursuant to the
Community Offering and that a purchaser of BB&T Financial Common Stock pursuant
to the Community Offering will have a tax basis in such stock equal to the
purchase price thereof, and will have a holding period for such stock
commencing on the day following the date on which such stock is purchased.
Bonus Interest. The Tax Opinion states that an Eligible Member Subscriber
will be in receipt of taxable income in the amount of the bonus interest paid
to the Eligible Member Subscriber, at the time such amount is paid or made
available.
IRA, Keogh or Similar Accounts. Those persons who are beneficial owners of
IRA, Keogh or similar retirement accounts are not themselves Eligible Member
Subscribers or Voting Members by virtue of having such accounts, but the
account itself may be an Eligible Member Subscriber or Voting Member. Thus, the
tax consequences of the receipt and exercise of Subscription Rights will be
applicable to the IRAs and Keogh accounts themselves, and not the beneficial
owners thereof. So long as such accounts are tax-exempt,
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<PAGE>
under section 408 of the Code (in the case of IRAs) or section 501(a) of the
Code (in the case of Keogh accounts), there will be no taxable gain to the
accounts resulting from receipt of Subscription Rights. In the case of an IRA,
Keogh or similar retirement account established at Asheville Savings, BB&T or
BB&T-SC, however, in order to subscribe for shares in the Subscription Offering
or Community Offering, the beneficial owner first must authorize and direct
such institution to transfer the account to a self-directed account at an
independent trustee that permits the account to hold stock. Payment for the
BB&T Financial Common Stock under these circumstances will have no federal
income tax consequences to the IRA or Keogh account or to the beneficial owner
of such account. To the extent that the balance in an IRA or Keogh account is
increased as a result of the exercise of Subscription Rights, additional income
generally will be recognized upon the future withdrawal of such account
balance.
Interest Payments and Backup Withholding. Any amounts received from a
Subscriber for the purchase of shares in the Subscription Offering (other than
by designation of such amounts for withdrawal from an eligible deposit account)
or in the Community Offering will be deposited in a special account at
Asheville Savings. Asheville Savings will pay interest to the Subscriber on
such funds at its passbook rate, currently % per annum, from the date
payment is received until the Conversion is completed or terminated. Interest
described in this paragraph should constitute ordinary interest income to the
Subscriber.
For federal income tax purposes, Asheville Savings is required, under certain
circumstances, to withhold 31 percent of payments ("reportable payments") of
interest to a Subscriber who is not exempt from "backup withholding." Backup
withholding applies if, among other things, (i) the Subscriber fails to furnish
Asheville Savings with his or her social security number or other taxpayer
identification number ("TIN") on the Stock Order Form, (ii) the IRS notifies
Asheville Savings that the TIN furnished by the Subscriber is incorrect, (iii)
the IRS notifies Asheville Savings that the Subscriber has failed to report
interest properly, or (iv) under certain circumstances, the Subscriber fails to
provide Asheville Savings with a certified statement, signed under penalties of
perjury, that the TIN provided to Asheville Savings is correct and that such
Subscriber is not subject to backup withholding. Backup withholding will not
apply to a reportable payment of interest if the Subscriber is an exempt
recipient (such as a corporation or a financial institution). Any amounts
withheld under the backup withholding rules would be allowed as a refund or a
credit against a Subscriber's federal income tax provided that required
information is furnished to the IRS.
DISTRIBUTION OF THE PROSPECTUS/PROXY STATEMENT
A Prospectus/Proxy Statement and other offering materials for the
Subscription Offering will be mailed to Eligible Member Subscribers and Voting
Members and additional copies being available to Eligible Member Subscribers
and Voting Members by contacting the Conversion Information Center, P.O. Box
652, Asheville, North Carolina 28802 (telephone no. (704) -- ). Offering
materials for the Community Offering will be distributed through Asheville
Savings and by Trident Securities, as sales agent in the Offerings. Officers
and directors of BB&T Financial and Asheville Savings will be available to
answer questions regarding the Subscription Offering and the Community Offering
and also may participate in informational meetings held by Trident Securities
for interested persons. Such officers and directors are not authorized to make
statements about BB&T Financial or Asheville Savings unless such information
also is set forth in this Prospectus/Proxy Statement, nor may they render
investment advice, and if any such information or investment advice is given,
it may not be relied upon. Eligible Member Subscribers, Voting Members and
Community Offering Residents will be instructed to send Stock Order Forms,
together with cash (if delivered in person) or checks in full payment for their
subscriptions for BB&T Financial Common Stock (or appropriate account
withdrawal instructions), by mail in the postage-paid return envelope
accompanying the Prospectus/Proxy Statement to the Conversion Information
Center or by hand delivery to any Asheville Savings office or to any BB&T
office in the Community Offering Area. See "--The Subscription Offering--Method
of Payment" and "--The Community Offering--Method of Payment."
BB&T Financial and Asheville Savings have retained Trident Securities to
assist BB&T Financial in marketing the shares of BB&T Financial Common Stock in
the Offerings and to provide related financial advisory services. Trident
Securities will assist in: (1) training and educating Asheville Savings and
BB&T Financial employees regarding the mechanics of the conversion merger
process; (2) conducting informational
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<PAGE>
meetings for interested investors; (3) organizing the sales efforts in
Asheville Savings' local communities; and (4) keeping records of subscriptions
by Subscribers. Trident Securities is an affiliate of Trident Financial, which
has determined the Appraised Value of Asheville Savings. Trident Financial also
acted as financial advisor to Asheville Savings in connection with the
Conversion Merger. See "--Subscription Offering--Appraised Value of Asheville
Savings" and "EXPERTS."
Trident Securities is registered with the SEC as a broker-dealer and is a
member of the National Association of Securities Dealers, Inc. ("NASD"). For
its services, BB&T Financial has agreed to pay Trident Securities a fee of
$100,000 plus 1.75% of the aggregate dollar amount of BB&T Financial Common
Stock sold to Eligible Member Subscribers, Voting Members and Community
Offering Residents (except for sales of shares to directors and executive
officers of BB&T Financial and Asheville Savings and their associates and the
sale of shares to the Asheville Savings ESOP). Such compensation may be deemed
to be underwriting compensation under the Securities Act of 1933, as amended.
BB&T Financial and Asheville Savings have agreed to reimburse Trident
Securities for its out-of-pocket expenses (including legal fees) associated
with its services as sales agent. BB&T Financial and Asheville Savings also
have agreed to indemnify Trident Securities against liabilities and expenses
(including legal fees) incurred in connection with certain claims or litigation
arising out of or based upon untrue statements or omissions contained in the
offering material for the shares of BB&T Financial Common Stock offered in the
Subscription Offering and in the Community Offering or to make certain
contributions in respect thereof.
THE SHARES OF BB&T FINANCIAL COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS AND
ARE NOT AND WILL NOT BE INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
ANTICIPATED SUBSCRIPTIONS FOR SHARES OF BB&T FINANCIAL COMMON STOCK BY ASHEVILLE
SAVINGS' DIRECTORS AND EXECUTIVE OFFICERS IN THE OFFERINGS
The following table sets forth the aggregate dollar amount of shares of BB&T
Financial Common Stock presently expected to be subscribed for by Asheville
Savings' directors and executive officers, including their associates, in the
Offerings:
<TABLE>
<CAPTION>
ANTICIPATED
AGGREGATE
SUBSCRIPTION
NAME POSITION AMOUNT
---- -------- ------------
<S> <C> <C>
Vice President and Chief Financial
Suzanne S. Chapman......... Officer $ 10,000
John M. Cross.............. Director 50,000
William L. Dalton.......... Vice President 40,000
Dr. Walter H. Davis........ Director 20,000
John B. Dickson............ President and Director 40,000
Douglas W. Haldane......... Vice President 10,000
John L. Hazlehurst......... Director 50,000
Charles G. Lee............. Chairman of the Board 40,000
Thomas G. Pardue........... Vice President 10,000
William O. Prescott........ Director 10,000
E. Bretney Smith........... Vice Chairman of the Board 50,000
Robert S. Webb, Jr. ....... Director 50,000
Stephen W. Woody........... Director 50,000
--------
All Directors and Executive Officers as a Group:................ $430,000
</TABLE>
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Shares of BB&T Financial Common Stock purchased in the Offerings by directors
and executive officers shall be subject to the restriction that these shares
shall not be sold without the prior written permission of the Administrator for
a period of one year following the Closing Date, except in the event of the
death of the director or executive officer.
In addition, the outside directors as a group will be granted ten-year
options to acquire 55,385 shares of BB&T Financial Common Stock at an exercise
price equal to the market price of BB&T Financial Common Stock on the date of
grant (which will be the closing date of the Conversion) and will be awarded
23,538 shares of restricted BB&T Financial Common Stock. Mr. Dickson will
receive ten-year options to acquire 25,846 shares of BB&T Financial Common
Stock at an exercise price equal to the market price of BB&T Financial Common
Stock on the date of grant and will be awarded 7,846 shares of restricted BB&T
Financial Common Stock. The four other executive officers listed above as a
group will be granted ten-year options to acquire 11,169 shares of BB&T
Financial Common Stock and will be awarded 7,846 shares of restricted BB&T
Financial Common Stock. None of the shares to be issued pursuant to options or
restricted stock awards are part of the shares issued in the Subscription
Offering or the Community Offering. The options and restricted stock will vest
20% per year over five years beginning on the first year after the close of the
Conversion and the Acquisition.
MARKET PRICE AND DIVIDENDS
BB&T Financial Common Stock is listed for quotation on the Nasdaq NMS under
the symbol "BBTF." The following table sets forth, for the indicated periods,
the high and low closing prices for the BB&T Financial Common Stock as reported
by the Nasdaq NMS, and the cash dividends declared per share of BB&T Financial
Common Stock for the indicated periods.
<TABLE>
<CAPTION>
PRICE RANGE CASH DIVIDENDS
----------- DECLARED
HIGH LOW PER SHARE
----- ----- --------------
<S> <C> <C> <C>
1992
First Quarter...................................... 27.75 21.88 .22
Second Quarter..................................... 30.13 25.50 .22
Third Quarter...................................... 29.88 27.38 .22
Fourth Quarter..................................... 32.25 28.75 .25
1993
First Quarter...................................... 35.38 31.00 .25
Second Quarter..................................... 34.38 31.63 .25
Third Quarter...................................... 34.63 32.25 .25
Fourth Quarter..................................... 35.88 29.13 .27
1994
First Quarter (through January , 1994)............
</TABLE>
On February , 1994, the last reported sale price of BB&T Financial Common
Stock, as reported on the Nasdaq NMS, was $ . On December 31, 1993, there
were 19,121 holders of record of BB&T Financial Common Stock and 32,476,387
shares outstanding. On June 22, 1993, the date BB&T Financial and Asheville
Savings entered into the Reorganization Agreement, the last reported sale price
of BB&T Financial Common Stock, as reported on the Nasdaq NMS, was $33.25.
The holders of BB&T Financial Common Stock are entitled to receive dividends
when and if declared by the Board of Directors out of funds legally available
therefor. BB&T Financial has paid, and prior to 1973, BB&T paid, regular
quarterly cash dividends since 1921. Although BB&T Financial currently intends
to continue to pay quarterly cash dividends on the BB&T Financial Common Stock,
there can be no assurance that BB&T Financial's dividend policy will remain
unchanged after completion of the Subscription Offering and the Community
Offering. The declaration and payment of dividends thereafter will depend upon
business conditions, operating results, capital and reserve requirements and
the Board of Directors' consideration of other relevant factors.
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BB&T Financial is a legal entity separate and distinct from its subsidiaries
and its revenues depend in significant part on the payment of dividends from
its subsidiary financial institutions, particularly BB&T. BB&T Financial's bank
subsidiaries are subject to certain legal restrictions on the amount of
dividends they are permitted to pay. See "SUPERVISION AND REGULATION OF BB&T
FINANCIAL--BB&T and BB&T-SC."
USE OF PROCEEDS
It is estimated that the net proceeds from the sale of the shares of BB&T
Financial Common Stock in the Offerings (assuming that all shares offered are
sold at the 85% Price) will range from $20.5 million to $28.1 million. The net
proceeds from the sale of the BB&T Financial Common Stock will be used by BB&T
Financial (along with additional funds from BB&T Financial) to acquire the
stock of Asheville Savings issued in the Conversion. It is possible, however,
that BB&T Financial will use the proceeds from the Offerings for general
corporate purposes in the event that the FDIC takes certain actions under
legislation proposed in the U.S. Congress. See "CERTAIN CONSIDERATIONS RELATING
TO THE OFFERINGS--Potential Effects of Pending Legislation." The purchase price
of the stock to be issued by Asheville Savings in the Conversion will equal the
Appraised Value of Asheville Savings less expenses incurred in the Conversion
and the Acquisition, but will in no event be less than the current net worth of
Asheville Savings.
The Plan of Conversion does not require a minimum number of shares to be sold
in the Offerings in order to consummate the Conversion. Thus, the net proceeds
from the Offerings could be substantially less than those set forth above.
However, the Administrator may condition his final approval of the Conversion
and the Acquisition on a minimum number of shares being sold in the Conversion
Merger. It is possible that shares not sold in the Offerings may be sold in a
public offering.
The estimated amount of net proceeds, which are expected to range from $20.5
million to $28.1 million, was determined by subtracting the estimated Offering
expenses of the sale of the shares of BB&T Financial Common Stock in the
Offerings from the estimated gross proceeds (which are expected to range from
$21.7 million to $29.3 million, based on the sale of all shares to be offered
based on the minimum and maximum of the Estimated Valuation Range of Asheville
Savings as determined by Trident Financial). In calculating the net proceeds,
it is assumed that: (a) 100% of the shares of BB&T Financial Common Stock
offered will be purchased in the Subscription Offering at the 85% Price and
none of the shares of BB&T Financial Common Stock offered will be sold in the
Subscription Offering at the 95% Price or the BB&T Market Price or in the
Community Offering at the 95% Price; (b) the 85% Price will be $25.50 (based on
an assumed BB&T Market Price of $30.00); and (c) Trident Securities will
receive a fee of $100,000 and a sales agency commission of 1.75% of the
aggregate dollar amount of such stock sold by Trident Securities in the
Offerings. See "THE OFFERINGS--Plan of Distribution."
The actual proceeds may be more or less than the estimated amount, depending
on, among other things, the BB&T Market Price, the Appraised Value and the
actual number of shares of BB&T Financial Common Stock purchased in the
Subscription Offering and the Community Offering. The following table sets
forth information regarding the range of the number of shares to be issued and
estimated gross proceeds and net proceeds based on the Appraised Value and the
minimum and maximum of the Estimated Valuation Range (as determined by Trident
Financial), and the assumptions set forth in the preceding paragraph.
<TABLE>
<CAPTION>
$25.50 MILLION $30.00 MILLION $34.50 MILLION
APPRAISED APPRAISED APPRAISED
VALUE VALUE VALUE
-------------- -------------- --------------
<S> <C> <C> <C>
Estimated Number of Shares to be
Sold in the Subscription
Offering(1)...................... 850,000 1,000,000 1,150,000
Estimated 85% Price Per Share..... $ 25.50 $ 25.50 $ 25.50
----------- ----------- -----------
Estimated Gross Proceeds from the
Offerings........................ $21,675,000 $25,500,000 $29,325,000
Expenses.......................... 1,140,000 1,200,000 1,260,000
----------- ----------- -----------
Estimated Net Proceeds from the
Offerings........................ $20,535,000 $24,300,000 $28,065,000
=========== =========== ===========
</TABLE>
- --------
(1) Calculated by dividing Appraised Value by estimated BB&T Market Price of
$30.00 per share.
45
<PAGE>
CAPITALIZATION
The following table sets forth the historic consolidated capitalization of
BB&T Financial at September 30, 1993 and the pro forma consolidated
capitalization of BB&T Financial after giving effect to the Conversion and
Acquisition, based upon the sale of BB&T Financial Common Stock under the
assumptions set forth under "USE OF PROCEEDS" and "PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS," as applied to the Acquisition of Asheville Savings.
<TABLE>
<CAPTION>
$25.50 MILLION $30.00 MILLION $34.50 MILLION
BB&T APPRAISED APPRAISED APPRAISED
FINANCIAL VALUE VALUE VALUE
---------- -------------- -------------- --------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Deposits................ $6,084,242 $6,358,975 $6,358,975 $6,358,975
========== ========== ========== ==========
Borrowings:
Short-term............ $ 917,317 $ 917,317 $ 917,317 $ 917,317
Long-term............. 292,778 309,837 309,837 309,837
---------- ---------- ---------- ----------
Total borrowings.... $1,210,095 $1,227,154 $1,227,154 $1,227,154
========== ========== ========== ==========
Shareholders' Equity(1):
Common stock.......... $ 77,192 $ 79,432 $ 79,807 $ 80,182
Paid-in capital....... 253,269 272,949 276,339 279,729
Retained earnings..... 372,635 372,635 372,635 372,635
Less loan to employee
stock ownership plan. 4,726 6,894 7,276 7,659
Less reserve for re-
stricted stock....... -- 1,385 1,385 1,385
---------- ---------- ---------- ----------
Total shareholders'
equity............. $ 698,370 $ 716,737 $ 720,120 $ 723,502
========== ========== ========== ==========
</TABLE>
- --------
(1) Includes the issuance of 46,155 shares of restricted BB&T Financial Common
Stock to be issued to the outside directors, executive officers and
employees of Asheville Savings, subject to vesting over a five-year period
beginning on the first anniversary after the date of grant.
46
<PAGE>
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined condensed balance sheet as of
September 30, 1993 and the unaudited pro forma combined condensed statement of
income for the year ended December 31, 1992 and nine months ended September 30,
1993 combine the historical financial statements of BB&T Financial, Old Stone,
Citizens of Newton, Mutual Savings, Citizens of Mooresville, Asheville Savings,
Home Savings Bank of Albemarle, S.S.B., Albemarle, North Carolina ("Home
Savings") and LSB. The pro forma combined condensed statements give effect to
the affiliations of each institution with BB&T Financial as if it had occurred
on September 30, 1993 with respect to the balance sheet, and at the beginning
of each period for the income statements, presented under the purchase method
of accounting for business combinations. The pro forma combined condensed
statements give effect to the affiliation of BB&T Financial with Mutual
Savings, Old Stone and Citizens of Mooresville and the expected affiliation of
BB&T Financial with Asheville Savings and Home Savings under the purchase
method of accounting, at and for the reporting periods indicated. The purchase
method of accounting requires that all assets and liabilities be adjusted to
their estimated fair market value as of the date of acquisition. The pro forma
combined condensed financial statements give effect to the affiliation of BB&T
Financial with Citizens of Newton and LSB under the pooling-of-interests method
of accounting. The pooling-of-interests method of accounting combines assets
and liabilities at their historical bases and restates the results of
operations as if BB&T and the institution had been combined at the beginning of
all reported periods.
The pro forma statements are provided for informational purposes only. The
pro forma combined condensed statement of income is not necessarily indicative
of actual results that would have been achieved had the acquisitions been
consummated at the beginning of the periods presented and is not indicative of
future results. The pro forma financial statements should be read in
conjunction with the audited financial statements and the notes thereto of BB&T
Financial, incorporated by reference herein.
47
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1993
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
BB&T ASHEVILLE CITIZENS OF
FINANCIAL SAVINGS OLD STONE NEWTON
---------- --------- --------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks, noninter-
est-bearing....................... $ 301,778 8,714 9,496 3,984
Interest-bearing bank balances..... 9,753 20,756 29,286 16,831
Federal funds sold................. -- -- -- --
Investment and mortgage-backed se-
curities.......................... 1,999,655 33,685 114,196 23,830
Loans.............................. 5,558,878 241,483 386,545 208,236
Less allowance for loan losses..... 84,038 1,762 4,235 705
---------- ------- ------- -------
5,474,840 239,721 382,310 207,531
Bank premises and equipment........ 110,382 6,366 2,482 4,714
Goodwill........................... 5,818 -- -- 1,663
Other assets....................... 187,067 13,230 10,952 3,327
---------- ------- ------- -------
Total assets..................... $8,089,293 322,472 548,722 261,880
========== ======= ======= =======
LIABILITIES
Deposits:
Noninterest-bearing............... $ 746,122 9,381 5,100 5,625
Interest-bearing.................. 5,338,120 265,352 478,136 217,923
---------- ------- ------- -------
Total deposits................... 6,084,242 274,733 483,236 223,548
Short-term borrowed funds.......... 917,317 -- -- --
Long-term debt..................... 292,778 17,059 20,000 15,000
Negative goodwill.................. 38,652 -- -- --
Other liabilities.................. 57,934 5,356 7,549 1,334
---------- ------- ------- -------
Total liabilities................ 7,390,923 297,148 510,785 239,882
SHAREHOLDERS' EQUITY
Common stock....................... 77,192 -- -- 1,245
Paid-in capital.................... 253,269 -- 35,000 5,336
Retained earnings.................. 372,635 25,324 2,937 15,417
Less loan to employee stock owner-
ship plan......................... 4,726 -- -- --
Less reserve for restricted stock.. -- -- -- --
---------- ------- ------- -------
698,370 25,324 37,937 21,998
---------- ------- ------- -------
Total liabilities and sharehold-
ers' equity..................... $8,089,293 322,472 548,722 261,880
========== ======= ======= =======
CAPITAL RATIOS
Equity to assets................... 8.63%
Net book value per share........... $ 22.62
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
BB&T
PURCHASE FINANCIAL
ACCOUNTING FULLY
MUTUAL CITIZENS OF HOME CONVERSION AND OTHER POOLING COMBINED
SAVINGS MOORESVILLE SAVINGS LSB ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
------- ----------- ------- --- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1,991 488 3,532 37,061 (2,937)(d) 359,489
(4,351)(l)
(267)(m)
212 2,022 7,038 -- 85,898
8,600 -- -- 14,200 22,800
29,740 4,185 27,345 221,305 49,394 (a) 4,520 (g) 2,507,855
44,247 52,577 117,199 381,224 11,700 (h) 7,002,089
437 203 144 4,980 96,504
------ ------ ------- ------- ------ ------- ------ ----------
43,810 52,374 117,055 376,244 11,700 6,905,585
638 776 1,029 14,896 3,000 (i) 135,474
(8,809)(p)
-- -- -- -- 22,483 (j) 29,964
1,398 562 1,910 13,754 (4,450)(o) 227,250
------ ------ ------- ------- ------ ------- ------ ----------
86,389 60,407 157,909 677,460 49,394 20,889 10,274,815
====== ====== ======= ======= ====== ======= ====== ==========
895 132 507 76,356 844,118
78,290 52,469 139,178 492,629 7,062,097
------ ------ ------- ------- ------ ------- ------ ----------
79,185 52,601 139,685 568,985 7,906,215
-- 2,500 -- 45,015 58,250 (b) 1,023,082
-- -- -- 8,000 352,837
-- -- -- -- 27,167 (p) 65,819
655 346 1,721 3,367 11,475 (e) 105,007
(3,486)(f)
7,870 (n)
10,886 (s)
------ ------ ------- ------- ------ ------- ------ ----------
79,840 55,447 141,406 625,367 112,162 9,452,960
-- -- -- 7,767 5,583 (a) 377 (k) 1,676 (q) 95,660
1,820 (r)
-- -- -- 21,734 49,287 (a) (35,000)(c) (1,676)(q) 330,273
4,143 (k) (1,820)(r)
6,549 4,960 16,503 22,592 (2,937)(d) 410,644
(4,351)(l)
(267)(m)
(48,718)(p)
-- -- -- (5,476)(a) -- 10,202
-- -- -- (4,520)(k) 4,520
------ ------ ------- ------- ------ ------- ------ ----------
6,549 4,960 16,503 52,093 49,394 (91,273) -- 821,855
------ ------ ------- ------- ------ ------- ------ ----------
86,389 60,407 157,909 677,460 49,394 20,889 10,274,815
====== ====== ======= ======= ====== ======= ====== ==========
8.00
21.56
</TABLE>
49
<PAGE>
(a) Investment of net proceeds from issuance of 216,539, 216,471, 800,000 and
1,000,000 shares of BB&T Financial Common Stock in connection with the
acquisitions of Mutual Savings, Citizens of Mooresville, Home Savings and
Asheville Savings, respectively, based on estimated appraised values of
$8,000,000, $6,900,000, $24,000,000 and $30,000,000, respectively. Using
actual 85% Prices of $28.58 for Mutual Savings and $27.09 for Citizens of
Mooresville and an assumed 85% price of $25.50 for Home Savings and
Asheville Savings, assuming that all shares are sold in the Subscription
Offering and that 23,529, 18,898, 68,293 and 100,000 shares are purchased
by the BB&T Employee Stock Ownership Plan at the 85% Price for Mutual
Savings, Citizens of Mooresville, Home Savings and Asheville Savings,
respectively.
(b) To record the acquisition of all the outstanding common shares of Old Stone
at a cost of $58,250,000 in cash.
(c) To reduce the equity of Old Stone to zero.
(d) To record payment of closing expenses and cash dividend to be paid by Old
Stone prior to acquisition.
(e) To record the estimated tax liabilities on the recapture of the tax bad
debt reserves.
(f) To adjust the deferred tax liabilities as a result of purchase accounting
adjustments at BB&T Financial's combined federal and North Carolina
statutory tax rate of 40.12%.
(g) To adjust the investment and mortgage-backed securities portfolios to
estimated market value.
(h) To adjust the loan portfolios to estimated market value.
(i) To adjust the fixed assets of Old Stone to estimated market value.
(j) To record the excess of cost of Old Stone over the fair value of the net
assets acquired (goodwill). The amount of goodwill will be deducted from
earnings over a period of ten years in accordance with Accounting
Principles Board Opinion No. 16.
(k) To record the issuance of 150,670 shares of restricted stock to key
employees and directors of acquired mutual savings institutions.
(l) To record the payment of funds, net of tax effect at BB&T Financial's
combined federal and North Carolina statutory tax rate of 40.12%, to
charitable trusts in which proceeds will be distributed to charities
recommended by the directors of the acquired savings institutions.
(m) To record cash bonuses, net of tax effect paid to employees of acquired
savings institutions prior to acquisition.
(n) To record the pension liability for employees and directors of acquired
savings institutions.
(o) To reduce the purchased mortgage servicing rights of Asheville Savings to
zero.
(p) To record the excess of fair value of net assets acquired over cost
(negative goodwill) of savings institutions acquired in conversion mergers,
after reducing the adjusted basis in premises and equipment to zero. The
amount of negative goodwill will be added to earnings over a period of ten
years in accordance with Accounting Principles Board Opinion No. 16.
(q) To record the issuance of 1,168,311 shares of BB&T Financial Common Stock
for all the 1,245,043 outstanding shares of Citizens of Newton common
stock, assuming an exchange ratio of .9389 shares of BB&T Common Stock for
each share of Citizens of Newton common stock.
(r) To record the issuance of 3,834,625 shares of BB&T Financial Common Stock
for all the 3,106,972 outstanding shares of LSB common stock, assuming an
exchange ratio of 1.2342 shares of BB&T common stock for each share of LSB
common stock.
(s) To record liability for 1% deposit premium to be paid on deposits of
Citizens of Mooresville and for 2.5% deposit premiums to be paid on
deposits of Asheville Savings and Home Savings.
50
<PAGE>
(PAGE INTENTIONALLY LEFT BLANK)
51
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1993(A)
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
BB&T
FINANCIAL
PRO FORMA
WITH
BB&T COMPLETED ASHEVILLE CITIZENS OF MUTUAL
FINANCIAL ACQUISITIONS SAVINGS NEWTON SAVINGS OLD STONE
---------- ------------ --------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest income......... $ 395,573 402,348 17,458 16,572 4,579 30,078
Interest expense........ 162,286 165,607 9,819 7,836 2,597 15,492
---------- ---------- ------ ------ ----- ------
Net interest income.... 233,287 236,741 7,639 8,736 1,982 14,586
Provision for loan loss-
es..................... 13,250 13,795 455 356 90 1,246
---------- ---------- ------ ------ ----- ------
Net interest income
after provision for
loan losses............ 220,037 222,946 7,184 8,380 1,892 13,340
Noninterest income...... 79,136 79,612 1,873 1,468 79 2,119
Noninterest expense..... 196,712 198,933 7,353 4,856 1,277 9,155
---------- ---------- ------ ------ ----- ------
Income before income
taxes.................. 102,461 103,625 1,704 4,992 694 6,304
Income taxes............ 32,646 32,998 (208) 2,020 260 2,328
---------- ---------- ------ ------ ----- ------
Net Income.............. $ 69,815 70,627 1,912 2,972 434 3,976
========== ========== ====== ====== ===== ======
Earnings Per Share(k):
Primary net income..... $ 2.31 2.31
Fully diluted net in-
come.................. 2.26 2.27
Average Common Shares:
Primary................ 30,248,866 30,640,860
Fully diluted.......... 31,011,123 31,403,117
</TABLE>
- --------
(a) BB&T Financial, Old Stone, Asheville Savings and LSB have fiscal years
ending December 31. Citizens of Newton and Home Savings have fiscal years
ending September 30. Mutual Savings has a fiscal year ending June 30, and
Citizens of Mooresville has a fiscal year ending March 31. The financial
data included herein in each case is for the nine months ended September
30, 1993, except for Citizens of Newton which is for the nine months ended
June 30, 1993.
(b) Estimated interest income on the investable funds of Mutual Savings,
Citizens of Mooresville, Asheville Savings and Home Savings provided from
their conversions at an estimated rate of 4.58% which is equal to estimated
available investment yields at the beginning of the period.
(c) Tax (benefit) expense using BB&T Financial's combined federal and North
Carolina statutory income tax rate of 40.12%.
(d) Amortization of excess of cost over fair value of assets acquired
(goodwill) of Old Stone over a ten-year period using the straight-line
method.
(e) Amortization of excess of fair value of net assets acquired over cost
(negative goodwill) of Mutual Savings, Citizens of Mooresville, Home
Savings and Asheville Savings over a ten-year period using the straight-
line method.
(f) Reduced depreciation from write-down of premises and equipment of Mutual
Savings, Citizens of Mooresville, Home Savings and Asheville Savings and
write up of Old Stone.
(g) Reduced interest income from write-up of investment securities and loans of
acquired entities.
(h) To record expense of restricted stock and ESOP over a five-year period.
(i) To adjust for reduced amortization of purchased mortgage servicing rights.
(j) To record interest expense on borrowed funds used to acquire Old Stone at
an estimated rate of 4.55%.
(k) Pro forma share data and per share data is computed based on the issuance
of 1,168,311 shares in the acquisition of Citizens of Newton, 3,834,625
shares in the acquisition of LSB, and the issuance of 216,539, 216,471,
800,000 and 1,000,000 shares of BB&T Financial Common Stock in consummating
the acquisitions of Mutual Savings, Citizens of Mooresville, Home Savings
and Asheville Savings, respectively.
52
<PAGE>
<TABLE>
<CAPTION>
PURCHASE BB&T FINANCIAL
CITIZENS HOME CONVERSION ACCOUNTING FULLY COMBINED
SAVINGS SAVINGS LSB COMBINED ADJUSTMENT ADJUSTMENTS PRO FORMA
- -------- ------- --- -------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
3,526 9,835 34,904 519,300 1,697(b) (1,692)(g) 519,305
1,782 4,369 13,674 221,176 1,988 (j) 223,164
----- ----- ------ ------- ----- ------ ----------
1,744 5,466 21,230 298,124 1,697 (3,680) 296,141
67 -- 1,162 17,171 17,171
----- ----- ------ ------- ----- ------ ----------
1,677 5,466 20,068 280,953 1,697 (3,680) 278,970
70 206 5,424 90,851 2,038 (e) 92,889
1,112 1,712 18,307 242,705 1,686 (d) 246,048
(277)(f)
2,354 (h)
(420)(i)
----- ----- ------ ------- ----- ------ ----------
635 3,960 7,185 129,099 1,697 (4,985) 125,811
251 1,483 2,011 41,143 681(c) (2,141)(c) 39,683
----- ----- ------ ------- ----- ------ ----------
384 2,477 5,174 87,956 1,016 (2,844) 86,128
===== ===== ====== ======= ===== ====== ==========
2.27
2.23
37,953,538
38,715,795
</TABLE>
53
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1992(A)
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
BB&T
FINANCIAL
PRO FORMA
WITH
BB&T COMPLETED ASHEVILLE CITIZENS OF MUTUAL
FINANCIAL ACQUISITIONS SAVINGS NEWTON SAVINGS OLD STONE
---------- ------------ --------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest income......... $ 493,449 564,342 27,732 24,474 6,868 46,781
Interest expense........ 225,094 265,956 18,450 13,753 4,224 26,130
---------- ---------- ------ ------ ----- ------
Net interest income.... 268,355 298,386 9,282 10,721 2,644 20,651
Provision for loan
losses................. 29,000 31,939 640 190 236 2,474
---------- ---------- ------ ------ ----- ------
Net interest income
after provision for
loan losses............ 239,355 266,447 8,642 10,531 2,408 18,177
Noninterest income...... 87,164 92,405 4,024 2,053 63 3,271
Noninterest expense..... 218,012 238,931 9,572 6,651 1,462 11,352
---------- ---------- ------ ------ ----- ------
Income before income
taxes.................. 108,507 119,921 3,094 5,933 1,009 10,096
Income taxes............ 32,431 41,252 1,553 2,288 401 3,088
---------- ---------- ------ ------ ----- ------
Net income.............. 76,076 78,669 1,541 3,645 608 7,008
========== ========== ====== ====== ===== ======
Earnings Per Share(k):
Primary net income..... $ 2.89 2.72
Fully diluted net
income................ 2.75 2.60
Average Common Shares:
Primary................ 26,312,788 28,893,405
Fully diluted.......... 28,349,464 30,930,081
</TABLE>
- --------
(a) BB&T Financial, Old Stone, Asheville Savings and LSB have fiscal years
ending December 31, Citizens of Newton and Home Savings have fiscal years
ending September 30, Mutual Savings has a fiscal year ending June 30, and
Citizens of Mooresville has a fiscal year ending March 31. The financial
data included herein in each case is for the most recently completed fiscal
year.
(b) Estimated interest income on the investable funds of Mutual Savings,
Citizens of Mooresville, Asheville Savings and Home Savings provided from
their conversions at an estimated rate of 6.45% which is equal to estimated
available yields at the beginning of the period.
(c) Tax (benefit) expense using BB&T Financial's combined federal and North
Carolina statutory income tax rate of 39.27%.
(d) Amortization of excess of cost over fair value of assets acquired
(goodwill) of Old Stone over a ten-year period using the straight-line
method.
(e) Amortization of excess of fair value of net assets acquired over cost
(negative goodwill) of Mutual Savings, Citizens of Mooresville, Asheville
Savings and Home Savings over a ten-year period using the straight-line
method.
(f) Reduced depreciation from write-down of premises and equipment of Mutual
Savings, Citizens of Mooresville, Asheville Savings and Home Savings and
write up of Old Stone.
(g) Reduced interest income from write-up of investment securities and loans of
acquired entities.
(h) To record expense of restricted stock and ESOP plans over a five-year
period.
(i) To adjust for reduced amortization of purchased mortgage servicing rights.
(j) To record interest expense on borrowed funds used to acquire Old Stone at
an estimated rate of 6.15%.
(k) Pro forma share data and per share data is computed based on the issuance
of 1,168,971 shares in the acquisition of Citizens of Newton, 3,834,624
shares in the acquisition of LSB, and the issuance of 216,539, 216,471,
800,000 and 1,000,000 shares of BB&T Financial Common Stock in consummating
the acquisitions of Mutual Savings, Citizens of Mooresville, Home Savings
and Asheville Savings, respectively.
54
<PAGE>
<TABLE>
<CAPTION>
BB&T
FINANCIAL
PURCHASE FULLY
CITIZENS OF HOME CONVERSION ACCOUNTING COMBINED
MOORESVILLE SAVINGS LSB COMBINED ADJUSTMENT ADJUSTMENTS PRO FORMA
- ----------- ------- ------ -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
4,900 13,502 47,725 736,324 3,186(b) (2,256)(g) 737,254
2,799 8,042 21,111 360,465 -- 3,582 (j) 364,047
----- ------ ------ ------- ----- ------ ----------
2,101 5,460 26,614 375,859 3,186 (5,838) 373,207
53 -- 2,528 38,060 -- -- 38,060
----- ------ ------ ------- ----- ------ ----------
2,048 5,460 24,086 337,799 3,186 (5,838) 335,147
416 523 5,964 108,719 2,717 (e) 111,436
1,366 2,355 21,477 293,166 2,248 (d) 297,624
(368)(f)
3,139 (h)
(561)(i)
----- ------ ------ ------- ----- ------ ----------
1,098 3,628 8,573 153,352 3,186 (7,579) 148,959
380 1,215 2,434 52,611 1,251(c) (3,229)(c) 50,633
----- ------ ------ ------- ----- ------ ----------
718 2,413 6,139 100,741 1,935 (4,350) 98,326
===== ====== ====== ======= ===== ====== ==========
2.71
2.61
36,206,083
38,242,759
</TABLE>
55
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF BB&T FINANCIAL
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table presents selected historical consolidated financial data
of BB&T Financial at or for the nine-month periods ended September 30, 1993 and
1992 and at or for the five fiscal years ended December 31, 1992. This
information (other than certain capital ratios) is derived from the historical
consolidated financial statements of BB&T Financial. The information set forth
below should be read in conjunction with the historical consolidated financial
statements and the notes thereto of BB&T Financial which are incorporated by
reference herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
The data at or for the nine-month periods ended September 30, 1993 and 1992
are unaudited, but have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and reflect all
adjustments, consisting of only normal recurring adjustments, which in the
opinion of the management of BB&T Financial are necessary for a fair
presentation of the results for such interim periods. All performance ratios
for such interim periods for BB&T Financial have been annualized. The results
of operations and the ratios for the nine-month period ended September 30, 1993
are not necessarily indicative of the results to be expected for the full year
ending December 31, 1993 or for any other interim period.
56
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE FISCAL YEARS ENDED DECEMBER 31,
----------------------- -------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
----------- ---------- --------- --------- --------- --------- ---------
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income......... $ 395,573 392,087 509,778 527,658 517,798 523,972 427,219
Interest expense........ 162,286 185,965 225,094 288,064 307,825 332,324 250,274
----------- ---------- --------- --------- --------- --------- ---------
Net interest income..... 233,287 206,122 268,355 222,163 191,455 170,561 156,410
Provision for loan loss-
es..................... 13,250 23,532 29,000 38,000 19,235 12,478 11,984
----------- ---------- --------- --------- --------- --------- ---------
Net interest income af-
ter provision for loan
losses................. 220,037 182,590 239,355 184,163 172,220 158,083 144,426
Noninterest income...... 79,136 67,165 87,164 83,552 62,103 55,706 44,385
Noninterest expense..... 196,712 164,742 218,012 184,833 162,433 153,522 137,065
----------- ---------- --------- --------- --------- --------- ---------
Income before taxes..... 102,461 85,013 108,507 82,882 71,890 60,267 51,746
Income taxes............ 32,646 25,926 32,431 22,710 18,275 13,820 9,029
----------- ---------- --------- --------- --------- --------- ---------
Net income.............. $ 69,815 59,087 76,076 60,172 53,615 46,447 42,717
=========== ========== ========= ========= ========= ========= =========
PER SHARE DATA:
Net income:
Primary................ $ 2.31 2.14 2.89 2.57 2.49 2.17 2.05
Fully diluted.......... 2.26 2.05 2.75 2.44 2.37 2.08 1.96
Cash dividends.......... .75 .66 .91 .85 .81 .74 .69
Market price:
High................... 35.38 32.25 32.25 23.63 20.38 24.50 18.25
Low.................... 31.00 21.88 21.88 14.50 14.50 16.38 14.25
Close.................. 33.88 29.13 31.88 22.00 15.88 20.00 17.00
Book value, end of peri-
od..................... 22.62 20.96 21.32 19.19 17.51 15.83 14.61
SELECTED AVERAGE BAL-
ANCES:
Assets.................. $ 7,500,543 6,674,339 6,439,038 5,676,520 5,124,573 5,059,390 4,461,609
Earning assets.......... 7,040,171 6,289,862 6,064,983 5,347,481 4,777,248 4,725,288 4,154,952
Investment securi-
ties(1)................ 1,857,843 1,716,857 1,658,607 1,472,972 1,211,350 1,177,838 966,572
Loans................... 5,168,121 4,564,869 4,398,867 3,813,131 3,469,454 3,471,961 3,116,576
Deposits................ 5,870,598 5,500,296 5,240,684 4,782,945 4,147,377 3,964,268 3,539,322
Interest-bearing liabil-
ities.................. 6,074,134 5,455,248 5,237,814 4,693,997 4,233,730 4,198,980 3,646,633
Shareholders' equity.... 653,108 545,497 524,639 426,591 357,102 323,991 290,663
SELECTED PERIOD END BAL-
ANCES:
Assets.................. $ 8,089,293 7,037,159 6,691,484 6,229,014 5,158,726 5,243,390 4,804,591
Earning assets.......... 7,568,286 6,631,378 6,250,279 5,820,120 4,799,074 4,741,187 4,478,973
Investment securi-
ties(1)................ 1,999,655 1,880,399 1,725,014 1,585,935 1,257,751 1,144,144 1,058,128
Loans................... 5,558,878 4,734,747 4,524,665 4,233,429 3,423,810 3,512,768 3,356,844
Deposits................ 6,084,242 5,620,620 5,346,320 5,203,499 4,406,442 4,265,149 3,903,138
Interest-bearing liabil-
ities.................. 6,548,215 5,717,710 5,369,001 5,059,530 4,172,705 4,263,658 3,890,124
Shareholders' equity.... 698,370 581,010 560,908 486,502 373,506 339,941 307,428
Shares outstanding (in
thousands)............. 30,876,759 27,713,820 26,312 25,348 21,328 21,473 21,038
RATIOS
Performance ratios(3):
Return on average as-
sets................... 1.24% 1.18 1.18 1.06 1.05 .92 .96
Return on average equi-
ty..................... 14.29 14.47 14.50 14.11 15.01 14.34 14.70
Net interest margin,
taxable equivalent..... 4.63 4.64 4.69 4.48 4.40 4.06 4.26
Capital ratios:
Average equity to aver-
age assets(3).......... 8.71% 8.17 8.15 7.52 6.97 6.40 6.51
Equity to assets (peri-
od-end)................ 8.63 8.26 8.38 7.81 7.24 6.48 6.40
Risk-based capital ra-
tios(2):
Tier 1 capital......... 12.80 12.36 12.35 11.13 9.72 N/A N/A
Total capital.......... 14.80 15.42 15.24 14.33 13.04 N/A N/A
Leverage ratio(2)....... 8.64 8.56 8.24 7.76 7.06 N/A N/A
</TABLE>
- --------
(1) Includes securities available for sale.
(2) Calculated in accordance with applicable Federal Reserve regulations which
became effective in 1989. See "SUPERVISION AND REGULATION OF BB&T
FINANCIAL--Capital Adequacy Guidelines for Bank Holding Companies."
(3) Annualized for interim periods.
57
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF BB&T FINANCIAL
The following discussion and analysis is intended to assist readers in
understanding BB&T Financial's results of operations and changes in financial
position for the past three years and for the three quarters ending September
30, 1993 and 1992. This review should be read in conjunction with the
consolidated financial statements, accompanying footnotes and supplemental
financial data incorporated by reference herein. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
In 1989 BB&T Financial became one of the first bank holding companies in the
country to take advantage of new legislation and agree to acquire a healthy
savings institution. During the period January 1, 1990 through the date of this
Prospectus/Proxy Statement, BB&T Financial has consummated the acquisitions of
fourteen savings institutions or their holding companies with total assets of
approximately $3.1 billion and several branches of a fifteenth institution. The
following table provides information relative to the fourteen acquisitions.
<TABLE>
<CAPTION>
TOTAL ASSETS METHOD
DATE OFFICES (DATE OF OF
INSTITUTION ACQUIRED AT ACQUISITION ACQUISITION) ACCOUNTING
----------- -------- -------------- ------------ --------------------
<S> <C> <C> <C> <C>
Carolina Bancorp, Inc. . 8-20-90 4 $297 million Pooling-of-Interests
High Point, N.C.
First Federal Savings
Bank of Pitt County.... 9-01-90 5 137 million Pooling-of-Interests
Greenville, N.C.
Home Savings & Loan
Association, Inc. ..... 3-15-91 5 240 million Purchase
Durham, N.C.
Gate City Federal
Savings & Loan
Association............ 8-08-91 11 460 million Purchase
Greensboro, N.C.
Albemarle Savings & Loan
Association............ 8-08-91 2 98 million Purchase
Elizabeth City, N.C.
Peoples Federal Savings
Bank of 6-26-92 2 107 million Purchase
Thomasville............
Thomasville, N.C.
First Fincorp, Inc. .... 2-24-93 10 334 million Purchase
Kinston, N.C.
Security Financial
Holding Company........ 2-25-93 9 316 million Pooling-of-Interests
Durham, N.C.
Carolina Savings Bank... 5-18-93 5 143 million Purchase
Wilmington, N.C.
Edenton Savings & Loan
Association............ 5-18-93 1 40 million Purchase
Edenton, N.C.
Citizens Savings Bank,
S.S.B., Inc. .......... 10-25-93 11 263 million Pooling-of-Interests
Newton, N.C.
Mutual Savings Bank of
Rockingham County,
Inc., S.S.B. .......... 10-29-93 3 88 million Purchase
Reidsville, N.C.
Old Stone Bank of North
Carolina, A Federal
Savings Bank........... 11-24-93 14 537 million Purchase
High Point, N.C.
Citizens Savings Bank of
Mooresville, S.S.B., . 12-23-93 2 60 million Purchase
Mooresville, N.C.
</TABLE>
58
<PAGE>
The acquisitions of Carolina Bancorp, Inc., First Federal Savings Bank of
Pitt County, Home Savings & Loan Association, Inc., First Fincorp, Inc.,
Security Financial Holding Company and Citizens of Newton were consummated
through the issuance of BB&T Financial Common Stock for all of the outstanding
shares of each of the respective entities. The acquisition of Old Stone was
consummated through the payment of $58.25 million in cash for all of the issued
and outstanding stock of Old Stone. The acquisitions of Gate City, Albemarle,
Peoples Federal Savings Bank of Thomasville ("Peoples"), Carolina Savings,
Edenton Savings, Mutual Savings and Citizens of Mooresville involved each
converting from a mutual to a stock institution with simultaneous acquisition
by BB&T Financial of all the stock issued in the conversion. To effect the
acquisitions of the mutual institutions, BB&T Financial sold 2,528,441 shares
of BB&T Financial Common Stock in 1991, 382,395 shares of BB&T Financial Common
Stock in 1992 and 940,192 shares of BB&T Financial Common Stock in 1993. In
making the acquisitions, BB&T Financial invested proceeds from the offerings in
Gate City, Albemarle, Peoples, Carolina Savings, Edenton Savings, Mutual
Savings and Citizens of Mooresville. Each of these associations (except Mutual
Savings, Citizens of Newton, Old Stone and Citizens of Mooresville) has been
subsequently merged into BB&T. There was an excess of net assets acquired over
cost for these institutions of approximately $56 million (negative goodwill),
which is being amortized as an accrual into BB&T Financial's earnings over
periods of ten years. The amount of income from amortized negative goodwill
included in earnings totalled approximately $4.0 million in 1992 and $1.5
million in 1991. As these acquisitions were accounted for as purchases, the
results of their operations are included with those of BB&T Financial
subsequent to the dates of their respective acquisitions. The growth rates in
balance sheet and income and expense accounts of BB&T Financial for 1992 and
1991 have been increased by these acquisitions.
In addition to acquiring the foregoing institutions, on June 1, 1993, BB&T
Financial acquired approximately $185 million of deposit liabilities, $68
million of loans and $4 million of fixed assets from 1st Home Federal Savings
and Loan Association of the Carolinas, F.A., Greensboro, North Carolina ("1st
Home") for $6.25 million in cash.
BB&T Financial has agreements to acquire through the date of this
Prospectus/Proxy Statement two additional mutual thrift institutions, including
Asheville Savings, and a bank holding company, all of whose assets totalled
approximately $1.1 billion as of September 30, 1993. The following table
provides information relative to those pending acquisitions.
<TABLE>
<CAPTION>
ANTICIPATED
ANTICIPATED TOTAL ASSETS METHOD OF
INSTITUTION ACQUISITION DATE OFFICES (9/30/93) ACCOUNTING
----------- ---------------- ------- ------------ --------------------
<S> <C> <C> <C> <C>
Home Savings Bank of
Albemarle, S.S.B. ..... 1st Qtr. 1994 2 158 million Purchase
Albemarle, N.C.
Asheville Savings Bank,
S.S.B. ................ 1st Qtr. 1994 9 322 million Purchase
Asheville, N.C.
L.S.B. Bancshares, Inc.
of South Carolina...... 2nd Qtr. 1994 23 646 million Pooling-of-Interests
</TABLE>
Asheville Savings, Scotland Savings and Home Savings are each mutual savings
institutions. Those acquisitions involve each converting from a mutual to a
stock institution with a simultaneous acquisition by BB&T Financial. To effect
the acquisition of these mutual institutions, BB&T Financial anticipates
selling approximately 1,800,000 shares of BB&T Financial Common Stock. BB&T
Financial anticipates recording negative goodwill in connection with these
acquisitions of $ million, which will be amortized as an accrual to income
over a ten-year period.
LSB is a South Carolina-chartered bank holding company. BB&T Financial
anticipates issuing approximately 3,834,625 shares (subject to adjustment) of
BB&T Financial Common Stock in connection with the acquisition.
RESULTS OF OPERATIONS
1992 COMPARED WITH 1991 AND 1990. BB&T Financial recorded higher earnings in
1992 for the tenth consecutive year. Net income totalled $76.1 million in 1992,
an increase of $15.9 million or 26.4% over 1991.
59
<PAGE>
Net income for 1991 was $60.2 million and was $6.6 million or 12.2% over the
earnings of $53.6 million recorded in 1990. The five-year compound annual
growth rate of net income has been 14.6%.
Primary net income per share rose 12.5% from 1991 to $2.89 and fully diluted
net earnings per share grew 12.7% to $2.75 in 1992. Primary net income per
share was $2.57 in 1991 and $2.49 in 1990, while fully diluted per share
earnings for those two years were $2.44 and $2.37, respectively. The following
highlights underscore the key elements of performance for 1992.
. The portfolios of earning assets are the primary sources of
profitability. Average earning assets increased 13.4% for the year, while
taxable equivalent net interest income rose $45.1 million or 18.8%. This
followed an increase in taxable equivalent net interest income of $29.6
million or 14.1% in 1991.
. The provision for loan losses was reduced by $9 million or 23.7%. This
followed an increase of $18.8 million or 97.6% in 1991. BB&T Financial
recorded a historically high provision in 1991 because of unusually high
levels of both nonperforming assets and actual charge-offs. Improved
asset quality allowed BB&T Financial to reduce its provision for loan
losses to a historically more normal level in 1992.
. Noninterest income for 1992 increased $3.6 million or 4.3% to $87.2
million in 1992. This followed an increase of $21.4 million or 34.5% in
1991. Noninterest income included gains on sales of securities of $5.4
million in 1992, $10.5 million in 1991 and $410,000 in 1990, and the
amortization of negative goodwill of approximately $4.0 million in 1992
and $1.5 million in 1991.
. Noninterest expense totalled $218.0 million in 1992. This represented an
increase of 18.0% from the $184.8 million in 1991, which was an increase
of 13.8% over 1990.
. The effective tax rate was 29.9% in 1992, compared with 27.4% in 1991 and
25.4% in 1990.
The return on average assets for 1992 was 1.18%, compared with 1.06% in 1991
and 1.05% in 1990. The returns on average shareholders' equity for each of the
last three years were 14.50%, 14.11% and 15.01%, respectively. The annual
return on average equity has exceeded 14% in each of the past ten years. At the
end of 1992 the ratio of equity to assets was 8.38%, compared with 7.81% a year
earlier and 7.24% at the end of 1990. BB&T Financial's risk-adjusted total
capital ratio was 15.24% at the end of the year, up from 14.33% twelve months
earlier. This ratio for BB&T Financial has consistently been in the top 10% of
the 100 largest U.S. bank holding companies. The following table provides
highlights of key profitability measures for each of the past five years.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
--------------------------------------
1992 1991 1990 1989 1988
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Return on average assets................ 1.18% 1.06% 1.05% .92% .96%
Return on average equity................ 14.50 14.11 15.01 14.34 14.70
Net interest margin..................... 4.69 4.48 4.40 4.06 4.26
Yield to break even(1).................. 2.64 2.60 2.50 2.33 2.52
</TABLE>
- --------
(1) Noninterest expense plus provision for loan losses less noninterest income,
divided by average earning assets.
NET INTEREST INCOME. Net interest income represents the principal source of
earnings for BB&T Financial. Net interest income equals the amount by which
interest income exceeds interest expense. For 1992 net interest income
represented 75.5% of net revenues (net interest income plus noninterest
income), compared with 72.7% in 1991 and 75.5% in 1990. The relationship of net
interest income to total revenues was lower in 1991 because of the gains on
sales of securities.
The taxable equivalent net yield on average earning assets is the primary
measure used in evaluating the effectiveness of the management of earning
assets and funding liabilities. The net yield on average earning assets was
4.69% in 1992, 4.48% in 1991 and 4.40% in 1990. Higher net interest margins
during the past three years represent a reversal of steadily declining net
yields through the latter half of the 1980's.
Three factors were primarily responsible for the improved net interest
margins in recent years. A slower rate of growth in earning assets,
particularly loans (excluding the effect of acquisitions), has reduced the
necessity of generating large amounts of additional non-core funding. The
growth experienced has been funded with lower cost retail deposits, including
regular savings, interest checking, money rate savings and retail certificates
of deposit.
60
<PAGE>
Second, through the retention of profits and the addition of equity through
various offerings in 1992 and 1991, shareholders' equity, rather than interest-
bearing liabilities, is now funding a proportionately greater amount of BB&T
Financial's earning assets. The ratio of average interest-bearing liabilities
to average earning assets was 86.4% in 1992, compared with 87.8% in 1991 and
88.6% in 1990. This relatively small decline in the dependence on interest-
bearing liabilities translates to a savings in excess of $3.5 million in
interest expense for 1992.
Third, market forces have had perhaps the greatest effect on the improved net
yields over the past two years. The prime rate of interest was 10% throughout
most of 1990. The prime rate of interest declined progressively to a rate of
6.5% at the end of 1991 and ultimately declined to 6% in 1992. Approximately
50% of the loans originated by BB&T Financial's subsidiaries are priced based
on the prime rate. Although BB&T Financial's subsidiaries have substantial
portfolios of residential mortgage and consumer loans which earn interest at
fixed rates or at variable rates that change annually, the returns on BB&T
Financial's loan portfolios declined materially during 1992. The average rate
earned on loans was 8.69% in 1992, compared with 10.33% in 1991 and 11.34% in
1990. Thus, the return on average interest-earning assets was 8.41% in 1992,
down from 9.87% in 1991 and 10.84% in 1990.
At the same time, the rates paid for deposits and other funds declined during
the year, and these declines generally preceded, and were of a greater
magnitude than, the reduction in the rates earned on assets. The average cost
of interest-bearing liabilities was 4.30% for 1992, a reduction of 184 basis
points from 6.14% in 1991, which in turn was a reduction from 7.27% in 1990.
The average rate earned on earning assets declined 146 basis points to 8.41% in
1992, compared with 9.87% in 1991 and 10.84% in 1990. The net result of these
forces was an improvement in the interest rate spread to 4.11% in 1992. The
interest rate spreads were 3.73% in 1991 and 3.57% in 1990. The combination of
these factors, as well as gains of approximately $18.2 million provided by
interest rate swaps in 1992 and $7.8 million in 1991, resulted in improvement
in the net interest margin in 1992 and 1991 and provided greater amounts of net
interest income. The following table shows the changes in interest income and
interest expense for each major component of interest-earning assets and
interest-bearing liabilities attributable to changes in volume and rate. The
change in interest due to both rate and volume has been allocated
proportionately to volume variance and rate variance based on the relationship
of the absolute dollar change in each.
<TABLE>
<CAPTION>
1992-1991 1991-1990
--------------------------- ---------------------------
INCOME/ INCOME/
EXPENSE VOLUME RATE EXPENSE VOLUME RATE
VARIANCE VARIANCE VARIANCE VARIANCE VARIANCE VARIANCE
-------- -------- -------- -------- -------- --------
(THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans................... $(11,678) 55,789 (67,467) 690 37,135 (36,445)
Investment securities:
U.S. Government and
other................. 5,296 18,381 (13,085) 15,246 23,313 (8,067)
State and municipal.... (7,438) (6,387) (1,051) (2,311) (1,859) (452)
-------- ------ ------- ------- ------ -------
Total investment secu-
rities............... (2,142) 11,994 (14,136) 12,935 21,454 (8,519)
Interest-bearing bank
balances.............. (2,454) (2,620) 166 (5,375) (5,014) (361)
Federal funds sold..... (1,606) (1,026) (580) 1,610 1,659 (49)
-------- ------ ------- ------- ------ -------
Total interest income. (17,880) 64,137 (82,017) 9,860 55,234 (45,374)
-------- ------ ------- ------- ------ -------
INTEREST EXPENSE
Interest-bearing depos-
its:
Savings................ (1,232) 3,052 (4,284) 856 1,494 (638)
Interest checking...... (3,566) 4,431 (7,997) 587 2,317 (1,730)
Money rate savings..... (10,744) 3,244 (13,988) (3,123) 4,746 (7,869)
Certificates of deposit
and other time
deposits.............. (45,335) 6,084 (51,419) 2,946 33,817 (30,871)
-------- ------ ------- ------- ------ -------
Total interest-bearing
deposits............. (60,877) 16,811 (77,688) 1,266 42,374 (41,108)
Short-term borrowed
funds................. (930) 7,496 (8,426) (18,859) (9,989) (8,870)
Long-term debt......... (1,163) (117) (1,046) (2,168) (1,412) (756)
-------- ------ ------- ------- ------ -------
Total interest ex-
pense................ (62,970) 24,190 (87,160) (19,761) 30,973 (50,734)
-------- ------ ------- ------- ------ -------
NET INTEREST INCOME..... $ 45,090 39,947 5,143 29,621 24,261 5,360
======== ====== ======= ======= ====== =======
</TABLE>
61
<PAGE>
PROVISION FOR LOAN LOSSES. An annual provision for loan losses is charged
against earnings in order to maintain the allowance for loan losses at a level
considered adequate by management to absorb existing and potential losses in
the loan portfolio. As a result of improved asset quality, the provision
recorded by BB&T Financial in 1992 was $29 million, compared with $38 million
in 1991 and $19.2 million in 1990. The decrease of $9 million in 1992 followed
an increase of $18.8 million or 97.6% in 1991. The greater provisions recorded
in 1991 and 1990 reflected increased levels of net charge-offs and
nonperforming assets, a persistent economic slowdown and a deterioration in
real estate markets and values. For a more detailed discussion of loan credit
qualities, see "--Balance Sheet Management," particularly, the section "--
Nonperforming Loans and Allowance for Loan Losses."
NONINTEREST INCOME. Noninterest income for BB&T Financial consists of service
charges on deposit accounts, trust revenue, mortgage origination and servicing
revenues, insurance commissions, gains and losses on investment securities
transactions, and other commissions and fees derived from various banking and
bank-related activities. Noninterest income has traditionally been an important
factor contributing to profitability at BB&T Financial, and its importance has
increased in recent years. Noninterest income for 1992 totalled $87.2 million,
compared with $83.6 million last year and $62.1 million in 1990. Over the past
five years, noninterest income has grown at a compound annual rate of 15.6%.
Gains on sales of securities totalled $5.4 million in 1992, compared with
$10.5 million in 1991. For several years prior to 1991, gains and losses
realized from sales of securities by BB&T Financial were relatively immaterial.
In recent years, both through generation within its banking subsidiaries and
through the acquisition of savings associations, BB&T Financial built a
significant portfolio of mortgage-backed securities. These securities had
attractive yields, and, as market rates of interest declined in 1991, the value
of such securities increased. However, the speed of repayment increased
dramatically as mortgage holders refinanced to take advantage of lower home
mortgage rates. BB&T Financial sold a significant amount of its portfolio of
mortgage-backed securities in the final half of 1991 and early 1992, thereby
realizing gains totalling approximately $8 million. BB&T Financial was able to
realize a significant amount of the inherent gains in its portfolio of
mortgage-backed securities prior to the heavy refinancing of home mortgages,
which commenced in the first quarter of 1992 and continued throughout the year.
This was an opportune decision by BB&T Financial, as a significant amount of
those gains would have disappeared as loans were paid off at par.
Service charges on deposit accounts have historically represented the largest
single item of noninterest income. This continued to be the case in 1992, as
such charges totalled $29.2 million, an increase from $26.3 million in 1991 and
$22.6 million in 1990. Deposit services are repriced annually to reflect
current costs and competitive factors.
BB&T Financial has made significant investments in its mortgage banking and
insurance agency operations in recent years. Mortgage banking income (which
includes servicing fees and profits from the origination and sale of loans)
increased by $722,000 or 6.8% to a total of $11.4 million in 1992. This
followed increases of $2.9 million or 36.9% in 1991 and $4.4 million or 128.1%
in 1990. There was a heavy volume of mortgage loan originations in 1992 because
of significant declines in home mortgage interest rates. As a result, BB&T
Financial realized gains from the origination and sale of mortgages totalling
$9.5 million in 1992, an increase of $5.7 million over 1991. This increase was
offset by a write-off of approximately $4.6 million in the excess servicing
receivable in the second half of 1992 to coincide with reduced values resulting
from accelerated prepayments. General insurance commissions increased $519,000
or 8.6% to a total of $6.5 million for the year. BB&T Financial's insurance
agencies have become an increasingly important source of noninterest revenue,
and this trend is expected to continue and accelerate in the future. BB&T
Financial has expanded its network of insurance agencies through acquisitions
in recent years, and, in 1992, BB&T Financial agreed to acquire three
additional agencies, two of which acquisitions were consummated in 1992.
Other service charges, commissions and fees were $13.0 million in 1992 and
$11.0 million in 1991. Bank card fees represented the largest source of other
service charges, commissions and fees. Bank card income totalled approximately
$6.5 million in 1992, up from $6.1 million in the previous year. In recent
years, BB&T Financial has expanded the sale of fixed income investment
securities to its customers. BB&T Financial markets both individual obligations
and mutual fund shares. Commissions from sales of securities totalled
62
<PAGE>
$579,000 in 1992, an increase of $311,000 from 1991. BB&T Financial plans to
significantly increase its sales staff in 1993, and its ultimate objective is
to have investment specialists in each of its regions in North and South
Carolina. BB&T Financial plans to establish a separate investment services
subsidiary of BB&T Financial with full service brokerage capabilities. This
activity represents a significant potential new source of noninterest revenue
for BB&T Financial.
A traditional service at many banks has been the offering of trust services.
BB&T Financial has had a trust department for over 80 years. Trust revenues
from corporate and personal trust services increased 15.0% in 1992 and 14.7% in
1991 to a total of $6.5 million in 1992. The trust division has historically
maintained collective funds to provide investment alternatives to its trust
clients. In 1992 the trust division established its own family of proprietary
mutual funds. BB&T Financial will now manage five mutual funds, which will
provide investment alternatives both for its trust clients and its other
customers.
Finally, noninterest income included approximately $4.0 million in amortized
negative goodwill in 1992 and $1.5 million in 1991. Negative goodwill (excess
of net assets acquired over cost) totalling $6.6 million in 1992 and $33.4
million in 1991 was recorded in the purchase acquisitions of thrifts.
NONINTEREST EXPENSE. Noninterest expense for 1992 increased 18.0% to $218.0
million. This followed an increase of 13.8% in 1991. The acquisitions of three
savings associations in 1991 and one in 1992 were accounted for as purchases,
and, accordingly, prior period history was not restated. The expense growth in
1992 and 1991 includes the incremental cost of operations related to these
acquisitions and the cost of standardizing their operating systems and
procedures to those of BB&T Financial.
Salaries and wages increased 16.4% in 1992 and 9.5% in 1991, which includes
approximately 5% annual merit increases, the effects of the additional
employees who joined BB&T Financial with the consummation of the four thrift
acquisitions, and above average incentive compensation because of the superior
1992 performance of BB&T Financial. Other personnel expense increased 18.0%
from $15.6 million in 1991 to $18.4 million in 1992. Such expenses grew 26.2%
in 1991. The annual cost of employee health insurance has increased
approximately $1.5 million over the past two years, while the annual pension
expense has grown $1.2 million over the same period.
BB&T Financial has increased its commitment to employee training and
education in recent years. As a result of this heightened commitment, the total
cost of training increased $922,000 or 45.4% to a total of $3.0 million in
1992, following an increase of $757,000 in 1991.
Premiums paid to the FDIC for deposit insurance increased $1.6 million or
16.1% to a total of $11.4 million for 1992. For 1991 the increase was $4.7
million or 90.0%. Insurance premiums have increased dramatically in recent
years, as the FDIC has had to look to healthy banks to cover the cost of actual
or pending failures of unhealthy institutions. For the period beginning January
1, 1991, the rate was increased from $.12 per $100 of deposits to $.195. There
was a further increase to $.23 for the period beginning July 1, 1991. There
have been no additional increases for BB&T Financial's bank subsidiaries since
that date, and BB&T Financial does not anticipate increases in deposit
insurance rates for 1993. See "SUPERVISION AND REGULATION OF BB&T FINANCIAL--
BB&T and BB&T-SC."
Another noteworthy item of other operating expense was an increase of
$643,000 or 23.2% in advertising and public relations expense in 1992. This
increase is partially reflective of heightened marketing efforts in the cities
in which the acquired thrifts operated. Net occupancy expense increased 10.7%
and furniture and equipment expense rose 15.5% in 1992. During the year BB&T
Financial opened five new offices, added two offices through merger and closed
12 offices. All of the new offices involved the relocation and/or consolidation
of existing offices. During 1992, BB&T Financial reduced the number of
locations from 220 to 210. BB&T Financial also implemented its loan platform
automation retail pilot program in three cities, purchased in excess of 650
additional CRTs and personal computers, added 12 new and replaced 11 existing
automated teller machines, purchased and installed a new data base management
system and human resource system, and began implementation of full teller
automation. Capital expenditures for new facilities, renovations, and furniture
and equipment are estimated at approximately $44.3 million for 1993, following
outlays of $28.7 million in 1992 and $15.1 million in 1991. Generally, capital
expenditures are funded by either funds generated from normal operations or
through short-term and long-term leases.
63
<PAGE>
The following table sets forth information regarding BB&T Financial's
operating efficiency.
<TABLE>
<CAPTION>
AT OR FOR THE FISCAL YEAR ENDED DECEMBER 31,
----------------------------------------------
1992 1991 1990 1989 1988
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Percent of average assets:
Noninterest income........... 1.35% 1.47 1.21 1.10 .99
Noninterest expense.......... 3.39 3.26 3.17 3.03 3.07
Personnel expense............ 1.65 1.60 1.58 1.53 1.58
Occupancy and equipment ex-
pense....................... .55 .55 .56 .52 .56
Other operating expense...... 1.19 1.10 1.02 .99 .93
Net noninterest expense (non-
interest expense less nonin-
terest income).............. 2.03 1.78 1.96 1.93 2.08
Net revenues (net interest in-
come plus noninterest income)
times noninterest expense..... 1.63x 1.65 1.56 1.47 1.46
Assets per employee (millions). $ 2.03 2.04 1.75 1.71 1.54
</TABLE>
In 1990, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. ("FAS") 106, "Employers' Accounting for
Post Retirement Benefits Other Than Pensions". The provisions of FAS 106 must
be adopted for years ending after December 31, 1992. FAS 106 will change the
way most employers account for post retirement benefits other than pensions,
particularly for those companies such as BB&T Financial that provide health
care benefits to retirees and their dependents. BB&T Financial has historically
accounted for post retirement benefits on a cash basis. FAS 106 requires that
the accrual basis be used with costs being recorded as benefits are earned. FAS
106 allows companies either to record the total liability for past services as
an accounting change in the year of implementation and recognize current costs
on an ongoing basis thereafter or to amortize the liability for past service
over a period of years. BB&T Financial will apply the provisions of FAS 106
beginning in 1993. BB&T Financial will amortize the initial liability of $12.4
million over a period of approximately 20 years. The impact of adoption will be
an increase in expense of approximately $1.3 million in 1993.
INCOME TAXES. BB&T Financial's effective tax rate has increased annually
since 1987. Changes in tax laws in recent years have reduced the availability
of and the advantages of tax-exempt securities for banks.
At BB&T Financial, as tax-exempt investments have matured, they have been
replaced with taxable assets which has resulted in a higher effective tax rate.
BB&T Financial's banking subsidiaries are allowed to make investments in small
issue tax-exempt obligations of governmental units, but the amount of such
investments available in the market has not been of the same magnitude as
maturing investments. Therefore, the trend to higher effective tax rates is
likely to continue into the future.
The following table sets forth information regarding federal income taxes
paid by BB&T Financial.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
----------------------------------------
1992 1991 1990 1989 1988
------- ------ ------ ------ -------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Tax expense at 34%................... $36,892 28,180 24,443 20,491 17,594
Increase (decrease) in taxes
resulting from:
State income taxes, net of federal
tax benefit....................... 1,427 1,178 859 -- --
Tax-exempt interest................ (5,340) (7,603) (8,799) (9,755) (10,169)
Disallowed interest expense........ 538 1,001 1,242 1,335 1,203
Accrual of federal income taxes on
excess tax bad debt reserve....... -- -- -- 900 --
Other items, net................... (1,086) (46) 530 849 401
------- ------ ------ ------ -------
Income tax expense................... $32,431 22,710 18,275 13,820 9,029
======= ====== ====== ====== =======
Effective tax rate................... 29.9% 27.4 25.4 22.9 17.4
Tax-exempt interest income as a
percent of pretax income............ 14.5 27.0 36.0 47.6 57.8
======= ====== ====== ====== =======
</TABLE>
64
<PAGE>
The FASB has issued FAS 109, "Accounting for Income Taxes". The provisions of
FAS 109 must be adopted for years beginning after December 31, 1992. FAS 109
will change BB&T Financial's method of accounting for income taxes from the
deferred method to the asset and liability method. Under the deferred method,
annual income tax expenses are matched with pretax accounting income by
providing deferred taxes at current tax rates for timing differences between
the determination of net income for financial reporting and tax purposes. The
objective of the asset and liability method is to establish deferred tax assets
and liabilities for the temporary differences between the financial reporting
basis and the tax basis of assets and liabilities at enacted tax rates expected
to be in effect when such amounts are realized or settled. BB&T Financial will
adopt the provisions of FAS 109 for fiscal 1993. This adoption will have no
material impact on either the financial condition or results of operations of
BB&T Financial.
FINANCIAL CONDITION
Average assets grew 13.4% in 1992, following increases of 10.8% in 1991 and
1.3% in 1990. Through its savings institution acquisitions, BB&T Financial
added assets of approximately $240 million in March, 1991, $558 million in
August, 1991 and $107 million in June, 1992. Average assets have increased at
an average annual rate of 10.0% over the past five years. Over the same five-
year period, the compound annual growth rates based on average balances have
been 10.3% for earning assets, 9.9% for loans, 11.7% for investment securities
and 10.6% for deposits. All growth rates have been enhanced by the effects of
acquisitions accounted for as purchases.
BB&T Financial experienced an above average rate of growth throughout most of
the 1980's, as a concerted effort was made to penetrate new markets to gain the
strength and operating efficiencies associated with size. BB&T Financial
generated this growth both through internal efforts and through acquisition.
The rate of internal growth has slowed in recent years as a result both of
management design and a general economic slow down. However, through its
acquisition strategy, BB&T Financial had acquired six savings institutions with
total assets of approximately $1.3 billion at December 31, 1992. These thrifts
have provided a new base of retail core deposits, a new constituency of
customers to which both credit and non-credit products and services can be
marketed, and an expanded branch distribution system in several of the major
metropolitan markets of North Carolina. The recent slower rate of growth and
the additional thrift retail deposits have enabled BB&T Financial to improve
profitability by maintaining and improving net interest margins and spreads
through a more profitable mix of funding liabilities.
In 1990 and 1991 serious problems developed in many real estate markets
throughout the country. These problems spread to other parts of the economy and
had many negative implications. As a result, BB&T Financial has placed
increased emphasis on the management of all lending activities.
Over the past three years, lending for construction and development at BB&T
Financial was restricted by both intent and demand. As a result, construction
loans declined from $421 million or 12.0% of loans at the end of 1989 to $356
million or 7.9% of loans on December 31, 1992. Generally, the decline in real
estate values was not as great in the Carolinas as in other parts of the
country, but the vacancy rates for many commercial properties did rise to
unprofitable levels, particularly in the metropolitan areas of the Carolinas.
The situation has improved significantly in recent months, as occupancy rates
have increased and real estate values have stabilized and shown improvement in
selected markets and segments.
Demand for consumer loans, installment and other loans to individuals, has
been weak over the past three years because of the sluggish economy and
excessive levels of consumer debt built up in the 1980's. The continuing
slowdown in automobile sales has had a negative impact on growth in direct and
indirect automobile loans in recent years. As a result of these factors,
consumer loans declined from $504 million or 14.3% of loans at the end of 1989
to $465 million or 10.3% at the end of 1992.
Gross loans were $4.5 billion at the end of 1992. This represented an
increase of approximately $291.3 million in 1992, following an increase of
approximately $810 million in 1991. The three savings institutions acquired in
1991 had loans totalling approximately $620 million at the respective dates of
acquisition, while the savings institution added in 1992 had loans totalling
approximately $80 million. Thus, the internally
65
<PAGE>
generated loan growth was $211 million in 1992 and $190 million in 1991. The
comparatively slower rate of growth in loans reflects the caution exercised by
both BB&T Financial and its customers, as businesses and individuals waited for
signs of renewed economic activity. The long range objective of BB&T Financial
is to maintain a rate of internal growth which approximates the growth of its
markets in the Carolinas. BB&T Financial believes that this will result in a
rate of increase which will be sustainable and provide for growth and
profitability, but it will not match the rate of internal growth experienced
during the decade of the 1980's.
Investment securities (including securities available for sale) increased
8.8% to a total of $1.73 billion at the end of 1992, following increases of
26.1% in 1991 and 9.9% in 1990. BB&T Financial historically has maintained an
investment portfolio of 21-25% of total assets. At the end of 1992, investment
securities represented 25.8% of assets. BB&T Financial expects the investment
portfolio to continue to represent 21-25% of total assets over the long-term,
but it is likely that the portfolio will exceed these parameters over the
short-term.
The policy at BB&T Financial is to invest primarily in securities of the U.S.
Government and its agencies and in investment grade municipals. Neither BB&T
Financial nor any of its subsidiaries have invested in non-investment grade
bonds. The following table provides a percentage breakdown of the securities
portfolios by risk class as of December 31, 1991 and 1992.
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------
TYPE OF SECURITY 1992 1991
- ---------------- ---------- ----------
PERCENT OF PORTFOLIO
----------------------
<S> <C> <C>
U.S. Government Securities............................... 86.43% 58.14
U.S. Agency Obligations:
Mortgage-backed Securities............................... .06 21.67
Other.................................................... 5.35 6.15
State, County and Municipal Securities:
AAA.................................................... 3.26 5.48
AA..................................................... .57 .58
A-1.................................................... 1.46 1.22
A...................................................... 2.24 1.99
BAA-1.................................................. .04 .07
BAA.................................................... .01 .04
Nonrated............................................... .35 2.32
Other.................................................... .23 2.34
---------- ----------
100.00% 100.00
========== ==========
</TABLE>
Mortgage-backed securities of U.S. Government agencies totalled $405.7
million at the end of 1990 and were 32.3% of the investment portfolio. Such
securities were reduced to $343.8 million or 21.7% of investment securities a
year later and less than $1 million at the end of 1992. While such securities
have attractive yields, the speed of prepayments tends to increase as interest
rates decline. Throughout the second half of 1991 and early 1992, BB&T
Financial sold mortgage-backed securities in order to realize gains before
prepayment could occur. The mortgage-backed securities of BB&T Financial were
primarily originated through its subsidiaries and securitized to provide
marketability or added through its savings institution acquisitions.
In recognition of the potential for increased activity in its portfolio of
investment securities created by changing market factors, BB&T Financial in
September 1992 segregated its investment securities into two portfolios. One
portfolio consists of securities considered to be investment securities, which
are carried at amortized cost. The second portfolio includes securities which
are classified as "available for sale," which are reported at the lower of cost
or market. At the time of the change, the former included U.S. Government
securities, state and municipal bonds and U.S. Treasury securities, while the
latter included mortgage-backed securities, collateralized mortgage obligations
and U.S. Treasury securities. In the future, BB&T Financial will follow its
established guidelines with respect to credit quality and maturities in making
purchases for
66
<PAGE>
both portfolios, and its policy generally will be to specifically identify
securities as either investment or available for sale at the time of purchase.
Average deposits increased 9.6% in 1992, following increases of approximately
15.3% in 1991 and 4.6% in 1990. Virtually all of the increases in recent years
have been in interest-bearing deposits; however, noninterest-bearing deposits
did increase by $90.7 million or 15.6% in 1992, following four years of no
growth. The acquired savings institutions had approximately $689 million in
deposits (principally interest-checking, savings and retail certificates of
deposits) at the respective dates of acquisition. A positive element of the
growth in 1992 and 1991 was that substantially all of the increases were in
lower cost core deposits. The slower overall growth rate has been an enabling
factor to improving the funding mix and, ultimately, net interest margins and
income.
Shareholders' equity grew 15.3% in 1992, 30.3% in 1991 and 9.9% in 1990. BB&T
Financial issued $12.6 million in equity to shareholders of Home Savings and
Loan Association Inc., Durham North Carolina in consummating that acquisition
in March 1991, and raised approximately $50.2 million of equity in August 1991
to complete the acquisitions of Gate City and Albemarle and $9.7 million in
June 1992 to complete the acquisition of Peoples. In recent years the return on
average equity has been in the 14-15% range and the dividend payout ratio has
been 31-33%. Thus, the retention of earnings has resulted in an annual
contribution of approximately 10% to the growth in equity. Also, the issuance
of new stock through dividend reinvestment and employee benefit plans generated
$19.0 million in equity in 1992 and $10.8 million in 1991.
67
<PAGE>
The following table sets forth certain information relating to average
balances, interest earned or paid, and average rates earned or paid for the
periods shown. Yields and costs are derived by dividing income or expense by
the average balance of assets or liabilities, respectively. Average balances
are derived from average daily balances.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1992 1991
---------------------------- ----------------------------
AVERAGE AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
---------- -------- ------- ---------- -------- -------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans (1)(2)(3)......... $4,398,867 382,275 8.69% $3,813,131 393,953 10.33%
Securities (3)(4):
U.S. Government and
other................. 1,505,039 109,482 7.27 1,264,518 104,186 8.24
State and municipal.... 153,568 17,756 11.56 208,454 25,194 12.09
---------- -------- ---------- --------
Total investment
securities........... 1,658,607 127,238 7.67 1,472,972 129,380 8.78
Interest-bearing bank
balances............... 93 8 8.60 30,686 2,462 8.02
Federal funds sold...... 7,416 257 3.47 30,692 1,863 6.07
---------- -------- ---------- --------
Total interest-earning
assets............... 6,064,983 509,778 8.41 5,347,481 527,658 9.87
---------- -------- ---------- --------
Allowance for loan
losses................. (69,323) (54,176)
Cash and due from banks,
noninterest-bearing.... 220,018 198,526
Bank premises and
equipment.............. 74,300 61,926
Other assets............ 149,060 122,763
---------- ----------
Total assets.......... $6,439,038 $5,676,520
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing
deposits:
Savings................ $ 321,497 10,371 3.23% $ 244,987 11,603 4.74%
Interest checking...... 605,806 15,918 2.63 477,565 19,484 4.08
Money rate savings..... 740,271 23,427 3.16 670,946 34,171 5.09
Certificates of deposit
and other time
deposits.............. 2,999,692 153,295 5.11 2,908,053 198,630 6.83
---------- -------- ---------- --------
Total interest-bearing
deposits............. 4,667,266 203,011 4.35 4,301,551 263,888 6.13
Short-term borrowed
funds.................. 482,242 15,733 3.26 302,721 16,663 5.50
Long-term debt.......... 88,306 6,350 7.19 89,725 7,513 8.37
---------- -------- ---------- --------
Total interest-bearing
liabilities.......... 5,237,814 225,094 4.30 4,693,997 288,064 6.14
-------- --------
Demand deposits,
noninterest-bearing.... 573,418 481,394
Other liabilities....... 103,167 74,538
Shareholders' equity.... 524,639 426,591
---------- ----------
Total liabilities and
shareholders' equity $6,439,038 $5,676,520
========== ==========
Interest income and rate
earned................. $509,778 8.41% $527,658 9.87%
Interest expense and
rate paid.............. 225,094 4.30 288,064 6.14
-------- --------
Interest rate spread.... 4.11 3.73
NET INTEREST INCOME AND
NET YIELD ON AVERAGE
EARNING ASSETS......... $284,684 4.69% $239,594 4.48%
======== ===== ======== =====
</TABLE>
- --------
(1) Nonaccrual loans are included in average balances for yield computations.
(2) Loan income includes fees of $6,114,000, $3,694,000, $3,189,000,
$3,410,000, and $2,649,000 for the years of 1992-1988, respectively.
(3) Yields related to loans and securities exempt from both federal and state
income taxes, federal income taxes only, or state income taxes only are
stated on a taxable equivalent basis assuming tax rates of 38.62%, 35.65%
or 7%, respectively, for the years of 1990-1988, and 39.32%, 35.91% or
8.06%, respectively for 1991, and 39.27%, 35.89% or 7.98%, respectively for
1992.
(4) Includes investment securities and securities available for sale.
68
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------------------------------
1990 1989 1988
- ---------------------------- ---------------------------- ----------------------------
AVERAGE AVERAGE AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------- -------- ------- ---------- -------- ------- ---------- -------- -------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$3,469,454 393,263 11.34% $3,471,961 406,655 11.71% $3,116,576 334,669 10.74%
987,564 88,940 9.01 952,353 83,097 8.73 723,262 57,611 7.97
223,786 27,505 12.29 225,485 27,347 12.13 243,310 29,339 12.06
- ---------- -------- ---------- -------- ---------- --------
1,211,350 116,445 9.61 1,177,838 110,444 9.38 966,572 86,950 9.00
92,974 7,837 8.43 70,261 6,445 9.17 66,966 5,195 7.76
3,470 253 7.29 5,228 428 8.19 4,838 405 8.37
- ---------- -------- ---------- -------- ---------- --------
4,777,248 517,798 10.84 4,725,288 523,972 11.09 4,154,952 427,219 10.28
- ---------- -------- ---------- -------- ---------- --------
(40,898) (37,256) (33,195)
221,007 212,054 208,424
59,729 56,493 51,325
107,487 102,811 80,103
- ---------- ---------- ----------
$5,124,573 $5,059,390 $4,461,609
========== ========== ==========
$ 213,960 10,747 5.02% $ 210,806 10,652 5.05% $ 214,090 10,810 5.05%
422,867 18,897 4.47 367,388 17,122 4.66 361,581 16,674 4.61
589,341 37,294 6.33 540,410 34,812 6.44 610,331 34,758 5.69
2,447,268 195,684 8.00 2,370,266 205,110 8.65 1,877,505 142,422 7.59
- ---------- -------- ---------- -------- ---------- --------
3,673,436 262,622 7.15 3,488,870 267,696 7.67 3,063,507 204,664 6.68
454,224 35,522 7.82 596,633 53,990 9.05 473,644 35,523 7.50
106,070 9,681 9.13 113,477 10,638 9.37 109,482 10,087 9.21
- ---------- -------- ---------- -------- ---------- --------
4,233,730 307,825 7.27 4,198,980 332,324 7.91 3,646,633 250,274 6.86
-------- -------- --------
473,941 475,398 475,815
59,800 61,021 48,498
357,102 323,991 290,663
- ---------- ---------- ----------
$5,124,573 $5,059,390 $4,461,609
========== ========== ==========
$517,798 10.84% $523,972 11.09% $427,219 10.28%
307,825 7.27 332,324 7.91 250,274 6.86
-------- -------- --------
3.57 3.18 3.42
$209,973 4.40% $191,648 4.06% $176,945 4.26%
======== ===== ======== ===== ======== =====
</TABLE>
69
<PAGE>
BALANCE SHEET MANAGEMENT
The business of banking is basically one of managing risks. In managing the
portfolios of assets and liabilities, the primary objective is to manage the
inherent credit risk and interest rate risk, in a context which also provides
ongoing profitability and meets customer needs. Prudent balance sheet
management also requires the maintenance of liquidity and a strong capital
position.
CREDIT RISK MANAGEMENT. A key component of BB&T Financial's balance sheet
management is the management of credit risk. In recent years, this represented
a particular risk, requiring a most concerted effort to minimize loss exposure.
Credit risk is inherent in the portfolios of both investment securities and
loans. However, substantially all credit risk taken by BB&T Financial is in the
loan portfolio.
LOAN PORTFOLIO MANAGEMENT. The Loan Policy Committee, which establishes loan
policy and reviews and approves larger credits, provides overall direction to
the administration of the loan portfolios. The Loan Administration Division is
responsible for the ongoing loan operations and oversees larger credits and
problem credits.
The loan review process is intended to ensure that sound and consistent
credit decisions are made. The loan function is administered by personnel who
have depth of experience and are provided with continuous training. Over the
years the methods for analyzing business financial performance and the ability
to repay loans has been refined. A detailed financial analysis is prepared
prior to the funding of larger business credits, and the analyses are updated
on a regular basis.
A key element in minimizing the risk of loss in a business loan portfolio is
the diversification of such risk. While the legal lending limit of BB&T is in
excess of $95 million, BB&T operates with in-house limits of $37.5 million or
less. Additional lower limits are established based on risk grades, the
business or industry of the borrower, type of collateral (non-real estate
versus real estate) and other considerations, including the ability of the
borrower to meet obligations with funds generated from normal operations.
Currently, no borrower has loans and/or commitments equal to the in-house
limit. Although the ability of the borrower to repay is the critical element in
any lending decision, substantially all loans at BB&T Financial, other than
those of the very highest quality, are, in BB&T Financial's view, well
collateralized. Independent appraisals are required for properties securing
loans in excess of $100,000.
A vast majority of loans made by BB&T and BB&T-SC are to businesses with
operations headquartered in the two Carolinas; however, a limited number of
loans have been made to businesses which are domiciled in other states but have
North Carolina operations. BB&T Financial has not provided credit for highly
leveraged transactions, the energy sector or loans to lesser developed
countries and has not been a purchaser of loan participations.
The following table sets forth loans by regulatory classification, primarily
based on types of collateral rather than the loan purpose. Real estate--
mortgage includes loans for land acquisition.
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------------------------------------------------------------------------
1992 1991 1990 1989 1988
---------------- ---------------- ---------------- ---------------- ----------------
% OF % OF % OF % OF % OF
AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL
---------- ----- ---------- ----- ---------- ----- ---------- ----- ---------- -----
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and industri-
al..................... $ 902,572 19.9% $ 857,716 20.2% $ 879,556 25.7% $ 879,806 25.0% $ 820,761 24.4%
Real estate--construc-
tion................... 356,229 7.9 366,745 8.7 350,331 10.2 421,434 12.0 382,011 11.4
Real estate--mort-
gage(1)................ 2,804,084 61.9 2,535,299 59.8 1,726,404 50.4 1,711,431 48.7 1,696,378 50.5
Installment and other
loans to individuals... 464,987 10.3 476,858 11.3 469,831 13.7 504,235 14.3 461,703 13.7
---------- ----- ---------- ----- ---------- ----- ---------- ----- ---------- -----
$4,527,872 100.0% $4,236,618 100.0% $3,426,122 100.0% $3,516,906 100.0% $3,360,853 100.0%
========== ===== ========== ===== ========== ===== ========== ===== ========== =====
</TABLE>
- --------
(1) Included residential mortgage loans of $1.7 billion in 1992 and $1.5
billion in 1991.
Even though loan policies and procedures at a bank may provide the basis for
a quality portfolio with minimal risk, individual borrowers do encounter
problems which result in lower quality and loss at times.
70
<PAGE>
Less frequently, general deterioration of loan quality may result from
weaknesses in specific industries or the economy in general. This was the case
in 1990 and 1991, as serious difficulties were encountered in real estate
markets throughout the country and the economy experienced a period of
recession. As a result, many major banks reported large increases in
nonperforming assets which in turn required increases in their provisions and
allowances for loan losses.
BB&T Financial also experienced increases in both nonperforming assets and
actual losses in 1991 and 1990. Accordingly, the provisions and allowances for
loan losses were increased in those years. BB&T Financial intensified its loan
review processes in order to minimize credit problems in that difficult
environment, and there were considerable improvements in both nonperforming
assets and actual losses in 1992.
The following table provides an analysis of the composition of the real
estate loans with the greatest risk as of December 31, 1992 and 1991, based on
BB&T Financial's internal classification system. The table does not include
permanent mortgages for one-to-four family residences and owner-occupied
commercial properties.
<TABLE>
<CAPTION>
NONPERFORMING
LOANS
----------------
ACQUISITION
AND % OF
1992 PERMANENT CONSTRUCTION DEVELOPMENT TOTAL AMOUNT LOAN TYPE
- ---- --------- ------------ ----------- ---------- ------ ---------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL-NONOWNER OCCUPIED:
Multi-family................ $119,207 18,132 9,974 147,313 622 42%
Hotels/motels............... 80,713 5,727 -- 86,440 -- --
Shopping centers/malls...... 49,861 17,642 12,139 79,642 100 .13
Office buildings............ 85,612 10,255 11,536 107,403 -- --
Warehouse/distribution/light
industrial................. 44,140 7,083 17,209 68,432 914 1.34
Acquisition only............ -- -- 44,208 44,208 3,120 7.06
-------- ------- ------- ---------- ------ -----
Total commercial-nonowner
occupied.................. 379,533 58,839 95,066 533,438 4,756 .89
-------- ------- ------- ---------- ------ -----
RESIDENTIAL-CONSTRUCTION,
ACQUISITION, AND
DEVELOPMENT................. -- 142,608 175,872 318,480 3,860 1.21
-------- ------- ------- ---------- ------ -----
Total real estate.......... $379,533 201,447 270,938 851,918 8,616 1.01%
======== ======= ======= ========== ====== =====
TOTAL LOANS.................. $4,527,872 26,974 .60%
TOTAL REAL ESTATE/TOTAL
LOANS....................... 18.81% 31.94
1991
COMMERCIAL-NONOWNER OCCUPIED:
Multi-family................ $112,801 19,853 12,026 144,680 2,524 1.74%
Hotels/motels............... 71,342 8,204 -- 79,546 289 .36
Shopping centers/malls...... 48,974 10,294 17,343 76,611 330 .43
Office buildings............ 86,113 14,694 11,436 112,243 717 .64
Warehouse/distribution/light
industrial................. 45,410 5,946 19,905 71,261 2,276 3.19
Acquisition only............ -- -- 49,943 49,943 5,061 10.13
-------- ------- ------- ---------- ------ -----
Total commercial-nonowner
occupied.................. 364,640 58,991 110,653 534,284 11,197 2.10
-------- ------- ------- ---------- ------ -----
RESIDENTIAL-CONSTRUCTION,
ACQUISITION, AND
DEVELOPMENT................. -- 126,925 206,953 333,878 16,089 4.82
-------- ------- ------- ---------- ------ -----
Total real estate.......... $364,640 185,916 317,606 868,162 27,286 3.14%
======== ======= ======= ========== ====== =====
TOTAL LOANS.................. $4,236,618 57,201 1.35%
TOTAL REAL ESTATE/TOTAL
LOANS....................... 20.49% 47.70
</TABLE>
71
<PAGE>
NONPERFORMING LOANS AND ALLOWANCE FOR LOAN LOSSES. Loans are placed on
nonaccrual status when collection of interest and principal is doubtful,
generally when loans become 90 days past due. There are three negative
implications for earnings when a loan is placed in nonaccrual status. All
interest accrued but unpaid at the date the loan goes on nonaccrual status is
either deducted from interest income or written off as a loss. Secondly, future
accruals of interest are not made until it becomes certain that both loan
principal and interest can be paid. Finally, there may be actual losses which
necessitate additional provisions for loan losses charged against earnings.
For BB&T Financial, nonperforming loans (including restructured loans)
totalled $27.0 million on December 31, 1992, compared with $57.2 million at the
end of 1991 and $38.0 million at the end of 1990. Nonperforming loans equalled
.60% of loans at the end of 1992, down from 1.35% a year earlier and 1.11% at
the end of 1990. Net charge-offs were .48% of average loans outstanding in
1992, compared with .66% in 1991 and .40% in 1990. For the same three years,
the provisions charged against earnings as a percent of average loans
outstanding were .66%, 1.00% and .55%, respectively. In 1992, both the amount
of actual charge-offs and the provision for loan losses declined significantly
from 1991 levels, which were the highest in the history of BB&T Financial.
The most critical issue faced by the banking industry in recent years
occurred in real estate lending activities. Of the real estate loans included
in the previous table, $8.6 million or 1.01% were nonperforming at the end of
1992 and $27.3 million or 3.14% were nonperforming at the end of 1991. For
other classes of loans, nonperforming loans were .50% and .89% of such loans
outstanding at the end of 1992 and 1991, respectively. Other categories of
nonperforming business loans were diversified throughout the portfolio.
The following table sets forth information with respect to BB&T Financial's
nonperforming assets and past due loans for the periods indicated.
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------
1992 1991 1990 1989 1988
------- ------ ------ ------ ------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans........................... $26,029 55,123 34,939 13,857 10,174
Restructured loans......................... 945 2,078 3,028 3,128 694
Foreclosed property........................ 19,864 23,364 9,875 4,422 4,701
------- ------ ------ ------ ------
Total nonperforming assets............... $46,838 80,565 47,842 21,407 15,569
======= ====== ====== ====== ======
Total nonperforming assets to:
Loans and foreclosed property............ 1.03% 1.89 1.39 .61 .46
Total assets............................. .70 1.29 .93 .41 .32
======= ====== ====== ====== ======
Accruing loans past due 90 days............ $11,628 14,155 7,823 11,249 7,273
======= ====== ====== ====== ======
</TABLE>
BB&T Financial maintains a watch list for credits with balances of $100,000
or greater and which are categorized in the highest risk grades. The amount of
loans on the watch list totalled $165.7 million, 3.66% of loans outstanding at
December 31, 1992, and $166.9 million, 3.94% of loans outstanding, a year
earlier. The $165.7 million includes $20.2 million in nonaccruing status and
$145.5 million, which are currently performing, but in the opinion of
management, represent other potential problem loans.
As a result of increased provisions for loan losses in recent years, the
allowance for loan losses increased to $70.4 million or 1.56% of loans
outstanding at the end of 1992. At the end of 1991 the allowance for loan
losses was $61.9 million or 1.46% of outstanding loans. The allowance for loan
losses was 2.61 times nonperforming loans at the end of 1992, up from 1.08
times nonperforming loans as of December 31, 1991, 1.12 times nonperforming
loans as of December 31, 1990 and 2.20 times at the end of 1989. The allowance
plus equity was 13.48 times nonperforming assets at the end of 1992, compared
with 6.81 a year earlier.
72
<PAGE>
The following tables set forth an analysis of the allowance for loan losses
and information regarding the allocation of the allowance for loan losses.
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
---------------------------------------------------
1992 1991 1990 1989 1988
---------- --------- --------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
LOANS OUTSTANDING AT END OF
PERIOD.................... $4,524,665 4,233,429 3,423,810 3,512,768 3,356,844
AVERAGE LOANS OUTSTANDING.. 4,398,867 3,813,131 3,469,454 3,471,961 3,116,576
========== ========= ========= ========= =========
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of
period.................... $ 61,932 42,649 37,387 34,022 30,003
Provision for loan losses.. 29,000 38,000 19,235 12,478 11,984
Adjustment for acquired
companies................. 825 6,408 -- 90 --
---------- --------- --------- --------- ---------
91,757 87,057 56,622 46,590 41,987
---------- --------- --------- --------- ---------
Loans charged off:
Business.................. 16,853 16,856 9,373 6,305 5,805
Consumer.................. 7,836 9,955 6,912 5,626 4,201
Mortgage.................. 445 590 80 103 2
---------- --------- --------- --------- ---------
Total loans charged off.. 25,134 27,401 16,365 12,034 10,008
---------- --------- --------- --------- ---------
Recovery of loans
previously charged off:
Business.................. 2,492 1,172 1,405 1,910 1,461
Consumer.................. 1,308 1,103 973 921 582
Mortgage.................. 2 1 14 -- --
---------- --------- --------- --------- ---------
Total recoveries......... 3,802 2,276 2,392 2,831 2,043
---------- --------- --------- --------- ---------
Net loans charged off...... 21,332 25,125 13,973 9,203 7,965
---------- --------- --------- --------- ---------
Balance, end of period..... $ 70,425 61,932 42,649 37,387 34,022
========== ========= ========= ========= =========
Net charge-offs to average
loans outstanding......... .48% .66 .40 .27 .26
Allowance for loan losses
to loans outstanding...... 1.56 1.46 1.25 1.06 1.01
Allowance for loan losses
times net charge-offs..... 3.30x 2.46 3.05 4.06 4.27
Allowance for loan losses
times nonperforming loans. 2.61 1.08 1.12 2.20 3.13
Allowance for loan losses
plus equity times
nonperforming assets...... 13.48 6.81 8.70 17.63 21.93
Earnings coverage of net
charge-offs(1)............ 6.19 4.39 6.49 7.87 8.04
</TABLE>
- --------
(1) Net income before taxes, securities gains or losses, and the provision for
loan losses divided by net charge-offs.
73
<PAGE>
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------
1992 1991 1990 1989 1988
------- ------ ------ ------ ------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Commercial and industri-
al..................... $17,606 12,387 9,383 9,980 8,406
Real estate-construc-
tion................... 7,043 7,432 4,985 3,220 5,257
Real estate-mortgage.... 28,169 23,534 13,780 12,643 10,137
Installment and other
loans to individuals... 10,564 12,386 9,236 7,848 6,860
Unassigned portion of
reserve................ 7,043 6,193 5,265 3,696 3,362
------- ------ ------ ------ ------
$70,425 61,932 42,649 37,387 34,022
======= ====== ====== ====== ======
</TABLE>
Management continually reviews the loan portfolio for signs of deterioration.
Factors considered in evaluating the portfolio include the individual strength
of borrowers, the strength of individual industries, the value and
marketability of collateral, specific market strengths and weaknesses and
general economic conditions. Management believes that the allowance for loan
losses at December 31, 1992 is adequate to cover potential loan losses inherent
in the loan portfolio.
INTEREST RATE RISK MANAGEMENT. The primary assets of banks are portfolios of
investment securities and loans, while liabilities are primarily composed of
interest-bearing deposits and borrowed funds. Assets and liabilities have
varying maturities from one day to several years and the associated interest
rates may be fixed or variable. The objective in managing maturities and rates
is to optimize net interest income to the extent possible, while minimizing the
risk associated with significant, often unforeseen shifts in interest rates.
Sensitivity to interest rate changes is one of the manageable risks assumed
by banks. When assets and liabilities reprice at different intervals, earnings
become sensitive to changes in market interest rates. One measure of the risk
associated with changes in interest rates is the ratio of interest-sensitive
assets to interest-sensitive liabilities. At the end of 1992, the sensitivity
ratio was 1.10x over a 30 day period, but slightly negative for all intervals
of 31-180 days.
BB&T Financial uses financial hedging instruments to help manage interest
rate risk and reduce its exposure to sharp changes in market rates of interest.
Interest rate swap agreements provide a hedge against the adverse effects of
changing interest rates and, thereby, contribute to the stabilization of net
interest income. This risk management strategy contributed $18.2 million to
pre-tax earnings in 1992 and $7.8 million in 1991.
The following tables set forth information relative to maturities and
sensitivities to rate changes for various categories of assets and liabilities.
74
<PAGE>
INTEREST SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>
AT DECEMBER 31, 1992
INTEREST SENSITIVE
-------------------------------------------------------------
1-30 31-60 61-90 91-180 181-365 TOTAL NONINTEREST
DAYS DAYS DAYS DAYS DAYS SENSITIVE SENSITIVE(1)
---------- -------- ------- -------- --------- --------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Loans................... $2,856,295 183,937 31,930 140,538 256,205 3,468,905 1,055,760
Investment securities... 49,387 79,536 27,048 52,016 523,523 731,510 993,504
Short-term investments.. 600 -- -- -- -- 600 --
Interest rate swaps..... (500,000) (125,000) 100,000 (100,000) 275,000 (350,000) 350,000
---------- -------- ------- -------- --------- --------- ---------
Total earning assets.. $2,406,282 138,473 158,978 92,554 1,054,728 3,851,015 2,399,264
========== ======== ======= ======== ========= ========= =========
INTEREST-BEARING
LIABILITIES
Time deposits of
$100,000 or more....... $ 133,528 103,041 121,049 158,481 94,118 610,217 131,464
All other deposits...... 1,440,882 162,054 158,159 571,980 354,641 2,687,716 1,242,979
Short-term borrowed
funds.................. 609,683 -- -- -- -- 609,683 --
Long-term debt.......... -- 50,000 -- 124 -- 50,124 36,818
Interest rate swaps..... -- (50,000) (50,000) 100,000 -- -- --
---------- -------- ------- -------- --------- --------- ---------
Total interest-bearing
liabilities.......... $2,184,093 265,095 229,208 830,585 448,759 3,957,740 1,411,261
========== ======== ======= ======== ========= ========= =========
Interest sensitivity gap
per period............. $ 222,189 (126,622) (70,230) (738,031) 605,969 (106,725) 988,003
Cumulative interest
sensitivity gap........ 222,189 95,567 25,337 (712,694) (106,725) -- --
Cumulative ratio of
interest-sensitive
assets to interest-
sensitive liabilities.. 1.10x 1.04 1.01 .80 .97
</TABLE>
- --------
(1) Assets and liabilities which are not sensitive to interest changes in a
twelve-month period because of maturities or fixed interest rates.
75
<PAGE>
SECURITIES--MATURITY/YIELD SCHEDULE
<TABLE>
<CAPTION>
AT DECEMBER 31, 1992
---------------------------------
APPROXIMATE TAXABLE
MARKET EQUIVALENT
BOOK VALUE VALUE YIELD(1)
---------- ----------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C>
U.S. Treasury:
Within 1 year............................... $ 692,192 699,925 5.91%
1 through 5 years........................... 798,723 808,468 5.57
---------- ---------
Total...................................... 1,490,915 1,508,393 5.72
---------- ---------
U.S. Government agencies and corporations:
Within 1 year............................... 11,865 12,095 7.67
1 through 5 years........................... 78,943 79,777 6.16
6 through 10 years.......................... 1,502 1,551 9.32
---------- ---------
Total...................................... 92,310 93,423 6.41
---------- ---------
State and municipal:
Within 1 year............................... 23,564 23,696 12.06
1 through 5 years........................... 56,380 59,203 10.75
6 through 10 years.......................... 44,897 48,261 10.08
Over 10 years............................... 12,076 13,166 10.53
---------- ---------
Total...................................... 136,917 144,326 10.73
---------- ---------
Mortgage-backed securities of U.S. Government
agencies.................................... 985 986 8.72
Other securities............................. 3,887 4,084 9.59
---------- ---------
$1,725,014 1,751,212 6.17
========== ========= =====
</TABLE>
- --------
(1) Yields related to securities exempt from both federal and state income
taxes, federal income taxes only, or state income taxes only are stated on
a taxable equivalent basis assuming tax rates of 39.27%, 35.89% or 7.98%,
respectively.
MATURITY SCHEDULE OF SELECTED LOANS
<TABLE>
<CAPTION>
AT DECEMBER 31, 1992
-----------------------------------------------
ONE
WITHIN THROUGH
ONE YEAR FIVE YEARS OVER FIVE YEARS TOTAL
---------- ---------- --------------- ---------
(THOUSANDS)
<S> <C> <C> <C> <C>
Commercial and industrial:
Fixed interest rates.......... $ 72,440 46,940 36,006 155,386
Floating interest rates....... 747,100 85 1 747,186
---------- ------ ------ ---------
Total........................ 819,540 47,025 36,007 902,572
---------- ------ ------ ---------
Real estate-construction:
Fixed interest rates.......... 17,196 20,988 661 38,845
Floating interest rates....... 317,384 -- -- 317,384
---------- ------ ------ ---------
Total........................ 334,580 20,988 661 356,229
---------- ------ ------ ---------
$1,154,120 68,013 36,668 1,258,801
========== ====== ====== =========
</TABLE>
LIQUIDITY. For BB&T Financial, the principal source of asset liquidity is
marketable investment securities, particularly those maturing within one year.
The objective in the management of the investment securities portfolio is to
maximize yields within a framework which emphasizes shorter maturities and a
managed assets/liabilities interest rate sensitivity position. Such a strategy
minimizes the possibility of earnings losses associated with sharp swings in
market rates of interest.
76
<PAGE>
Through a strategy of securitizing internally originated residential mortgage
loans, the average maturity in the investment portfolio was lengthened in 1989-
1991. The average maturity of the portfolio at the end of 1991 was two years,
nine months. By the end of 1992, the average maturity had been reduced to 1
year, 5 months principally due to the liquidation of mortgage-backed
securities. At the end of 1992, approximately 42% of the portfolio matured
within one year and approximately 96% matured within a five-year period.
The portfolio includes investments in obligations of the U.S. Treasury, and
Government agency obligations, mortgage-backed securities and higher grade
municipal securities. In addition to the liquidity provided by normal
maturities, liquidity also is provided by the marketability of the portfolio.
Asset liquidity also is provided by scheduling maturities within the loan
portfolio, although the probability of conversion is not so certain as with
investment securities. At the end of 1992 approximately 77% or $3.5 billion of
loans would mature or reprice within a one-year period.
Liability liquidity is provided by sizable core deposits and other sources of
funds generated from the normal customer base. Substantially all of the funds
utilized by the subsidiaries and BB&T Financial are generated from the normal
customer base.
In addition to the liquidity provided by the balance sheet, BB&T Financial
maintains a capacity to borrow additional funds when the need arises. BB&T
Financial has a strong credit rating. BB&T has established federal funds lines
with many major banks totalling approximately $1 billion. BB&T Financial issues
commercial paper under a master agreement backed by bank lines of credit in the
amount of $90 million. BB&T has a medium-term bank note program whereby it may
sell from time to time bank notes (unsecured, unsubordinated and uninsured
obligations) in an aggregated amount of up to the lesser of $500 million or 50%
of BB&T's capital stock and unimpaired surplus outstanding at any time.
The retention of earnings also is a major source of liquidity. For the years
1992-1990, funds provided from operations were $102.7 million, $86.8 million
and $78.1 million, respectively.
The following table sets forth certain information concerning BB&T
Financial's liquidity.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
-----------------------------------
1992 1991 1990 1989 1988
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Average loans to:
Average deposits....................... 83.94% 79.72 83.65 87.58 88.06
Average deposits and short-term bor-
rowed funds........................... 76.86 74.98 75.40 76.12 77.66
====== ====== ====== ====== ======
</TABLE>
EQUITY AND CAPITAL RESOURCES. Shareholders' equity increased to $561 million
at the end of 1992, compared with $487 million at the end of 1991 and $374
million on December 31, 1990. The ratio of shareholders' equity to year-end
assets was 8.38%, 7.81% and 7.24% for 1992, 1991 and 1990, respectively.
Shareholders' equity has grown 15.3% and 30.3% over the last two years as a
result of the retention of earnings and the issuance of new equity. In 1992
approximately $28.7 million was added to equity through the issuance of stock,
following additions of $73.7 million in 1991 and $2.6 million in 1990.
BB&T Financial has consistently generated additional equity through the
retention of earnings. The rate of internal capital generation was 10.0% in
1992, 9.4% in 1991 and 10.2% in 1990. The dividend payout ratios were 31.0% and
33.3%, respectively, for 1992 and 1991. The current dividend policy is to
maintain a normal payout ratio of 30-35% of earnings.
While management views the equity to asset ratio as the principal indicator
of capital strength, additional measures have been prescribed by BB&T
Financial's regulators. Bank holding companies, and their subsidiaries, are
subject to risk-based capital measures, which were fully implemented at the end
of 1992.
77
<PAGE>
The ratios measure the relationship of capital to a combination of balance
sheet and off-balance sheet credit risks. The values of both balance sheet and
off-balance sheet items are adjusted to reflect credit risks.
Tier 1 capital is required to be at least 4% of risk-weighted assets, and
total capital must be 8% of risk-weighted assets. The Tier 1 capital ratio for
BB&T Financial at the end of 1992 was 12.35%, and the total capital ratio was
15.24%.
In evaluating capital strength and adequacy, regulators and their examiners
also utilize a leverage capital ratio. This ratio measures the relationship of
Tier 1 capital to tangible assets and must be at least 3% for the strongest
banks. At the end of 1992, the leverage ratio for BB&T Financial was 8.24%. See
"SUPERVISION AND REGULATION OF BB&T FINANCIAL--Capital Adequacy Guidelines for
Bank Holding Companies." The following table sets forth information concerning
BB&T Financial's capital adequacy for the indicated periods.
<TABLE>
<CAPTION>
AT OR FOR THE FISCAL YEAR
ENDED DECEMBER 31,
----------------------------
1992 1991 1990 1989 1988
----- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C>
Average equity to average assets.............. 8.15% 7.52 6.97 6.40 6.51
Equity to assets at year-end.................. 8.38 7.81 7.24 6.48 6.40
Risk-based capital ratios (fully phased-in
guidelines):
Tier 1 capital............................... 12.35 11.13 9.72 N/A N/A
Total capital................................ 15.24 14.33 13.04 N/A N/A
Leverage ratio................................ 8.24 7.76 7.06 N/A N/A
===== ===== ===== ==== ====
</TABLE>
STOCK PERFORMANCE. BB&T Financial Common Stock is traded over-the-counter and
quoted on the Nasdaq NMS under the symbol "BBTF." At the end of 1992, BB&T
Financial had approximately 15,663 shareholders of record and 26,311,915 shares
outstanding. Approximately 76% of the outstanding shares were owned by
individual investors.
The following table sets forth information with respect to BB&T Financial's
stock performance for the periods indicated.
<TABLE>
<CAPTION>
AT OR FOR THE FISCAL
YEAR ENDED DECEMBER 31,
-------------------------
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Dividend payout percentage........................ 31.0% 33.3 31.9 32.4 32.2
Dividend yield (based on average high/low price
for the year).................................... 3.4 4.5 4.6 3.6 4.2
Price/earnings ratio (based on year-end stock
price and fully diluted earnings per share)...... 11.6x 9.0 6.7 9.6 8.7
Price/book ratio (end of year).................... 1.5 1.1 .9 1.3 1.2
==== ==== ==== ==== ====
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1993
The following discussion and analysis is intended to assist in understanding
BB&T Financial's results of operations and changes in financial position for
the nine months and third quarter ended September 30, 1993.
On February 24, 1993, BB&T Financial acquired First Fincorp, Inc. of Kinston,
North Carolina, and its wholly-owned subsidiary, First Financial Savings Bank,
Inc. in a transaction accounted for as a purchase. The merger was consummated
through the issuance of 673,148 shares of BB&T Financial Common Stock for all
of the outstanding common stock of Fincorp. The results reported for 1993
include the operations of First Fincorp subsequent to the date of acquisition.
On February 25, 1993, BB&T Financial completed the acquisition of Security
Financial Holding Company of Durham, North Carolina, and its wholly-owned
subsidiary, Security Federal Savings Bank, in a transaction accounted for as a
pooling-of-interests. The merger was consummated through the issuance of
1,408,178 shares of BB&T Financial Common Stock for all of the outstanding
common stock of Security. All financial information has been restated to
include the
78
<PAGE>
operations of Security Financial Holding Company as if the transaction had been
completed as of the beginning of the earliest period reported. On the
respective dates of acquisition, First Fincorp had total assets of
approximately $322 million and Security had total assets of approximately $316
million.
On May 18, 1993, BB&T Financial acquired Carolina Savings and Edenton Savings
in transactions accounted for as purchases. The results reported for 1993
include the operations of Carolina Savings and Edenton Savings subsequent to
the date of acquisition. On the date of the acquisitions, Carolina Savings had
total assets of approximately $142 million and Edenton Savings had total assets
of approximately $40 million.
The acquisitions of Carolina Savings and Edenton Savings involved their
conversions from mutual savings associations to stock savings associations
simultaneous with their acquisition by BB&T Financial. To complete the
conversions and acquisitions, BB&T Financial sold shares of its common stock
with the proceeds being invested in the acquired companies. BB&T sold
approximately 507,182 shares of its common stock with net proceeds of
approximately $15.3 million to complete the acquisitions of Carolina Savings
and Edenton Savings.
OVERVIEW. Net income for the nine months ended September 30, 1993 totalled
$69.8 million, compared with $59.1 million for the same period in 1992, an
increase of 18.2%. Primary net income per share for the period was $2.31
compared with $2.14, while, on a fully diluted basis, earnings per share were
$2.26 and $2.05, respectively.
Consolidated net income for the third quarter totalled $24.4 million, $.78
per share, compared with $20.0 million, $.71 per share for the same quarter of
1992. Fully diluted earnings per share were $.78 and $.68, respectively.
On an annualized basis, the return on average assets was 1.24% for the first
nine months of 1993, compared with 1.18% for the same period of 1992. For the
third quarter of 1993, the return on average assets was 1.22%, compared with
1.18% in the same quarter of 1992. The annualized returns on average
shareholders' equity were compared with 14.5% and 14.0%, respectively, for the
corresponding periods in 1992.
NET INTEREST INCOME. Net interest income for the first nine months of 1993
totalled $233.3 million. This represented an increase of $27.2 million or 13.2%
over $206.1 million for the first nine months of 1992. For the quarter ended
September 30, 1993, net interest income increased $12.3 million or 17.8% over
the third quarter of 1992 for a total of $81.7 million.
The period 1991-93 generally has been characterized by steady and significant
declines in market rates of interest. Throughout most of that period,
reductions in the cost of funds preceded declines in yields on earning assets.
As a result, interest rate spreads and margins have been greater than those
which were recorded in the years immediately preceding 1991.
In 1993, short-term interest rates have stabilized with relatively minor
movements--either up or down-- but long-term rates have continued to fall.
Accordingly, there has been a continuing movement by customers to refinance
home mortgages. This has resulted in lower yields on home mortgages, but
greater profits from loan origination activities. The average taxable
equivalent yield on investment securities declined to 6.55% for the first nine
months of 1993 and 6.21% for the third quarter, compared with 7.97% and 7.41%
in the respective periods of 1992. Maturing securities have been replaced with
lower yielding maturities, and growth has been at lower prevailing rates. Also,
the older portfolios of tax-exempt state and municipal securities are
continuing to mature, and there are no alternative investments offering the
same high yields.
Average earning assets increased 11.9% for the first nine months of 1993 and
17.7% for the third quarter. Acquisitions accounted for as purchases were
partially responsible for the growth, but demand for loans has increased in
recent months. Also, BB&T Financial added approximately $666 million to its
securities portfolio (including both investment securities and securities
available for sale) in the first three quarters of 1993 to replace $539 million
of securities that matured or were sold. The average maturity of BB&T
Financial's portfolio of investment securities has been shortened to one year,
seven months. BB&T Financial believes that it is prudent to maintain such a
position as interest rates approach secular lows.
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For both the first nine months and the third quarter of 1993, net interest
income and average earning assets increased at approximately the same rate. On
a taxable equivalent basis, the interest rate spread was 4.14% for the first
nine months in 1993 and 4.04% for the third quarter of 1993, compared with
4.04% and 4.00%, respectively, in the same periods in 1992. The taxable
equivalent net interest margin was 4.63% for the first nine months of 1993,
compared with 4.64% in 1992. For the third quarters of each year, the margins
were 4.52% and 4.58%, respectively. The average yield on earning assets
declined 88 basis points for the first three quarters of 1993 and 68 basis
points for the third quarter of 1993 from the 1992 yields. On the other hand,
the average cost of funds was down 98 basis points for the first nine months of
1993 and 72 basis points in the third quarter of 1993.
BB&T Financial uses interest rate swaps as hedges to protect its earnings
against dramatic changes in market rates of interest. These hedges contributed
$14.4 million to net interest income in 1993, compared with $13.8 million for
the same period in 1992. The contributions from hedges were $4.6 million and
$4.3 million, respectively in the third quarters of each year.
PROVISION AND ALLOWABLE FOR LOAN LOSSES. BB&T Financial's subsidiaries
maintain allowances for loan losses to absorb potential future losses.
Provisions for loan losses are charged against earnings to maintain the
allowances at appropriate levels.
The provision for loan losses for the first nine months of 1993 was $13.3
million, which was approximately $10.3 million or 43.7% below the $23.5 million
recorded in the first nine months of 1992. The provision of $3.8 million
recorded in the third quarter of 1993 represented a decline of 47.8% from $7.2
million in the three months ended September 30, 1992. The reduced charges
against earnings for possible losses have been achieved because of significant
improvements in asset quality and a resultant lower level of actual charge-
offs.
On an annualized basis, net charge-offs as a percent of average loans
outstanding were .17% for the first nine months of 1993 and .26% for the third
quarter of 1993. The ratios for the same periods in 1992 were .44% and .37%,
respectively. At the end of September 1993, nonperforming assets (nonaccrual
and restructured loans and foreclosed property) totalled $40.3 million or .50%
of total assets. This represents a significant improvement from the level of
nonperforming assets of $62.6 million, or .89% of total assets, at the end of
the third quarter of 1992 and $47.3 million, or .66%, at the end of 1992.
The allowance for loan losses of $84.0 million was 1.51% of loans outstanding
at the end of the third quarter in 1993. This compares with allowances of $72.6
million, or 1.53% of loans outstanding, a year earlier and $72.7 million, or
1.54% of outstanding loans, at the end of 1992. The allowance for loan losses
was 3.24 times nonperforming loans on September 30, 1993, up from 1.85 at the
end of the third quarter in 1992 and 2.69 at the end of 1992. In management's
opinion, the allowance for loan losses on September 30 was adequate.
NONINTEREST INCOME. Noninterest income for the first three quarters of 1993
totalled $79.1 million, an increase of 17.8% from last year. Major categories
of noninterest income include service charges on deposit accounts, mortgage
banking income, trust income, gains on sales of securities and insurance
commissions. All categories of noninterest income, other than gains on sales of
securities, reported increases over 1992 for the first nine months of the year
with insurance commissions reporting the greatest percentage change.
Service charges on deposit accounts provide the largest amount of noninterest
income. Service charges on deposit accounts increased $4.1 million or 18.8% to
a total of $26.0 million for the first three quarters of 1993. For the third
quarter of 1993, the increase over the comparable quarter of 1992 was $1.7
million or 22.1%. The growth in service charges on deposit accounts in recent
quarters is partially due to increases in fee schedules, but growth in the
average balance of noninterest-bearing deposits also has been a significant
contributor. For the first nine months of 1993, the average balance of
noninterest-bearing demand deposits increased approximately $99.5 million or
17.7%. These noninterest-bearing deposits also have been a significant
contributor to sustaining interest margins and providing greater amounts of net
interest income.
Over the past several years, BB&T Financial has developed a significant
mortgage banking operation, with an emphasis on the origination and servicing
of single-family mortgages. This emphasis has been
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heightened and expanded by recent acquisitions of thrifts. Income from mortgage
banking activities totalled $11.6 million for the first nine months of 1993, a
12.4% increase from the total of $10.4 million in 1992. For the third quarter
ended September 30, 1993, mortgage banking income totalled $4.8 million,
compared with $3.7 million a year earlier, an increase of 29.8%. Income from
the origination and sale of mortgage loans totalled $9.1 million in the first
three quarters of 1993 compared with $5.4 million in the first nine months of
1992. The volume of mortgage loan originations has increased throughout 1992
and 1993, as home mortgages have been refinanced to take advantage of lower
interest rates. Mortgage loan servicing fees increased to $7.3 million for the
first nine months of 1993, up from $6.6 million in the same period of 1992;
however, servicing income declined due to accelerated amortization of the
mortgage loan excess servicing asset necessitated by early payoffs.
Amortization charged against revenues totalled $5.5 million in the first nine
months and $2.3 million in the third quarter of 1993 compared with $2.3 million
and $1.1 million, respectively in 1992.
In recent years, BB&T Financial has made a concerted effort to build a
statewide network of independent insurance agencies, primarily through
acquisitions. BB&T Financial has acquired six independent agencies over the
past 12 months. General insurance commissions totalled $7.3 million for the
first three quarters of 1993, an increase of $2.5 million or 52.4% over the
$4.8 million recorded in the first nine months of the prior year. For the third
quarter of 1993, general insurance commissions totalled $2.7 million, compared
with $1.5 million in the quarter ended September 30, 1992. BB&T Financial's
insurance operations represent an increasingly important source of noninterest
income.
Trust activities have provided noninterest revenues for BB&T Financial for
many years. BB&T Financial offers both corporate and personal trust services.
BB&T Financial is placing an increased emphasis on employee benefit services
and, beginning in the fourth quarter of 1992, manages a proprietary family of
mutual funds. Other service charges, commissions and fees include $1.1 million
in fees from the sales of mutual funds for the first nine months of 1993,
compared with $314,000 in 1992. For the first nine months of 1993, income from
trust services increased $1.1 million or 16.2% to a total of $7.7 million. For
the third quarter of 1993, trust revenues totalled $2.8 million, compared with
$2.4 million in the third quarter of 1992.
Declining market rates of interest have created gains in the investment
portfolio in recent years. At the end of September 1993, the market value of
investment securities (including those available for sale) exceeded the
carrying value by approximately $34 million. Gains on sales of securities
totalled $1.3 million for the first three quarters of 1993, compared with $4.7
million for the same period a year earlier, while for the third quarter of
1993, gains were only $82,000, compared with $705,000 in the same quarter of
1992.
Other operating income totalled $13.6 million for the first nine months of
1993, compared with $8.9 million a year earlier. The amortization of negative
goodwill, which was recorded in thrift acquisitions, totalling $3.3 million is
included in this category for 1993, compared with $2.5 million in 1992. Other
operating income also included a gain of approximately $1.3 million from the
sale of BB&T Financial's interest in a credit card processing company in the
second quarter of 1993 and $1.1 million earned on life insurance policies on
officers' lives.
NONINTEREST EXPENSE. Noninterest expense for the first three quarters of 1993
increased 19.4%. For the third quarter of 1993 the increase was 24.1%. The
rates of increase were unusually large because of the use of purchase
accounting in savings institution acquisitions.
Three categories of operating expense were particularly affected by the
acquisitions. Personnel costs were up 20.8% for the first nine months of 1993,
furniture and equipment expense was up 32.1% and net occupancy expense
increased 11.1%. Included in personnel costs were increases of 19.7% in
salaries and wages and 26.0% in other personnel expense. A change to the
accrual method of accounting for retiree health insurance benefits resulted in
an increased expense of $1.2 million for the first three quarters of 1993.
The premium paid to the FDIC for deposit insurance has been increased
significantly since 1989 to cover the cost associated with failed banks. The
rate has increased from $.8333 per thousand dollars of deposits in 1989 to the
current rate of $2.30. The cost of deposit insurance was $10.0 million in the
first three quarters of
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1993, compared with $9.1 million for the comparable period a year earlier. The
rise was entirely related to growth and acquisitions.
The provisions for loan losses have been increased in recent years due to the
increased incidence of nonperforming loans and actual losses, but the reduction
in credit quality also had a significant impact on noninterest expense in 1992.
The expense of maintaining foreclosed property and the ultimate gain or loss on
the sale of such properties is included in noninterest expense. Improved asset
quality and intensive efforts to sell and/or recognize losses in 1992 have
combined to substantially reduce charges against earnings in 1993. For the
first three quarters of 1993, the cost and expense related to foreclosed
properties totalled $1.8 million, down from $4.9 million in the first nine
months of 1992.
FINANCIAL POSITION. BB&T Financial continues to be very liquid, although
short-term borrowed funds did increase to $917 million at the end of September
1993, compared with $632 million a year earlier and $610 million at the end of
1992. As interest rates have continued to decline, many investors who
traditionally purchased certificates of deposit have sought alternative
investment opportunities. Many have moved to other instruments, particularly
mutual funds. BB&T Financial also has intentionally used borrowed funds to
support its assets because of the greater spreads which are available. BB&T
Financial believes this strategy to be prudent, because its portfolios of
investment securities totalling approximately $2.0 billion represent
approximately 25% of its total assets, have an average maturity of one year,
seven months and are comprised almost entirely of obligations of the U.S.
Treasury and other investment grade securities. Also, the loan portfolio
includes approximately $385 million of home mortgage loans to be packaged for
sale to third party investors ($265 million were under forward contract at the
end of September 1993).
Short-term borrowed funds at September 30, 1993 included $172.8 million of
securities sold under agreements to repurchase, approximately $158.0 million of
master notes of BB&T and $586.6 million of federal funds purchased. BB&T had
unused federal funds lines of approximately $1.6 billion at September 30, 1993.
BB&T also had unused lines of credit totalling $55 million at the end of the
third quarter of 1993.
In the second quarter of 1993, BB&T put in place a program which will allow
it to issue $500 million of medium-term notes as needed to meet ongoing funding
and operational needs. These notes are rated A2/P1 by Moody's and A/A-1 by
Standard and Poor's. On September 30, 1993, BB&T had issued approximately $200
million of the notes to mature in 1996.
The traditionally strong equity and capital position of BB&T Financial and
its subsidiaries have been strengthened in recent years and continue to be very
good. The ratio of equity to assets at the end of September 1993 was 8.63%,
compared with 8.26% a year earlier. Equity has been generated from acquisitions
and the issuance of new shares, as well as the retention of earnings.
Regulators use other ratios to measure the capital adequacy of financial
institutions. The principal measures are the risk-based capital ratios. BB&T
had a Tier 1 capital ratio of 12.80% and a total capital ratio of 14.80% on
September 30, 1993. These ratios compare with 12.36% and 15.42%, respectively,
at the end of the third quarter of 1992. The minimum required Tier 1 risk-based
capital ratio is 4%, and the required total risk-based capital ratio is 8%.
IMPACT OF NEW ACCOUNTING STANDARDS
Effective January 1, 1993, BB&T Financial adopted the provisions of FAS 106,
"Employers' Accounting for Post Retirement Benefits Other Than Pensions," which
requires the accrual of nonpension post retirement benefits over the employees'
active service period, defined as the date of employment up to the date of
employees' eligibility for such benefits. BB&T Financial provides health care
benefits to retirees and, prior to 1993, expensed those costs as incurred.
During the quarter ended March 31, 1993, BB&T Financial recorded and expensed
$412,000 to cover the estimated cost of retiree benefits other than pensions.
In the first quarter of 1992, BB&T Financial incurred and expensed $103,000 to
provide health care benefits to its retirees.
Effective January 1, 1993, BB&T Financial adopted the provisions of FAS 109,
"Accounting for Income Taxes," which requires the use of the asset and
liability method to account for income taxes. Prior to 1993,
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BB&T Financial used the deferred method for accounting for income taxes. The
adoption of the provisions of FAS 109 did not have a material impact on either
the financial position or results of operations of BB&T Financial.
The FASB has issued FAS 112, "Employers' Accounting for Postemployment
Benefits," which requires accrual of a liability for all types of benefits paid
to former or inactive employees after employment but before retirement. The
periodic effect on net income, if any, has not been determined. Adoption of FAS
112 is required for fiscal years beginning after December 15, 1993.
The FASB has issued FAS 115, "Accounting for Certain Investments in Debt and
Equity Securities," which changes the method of accounting and reporting for
debt and equity securities. Securities that are held to maturity would be
classified as such and reported at amortized cost. Securities for current
resale would be classified as trading securities and reported at fair value,
with unrealized gains and losses included in current earnings. Securities that
are not classified as trading securities or held-to-maturity securities would
be classified as securities available for sale and reported at fair value, with
unrealized gains and losses excluded from current earnings and reported as a
separate component of shareholders' equity. FAS 115 will be effective for
fiscal years beginning after December 15, 1993. BB&T will adopt the provisions
of FAS 115 on January 1, 1994. It is anticipated that the adoption will have no
material effects either on the financial condition or results of operations of
BB&T.
The FASB also has issued FAS 114, "Accounting by Creditors for Impairment of
a Loan," which requires that creditors value all loans for which it is probable
that the creditor will be unable to collect all amounts due according to the
terms of the loan agreement based on the discounted expected future cash flows.
This discounting would be at the loan's effective interest rate. Adoption of
FAS 114 is required for fiscal years beginning after December 15, 1994.
SUPERVISION AND REGULATION OF BB&T FINANCIAL
The following description briefly discusses certain provisions of federal and
state laws and regulations and the potential impact of such provisions on BB&T
Financial and its subsidiaries. The discussion is only a summary and does not
purport to be a complete description of the applicable laws and regulations,
and summarizes only the laws and regulations as currently in effect.
GENERAL
As a bank holding company registered under the BHCA, BB&T Financial is
subject to the regulation of the Federal Reserve. Under the BHCA, BB&T
Financial's activities and those of its subsidiaries are limited to banking,
managing or controlling banks, furnishing services to or performing services
for its subsidiaries or engaging in any other activity which the Federal
Reserve determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. The BHCA prohibits BB&T
Financial from acquiring direct or indirect control of more than 5% of the
outstanding voting stock or substantially all of the assets of any bank or
merging or consolidating with another bank holding company without prior
approval of the Federal Reserve. The BHCA also prohibits BB&T Financial from
acquiring control of any bank operating outside the State of North Carolina
unless such action is specifically authorized by the statutes of the state in
which the bank to be acquired is located.
Additionally, the BHCA prohibits BB&T Financial from engaging in, or
acquiring ownership or control of, more than 5% of the outstanding voting stock
of any company engaged in a nonbanking business unless such business is
determined by the Federal Reserve to be so closely related to banking as to be
a proper incident thereto. The BHCA generally does not place geographic
restrictions on the activities of such nonbanking activities.
There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by federal law and
regulatory policy that are designed to reduce potential
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loss exposure to the depositors of such depository institutions and to the FDIC
insurance funds in the event the depository institution becomes in danger of
default or in default. For example, to reduce the likelihood of receivership of
an insured depository institution subsidiary, a bank holding company is
required to guarantee the compliance of any insured depository institution
subsidiary that may become "undercapitalized" with the terms of any capital
restoration plan filed by such subsidiary with its appropriate federal banking
agency up to the lesser of (i) an amount equal to 5% of the subsidiary
institution's total assets at the time the institution became undercapitalized
or (ii) the amount which is necessary (or would have been necessary) to bring
the institution into compliance with all applicable capital standards as of the
time such institution fails to comply with such capital restoration plan. See
"--Impact of the 1991 Banking Law." Under a policy of the Federal Reserve with
respect to bank holding company operations, a bank holding company is required
to serve as a source of financial strength to its subsidiary depository
institutions and to commit resources to support such institutions in
circumstances where it might not do so absent such policy. The Federal Reserve
under the BHCA also has the authority to require a bank holding company to
terminate any activity or to relinquish control of a nonbank subsidiary (other
than a nonbank subsidiary of a bank) upon the Federal Reserve's determination
that such activity or control constitutes a serious risk to the financial
soundness and stability of any bank subsidiary of the bank holding company.
In addition, the "cross-guarantee" provisions of the Federal Deposit
Insurance Act, as amended ("FDIA") require insured depository institutions
under common control to reimburse the FDIC for any loss suffered or reasonably
anticipated by either the SAIF or the BIF as a result of the default of a
commonly controlled insured depository institution or for any assistance
provided by the FDIC to a commonly controlled insured depository institution in
danger of default. The FDIC may decline to enforce the cross-guarantee
provisions if it determines that a waiver is in the best interest of the SAIF
or the BIF or both. The FDIC's claim for damages is superior to claims of
stockholders of the insured depository institution or its holding company but
is subordinate to claims of depositors, secured creditors and holders of
subordinated debt (other than affiliates) of the commonly controlled insured
depository institutions.
BB&T Financial is subject to the obligations and restrictions described
above, and BB&T, BB&T-SC, Mutual Savings, Citizens of Newton, Old Stone and
Citizens of Mooresville are, and after the Acquisition, Asheville Savings will
be, subject to the cross-guarantee provisions of the FDIA. However, management
of BB&T Financial currently does not expect that any of these provisions will
have any impact on operations.
BB&T Financial also is a savings and loan holding company registered under
the HOLA by virtue of its ownership of Old Stone and thus is subject to the
supervision and regulation of the OTS. At least until the merger or other
consolidation of Old Stone with and into BB&T, BB&T Financial will continue to
be a savings and loan holding company.
As a result of BB&T Financial's ownership of BB&T and its indirect ownership
of BB&T-SC, BB&T Financial is registered under the bank holding company laws of
North Carolina and South Carolina, respectively. Accordingly, BB&T Financial
and its subsidiaries also are subject to regulation and supervision by the
North Carolina Commissioner of Banks ("Commissioner") and South Carolina
banking authorities. As a result of BB&T Financial's ownership of Citizens of
Newton, Mutual Savings and Citizens of Mooresville, BB&T Financial also is
registered under the savings institutions holding company laws of North
Carolina and, thereby, is subject to regulation and supervision by the
Administrator.
CAPITAL ADEQUACY GUIDELINES FOR BANK HOLDING COMPANIES
The Federal Reserve has adopted capital adequacy guidelines for bank holding
companies and banks that are members of the Federal Reserve System and thus
subject to its regulation.
Bank holding companies are required to comply with the Federal Reserve's
risk-based capital guidelines. Under these guidelines the minimum ratio of
total capital to risk-weighted assets (including certain off-balance sheet
activities, such as standby letters of credit) is 8%. At least half of the
total capital is required to be "Tier 1 capital," principally consisting of
common stockholders' equity, noncumulative perpetual preferred stock and a
limited amount of cumulative perpetual preferred stock, less certain goodwill
items. The
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remainder ("Tier 2 capital") may consist of a limited amount of subordinated
debt, certain hybrid capital instruments and other debt securities, perpetual
preferred stock and a limited amount of the general loan loss allowance. In
addition to the risk-based capital guidelines, the Federal Reserve has adopted
a minimum Tier 1 (leverage) capital ratio, under which a bank holding company
must maintain a minimum level of Tier 1 capital to average total consolidated
assets of at least 3% in the case of a bank holding company which has the
highest regulatory examination rating and is not contemplating significant
growth or expansion. All other bank holding companies are expected to maintain
a ratio of at least 100 to 200 basis points above the stated minimum.
The following table sets forth BB&T Financial's regulatory capital position
at September 30, 1993 on a historical basis as well as a pro forma basis
assuming consummation of the Acquisition. See "PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS." For a discussion of BB&T's historical and pro forma
capital positions as of September 30, 1993, see "--BB&T and BB&T-SC."
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1993
----------------------------------
HISTORICAL PRO FORMA
---------------- ----------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Shareholders' Equity........................ $ 698,370 8.63% $ 720,120 8.55%
========== ===== ========== =====
REGULATORY CAPITAL
Tier 1 risk-based:
Actual.................................... $ 686,080 12.80% $ 707,830 12.81%
Required.................................. 214,352 4.00 220,953 4.00
---------- ----- ---------- -----
Excess.................................... $ 471,728 8.80% $ 486,877 8.81%
========== ===== ========== =====
Total risk-based:
Actual.................................... $ 793,275 14.80% $ 815,025 14.75%
Required.................................. 428,703 8.00 441,907 8.00
---------- ----- ---------- -----
Excess.................................... $ 364,572 6.80% $ 373,118 6.75%
========== ===== ========== =====
Leverage:
Actual.................................... $ 686,080 8.64% $ 707,830 8.54%
Required.................................. 238,246 3.00 248,575 3.00
---------- ----- ---------- -----
Excess.................................... $ 447,834 5.64% $ 459,255 5.54%
========== ===== ========== =====
Total risk-based assets..................... $5,358,791 5,523,833
========== ==========
Total assets.............................. $8,089,293 $8,422,669
========== ==========
</TABLE>
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the "1991
Banking Law") required each federal banking agency, including the Federal
Reserve, to revise its risk-based capital standards to ensure that those
standards take adequate account of interest rate risk, concentration of credit
risk and the risks of nontraditional activities, as well as reflect the actual
performance and expected risk of loss on multi-family mortgages. The Federal
Reserve, the FDIC and the Office of the Comptroller of the Currency have issued
a joint advance notice of proposed rulemaking, and have issued a revised
proposal soliciting comments on a proposed framework for implementing these
revisions. Under the proposal, an institution's assets, liabilities and off-
balance sheet positions would be weighed by risk factors that approximate the
instruments' price sensitivity to a 100 basis point change in interest rates.
Institutions with interest rate risk exposure in excess of a threshold level
would be required to hold additional capital proportional to that risk. The
notice also asked for comments on how the risk-based capital guidelines of each
agency may be revised to take account of concentration and credit risk and the
risk of nontraditional activities. Due to the preliminary nature of the
proposal, BB&T Financial cannot assess at this point the impact the proposal
would have on the capital requirements of BB&T Financial or its subsidiary
banks.
BB&T AND BB&T-SC
BB&T is organized as a North Carolina chartered banking corporation and is
subject to various statutory requirements and to rules and regulations
promulgated and enforced by the Commissioner and the FDIC.
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BB&T-SC is organized as a South Carolina chartered banking corporation and is
subject to various statutory requirements and to rules and regulations
promulgated and enforced by South Carolina banking agencies and the FDIC.
North Carolina chartered banks, such as BB&T, are subject to legal
limitations on the amount of dividends they are permitted to pay. Prior
approval of the Commissioner is required if the total of all dividends declared
by BB&T in any calendar year exceeds its net profits (as defined by statute)
for that year combined with its retained net profits (as defined by statute)
for the preceding two calendar years, less any required transfers to surplus.
Under the FDIA, insured depository institutions, such as BB&T and BB&T-SC, are
prohibited from making capital distributions, including the payment of
dividends, if, after making such distribution, the institution would become
"undercapitalized" (as such term is used in the statute). Based on its
subsidiaries' current financial condition, BB&T Financial does not expect that
this provision will have any impact on BB&T Financial's ability to obtain
dividends from its insured depository institutions.
As state-chartered, FDIC-insured institutions which are not members of the
Federal Reserve System, BB&T and BB&T-SC are subject to capital requirements
imposed by the FDIC. The FDIC requires state-chartered banks to comply with
risk-based capital standards substantially similar to those required by the
Federal Reserve. See "--Capital Adequacy Guidelines for Bank Holding
Companies." The FDIC also requires state-chartered banks to maintain a minimum
leverage ratio similar to that adopted by the Federal Reserve. Under the FDIC's
leverage capital requirement, state nonmember banks such as BB&T and BB&T-SC
that (i) receive the highest rating during the examination process and (ii) are
not anticipating or experiencing any significant growth are required to
maintain a minimum leverage ratio of 3% of Tier 1 capital to total assets; all
other banks are required to maintain a minimum ratio of 100 to 200 basis points
above the stated minimum, with an absolute minimum leverage ratio of not less
than 4%. As of September 30, 1993, the leverage ratio of BB&T-SC was 8.67%.
The following table sets forth BB&T's regulatory capital position as of
September 30, 1993 on a historical basis as well as a pro forma basis assuming
consummation of the Acquisition and the Merger. See "PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS." For a discussion of the historical and pro
forma regulatory capital positions of BB&T Financial, see "--Capital Adequacy
Guidelines for Bank Holding Companies."
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1993
----------------------------------
HISTORICAL PRO FORMA
---------------- ----------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Shareholders' Equity........................ $ 662,062 8.70% $ 683,812 8.60%
========== ===== ========== =====
REGULATORY CAPITAL
Tier 1 risk-based:
Actual.................................... $ 649,886 13.16% $ 671,636 13.17%
Required.................................. 197,460 4.00 204,062 4.00
---------- ----- ---------- -----
Excess.................................. $ 452,426 9.16% $ 467,574 9.17%
========== ===== ========== =====
Total risk-based:
Actual.................................... $ 735,794 14.91% $ 757,544 14.85%
Required.................................. 394,920 8.00 408,123 8.00
---------- ----- ---------- -----
Excess.................................. $ 340,874 6.91% $ 349,421 6.85%
========== ===== ========== =====
Leverage:
Actual.................................... $ 649,886 8.69% $ 671,636 8.60%
Required.................................. 224,340 3.00 234,342 3.00
---------- ----- ---------- -----
Excess.................................. $ 425,546 5.69% $ 437,294 5.60%
========== ===== ========== =====
Total risk-based assets..................... $4,936,498 $5,101,540
========== ==========
Total assets............................ $7,619,430 $7,952,836
========== ==========
</TABLE>
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As institutions with deposits insured by the BIF, BB&T and BB&T-SC also are
subject to insurance assessments imposed by the FDIC. Under current law, the
insurance assessment to be paid by BIF-insured institutions shall be as
specified in a schedule required to be issued by the FDIC that specifies, at
semiannual intervals, target reserve ratios designed to increase the FDIC
insurance funds' reserve ratios to 1.25% of estimated insured deposits (or such
higher ratio as the FDIC may determine in accordance with the statute) in 15
years. Further, the FDIC is authorized to impose one or more special
assessments in any amount deemed necessary to enable repayment of amounts
borrowed by the FDIC from the U.S. Department of the Treasury. See "--Impact of
the 1991 Banking Law." Effective January 1, 1993, the FDIC implemented a risk-
based assessment schedule, having assessments ranging from 0.23% to 0.31% of an
institution's average assessment base. The actual assessment to be paid by each
BIF member is based on the institution's assessment risk classification, which
is determined based on whether the institution is considered "well
capitalized," "adequately capitalized" or "undercapitalized," as such terms
have been defined in applicable federal regulations adopted to implement the
prompt corrective action provisions of the 1991 Banking Law (see "--Impact of
the 1991 Banking Law"), and whether such institution is considered by its
supervisory agency to be financially sound or to have supervisory concerns. As
a result of the current provisions of federal law, the assessment rates on
deposits could increase over the next 15 years over present levels. Based on
the current financial condition and capital levels of BB&T Financial's bank
subsidiaries, BB&T Financial does not expect that the current BIF risk-based
assessment schedule will have a material adverse effect on the earnings of its
bank subsidiaries. See "--Impact of the 1991 Banking Law." BB&T's future
deposit insurance premium expenses, however, may be affected by changes in the
SAIF assessment rate. See "--Savings Institution Acquisitions."
BB&T and BB&T-SC also are subject to examination by the FDIC and state bank
examiners. In addition, BB&T and BB&T-SC are subject to various other state and
federal laws and regulations, including state usury laws, laws relating to
fiduciaries, consumer credit and equal credit laws, fair credit reporting laws
and laws relating to branch banking. Further, insured state-chartered banks are
prohibited from engaging as a principal in activities that are not permitted
for national banks, unless: (i) the FDIC determines that the activity would
pose no significant risk to the appropriate deposit insurance fund, and (ii)
the bank is, and continues to be, in compliance with all applicable capital
standards. BB&T Financial does not believe that these restrictions have a
material adverse effect on its current operations.
IMPACT OF THE 1991 BANKING LAW
The 1991 Banking Law provided the federal banking agencies with broad powers
to take prompt corrective action to resolve problems of insured depository
institutions. The extent of these powers depends upon whether the institutions
in question are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Under uniform regulations defining such capital levels
issued by each of the federal banking agencies, a bank is considered "well
capitalized" if it has (i) a total risk-based capital ratio of 10% or greater,
(ii) a Tier 1 risk-based capital ratio of 6% or greater, (iii) a leverage ratio
of 5% or greater and (iv) is not subject to any order or written directive to
meet and maintain a specific capital level. An "adequately capitalized" bank is
defined as one that has (i) a total risk-based capital ratio of 8% or greater,
(ii) a Tier 1 risk-based capital ratio of 4% or greater and (iii) a leverage
ratio of 4% or greater (or 3% or greater in the case of a bank with a composite
CAMEL rating of 1). A bank is considered (A) "undercapitalized" if it has (i) a
total risk-based capital ratio of less than 8%, (ii) a Tier 2 risk-based
capital ratio of less than 4% or (iii) a leverage ratio of less than 4% (or 3%
in the case of a bank with a composite CAMEL rating of 1); (B) "significantly
undercapitalized" if the bank has (i) a total risk-based capital ratio of less
than 6%, or (ii) a Tier 1 risk-based capital ratio of less than 3% or (iii) a
leverage ratio of less than 3% and (C) "critically undercapitalized" if the
bank has a ratio of tangible equity to total assets equal to or less than 2%.
The 1991 Banking Law also amended the prior law with respect to the
acceptance of brokered deposits by insured depository institutions to permit
only a "well capitalized" depository institution to accept brokered deposits
without prior regulatory approval. Under FDIC regulations, "well capitalized"
banks may accept brokered deposits without restriction, "adequately
capitalized" banks may accept brokered deposits with a waiver from the FDIC
(subject to certain restrictions on payments of rates), while
"undercapitalized" banks may not accept brokered deposits. The regulations
provide that the definitions of "well capitalized," "adequately capitalized"
and "undercapitalized" are the same as the definitions adopted by the agencies
to
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implement the corrective action provisions of the 1991 Banking Law (described
in the previous paragraph). BB&T Financial does not believe that these
regulations will have a material adverse effect on its operations.
To facilitate the early identification of problems, the 1991 Banking Law
requires the federal banking agencies to review and, under certain
circumstances, prescribe more stringent accounting and reporting requirements
than those required by generally accepted accounting principles. The FDIC
issued a final rule effective July 2, 1993 implementing those provisions. The
rule, among other things, requires that management report on the institution's
responsibility for preparing financial statements and establishing and
maintaining an internal control structure and procedures for financial
reporting and compliance with designated laws and regulations concerning safety
and soundness, and that independent auditors attest to and report separately on
assertions in management's reports concerning compliance with such laws and
regulations, using FDIC-approved audit procedures.
The 1991 Banking Law further requires the federal banking agencies to develop
regulations requiring disclosure of contingent assets and liabilities and, to
the extent feasible and practicable, supplemental disclosure of the estimated
fair market value of assets and liabilities. The 1991 Banking Law further
requires annual examinations of all insured depository institutions by the
appropriate federal banking agency, with some exceptions for small, well-
capitalized institutions and state chartered institutions examined by state
regulators. Moreover, the 1991 Banking Law, as modified by the Federal Housing
Enterprises Financial Safety and Soundness Act, requires the federal banking
agencies to set operational and managerial, asset quality, earnings and stock
valuation standards for insured depository institutions and depository
institution holding companies (including bank holding companies such as BB&T
Financial), as well as compensation standards (but not dollar levels of
compensation) for insured depository institutions that prohibit excessive
compensation, fees or benefits to officers, directors, employees and principal
stockholders. The federal banking agencies have issued a joint advance notice
of proposed rulemaking soliciting comments on all aspects of the implementation
of these standards in accordance with the 1991 Banking Law, including whether
the compensation standards should apply to depository institution holding
companies.
ACQUISITIONS OF SAVINGS INSTITUTIONS
The FDIA authorizes the merger or consolidation of any BIF member with any
SAIF member (such as savings associations and most savings banks), the
assumption of any liability by any BIF member to pay any deposits of any SAIF
member or vice versa, or the transfer of any assets of any BIF member to any
SAIF member in consideration for the assumption of liabilities of such BIF
member or vice versa, provided that certain conditions are met and in the case
of any acquiring, assuming or resulting depository institution which is a BIF
member, such institution continues to make payment of SAIF assessments on the
portion of liabilities attributable to any acquired, assumed or merged SAIF-
insured institution. BB&T Financial anticipates merging or otherwise
consolidating Asheville Savings and any other savings institution located in
North Carolina that BB&T Financial has acquired or may acquire, including
Citizens of Newton, Mutual Savings, Old Stone, Citizens of Mooresville and Home
Savings with and into BB&T under these provisions, and BB&T will continue to
make payment of assessments to SAIF on the portion of liabilities attributable
to its savings institution acquisitions. As of September 30, 1993, BB&T paid
assessments to the SAIF on $ billion of its deposits, all of which are
attributable to the savings institutions it previously has acquired. See
"DESCRIPTION OF BB&T FINANCIAL--Savings Institution Acquisitions and
Operations." The FDIC has established a risk-based assessment system for SAIF
insured institutions which currently is the same as for BIF-insured
institutions. See "--BB&T and BB&T-SC." The FDIA provides that the SAIF
assessment rate may not be less than 0.23% of insured deposits for the period
from January 1, 1991 through December 31, 1993. The minimum rate may be
decreased to not less than 0.18% for the period January 1, 1994 through
December 31, 1997. After December 31, 1997, the SAIF assessment rate will be a
rate determined by the FDIC to be appropriate to increase the SAIF's reserve
ratio to 1.25% of insured deposits or such higher percentage as the FDIC
determines to be appropriate, but the assessment rate may not be less than
0.15%. As a result, depending on, among other things, recently enacted
legislation to fund the SAIF, the SAIF assessment could increase substantially
in the future. Accordingly, BB&T's future deposit insurance premium expense
will be affected by changes in the SAIF assessment rate.
For information concerning the potential effects of pending congressional
legislation on acquisitions of savings institutions, see "CERTAIN
CONSIDERATIONS RELATING TO THE OFFERINGS--Potential Effects of Pending
Legislation."
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DESCRIPTION OF CAPITAL STOCK OF BB&T FINANCIAL
GENERAL
BB&T Financial's authorized capital stock consists of two classes,
represented by 50,000,000 shares of BB&T Financial Common Stock, $2.50 par
value, of which shares were issued and outstanding and
shares were reserved for issuance as of and 4,000,000 shares of nonvoting
preferred stock, $2.50 par value, with no such shares issued or outstanding.
BB&T Financial's Amended Articles of Incorporation authorize the Board of
Directors, without shareholder approval, to fix the preferences, limitations
and relative rights of the preferred stock and to establish series of such
preferred stock and determine the variations between each series. If any shares
of preferred stock are issued, the rights of holders of BB&T Financial Common
Stock will be subject to the rights and preferences conferred to holders of
such preferred stock.
DIVIDEND RIGHTS
The holders of BB&T Financial Common Stock are entitled to share ratably in
dividends when and as declared by its Board of Directors out of funds legally
available therefor. One of the principal sources of income to BB&T Financial is
dividends from its subsidiaries. For a description of certain restrictions on
the payment of dividends by banks, see "SUPERVISION AND REGULATION OF BB&T
FINANCIAL--BB&T and BB&T-SC."
VOTING RIGHTS
A holder of BB&T Financial Common Stock has one vote for each share held on
any matter presented for consideration by the shareholders. Under North
Carolina law, the right of cumulative voting in the election of directors is
denied to shareholders of publicly held corporations such as BB&T Financial.
PREEMPTIVE RIGHTS
A holder of BB&T Financial Common Stock does not have any preemptive or
preferential right to purchase or to subscribe for additional shares of BB&T
Financial Common Stock or any other securities that BB&T Financial may issue.
ASSESSMENT AND REDEMPTION
The shares of BB&T Financial Common Stock presently outstanding are, and
those shares of BB&T Financial Common Stock issuable upon consummation of the
Conversion will be when issued, fully paid and nonassessable. Such shares do
not have any redemption provisions.
LIQUIDATION RIGHTS
In the event of liquidation, dissolution or winding up of BB&T Financial,
whether voluntary or involuntary, the holders of BB&T Financial Common Stock
will be entitled to share ratably in any of its net assets or funds which are
available for distribution to its shareholders after the satisfaction of its
liabilities or after adequate provision is made therefor, subject to the rights
of the holders of any preferred stock outstanding at the time.
TRANSFER AGENT
The Transfer Agent and Registrar for BB&T Financial Common Stock is BB&T.
CERTAIN PROVISIONS WHICH MAY HAVE AN ANTI-TAKEOVER EFFECT
Certain provisions of the Amended Articles of Incorporation and By-laws of
BB&T Financial and North Carolina law, and certain other arrangements, some of
which are described below, may discourage an attempt to acquire control of BB&T
Financial which a majority of its shareholders might determine to be in their
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best interest or in which shareholders might receive a premium over the current
market price for their shares. These provisions also may render the removal of
a BB&T Financial director or of the entire BB&T Financial Board of Directors
more difficult and may deter or delay corporate changes of control which have
not received the requisite approval of the Board of Directors.
REMOVAL OF DIRECTORS. Under BB&T Financial's Amended Articles of
Incorporation, approval by the vote of at least two-thirds of the outstanding
shares of BB&T Financial Common Stock entitled to vote is required for the
removal of any director or the entire Board of Directors.
AUTHORIZED PREFERRED STOCK. BB&T Financial's Amended Articles of
Incorporation authorize 4,000,000 shares of nonvoting preferred stock. The
Board of Directors of BB&T Financial may, subject to applicable law and the
rules of the NASD for Nasdaq NMS companies, authorize the issuance of preferred
stock at such times, for such purposes and for such consideration as it may
deem advisable without further shareholder approval. The issuance of preferred
stock under certain circumstances may have the effect of discouraging an
attempt by a third party to acquire control of BB&T Financial by, for example,
authorizing the issuance of a series of preferred stock with rights and
preferences designed to impede the proposed transaction. A series of preferred
stock also could be used for a shareholder rights plan, which may be adopted
without shareholder approval. Such a plan, if adopted, could deter attempts by
third parties to acquire a significant number of shares of BB&T Financial
Common Stock without the prior approval of the Board of Directors of BB&T
Financial.
NORTH CAROLINA SHAREHOLDER PROTECTION LEGISLATION. The North Carolina
Shareholder Protection Act and the Control Share Acquisition Act both apply to
BB&T Financial. These statutes are designed to protect shareholders against
certain changes in control and to provide shareholders with the opportunity to
vote on whether to accord voting rights to a 20% or more shareholder. The
effect of these statutes may be to deter or delay changes in control which are
opposed by the BB&T Financial Board of Directors or shareholders.
SUPERMAJORITY VOTING PROVISIONS. BB&T Financial's Amended Articles of
Incorporation require the affirmative vote of two-thirds of the outstanding
shares entitled to vote to approve a merger, consolidation, or other business
combination, unless the transaction is approved, prior to consummation, by two-
thirds of the members of BB&T Financial's Board of Directors. This provision
could tend to make the acquisition of BB&T Financial more difficult to
accomplish without the cooperation or favorable recommendation of BB&T
Financial's Board of Directors.
AMENDMENTS TO ARTICLES OF INCORPORATION. BB&T Financial's Amended Articles of
Incorporation require approval by holders of at least two-thirds of the
outstanding shares entitled to vote in order to amend certain provisions of the
Amended Articles of Incorporation. Those provisions require holders of at least
two-thirds of its outstanding shares to approve (i) the removal of a director
or the entire Board of Directors, (ii) a merger, consolidation or other
business combination not approved by two-thirds of the Board of Directors and
(iii) an amendment or repeal of the By-laws. Any other amendment of the Amended
Articles of Incorporation requires the affirmative vote of the holders of a
majority of the shares entitled to vote on such amendment.
AMENDMENTS TO BYLAWS. BB&T Financial's Bylaws may be amended by either the
vote of a majority of its Board of Directors or by the affirmative vote of the
holders of at least two-thirds of the outstanding BB&T Financial Common Stock
entitled to vote.
EMPLOYEE STOCK OWNERSHIP PLANS. BB&T Financial has established employee
stock ownership plans for the benefit of the employees of Gate City, Albemarle,
Peoples, Carolina Savings, Edenton Savings, Mutual Savings and Citizens of
Mooresville upon their acquisitions by BB&T Financial. These plans hold
shares of BB&T Financial Common Stock. The plans, as well as the Asheville
Savings ESOP, are or will be plans established as subparts of BB&T's Savings
and Thrift Plan, which holds an additional shares of BB&T Financial Common
Stock. The Asheville Savings ESOP will hold approximately 10% of the shares
(currently estimated to be 100,000) of BB&T Financial Common Stock offered in
the Subscription Offering. Under plan terms, participants in the Savings and
Thrift Plan, including the Asheville Savings ESOP and the plans
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established in 1991, 1992 and 1993 have and will have the right to direct the
trustee as to the voting of the shares held in their accounts on all matters,
including the election of directors. Each employee stock ownership plan
provides that the trustee is required, subject to applicable law, to vote the
shares as to which participant directions are not received and as to shares not
allocated to participant accounts in the same proportion as the allocated
shares as to which directions are received. Plan terms also would require the
trustee of each employee stock ownership plan to follow participant
instructions as to the tendering of any shares held in participant accounts in
the event of a tender offer. Shares allocated to participant accounts as to
which instructions are not received and unallocated shares are, again subject
to applicable law, tendered pursuant to the same procedures as to which shares
would be voted. As a result of these so-called "pass-through" provisions, any
third-party attempt to acquire control of BB&T Financial by means of a proxy
contest or tender offer may require the support of the plan participants. The
BB&T Financial employee stock ownership plans established and to be established
thus may tend to discourage such attempts to the extent that participants
oppose third-party attempts to acquire control and shareholder approval or
support is required for such attempts.
THE SHARES OF BB&T FINANCIAL COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS AND
ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
OPINIONS
The validity of the shares of BB&T Financial Common Stock offered by BB&T
Financial by means of this Prospectus/Proxy Statement is being passed upon for
BB&T Financial by Jerone C. Herring, Esquire, Vice President and Secretary of
BB&T Financial. As of the date of this Prospectus/Proxy Statement, Mr. Herring
beneficially owned shares of BB&T Financial Common Stock and held options
exercisable within 60 days of such date to acquire shares of BB&T Financial
Common Stock. Certain other legal matters will be passed upon for BB&T
Financial by Arnold & Porter, Washington, D.C., special counsel to BB&T
Financial. Certain tax matters will be passed upon for BB&T Financial by KPMG
Peat Marwick, tax advisors to BB&T Financial. Certain legal matters will be
passed upon for Trident Securities by Housley Goldberg & Kantarian, P.C.,
Washington, D.C., counsel to Trident Securities. Certain legal matters will be
passed upon for Asheville Savings by Brooks, Pierce, McLendon, Humphrey &
Leonard, L.L.P., Greensboro,North Carolina, special counsel to Asheville
Savings.
EXPERTS
The audited consolidated financial statements of BB&T Financial and its
subsidiaries as of December 31, 1992 and 1991 and for each of the years in the
three-year period ended December 31, 1992 incorporated by reference herein have
been incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick, independent certified public accountants, incorporated by reference
herein and upon the authority of said firm as experts in accounting and
auditing.
The audited consolidated financial statements of Old Stone and subsidiaries
as of and for the year ended December 31, 1992, incorporated by reference
herein have been incorporated by reference herein in reliance upon the report
of KPMG Peat Marwick, independent certified public accountants, incorporated by
reference herein and upon the authority of said firm as experts in accounting
and auditing.
The audited consolidated financial statements of Home Savings as of and for
the year ended September 30, 1993, incorporated herein by reference, have been
audited by McGladrey & Pullen, independent auditors, as indicated in their
report and have been incorporated by reference herein upon the authority of
that firm as experts in auditing and accounting.
The audited consolidated financial statements of Citizens of Newton as of
September 30, 1992 and for the year ended September 30, 1992, incorporated
herein by reference, have been audited by McGladrey & Pullen, independent
auditors, as indicated in their report and have been incorporated by reference
herein upon the authority of that firm as experts in auditing and accounting.
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The audited consolidated financial statements of Security Financial Holding
Company as of December 31, 1992 and 1991 and for each of the three years in the
period ended December 31, 1992 incorporated in this Prospectus/Proxy Statement
by reference to the Current Report on Form 8-K of BB&T dated August 6, 1993
have been so incorporated in reliance on the report of Price Waterhouse,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The audited consolidated financial statements of Asheville Federal Bank, FSB
and subsidiaries (now Asheville Savings Bank, S.S.B.) as of December 31, 1992
and 1991 and for the years then ended incorporated herein by reference from
BB&T's Current Report on Form 8-K dated August 6, 1993 have been audited by
Deloitte & Touche, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of L.S.B. Bancshares, Inc. of South
Carolina as of December 31, 1992 and 1991 and for each of the three years ended
in the period ended December 31, 1992, incorporated herein by reference to
BB&T's Current Report on Form 8-K dated January 10, 1994, have been so
incorporated by reference in reliance on the report of Donald G. Jones and
Company, P.A., independent accountants, given on the authority of said firm as
experts in auditing and accounting.
Asheville Savings and BB&T Financial have relied upon an opinion prepared by
Trident Financial as to the Appraised Value of Asheville Savings. Trident
Financial is an affiliate of Trident Securities, which is acting as a sales
agent in the Offerings. Trident Financial also acted as financial advisor to
Asheville Savings in connection with the Conversion Merger.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS/PROXY
STATEMENT IN CONNECTION WITH THE OFFERINGS COVERED BY THIS PROSPECTUS/PROXY
STATEMENT. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY BB&T FINANCIAL CORPORATION OR ANY
SELLING AGENT. THIS PROSPECTUS/PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS/PROXY
STATEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS/PROXY STATEMENT OR IN THE AFFAIRS OF BB&T FINANCIAL CORPORA-
TION OR ASHEVILLE SAVINGS BANK, S.S.B. SINCE ANY OF THE DATES AS OF WHICH IN-
FORMATION IS FURNISHED OR INCORPORATED HEREIN OR SINCE THE DATE HEREOF.
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TABLE OF CONTENTS
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PAGE
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Available Information..................................................... 5
Incorporation of Certain Documents by Reference........................... 5
Summary................................................................... 6
Certain Considerations Relating to the Offerings.......................... 17
Description of BB&T Financial............................................. 19
Management of BB&T Financial.............................................. 21
The Offerings............................................................. 24
Anticipated Subscriptions for Shares of BB&T Financial Common Stock by
Asheville Savings' Directors and Executive Officers in the Offerings..... 40
Market Price and Dividends................................................ 41
Use of Proceeds........................................................... 42
Capitalization............................................................ 43
Pro Forma Combined Condensed Financial Statements......................... 44
Selected Consolidated Financial Data of BB&T Financial.................... 54
Management's Discussion and Analysis of Financial Condition and Results of
Operations of BB&T Financial............................................. 56
Supervision and Regulation of BB&T Financial.............................. 81
Description of Capital Stock of BB&T Financial............................ 87
Opinions.................................................................. 89
Experts................................................................... 89
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BB&T FINANCIAL
CORPORATION
AN ESTIMATED 1,000,000 SHARES OF
COMMON STOCK
----------------
PROSPECTUS
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TRIDENT SECURITIES, INC.
FEBRUARY , 1994
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
A. The Registrant is incorporated under the laws of North Carolina. The
North Carolina Business Corporation Act ("North Carolina BCA") contains
provisions prescribing the extent to which directors and officers shall or may
be indemnified. The following is a summary of these provisions:
1. Subject to certain exceptions, a corporation may indemnify an individual
made a party to a proceeding because he is or was a director against liability
incurred in the proceeding if (i) he conducted himself in good faith; and (ii)
he reasonably believed (a) in the case of conduct in his official capacity with
the corporation, that his conduct was in its best interests and (b) in all
other cases, that his conduct was at least not opposed to its best interests;
and (iii) in the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful. Moreover, unless limited by its articles of
incorporation, a corporation must indemnify a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding in
which he was a party because he is or was a director of the corporation against
reasonable expenses incurred by him in connection with the proceeding. Expenses
incurred by a director in defending a proceeding may be paid by the corporation
in advance of the final disposition of such proceeding as authorized by the
board of directors in the specific case or as authorized or required under any
provision in the articles of incorporation or bylaws or by any applicable
resolution or contract upon receipt of an undertaking by or on behalf of a
director to repay such amount unless it shall ultimately be determined that he
is entitled to be so indemnified by the corporation against such expenses. A
director may also apply for court-ordered indemnification under certain
circumstances.
2. Unless a corporation's articles of incorporation provide otherwise, (i)
an officer of a corporation is entitled to mandatory indemnification and is
entitled to apply for court-ordered indemnification to the same extent as a
director; (ii) the corporation may indemnify or advance expenses to an officer,
employee, or agent of a corporation to the same extent as to a director; and
(iii) a corporation may also indemnify or advance expenses to an officer,
employee, or agent who is not a director to the extent, consistent with public
policy, that may be provided by its articles of incorporation, bylaws, general
or specific action of its board of directors, or contract.
3. In addition and separate and apart from the indemnification rights
discussed above, a corporation may, in its articles of incorporation or bylaws,
or by contract or resolution, indemnify or agree to indemnify any one of its
directors, officers, employees, or agents against liability and expenses in any
proceeding (including without limitation a proceeding brought by or on behalf
of the corporation itself) arising out of their status as
<PAGE>
such or their activities in any of the foregoing capacities; provided, however,
that a corporation may not indemnify or agree to indemnify a person against
liability or expenses he may incur on account of his activities which were at
the time taken known or believed by him to be clearly in conflict with the best
interests of the corporation. A corporation may likewise and to the same extent
indemnify or agree to indemnify any person who, at the request of the
corporation, is or was serving as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise or as a trustee or administrator under
an employee benefit plan. Any such provision for indemnification may also
include provisions for recovery from the corporation of reasonable cost,
expenses, and attorneys' fees in connection with the enforcement of rights to
indemnification and may further include provisions establishing reasonable
procedures for determining and enforcing the rights granted therein.
B. The Registrant's Articles of Incorporation provide for the
indemnification of directors to the fullest extent authorized by North Carolina
law as it exists or may be hereafter amended. A director shall not be
personally liable for any monetary damages relating to a breach of duty as a
director to the corporation, its shareholders or otherwise.
C. Article IX of the Registrant's Bylaws provides for indemnification of
Registrant's directors, officers, employee or agents against certain expenses,
including attorney's fees, and payments made in satisfaction of judgments,
money decrees, fines and penalties for which they may become liable in such and
other fiduciary capacities, exclusive of indemnification for certain activities
involving criminal misconduct or clearly in conflict with the best interest of
the Registrant.
D. The Registrant has purchased liability insurance for its directors and
certain of its officers covering certain liabilities which may be incurred by
such officers and directors of the Registrant in connection with the
performance of their duties.
ITEM 16. EXHIBITS
The following are filed as exhibits to this Registration Statement.
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Exhibit No. Description
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1.1 A form of Sales Agency Agreement between BB&T
Financial Corporation and Trident Securities, Inc. (relating to
the Conversion Merger of Mutual Savings Bank of Rockingham
County, S.S.B.) (previously filed).
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1.2 A form of Sales Agency Agreement between BB&T Financial
Corporation and Trident Securities, Inc., dated as of
November __, 1993 (relating to the Conversion Merger of Scotland
Savings Bank, S.S.B.)(previously filed).
1.3 A form of Sales Agency Agreement between BB&T Financial
Corporation and Trident Securities, Inc., dated as of
November __, 1993 (relating to the Conversion Merger of Citizens
Savings Bank, S.S.B.)(previously filed).
1.4 A form of Sales Agency Agreement between BB&T Financial
Corporation and Trident Securities, Inc., dated as of _________,
1994 (relating to the Conversion Merger of Home Savings Bank of
Albemarle, S.S.B.) (previously filed).
1.5 A form of Sales Agency Agreement between BB&T Financial
Corporation and Trident Securities, Inc., dated as of __________,
1994 (relating to the Conversion Merger of Asheville Savings
Bank, S.S.B.).
2.1 Agreement and Plan of Reorganization dated February 26, 1993 by
and between Mutual Savings Bank of Rockingham County, SSB and
BB&T Financial Corporation (incorporated by reference herein from
Exhibit (2)(c) to Registrant's quarterly report on Form 10-Q for
the quarter ended March 31, 1993).
2.2 Agreement and Plan of Reorganization dated April 26, 1993 by and
between Scotland Savings Bank, SSB and BB&T Financial Corporation
(incorporated by reference herein from Exhibit (2)(e) to
Registrant's quarterly report on Form 10-Q for the quarter ended
March 31, 1993).
2.3 Agreement and Plan of Reorganization dated April 28, 1993 by and
between Citizens Savings Bank, SSB and BB&T Financial Corporation
(incorporated by reference herein from Exhibit (2)(f) to
Registrant's quarterly report on Form 10-Q for the quarter ended
March 31, 1993).
2.4 Agreement and Plan of Reorganization dated May 27, 1993 by and
between Home Savings Bank of Albemarle, SSB and BB&T Financial
Corporation (incorporated by reference herein from Exhibit (2)(b)
of Registrant's quarterly report on Form 10-Q for the quarter
ended June 30, 1993).
2.5 Agreement and Plan of Reorganization dated June 22, 1993 by and
between Asheville Savings Bank, SSB and BB&T Financial
Corporation (incorporated by reference herein from Exhibit (2)(c)
of Registrant's quarterly report on Form 10-Q for the quarter
ended June 30, 1993).
2.6 Plan of Conversion adopted by Mutual Savings Bank of Rockingham
County, S.S.B. on February 26, 1993 and amended on July 21, 1993
and August 4, 1993 (previously filed).
2.7 Plan of Conversion adopted by Scotland Savings Bank, S.S.B. on
April 26, 1993 and amended on __________, 1993 (previously
filed).
2.8 Plan of Conversion adopted by Citizens Savings Bank, S.S.B. on
April 28, 1993 and amended on October 25, 1993 (previously
filed).
2.9 Plan of Conversion adopted by Home Savings Bank of Albemarle,
SSB on May 27, 1993 and amended on December 13, 1993 and December
21, 1993 (previously filed).
</TABLE>
<PAGE>
<TABLE>
<S> <C>
2.10 Plan of Conversion adopted by Asheville Savings Bank, S.S.B. on
June 22, 1993 and amended on January 19, 1994 and February 2,
1994.
4.1 Specimen stock certificate for BB&T Financial's common stock,
$2.50 par value (incorporated by reference herein from the
identified exhibit to BB&T Financial registration statement on
Form S-14 (File No. 2-68274) as filed and declared effective on
August 5, 1980).
4.2 Excerpts from Registrant's By-laws (Article II, Sections 8 and 9)
relating to rights of holders of Registrant's common stock
(incorporated by reference herein from the identified exhibit to
the Registrant's registration statement on Form S-8 (File No.
2-91779) as filed and declared effective on July 10, 1984).
4.3 Excerpts from Registrant's Amended Articles of Incorporation
(Articles IV, X, and XII) (incorporated by reference herein from
the identified exhibit to the Registrant's registration statement
on Form S-4 (File No. 33-37893) as filed and declared effective
on February 7, 1991).
5.1 Opinion of Jerone C. Herring, Esquire, Vice President and
Secretary to BB&T Financial Corporation, regarding the legality
of the securities to be registered hereby (previously filed).
8.1 Opinion of KPMG Peat Marwick, dated July 8, 1993, tax advisors
to BB&T Financial Corporation, regarding certain federal income
tax consequences of the Mutual Savings Conversion Merger
(previously filed).
8.2 Opinion of KPMG Peat Marwick, dated October 29, 1993, tax
advisors to BB&T Financial Corporation, regarding certain federal
income tax consequences of the Scotland Savings Conversion
Merger (previously filed).
8.3 Opinion of KPMG Peat Marwick, dated October 29, 1993, tax
advisors to BB&T Financial Corporation, regarding certain federal
income tax consequences of the Citizens Savings Conversion
Merger (previously filed).
8.4 Opinion of KPMG Peat Marwick, dated January 3, 1994, tax
advisors to BB&T Financial Corporation, regarding certain federal
income tax consequences of the Home Savings Conversion Merger
(previously filed).
8.5 Opinion of KPMG Peat Marwick, dated January 31, 1994, tax
advisors to BB&T Financial Corporation, regarding certain federal
income tax consequences of the Asheville Savings Conversion
Merger.
23.1 Consent of KPMG Peat Marwick, dated July 8, 1993 (BB&T Financial)
(previously filed).
23.2 Consent of Trident Financial Corporation, dated July 9, 1993
(previously filed).
23.3 Consent of Jerone C. Herring, Esquire, Vice President and
Secretary of BB&T Financial Corporation included as part of
Exhibit 5.1 (previously filed).
23.4 Consent of KPMG Peat Marwick, dated July 8, 1993, relating to
their opinion included in Exhibit 8.1 (previously filed).
</TABLE>
<PAGE>
<TABLE>
<S> <C>
23.5 Consent of McGladrey & Pullen dated August 6, 1993 (Home Savings)
(previously filed).
23.6 Consent of McGladrey & Pullen dated August 6, 1993 (Citizens of
Newton) (previously filed).
23.7 Consent of Price Waterhouse dated August 6, 1993 (Security
Financial Holding Company) (previously filed).
23.8 Consent of Deloitte & Touche dated August 6, 1993 (Asheville
Savings) (previously filed).
23.9 Consent of KPMG Peat Marwick dated August 6, 1993 (Old Stone)
(previously filed).
23.10 Consent of KPMG Peat Marwick, dated October 29, 1993 (BB&T
Financial) (previously filed).
23.11 Consent of Trident Financial Corporation, dated October 29, 1993
(previously filed).
23.12 Consent of Jerone C. Herring, Esquire, Vice President and
Secretary of BB&T Financial Corporation, dated October 29, 1993,
relating to his opinion included in Exhibit 5.1 (previously
filed).
23.13 Consent of KPMG Peat Marwick, dated October 29, 1993, relating
to their opinion included in Exhibit 8.2 (previously filed).
23.14 Consent of McGladrey & Pullen dated October 29, 1993 (Home
Savings) (previously filed).
23.15 Consent of McGladrey & Pullen dated October 29, 1993 (Citizens
of Newton) (previously filed).
23.16 Consent of Price Waterhouse dated October 29, 1993 (Security
Financial Holding Company) (previously filed).
23.17 Consent of Deloitte & Touche dated October 29, 1993 (Asheville
Savings) (previously filed).
23.18 Consent of KPMG Peat Marwick dated October 29, 1993 (Old Stone)
(previously filed).
23.19 Consent of KPMG Peat Marwick, dated October 29, 1993 (BB&T
Financial) (previously filed).
23.20 Consent of KPMG Peat Marwick, dated October 29, 1993, relating
to their opinion included in Exhibit 8.3 (previously filed).
23.21 Consent of KPMG Peat Marwick dated January 5, 1994, relating
to their opinion included in Exhibit 8.4 (previously filed).
23.22 Consent of KPMG Peat Marwick dated January 10, 1994 (BB&T
Financial Corporation) (previously filed).
23.23 Consent of KPMG Peat Marwick dated January 4, 1994 (Old Stone)
(previously filed).
23.24 Consent of Jerone C. Herring, Esquire, Vice President and
Secretary of BB&T Financial Corporation, dated January 10, 1994,
relating to his opinion included in Exhibit 5.1 (previously
filed).
23.25 Consent of McGladrey & Pullen dated January 5, 1994 (Home
Savings) (previously filed).
23.26 Consent of McGladrey & Pullen dated January 5, 1994 (Citizens
of Newton) (previously filed).
23.27 Consent of Price Waterhouse dated January 4, 1994 (Security
Financial Holding Company) (previously filed).
23.28 Consent of Deloitte & Touche dated January 10, 1994 (Asheville
Savings) (previously filed).
23.29 Consent of David G. Jones and Company, P.A. dated January 6,
1994 (L.S.B. Bancshares, Inc. of South Carolina) (previously
filed).
23.30 Consent of Trident Financial Corporation, dated January 4,
1994 (previously filed).
23.31 Consent of KPMG Peat Marwick, dated January 31, 1994, relating to
their opinion included in Exhibit 8.5.
23.32 Consent of KPMG Peat Marwick dated February 3, 1994 (BB&T
Financial Corporation).
23.33 Consent of KPMG Peat Marwick dated February 3, 1994 (Old Stone).
23.34 Consent of Jerone C. Herring, Esquire, Vice President and
Secretary of BB&T Financial Corporation, dated February 3, 1994,
relating to his opinion included in Exhibit 5.1.
23.35 Consent of McGladrey & Pullen dated January 31, 1994 (Home
Savings).
23.36 Consent of McGladrey & Pullen dated January 31, 1994 (Citizens of
Newton).
23.37 Consent of Price Waterhouse dated January 31, 1994 (Security
Financial Holding Company).
23.38 Consent of Deloitte & Touche dated February 3, 1994 (Asheville
Savings).
23.39 Consent of David G. Jones and Company, P.A., dated February 1,
1994 (L.S.B. Bancshares, Inc. of South Carolina).
23.40 Consent of Trident Financial Corporation dated January 31, 1994.
24.1 Powers of Attorney from certain signatory directors and officers
of BB&T Financial Corporation (previously filed).
</TABLE>
<PAGE>
ITEM 17. UNDERTAKINGS
ITEM 512 OF REGULATION S-K.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that (i) and (ii) would not apply if the information
required by sections (i) and (ii) is contained in a periodic report filed by
the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference into this Registration Statement.
2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
4. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
5. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions set forth in response to Item 15
hereof, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
6. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
7. For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-3 and has duly caused this Post-Effective
Amendment No. 3 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wilson, State of North
Carolina, on February 4, 1994.
BB&T FINANCIAL CORPORATION
By: Jerone C. Herring
/s/ Jerone C. Herring
-----------------------
Jerone C. Herring,
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 3 to the Registration Statement has been signed by
the following persons in the capacities indicated on February 4, 1994.
<TABLE>
<CAPTION>
NAME CAPACITY
<S> <C>
* Chairman of the Board of
- ------------------- Directors and Chief Executive Officer
John A. Allison IV (Principal Executive Officer)
* Treasurer (Principal
- ------------------- Financial and Accounting Officer)
Scott E. Reed
* Director
- -------------------
Joseph B. Alala, Jr.
* Director
- -------------------
W. Watson Barnes
* Director
- -------------------
Paul B. Barringer
Director
- -------------------
Robert L. Brady
</TABLE>
<PAGE>
<TABLE>
<S> <C>
* Director
- ------------------
W.G. Clark III
* Director
- ------------------
Jesse W. Corbett, Jr.
* Director
- ------------------
W.R. Cuthbertson, Jr.
* Director
- ------------------
Fred H. Deaton, Jr.
* Director
- ------------------
Joe L. Dudley, Sr.
* Director
- ------------------
Tom D. Efird
* Director
- ------------------
O. William Fenn, Jr.
* Director
- ------------------
James E. Heins
* Director
- ------------------
Raymond A. Jones, Jr.
* Director
- ------------------
Kelly S. King
* Director
- ------------------
David R. LaFar, III
* Director
- ------------------
J. Ernest Lathem, M.D.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
* Director
- ------------------
James H. Maynard
* Director
- ------------------
Dorothy G. Owen
* Director
- ------------------
W.H. Parks
* Director
- ------------------
A. Winniett Peters
* Director
- ------------------
Richard L. Player, Jr.
* Director
- ------------------
S.B. Tanner III
Director
- ------------------
Larry J. Waggoner
* Director
- ------------------
Henry G. Williamson, Jr.
* Director
- ------------------
William B. Young, M.D.
</TABLE>
*By: Jerone C. Herring
/s/Jerone C. Herring
----------------------
Jerone C. Herring,
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1.5 A form of Sales Agency Agreement between BB&T Financial
Corporation and Trident Securities, Inc., dated as of __________,
1994 (relating to the Conversion Merger of Asheville Savings
Bank, S.S.B.).
2.10 Plan of Conversion adopted by Asheville Savings Bank, S.S.B. on
June 22, 1993, and amended on January 19, 1994 and February 2,
1994.
8.5 Opinion of KPMG Peat Marwick, dated January 31, 1994, tax
advisors to BB&T Financial Corporation, regarding certain federal
income tax consequences of the Asheville Savings Conversion
Merger.
23.31 Consent of KPMG Peat Marwick dated January 31, 1994, relating to
their opinion included in Exhibit 8.5.
23.32 Consent of KPMG Peat Marwick dated February 3, 1994 (BB&T
Financial Corporation).
23.33 Consent of KPMG Peat Marwick dated February 3, 1994 (Old Stone).
23.34 Consent of Jerone C. Herring, Esquire, Vice President and
Secretary of BB&T Financial Corporation, dated February 3, 1994,
relating to his opinion included in Exhibit 5.1.
23.35 Consent of McGladrey & Pullen dated January 31, 1994 (Home
Savings).
23.36 Consent of McGladrey & Pullen dated January 31, 1994 (Citizens
of Newton).
23.37 Consent of Price Waterhouse dated January 31, 1994 (Security
Financial Holding Company).
23.38 Consent of Deloitte & Touche dated February 3, 1994 (Asheville
Savings).
23.39 Consent of David G. Jones and Company, P.A. dated February 1,
1994 (L.S.B. Bancshares, Inc. of South Carolina).
23.40 Consent of Trident Financial Corporation, dated January 31,
1994.
</TABLE>
<PAGE>
EXHIBIT 1.5
BB&T FINANCIAL CORPORATION
(a North Carolina corporation)
Common Stock
($2.50 Par Value)
AGENCY AGREEMENT
January __, 1994
TRIDENT SECURITIES, INC.
4601 Six Forks Road, Suite 400
Raleigh, North Carolina 27609
Dear Sirs:
BB&T FINANCIAL CORPORATION, a North Carolina corporation (the
"Company"), hereby confirms its agreement with Trident Securities, Inc. (the
"Agent"), with respect to the issuance and sale by the Company of up to an
estimated 1,000,000 shares (the "Shares") of common stock, $2.50 par value per
share, of the Company (the "Common Stock"), and with respect to the solicitation
by the Agent of offers to purchase shares of Common Stock as described in
Section 2 hereof.
Prior to the date hereof, a Plan of Conversion dated as of June 22,
1993, as amended on January 19, 1993 (the "Plan") was adopted by Asheville
Savings Bank S.S.B., Asheville, North Carolina ("Asheville Savings"). Asheville
Savings will convert from a North Carolina chartered mutual savings bank to a
North Carolina chartered stock savings bank pursuant to the Plan, and the
Company will acquire all the shares of capital stock to be issued by Asheville
Savings in such conversion (the "Asheville Savings Common Stock"), all in
accordance with the provisions of an Agreement and Plan of Reorganization dated
as of June 22, 1993 between the Company and Asheville Savings (the "Conversion
Agreement"). Collectively, the transactions contemplated by the Plan and the
Conversion Agreement are herein sometimes collectively referred to as the
"Conversion Merger" and the acquisition of Asheville Savings by the Company
pursuant to the Conversion Agreement is sometimes referred to as the
"Acquisition."
In accordance with the Plan and pursuant to the Conversion Agreement,
the Company is offering to certain depositors and borrowers of Asheville Savings
as of certain record dates nontransferable rights to subscribe for the Shares in
a subscription offering (the "Subscription Offering"). An employee stock
ownership plan and trust established for the benefit of the Asheville Savings'
employees (the "ESOP") will have first priority to purchase Shares in the
Subscription Offering equal to 1% of the Common Stock anticipated to be
outstanding at the opening of business on the day following the effective date
of the Conversion Merger. In the Subscription Offering, persons holding a
Qualifying Deposit in Asheville Savings as of the Eligibility Record Date
("Eligible Member Subscribers") will receive nontransferable rights to subscribe
("Subscription Rights") for a whole number of Shares in a minimum aggregate
dollar amount of $500 and a maximum aggregate dollar amount of $150,000 (or
$250,000 in the case of Eligible Member Subscribers with multiple account
relationships or with a single account with more than $25,000 on deposit at
Asheville Savings in either case as of the Eligibility Record Date) upon either
(or both) of the following prices and terms, in the Eligible Member Subscriber's
discretion: (x) the 85% Price, as defined in the Plan, subject to the
restriction that shares purchased at the 85% Price may not be transferred by
sale, gift or otherwise for a period of four months from the Closing Date,
except in the case of the death of the Subscriber; and/or (y) the 95% Price, as
defined in the Plan, with no restriction on transfer.
1
<PAGE>
An Eligible Member Subscriber with only one account relationship of less than
$25,000 may purchase in the Subscription Offering an additional number of Shares
having an aggregate purchase price of up to $150,000 at the BB&T Market Price,
as defined in the Plan, up to an aggregate of not more than $250,000. In
addition, members of Asheville Savings eligible to vote at the special meeting
of members to consider and vote upon the Plan ("Voting Members") who are not
also Eligible Member Subscribers will receive Subscription Rights for a whole
number of Shares in a minimum aggregate dollar amount of $500 and a maximum
aggregate dollar amount of $250,000 at the BB&T Market Price, as defined in the
Plan.
Concurrently with the Subscription Offering, and subject to the
priorities granted by the Plan, the Company intends to offer any Shares not sold
in the Subscription Offering to (i) natural persons residing in Buncombe,
Henderson, Madison and McDowell Counties, North Carolina (the "Community
Offering Area"), (ii) IRA, Keogh and similar retirement accounts established by
or for the benefit of individuals described in clause (i), and (iii)
corporations, partnerships, and similar entities headquartered in the Community
Offering Area (collectively, "Community Offering Residents") in a community
offering ("Community Offering"). Each Community Offering Resident will be
eligible to purchase up to $250,000 of BB&T Common Stock at the 95% Price, as
defined in the Plan. The Subscription Offering and the Community Offering are
collectively referred to herein as the "Offerings." Under the Plan, no minimum
number of Shares need be sold in the Offerings in order to consummate the
Conversion Merger and Acquisition. It is anticipated that Shares not sold in
the Subscription Offering or the Community Offering will not be sold in a public
offering or otherwise pursuant to the Plan. It is understood, however, that the
Administrator of the Savings Institutions Division of the North Carolina
Department of Commerce (the "Administrator") may condition final approval of the
Conversion Merger on the sale of a minimum number of Shares. The Shares
actually sold in the Offerings are referred to herein as the "Conversion Stock."
Each prospective investor subscribing to purchase Shares in the
Subscription Offering and each prospective investor subscribing to purchase
Shares in the Community Offering will be required to execute and deliver,
through the Agent, a stock order form (a "Stock Order Form"), in each case in
the form delivered with the Prospectus hereinafter referred to.
The respective obligations of the Company and Asheville Savings to
consummate the transactions contemplated by the Conversion Agreement, including
the Offerings, are subject to the satisfaction (or, in some cases, waiver) of
certain conditions in the Conversion Agreement, including (i) receipt of certain
required regulatory approvals, (ii) approval of the Plan by the Voting Members,
(iii) receipt of an opinion from KPMG Peat Marwick with respect to certain tax
matters, (iv) material performance by Asheville Savings of all obligations and
compliance with all covenants required by the Conversion Agreement, (v) that the
Company shall not have determined in good faith that there has been a material
adverse change in the condition or operations of Asheville Savings since
September 30, 1992, and (vi) that the average closing price of the Common Stock
reported on the National Association of Securities Dealers Automated Quotation
System National Market System ("NASDAQ/NMS") for the ten trading days prior to
the Closing Date not be less than $25.00 per share. Subsequent to the Conversion
Merger and Acquisition, the Company intends to merge Asheville Savings (the
"Bank Merger") with and into Branch Banking and Trust Company, a North Carolina
commercial bank wholly owned by the Company ("BB&T-NC"). Regulatory approval of
the Bank Merger is not a condition precedent to the obligations of the parties
hereunder.
The Company has filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "1933 Act"), a
registration statement on Form S-3 (File No. 33-49749) for the registration of
3,215,400 shares of Common Stock and has filed Post-Effective Amendment No. 3 to
such Registration Statement, dated January __, 1994, containing a prospectus
relating to the Offerings. Such Post-Effective Amendment No. 3 has been
declared effective under the 1933 Act by the Commission on February __, 1994
(the "Effective Time"). Such Post-Effective Amendment at the Effective Time,
and the prospectus relating to the Offerings constituting a part thereof
(including, in the case of such Post-Effective Amendment No. 3, and of such
prospectus, all exhibits thereto and all documents incorporated or deemed
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933
Act and all exhibits to such documents), as from time to time amended or
supplemented pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the rules and regulations of the Commission thereunder (the "1934
Act Regulations"), the 1933 Act, the rules and regulations of the Commission
(including the forms prescribed therein) thereunder (the "1933 Act Regulations")
2
<PAGE>
or otherwise, are referred to herein as the "Registration Statement," and the
"Prospectus," respectively, except that if the prospectus which is used in the
Offerings differs from the prospectus for the Offerings on file at the
Commission at the Effective Time (whether or not such revised prospectus is
required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act
Regulations), the term "Prospectus," shall refer to such revised prospectus from
and after the time it is first used in the Offerings but shall in no event
include any part of Annex I, Annex II or Annex III thereto, which Annexes (as
stated in the Prospectus) were not filed as part of the Registration Statement
and do not constitute part of the Prospectus.
The Company desires to engage the Agent to assist the Company in selling
the Shares in the Offerings, and the Agent desires to accept such engagement, on
the following terms and conditions.
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Agent as follows:
(a) At the Effective Time, the Registration Statement and the
Prospectus complied in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the Registration Statement did
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and, at the Effective Time (unless the
term "Prospectus" refers to a prospectus used in the Offerings which
differs from the prospectus relating to such offerings on file with the
Commission at the Effective Time, in which case at the time such prospectus
is first used in such offerings), and at Closing Time (as defined in
Section 2 hereof), the Prospectus and Annexes thereto and any supplemental
sales literature authorized in writing by Scott E. Reed, Senior Executive
Vice President and Treasurer of the Company, or Jerome C. Herring, Vice
President and Secretary of the Company (each, an "Authorized Officer"), for
use in connection with the Offerings to which such prospectus relates (when
read in conjunction with such prospectus), did not or will not, as the case
may be, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to the information, if any, in the Prospectus
regarding the Agent, made in reliance upon, and in conformity with
information furnished in writing to the Company by the Agent under the
heading "The Offerings -- Plan of Distribution" and on the front cover page
of the Prospectus (any such information being herein called the "Agent's
Information").
(b) Each time a post-effective amendment to the Registration
Statement became or becomes, as the case may be, effective, the
Registration Statement and the Prospectus, complied or will comply, as the
case may be, in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations, and the Registration Statement did not or
will not, as the case may be, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the
Prospectus, each time a post-effective amendment to the Registration
Statement relating to the Offerings became or becomes, as the case may be,
effective (unless the term "Prospectus" refers to a prospectus which has
been provided to the Agents by the Company for use in the Offerings which
differs from the Prospectus on file at the Commission at the time such
post-effective amendment to the Registration Statement became or becomes,
as the case may be, effective, in which case at the time it is first
provided to the Agent for such use) and at Closing Time, will not contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to the Agent's Information.
(c) Each document incorporated or deemed incorporated by reference
into the Prospectus and the Registration Statement pursuant to Item 12 of
Form S-3 under the 1933 Act ("Incorporated Information"), at the time it
was or hereafter is filed with the Commission, complied or will comply, as
the case may be, in all material respects with the requirements of the 1934
Act and the 1934 Act Regulations, and, when read together and with the
other information in the Prospectus (and in any supplemental sales
literature authorized in writing by an Authorized Officer, in connection
with the Offerings) at the Effective Time, at the time each post-effective
amendment was or hereafter is declared
3
<PAGE>
effective, during the time a Prospectus is required to be delivered by the
1933 Act, and at Closing Time, did not or will not, as the case may be,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
(d) In order to effect the Company's acquisition of Asheville Savings
pursuant to Section 3(a)(2) of the Bank Holding Company Act of 1956, as
amended (the "BHCA"), and the regulations for bank holding companies
promulgated by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") thereunder (the "BHCA Regulations") and pursuant
to Article 3 of Chapter 54C of the North Carolina General Statutes (the
"NCGS") and the rules and regulations for North Carolina savings
institution holding companies promulgated by the Administrator thereunder
(the "NCGS Holding Company Regulations"), the Company has caused to be
filed a FR Y-2 Application, dated January __, 1994 (the "BHCA
Application"), with the Federal Reserve Board and an Acquisition
Application, dated January __, 1994 (the "Acquisition Application"), with
the Administrator (collectively, the "Holding Company Applications")
seeking authorization for the Company to acquire the Asheville Savings
Common Stock in the Acquisition. The Conversion Application (as defined in
Section (iii) of Exhibit A hereto) has been approved by the Administrator.
At or prior to Closing Time, each Holding Company Application has been
approved by the Federal Reserve Board and by the Administrator, as the case
may be.
(e) None of the Administrator, the Commission nor any states
securities or blue sky authority ("State Commissioner") has, by order or
otherwise, prevented or suspended the use of the Prospectus, the Annexes
thereto or any supplemental sales literature authorized in writing by an
Authorized Officer for use in connection with the Offerings, which
prospectus, annex or literature was actually used in the Offerings.
(f) At Closing Time, the conditions precedent to the Conversion
Merger in accordance with the Plan, the Conversion Agreement, and all other
applicable laws, regulations, decisions and orders, including all material
terms, conditions, requirements and provisions precedent to the Conversion
Merger and Acquisition imposed upon the Company by the Federal Reserve
Board and the Administrator shall be completed in all material respects
other than those which the Federal Reserve Board, or the Administrator, as
the case may be, expressly permit to be completed after the effective time
of the Conversion Merger and Acquisition or which the Company has waived
pursuant to Section 3 hereof. At Closing Time, the Company shall have no
notice or knowledge that any person shall have sought to obtain review of
the final action of the Administrator or the Federal Reserve Board in
approving the Plan or the Acquisition.
(g) The accountants who certified the financial statements and
supporting schedules of the Company included or incorporated by reference
in the Registration Statement were and are (A) independent public
accountants as required by the 1933 Act and the 1933 Act Regulations
(including Commission Regulation S-X); and such accountants are, with
respect to the Company and its subsidiaries, (B) independent within the
meaning of Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants and its interpretations and
rulings, and (C) independent auditors within the meaning of the rules,
regulations, resolutions and practice of the Administrator relating to
North Carolina savings banks and their holding companies.
(h) The financial statements of the Company included or incorporated
by reference in the Registration Statement and in the Prospectus comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act and
the 1934 Act Regulations (including Rule 3-05 of Commission Regulation S-X)
and no other financial statements of the Company are required to be
included in the Registration Statement or the Prospectus, and said
financial statements present fairly the financial position of the Company
and its subsidiaries on a consolidated basis as of the dates indicated and
the results of their operations for the periods specified; except as
otherwise stated in the Registration Statement or in the Prospectus, such
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis and such
financial statements are consistent in all material respects with financial
statements and
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other reports filed by the Company and its subsidiaries with the Commission
and the Federal Reserve Board except to the extent that the accounting
principles employed in such filings conform to the requirements of such
regulatory authorities and not necessarily to generally accepted accounting
principles; the supporting schedules included or incorporated by reference
in the Registration Statement and in the Prospectus present fairly the
information required to be stated therein; and the pro forma financial
statements of the Company and its subsidiaries, Asheville Savings, Old
Stone Bank of North Carolina, a Federal Savings Bank, High Point, North
Carolina and its subsidiaries ("Old Stone"), Mutual Savings Bank of
Rockingham County, Inc., S.S.B., Reidsville, North Carolina, and its
subsidiaries ("Mutual Savings"), Citizens Savings Bank, S.S.B., Inc.,
Newton, North Carolina and its subsidiaries ("Citizens of Newton"),
Scotland Savings Bank, S.S.B., Laurinburg, North Carolina ("Scotland"),
Citizens Savings Bank, Inc., S.S.B., Mooresville, North Carolina ("Citizens
of Mooresville"), Home Savings Bank of Albemarle, S.S.B., Albemarle, North
Carolina ("Home Savings") and L.S.B. Bancshares, Inc., Lexington, South
Carolina, and its subsidiaries ("L.S.B."), all of which are recent or
pending acquisitions (collectively, "Pending Acquisitions") included or
incorporated by reference in the Registration Statement and in the
Prospectus comply as to form in all material respects with the applicable
requirements of Commission Regulation S-X and reflect all adjustments
necessary to summarize fairly the pro forma financial position of the
Company, Asheville Savings, and the institutions involved in the Pending
Acquisitions and their respective subsidiaries at the dates indicated and
the pro forma results of their operations for the periods specified. It is
understood and agreed that the Company has relied upon the audited and
unaudited financial statements of Asheville Savings, and the institutions
involved in the Pending Acquisitions in preparing such pro forma financial
statements, and the Company makes no representation or warranty as to the
accuracy or adequacy of such financial statements.
(i) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
herein or as otherwise disclosed or incorporated by reference in the
Prospectus pursuant to Item 12 of Form S-3 under the 1933 Act, (A) there
has not been any material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or the earnings or business affairs of
the Company or of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, (B)
there have not been any transactions entered into by the Company or any of
its subsidiaries, other than those in the ordinary course of business,
which are material to the Company or to the Company and its subsidiaries
considered as one enterprise and (C) except for regular dividends on the
Common Stock, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock,
and (D) there has not been any change in the capital stock of the Company
except for open-market stock repurchases, the issuance of shares of Common
Stock upon the completion of a Pending Acquisition, the exercise of
outstanding options or other issuances under Company plans, the conversion
of outstanding securities or pursuant to the dividend reinvestment plan.
(j) The Company and its subsidiaries possess such licenses, permits
and other governmental and regulatory authorizations as are currently
required for the conduct of their respective businesses; all such licenses,
permits and other governmental and regulatory authorizations are in full
force and effect, and the Company and its subsidiaries are in all material
respects complying therewith; neither the Company nor any of its
subsidiaries has received notice of any proceeding or action relating to
the revocation or modification of any such license, permit or other
governmental or regulatory authorization which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, might have a
Material Adverse Effect. For purposes of this Agreement, "Material Adverse
Effect" means any material adverse effect or any development that could
reasonably be expected to result in a material adverse effect on the
conduct of the business or on the condition, financial or otherwise, or the
earnings or business affairs of the Company or of the Company and its
subsidiaries considered as one enterprise.
(k) The authorized, issued and outstanding capital stock of the
Company is as set forth on the dates indicated in the Prospectus under the
captions "Capitalization" and "Description of Capital Stock of BB&T
Financial;" the issued and outstanding shares of the Common Stock have been
duly and validly authorized and issued and are fully paid and
non-assessable; the Shares have been duly and validly authorized for
issuance and, when issued and delivered by the Company pursuant to the Plan
against
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payment of the consideration calculated as set forth in the Plan, will be
duly and validly issued and fully paid and non-assessable and will be
issued to purchasers free and clear (except for any pledge made in
connection with the financing obtained by the ESOP to purchase Shares in
the Subscription Offering) of any security interest, mortgage, pledge,
lien, encumbrance or claim; the issuance of the Shares is not subject to
preemptive or other similar rights, except to the extent that Subscription
Rights under the Plan may be deemed to be preemptive rights; and the terms
and provisions of the Common Stock and the other capital stock of the
Company conform in all material respects to the descriptions hereof
contained or incorporated by reference in the Prospectus.
(l) Upon consummation of the Conversion Merger, the liquidation
account for the benefit of eligible account holders of Asheville Savings
will be duly established in accordance with the requirements of the North
Carolina Conversion Law and Regulations; and, in the event of a complete
liquidation of Asheville Savings or any successor thereto, including
without limitation, BB&T-NC, each eligible account holder who continues to
maintain a deposit account in Asheville Savings and, following the Bank
Merger, in BB&T-NC, will be entitled to receive a liquidation distribution
to the extent specified in the North Carolina Conversion Law and
Regulations, from the liquidation account at such institution in the amount
of the then current adjusted subaccount balance for each of such eligible
account holder's deposit accounts and then held before any liquidation
distribution may be made to the holders of shares of capital stock of such
institution.
(m) The Company is duly registered (A) as a bank holding company
under the BHCA and the BHCA Regulations and the North Carolina Bank Holding
Company Act of 1984 ("NCBHCA") and regulations thereunder and as a savings
institution holding company under the NCGS and the NCGS Holding Company
Regulations, and (B) as a savings and loan holding company under the Home
Owners' Loan Act ("HOLA") and regulations thereunder; the Company has been
duly incorporated and is validly existing and in good standing as a
corporation under the laws of the State of North Carolina, with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as provided in the Prospectus and the Incorporated
Information; and the Company is duly qualified as a foreign corporation to
transact business and in good standing in each jurisdiction in which such
qualification or good standing is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where
the failure to so qualify or be in good standing would not have a Material
Adverse Effect.
(n) Each subsidiary of the Company has been duly incorporated and is
validly existing and in good standing as a corporation under the laws of
the jurisdiction of its incorporation, has full corporate power and
authority to own, lease and operate its properties and to conduct its
business as provided in the Prospectus and the Incorporated Information,
and is duly qualified to transact business and in good standing in each
jurisdiction in which such qualification or good standing is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good standing,
would not have a Material Adverse Effect. The deposits of BB&T-NC, Branch
Banking and Trust Company of South Carolina ("BB&T-SC"), Old Stone,
Citizens of Newton, Citizens of Mooresville, and each other commercial
bank, savings bank or savings and loan association subsidiary of the
Company are insured by the FDIC to the fullest extent allowable under
applicable law, and no proceedings for the termination or revocation of
such insurance are pending or, to the knowledge of the Company, threatened;
the activities of each subsidiary of the Company are permitted to
subsidiaries of a bank holding company, a savings and loan holding company
(if the Company is a savings and loan holding company) and a savings
institution holding company or to state-chartered banks by the laws
administered by and the rules, regulations, resolutions and practices of
the Federal Reserve Board, the FDIC, the North Carolina Commissioner of
Banks (the "Commissioner"), the OTS, the Administrator and the South
Carolina Board of Financial Institutions (the "SC Board"), as the case may
be, except in each case for any lack of permission that, singularly or
taken in the aggregate, would not have a Material Adverse Effect; all of
the issued and outstanding capital stock of each subsidiary of the Company
has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company directly or indirectly, fee and
clear of any security interest, mortgage, pledge, lien, encumbrance or
claim.
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<PAGE>
(o) The Company has taken all corporate action necessary to execute,
deliver and perform this Agreement and the Conversion Agreement, and this
Agreement and the Conversion Agreement have been duly executed by and are
valid and binding agreements of the Company enforceable in accordance with
their terms, except as enforcement may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and by judicial limitations on the right of specific
performance and except as the enforceability of the indemnification and
contribution provisions may be limited by applicable securities laws.
(p) Neither the Company nor any of its subsidiaries is in violation
of its charter or by-laws or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
license, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of them may be bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
which violation or default would have a Material Adverse Effect. The
execution, delivery and performance of this Agreement and the Conversion
Agreement, the issuance and delivery of the Conversion Stock and the
consummation of the transactions contemplated herein, therein and thereby
will not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to any contract, indenture, mortgage, loan agreement, note, lease
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them may be bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of
the charter or by-laws of the Company or any of its subsidiaries or any
law, rule, or regulation, or administrative, court, arbitration decree or
holding, which breach, default, creation, imposition or violation would
have a Material Adverse Effect.
(q) The Company and each of its subsidiaries have good and marketable
title to all properties and assets for which ownership is material to the
business of the Company and its subsidiaries considered as one enterprise
and to those properties and assets described or referred to in the
Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions; and all of the leases and subleases material
to the business of the Company and its subsidiaries considered as one
enterprise under which the Company or any of its subsidiaries holds
properties, including those described or referred to in the Prospectus, are
valid and binding and the Company is in compliance therewith.
(r) Neither the Company nor any of its subsidiaries is in violation
of any written order, memorandum of understanding, capital or other
directive, agreement or understanding with, or resolutions (collectively,
for purposes hereof, a "Directive") requested by the Federal Reserve Board,
the OTS, the Commissioner, the FDIC, the Administrator or any other bank or
savings and loan regulatory agency which may have jurisdiction over the
Company or its subsidiaries to make any material change in the method of
conducting its business; the Company and its subsidiaries have conducted
and are conducting their businesses so as to comply in all material
respects with all applicable statutes and regulations (including, without
limitation, all regulations, decisions, directives and orders of the
Federal Reserve Board, the OTS, the Commissioner, the FDIC, the
Administrator and any other bank or savings and loan regulatory agency
which may have jurisdiction over the Company or its subsidiaries); there is
no charge, investigation, action, suit or proceeding before or by any court
or governmental, regulatory or arbitration agency, body or authority,
domestic or foreign, now pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries which is required
to be disclosed in the Registration Statement and the Prospectus (other
than as disclosed therein), or which would have a Material Adverse Effect,
or which would materially and adversely affect the properties or assets
thereof or which would materially and adversely affect the performance of
this Agreement or the Conversion Agreement, the issuance and delivery of
the Conversion Stock or the consummation of the transactions herein,
therein or thereby contemplated; all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party or
of which any of their respective properties or assets is the subject which
are not described or referred to in the Prospectus, including ordinary
routine litigation incidental to their business, are, considered in the
aggregate, not material, and there are no contracts, indentures, mortgages,
loan agreements, notes, leases or other agreements or instruments required
by
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<PAGE>
the 1933 Act or by the 1933 Act Regulations to be described or incorporated
by reference in the Prospectus or described, filed or incorporated by
reference as exhibits to the Registration Statement which have not been so
described, filed or incorporated by reference.
(s) The Company and each of its subsidiaries have filed all necessary
federal, state and foreign income, franchise, intangible and other tax
returns and have paid all taxes shown as due thereon (or obtained
appropriate extensions); except for matters described or referred to in the
Prospectus, there are no tax deficiencies which have been asserted or
threatened against the Company or any of its subsidiaries which,
individually or in the aggregate, might have a Material Adverse Effect; the
federal income tax returns of the Company have been audited and settled by
the Internal Revenue Service ("IRS") for all years to and including the
fiscal year ending December 31, 1987 and there is no liability for federal
income tax asserted against the Company or any of its subsidiaries for that
or any prior year and the Company has not been requested by the IRS to
extend the statute of limitations for any tax year.
(t) The Company maintains insurance of the type and in the amounts
generally deemed adequate for its business and consistent with insurance
maintained by similar companies in similar businesses, including, but not
limited to, general liability insurance, product liability insurance and
insurance covering all material real and personal property owned or leased
by the Company against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is in
full force and effect.
(u) The Company and each of its subsidiaries are in compliance in all
material respects with the applicable financial record keeping and
reporting requirements of the Currency and Foreign Transaction Reporting
Act of 1970, as amended, and the regulations and rules thereunder.
(v) The Common Stock is and, upon issuance, the Conversion Stock will
be designated by the National Association of Securities Dealers, Inc.
("NASD") as a NASDAQ/NMS security; the Company is in compliance with the
NASDAQ/NMS Listing Agreement and no proceedings to terminate the
designation of the Common Stock as a NASDAQ/NMS security are pending or
threatened and the Company is not aware of any basis for such proceedings.
(w) No approval, authorization, consent or other order of any public
board, body or authority is required for the execution and delivery by the
Company of this Agreement or the Conversion Agreement, the issuance of the
Conversion Stock or the consummation of the Conversion Merger and the
Acquisition, except that no representation is made with respect to any
approval or qualification required under any state securities or blue sky
laws.
(x) No labor dispute by the employees of the Company or any
subsidiary thereof, exists or, to the knowledge of the Company, is
threatened which might be expected to have a Material Adverse Effect.
(y) The Prospectus includes or incorporates by reference, if and to
the extent required, appropriate disclosure of the material effects that
compliance with federal, state and local provisions which have been enacted
or adopted, regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment, may have upon the
capital expenditures, earnings and competitive position of the Company and
its subsidiaries, consistent with Commission Regulation S-K, Item
101(c)(xii) and with published Commission interpretations thereof.
(z) The summary and selected consolidated financial and statistical
data, and the tables in the Prospectus fairly present the information
contained therein, and are consistent with and derived from, the Company
financial statements incorporated or deemed incorporated by reference in
the Registration Statement and in the Prospectus. The financial and
statistical information required by Commission Industry Guide 3
"Statistical Disclosure by Bank Holding Companies" to be included in the
Prospectus or any filings incorporated therein by reference, present fairly
the information set forth therein, and is in compliance with the 1933 Act,
the 1934 Act, the 1933 Act and/or 1934 Act Rules and Regulations and
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said Guide 3, and such data are consistent with the Company financial
statements set forth or incorporated in the Registration Statement and the
Prospectus.
(aa) The Company is not an "investment company" nor a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act").
Any certificate signed by any officer of the Company and delivered to the Agent
or to counsel for the Agent pursuant to the terms of this Agreement which makes
specific reference to this Agreement shall be deemed a representation and
warranty by the Company to the Agent as to the matters covered thereby.
SECTION 2. APPOINTMENT AS AGENT; OFFERING AND SALE OF CONVERSION STOCK;
CLOSING
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Agent is hereby
appointed as exclusive agent of the Company in the Offerings for the purpose of
facilitating the sale of Conversion Stock for the account of the Company. The
Agent will be paid in respect of any purchases of the Conversion Stock solicited
by such Agent in the manner referred to in paragraph (g) of this Section. The
Community Offering shall commence simultaneously with the Subscription Offering
on the day that the Prospectus is first made available to the Agent by the
Company for delivery in connection with the Offerings. The Offerings shall
continue until 5:00 P.M., Eastern Daylight Savings Time, on February 10, 1994,
or such later date as is determined by the Company or until the Offerings are
otherwise terminated in accordance with the Conversion Agreement and the Plan
(the "Offering Termination Date").
Subject to the performance by the Company of all of its obligations to be
performed hereunder, and to the completeness and accuracy of all of the
representations and warranties contained herein or acquired hereby, the Agent
hereby accepts such agency and agrees on the terms and conditions herein set
forth to act as agent for the Company in facilitating sales of Conversion Stock
in the Offerings. The Agent's agency hereunder, which is coupled with an
interest and, therefore, is not terminable by the Company without such Agent's
permission, except as otherwise expressly so provided in this Section 2 and
Section 9 hereof, shall continue until the Offering Termination Date. Any
termination of an Agent's agency or of this Agreement in compliance with Section
9 hereof shall be without obligation on the Agent's part or on the part of the
Company except as provided in Section 4 hereof, and except that the rights to
indemnification and contribution provided in Section 6 and Section 7 hereof,
respectively, shall continue after such termination of this Agency Agreement.
(b) If the Conversion Merger is not consummated either because of the
failure to satisfy a condition precedent under Article V of the Conversion
Agreement or because of a termination under Article VI of the Conversion
Agreement, then all funds received by the Company from subscribers and other
prospective purchasers shall be (i) returned with interest and without deduction
of any escrow or other fee or expense as described in the Prospectus, or (ii) if
made by authorized withdrawal direction from a deposit account at Asheville
Savings, released from such direction as described in the Prospectus; and the
Agent's agency and this Agreement shall terminate without obligation on such
Agent's part or on the part of the Company except as provided in this Section 2
and Section 4 hereof and except that the rights to indemnification and
contribution provided in Sections 6 and 7 hereof, respectively, shall continue
after such termination of this Agency Agreement.
(c) If the Offerings are not terminated as described in paragraph (b) of
this Section and if the conditions in Section 5 hereof are satisfied or waived,
then, at the time and on the date determined by the Company, but within 15
business days after the Offering Termination Date unless otherwise agreed to by
the parties hereto, the Conversion Stock shall be issued and sold and the
Conversion Merger and Acquisition shall be consummated.
(d) The Company has used its best efforts to ensure that appropriate
arrangements have been made for placing the funds received from subscriptions
for Shares or other offers to purchase Shares in a special segregated
interest-bearing deposit account held by Asheville Savings for the benefit of
each subscriber in the Subscription Offering and until the Closing Time with
provision for delivery to the Company upon issuance of the Conversion Stock, or
provision for refund if the Offerings are terminated without issuance of the
Conversion Stock. The Company agrees to issue or have issued the Conversion
Stock sold in the Offerings at Closing Time
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against payment therefor by release of funds from the special individual
interest-bearing deposit accounts referred to above and to deliver or arrange
for the delivery of certificates for such Conversion Stock in such authorized
denominations and registered in such names as may be indicated on the Order
Forms or otherwise directly to the purchasers thereof as promptly as practicable
after the Closing Time with provision for refund of any unfilled subscription
orders with interest and without deduction of any escrow or other fee or expense
as described in the Prospectus.
(e) Payment of the purchase price for the shares of Conversion Stock shall
be made at such place as shall be agreed upon by the Agent and the Company, at
such time and on such business day as shall be determined pursuant to paragraph
(c) of this Section (such time and date of payment being herein called "Closing
Time").
(f) The Agent shall receive in immediately available funds at the Offering
Termination Date, a nonrefundable financial advisory fee of $120,000, which is
the balance of the advisory fee of $150,000, which remains unpaid as of the date
hereof.
(g) The Agent shall receive in immediately available funds at Closing Time
as compensation for its services hereunder, in addition to the financial
advisory fee specified in paragraph (f) of this Section and any expenses payable
pursuant to Section 4 hereof and the provisions of Sections 6 and 7 hereof, one
and three-quarters percentum (1.75%) of the aggregate dollar amount of all
shares of Conversion Stock sold in the Offerings, excluding any such Conversion
Stock sold to directors and executive officers and any stock benefit plans
including the ESOP and restricted stock plans of the Company and Asheville
Savings, and such directors' and officers' "associates" (as defined in the
Plan).
SECTION 3. COVENANTS. The Company hereby covenants and agrees with the
Agent as follows:
(a) The Company will use its best efforts to cause any supplemental sales
literature authorized in writing by an Authorized Officer for use in connection
with the Offerings to be authorized for use in final form by the Administrator
and will notify the Agent immediately and confirm the notice in writing (i) when
any post-effective amendment to the Registration Statement (and any other
amendment thereto) relating to the Offerings has been declared effective by the
Commission, (ii) of the transmittal to the Commission for filing of any
amendment or supplement to the Prospectus or any document that will be
incorporated by reference in the Prospectus, (iii) of the receipt of any
comments from the Administrator, the Commission or any State Commissioner with
respect to the transactions contemplated by this Agreement, (iv) of any request
by the Federal Reserve Board, FDIC, the Administrator, the Commission or any
State Commissioner for any amendment or supplement to the Conversion
Application, the Registration Statement or the Prospectus as the case may be, or
for additional information, commitments or conditions to any of the transactions
contemplated herein, therein or thereby, (v) of the issuance by the FDIC, the
Administrator, the Commission or any State Commissioner or court of competent
jurisdiction of any order suspending any of the Subscription Offering, and/or
the Community Offering, or the use of the Prospectus or the threat of any such
action by any such entity, (vi) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any action
by the Commission under Sections 21B or 21C of the 1934 Act against the Company
or of the initiation or threat of any proceedings for that purpose, and (vii) of
the receipt of any notification with respect to the suspension of the
qualification of the Shares for offering or sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The Company will
make reasonable efforts to prevent the issuance of any order referred to in
clauses (v), (vi) or (vii) above and, if any such order shall at any time be
issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Company will give the Agent notice of its intention or, to the
extent possible, the intent of Asheville Savings to file or prepare any
amendments or supplement to the Conversion Application, or the Registration
Statement or any amendment or supplement to a Prospectus (whether, in the case
of the Registration Statement and the Prospectus, by the filing of Incorporated
Information pursuant to the 1934 Act, the 1933 Act or otherwise and, in the case
of a Prospectus, including any revised prospectus which the Company proposes for
use by the Agent in connection with the Community Offering from the Prospectus
then being so used by the Agent), and the Company will furnish the Agent with
copies of any such amendment or supplement
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a reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file any such amendment or supplement or use any such
prospectus to which the Agent or counsel for the Agent shall reasonably object
in writing.
(c) The Company shall cause Asheville Savings to deliver to the Agent as
many conformed copies as the Agent may reasonably request of the Conversion
Application, with exhibits. In addition, the Company will deliver to the Agent
such number of conformed copies of the Registration Statement as originally
filed and of each amendment thereto relating to the Offerings (including
exhibits filed therewith or incorporated by reference therein and documents
incorporated by reference in the Prospectus) as the Agent may reasonably
request.
(d) The Company will furnish to the Agent, from time to time during the
period when a Prospectus relating to the Offerings is required to be delivered
under the 1933 Act, the number of copies of the Prospectus (as amended or
supplemented) as the Agent may reasonably request for the purposes contemplated
by the 1933 Act or the 1933 Act Regulations.
(e) During the period when a Prospectus relating to the Offerings is
required to be delivered, the Company will comply, at its own expense, with all
requirements imposed upon it by the Administrator, by the applicable rules and
regulations of and laws administered by the Administrator, including the North
Carolina Conversion Law and Regulations, and by the Commission under the 1933
Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations
(including, without limitation, Rule 10b-6 under the 1934 Act), insofar as
necessary to permit the continuance of sales or dealing in shares of Common
Stock during such period in accordance with the provisions hereof and the
Prospectus. The Company will not take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Common Stock.
(f) If any event shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel for the Agent, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser or to amend or
supplement the Registration Statement or the Prospectus (including in each case
the Incorporated Information) in order to comply with the requirements of the
1933 Act or the 1933 Act Regulations, the Company will forthwith amend or
supplement the Prospectus (in form and substance satisfactory to counsel for the
Agent), whether by filing Incorporated Information pursuant to the 1933 Act, the
1934 Act or otherwise, so that, as so amended or supplemented, the Prospectus
will not contain an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time the Prospectus is delivered to an
offeree, not misleading and the Registration Statement and the Prospectus will
comply with such requirements.
(g) The Company will endeavor, in cooperation with the Agent, to qualify
the Shares for offering and sale under the applicable securities laws of such
jurisdictions as the Company shall determine consistent with the Plan and all
applicable laws and regulations, and will maintain such qualifications in effect
for so long as is required for the distribution of the Conversion Stock;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify to do business in any jurisdiction
in which it is not so qualified. In each jurisdiction where any of the Shares
shall have been qualified as above provided, the Company will file such
statements and reports in each year as are or may be reasonably required by the
laws of such jurisdiction.
(h) During the period when a Prospectus is required to be delivered under
the 1933 Act, the Company will timely file all documents required to be filed by
it with the Commission pursuant to Sections 13(a), 13(c), 14 or 15 of the 1934
Act. For so long as the Common Stock is registered under the 1934 Act, the
Company will furnish to its stockholders after the end of each fiscal year such
reports and other information as are required to be furnished to its
stockholders under the 1934 Act (including full consolidated financial
statements of the Company and its subsidiaries, certified by independent public
accountants).
(i) During the period commencing on the date of this Agreement and ending
on the fourth anniversary hereof, the Company will furnish to the Agent, a paper
copy of each report of the Company furnished generally to stockholders of the
Company or furnished to or filed with the Commission under the 1934 Act or
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any national securities exchange or system on which any class of securities of
the Company is listed at the time such report is delivered to stockholders of
the Company, the Commission or such exchange or system, as the case may be.
(j) The Company will use the net proceeds from the sale of the Conversion
Stock, in all material respects as described in the Prospectus under the caption
"Use of Proceeds", and consistent with any resolutions, orders and approvals of
the Conversion Merger and Acquisition by the Administrator or other regulatory
authorities.
(k) The Company shall not deliver the Conversion Stock until each and
every condition set forth in Section 5 hereof has been satisfied, unless such
condition is waived in writing by the Agent.
(l) Other than as permitted by the North Carolina Conversion Law and
Regulations, the 1933 Act and the 1933 Act Regulations, the Company shall not
distribute any prospectus, offering circular or other offering material in
connection with the offering and sale of the Conversion Stock.
(m) The Company will make generally available to its security holders
(within the meaning of Rule 158 under the 1933 Act) as soon as practicable, but
not later than 60 days after the close of the period covered thereby, an
earnings statement (in form complying with the provisions of said Rule 158)
covering a twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the effective date (as defined in said
Rule 158) of the Registration Statement and each post-effective amendment
thereto.
(n) The Company will take such actions as are necessary to register the
Conversion Stock for quotation on the NASDAQ/NMS; during the period that the
Company has a class of securities traded in the over-the-counter market and
quoted on NASDAQ/NMS, the Company will file with the NASD all documents and
notices required by the NASD of issuers with securities quoted on the NASDAQ/NMS
and will not take any action which would cause the NASD to terminate the
designation of the Common Stock as a NASDAQ/NMS security.
(o) The Company shall advise the Agent, if necessary, as to the allocation
of the Conversion Stock in the event of an oversubscription of the Subscription
and/or the Community Offerings, and in such event shall cooperate with and
provide and cause Asheville Savings to provide the Agent with accurate and
complete written instructions for allocating the shares of Conversion Stock in
accordance with the Plan. The Agent shall be entitled to rely on such written
instructions and shall be held harmless by the Company and have no liability in
respect to its reliance thereon, including, without limitation, liability
related to the denial, in whole or in part, or the grant of a subscription
unless such liability is based on the Agent's failure to follow such written
instructions through negligence or willful misconduct.
(p) As between the Company and the Agent, the Company shall have sole
responsibility for determining, in accordance with the Plan and the North
Carolina Conversion Law and Regulations, the status of persons and entities,
whether as Members, eligible account holders, other members, supplemental
account holders, Community Offering Residents or otherwise (as defined in the
Plan and the North Carolina Conversion Law and Regulations) for purposes of
determining their right to receive Subscription Rights and their eligibility to
purchase or priority in purchasing shares of Conversion Stock.
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all
out-of-pocket expenses incident to the performance of its obligations under this
Agreement including, but not limited to, (i) the preparation, issuance and
delivery of certificates for the Conversion Stock to the purchasers, (ii) the
reasonable fees and disbursements of the counsel and accountants of the Company
and the Agent, (iii) the qualification of the Shares under securities laws in
accordance with the provisions of Section 3(g), including filing fees and the
fees and disbursements of counsel in connection therewith and in connection with
the preparation of the Blue Sky Survey, (iv) the printing and delivery to the
Agent in such quantities as the Agent shall reasonably request of copies of the
Registration Statement and all amendments thereto, the Prospectus and Annexes
thereto, each amendment or supplement to any of the foregoing and the other
documents prepared in connection with the Conversion Merger, and (v) the
printing and delivery to the Agent in such quantities as the Agent may
reasonably request of copies of the Blue Sky Survey and this Agreement.
Notwithstanding the foregoing, the provisions of the
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Conversion Agreement shall govern the respective obligations of the Company and
Asheville Savings with respect to the foregoing between themselves.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 5 or Section 9(a), the Company shall reimburse the Agent
upon demand for all of its out-of-pocket expenses, including, but not limited
to, the reasonable fees and disbursements of counsel for the Agent in accordance
with the terms of the Agent Engagement Letter.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS. The obligations of the
Agent hereunder are subject to the accuracy of the representations and
warranties of the Company and Asheville Savings contained herein or in an
Exhibit hereto or in any certificate delivered pursuant hereto as of the date
hereof and Closing Time, to the performance by the Company of its obligations
hereunder, and to the following further conditions:
(a) Any supplemental sales literature authorized in writing by an
Authorized Officer for use in connection with the Offerings shall have been
approved orally or in writing for use in final form by the Administrator
not later than 6:30 P.M. on the date hereof, or at such later time and date
as may be approved by the Agent. At Closing Time, no stop order suspending
the effectiveness of the Registration Statement shall have been issued
under the 1933 Act, no actions shall have been taken under Sections 21B or
21C of the 1934 Act against the Company nor shall have any proceedings
therefor been initiated or threatened by the Commission and no order
suspending the Subscription Offering, the Community Offering, or the use of
the Prospectus and Annexes thereto (or such supplemental sales literature)
shall have been issued or proceedings therefore initiated or threatened by
the Administrator or any other agency, body or authority.
(b) At Closing Time, the Agents shall have received:
(1) The favorable opinion, dated as of Closing Time, of Jerone
C. Herring, Esq., Vice President, Secretary and General Counsel of the
Company, in form and substance satisfactory to counsel for the Agent,
to the effect that:
(i) The Company has been duly incorporated and is validly
existing and in good standing as a corporation under the laws of
the State of North Carolina.
(ii) The Company has corporate power and authority to own,
lease and operate its properties to conduct its business as
described in the Prospectus.
(iii) The Company is duly registered as (A) a bank holding
company under the BHCA and the BHCA Regulations, the NCBHCA and
regulations thereunder, (B) a savings institution holding company
under the NCGS and the NCGS Holding Company Regulations and (C) a
savings and loan holding company under the HOLA and the
regulations thereunder,
(iv) The Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction
in which such qualification or good standing is required, whether
by reason of the ownership or leasing of property or the conduct
of business, except where the failure to so qualify or be in good
standing would not have a Material Adverse Effect.
(v) Each of BB&T-NC, BB&T-SC, BB&T Financial Corporation of
South Carolina, each other commercial bank, savings bank or
savings and loan subsidiary of the Company and any other
subsidiary whose assets or results of operations are material to
the Company (a "Material Subsidiary") has been duly incorporated
and is validly existing and in good standing as a corporation
under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its
properties and to conduct its business as provided in the
Prospectus and the Incorporated Information, and is duly
qualified to transact business and is in good
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standing in each jurisdiction in which such qualification or good
standing is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not have a
Material Adverse Effect; the activities of each Material
Subsidiary of the Company are in all material respects permitted
to subsidiaries of a bank holding company, a savings institution
holding company and, if applicable, a savings and loan holding
company by the laws administered by and the rules, regulations,
resolutions and practices of the Federal Reserve Board, the FDIC,
the Commissioner, the OTS, the Administrator and the SC Board, as
the case may be. The deposits of BB&T-NC, BB&T-SC and each other
commercial bank, savings bank or savings and loan association
subsidiary of the Company are insured by the FDIC to fullest
extent allowable under applicable law, and no proceedings for the
termination or revocation of such insurance are pending or, to
such counsel's knowledge, threatened.
(vi) Each Material Subsidiary of the Company is a direct or
indirect subsidiary of the Company; all of the issued and
outstanding capital stock of each subsidiary of the Company has
been duly authorized and validly issued, is fully paid and
non-assessable, and is owned by the Company (or by a wholly-owned
subsidiary of the Company) of record, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or claim.
(vii) The authorized, issued and outstanding capital stock
of the Company is as set forth at the dates indicated in the
Prospectus under the caption "Description of Capital Stock of
BB&T Financial -- General;" the issued and outstanding shares of
Common Stock have been duly and validly authorized and issued and
are fully paid and non-assessable; the Conversion Stock has been
duly and validly authorized for issuance and, when issued and
delivered by the Company pursuant to the Plan against payment of
the consideration calculated as set forth in the Plan, will be
duly and validly authorized for issuance and, when issued, fully
paid and non-assessable and will not be subject to any security
interest, mortgage, pledge, lien, encumbrance or claim (except
for any pledge made in connection with the financing by the ESOP
for the purchase of the Shares); and the issuance of the
Conversion Stock is not subject to preemptive rights, except to
the extent that subscription rights under the Plan may be deemed
to be preemptive rights.
(viii) The Acquisition Application has been approved by the
Administrator, and, at the date of such approval, and at all
times subsequent thereto up to and including the Closing Time,
the Acquisition Application complied as to form in all material
respects with the applicable requirements of the NCGS and the
NCGS Holding Company Regulations.
(ix) This Agreement and the Conversion Agreement have been
duly authorized, executed and delivered by, and are valid and
binding agreements of, the Company enforceable in accordance with
their terms, except as enforcement may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and by judicial
limitations on the right of specific performance and except as
the enforceability of the indemnification and contribution
provisions may be limited by applicable securities laws.
(x) No approval, authorization, consent or other order of
any public board, body or authority is required in connection
with the execution and delivery of this Agreement or the
Conversion Agreement, the issuance of the Conversion Stock, or
the consummation of the Conversion Merger and Acquisition except
as have been obtained, and except as may be required under the
securities or Blue Sky laws of various jurisdictions.
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(xi) Each document filed pursuant to the 1934 Act and
incorporated by reference in the Prospectus complied when filed
as to form in all material respects with the 1934 Act and the
1934 Act Regulations; no actions have been taken by the
Commission against the Company under Sections 21B or 21C of the
1934 Act nor, to such counsel's knowledge, have any such actions
threatened by the Commission.
(xii) The information in the Registration Statement and the
Prospectus under the captions "Supervision and Regulation of BB&T
Financial" and "Description of Capital Stock of BB&T Financial"
and in the Company's latest annual report on Form 10-K filed with
the Commission under the headings "Description of Business
--Regulation" and "Legal Proceedings" to the extent such
information constitutes matters of federal or state law or legal
conclusions with respect thereto, has been reviewed by such
counsel and is accurate in all material respects.
(xiii) The terms and provisions of the Common Stock conform
in all material respects to the description thereof contained in
the Prospectus, and the form of certificate used to evidence the
shares of Conversion Stock is in due and proper form for the
enforcement of the rights and limitations of rights pertaining to
the Common Stock which are set forth in the Amended Articles of
Incorporation of the Company and under the laws of the State of
North Carolina.
(xiv) To the best of such counsel's knowledge after due
inquiry, there is no charge, investigation, action, suit or
proceeding before or by any court, governmental, regulatory or
arbitration agency, body or authority, domestic or foreign, now
pending or, to the knowledge of such counsel, threatened against
the Company or any of its subsidiaries which is required to be
disclosed in the Registration Statement and the Prospectus (other
than as disclosed therein), or which would have a Material
Adverse Effect, or would materially and adversely affect the
properties or assets of BB&T taken as a whole or which would
materially and adversely affect the performance of this Agreement
or the Conversion Agreement, the issuance and delivery of the
Conversion Stock or the consummation of the transactions herein,
therein or thereby contemplated; all pending legal, governmental
or regulatory proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective
properties or assets is the subject which are not described in
the Registration Statement and the Prospectus, including ordinary
routine litigation incidental to their business, are, considered
in the aggregate, not material.
(xv) To the best of such counsel's knowledge after due
inquiry, there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other agreements or instruments
required by the 1933 Act or by the 1933 Act Regulations to be
described or incorporated by reference in the Prospectus or to be
described, filed or incorporated by reference as exhibits of the
Registration Statement which have not been so described, filed or
incorporated by reference, and, to such counsel's knowledge, no
material default exists in the due performance or observance by
the Company of any obligation, agreement, covenant or condition
contained in any note, lease or other agreement or instrument so
described, filed or incorporated by reference.
(xvi) The Company has fulfilled its obligations required to
effect the Conversion Merger and Acquisition in all material
respects in accordance with the applicable requirements of North
Carolina law and regulations, the Conversion Agreement and all
other applicable regulations, and published decisions and orders
thereunder, including all material applicable terms, conditions,
requirements and conditions precedent to the Conversion Merger
and Acquisition imposed upon the Company by the Federal Reserve
Board and the Administrator.
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(xvii) No order has been issued by the Administrator, the
Commission or any State Commissioner to suspend the consummation
of the Offerings, and no action for any such purposes has been
instituted or, to such counsel's knowledge, threatened by the
Administrator, the Commission or any State Commissioner; and to
such counsel's knowledge, no person has sought to obtain judicial
review or reconsideration of the final action of the
Administrator or the Federal Reserve Board in approving the Plan,
the Conversion Merger, the Acquisition, or otherwise.
(xviii) The Company and its subsidiaries possess such
licenses, permits and other governmental and regulatory
authorizations as are currently required for the conduct of their
respective businesses, except for such licenses, permits and
other governmental and regulatory authorizations which if not so
obtained would not have a Material Adverse Effect; and all such
material licenses, permits and other governmental and regulatory
authorizations are in full force and effect, and the Company and
its subsidiaries are in all material respects complying
therewith.
(xix) Neither the Company nor any of its Material
Subsidiaries is in violation of its charter or by-laws or, to the
best of such counsel's knowledge after due inquiry, in default in
the performance or observance of any obligation, agreement,
covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which any of the property or assets of
the Company or any of their property may be bound or to which any
of the property or assets of the Company or any of its Material
Subsidiaries is subject, which violation or default would have a
Material Adverse Effect; the execution, delivery and performance
of this Agreement and the Conversion Agreement by the Company,
the issuance and delivery of the Conversion Stock pursuant to the
Plan and the consummation by the Company of the transactions
contemplated herein, therein and thereby have been duly
authorized by all necessary corporate action by the Company and
will not conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any material
lien, charge or encumbrance upon any property or assets of the
Company or any of its Material Subsidiaries pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any of its
Material Subsidiaries is a party or by which any of them may be
bound or to which any of the property or assets of the Company or
any of its Material Subsidiaries is subject, nor will such action
result in any violation of the provisions of the charter or
by-laws of the Company or any of its Material Subsidiaries or any
law, rule or regulation, or administrative, court or arbitration
decree or decision, which breach, rule or regulation, or
administrative, court or arbitration decree or decision, which
breach, default, creation, imposition or violation would have a
Material Adverse Effect.
(2) The favorable opinion, dated as of the Closing Time, of Arnold &
Porter, special counsel for the Company, in form and substance satisfactory
to counsel for the Agent, to the effect that:
(i) The Company is duly registered as a bank holding
company under the BHCA and the BHCA Regulations, and as a savings
and loan holding company under the HOLA and the regulations
thereunder.
(ii) The BHCA Application has been approved by the Federal
Reserve Board and at the date of such approval, the BHCA
Application complied as to form in all material respects with the
applicable requirements of the BHCA and the BHCA Regulations,
with such modifications and revisions as were agreed to by the
Federal Reserve Bank of Richmond acting pursuant to delegated
authority.
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(iii) This Agreement has been duly authorized, and delivered
by the Company; provided that such counsel need express no
opinion as to the enforceability of this Agreement.
(iv) The Registration Statement has become effective under
the 1933 Act and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement under the 1933 Act has been issued and no proceedings
with respect thereto are pending or threatened by the Commission.
(v) No approval, authorization, consent or order of or
filing with the OTS, the FDIC, the Federal Reserve Board, the
Office of the Comptroller of the Currency, the Commission or any
other federal regulatory commission, board, body, authority or
agency, is required to be obtained or made by the Company in
connection with the execution and delivery by the Company of this
Agreement or the Conversion Agreement, the issuance of the
Conversion Stock or the consummation of the Conversion Merger and
the Acquisition, other than registration of the Shares under the
1933 Act, and any other approval, authorization, consent, order
or filing which has already been obtained or made (other than any
approvals required in connection with the Bank Merger); provided,
however, no opinion need be expressed with respect to any
approval or qualification required under any state securities or
blue sky laws.
(vi) Considered in light of such counsel's understanding of
the applicable law (including the requirements of Form S-3 and
the character of the Prospectus) and such counsel's experience in
its practice thereunder, the Registration Statement (other than
documents incorporated by reference, any financial statements and
other financial and statistical information, as to all of which
such counsel need express no opinion or belief), complied in all
material respects as to form with the requirements of the 1933
Act and the 1933 Act Regulations as in effect on the date of the
effectiveness of the Registration Statement.
(vii) The descriptions of federal laws, rules and
regulations of the United States contained in the Registration
Statement and the Prospectus under the caption "The Offerings --
Certain Federal Income Tax Consequences" and "Supervision and
Regulation of BB&T Financial" constituted accurate summaries
thereof in all material respects as of the date of the
Prospectus.
(viii) The terms and provisions of the Shares conform in
all material respects to the description thereof in the
Prospectus under the caption "Description of Capital Stock of
BB&T Financial."
(ix) To such counsel's knowledge, without independent
inquiry, there are no actions, suits or proceedings pending or
threatened against the Company before or by any federal, state or
local governmental, regulatory, or arbitral commission, board,
body, authority or agency (A) which are required to be disclosed
by the 1933 Act and the 1933 Act Regulations in the Prospectus
but are not so described, or (B) which, if determined adversely
to BB&T, would have a Material Adverse Effect, or (C) of which
such counsel is aware, which in such counsel's opinion is
reasonably likely to result in a judgment, decree or order having
a material adverse effect on the consummation of the Conversion
Merger and Acquisition or the transactions contemplated by this
Agreement.
(x) To such counsel's knowledge, without independent
inquiry, there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other agreements or instruments
required by Item 601(b)(10) of Commission Regulation S-K to be
filed or incorporated by reference as an exhibit to the
Registration Statement which have not been so filed or
incorporated (provided, however, that for the purposes of this
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paragraph (x), the exhibits required by the Registration
Statement shall be deemed to be those required by a registration
statement on Form S-3, and no opinion would be given by such
counsel as to whether any requirements for exhibits in any
report, registration statement, declaration or form incorporated
by reference in the Registration Statement have been complied
with in such report, Registration Statement, declaration or
form).
(xi) To such counsel's knowledge, no order has been issued
by the Federal Reserve Board or the Commission to suspend the
Offerings; to such counsel's knowledge without independent
investigation, no action for any such purposes has been
instituted or threatened by the Federal Reserve Board or the
Commission; and to such counsel's knowledge without independent
investigation, no person has sought to obtain judicial review of
the final action of the Administrator in connection with his
approval of the Plan or otherwise.
(3) The favorable opinion, dated as of the Closing Time, of
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., special counsel
for Asheville Savings, in form and substance satisfactory to counsel
for the Agent, to the effect that:
(i) Asheville Savings is a North Carolina chartered stock
savings bank duly organized and validly existing under the laws
of the State of North Carolina, and is duly qualified to transact
business and is in good standing in each jurisdiction where such
qualification is required, except where failure to so qualify or
be in good standing would not have a material adverse effect on
the business or operations of Asheville Savings, with full
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus and Annexes thereto (the Prospectus and Annexes
thereto collectively referred to as the "Proxy Statement");
Asheville Savings is in good standing under the laws of the State
of North Carolina and under the income, franchise and intangible
tax laws of the State of North Carolina (to the extent the State
of North Carolina provides certificates generally as to such
matters); Asheville Savings is a member in good standing of the
Federal Home Loan Bank of Atlanta; Asheville Savings' deposits
are insured by SAIF to the fullest extent allowable under
applicable law, and no proceedings for the termination or
revocation of such insurance are pending or, to such counsel's
knowledge, threatened.
(ii) Each subsidiary of Asheville Savings has been duly
incorporated and is validly existing and in good standing as a
corporation under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease
and operate its properties and to conduct its business as
described in the Proxy Statement and is duly qualified to
transact business and in good standing in each jurisdiction in
which such qualification or good standing is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the business
or operations of Asheville Savings and its subsidiaries
considered as one enterprise; and the activities of each
subsidiary of Asheville Savings of which such counsel has
knowledge and based upon an Officer's Certificate have been
approved by the Administrator and are permitted to subsidiaries
of North Carolina chartered savings banks by law, and the rules,
regulations, resolutions and practices of the Administrator and
the FDIC.
(iii) Each subsidiary of Asheville Savings, if any, is a
direct or indirect subsidiary of Asheville Savings; all of the
issued and outstanding capital stock of each subsidiary of
Asheville Savings has been duly authorized and validly issued, is
fully paid and nonassessable, and is owned by Asheville Savings
(or a wholly-owned subsidiary of Asheville Savings) of record,
and to such counsel's knowledge and based upon an
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Officer's Certificate, is free and clear of any security
interest, mortgage, pledge, lien, encumbrance or claim.
(iv) The Conversion Agreement has been duly executed and
delivered by Asheville Savings, and the Plan has been duly
adopted by Asheville Savings and its Voting Members, and the
Conversion Agreement is a valid and binding agreement of
Asheville Savings enforceable in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and by judicial limitations on
equitable remedies and except as the enforceability of the
indemnification and contribution provisions may be limited by
applicable securities laws.
(v) The shares of Asheville Savings Common Stock issued to
the Company pursuant to the Plan and the Conversion Agreement
have been duly and validly issued and are fully paid and
non-assessable, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim created, permitted
or suffered by Asheville Savings.
(vi) To such counsel's knowledge and based upon an
Officers' Certificate, there is no charge, investigation, action,
suit or proceeding before or by any court, governmental,
regulatory or arbitration agency, body or authority, domestic or
foreign, now pending or threatened against Asheville Savings or
any of its subsidiaries which is required to be disclosed in the
Registration Statement, the Prospectus and/or the Proxy Statement
(other than as disclosed therein), or which would have a material
adverse effect on the business or operations of Asheville Savings
and its subsidiaries considered as one enterprise, or which would
materially and adversely affect the properties or assets thereof
or which would materially and adversely affect the performance of
the Plan, the Conversion Agreement or this Agreement, the
issuance and delivery of Asheville Savings Common Stock or the
Conversion Stock or the consummation of the transactions herein,
therein or thereby contemplated; all pending legal, governmental,
regulatory or arbitration proceedings to which Asheville Savings
or any of its subsidiaries is a party or of which any of their
respective properties or assets is the subject which are not
described in the Registration Statement, the Prospectus or the
Proxy Statement, including ordinary routine litigation incidental
to their businesses, are, considered in the aggregate, not
material.
(vii) To such counsel's knowledge and based upon an
Officers' Certificate, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other agreements or
instruments to which Asheville Savings or any of its subsidiaries
is a party which are required by the 1933 Act or by the 1933 Act
Regulations to be described or incorporated by reference in the
Prospectus, to be described or otherwise disclosed in the Proxy
Statement or any exhibits thereto or described, filed or
incorporated by reference as exhibits to the Registration
Statement which have not been so described, filed or incorporated
by reference, and, to such counsel's knowledge, no default exists
or which, upon notice, the lapse of time or both, would exist in
the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
agreement or instrument so described, filed or incorporated by
reference.
(viii) The Plan, the Conversion Agreement, and all other
agreements relating to the Conversion Merger and Acquisition have
been duly authorized, approved and adopted by the board of
directors of Asheville Savings, and, to such counsel's knowledge
and based upon an Officers' Certificate, the Administrator's
approval of the Plan and the Conversion Merger and Acquisition
remain in full force and effect and have not been modified in any
material respect; the Plan has been duly approved and adopted by
the eligible voting members of Asheville Savings; to such
counsel's knowledge, Asheville Savings has conducted the
Conversion Merger and Acquisition in
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all material respects in accordance with applicable requirements
of the North Carolina Conversion Law and Regulations, the Plan,
the Conversion Agreement and all other applicable regulations,
and published decisions and orders thereunder, including all
material applicable terms, conditions, requirements and
conditions precedent to the Conversion Merger and Acquisition
imposed upon Asheville Savings by the Administrator; to such
counsel's knowledge and based upon an Officers' Certificate,
Asheville Savings has performed all its covenants and agreements
contained in the Plan and the Conversion Agreement, and satisfied
the conditions precedent to the Conversion Merger and Acquisition
in all material respects in accordance with the Plan, the
Conversion Agreement, the applicable North Carolina Conversion
Law and Regulations (including the Administrator's
interpretations thereunder), and all other applicable laws,
regulations, decisions and orders, including all material terms,
conditions, requirements and provisions precedent to the
Conversion Merger and Acquisition imposed upon Asheville Savings
by the Administrator, other than those which the Administrator,
expressly permits to be completed after consummation of the
Conversion Merger and Acquisition; to such counsel's knowledge,
no order has been issued by the Administrator, the Commission or
any State Commissioner to suspend the Conversion Merger and
Acquisition, the Subscription Offering, the Community Offering;
and no action for any such purpose has been instituted or, to
such counsel's knowledge, threatened by the Administrator, the
Commission or any State Commissioner; and to such counsel's
knowledge, no person has sought to obtain judicial review or
reconsideration of the final action of the Administrator in
approving the Plan.
(ix) Asheville Savings and its subsidiaries, if any,
possess such licenses, permits and other governmental and
regulatory authorizations as are currently required for the
conduct of their respective businesses, except for such licenses,
permits and other governmental and regulatory authorizations
which if not so obtained would not have a material adverse effect
on the business or operations of Asheville Savings and its
subsidiaries considered as one enterprise, and all such material
licenses, permits and other governmental and regulatory
authorizations are in full force and effect, and, to such
counsel's knowledge, Asheville Savings and its subsidiaries is in
all material respects complying therewith.
(x) Neither Asheville Savings nor any of its subsidiaries,
if any, is in violation of its charter, by-laws or, to such
counsel's knowledge, in default in the performance or observance
of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which Asheville Savings or any
of its subsidiaries is a party or to which Asheville Savings or
any of its subsidiaries or any of the property or assets of
Asheville Savings or any of its subsidiaries is subject, which
violation or default would have a material adverse effect on the
business or operations of Asheville Savings and its subsidiaries
considered as one enterprise; the execution and delivery of the
Plan and the Conversion Agreement by Asheville Savings, the
issuance and delivery to the Company of Asheville Savings Common
Stock and the consummation of the transactions contemplated
herein, therein and thereby have been duly authorized by all
necessary corporate action by Asheville Savings and, to such
counsel's knowledge and based upon an Officer's Certificate, will
not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of Asheville Savings or
any of its subsidiaries pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or
instrument to which Asheville Savings or any of its subsidiaries
is a party or by which any of them may be bound, or to which any
of the property or assets of Asheville Savings or any of its
subsidiaries is subject (other than certain insurance policies
now held for the benefit of Asheville Savings, its officers,
directors and others which will be cancelled as a result of the
consummation of the transactions contemplated by the Conversion
Agreement and the Plan), nor will such action result
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<PAGE>
in any violation of the provisions of the charter or by-laws of
Asheville Savings or any of its subsidiaries or any applicable
law, rule or regulation, or court, administrative or arbitration
decree or decision, which breach, default, creation, imposition
or violation might have a material adverse effect on the business
or operations of Asheville Savings and its subsidiaries
considered as one enterprise.
(xi) The Conversion Application has been approved by the
Administrator; and at the date of such approval, such Application
complied as to form in all material respects with the applicable
requirements of the North Carolina Conversion Law and
Regulations, with such modifications as were in such counsel's
opinion appropriate for the nature of the transactions described
in such Applications.
As used in this subsection 5(b)(3), the phrase "knowledge" means
the conscious awareness of counsel for Asheville Savings. Where used
in this subsection 5(b)(3), an "Officer's Certificate" shall mean a
certificate of an executive officer of Asheville Savings, acceptable
to counsel to the Agent, which is dated as of the date of the opinion,
and upon which certificate Asheville Savings' counsel has relied in
giving its opinion and nothing to the contrary has come to the
knowledge of Asheville Savings' counsel.
(4) The favorable opinion, dated as of Closing Time, of Housley
Goldberg & Kantarian, P.C., counsel for the Agent, with respect to the
matters set forth in clauses (i), (vii) (with respect to the issuance
of the Conversion Stock only) and (ix) (with respect to this Agreement
only) of subsection (b)(1) and clause (iv) of subsection (b)(2) of
this Section. In rendering such opinion, Housley Goldberg &
Kantarian, P.C. may rely on the opinions of Jerome C. Herring, Esq. or
counsel to Asheville Savings as to matters of North Carolina law as
such counsel deems proper in the exercise of its judgment.
In giving their opinions, each counsel specified in this Section 5(b) shall
additionally state that nothing has come to such counsel's attention that would
lead such counsel to believe that the Registration Statement (except as to
financial statements, notes to financial statements, financial tables and other
financial and statistical data contained therein and Agent's information as to
which counsel need not comment), at the Effective Time (or if an amendment to
the Registration Statement has been filed by the Company with the Commission
subsequent to the Effective Time, then at the time of the effectiveness of the
most recent such amendment), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, at the date
thereof or at Closing Time, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statement therein, in the light of the circumstances under which they
were made, not misleading.
Jerone C. Herring, Esq., Arnold & Porter, Brooks, Pierce, McLendon,
Humphrey & Leonard, L.L.P. and Housley Goldberg & Kantarian, P.C. may rely (i)
upon certificates of appropriate government or regulatory officials, (ii) as to
matters of fact, upon certificates and written statements of officers and
employees of and accountants for the Company, or any of its subsidiaries, or
Asheville Savings or any of its subsidiaries, and (iii) as to matters of law as
to which such counsel is not qualified to opine, on one or more opinions of
local counsel in form and substance satisfactory to counsel to the Agent. In
addition, Jerone C. Herring, Esq. may rely on one or more opinions of counsel in
form and substance satisfactory to counsel to the Agent with respect to the
incorporation and activities of any savings association or savings bank
subsidiary of the Company.
(c)(1) At Closing Time, there shall not have been, since the
date hereof or since the respective dates as of which information is
given in the Registration Statement and the Prospectus, any material
adverse change or any development that could reasonably be expected to
result in a material adverse change in the condition, financial or
otherwise, or in the earnings or business affairs of the Company, or
of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Agent shall have received a certificate of the Chairman and the
principal financial or accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material
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<PAGE>
adverse change or development; (ii) the representations and warranties
in Section 1 hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time; (iii) the
Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to Closing Time;
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and, to such persons' knowledge, no
proceedings for the purpose have been initiated or threatened by the
Commission; and (v) no order suspending any of the Offerings has been
issued and, to such persons' knowledge, no proceedings for that
purpose have been initiated or threatened by the Commission, the
Administrator or any State Commissioner and no person has sought to
obtain reconsideration or judicial review of the action of the
Administrator in approving the Plan in accordance with the North
Carolina Conversion Law and Regulations or of the Federal Reserve
Board or the Administrator in approving the Acquisition.
(2) On the date hereof and at Closing Time there shall not have
been, since the date hereof (in the case of Closing Time) or since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change or any
development that could reasonably be expected to result in a material
adverse change in the condition, financial or otherwise, or in the
earnings or business affairs of Asheville Savings, whether or not
arising in the ordinary course of business, and the Agent shall have
received a certificate of the President and the principal financial or
accounting officer of Asheville Savings, dated the date hereof or as
of Closing Time, as the case may be, to the effect that (i) there has
been no such material adverse change or development; (ii) the
representations and warranties in Exhibit A hereto are true and
correct with the same force and effect as though expressly made at and
as of the date hereof or Closing Time, as the case may be; and (iii)
to such persons' knowledge, no order suspending any of the Offerings
have been issued and no proceedings for that purpose have been
initiated or threatened by the Administrator or any other agency, body
or authority and no person has sought to obtain reconsideration or
judicial review of the action of the Administrator in approving the
Plan in accordance with the North Carolina Conversion Law and
Regulations.
(d) At the time of the execution of this Agreement, the Agent
shall have received from KPMG Peat Marwick a letter dated such date,
in form and substance satisfactory to the Agent, to the effect that
(i) they are with respect to the Company and its subsidiaries
independent public accountants within the meaning of the 1933 Act and
the 1933 Act Regulations; (ii) it is their opinion that the
consolidated financial statements and supporting schedules audited by
them and included or incorporated by reference in the Registration
Statement and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act,
the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations
(including Commission Regulation S-X); (iii) based upon limited
procedures set forth in detail in such letter, nothing has come to
their attention which causes them to believe that (A) the unaudited
consolidated interim financial statements and supporting schedules of
the Company and its subsidiaries included or incorporated by reference
in the Registration Statement and the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act
and the 1934 Act Regulations (including Commission Regulation S-K,
Item 301 with respect to the selected financial data of the Company),
or that any material modifications should be made to such statements
for them to be in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of
the audited consolidated financial statements of the Company and its
subsidiaries included or incorporated by reference in the Registration
Statement and the Prospectus, (B) at a specified date not more than
five days prior to the date of this Agreement, there have been any
changes in the capital stock or consolidated long-term debt of the
Company and its consolidated subsidiaries or any increases in
consolidated short-term borrowed funds of the Company or any decreases
in consolidated total assets or stockholders' equity of the Company
and subsidiaries, in each case as compared with the amounts shown in
the September 30, 1993 consolidated financial statements of the
Company or, during the period from September 30, 1993 to a specified
date not more than five
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<PAGE>
days prior to the date of this Agreement, there were any decreases, as
compared with the corresponding period of the preceding year, in
consolidated interest income, net interest income, income before
income taxes or net income of the Company and its subsidiaries, except
in all instances for increases or decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur or
increases or decreases which are disclosed in such letter, and (C) the
unaudited pro forma consolidated condensed financial statements
included or incorporated by reference in the Registration Statement
and the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of Rule 11-02 of
Commission Regulation S-X and that the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of
those statements; (iv) in addition to the examination referred to in
their opinion and the limited procedures referred to in clause (iii)
above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information which are derived from the accounting,
financial and other records of the Company and its subsidiaries,
Asheville Savings, and the entities involved in the Pending
Acquisitions and the respective subsidiaries thereof together with any
other subsidiaries, which are included or incorporated by reference in
the Registration Statement and the Prospectus and which are specified
by the Agent, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial
and other records of the Company and its subsidiaries.
(e) At Closing Time, the Agent shall have received from KPMG
Peat Marwick a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (d) of this Section (except that the specified date
referred to shall be a date not more than five days prior to Closing
Time) and stating that they have updated their opinion to the Boards
of Directors of the Company and Asheville Savings included as an
exhibit to the Registration Statement as to certain income tax
consequences of the Conversion Merger and Acquisition.
(f) At Closing Time, the Agent shall have received a letter from
Trident Financial Corporation ("Trident Financial"), dated as of
Closing Time, (i) confirming that Trident Financial is independent of
the Company, Asheville Savings and their respective subsidiaries and
is experienced and expert in the area of corporate appraisals within
the meaning of Rule .0717(a) of the North Carolina Conversion Law and
Regulations, (ii) stating that the appraisal prepared by Trident
Financial with regard to Asheville Savings complies in all material
respects with the applicable requirements of the North Carolina
Conversion Law and Regulations, and (iii) further stating that their
opinion of the pro forma market value of Asheville Savings expressed
in its appraisal as of January __, 1994 and as most recently updated,
remains in effect.
(g) At Closing Time, counsel for the Agent shall have been
furnished with such documents, certificates and opinions as such
counsel may reasonably require which confirm the satisfactory
completion of all conditions to the Conversion Merger and Acquisition
and for the purpose of enabling them to pass upon the sale of the
Conversion Stock to be issued and sold in the Offerings as herein
contemplated and related proceedings or in order to evidence the
accuracy or completeness of any of the representations or warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the sale of the
Conversion Stock to be issued and sold in the Offerings as herein
contemplated shall be reasonably satisfactory in form and substance to
the Agent and counsel for the Agent.
If any condition specified in this Section shall not have been fulfilled when
and as required to be fulfilled, this Agreement may be terminated by the Agent
by notice to the Company at any time at or prior to Closing Time, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
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SECTION 6. INDEMNIFICATION. (a) In addition to any rights to
indemnification granted to the Agent by this or any other agreement, the Company
agrees to indemnify and hold harmless the Agent, and each person, if any, who
controls the Agent within the meaning of Section 15 of the 1933 Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained or incorporated by reference
in the Registration Statement in the form in which it initially became
effective (or in any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expenses
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all reasonable expense, whatsoever (including
the fees and disbursements of counsel chosen by the Agent), as incurred,
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided, however, that the indemnity agreement in this subsection (a) shall not
apply to any loss, liability, claim, damage or expense to the extent it arises
out of any untrue statement or omission or alleged untrue statement or omission
made in the Registration Statement (or in any amendment thereto) or in the
Prospectus in reliance upon and in conformity with the Agent's Information or
written information furnished to the Company by the Agent expressly for use in
the Registration Statement or the Prospectus and included under the caption "The
Offerings -- Plan of Distribution" (if any such Agent's Information or other
information is included therein) and on the front cover page of the Prospectus.
(b) The Agent agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or in any
amendment thereto) or the Prospectus under the caption "The Offerings -- Plan of
Distribution" (if any such Agent's Information or other is included therein) and
on the front cover page of the Prospectus in reliance upon and in conformity
with the Agent's Information or written information furnished to the Company by
such Agent expressly for use in the Registration Statement or the Prospectus.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action or proceeding commenced
against it in respect of which indemnity may be sought hereunder, but failure so
to notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of the indemnity
agreement in this Section 6. An indemnifying party may participate at its own
expense in the defense of any such action. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any local counsel or any other counsel specially retained by counsel) separate
from their own counsels for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegation or circumstances.
SECTION 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by
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<PAGE>
the indemnified parties although applicable in accordance with its terms, the
Company and the Agent shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement incurred by the Company and the Agent, as incurred, in such
proportions that the Agent is responsible for that portion represented by the
percentage that the commission it receives pursuant to Section 2 hereof bears to
the aggregate offering price of the Conversion Stock (including such
commissions) and the Company is responsible for the balance; provided, however,
that no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls the Agent within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as the
Agent, and each director of the Company, each officer of the Company who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribute as the Company.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Company and Asheville Savings
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Agent or any
controlling person thereof, or by or on behalf of the Company and Asheville
Savings, and shall survive delivery of the Conversion Stock.
SECTION 9. TERMINATION OF AGREEMENT. (a) The Agent may terminate this
Agreement, by notice to the Company at any time at or prior to Closing Time (i)
if there has been, since the date of this Agreement or since the respective
dates as of which information is given in the Registration Statement, any
material adverse change or any development that could reasonably be expected to
result in a material adverse change in the condition, financial or otherwise, or
the earnings or business affairs of the Company, or the Company and its
subsidiaries considered as one enterprise, or Asheville Savings and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets of the United States or any outbreak or
escalation of hostilities or other calamity or crises the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Agent, impracticable to market the Shares or to enforce contracts for the
sale of Shares, or (iii) if (A) trading in the Common Stock on the NASDAQ/NMS
has been suspended, or (B) trading generally on the NASDAQ/NMS, the American
Stock Exchange or the New York Stock Exchange has been suspended, or (C) minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by the NASDAQ/NMS, the American Stock Exchange or
the New York Stock Exchange or by order of the Commission or any other
governmental authority, or (iv) if a banking moratorium has been declared by
federal, New York or North Carolina authorities.
(b) The Company, upon written notice, may terminate this Agreement with
respect to the Agent upon a material breach hereof by such Agent.
(c) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
SECTION 10. CONFIDENTIALITY; COOPERATION.
(a) The Agent shall not without the written consent of the Company
disclose material nonpublic information contained in any regulatory report of
the Company if disclosure thereof would in its reasonable judgment violate any
federal law or regulation.
(b) The Agent agrees to cooperate with the Company and Asheville Savings
in connection with the performance of its duties hereunder.
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SECTION 11. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed, sent by
overnight delivery services or transmitted by any standard form of
telecommunication as provided below:
If to the Agent: Trident Securities, Inc.
4601 Six Forks Road, Suite 400
Raleigh, North Carolina 27609
Attention: William M. Moore, Jr.
Facsimile No.: (919) 787-1670
with a copy to: Housley Goldberg & Kantarian, P.C.
1220 19th Street, N.W., Suite 700
Washington, D.C. 20036
Attention: Gary R. Bronstein, Esq.
Facsimile No.: (202) 822-0140
If to the Company: BB&T Financial Corporation
225 West Nash Street
Wilson, North Carolina 27893
Attention: Scott E. Reed
Facsimile No.: (919) 399-4871
with a copy to: Arnold & Porter
1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Attention: L. Stevenson Parker, Esq.
Facsimile No.: (202) 872-6720
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Agent, the Company and its successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation (including, without limitation, any depositor,
creditor, borrower or member of Asheville Savings), other than the Agent, the
Company and their respective successors and the controlling persons and officers
and directors referred to in Sections 6 and 7 hereof and their heirs and legal
representatives, any legal or equitable right, remedy or claim, whether as a
third party beneficiary or otherwise under or in respect of this Agreement or
any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Agent, the Company, their respective successors, and such controlling persons
and officers and directors and their heirs and legal representatives, and for
the benefit of no other person, firm or corporation.
SECTION 13. GOVERNING LAW AND TIMES. This Agreement shall be governed by
and construed in accordance with the laws of the State of North Carolina
applicable to agreements made and to be performed in such State. Specified
times of day refer to Eastern Time.
SECTION 14. COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same agreement.
SECTION 15. AMENDMENT. This Agreement may be amended only by a subsequent
writing signed by the Agent and the Company.
SECTION 16. HEADINGS. The index, headings and subheadings in this
Agreement are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
SECTION 17. ENTIRE AGREEMENT. This Agreement, together with the exhibits
and schedules thereto, and any terms incorporated by reference herein,
constitutes the entire understanding between and among the
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Parties with respect to the subject matter hereof and shall supersede any prior
agreements and understandings among the parties with respect to such subject
matter.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between the Agent
and the Company in accordance with its terms.
Very truly yours,
BB&T FINANCIAL CORPORATION
By:
-----------------------------------------------
Name: Scott E. Reed
Title: Senior Executive Vice President
CONFIRMED AND ACCEPTED,
as of the date first above written:
TRIDENT SECURITIES, INC.
By:
----------------------------------
Name: Timothy E. Lavelle
Title: President
Asheville Savings hereby joins in the foregoing Agreement, undertakes that
it will be bound thereby and that it will do and perform all the acts therein
provided to be done by it. In order to induce the Agent to enter into the
foregoing Agreement, Asheville Savings further agrees to indemnify and hold
harmless the Agent and each person, if any, who controls the Agent within the
meaning of Section 15 of the 1933 Act against any and all loss, liability,
claim, damage and expense whatsoever (including amounts paid in settlement),
arising out of any statement which is false or misleading with respect to a
material fact contained in the Proxy Statement or the omission or alleged
omission of a material fact necessary in order to make the statements in the
Proxy Statement not false or misleading.
ASHEVILLE SAVINGS BANK, S.S.B.
By:
-----------------------------------------------
Name: John B. Dickson
Title: President and Chief Executive Officer
27
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EXHIBIT A
TO THE
AGENCY AGREEMENT
REPRESENTATIONS AND WARRANTIES
OF
ASHEVILLE SAVINGS BANK, S.S.B.
All capitalized terms used but not defined in this Exhibit shall have the
respective meanings thereof assigned in the Agency Agreement to which this is an
Exhibit.
Asheville Savings makes the following representations and warranties to the
Agent pursuant to Section 5(c)(2) of the Agency Agreement:
(i) (a) At the Effective Time, the Registration Statement and the
Prospectus, insofar as they relate to Asheville Savings, complied in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations, and the Registration Statement, insofar as it relates to Asheville
Savings, did not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and, at the Effective Time (unless the term "Prospectus"
refers to a prospectus used in connection with the Subscription Offering or the
Community Offering which differs from the Prospectus on file with the Commission
at the Effective Time, in which case at the time such prospectus is first used
in the Subscription Offering or the Community Offering) and at Closing Time, the
Prospectus and Annexes thereto and any supplemental sales literature authorized
by the Company or Asheville Savings for use in connection with the Subscription
Offering or the Community Offering, insofar as they relate to Asheville Savings
(when read in conjunction with the Prospectus) did not or will not, as the case
may be, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply to
the Agent's Information. There are no contracts, indentures, mortgages, loan
agreements, notes, leases or other agreements or instruments to which Asheville
Savings or any of its subsidiaries is a party to or to which any of them or
their respective properties and assets are subject or bound, which are required
by the 1933 Act and 1933 Act Regulations or the North Carolina Conversion Law
and Regulations, to be described or incorporated by reference in the Prospectus
or described in or filed or incorporated by reference as exhibits to the
Registration Statement, the Conversion Application, as defined hereinafter, or
the Proxy Statement, as defined hereinafter, which have not been so described,
filed or incorporated by reference.
(b) Asheville Savings was and is exclusively responsible for the
information concerning Asheville Savings and its subsidiaries contained in the
Conversion Application, as defined hereinafter, and Prospectus and Annexes
thereto (the Prospectus and Annexes thereto collectively referred to as the
"Proxy Statement"), and in any amendments or supplements thereto. Asheville
Savings will make such changes, and provide such supplements or amendments, to
the Conversion Application, as defined hereinafter, the Proxy Statement, and any
marketing material related to Asheville Savings' solicitation of proxies (the
"Proxy Solicitation") with respect to the Conversion Merger and/or the
Offerings, which, in the opinion of the Agent and its counsel (and not
reasonably objectionable to Asheville Savings and its counsel), are necessary or
desirable to comply in all material respects with all applicable statutes, rules
and regulations with respect to such Proxy Statement, the Prospectus and
materials related to the Proxy Solicitation and/or the Offerings (collectively,
the "Disclosure Requirements"). The Proxy Statement does not and will not
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements contained
therein not misleading at the time such documents are filed with the
Administrator, when the Proxy Statement becomes effective and at the date the
Proxy Statement is first mailed to Voting Members. Asheville Savings has mailed
or caused to be mailed the Proxy Statement together with all related Proxy
Solicitation materials, in forms in compliance with the applicable regulations,
including, without limitation, the North Carolina Conversion Law and
Regulations, to each depositor, borrower or other voting member of Asheville
Savings entitled to receive such a Proxy Statement under the North Carolina
Conversion Law and Regulations, on a timely basis and in the manner and form
required by the North Carolina Conversion Law and Regulations.
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(ii) Each time a post-effective amendment to the Registration Statement
became or becomes, as the case may be, effective, the Registration Statement and
the Prospectus insofar as they relate to Asheville Savings, complied or will
comply, as the case may be, in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations, and the Registration Statement,
insofar as it relates to Asheville Savings, did not or will not, as the case may
be, contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and the Prospectus, insofar as it relates to Asheville Savings,
each time a post-effective amendment to the Registration Statement became or
becomes effective (unless the term "Prospectus" refers to a prospectus which
has been provided to the Agent by the Company for use in connection with the
Offerings which differs for the applicable Prospectus on file at the Commission
at the time such post-effective amendment to the Registration Statement became
or becomes, as the case may be, effective, in which case at the time it is first
provided to the Agent for such use) and at Closing Time, will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to the Agent's
Information.
(iii) Pursuant to Article 3 of Chapter 54C of the NCGS and the rules
and regulations promulgated thereunder by the Administrator, including all
published interpretations, rulings and decisions of the Administrator issued
thereunder and all waivers, interpretations and orders issued by the
Administrator to Asheville Savings thereunder (the "North Carolina Conversion
Law and Regulations"), Asheville Savings has filed with the Administrator an
application for conversion (the "Conversion Application") and has filed such
amendments thereto and supplementary materials as may have been required to the
date hereof, including copies of the Proxy Statement and the Prospectus.
Asheville Savings will promptly file the Prospectus with the Administrator and
will promptly file such further amendments and supplements to the Conversion
Application as may be necessary or desirable in connection with the Conversion
Merger and Acquisition. At the date hereof and at all times subsequent hereto,
up to and including the Closing Time, the Conversion Application complies and
will comply in all materials respects with the applicable provisions of the
North Carolina Conversion Law and Regulations (including the Administrator's
interpretations thereunder). The Administrator has, by letter dated November
12, 1993, approved the Conversion Application, and such approval remains in full
force and effect.
(iv) The Proxy Statement, form of proxy, notice of meeting and any
other communication, written or oral, used in the Proxy Solicitation have
complied and will comply in all material respects with the applicable provisions
of the North Carolina Conversion Law and Regulations and at the time of their
use did not contain any statement which, at the time and in light of the
circumstances under which it was made, was false or misleading with respect to
any material fact, or which omitted to state any material fact necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in an earlier communication with respect to the Proxy
Solicitation which had become false or misleading, and at the time of mailing,
Asheville Savings had received all required authorizations of the Administrator
for the use of such Proxy Statement and the other Proxy Solicitation materials;
the Prospectus and any supplemental sales literature authorized in writing by an
Authorized Officer or by Asheville Savings for use in connection with the
Subscription Offering or the Community Offering are in compliance in all
material respects with the applicable provisions of the North Carolina
Conversion Law and Regulations and, at or prior to the Effective Time, received
all required authorizations of the Administrator for use in final form.
(v) At Closing Time, the Plan and the Conversion Agreement shall have
been duly adopted by Asheville Savings by all necessary action of its board of
directors and voting members, and such approvals shall remain in full force and
effect through the Closing Time.
(vi) At Closing Time, Asheville Savings shall have completed all the
conditions precedent to the Conversion and Acquisition in accordance in all
material respects with the Plan, the Conversion Agreement, the North Carolina
Conversion Law and Regulations and all other applicable laws, regulations,
decisions and orders, including all material terms, conditions, requirements and
provisions precedent to the Conversion Merger and Acquisition imposed upon
Asheville Savings by the Administrator other than those which the Administrator
expressly permitted to be completed after the Conversion Merger and Acquisition
becomes effective. At Closing Time, Asheville Savings shall have no knowledge
or notice that any person has sought or
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intends to seek to obtain reconsideration or judicial review of the final action
of the Administrator in approving the Plan or otherwise.
(vii) Trident Financial, which prepared the valuation of Asheville
Savings as part of the Conversion Merger and Acquisition, is independent with
respect to Asheville Savings within the meaning of the North Carolina Conversion
Law and Regulations.
(viii) The accountants who certified the financial statements and
supporting schedules of Asheville Savings forming the bases of the financial
and/or statistical information relating to Asheville Savings included or
incorporated by reference in the Prospectus, Proxy Statement and/or the
Registration Statement were at the time of such certification independent within
the meaning of Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants and its interpretations and rulings
and independent public accountants as required by the 1933 Act and 1933 Act
Regulations; and such accountants were at the time of such certification, with
respect to Asheville Savings and its subsidiaries, independent auditors within
the meaning of the rules, regulations, resolutions and practice of the
Administrator relating to North Carolina savings banks and savings and loan
associations.
(ix) The financial statements of Asheville Savings that form the bases
for the financial and/or statistical information regarding Asheville Savings
included or incorporated by reference in the Registration Statement, Prospectus
and the Proxy Statement present fairly the financial position of Asheville
Savings and its subsidiaries as of the dates indicated and the results of their
operations and cash flows for the periods specified and no other financial
statements of Asheville Savings are required to be included in the Proxy
Statement or the Conversion Application; except as otherwise stated in the
Registration Statement or the Prospectus and the Proxy Statement, such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis and such financial statements are
consistent in all materials respects with financial statements and other reports
filed by Asheville Savings and its subsidiaries with the FDIC and the
Administrator except that the accounting principles employed in such other
filings conform to the requirements of the FDIC and the Administrator and not
necessarily to generally accepted accounting principles.
(x) Since the respective dates as of which information is given in
the Registration Statement, the Prospectus and the Proxy Statement, except as
otherwise stated therein, (A) there has not been any material adverse change in
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of Asheville Savings and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and (B)
there have not been any transactions entered into by Asheville Savings or any of
its subsidiaries, other than those in the ordinary course of business, which are
material to Asheville Savings and its subsidiaries considered as one enterprise.
(xi) Asheville Savings and its subsidiaries possess such licenses,
permits and other governmental and regulatory authorizations as are required for
the conduct of their respective businesses; all such licenses, permits and other
governmental and regulatory authorizations are in full force and effect and
Asheville Savings and its subsidiaries are in all material respects complying
therewith; neither Asheville Savings nor any of its subsidiaries has received
notice of any proceeding or action relating to the revocation or modification of
any such license, permit or other governmental or regulatory authorization
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, might have a material adverse effect on the conduct of the
business or the condition, financial or otherwise, or the earnings, business
affairs or business prospects of Asheville Savings and its subsidiaries
considered as one enterprise.
(xii) At the Closing Time, the shares of Asheville Savings Common Stock
to be issued to the Company pursuant to the Plan and the Conversion Agreement
shall have been duly and validly authorized for issuance and, when issued and
delivered by Asheville Savings pursuant to the Plan and Conversion Agreement
against payment therefor in the amount of all net proceeds from the sale of the
Conversion Stock pursuant to the Plan, will be duly and validly issued and fully
paid and non-assessable and will be issued to the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance or claim, created,
permitted or suffered by Asheville Savings.
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(xiii) Upon consummation of the Conversion Merger and Acquisition,
liquidation accounts for the benefit of eligible account holders and
supplemental eligible account holders, if any, of Asheville Savings will have
been duly established in accordance with the requirements of the North Carolina
Conversion Law and Regulations. In the event of a complete liquidation of
Asheville Savings or any successor thereto, including, without limitation,
BB&T-NC, each eligible account holder and each supplemental eligible account
holder, if any, who continues to maintain a deposit account in Asheville Savings
or in such successor thereto and will be entitled to receive a liquidation
distribution to the extent specified in the North Carolina Conversion Law and
Regulations from the liquidation account at Asheville Savings or its successors
in the amount of the then current adjusted subaccount balance for each of such
eligible account holders' or supplemental eligible account holders' deposit
accounts then held, before any liquidation distribution may be made to the
holders of shares of capital stock of Asheville Savings or its successors.
(xiv) Asheville Savings is a North Carolina chartered mutual savings
bank and at Closing Time will be a North Carolina chartered stock savings bank,
in each case with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Proxy Statement
and the Prospectus. Asheville Savings is in good standing under the laws of
the United States and the State of North Carolina, and is duly qualified to
transact business and is in good standing in each jurisdiction in which such
qualification or good standing is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the failure to
so qualify or be in good standing would not have a material adverse effect on
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of Asheville Savings and its subsidiaries considered as one
enterprise.
(xv) Each subsidiary, if any, of Asheville Savings has been duly
incorporated and is validly existing and in good standing as a corporation under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and the Proxy Statement, and is duly qualified to
transact business and is in good standing in each jurisdiction in which such
qualification or good standing is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the failure to
so qualify or be in good standing would not have a material adverse effect on
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of Asheville Savings and its subsidiaries considered as one
enterprise. The activities of each subsidiary of Asheville Savings have been
approved by all necessary regulatory and governmental authorities, are permitted
to subsidiaries of a North Carolina chartered savings bank by law and the rules,
regulations, resolutions and practices of the Administrator and the FDIC and any
resolutions orders or decisions authorizing or permitting such activities by
Asheville Savings subsidiaries. All of the issued and outstanding capital stock
of each subsidiary of Asheville Savings has been duly authorized and validly
issued, is fully paid and nonassessable and is owned by Asheville Savings,
directly or indirectly, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or claim.
(xvi) Asheville Savings is a member in good standing of the Federal
Home Loan Bank of Atlanta; the deposit accounts of Asheville Savings are insured
by SAIF to the fullest extent allowable under law and no proceedings for the
termination or revocation of such insurance are pending or, to the knowledge of
Asheville Savings, threatened.
(xvii) Asheville Savings has taken all corporate action necessary to
adopt and perform the Plan, and to execute, deliver and perform the Conversion
Agreement, and the Conversion Agreement is a valid and binding agreement of
Asheville Savings enforceable in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, reorganization, insolvency,
receivership, conservatorship, moratorium or similar laws affecting creditors'
rights generally and by judicial limitations on equitable remedies and except as
the enforceability of the indemnification and contribution provision may be
limited by applicable securities laws.
(xviii) Neither Asheville Savings nor any of its subsidiaries is in
violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, license, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which Asheville Savings or any of its subsidiaries is
a party or by which any of them may be bound or to which any of the property or
assets of Asheville Savings or any of its subsidiaries is subject, which
violation or default might have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or
31
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business prospects of Asheville Savings and its subsidiaries considered as one
enterprise. The adoption and performance of the Plan, and the execution,
delivery and performance of the Conversion Agreement, the issuance and delivery
to the Company of Asheville Savings Common Stock and the consummation of the
transaction contemplated herein, therein and thereby will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
Asheville Savings or any of its subsidiaries pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which Asheville Savings or any of its subsidiaries is a party or
by which any of them may be bound, or to which any of the property or assets of
Asheville Savings is subject (other than certain insurance policies now held for
the benefit of Asheville Savings, its officers, directors and others which will
be cancelled as a result of the consummation of the transactions contemplated by
the Conversion Agreement and the Plan), nor will such action result in any
violation of the provisions of the charter or by-laws of Asheville Savings or
any of its subsidiaries or any applicable law, rule, regulation, or court,
administrative or arbitration decree, resolution, order or decision which
breach, default, creation, imposition or violation might have a material adverse
effect on the condition, financial or otherwise, or the earnings, business
affairs or business prospects of Asheville Savings and its subsidiaries
considered as one enterprise.
(xix) Asheville Savings and each of its subsidiaries have good and
marketable title to all properties and assets for which ownership is material to
the business of Asheville Savings and its subsidiaries considered as a whole,
and to those properties and assets described in the Prospectus and/or the Proxy
Statement as owned by them, free and clear of all security interests, liens,
mortgages, charges, pledges, encumbrances, restrictions or adverse claims; and
all of the leases and subleases material to the business of Asheville Savings or
any of its subsidiaries under which Asheville Savings or any of its subsidiaries
holds properties, including, without limitation, those described in the
Prospectus and/or the Proxy Statement, are valid, subsisting and binding.
(xx) Neither Asheville Savings nor any of its subsidiaries is in
violation of any directive, order, agreement, resolution or understanding of
kind (regardless of form) from or with the FDIC or the Administrator specifying
any material restriction of, or requiring any material change in, Asheville
Savings' conduct of its business. Asheville Savings and its subsidiaries have
conducted and are conducting their businesses so as to comply in all material
respects will all applicable statutes and regulations (including, without
limitation, all regulations, decisions, directives and orders of the
Administrator and the FDIC); there is no charge, investigation, action, suit or
proceeding before or by any court, governmental, regulatory or arbitration
agency, body or authority, domestic or foreign, now pending or, to the knowledge
of Asheville Savings, threatened against Asheville Savings or any of its
subsidiaries which is required to be disclosed in the Registration Statement and
the Prospectus and/or the Proxy Statement (other than as disclosed therein), or
which might have a material adverse effect on the condition, financial or
otherwise, or the earning, business affairs or business prospects of Asheville
Savings and its subsidiaries considered as one enterprise, or which might
materially and adversely affect the properties or assets thereof or which would
materially and adversely affect the performance of the Plan or Conversion
Agreement, the issuance and delivery of Asheville Savings Common Stock or the
Conversion Stock or the consummation of the transactions herein, therein or
thereby contemplated. All pending legal, governmental, regulatory and
arbitration proceedings to which Asheville Savings or any of its subsidiaries is
a party or of which any of their respective properties or assets is the subject
which are not described in the Prospectus and/or the Proxy Statement, including
ordinary routine litigation incidental to their businesses, are, considered in
the aggregate, not material. There are no contracts, indentures, mortgages,
loan agreements, notes, leases or other agreements or instruments to which
Asheville Savings or any of its subsidiaries is a party which are required by
the 1933 Act, the 1933 Act Regulations or the North Carolina Conversion Law and
Regulations to be described or incorporated by reference in the Prospectus or
described, filed or incorporated by reference as exhibits to the Registration
Statement and/or Proxy Statement or the Conversion Application which have not
been so described, filed or incorporated by reference.
(xxi) Asheville Savings and each of its subsidiaries have filed all
necessary federal, state and foreign income, franchise, intangible and other tax
returns and have paid all taxes shown as due thereon (or obtained appropriate
extension); except for matters referred to in the Prospectus or the Proxy
Statement, there are no tax deficiencies which have been asserted or threatened
against Asheville Savings or any of its subsidiaries which, individually or in
the aggregate, might have a material adverse effect on the condition, financial
or otherwise, or the earnings, business affairs or business prospects of
Asheville Savings and its subsidiaries
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considered as one enterprise. The federal income tax returns of Asheville
Savings have not been audited through December 31, 19__ and there is no
liability for federal income tax asserted against Asheville Savings or any of
its subsidiaries for any year prior to the tax liabilities for Asheville
Savings' current tax year, all of which have accrued, and all payment of which
have been made in full prior to delinquency.
(xxii) Asheville Savings maintains insurance of the type and in the
amounts generally deemed adequate for its business and consistent with insurance
maintained by similar companies in similar businesses, including, but not
limited to, general liability insurance, product liability insurance and
insurance covering all real and personal property owned or leased by Asheville
Savings against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect.
(xxiii) Asheville Savings and each of its subsidiaries are in
compliance in all material respects with the applicable financial recordkeeping
and reporting requirements of the Currency and Foreign Transaction Reporting Act
of 1970, as amended, and the regulations and rules thereunder.
(xxiv) No approval, authorization, consent or other order of any public,
governmental or board, or body is required for the execution and delivery by
Asheville Savings of the Conversion Agreement, the issuance of Asheville Savings
Common Stock or the Conversion Stock, or the consummation of the Conversion
Merger and Acquisition except as indicated in the Blue Sky Survey delivered to
the Agent.
(xxv) The various certificates and other facts presented in support of
the tax opinions to be rendered in connection with the Conversion Merger by KPMG
Peat Marwick, insofar as they relate to Asheville Savings or any subsidiary, are
true, correct and complete in all material respects, and Asheville Savings has
not and will not take any action inconsistent with such facts.
(xxvi) No labor dispute by the employees of Asheville Savings or any
subsidiary exists or, to Asheville Savings' knowledge, is threatened, which
might have a material adverse effect upon the conduct of the business or on the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of Asheville Savings and its subsidiaries considered as one
enterprise.
(xxvii) During the period when the Prospectus is required to be
delivered, Asheville Savings will comply, at its own expense, with all
requirements imposed upon it by the Commission, the FDIC, or the Administrator,
as the case may be, by the applicable rules and regulations of and laws
administered by the Commission, the FDIC or the Administrator, including the
North Carolina Conversion Law and Regulations, the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations (including, without
limitation, Rule 10b-6 under the 1934 Act), insofar as necessary to permit the
continuance of sales or dealing in shares of Common Stock during such period in
accordance with the provisions hereof and the Prospectus.
(xxviii) Other than as permitted by the North Carolina Conversion Law
and Regulations, the 1933 Act and the 1933 Act Regulations, Asheville Savings
shall not distribute any prospectus, offering circular or other offering
material or any proxy solicitation material in connection with the offering and
sale of the Conversion Stock or the solicitation of proxies with respect to the
meeting of Asheville Savings' voting members to be held to consider and vote
upon the Conversion Merger and Acquisition. Any such material shall be
delivered to the Agent a reasonable time before its intended use and filing with
the Administrator, and no filing or use shall be made thereof unless expressly
permitted by the Agent, and as permitted by the Commission and/or the
Administrator.
(xxix) To the best of Asheville Savings' knowledge, the records of
account holders, depositors, borrowers and other members of Asheville Savings
which have been delivered to the Agent by or on behalf of Asheville Savings, or
to the Conversion Agent for use during the Conversion Merger, are reliable and
accurate in all material respects.
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EXHIBIT 2.10
ASHEVILLE SAVINGS BANK, S.S.B.
11 Church Street
Asheville, North Carolina 28802
PLAN OF CONVERSION
June 22, 1993
As amended on January 19, 1994 and February 2, 1994
Section 1. INTRODUCTION
By Resolutions adopted on June 22, 1993, the Board of Directors of
Asheville Savings Bank, S.S.B. ("Savings Bank"), a North Carolina chartered
mutual savings bank headquartered in Asheville, North Carolina, the deposit
accounts of which are insured by the Savings Association Insurance Fund of the
Federal Deposit Insurance Corporation, has adopted this Plan of Conversion,
whereby (i) the Savings Bank will convert in a Stock Conversion from a North
Carolina chartered mutual savings bank to a North Carolina chartered stock
savings bank; (ii) all shares of capital stock issued by the Savings Bank in the
Stock Conversion will be acquired in an Acquisition by BB&T Financial
Corporation ("Acquiror"), a North Carolina corporation; and (iii) as soon as
practicable after the Stock Conversion and the Acquisition, and after any
interim steps as may be necessary or advisable, the Savings Bank will be merged
or otherwise consolidated in a Merger with and into Branch Banking and Trust
Company (the "Bank"), a North Carolina chartered commercial bank and a wholly
owned subsidiary of the Acquiror. The Board of Directors amended this Plan of
Conversion on January 19, 1994 and February 2, 1994.
In connection with the Stock Conversion, rights to subscribe for shares of
Common Stock of the Acquiror will be offered first to an Employee Stock
Ownership Plan and Trust to be established by the Acquiror for the benefit of
the employees of the Savings Bank, and then to the Savings Bank's Eligible
Member Subscribers and Voting Members in a Subscription Offering in accordance
with this Plan of Conversion. The shares of Common Stock of the Acquiror, if
any, that are offered but not sold in the Subscription Offering will be offered
to Community Offering Residents in a Community Offering. It is currently
anticipated that the shares of Common Stock not sold in the Subscription
Offering and the Community Offering will not be sold in a public offering or
otherwise pursuant to this Plan of Conversion.
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- 2 -
Section 2. DEFINITIONS
As used herein, unless the context otherwise requires, the following terms
shall have the following meanings:
"Acquiror" shall mean BB&T Financial Corporation, a North Carolina
corporation which is a bank holding company under the Bank Holding Company Act
of 1956, as amended, located at 223 West Nash Street, Wilson, North Carolina
27893.
"Acquisition" shall mean the acquisition by the Acquiror of all of the
Conversion Shares, in accordance with, and subject to the terms and conditions
of, the Conversion Plan and the Agreement.
"Acting in concert" shall mean:
(a) knowing participation in a joint activity or interdependent conscious
parallel action towards a common goal whether or not pursuant to an express
agreement; or
(b) a combination or pooling of voting or other interests in the securities
of an issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise.
A person which acts in concert with another person ("Other Party") shall
also be deemed to be acting in concert with any person that also is acting in
concert with that Other Party, except that any tax-qualified employee stock
benefit plan, such as the Asheville Savings ESOP, or any other employee stock
ownership plan established by BB&T under the BB&T Savings and Thrift Plan, will
not be deemed to be acting in concert with its trustee or a person who serves in
a similar capacity.
"Administrator" shall mean the Administrator of the Savings Institutions
Division of the North Carolina Department of Commerce.
"Affiliate" shall mean, with respect to any person, a person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the person specified.
<PAGE>
- 3 -
"Agreement" shall mean the Agreement and Plan of Reorganization dated as
of June 22, 1993, as it may be amended from time to time, between the Savings
Bank and the Acquiror, providing for the Stock Conversion, the Acquisition and
the Merger.
"Appraised Value" shall mean the estimated pro forma market value of the
Savings Bank as a capital stock institution, as determined by the Independent
Appraiser in accordance with the Regulations and Section 4.1(b) of the
Conversion Plan.
"Asheville Savings ESOP" shall mean the Employee Stock Ownership Plan and
Trust to be established by the Acquiror for the benefit of the employees of the
Savings Bank.
"Associate" shall mean, with respect to any person:
(a) any company (other than the Savings Bank) of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities;
(b) any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a similar
fiduciary capacity, except for a tax-qualified employee stock benefit plan; or
(c) any relative or spouse of such person who has the same home as such
person.
"Bank" shall mean Branch Banking and Trust Company, a North Carolina
chartered commercial bank and wholly owned subsidiary of the Acquiror.
"BB&T Market Price" shall mean the last sale price on the Nasdaq National
Market System of a share of Common Stock prior to the close of business on the
day of the expiration of the Community Offering, rounded to the nearest cent
(with any amount equal to $.0050 rounded to the next higher $.01).
"Board of Directors" shall mean the board of directors of the Savings
Bank.
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- 4 -
"Closing Date" shall mean the effective date on which the Stock Conversion
and the Acquisition are consummated.
"Common Stock" shall mean the common stock, par value $2.50 per share, of
the Acquiror, shares of which are to be offered pursuant to the Conversion Plan.
"Community Expiration Date" shall mean that date by which Order Forms
distributed in connection with the Community Offering must be received by the
Conversion Information Center, a customer service representative at any of the
Savings Bank's offices or, if hand delivered, at an office of the Bank in the
Community Offering Area, together with payment for the subscribed Subscription
Shares, in accordance with Section 8.3 of the Conversion Plan, which date shall
be determined by the Savings Bank and shall not be less than 20 days after Order
Forms are first made available to Community Offering Residents pursuant to
Section 7.1(b) of the Conversion Plan and not more than 45 days after the close
of the Subscription Offering in accordance with Section 7.1(a) of the Conversion
Plan.
"Community Offering" shall mean the offering for sale of Subscription
Shares to Community Offering Residents concurrently with the Subscription
Offering in accordance with Section 7 of the Conversion Plan.
"Community Offering Area" shall mean Buncombe, McDowell, Henderson and
Madison counties, North Carolina.
"Community Offering Purchasers" shall mean Community Offering Residents
who subscribe for shares in the Community Offering.
"Community Offering Residents" shall mean (i) individuals who reside in
the Community Offering Area; (ii) corporations, partnerships, joint ventures,
sole proprietorships and similar business entities which are headquartered in
the Community Offering Area; and (iii) Individual Retirement Accounts, Keogh
Plans and similar retirement plans established by or for the benefit of those
individuals described in clause (i).
"company" shall mean any corporation, partnership, association, joint-stock
company, trust, unincorporated organization or similar entity.
<PAGE>
- 5 -
"Conversion Information Center" shall mean the center at 11 Church Street,
Asheville, North Carolina (or such other location or locations as the Savings
Bank may select) where Subscribers may send or hand deliver Order Forms,
together with full payment (or in the case of the Asheville Savings ESOP,
Eligible Member Subscribers and Voting Members, if they so elect, instructions
for payment in accordance with Section 8.3(c)) for the subscribed Subscription
Shares in the Subscription Offering and the Community Offering.
"Conversion Plan" shall mean this Plan of Conversion, including any
amendment hereto approved pursuant to Section 11.5.
"Conversion Shares" shall mean all shares of the common stock of the
Savings Bank issued to the Acquiror in the Stock Conversion and the Acquisition.
"Determination Date" shall mean the date as of which the Savings Bank's
Net Worth is determined for purposes of the Liquidation Account, which date
shall be the latest date as of which, under the Regulations, such determination
may be made.
"Eligibility Record Date" shall mean the close of business on February 28,
1993.
"Eligible Member Subscriber" shall mean any holder of a Qualifying Deposit
or a Qualifying Borrowing on the Eligibility Record Date.
"Estimated Valuation Range" shall mean the estimated pro forma valuation
range of the Savings Bank as a capital stock institution, as determined by the
Independent Appraiser in accordance with Section 4.1(b) of the Conversion Plan.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Group" shall mean any two or more persons who are acting in concert with
respect to the activity or object in question.
"Independent Appraiser" shall mean the firm of appraisers retained by the
Savings Bank pursuant to Section 4.1(b) of the Conversion Plan, which firm shall
be (a) independent of the Savings Bank, the Acquiror and their respective
Affiliates and Associates, (b) experienced and expert in assessing the market
value
<PAGE>
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of financial institutions and (c) acceptable to the Administrator and the
Acquiror.
"Liquidation Account" shall mean the account established and maintained by
the Savings Bank pursuant to Section 10.2 of the Conversion Plan upon the Stock
Conversion for the benefit of Eligible Member Subscribers who held a Qualifying
Deposit on the Eligibility Record Date.
"Merger" shall mean the merger or consolidation of the Savings Bank with
and into the Bank.
"Nasdaq" shall mean the National Association of Securities Dealers
Automated Quotations System.
"Net Worth" shall mean the total net worth of the Savings Bank as set
forth in the latest statement of financial condition of the Savings Bank
contained in the prospectus distributed in the Subscription Offering and the
Community Offering.
"Officer" shall mean, with respect to any company, the chairman of the
board, if any, president, vice-president, secretary, treasurer or principal
financial officer, comptroller or principal accounting officer, and any other
person performing similar functions with respect to such company.
"Order Form" shall mean the one or more subscription order forms that will
be mailed to Eligible Member Subscribers and Voting Members in accordance with
Section 6.1(c) of the Conversion Plan and made available to Community Offering
Residents in accordance with Section 7.1(b) of the Conversion Plan.
"Outstanding BB&T Common Stock" shall mean the number of shares of Common
Stock anticipated to be outstanding at the opening of business on the day
following the Closing Date.
"Person" shall mean any individual or company.
"85% Price" shall mean a price equal to 85% of the BB&T Market Price,
rounded to the nearest cent (with any amount equal to $.0050 rounded to the next
higher $.01).
<PAGE>
- 7 -
"95% Price" shall mean a price equal to 95% of the BB&T Market Price,
rounded to the nearest cent (with any amount equal to $.0050 rounded to the next
higher $.01).
"Proxy" shall mean the form of authorization by which a person is, or may
be deemed to be, designated to act for a Voting Member in the exercise of his or
her voting rights in the affairs of the Savings Bank.
"Qualifying Borrowing" shall mean any borrowing from the Savings Bank held
by any person on the Eligibility Record Date.
"Qualifying Deposit" shall mean the aggregate of the balances of all
deposit accounts in the Savings Bank held by any person on the Eligibility
Record Date; provided, that if the aggregate deposit account balances held by an
Eligible Member Subscriber on the Eligibility Record Date is less than $50, such
aggregate balances shall not constitute a Qualifying Deposit.
"Registration Statement" shall mean the registration statement(s) filed by
the Acquiror with the SEC to register the shares of Common Stock under the
Securities Act of 1933, as amended, to be offered in the Subscription Offering
and the Community Offering.
"Regulations" shall mean the regulations adopted by the Administrator
relating to mutual to stock conversions of North Carolina chartered savings
banks.
"SAIF" shall mean the Savings Association Insurance Fund of the FDIC.
"Savings Bank" shall mean Asheville Savings Bank, S.S.B., in mutual or
stock form (except that Asheville Savings Bank, S.S.B. in stock form may be
named such other name as the Acquiror may determine).
"SEC" shall mean the Securities and Exchange Commission.
"Special Meeting" shall mean the special meeting of the Voting Members of
the Savings Bank called for the purpose of submitting the Conversion Plan to the
Voting Members for their approval.
"Stock Conversion" shall mean the conversion of the Savings Bank to a
North Carolina chartered stock savings bank pursuant to, and in accordance with,
the
<PAGE>
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Regulations, the Agreement, the Conversion Plan and the Stock Conversion
Application.
"Stock Conversion Application" shall mean the application to effect the
Stock Conversion and any amendments thereto to be filed by the Savings Bank with
the Administrator pursuant to Section 4.1(c) of this Conversion Plan.
"Sub-Account" shall mean, with respect to each Qualifying Deposit held by
an Eligible Member Subscriber, the inchoate interest of the holder of such
Qualifying Deposit in a portion of the Liquidation Account representing the
amount such Eligible Member Subscriber would be entitled to receive pursuant to
Section 10.2 of the Conversion Plan in the event of a complete liquidation of
the Savings Bank subsequent to the Stock Conversion.
"Subscribers" shall mean (i) the Asheville Savings ESOP, Eligible Member
Subscribers and Voting Members who subscribe for shares in the Subscription
Offering and (ii) Community Offering Purchasers.
"Subscription Expiration Date" shall mean the date by which Order Forms
distributed in connection with the Subscription Offering must be received by the
Conversion Information Center, a customer service representative at any of the
Savings Bank's offices or, if hand delivered, at an office of the Bank in the
Community Offering Area, together with payment (or, in the case of the Asheville
Savings ESOP, Eligible Member Subscribers and Voting Members, if they so elect,
instructions for payment), for the subscribed Subscription Shares, in accordance
with Section 8.3 of the Conversion Plan, which date shall be determined by the
Savings Bank and shall be not less than 20 and not more than 45 days after Order
Forms are mailed to Eligible Member Subscribers and Voting Members pursuant to
Section 6.1(c) of the Conversion Plan.
"Subscription Offering" shall mean the offering of the Subscription Shares
to the Asheville Savings ESOP, Eligible Member Subscribers and Voting Members in
accordance with the terms and conditions set forth in Section 6 of the
Conversion Plan.
"Subscription Rights" shall mean the rights of the Asheville Savings ESOP,
Eligible Member Subscribers and Voting Members to subscribe for Subscription
Shares to be offered by the Acquiror pursuant to Section 6 of
<PAGE>
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the Conversion Plan, which rights shall not be transferable either directly or
indirectly.
"Subscription Shares" shall mean the number of shares of the Common Stock
to be offered in the Subscription Offering as set forth in Section 6.1(b) of the
Conversion Plan, and, if necessary, the Community Offering pursuant to the
Conversion Plan.
"Voting Member" shall mean any member of the Savings Bank pursuant to its
mutual charter and bylaws, who is eligible to vote at the Special Meeting.
"Voting Record Date" shall mean the record date fixed by the Board of
Directors in accordance with the mutual charter and bylaws of the Savings Bank
and the Regulations for determining eligibility to vote on the Conversion Plan
at the Special Meeting.
Section 3. GENERAL AUTHORITY FOR THE STOCK
CONVERSION, THE ACQUISITION AND
THE MERGER
The Stock Conversion shall be effected in accordance with Section 54C-33 of
the North Carolina General Statutes and Chapter 16G of the Regulations, and this
Conversion Plan and shall be subject to, among other things, the approval of the
Administrator, other required regulatory approvals and the affirmative vote of
at least a majority of the total outstanding votes eligible to be cast by the
Voting Members at the Special Meeting.
The Acquisition shall be effected in accordance with applicable law, and
subject to the terms and conditions of the Agreement and the Conversion Plan and
shall be subject to all necessary regulatory and other approvals. The Merger
shall be consummated in accordance with applicable law, and shall be subject to
receipt of necessary regulatory and other approvals.
Section 4. STEPS REQUIRED PRIOR TO ADMINISTRATOR
APPROVAL AND THE COMMENCEMENT OF THE
SUBSCRIPTION OFFERING AND THE COMMUNITY
OFFERING
4.1. Conditions to Administrator Approval. The following steps shall be
------------------------------------
taken before the Administrator approves the Stock Conversion Application:
<PAGE>
- 10 -
(a) Promptly after the execution of the Agreement and adoption of
the Conversion Plan, the Savings Bank shall (i) notify its Eligible Member
Subscribers of the adoption of the Conversion Plan by publishing a statement in
a newspaper of general circulation in each community in which an office of the
Savings Bank is located, and (ii) make copies of the Conversion Plan available
for inspection by members of the Savings Bank at each office of the Savings
Bank. The notice described in the preceding sentence shall conform to Section
.0404(d) of the Regulations, and shall be in a form approved by the Acquiror.
(b) The Savings Bank shall cause the Independent Appraiser to
determine the Appraised Value and the Estimated Valuation Range. The
Independent Appraiser shall prepare and submit to the Savings Bank, the Acquiror
and the Administrator a written report summarizing its findings (the "Appraisal
Report"). Such Appraisal Report shall explain the basis for its determination,
shall contain a brief summary of data that is sufficient to support the
conclusions reached therein, and shall comply with the requirements of the
Regulations.
(c) The Acquiror and the Savings Bank shall prepare and file the
necessary and appropriate applications (including the Stock Conversion
Application and the proxy statement contained therein) with the appropriate
regulatory authorities in connection with the Stock Conversion, the Acquisition,
the Merger and any other interim transactions as may be necessary or
advisable.
(d) Promptly upon being advised in writing by the Administrator pursuant
to Section .0405 of the Regulations to do so, the Savings Bank shall publish a
notice of the filing of the Stock Conversion Application in a newspaper printed
in the English language and having general circulation in each community in
which an office of the Savings Bank is located, in accordance with the
requirements of Section .0405 of the Regulations, and post a copy of such notice
in each of its offices.
4.2. Preparation of Registration Statement. The Acquiror shall prepare
-------------------------------------
and file the Registration Statement with the SEC and also shall prepare and file
with state securities officials (subject to Section 4.4 herein) such
applications, statements and notices as may be necessary in connection with the
Subscription
<PAGE>
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Offering. The Registration Statement also shall be provided to the
Administrator.
4.3. Conditions to Undertaking the Subscription Offering and the
-----------------------------------------------------------
Community Offering. The Acquiror shall undertake the Subscription Offering and
- ------------------
the Community Offering only upon satisfaction of the following conditions:
(a) The Administrator shall have approved the Stock Conversion
Application and shall have authorized for use the proxy statement to be mailed
to the Voting Members for the Special Meeting;
(b) All other necessary approvals to effect the Stock Conversion and the
Acquisition shall have been received;
(c) If necessary, the Independent Appraiser shall update and revise the
Appraised Value and the Estimated Valuation Range and shall submit its update to
the Savings Bank, the Acquiror and the Administrator;
(d) The Registration Statement shall have been declared effective by the
SEC, and no stop order suspending the effectiveness of the Registration
Statement shall have been issued, or proceedings for that purpose initiated or
threatened, by the SEC; and
(e) All requirements under applicable state securities laws for the
Subscription Offering and the Community Offering shall have been satisfied
(subject to Section 4.4 herein), no order suspending the effectiveness of any
registration, qualification or permit thereunder with respect to the
Subscription Offering, Community Offering or the Subscription Shares shall have
been issued, and no proceeding for such purpose shall have been initiated or
threatened by any state securities officials.
4.4. State Blue Sky Law Considerations. In undertaking the Subscription
---------------------------------
Offering and the Community Offering, the Acquiror shall make reasonable efforts
to comply with the securities laws of all jurisdictions in the United States in
which Eligible Member Subscribers and Voting Members reside. However,
Subscription Rights shall not be issued to any person who resides in a foreign
country, or who resides in any jurisdiction in the United States, if any of the
following apply:
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- 12 -
(i) A small number of persons otherwise eligible to subscribe for
Subscription Shares under the Conversion Plan reside in such jurisdiction;
(ii) The offer or sale of Subscription Shares to such persons would
require the Acquiror, under the securities laws of such jurisdiction, to
register as a broker or dealer or otherwise qualify its securities for
sale in such jurisdiction; or
(iii) Such registration or qualification would be impracticable for
reasons of cost or otherwise.
Section 5. THE VOTE OF THE SAVINGS BANK'S MEMBERS
After approval of the Stock Conversion Application (which includes the
proxy statement described below) by the Administrator, the Savings Bank shall
mail to each of the Voting Members as of the Voting Record Date at their last
known address appearing on the records of the Savings Bank a notice of special
meeting and a proxy statement describing the Conversion Plan (which proxy
statement may be printed in a document which also contains the prospectus used
in the Subscription Offering and the Community Offering), which will be
submitted to a vote of the Voting Members at the Special Meeting called for that
purpose. Approval of the Conversion Plan shall require the affirmative vote,
cast in person or by proxy, of those Voting Members on the Voting Record Date
holding at least a majority of the total outstanding votes entitled to be cast
at the Special Meeting.
Section 6. THE SUBSCRIPTION OFFERING
6.1. In General.
----------
(a) Promptly after the conditions set forth in Section 4.3 have been
satisfied, the Acquiror shall effect the Subscription Offering in accordance
with the provisions of this Section 6 of the Conversion Plan and the provisions
of the Agreement.
(b) In the Subscription Offering, the Acquiror shall offer, without
payment, to the Asheville Savings ESOP, Eligible Member Subscribers and Voting
Members,
<PAGE>
- 13 -
nontransferable Subscription Rights to purchase a number of shares of Common
Stock (the "Subscription Shares"), at the prices specified in Section 6.2(a),
equal to (x) the Appraised Value divided by (y) the BB&T Market Price.
(c) In conducting the Subscription Offering, the Acquiror shall mail to
each Eligible Member Subscriber and Voting Member, at its last known address
appearing on the records of the Savings Bank, an Order Form together with a copy
of the prospectus and such additional information relating to the Subscription
Offering as the Savings Bank may consider appropriate, as approved by the
Administrator.
(d) The Subscription Offering may be held concurrently with the
solicitation of proxies for the Special Meeting.
(e) The Acquiror may pay a reasonable commission to registered broker
dealers effecting sales in the Subscription Offering.
6.2. Amount of Subscription Shares that may be
-----------------------------------------
Purchased in the Subscription Offering.
--------------------------------------
(a) The Acquiror shall offer Subscription Rights in the following
amounts:
(i) to the Asheville Savings ESOP, Subscription Rights to
subscribe for up to 10% of the actual number of Subscription Shares offered
in the Subcription Offering upon either of the following prices and terms
in the Asheville Savings ESOP's discretion: (x) the 85% Price, subject to
the transfer restriction described in Section 6.4 below, and/or (y) the 95%
Price with no restriction on transfer;
(ii) to each Eligible Member Subscriber who held a Qualifying
Deposit on the Eligibility Record Date, Subscription Rights to subscribe
for Subscription Shares at the following purchase prices and in the
following quantities
(A) Each such Eligible Member Subscriber would be eligible
to purchase up to a number of Subscription Shares having an
aggregate purchase price of $150,000, upon either of the following
<PAGE>
- 14 -
prices and terms in such Eligible Member Subscriber's discretion
subject to the other terms of this Conversion Plan: (x) the 85%
Price, subject to the transfer restriction described in Section 6.4
below, and/or (y) the 95% Price with no restriction on transfer;
(B) Each such Eligible Member Subscriber who has either:
(1) a second account at the Savings Bank at the
Eligibility Record Date (which account may include a demand
deposit account, a savings account, a certificate of deposit
or similar account, as well as a borrowing) in addition to the
account which qualifies such Eligible Member Subscriber as an
Eligible Member Subscriber or
(2) a single account at the Savings Bank with a balance
of at least $25,000 at the Eligibility Record Date,
would be eligible to purchase, at such Eligible Member Subscriber's
election, either at (x) the 85% Price, subject to the transfer
restriction described in Section 6.4 below, and/or (y) the 95% Price
(with no restriction on transfer), in either case up to a number of
Subscription Shares having an aggregate purchase price of $100,000
(in addition to the $150,000 provided in subsection (ii)(A) above),
subject to the other terms of this Conversion Plan.
(iii) Each Eligible Member Subscriber who held a Qualifying Deposit
on the Eligibility Record Date who is not described in subsection (ii)(B)
above would be eligible to purchase at the BB&T Market Price (with no
restriction on transfer) up to a number of Subscription Shares having an
aggregate purchase price of $100,000 (in addition to the $150,000 provided
in subsection (ii)(A) above), subject to the other terms of this Conversion
Plan;
<PAGE>
- 15 -
(iv) to each Voting Member, Subscription Rights to subscribe for
that number of Subscription Shares at the BB&T Market Price having an
aggregate purchase price equal to $250,000, subject further to the terms
and conditions set forth herein;
(v) to each Eligible Member Subscriber who did not hold a
Qualifying Deposit on the Eligibility Record Date, Subscription Rights to
subscribe for Subscription Shares at the following purchase prices and in
the following quantities:
(A) Each such Eligible Member Subscriber would be eligible to
purchase up to a number of Subscription Shares having an aggregate
purchase price of $150,000, upon either of the following prices and
terms in such Eligible Member Subscriber's discretion subject to the
other terms of this Conversion Plan: (x) the 85% Price, subject to
the transfer restriction described in Section 6.4 below, and/or (y)
the 95% Price with no restriction on transfer;
(B) Each such Eligible Member Subscriber who has a second
account (which may include another borrowing) at the Savings Bank
on the Eligibility Record Date in addition to the borrowing which
qualifies such Eligible Member Subscriber as an Eligible Member
Subscriber would be eligible to purchase, at such Eligible Member
Subscriber's election, either at (x) the 85% Price, subject to the
transfer restriction described in Section 6.4 below, and/or (y) the
95% Price (with no restriction on transfer), in either case up to a
number of Subscription Shares having an aggregate purchase price of
$100,000 (in addition to the $150,000 provided in subsection
(iv)(A) above), subject to the other terms of this Conversion Plan.
(vi) Each Eligible Member Subscriber who did not hold a Qualifying
Deposit on the Eligibility Record Date who is not described in subsection
(v)(B) above would be eligible to
<PAGE>
- 16 -
purchase at the BB&T Market Price (with no restriction on transfer) up to a
number of Subscription Shares having an aggregate purchase price of
$100,000 (in addition to the $150,000 provided in subsection (iv)(A)
above), subject to the other terms of this Conversion Plan.
(b) Each Subscriber in the Subscription Offering (other than the
Asheville Savings ESOP) may purchase, subject to the priority and
oversubscription procedures contained in this Section 6 and the maximum purchase
limitations set forth in Section 8.2 herein, as many whole shares of Common
Stock that can be purchased by such Subscriber in accordance with the provisions
of Section 6.2(a) at the 85% Price, the 95% Price and/or the BB&T Market Price,
as applicable, with the amount of funds submitted by the Subscriber, but in no
event more than $250,000, and any excess amount shall be refunded. Purchases by
the beneficiary of an IRA, Keogh or similar retirement account will be
aggregated with purchases by the retirement account. If such Subscriber is also
a Community Offering Resident and wishes to purchase Common Stock in both the
Subscription Offering and the Community Offering, as provided in Section 8.1 of
this Conversion Plan, then such Subscriber may purchase as many whole shares of
Common Stock that can be purchased at the 85% Price, the 95% Price and/or the
BB&T Market Price, as applicable, in each case in the amounts indicated on the
Order Form(s) at each such price with the amount of funds submitted by the
Subscriber, but in no event shall the Subscriber be permitted to purchase in the
aggregate more than $250,000 of Common Stock, and any excess amount shall be
refunded. The Asheville Savings ESOP shall purchase as many whole shares of
Common Stock as are designated on its Subscription Order Form, up to the limit
set forth in Section 6.2(a)(i).
(c) In determining the number of Subscription Shares for which an
Eligible Member Subscriber or Voting Member is issued Subscription Rights,
fractions of shares shall be disregarded.
(d) The Savings Bank may require any Eligible Member Subscriber claiming
an additional account relationship with the Savings Bank, or deposits of at
least $25,000 in a single account, to provide evidence satisfactory to the
Savings Bank of the existence of such additional account relationship or such
deposits as of the Eligibility Record Date. All determinations as to whether
such Eligible Member Subscriber has submitted sufficient evidence of such
additional account
<PAGE>
- 17 -
relationship or deposits shall be made by the Savings Bank in its sole
discretion and shall be final and conclusive. If evidence of such additional
account relationship or deposits satisfactory to the Savings Bank is not
provided, the Savings Bank may in its sole discretion reject orders received in
the Subscription Offering by such Eligible Member Subscriber at the 85% Price or
the 95% Price in excess of $150,000.
(e) Subscription Rights issued pursuant to Subsection (a)(ii) above
shall be subordinate to Subscription Rights issued pursuant to Subsection (a)(i)
above; Subscription Rights issued pursuant to Subsection (a)(iii) above shall be
subordinate to Subscription Rights issued pursuant to Subsections (a)(i) and
(a)(ii) above; Subscription Rights issued pursuant to Subsection (a)(iv) above
shall be subordinate to Subscription Rights issued pursuant to Subsections
(a)(i), (a)(ii) and (a)(iii) above; Subscription Rights issued pursuant to
Subsection (a)(v) above shall be subordinate to Subscription Rights issued
pursuant to Subsections (a)(i), (a)(ii), (a)(iii) and (a)(iv) above; and
Subscription Rights issued pursuant to Subsection (a)(vi) above shall be
subordinate to Subscription Rights issued pursuant to Subsections (a)(i),
(a)(ii), (a)(iii), (a)(iv) and (a)(v) above.
6.3. Oversubscription Procedures. In the event that Subscribers in the
---------------------------
Subscription Offering subscribe for more than the Subscription Shares as
described in Section 6.1(b), the excess shall be considered an oversubscription
for the Subscription Shares. In such event, the number of shares described in
Section 6.1(b) shall be allocated among the Asheville Savings ESOP and
subscribing Eligible Member Subscribers and Voting Members as follows:
(a) The Subscription Shares first shall be allocated to the Asheville
Savings ESOP. The remaining Subscription Shares that are subscribed for at the
85% Price and/or the 95% Price shall then be allocated among subscribing
Eligible Member Subscribers who held a Qualifying Deposit on the Eligibility
Record Date so as to permit each such Eligible Member Subscriber to purchase the
lesser of (a) the number of shares for which such Eligible Member Subscriber
subscribed at the 85% Price and/or the 95% Price, or (b) the number of shares
equal to the proportion that the amount of Qualifying Deposits of each such
Eligible Member Subscriber bears to the total amount of Qualifying Deposits of
all such Eligible Member Subscribers whose
<PAGE>
- 18 -
subscriptions for shares at the 85% Price and/or the 95% Price remain
unsatisfied. If the amount so allocated exceeds the amount subscribed for at
the 85% Price and/or the 95% Price by any one or more of such Eligible Member
Subscribers, the excess shall be reallocated (one or more times as necessary)
among those Eligible Member Subscribers who held a Qualifying Deposit on the
Eligibility Record Date whose subscriptions at the 85% Price and/or the 95%
Price are still not fully satisfied on the same principle described above until
all available shares have been allocated or all such subscriptions satisfied.
(b) The Subscription Shares remaining, if any, after the allocations
described in Subsection (a) above, shall be allocated, subject to Sections
6.2(e) above, among Eligible Member Subscribers who held a Qualifying Deposit on
the Eligibility Record Date subscribing at the BB&T Market Price so as to permit
each such Eligible Member Subscriber to purchase the lesser of (a) the number of
shares subscribed for at the BB&T Market Price or (b) the number of shares equal
to the proportion that the amount of Qualifying Deposits of each such Eligible
Member Subscriber bears to the total amount of Qualifying Deposits of all such
Eligible Member Subscribers who subscribed for shares at the BB&T Market Price.
If the amount so allocated exceeds the amount subscribed for at the BB&T Market
Price by any one or more of such Eligible Member Subscribers, the excess shall
be reallocated (one or more times as necessary) among Eligible Member
Subscribers who held a Qualifying Deposit on the Eligibility Record Date whose
subscriptions at the BB&T Market Price are still not fully satisfied on the same
principle described above until all available shares have been allocated or all
such subscriptions satisfied.
(c) The Subscription Shares remaining, if any, after the allocations
described in Subsections (a) and (b) above shall be allocated, subject to
Sections 6.2(e) above, among subscribing Voting Members (who are not Eligible
Member Subscribers), if any, so as to permit each such Voting Member to purchase
the proportion that the amount of shares subscribed for by each such Voting
Member bears to the total amount of the shares subscribed for by all such Voting
Members. If the amount so allocated exceeds the amount subscribed for at the
BB&T Market Price by any one or more Voting Member, the excess shall be
reallocated (one or more times as necessary) among Voting Members whose
subscriptions are still not fully satisfied on the same principle
<PAGE>
- 19 -
described above until all available shares have been allocated or all such
subscriptions satisfied.
(d) The Subscription Shares remaining, if any, after the allocations
described in Subsections (a), (b) and (c) above, shall be allocated, subject to
Sections 6.2(e) above, among subscriptions at the 85% Price and/or the 95% Price
of Eligible Member Subscribers who did not hold a Qualifying Deposit on the
Eligibility Record Date so as to permit each such Eligible Member Subscriber to
purchase the proportion that the amount of shares subscribed for at the 85%
Price and/or 95% Price by each such Eligible Member Subscriber bears to the
total amount of the shares subscribed for at the 85% Price or the 95% Price by
all such Eligible Member Subscribers. If the amount so allocated exceeds the
amount subscribed for at the 85% Price and the 95% Price by any one or more of
such Eligible Member Subscribers, the excess shall be reallocated (one or more
times as necessary) among those Eligible Member Subscribers who did not hold a
Qualifying Deposit on the Eligibility Record Date whose subscriptions at the 85%
Price and/or the 95% Price are still not fully satisfied on the same principle
described above until all available shares have been allocated or all such
subscriptions satisfied.
(e) The Subscription Shares remaining, if any, after the allocations
described in Subsections (a), (b), (c) and (d) above, shall be allocated,
subject to Sections 6.2(e) above, among subscriptions at the BB&T Market Price
of Eligible Member Subscribers who did not hold a Qualifying Deposit on the
Eligibility Record Date so as to permit each such Eligible Member Subscriber to
purchase the proportion that the amount of shares subscribed for at the BB&T
Market Price by each such Eligible Member Subscriber bears to the total amount
of the shares subscribed for at the BB&T Market Price by all such Eligible
Member Subscribers. If the amount so allocated exceeds the amount subscribed
for at the BB&T Market Price by any one or more of such Eligible Member
Subscribers, the excess shall be reallocated (one or more times as necessary)
among Eligible Member Subscribers who did not hold a Qualifying Deposit on the
Eligibility Record Date whose subscriptions at the BB&T Market Price are still
not fully satisfied on the same principle described above until all available
shares have been allocated or all such subscriptions satisfied.
<PAGE>
- 20 -
6.4. Resale Restriction on Shares of Common Stock Purchased in the
-------------------------------------------------------------
Subscription Offering at the 85% Price. Each share of Common Stock purchased by
- --------------------------------------
Subscribers in the Subscription Offering at the 85% Price shall be subject to
the restriction that the shares shall not be sold or transferred, by sale, gift
or otherwise with or without consideration, for a period of four months
following the date of the prospectus used in the Subscription Offering and the
Community Offering, except in the event of the death of the Subscriber. Each
certificate representing any such restricted shares shall bear an appropriate
notice of such restrictions. Appropriate instructions shall be given to the
Acquiror's transfer agent with respect to such restriction. Any shares issued
as a stock dividend, stock split or otherwise with respect to any such
restricted shares shall be subject to the same restriction for the remainder of
such four-month period.
Section 7. THE COMMUNITY OFFERING
7.1. In General.
----------
(a) Any shares of Common Stock not subscribed for in the Subscription
Offering shall be offered for sale in a Community Offering to Community Offering
Residents, pursuant to this Section 7 or such other terms and conditions as may
be established by the Board of Directors and by the Acquiror and approved by the
Administrator. The Community Offering will commence concurrently with, or as
soon as practicable after the commencement of, the Subscription Offering and
must be completed within 45 days after the last day of the Subscription
Offering, unless extended by the Savings Bank and the Acquiror with the approval
of the Administrator. No such single extension of time shall exceed 90 days and
shall comply with the conditions of such extension set forth in Section .0722 of
the Regulations. The price of the Subscription Shares offered in the Community
Offering shall be equal to the 95% Price. The Acquiror may pay a reasonable
commission to registered broker-dealers effecting sales in the Community
Offering.
(b) In effecting the Community Offering, the Acquiror shall make
available to Community Offering Residents an Order Form together with a copy of
the Prospectus, and such additional information relating to the Community
Offering as the Savings Bank may consider appropriate, as approved by the
Administrator.
<PAGE>
- 21 -
(c) The Savings Bank may require any purchaser who purports to be a
Community Offering Resident to provide evidence, satisfactory to the Savings
Bank, that she, he or it qualifies as a Community Offering Resident. All
determinations as to whether a purchaser qualifies as a Community Offering
Resident shall be made by the Savings Bank in its sole discretion and shall be
final and conclusive. The Savings Bank may in its sole discretion accept or
reject, in whole or in part, orders received in the Community Offering.
(d) The Subscription Shares to be offered in the Community Offering
shall be offered and sold in a manner that will achieve the widest distribution
of such stock.
7.2. Community Offering Maximum Purchase
-----------------------------------
Limitation and Priorities.
-------------------------
(a) Each Community Offering Resident may purchase in the Community
Offering at the 95% Price that number of Subscription Shares which, when
multiplied by the 95% Price, would not exceed $250,000. If such Community
Offering Resident is also an Eligible Member Subscriber or a Voting Member and
wishes to purchase Common Stock in both the Subscription Offering and the
Community Offering, as provided in Section 8.1 of this Conversion Plan, then
such Community Offering Resident may purchase as many whole shares of Common
Stock that can be purchased at the 85% Price, the 95% Price, and/or the BB&T
Market Price, as applicable, in each case, in the amounts indicated on the Order
Form at each such price, with the amount of funds submitted by such Community
Offering Resident, but in no event shall the Subscriber be permitted to purchase
in the aggregate more than $250,000 of Common Stock, and any excess amount shall
be refunded. The limitations contained in this Section 7.2 are further subject
to the priority and oversubscription procedures contained in this Section 7 and
the maximum purchase limitation described in Section 8.2 herein.
(b) In the Community Offering, preference shall be given to natural
persons qualifying as Community Offering Residents.
<PAGE>
- 22 -
7.3. Oversubscription Procedures.
---------------------------
(a) If the Subscription Shares offered in the Subscription Offering are
fully subscribed, then no Subscription Shares will be available for purchase in
the Community Offering.
(b) If Community Offering Purchasers subscribe for more than is
available for purchase in the Community Offering, the Subscription Shares first
shall be allocated among subscribing Community Offering Purchasers who are
natural persons so as to permit each such natural person to purchase shares in
the proportion that the amount of shares ordered by each such purchaser bears to
the total amount of the shares ordered by all such Community Offering
Purchasers, until all subscriptions are satisfied or all available shares have
been allocated.
(c) The Subscription Shares remaining, if any, after the allocations
described in Subsection (b) above shall be allocated among Community Offering
Purchasers who are not natural persons so as to permit each such Community
Offering Purchaser to purchase shares in the proportion that the amount of
shares ordered by each such purchaser bears to the total amount of the shares
ordered by all such Community Offering Purchasers, until all subscriptions are
satisfied or all available shares have been allocated.
7.4. No Public Offering. It is currently anticipated that the shares of
------------------
Common Stock not sold in the Subscription Offering or the Community Offering
will not be sold in a public offering or otherwise pursuant to this Conversion
Plan.
Section 8. PROCEDURES APPLICABLE TO BOTH THE
SUBSCRIPTION OFFERING AND THE
COMMUNITY OFFERING
8.1. Order Forms.
-----------
(a) All Subscription Rights issued in connection with the Stock
Conversion shall be exercisable by delivery of properly completed and executed
Order Forms to the Savings Bank or, if hand delivered, at an office of the Bank
in the Community Offering Area, in accordance with the provisions of
Section 8.1(b) of this Conversion Plan. Community Offering Residents who also
are Eligible Member Subscribers or Voting Members may participate in either the
<PAGE>
- 23 -
Subscription Offering or the Community Offering or both. The Savings Bank may,
in its discretion, authorize one Order Form for use in the Subscription Offering
and a separate Order Form to be used in the Community Offering. If the Savings
Bank authorizes separate Order Forms and a Subscriber is both a Community
Offering Resident and an Eligible Member Subscriber or Voting Member and wishes
to purchase in both the Subscription Offering and the Community Offering, such
Subscriber would submit both a Subscription Order Form for the purchase of
Common Stock at the 85% Price, the 95% Price and/or the BB&T Market Price, as
applicable, and a Community Order Form for the purchase of Common Stock at the
95% Price. Such Subscriber shall be limited to purchasing the aggregate dollar
amount of Common Stock in both offerings in the amounts indicated on the Order
Form, but in no event more than $250,000 in the aggregate. If a Subscriber
elects to subscribe for Subscription Shares pursuant to Section 6.2(a)(ii)(B) or
Section 6.2(a)(v)(B), the Savings Bank may require the Subscriber to provide a
list of multiple accounts on the Order Form and to provide such other evidence
of eligibility as may be requested by the Savings Bank.
(b) Subject to the oversubscription procedures set forth in Section 6.3,
the Asheville Savings ESOP and each Eligible Member Subscriber and Voting Member
who wishes to subscribe for Subscription Shares in the Subscription Offering
shall be required to subscribe for a number of Subscription Shares having a
minimum aggregate 85% Price, 95% Price or BB&T Market Price, as applicable, of
$500. Subject to the oversubscription procedures set forth in section 7.3, each
Subscriber who wishes to subscribe in the Community Offering shall be required
to subscribe for a number of Subscription Shares having a minimum aggregate 95%
Price of $500.
(c) The Asheville Savings ESOP and each Eligible Member Subscriber and
Voting Member receiving an Order Form authorized for use in the Subscription
Offering shall have until the close of business on the Subscription Expiration
Date to properly complete, execute and return the executed Order Form to the
Conversion Information Center, to a customer service representative at any one
of the Savings Bank's offices, or, if hand delivered, to an office of the Bank
in the Community Offering Area, in each case accompanied by payment (or in the
case of the Asheville Savings ESOP, Eligible Member Subscribers or Voting
Members, if they so elect, instructions for payment), as described in
Section 8.3 of the Conversion Plan. Each Community Offering Resident receiving
an Order Form authorized for use in the Community Offering shall have
<PAGE>
- 24 -
until the close of business on the Community Expiration Date to properly
complete, execute and return the executed Order Form to the Conversion
Information Center, to a customer service representative at any one of the
Savings Bank's offices, or, if hand delivered, to an office of the Bank in the
Community Offering Area, in each case accompanied by payment (or in the case of
any Community Offering Resident who also is an Eligible Member Subscriber or a
Voting Member, if he, she or it so elects, instructions for payment), as
described in Section 8.3 of the Conversion Plan. Order Forms may be sent by
mail, hand delivery or facsimile transmission; however, the Savings Bank may, in
its sole discretion, reject any orders submitted by facsimile transmission. Any
Order Form sent by mail or similar means must be received at the Conversion
Information Center by the Subscription Expiration Date in the case of the
Subscription Offering and by the Community Expiration Date in the case of the
Community Offering. Failure of the Savings Bank, for any reason, to receive from
the Asheville Savings ESOP or any Eligible Member Subscriber or Voting Member a
properly completed and executed Order Form and payment, or instructions for
payment, before the close of business on the Subscription Expiration Date, or to
receive from any Community Offering Purchaser a properly completed and executed
Order Form and payment, or if appropriate, instructions for payment, before the
close of business on the Community Expiration Date, shall be deemed a waiver and
release by the Asheville Savings ESOP or such Eligible Member Subscriber, Voting
Member or Community Offering Resident of any right to subscribe hereunder for
Subscription Shares; provided, however, that on an equitable basis the Savings
Bank may, but will not be required to, waive any immaterial irregularity in any
Order Form or require the submission of a corrected form or the remittance of
full payment for subscribed shares by such date as the Savings Bank may specify.
Subject to the next sentence, once an Order Form is received by the Savings
Bank, the Subscriber may not amend, modify or rescind the Order Form.
Notwithstanding anything in this Conversion Plan to the contrary, the Savings
Bank in its sole discretion, upon notice to Subscribers, may permit Subscribers
to amend, modify or rescind their Order Forms. The Savings Bank's
interpretation of terms and conditions of Order Forms shall be final, subject
to the authority of the Administrator.
8.2. Maximum Purchase Limitation. Notwithstanding anything contained in
---------------------------
this Conversion Plan to the contrary, no person (other than the Asheville
Savings ESOP, and any other employee stock ownership plan established by the
Acquiror as part of the BB&T Savings and Thrift Plan), together with any
Associate or group of persons acting in concert with such person, may acquire,
through the exercise of Subscription Rights in the Subscription Offering and/or
through purchases in the Community Offering, beneficial ownership of more than
5% of the Outstanding BB&T Common Stock in the aggregate (taking into account
shares that
<PAGE>
- 25 -
already may be held by such person). For purposes of this Section 8.2, the
Board of Directors and officers of the Savings Bank who also are Eligible Member
Subscribers or Voting Members shall not be deemed to be Associates or a group
acting in concert solely as a result of their office or board membership.
8.3. Method of Payment.
-----------------
(a) Neither the Savings Bank, the Acquiror nor any Affiliate of the
Acquiror shall loan funds or otherwise extend credit to any person (other than
the Asheville Savings ESOP) for the purpose of purchasing any shares of the
Common Stock pursuant to this Conversion Plan.
(b) Subject to Subsections (c) and (d) below, all shares of Common Stock
purchased in the Subscription Offering and the Community Offering shall be paid
for in cash (if paid in person at the Conversion Information Center, the office
of the Savings Bank or an office of the Bank in the Community Offering Area), or
by check, money order or wire transfer; provided, however, that the Savings Bank
may, in its sole discretion, reject any orders where funds are submitted by wire
transfer.
(c) If a Subscriber has a deposit account (other than in a demand
deposit account or negotiable order of withdrawal account) with the Savings
Bank, the Subscriber may pay for the shares subscribed for by authorizing and
directing the Savings Bank on the Order Form to make a withdrawal from such
deposit account in an amount equal to the aggregate price of such shares. The
Savings Bank shall make such withdrawal and shall pay such amount to the
Acquiror on the Closing Date. Those persons who are beneficiaries of Individual
Retirement Accounts, Keogh Plans or similar retirement plans are not themselves
Account Holders, but the account itself may be. If the beneficiary wishes such
account or plan to subscribe for Subscription Shares in the Subscription
Offering or the Community Offering, the beneficiary should authorize and direct
the Savings Bank on the Order Form to transfer the Subscriber's account or plan
to a self-directed account at an independent trustee that permits the account to
hold stock. The independent trustee must then be directed by the beneficiary to
use funds from such account in an amount equal to the aggregate price for the
shares subscribed for. Such shares shall then become part of the retirement
account or plan estate. Notwithstanding any regulatory provision regarding
penalties for early withdrawal from a certificate of deposit account, the
Savings Bank shall permit a Subscriber to pay for any shares of Common Stock
<PAGE>
- 26 -
subscribed for by withdrawal from a certificate of deposit account without the
assessment of an early withdrawal penalty. If the authorized withdrawal is from
a certificate account and the remaining balance does not meet the applicable
minimum balance requirement, the certificate shall be cancelled at the time of
the withdrawal and the remaining balance shall earn interest thereafter at the
Savings Bank's passbook rate. Funds for which such a withdrawal is authorized
shall remain as part of the Subscriber's Qualifying Deposit, but may not be used
by the Subscriber until the Subscription Shares have been sold or the Stock
Conversion is terminated.
(d) The Asheville Savings ESOP may pay for or arrange for the payment
for the shares it subscribes for on or before the Closing Date.
(e) All amounts received for the purchase of Subscription Shares in the
Subscription Offering and the Community Offering (other than by charge against
the Subscriber's account or as provided in Subsections (c) and (d)) shall be
placed in a special escrow account with the Savings Bank. The Savings Bank
shall pay interest to the Subscriber at the passbook rate on such amounts paid
to purchase Subscription Shares from the date payment is received until the
Stock Conversion is completed or terminated, as the case may be. The Savings
Bank shall deliver all amounts received for the purchase of Subscription Shares
in the Subscription Offering and the Community Offering to the Acquiror on the
Closing Date.
(f) In the event that the Conversion Plan or the Subscription Offering
and/or Community Offering is terminated or abandoned, all funds received from
Subscribers shall be promptly refunded, and funds authorized for withdrawal
released, with interest thereon as provided in Section 8.3(e).
(g) Any interest payment or refund required to be made pursuant to
paragraph (e) or (f) above shall be made to the Subscriber entitled thereto
promptly after the Stock Conversion is completed or terminated, as the case may
be.
8.4. Restriction on Common Stock Purchased by Officers and Directors.
---------------------------------------------------------------
All Common Stock purchased in the Subscription Offering and/or Community
Offering by directors or officers of the Savings Bank shall be subject to the
restriction that the shares shall not be sold without the prior written
permission of the Administrator for a period of one year following the Closing
Date, except in the event of the death of the director or officer. Each
<PAGE>
- 27 -
certificate representing any such restricted shares shall bear an appropriate
notice of such restriction. Appropriate instructions shall be given to the
Acquiror's transfer agent with respect to such restriction. Any shares issued
as a stock dividend, stock split or otherwise with respect to any such
restricted shares shall be subject to the same restriction for the remainder of
such one-year period.
Section 9. CONSUMMATION OF THE STOCK CONVERSION,
THE ACQUISITION AND THE MERGER
9.1. Confirmation of Appraised Value. At the expiration of the
-------------------------------
Subscription Offering and the Community Offering, the Independent Appraiser
shall promptly confirm to the Savings Bank and the Administrator that, to the
best of its knowledge, either (i) nothing of a material nature has occurred
that, taking into account all relevant factors, would cause it to conclude that
the Appraised Value of the Savings Bank as most recently submitted to the
Administrator prior to the Subscription Offering and the Community Offering is
incompatible with its estimate of the Appraised Value as of the expiration of
the Subscription Offering and the Community Offering, or (ii) there is such an
incompatibility, in which case the Independent Appraiser shall state its
determination of the Appraised Value as of the expiration of the Subscription
Offering and the Community Offering. If the Appraised Value, as updated as of
the expiration of the Subscription Offering and the Community Offering, is not
within the Estimated Valuation Range, then Administrator approval shall be
obtained before such updated Appraised Value is used as the basis for
determining the total number of shares of Common Stock that the Acquiror will
offer for sale pursuant to the Conversion Plan.
9.2. Consummation of the Stock Conversion, the Acquisition and the
-------------------------------------------------------------
Merger. After all required regulatory approvals have been received and all
- ------
other conditions set forth herein or in the Agreement have been satisfied or
waived, the Stock Conversion shall be consummated and immediately thereafter
(a) the Savings Bank shall issue to the Acquiror all of the Conversion Shares
and the Acquiror shall pay in consideration thereof cash or other qualifying
assets in an aggregate dollar amount equal to the Appraised Value, minus
expenses, but in no event less than the Net Worth of the Savings Bank; and
(b) the Acquiror shall issue and sell to the Subscribers the Subscription Shares
subscribed for during the Subscription Offering and the Community Offering. As
soon as practicable after
<PAGE>
- 28 -
consummation of the Stock Conversion and the Acquisition and after any interim
steps as may be necessary or advisable, the Merger will be consummated.
9.3. Charter and Bylaws. The charter and bylaws of the Savings
------------------
Bank shall be amended and restated, effective immediately upon consummation of
the Stock Conversion, as specified in Annexes A and B hereto.
9.4. Effectiveness of the Stock Conversion, the Acquisition and the
--------------------------------------------------------------
Merger. The Stock Conversion and the Acquisition shall be deemed to occur and
- ------
be effective on the Closing Date. The Merger shall be deemed to occur and be
effective at the time set forth in the Articles of Merger or other appropriate
document effecting the Merger.
9.5 Cash Bonus to Depositors. In connection with the Stock Conversion
------------------------
and the Acquisition, BB&T agrees to pay a one time cash bonus to eligible
depositors of the Savings Bank upon such terms and subject to the conditions
agreed to by the Acquiror and the Savings Bank.
Section 10. STATUS OF DEPOSITS FOLLOWING THE
STOCK CONVERSION, THE ACQUISITION
AND THE MERGER
10.1. Continuation of Deposits.
------------------------
(a) All of the Savings Bank's deposit accounts shall retain the same
status after the Stock Conversion and Acquisition as they had prior to the Stock
Conversion and Acquisition (except as to voting and liquidation rights). Each
deposit shall have a value equal to and of the same character as the deposit
immediately prior to the consummation of the Stock Conversion and Acquisition
and each holder of a deposit account shall retain, without payment, a
withdrawable deposit account or accounts in the Savings Bank, equal in
withdrawable amount to the withdrawal value of such holder's deposit account in
the Savings Bank immediately prior to consummation of the Stock Conversion and
Acquisition. Upon consummation of the Stock Conversion and Acquisition, all
insured deposits shall continue to be insured up to the legal maximum by the
SAIF.
(b) Upon consummation of the Merger, all insured deposits shall continue
to be insured up to the legal maximum by the FDIC in accordance with the
provisions of applicable law, except that, in accordance with 12 U.S.C.
(S) 1818(q), persons who had deposit accounts at the Bank and the Savings Bank
prior to the Merger will retain separate insurance coverage on such deposit
accounts only until the
<PAGE>
- 29 -
end of six months from the date of the Merger, or in the case of any time
deposit account coming due after the six-month period, at the earliest maturity
date after such six-month period.
10.2. Liquidation Account and Sub-Accounts.
-----------------------------------
(a) The Savings Bank shall establish and maintain a Liquidation Account,
which shall be assumed by the Bank in the Merger, for the benefit of Eligible
Member Subscribers who held a Qualifying Deposit on the Eligibility Record Date
who maintain an account in the Savings Bank (or in the Bank subsequent to the
Merger) in the event of a complete liquidation of the Savings Bank following the
Stock Conversion (or the Bank subsequent to the Merger). The initial
Liquidation Account balance shall be equal to the Net Worth of the Savings Bank
as of the Determination Date. The initial Liquidation Account balance shall not
be increased, and shall be subject to downward adjustment to the extent of any
downward adjustment to any Sub-Account balance in accordance with Section .0314
of the Regulations.
(b) The Savings Bank shall maintain, in accordance with the Regulations,
for each Qualifying Deposit, a Sub-Account of the Liquidation Account the
initial balance of which shall be determined by multiplying (x) the opening
balance in the Liquidation Account by (y) a fraction (A) the numerator of which
is the balance in such deposit on the Eligibility Record Date, and (B) the
denominator of which is the total amount of Qualifying Deposits of the Savings
Bank on the Eligibility Record Date.
(c) A distribution of each Sub-Account balance may be made only in the
event of a complete liquidation of the Savings Bank subsequent to the Stock
Conversion and Acquisition (or the Bank subsequent to the Merger) and only out
of funds available for such purpose after payment of all creditors but before
any payments to stockholders. The Savings Bank (or the Bank subsequent to the
Merger) shall not be required to set aside funds for the purpose of establishing
the Liquidation Account.
10.3. Voting Rights. Voting Rights in the Acquiror are held and
-------------
exclusively exercised by the holders of the common stock of the Acquiror. After
consummation of the Stock Conversion and the Acquisition, no deposit account
holders or borrowers of the Savings Bank shall have any voting rights in those
capacities in the Savings Bank or
<PAGE>
- 30 -
the Acquiror, except to the extent such persons become stockholders of the
Acquiror.
Section 11. MISCELLANEOUS
11.1. Expenses of the Stock Conversion and Acquisition. The expenses
------------------------------------------------
incurred by the Savings Bank in the Stock Conversion and the Acquisition shall
be reasonable.
11.2. Time Limitation. The Stock Conversion and the Acquisition must be
---------------
completed not more than 12 months after the date on which the Voting Members
approve the Conversion Plan, which date may be extended up to an additional
12 months with the prior written approval of the Administrator.
11.3. Preemptive Rights. Persons that acquire Common Stock in the
-----------------
Subscription Offering and/or the Community Offering shall not have preemptive
rights to acquire additional or treasury shares of the Acquiror. In addition,
the Acquiror shall not have preemptive rights to acquire additional or treasury
shares of the Savings Bank.
11.4 Interpretation of Conversion Plan. All interpretations of the
---------------------------------
Conversion Plan and application of its provisions to particular circumstances by
a majority of the Board of Directors shall be final, subject to the Agreement
and the authority of the Administrator. The headings contained in the
Conversion Plan are for reference purposes only and shall not affect the
interpretation of the Conversion Plan.
11.5 Amendment or Termination of Conversion Plan. If deemed necessary or
-------------------------------------------
desirable, the Board of Directors may amend or terminate the Conversion Plan at
any time without the concurrence of the Administrator before the Stock
Conversion Application is filed, and at any time after the Stock Conversion
Application is filed until the Closing Date with the concurrence of the
Administrator, provided that any such amendment or termination is effected in
accordance with Article VI of the Agreement.
<PAGE>
[LETTERHEAD OF KPMG PEAT MARWICK APPEARS HERE]
EXHIBIT 8.5
January 31, 1994
Board of Directors
Asheville Savings Bank, S.S.B.
11 Church Street
Asheville, North Carolina 28802
Board of Directors
BB&T Financial Corporation
223 West Nash Street
Wilson, North Carolina 27893
Gentlemen:
You have requested our opinion as to the federal and North Carolina income tax
consequences resulting from a plan pursuant to which there will be offered
shares of newly issued common stock of BB&T Financial Corporation ("BB&T
Financial") in simultaneous subscription and community offerings (the
"Offerings"). Under the plan, Asheville Savings Bank, S.S.B., Asheville, North
Carolina ("Asheville Savings") will convert from a North Carolina-chartered
mutual savings bank to a North Carolina-chartered stock savings bank (the
"Conversion") and will concurrently become a wholly-owned subsidiary of BB&T
Financial (the "Acquisition"). The Conversion and the Acquisition will be
referred to herein as the Conversion/Acquisition. After the Conversion/
Acquisition, and after any interim steps as may be necessary or advisable,
Asheville Savings will be merged or otherwise combined with and into Branch
Banking and Trust Company ("BB&T-NC"), a North Carolina chartered commercial
bank and a wholly-owned subsidiary of BB&T Financial (the "Bank Merger").
You have submitted for our consideration certain representations as to the
proposed transaction and copies of the Plan of Conversion (the "Plan"), as
amended, the Agreement and Plan of Reorganization, dated as of June 22, 1993,
(the "Reorganization Agreement"), the Form S-3 Registration Statement filed with
the Securities and Exchange Commission ("SEC") on July 9, 1993, Pre-Effective
Amendment No. 1 to the Form S-3, as filed with the SEC on August 9, 1993,
Post-Effective Amendment No. 1 to the Form S-3, as filed with the SEC on October
29, 1993, Post-Effective Amendment No. 2 to the Form S-3 as filed with the SEC
on January 10, 1994 and Post-Effective Amendment No. 3 to the Form S-3 to be
filed with the SEC on or about January 31, 1994. Our opinion is based on a
review of the information above and certain assumptions of fact. It is also
based on existing tax law and authorities that are subject to change. We have
not
<PAGE>
Board of Directors
January 31, 1994
Page 2
reviewed the legal documents necessary to effectuate the steps to be undertaken
and we assume that all steps will be effectuated under state and federal law
and will be consistent with the legal documentation and with the list of steps
submitted to us.
FACTS
BB&T Financial, a North Carolina corporation, is a registered bank holding
company under federal and North Carolina law, a registered savings institution
holding company under North Carolina law and the parent holding company of BB&T-
NC, and through BB&T Financial Corporation of South Carolina (which is wholly-
owned by BB&T Financial), Branch Banking and Trust Company of South Carolina
("BB&T-SC"). BB&T Financial has authorized two classes of capital stock,
consisting of common and nonvoting preferred. Common stockholders are entitled
to one vote for each share of stock held.
Asheville Savings is a North Carolina-chartered mutual savings bank. As a mutual
savings bank, Asheville Savings has no authorized capital stock. Instead, the
residual proprietary interest in Asheville Savings' reserves and undivided
profits belong to all of its depositors. Each depositor is entitled to interest
on his or her account balance that is declared and paid by Asheville Savings. In
addition, each depositor has an intangible ownership interest in the net
proceeds on liquidation of the institution equal to the proportion that his or
her deposit balance bears to the aggregate deposit balances of all depositors.
However, liquidation of the institution requires approval by the Administrator
of the North Carolina Savings Institutions Division (the "NC Administrator").
Voting rights in Asheville Savings are held by the depositors and by certain
borrowers on outstanding loans. All voting and ownership interests of a
depositor cease when he or she closes his or her account(s) with Asheville
Savings.
The Conversion/Acquisition will enable Asheville Savings to offer a wider range
of services and products to its existing customers and market area due to the
stronger financial and managerial resources of BB&T Financial. BB&T Financial
will be acquiring all of the capital stock of Asheville Savings and the combined
resources of Asheville Savings and BB&T Financial will enable BB&T Financial to
maintain and expand the business of Asheville Savings.
<PAGE>
Board of Directors
January 31, 1994
Page 3
In the Conversion/Acquisition, Asheville Savings will convert from a North
Carolina-chartered mutual savings bank to a North Carolina-chartered stock
savings bank and simultaneously become a wholly-owned subsidiary of BB&T
Financial. After the Conversion/Acquisition, and after any interim steps as may
be necessary or advisable, Asheville Savings will be merged or otherwise
combined with and into BB&T-NC in the Bank Merger.
In accordance with the NC Administrator's regulations regarding conversions,
upon completion of the Conversion/Acquisition, a liquidation account will be
established by Asheville Savings for the benefit of the depositors who held
accounts in Asheville Savings at February 28, 1993 in an amount equal to the net
worth of Asheville Savings as shown on its statement of financial condition as
of December 31, 1992. Each depositor would be entitled to his or her pro rata
interest in the liquidation account in the event of a complete liquidation of
Asheville Savings following the Conversion/Acquisition. Each depositor would
have an initial interest in such liquidation account for each deposit account
held at Asheville Savings on February 28, 1993. A depositor's interest as to the
liquidation account will be in the same proportion to the total liquidation
account as the balance of his or her deposit account was to the balance in all
deposit accounts held by depositors of Asheville Savings as of the eligibility
record date (February 28, 1993). However, if the amount in the deposit account
on any subsequent measurement date is less than the amount in such account on
the eligibility record date, or the amount in such account on any previous
measurement date, then such depositor's interest in the liquidation account
would be reduced from time to time by an amount proportionate to any such
reduction and his or her interest would cease to exist if such deposit account
were closed. The interest in the liquidation account would never be increased
despite any subsequent increase in the related deposit account after the
Conversion/Acquisition.
Pursuant to the Plan, shares of BB&T Financial Common Stock (the "Conversion
Stock") are being offered through nontransferable subscription rights granted
first to an employee stock ownership plan and trust established for the benefit
of employees of Asheville Savings (the "Asheville Savings ESOP") and then to
holders of qualifying deposit accounts of Asheville Savings as of the
eligibility record date ("Eligible Member Subscribers") and to certain other
members of Asheville Savings who are eligible to vote on the Plan ("Voting
Members"), in a subscription offering (the "Subscription Offering"). Shares
offered but not sold in the Subscription Offering are being offered
simultaneously to residents of Buncombe, Henderson, Madison and McDowell
counties, North Carolina in a community offering (the "Community Offering").
<PAGE>
Board of Directors
January 31, 1994
Page 4
The number of shares of Conversion Stock to be offered will be determined based
upon an independent appraisal of the pro forma market value of Asheville Savings
and the price of the Conversion Stock. The price of the Conversion Stock will be
equal to a percentage (85% in the case of Eligible Member Subscribers
participating in the Subscription Offering that consent to a four month holding
period restriction, subject to certain purchase limitations, 95% in the case of
Eligible Member Subscribers participating in the Subscription Offering that do
not consent to a four month holding period restriction, 95% in the case of
participants in the Community Offering, 85% or 95% in the case of the Asheville
Savings ESOP and 100% in the case of Voting Members) of the last sale price of
the common stock of BB&T Financial as reported on the NASDAQ National Market
System (trading symbol "BBTF) on the Community Expiration Date, as defined in
the Plan, rounded to the nearest cent, with any amount equal to $.0050 rounded
to the next higher $.01.
In exchange for all of the net proceeds from the sale of the Conversion Stock,
BB&T Financial will be issued all of the capital stock of Asheville Savings.
Irrespective of the amount of Conversion Stock sold in the Subscription and
Community Offerings, BB&T Financial will invest cash or other qualified assets
in Asheville Savings equal to the appraised value of Asheville Savings less the
expenses of the Conversion/Acquisition, but in no event less than the current
net worth of Asheville Savings. BB&T Financial does not anticipate selling any
shares that are not sold in the Offerings, in a public offering or otherwise
pursuant to the Plan. The Conversion/Acquisition is subject to the receipt of
regulatory approval from appropriate parties, including the NC Administrator and
the Board of Governors of the Federal Reserve System.
In connection with the Conversion/Acquisition, the Eligible Member Subscribers
of Asheville Savings will receive a one-time bonus interest payment ("Bonus
Interest") in an amount equal to two and one-half (2.50) additional percentage
points of the balance in each deposit account on February 28, 1993. The Bonus
Interest will be paid to depositors within thirty days of the closing of the
Conversion/Acquisition (the "Closing Date").
Immediately after the Conversion/Acquisition, BB&T has agreed to grant to the
directors and certain officers of Asheville Savings shares of restricted stock
of BB&T Financial in a manner designed to encourage such individuals to remain
with BB&T Financial following the Conversion/Acquisition.
<PAGE>
Board of Directors
January 31, 1994
Page 5
The shares of restricted stock vest in equal increments over a five year period
beginning on the first anniversary of the date of grant, subject to acceleration
with 100% vesting at the individual's earlier retirement from the director or
officer position due to mandatory retirement, health reasons, death or
disability, and also subject to approval by the BB&T Financial Compensation
Committee that vesting be accelerated in the event of termination of employment
by BB&T Financial other than for cause. In addition, BB&T Financial will pay
cash bonuses to the individuals receiving awards of restricted stock to
compensate those individuals for a portion of the tax liability associated with
the awards granted. The cash bonus would equal 53.9% of the market price of the
restricted stock awarded at the date of grant, payable as the tax liability is
incurred. If the individual elects not to incur all of the tax liability in the
year the restricted stock is awarded, 20% of the cash bonus will be paid in each
year as the stock vests. The grants of restricted stock and related cash awards
are referred to herein as the "Restricted Stock Plan."
In addition to the foregoing statement of facts, the following representations
have been made:
(a) The fair market value of the deposits in the stock savings bank plus
interests in the liquidation account and subscription rights to acquire
BB&T Financial stock to be received in the Conversion will be
approximately equal to the fair market value of the deposits and
proprietary interests in the mutual savings bank surrendered in the
Conversion.
(b) There is no plan or intention for the depositors of Asheville Savings
to sell, exchange or otherwise dispose of any of the deposits received
in the Conversion.
(c) Immediately following the Conversion, the depositors of Asheville
Savings on the eligibility record date will own all of the outstanding
interests in the liquidation account, and will own such interests
solely by reason of their ownership of deposits at the mutual savings
bank (including the rights to liquidation proceeds). As a matter of
law, additional interests in the liquidation account may not be issued
following the Conversion.
(d) Immediately following the Conversion/Acquisition, Asheville Savings
will possess the same assets and liabilities that it held immediately
prior to the transaction, except for the addition of cash paid by BB&T
Financial for the shares of Asheville Savings issued in the
Conversion/Acquisition.
<PAGE>
Board of Directors
January 31, 1994
Page 6
(e) Except for Asheville Savings' agreement to sell all of its stock to BB&T
Financial in the Conversion/Acquisition, at the time of the Conversion/
Acquisition, Asheville Savings will not have outstanding any warrants,
options, convertible securities, or any other type of right pursuant to
which any person could acquire stock in Asheville Savings.
(f) Asheville Savings has no plan or intention to reacquire any of the stock
issued to BB&T Financial in the Acquisition.
(g) Except for the Bank Merger, Asheville Savings has no plan or intention
to sell or otherwise dispose of any of the assets of the mutual savings
bank, except in the ordinary course of business.
(h) The liabilities to be assumed by the stock savings bank, plus the
liabilities, if any, to which the transferred assets are subject, were
incurred by Asheville Savings in the ordinary course of its business and
are associated with the assets transferred.
(i) Immediately following the Conversion/Acquisition, BB&T Financial will
continue the historic business of Asheville Savings or will use a
significant portion of Asheville Savings' historic business assets in a
business.
(j) The depositors of Asheville Savings will pay their expenses, if any,
incurred in connection with the Conversion.
(k) Asheville Savings is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368 (a) (3) (A) of the
Internal Revenue Code.
(l) No depositor of Asheville Savings who is eligible to receive an interest
in the liquidation account will be excluded from participating in the
liquidation account.
(m) BB&T Financial will pay all of the expenses of the Conversion/
Acquisition, except for expenses of the depositors of Asheville Savings.
(n) BB&T Financial has no plan or intention to redeem or otherwise acquire
any of the Conversion Stock to be issued pursuant to the Conversion/
Acquisition.
<PAGE>
Board of Directors
January 31, 1994
Page 7
(o) At the time of the Conversion, the fair market value of the assets of the
mutual savings bank (on a going-concern basis) to be transferred to the
stock savings bank will equal or exceed the liabilities to be assumed by
the stock savings bank plus the liabilities to which such assets are
subject. Immediately prior to the Conversion, Asheville Savings will have
a positive net worth.
(p) None of the shares of the Conversion Stock to be issued to or purchased
by depositors who are also employees of Asheville Savings will be issued
or acquired at a discount from the price offered to any other depositor
or as compensation. Compensation to be paid to depositors who are also
employees of Asheville Savings will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
(q) Except for the Bank Merger, BB&T Financial has no plan or intention to
sell or otherwise dispose of the stock of Asheville Savings received by
it in the Conversion/Acquisition and there is no plan or intention for
Asheville Savings to liquidate or merge into another corporation
following the Conversion/Acquisition.
(r) BB&T Financial and Asheville Savings are corporations within the meaning
of Section 7701 (a) (3) of the Code.
(s) No cash or property will be given to depositors of Asheville Savings or
others in lieu of non-transferable subscription rights or an interest in
the liquidation account of Asheville Savings.
<PAGE>
Board of Directors
January 31, 1994
Page 8
Opinion
FEDERAL INCOME TAX CONSEQUENCES
- -------------------------------
Based solely on the above facts and representations, it is our opinion that:
(1) The proposed conversion of Asheville Savings from a North
Carolina-chartered mutual savings bank to a North Carolina-chartered stock
savings bank will constitute a reorganization within the meaning of Section
368(a) of the Code, and no gain or loss will be recognized by Asheville
Savings as a result of the Conversion. Rev. Rul. 80-105, 1980-1 C.B. 78.
The mutual savings bank and the stock savings bank will each be a "party to
the reorganization" within the meaning of Section 368(b) of the Code.
(2) No gain or loss will be recognized by Asheville Savings upon the receipt of
money from BB&T Financial in exchange for shares of common stock of
Asheville Savings. In addition, no gain or loss will be recognized by BB&T
Financial upon the receipt of money in exchange for its common stock.
Section 1032(a).
(3) Asheville Savings will not recognize any gain or loss with respect to its
assets as a result of the Conversion; the basis of Asheville Savings in its
assets will not change as a result of the Conversion and the holding period
of the assets will include the period during which such assets were held by
Asheville Savings prior to the Conversion.
(4) No gain or loss will be recognized by a depositor of Asheville Savings upon
the deemed issuance to him or her of deposit accounts in the stock savings
bank in exchange for, and in the same amount as, his or her deposit
accounts in the mutual savings bank.
(5) Gain, if any, will be recognized by an Eligible Member Subscriber upon the
exchange of his or her membership interest in the mutual savings bank for
subscription rights and an interest in the liquidation account. Any gain
resulting therefrom will be recognized, but only in an amount not in excess
of the fair market value of the subscription rights and the interests in
the liquidation account. However, the interests in the liquidation account
will have nominal, if any, fair market value. Section 1001;
Paulsen v. Commissioner, 469 U.S. 131 (1985).
------- ------------
<PAGE>
Board of Directors
January 31, 1994
Page 9
(6) A Voting Member will be in receipt of taxable income upon the receipt
of nontransferable subscription rights to the extent of the fair market
value, if any, of the subscription rights received.
(7) A depositor will be in receipt of taxable income in the amount of the Bonus
Interest paid to the depositor, at the time such amount is paid or made
available.
(8) A depositor's basis in his or her deposit accounts will not change as a
result of the Conversion. An Eligible Member Subscriber will have a basis
of zero in his or her interest in the liquidation account, increased by the
amount of gain, if any, recognized on receipt of such interest. Finally,
an Eligible Member Subscriber or Voting Member will have a basis in any
subscription rights received equal to zero, increased by the amount of
income or gain, if any, recognized on receipt of such rights.
(9) No taxable income will be recognized by an Eligible Member Subscriber or
Voting Member as a result of the exercise of his or her subscription
rights. Rev. Rul. 56-572,1956-2 C.B. 182.
(10) An Eligible Member Subscriber or Voting Member will be entitled to claim,
for the year in which any subscription rights expire unexercised, a loss in
an amount equal to his or her basis in such rights. Such loss will be a
capital loss provided the common stock of BB&T Financial that would have
been acquired upon the exercise of such subscription rights would have
constituted a capital asset in the hands of the Eligible Member Subscriber
or Voting Member.
(11) No income, gain or loss will be recognized by the purchasers of BB&T
Financial stock pursuant to the Community Offering. A purchaser of
Conversion Stock will have a basis in such stock equal to the purchase
price of such stock, increased (in the case of stock acquired pursuant to
the Subscription Offering) by the basis, if any, of the subscription
rights exercised. Section 1012.
(12) The holding period for BB&T Financial stock acquired pursuant to the
Subscription Offering will commence on the date the subscription rights are
exercised. Section 1223(6). The holding period for BB&T Financial stock
acquired pursuant to the Community Offering will commence on the date
following the date on which such stock is purchased. Rev. Rul. 70-598,
1970-2 C.B. 168; Rev. Rul. 66-97, 1966-1, C.B. 190.
<PAGE>
Board of Directors
January 31, 1994
Page 10
(13) The tax attributes enumerated in Section 381(c), including any earnings
and profits or a deficit of earnings and profits, will be taken into
account by Asheville Savings following the Conversion. Section 381.
(14) The Conversion/Acquisition will not require the bad debt reserves of
Asheville Savings to be restored to gross income (Section 381(c) (4),
Treas. Reg. Sec. 1.381(c) (4)-1(a) (1) (ii)), nor will it affect deductions
for additions to reserves for bad debts under Section 593 or distributions
to shareholders under Section 593 (e). Because the Conversion will be a
transaction to which Section 381 applies, Section 593 (e) will not apply.
NORTH CAROLINA INCOME TAX CONSEQUENCES
- --------------------------------------
It is our opinion that the State of North Carolina will, for North Carolina
income tax purposes, treat the Conversion/Acquisition in an identical manner
as it is treated by the Internal Revenue Service for federal income tax
purposes. N.C.G.S. 105-130.2, 105-130.3, 105-130.5, 105-134.1, 105-134.2, 105-
134.5, 105-134.6, 105-134.7 and 105-228.23.
THE BANK MERGER
- ---------------
Nothing in the foregoing opinion is to be construed either explicitly or
implicitly as opining on the federal or North Carolina income tax consequences
of the Bank Merger.
THE RESTRICTED STOCK PLAN
- -------------------------
Nothing in the foregoing opinion is to be construed either explicitly or
implicitly as opining on the federal or North Carolina income tax consequences
of the Restricted Stock Plan.
Sincerely,
KPMG Peat Marwick
Sheldon M. Fox, Partner
SMF:jr
<PAGE>
(LETTERHEAD OF KPMG PEAT MARWICK APPEARS HERE)
EXHIBIT 23.31
TAX ADVISORS' CONSENT
---------------------
Board of Directors
Asheville Savings Bank, S.S.B.
Board of Directors
BB&T Financial Corporation
We consent to the inclusion of our tax opinion dated January 31, 1994 regarding
the federal and North Carolina income tax consequences of the Conversion and the
Acquisition, in Exhibit No. 8.5 of Post-Effective Amendment No. 3 to the Form
S-3 Registration Statement to be filed with the Securities and Exchange
Commission, and the references to our firm under the headings "SUMMARY - Certain
Federal Income Tax Consequences", "THE OFFERINGS - Certain Federal Income Tax
Consequences" and "Opinions" in the Prospectus/Proxy Statement.
KPMG Peat Marwick
Raleigh, North Carolina
January 31, 1994
<PAGE>
EXHIBIT 23.32
The Board of Directors
BB&T Financial Corporation
We consent to the use of our report dated January 14, 1993 included in BB&T
Financial Corporation's Form 10-K for the year ended December 31, 1992
incorporated herein by reference and to the reference to our firm under the
heading "Experts" in the Registration Statement and related Prospectus for the
conversion/acquisition of Asheville Savings Bank, S.S.B.
KPMG Peat Marwick
Raleigh, North Carolina
February 3, 1994
<PAGE>
EXHIBIT 23.33
Board of Directors
BB&T Financial Corporation
We consent to the use of our report on the consolidated statement of financial
condition of Old Stone Bank of North Carolina and subsidiaries as of December
31, 1992 and the related consolidated statements of income, stockholder's equity
and cash flows for the year then ended incorporated herein by reference to our
firm under the heading "Experts" in the Prospectus/Proxy Statement.
KPMG Peat Marwick
Greensboro, North Carolina
February 3, 1994
<PAGE>
EXHIBIT 23.34
February 3, 1994
Board of Directors
BB&T Financial Corporation
223 West Nash Street
Wilson, North Carolina 27893
Gentlemen:
I hereby consent to the reference to my name under the caption "Opinions" in the
Prospectus relating to Asheville Savings Bank, S.S.B. included in
Post-Effective Amendment No. 3 to the Registration Statement.
Very Truly Yours,
Jerone C. Herring
Vice President and Secretary
<PAGE>
(LOGO OF McGLADREY & PULLEN APPEARS HERE) (LOGO OF RSM APPEARS HERE)
Exhibit 23.35
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors
BB&T Financial Corporation
Wilson, North Carolina
We consent to the incorporation by reference in the Prospectus/Proxy Statement
for the conversion/acquisition of Asheville Savings Bank, S.S.B. of our report
dated November 10, 1993, with respect to the financial statements of Home
Savings Bank of Albemarle, SSB and subsidiary incorporated by reference on BB&T
Financial Corporation's Form 8-K for the years ended September 30, 1993, 1992
and 1991 and to the reference to our Firm under the heading "Experts".
McGLADREY & PULLEN
By: /s/ McGLADREY & PULLEN
-----------------------
Charlotte, North Carolina
January 31, 1994
Interstate Tower, Suite 2700 Worldwide
121 West Trade Street Services
Charlotte, North Carolina 28202-5399 Through
(704) 333-9003 FAX (704) 376-3255 RSM International
<PAGE>
(LOGO OF McGLADREY & PULLEN APPEARS HERE) (LOGO OF RSM APPEARS HERE)
Exhibit 23.36
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors
BB&T Financial Corporation
Wilson, North Carolina
We consent to the incorporation by reference in the Prospectus/Proxy Statement
for the conversion/acquisition of Asheville Savings Bank, S.S.B. of our report
dated October 27, 1992, with respect to the financial statements of Citizens
Savings Bank, SSB, Inc. (formerly Citizens Savings Bank, Inc.) and subsidiary
incorporated by reference on BB&T Financial Corporation's Form 8-K for the
years ended September 30, 1992, 1991 and 1990 and to the reference to our Firm
under the heading "Experts".
McGLADREY & PULLEN
By: /s/ McGLADREY & PULLEN
-----------------------
Charlotte, North Carolina
January 31, 1994
Interstate Tower, Suite 2700 Worldwide
121 West Trade Street Services
Charlotte, North Carolina 28202-5399 Through
(704) 333-9003 FAX (704) 376-3255 RSM International
<PAGE>
EXHIBIT 23.37
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus/Proxy
Statement constituting part of this Registration Statement on Form S-3 of BB&T
Financial Corporation of our report dated March 12, 1993 relating to the
consolidated financial statements of Security Financial Holding Company, which
appears in the Current Report on Form 8-K of BB&T Financial Corporation dated
August 6, 1993. We also consent to the reference to us under the heading
"Experts" in such Prospectus/Proxy Statement.
/s/ Price Waterhouse
PRICE WATERHOUSE
Raleigh, North Carolina
January 31, 1994
<PAGE>
EXHIBIT 23.38
INDEPENDEDNT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No.3 to
Registration Statement No. 33-49749 of BB&T Financial Corporation on Form S-3 of
our report dated January 22, 1993, relating to the consolidated financial
statements of Asheville Federal Bank, FSB and subsidiary (now Asheville Savings
Bank, SSB), appearing in the Current Report on Form 8-K of BB&T Financial
Corporation dated August 6, 1993, and to the reference to us under the heading
"Experts" in the Prospectus/Proxy Statement, which is part of this Registration
Statement.
/s/ Deloitte & Touche
DELOITTE & TOUCHE
Hickory, North Carolina
February 3, 1994
<PAGE>
EXHIBIT 23.39
We consent to the incorporation by reference into this Registration
Statement of BB&T Financial Corporation on Form S-3 of our report dated March
11, 1993 relating to the consolidated financial statements of L.S.B. Bancshares,
Inc. of South Carolina as of December 31, 1992 and 1991 and for each of the
three years in the period ended December 31, 1992. We also consent to the
reference to us under the heading "Experts" in the Prospectus/Proxy Statement
for the conversion merger of Asheville Savings Bank, S.S.B. forming a part of
this Registration Statement.
/s/ Donald G. Jones and Company, P.A.
Donald G. Jones and Company, P.A.
February 1, 1994
<PAGE>
[LETTER OF TRIDENT FINANCIAL CORPORATION APPEARS HERE]
Exhibit 23.40
January 31, 1994
Board of Directors
BB&T Financial Corporation
223 West Nash
Wilson, North Carolina 27893
Board of Directors
Home Savings Bank of Albemarle, S.S.B.
155 West South Street
Albemarle, North Carolina 28002
Gentlemen:
We hereby consent to the reference to our firm under the heading "Experts"
in Post-Effective Amendment No. 3 to the Form S-3 Registration Statement and in
BB&T Financial Corporation's Prospectus/Proxy Statement for the acquisition of
Asheville Savings Bank, S.S.B. and do further consent to the use of the summary
of our appraisal opinion of Asheville Savings Bank, S.S.B. in the
Prospectus/Proxy Statement.
Sincerely,
/s/ JOHN F. SCHRAMM
John F. Schramm
Senior Vice President
