AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 9, 1997
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
AMERICAN NATIONAL BANKSHARES INC.
(Name of Issuer)
AMERICAN NATIONAL BANKSHARES INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, $1.00 PAR VALUE PER SHARE
(Title of Class of Securities)
027745108
(CUSIP Number of Class of Securities)
CHARLES H. MAJORS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMERICAN NATIONAL BANKSHARES INC.
P. O. BOX 191
628 MAIN STREET
DANVILLE, VIRGINIA 24543-0191
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
COPIES TO:
KENNETH J. ALCOTT, ESQ.
HUNTON & WILLIAMS
RIVERFRONT PLAZA, EAST TOWER
951 EAST BYRD STREET
RICHMOND, VIRGINIA 23219
APRIL 9, 1997
(Date Tender Offer First Published,
Sent or Given to Security Holders)
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
$6,750,000 $1,350
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*Calculated solely for the purpose of determining the filing fee, based upon the
purchase of 250,000 shares at $27.00 per share.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: N/A FILING PARTY: N/A
FORM OR REGISTRATION NO.: N/A DATE FILED: N/A
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule 13E-4 relates
is American National Bankshares Inc., a Virginia corporation (the "Company"),
the street address of its principal executive office is 628 Main Street,
Danville, Virginia 24541 and the mailing address of its principal executive
office is P.O. Box 191, Danville, Virginia 24543-0191.
(b) This Schedule 13E-4 relates to the offer by the Company to purchase
up to 250,000 Shares (or such lesser number of shares as are properly tendered)
of its common stock, $1.00 par value per share (the "Shares"), 3,279,798 of
which Shares were outstanding as of April 8, 1997, at prices not in excess of
$27.00 nor less than $25.00 net per Share in cash upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated April 9, 1997 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer"), copies of which are attached as Exhibits (a)(1) and
(a)(2), respectively, and incorporated herein by reference. Officers and
directors of the Company may participate in the Offer on the same basis as the
Company's other shareholders, although the Company has been advised that no
director or executive officer of the Company intends to tender any shares
pursuant to the Offer. The information set forth in "Introduction" and "The
Offer - Section 1, Number of Shares; Proration" of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in and "The Offer - Section 8, Price
Range of Shares; Dividends" of the Offer to Purchase is incorporated herein by
reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in "The Offer - Section 9, Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth in "Introduction" and "The Offer -
Section 2, Purpose of the Offer; Certain Effects of the Offer," "The Offer -
Section 9, Source and Amount of Funds," "The Offer - Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" and
"The Offer - Section 12, Effects of the Offer on the Market for Shares;
Registration Under the Exchange Act" of the Offer to Purchase is incorporated
herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "The Offer - Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" of the
Offer to Purchase is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENT, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in "The Offer - Section 1, Number of Shares;
Proration," "The Offer - Section 2, Purpose of the Offer; Certain Effects of the
Offer," "The Offer - Section 16, Fees and Expenses" and "The Offer - Section 11,
Interest of Directors and Officers; Transactions and Arrangements Concerning
Shares" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.
The information set forth in "Introduction," "The Offer - Section 3,
Procedures for Tendering Shares" and "The Offer Section 16, Fees and Expenses"
of the Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "The Offer - Section 10, Certain
Information Concerning the Company" of the Offer to Purchase is incorporated
herein by reference and the information set forth on pages 24 through 34 of the
Company's Annual Report to Shareholders for the year ended December 31, 1996,
filed as Exhibit (g)(1) hereto, is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
<PAGE>
(b) The information set forth in "The Offer - Section 1, Number of
Shares; Proration," "The Offer - Section 9, Source and Amount of Funds," "The
Offer - Section 11, Interest of Directors and Officers; Transactions and
Arrangements Concerning Shares" and "The Offer - Section 13, Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(c) The information set forth in "The Offer - Section 12, Effects of
the Offer on the Market for Shares; Registration under the Exchange Act" of the
Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase and Letter of
Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase, dated April 9, 1997.
(2) Form of Letter of Transmittal (including Certification of
Taxpayer Identification Number on Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(6) Text of Press Release issued by the Company, dated April 7,
1997.
(7) Form of Letter to Shareholders of the Company, dated April 9,
1997 from Charles H. Majors, President and Chief Executive
Officer of the Company.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 24 through 34 of the Company's Annual Report to
Shareholders for the year ended December 31, 1996.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13E-4 is true, complete and
correct.
April 9, 1997 AMERICAN NATIONAL BANKSHARES INC.
By: /s/ Charles H. Majors
------------------------
Charles H. Majors
President and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
(a)(1) Form of Offer to Purchase, dated April 9, 1997.
(2) Form of Letter of Transmittal (including Certification
of Taxpayer Identification Number on Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(6) Text of Press Release issued by the Company, dated
April 7, 1997.
(7) Form of Letter to Shareholders of the Company, dated
April 9, 1997, from Charles H. Majors, President and
Chief Executive Officer of the Company.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 24 through 34 of the Company's Annual Report to
Shareholders for the year ended December 31, 1996.
<PAGE>
Exhibit (A)(1)
AMERICAN NATIONAL BANKSHARES INC.
Offer to Purchase for Cash up to
250,000 Shares of its Common Stock
At a Purchase Price Not in Excess of $27.00
Nor less than $25.00 per Share
- --------------------------------------------------------------------------------
YOUR PROMPT ATTENTION TO THIS OFFER IS REQUESTED. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON THURSDAY, MAY 8, 1997,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
American National Bankshares Inc., a Virginia corporation (the
"Company"), hereby invites its shareholders to tender shares of its Common
Stock, $1.00 par value per share (the "Shares"), at prices not in excess of
$27.00 nor less than $25.00 per Share in cash, as specified by shareholders
tendering their Shares, upon the terms and subject to the conditions set forth
herein and in the related Letter of Transmittal (which together constitute the
"Offer"). Each shareholder desiring to tender some or all of his or her Shares
must specify in the Letter of Transmittal the price (not more than $27.00 nor
less than $25.00 per Share) at which such shareholder is willing to have his or
her Shares purchased by the Company. The Company will determine the single price
per Share (the "Purchase Price"), not in excess of $27.00 nor less than $25.00
per Share, that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 250,000 Shares (or such lesser number of Shares as are
properly tendered at prices not in excess of $27.00 nor less than $25.00 per
Share). All Shares properly tendered at prices at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, subject to the terms
and the conditions of the Offer, including the proration and conditional tender
provisions. All Shares acquired in the Offer will be acquired at the Purchase
Price. The Company reserves the right, in its sole discretion, to purchase more
than 250,000 Shares pursuant to the Offer. See Section 15.
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF
SHARES BEING TENDERED IN THE OFFER. SEE SECTION 7.
THE SHARES ARE TRADED OVER THE COUNTER AND LISTED ON THE OTC BULLETIN
BOARD. ON APRIL 7, 1997, THE LAST FULL DAY OF LISTING ON THE OTC BULLETIN BOARD
PRIOR TO THE ANNOUNCEMENT OF THE OFFER, THE BID PRICE WAS $23.50 PER SHARE, THE
ASK PRICE WAS $24.75 PER SHARE AND THE LAST KNOWN SALES PRICE WAS $23.625 PER
SHARE. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES. SEE SECTION 8.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
THEIR SHARES, AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NONE OF
ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE
OFFER.
-----------
<PAGE>
IMPORTANT
Any shareholder wishing to tender all or any part of his or her Shares
should either (a) complete and sign a Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
either mail or deliver it with any required signature guarantee and any other
required documents to American National Bank and Trust Company (the
"Depositary"), and either mail or deliver the stock certificates for such Shares
to the Depositary (with all such other documents) or tender such Shares pursuant
to the procedure for book-entry tender set forth in Section 3, or (b) request a
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. Holders of Shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee should contact
such person if they desire to tender their Shares. Any shareholder who desires
to tender Shares and whose certificates for such Shares cannot be delivered to
the Depositary or who cannot comply with the procedure for book-entry transfer
or whose other required documents cannot be delivered to the Depositary, in any
case, by the expiration of the Offer must tender such Shares pursuant to the
guaranteed delivery procedure set forth in Section 3.
TO TENDER SHARES PROPERLY, SHAREHOLDERS MUST COMPLETE THE SECTION OF
THE LETTER OF TRANSMITTAL RELATING TO THE PRICE AT WHICH THEY ARE TENDERING
SHARES.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Company or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
The Dealer Manager for the Offer is:
Scott & Stringfellow, Inc.
The Date of this Offer to Purchase is April 9, 1997
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY OR THE DEALER MANAGER AS TO WHETHER SHAREHOLDERS SHOULD
TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS
NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE DEALER MANAGER.
-------------------------
THE DEALER MANAGER FOR THE OFFER IS:
SCOTT & STRINGFELLOW, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
TABLE OF CONTENTS........................................................................... i
SUMMARY..................................................................................... 1
INTRODUCTION................................................................................ 3
THE OFFER................................................................................... 4
1. Number of Shares; Proration........................................................ 4
2. Purpose of the Offer; Certain Effects of the Offer................................. 6
3. Procedures for Tendering Shares.................................................... 8
4. Withdrawal Rights.................................................................. 10
5. Purchase of Shares and Payment of Purchase Price................................... 11
6. Conditional Tender of Shares....................................................... 12
7. Certain Conditions of the Offer.................................................... 12
8. Price Range of Shares; Dividends................................................... 14
9. Source and Amount of Funds......................................................... 14
10. Certain Information Concerning the Company......................................... 15
11. Interest of Directors and Officers; Transactions and Arrangements Concerning
Shares............................................................................. 17
12. Effects of the Offer on the Market for Shares; Registration under the Exchange
Act................................................................................ 18
13. Certain Legal Matters; Regulatory Approvals........................................ 18
14. Certain Federal Income Tax Consequences............................................ 19
15. Extension of Offer; Termination; Amendment......................................... 22
16. Fees and Expenses.................................................................. 23
17. Miscellaneous...................................................................... 23
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
<S> <C>
CERTAIN TRANSACTIONS INVOLVING THE COMPANY'S SHARES..................A-1
GLOSSARY....................................................................................A-2
LIST OF CERTAIN FORMS.......................................................................A-4
</TABLE>
ii
<PAGE>
SUMMARY
This general summary is solely for the convenience of the Company's shareholders
and is qualified in its entirety by reference to the full text and more specific
details in this Offer to Purchase.
Purchase Price. The Company will select a single Purchase Price,
which will be not more than $27.00 or less than
$25.00 per Share, which represents a 5.8% to 14.3%
premium to the last known sales price as reported on
the OTC Bulletin Board on the last full day of
listing on the OTC Bulletin Board before the
announcement of the Offer. All Shares tendered at or
below the Purchase Price will be purchased by the
Company at the Purchase Price, subject to proration.
Each shareholder desiring to tender some or all of
his or her Shares must specify in the Letter of
Transmittal the price (not more than $27.00 nor less
than $25.00 per Share) at which such shareholder is
willing to have his or her Shares purchased by the
Company. Shareholders who are willing to sell their
Shares at any price within the foregoing range may so
indicate on the Letter of Transmittal in accordance
with Instruction 5 thereof.
Number of Shares to Be
Purchased. 250,000 Shares (or such lesser number of Shares as
are properly tendered). The Company reserves the
right, in its sole discretion, to purchase more than
250,000 Shares. See Section 15.
Amount of Shares. Each shareholder may tender all or any portion of
Shares owned by such shareholder.
How to Tender Shares. See the summary instructions for tendering set forth
below and see Section 3. Shareholders with questions
may call the Company, the Dealer Manager, or the
Depositary, or consult your broker for assistance.
Brokerage Commissions. None.
Stock Transfer Tax. None, if payment is made to the registered holder.
Expiration Date. The Offer will expire at 5:00 P.M., New York City
time, on Thursday, May 8, 1997 unless extended by the
Company.
Payment Date. As soon as practicable after the Expiration Date.
Position of The Company
And Its Directors. Neither the Company nor its Board of Directors makes
any recommendation to any shareholder as to whether
to tender or refrain from tendering Shares.
Withdrawal Rights. Tendered Shares may be withdrawn at any time until
5:00 P.M., New York City time, on Thursday, May 8,
1997, unless the Offer is extended by the Company,
and, unless previously purchased, after 12:00
midnight, New York City time, on Wednesday, June 5,
1997. See Section 3.
Further Developments
Regarding The Offer. Call the Company, the Dealer Manager, or consult your
broker. Please see below and the back cover for the
address and telephone numbers of the Company and the
Dealer Manager.
Glossary. Several defined terms are used throughout the Offer.
A glossary of selected terms
appears at the end of this Offer to Purchase.
Important Numbers. For information, please call:
1
<PAGE>
Company (American National Bankshares Inc.):
Carolyn H. Compton (804) 773-2220
David Hyler (804) 773-2242
Charles H. Majors (804) 773-2219
Dealer Manager (Scott & Stringfellow, Inc.):
G. Jacob Savage III
(800) 552-7757, ext. 230.
2
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF AMERICAN NATIONAL BANKSHARES INC.:
INTRODUCTION
American National Bankshares Inc., a Virginia corporation (the
"Company"), invites its shareholders to tender shares of its Common Stock, $1.00
par value per share (the "Shares"), at prices not in excess of $27.00 nor less
than $25.00 per Share, as specified by shareholders tendering their Shares, upon
the terms and subject to the conditions set forth herein and in the related
Letter of Transmittal (which together constitute the "Offer"). Each shareholder
desiring to tender some or all of his or her Shares must specify in accordance
with Instruction 5 of the Letter of Transmittal the price (not more than $27.00
nor less than $25.00 per Share) at which such shareholder is willing to have his
or her Shares purchased by the Company. Shareholders who are willing to sell
their Shares at any price within the foregoing range may so indicate in
accordance with Instruction 5 of the Letter of Transmittal. The Company will
determine the single price per Share, not in excess of $27.00 nor less than
$25.00 per Share, net to the seller in cash (the "Purchase Price"), that it will
pay for Shares properly tendered pursuant to the Offer, taking into account the
number of Shares so tendered and the prices specified by tendering shareholders.
The Company will select the lowest Purchase Price that will allow it to buy
250,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $27.00 nor less than $25.00 per Share). All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proration and conditional tender
provisions. Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration or conditional tender will be returned. The
Company reserves the right, in its sole discretion, to purchase more than
250,000 Shares pursuant to the Offer. See Section 15.
THIS OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED IN THE OFFER. SEE SECTION 7.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 250,000 Shares are properly tendered at or
below the Purchase Price and not withdrawn, the Company will buy Shares on a pro
rata basis from all shareholders who properly tender at prices at or below the
Purchase Price (and do not withdraw them prior to the expiration of the Offer).
All stock certificates representing Shares not purchased pursuant to the Offer,
including Shares tendered at prices greater than the Purchase Price and not
withdrawn and Shares not purchased because of proration or conditional tenders,
will be returned at the Company's expense to the shareholders who tendered such
Shares. See Sections 1 and 6.
The Purchase Price will be paid to the tendering shareholder in cash
for all Shares purchased. Tendering shareholders will not be obligated to pay
brokerage commissions, solicitation fees or, subject to Instruction 7 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Company. HOWEVER, ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO
COMPLETE, SIGN AND RETURN TO THE DEPOSITARY THE FORM W-9 THAT IS INCLUDED IN THE
LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER
PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. Foreign Shareholders should request
Form W-8 from the Depositary. The Company will pay all fees and expenses of the
Dealer Managers. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
MAKING OF THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS
MAKES ANY RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING THEIR SHARES AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH TO TENDER.
As of April 7, 1997, the Company had issued and outstanding 3,279,798
Shares. The 250,000 Shares that
3
<PAGE>
the Company is offering to purchase pursuant to the Offer represent
approximately 7.62% of the outstanding Shares. The Shares are listed on the OTC
Bulletin Board under the symbol "AMNB." On April 7, 1997, the last full day of
listing on the OTC Bulletin Board prior to the announcement of the Offer, the
bid price was $23.50 per Share, the ask price was $24.75 per Share and the last
known sales price was $23.625 per Share as reported on the OTC Bulletin Board.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. See
Section 8.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company
will purchase up to 250,000 Shares or such lesser number of Shares as are
properly tendered (and not withdrawn in accordance with Section 4) prior to the
Expiration Date (as defined below) at prices not in excess of $27.00 nor less
than $25.00 net per Share in cash. This Offer will expire at 5:00 P.M., New York
City time, on Thursday, May 8, 1997 (the "Expiration Date"), unless and until
the Company, in its sole discretion, shall have extended the period of time
during which the Offer will remain open, in which event the term "Expiration
Date" shall refer to the latest time and date at which the Offer, as so extended
by the Company, shall expire. See Section 15 for a description of the Company's
right, in its sole discretion, to extend, delay, terminate or amend the Offer.
The Company reserves the right to purchase more than 250,000 Shares pursuant to
the Offer. In accordance with applicable regulations of the Securities and
Exchange Commission (the "Commission"), the Company may purchase pursuant to the
Offer an additional amount of Shares not to exceed 2% of the number of Shares
outstanding on April 8, 1997 without amending or extending the Offer. See
Section 15. In the event of an over-subscription of the Offer as described
below, Shares tendered at or below the Purchase Price prior to the Expiration
Date will be subject to proration, as explained below. The proration period also
expires on the Expiration Date.
The Company will select the lowest Purchase Price that will allow it to
buy 250,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $27.00 nor less than $25.00 per Share). All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, subject to the terms and the conditions
of the Offer, including the proration and conditional tender provisions. All
Shares purchased in the Offer will be purchased at the Purchase Price.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED IN THE OFFER. SEE SECTION 7.
In accordance with Instruction 5 of the Letter of Transmittal,
shareholders desiring to tender some or all of their Shares must specify the
price, not in excess of $27.00 nor less than $25.00 per Share, at which they are
willing to sell their Shares to the Company (sometimes referred to as a
"modified Dutch Auction" tender process). Shareholders who are willing to sell
their Shares at whatever price may be established by the modified Dutch Auction
tender process within the foregoing range may so indicate in accordance with
Instruction 5 of the Letter of Transmittal. As promptly as practicable following
the Expiration Date, the Company will, in its sole discretion, determine the
Purchase Price that it will pay for Shares properly tendered pursuant to the
Offer and not withdrawn, taking into account the number of Shares tendered and
the prices specified by tendering shareholders. The Company intends to select
the lowest Purchase Price, not in excess of $27.00 nor less than $25.00 net per
Share in cash, that will enable it to purchase 250,000 Shares (or such lesser
number of Shares as are properly tendered) pursuant to the Offer. Shares
properly tendered pursuant to the Offer at or below the Purchase Price and not
withdrawn will be purchased at the Purchase Price, subject to the terms and
conditions of the Offer, including the proration and conditional tender
provisions. All Shares tendered and not purchased pursuant to the Offer,
including Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration or conditional tender (but not including
Fiduciary Shares for which an Aid and Guidance Action is pending, as described
below), will be returned to the tendering shareholders at the Company's expense
as promptly as practicable following the Expiration Date.
The Company will be deemed to have accepted for payment, subject to
proration, Shares tendered at or
4
<PAGE>
below the Purchase Price and not withdrawn if, as and when the Company gives
oral or written notice to American National Bank and Trust Company, in its
capacity as the depositary under the terms of the Offer (the "Depositary"), of
its acceptance of such Shares for purchase pursuant to the Offer. Payment for
Shares accepted for purchase pursuant to the Offer will be made by depositing
the aggregate Purchase Price for such Shares with the Depositary, which will act
as agent for the tendering shareholders for the purpose of receiving payment
from the Company and transmitting such payments to tendering shareholders.
Acceptance for payment and payment for Fiduciary Shares purchased pursuant to
the Offer may be made at a time after acceptance for payment and payment for
other Shares, as described below.
Of the 3,279,798 Shares of the Company outstanding, 770,086, or
approximately 23.48%, are held by American National Bank and Trust Company, a
wholly-owned federally chartered bank subsidiary of the Company (the "Bank"), in
a fiduciary capacity (either alone or jointly with others, as the case may be)
in connection with the trust business conducted by the Bank. The Company has
been informed by the trustees of one such trust, the Alexander Berkeley
Carrington, Jr., and Ruth Simpson Carrington Charitable Trust (the "Carrington
Trust"), that it may tender some or all of the 152,345 Shares it holds.
Applicable law provides that the sale of trust or fiduciary property by a bank,
acting as a fiduciary for such trust or estate, in a transaction with such bank
or an affiliate of such bank shall be a breach of trust and voidable at the
election of any beneficiary or successor trustee unless such transaction is
approved by, among other things, appropriate court order (hereinafter referred
to as "Fiduciary Approval"). The process necessary to obtain such court approval
in Virginia is generally known as an "Aid and Guidance Action."
The Trustees of the Carrington Trust have advised the Company that they
may seek Fiduciary Approval of the sale of its Shares under the terms of the
Offer by initiating an Aid and Guidance Action in the appropriate state court
immediately following the commencement of the Offer.
Any Shares tendered by the Carrington Trust, or any other similarly
situated trust or estate (collectively, "Fiduciary Shares"), pursuant to the
Offer may be made subject to such trust or estate obtaining Fiduciary Approval.
It is possible that the applicable Fiduciary Approval will not be forthcoming
until after the Expiration Date of the Offer. In the event that the applicable
Fiduciary Approval is obtained before the time that the other Shares tendered
are accepted for payment and purchased in accordance with the terms of the
Offer, the Fiduciary Shares to which the Fiduciary Approval applies will be
accepted for payment and purchased at the same time as other Shares tendered,
all in accordance with the terms of the Offer. In the event that the applicable
Fiduciary Approval is not obtained before the time that other Shares tendered
are accepted for payment and purchased in accordance with terms of the Offer,
then, subject to the requirements of Rule 13e-4 under the Exchange Act, the
Depositary will retain such Fiduciary Shares while the applicable Aid and
Guidance Action is pending and the Company will accept for payment and purchase
such Fiduciary Shares as soon as practical after the applicable Fiduciary
Approval is obtained, all in accordance with the terms of the Offer. In the
event that the Aid and Guidance Action is terminated without obtaining Fiduciary
Approval or if Fiduciary Approval is denied, such Fiduciary Shares to which such
Aid and Guidance Action applies will not be purchased by the Company pursuant to
the Offer and, in such event, will be returned to the tendering shareholders at
the Company's expense as promptly as practicable following such termination or
denial.
All prorations required under the terms of the Offer will be made
assuming that all Fiduciary Shares will be purchased. In the event that any such
Fiduciary Shares are not purchased because the applicable Fiduciary Approval was
not obtained, or such Fiduciary Shares were withdrawn, after the time at which
other Shares were accepted for payment and purchased pursuant to the terms of
the Offer, such proration will not be adjusted or otherwise affected.
PRIORITY OF PURCHASERS. Upon the terms and subject to the conditions of
the Offer, if more than 250,000 Shares have been properly tendered at prices at
or below the Purchase Price and not withdrawn prior to the Expiration Date, the
Company will purchase properly tendered Shares on the basis set forth below:
(a) FIRST, all Shares properly and conditionally tendered at or
below the Purchase Price in accordance with Section 6, for
which the condition was satisfied, and all other Shares
tendered properly and
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unconditionally at prices at or below the Purchase Price and
not withdrawn prior to the Expiration Date, all on a pro rata
basis, if necessary (with appropriate adjustments to avoid
purchases of fractional Shares), as described below (for these
purposes, Fiduciary Shares tendered at prices at or below the
Purchase Price will be deemed to be Shares tendered properly
and unconditionally at prices at or below the Purchase Price
notwithstanding the fact that applicable Fiduciary Approval is
then still pending); and
(b) SECOND, if necessary, Shares properly and conditionally
tendered at or below the Purchase Price and not withdrawn
prior to the Expiration Date, selected by random lot in
accordance with Section 6.
The Company also reserves the right, but will not be obligated, to purchase all
Shares duly tendered by any shareholder who tendered all Shares owned,
beneficially or of record, at or below the Purchase Price and who, after
proration, would then own, beneficially or of record, an aggregate of fewer than
100 Shares. If the Company exercises this right, it will increase the number of
Shares that it is offering to purchase by the number of Shares purchased through
the exercise of the right.
PRORATION. In the event that proration of tendered Shares is required,
the Company will determine the proration factor as soon as practicable following
the Expiration Date. Proration for each shareholder tendering Shares at or below
the Purchase Price shall be based on the ratio of (i) the number of Shares the
Company determines to purchase divided by (ii) the total number of Shares
tendered by all shareholders at or below the Purchase Price, including Fiduciary
Shares tendered subject to Fiduciary Approval. Because of the difficulty in
determining the number of Shares properly tendered (including Shares tendered by
guaranteed delivery procedures, as described in Section 3) and not withdrawn,
the Company does not expect that it will be able to announce the final proration
factor or to commence payment for any Shares purchased pursuant to the Offer
until approximately seven trading days after the Expiration Date. The
preliminary results of any proration will be announced by press release as
promptly as practicable after the Expiration Date. Shareholders may obtain such
preliminary information from the Depositary or the Dealer Manager and may be
able to obtain such information from their brokers. Any failure by the Company
to purchase Fiduciary Shares after the purchase of other tendered Shares
pursuant to the Offer will not result in a recalculation or adjustment to the
proration factor as determined pursuant to this Section 1.
This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
Company's shareholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
The Company believes that the purchase of Shares is an attractive use
of a portion of the Company's available capital on behalf of its shareholders
and is consistent with the Company's long-term goal of increasing shareholder
value. The Company believes it has adequate sources of capital to complete the
Share repurchase and pursue business opportunities.
Over time, the Company's profitable operations have contributed to the
growth of a capital base that exceeds applicable regulatory standards and the
amount of capital needed to support the Company's banking business. After
evaluating a variety of alternatives to utilize more effectively its capital
base and to attempt to maximize shareholder value, the Company's management and
its Board of Directors believe that the purchase of Shares pursuant to the Offer
is a positive action that is intended to accomplish the desired objectives.
The Offer is designed to restructure the Company's balance sheet in
order to increase return on equity and earnings per share by reducing the amount
of equity and Shares outstanding. The Offer is also designed to help relieve any
unsatisfied selling demand in the Shares resulting from large holdings by
fiduciary shareholders such as the Carrington Trust and other similarly situated
trusts and estates, Shares held by new shareholders of the Company as a result
of the Mutual Merger (as defined in Section 10) and an historical lack of
liquidity in the
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Shares. Based upon the current market price of its Shares, the Company believes
that purchase of the Shares is an attractive use of its funds. Following the
purchase of the Shares, the Company believes funds provided by earnings combined
with its other sources of liquidity will be fully adequate to meet its funding
needs for the foreseeable future. Upon completion of the Offer, the Company
expects that it and the Bank will continue to maintain the highest regulatory
standard for capital, which is designated as "well capitalized" under the prompt
corrective action scheme enacted by the Federal Deposit Insurance Corporation
Improvement Act of 1991.
The Offer will enable shareholders to sell all or a portion of their
Shares at prices greater than the market prices prevailing immediately prior to
the announcement of the Offer. Shareholders may determine the price or prices
(not greater than $27.00 nor less than $25.00 per Share) at which they are
willing to sell their Shares, and, if any such Shares are purchased pursuant to
the Offer, to sell those Shares for cash without the usual transaction costs
associated with open-market sales. In addition, shareholders owning fewer than
100 Shares, whose Shares are purchased pursuant to the Offer, not only will
avoid the payment of brokerage commissions but will also avoid any applicable
odd lot discounts to the market price typically charged by brokers for executing
odd lot trades.
Shareholders who do not tender their Shares pursuant to the Offer and
shareholders who otherwise retain an equity interest in the Company as a result
of a partial tender of Shares or a proration pursuant to Section 1 of the Offer
will continue to be owners of the Company with the attendant risks and rewards
associated with owning the equity securities of the Company. As noted above, the
Company, following completion of the Offer, expects to continue to maintain the
highest regulatory capital ranking. Consequently, the Company believes that
shareholders will not be subject to materially greater risk as a result of the
reduction of the capital base.
Shareholders who determine not to accept the Offer will realize a
proportionate increase in their relative equity interest in the Company and,
thus, in the Company's earnings and assets, subject to any risks resulting from
the Company's purchase of Shares and the Company's ability to issue additional
equity securities in the future. For shareholders who do not tender or who
otherwise maintain an equity interest in the Company, the trading price of the
Shares may increase as a result of the Offer. There is no assurance, however,
that the purchase of Shares will achieve its objectives or that the Shares will
trade at or above the price range being offered by the Company.
To the extent that Fiduciary Shares are not purchased because they are
withdrawn pursuant to the Offer or because of the failure to obtain Fiduciary
Approval, any unsatisfied selling demand will not be relieved to the extent of
those Shares.
In addition, to the extent the purchase of Shares pursuant to the Offer
results in a reduction in the number of shareholders of record, the Company's
costs for services to shareholders may be reduced. Finally, the Offer may affect
the Company's ability to qualify for pooling-of-interests accounting treatment
for any merger transaction for approximately the next two years.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES
AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION.
SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER,
CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR
PRICES AT WHICH TO TENDER.
The Company may in the future purchase additional Shares on the open
market, in private transactions, through tender offers or otherwise. Any such
purchase may be on the same terms or on terms which are more or less favorable
to shareholders than the terms of the Offer. However, Rule 13e-4 under the
Exchange Act prohibits the Company and its affiliates from purchasing any
Shares, other than pursuant to the Offer, until at least ten business days after
the Expiration Date. Any possible future purchases by the Company will depend on
many factors, including the market price of the Shares, the results of the
Offer, the Company's business and financial position and general economic and
market conditions.
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Shares the Company acquires pursuant to the Offer will be restored to
the status of authorized and unissued Shares and will be available for the
Company to issue without further shareholder action (except as required by
applicable law or the rules of the OTC Bulletin Board or any other securities
exchange on which the Shares are listed) for purposes including, but not limited
to, the acquisition of other businesses, the raising of additional capital for
use in the Company's business and the satisfaction of obligations under existing
or future employee benefit plans. On February 18, 1997, the Company's Board of
Directors adopted a stock option plan (the "Plan"), subject to shareholder
approval at the Company's next annual meeting, which is scheduled for April 22,
1997. A total of up to 150,000 Shares may be issued under the Plan, subject to
adjustment in the case of any future stock dividend, stock split or any similar
change in the capitalization of the Company. The Plan is more specifically
described in the proxy statement mailed by the Company to its shareholders on
March 21, 1997.
3. PROCEDURES FOR TENDERING SHARES.
PROPER TENDER OF SHARES. For Shares to be tendered properly pursuant to
the Offer, (a) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof), including any required signature guarantees
and any other documents required by the Letter of Transmittal, must be received
prior to 5:00 P.M., New York City time, on the Expiration Date by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase or
(b) the tendering shareholder must comply with the guaranteed delivery procedure
set forth below. It is not necessary for Shareholders to tender all of their
Shares in order to participate in the Offer. IN ACCORDANCE WITH INSTRUCTION 5 OF
THE LETTER OF TRANSMITTAL, SHAREHOLDERS DESIRING TO TENDER SHARES PURSUANT TO
THE OFFER MUST PROPERLY INDICATE IN THE SECTION CAPTIONED "PRICE (IN DOLLARS)
PER SHARE AT WHICH SHARES ARE BEING TENDERED" OF THE LETTER OF TRANSMITTAL THE
PRICE (IN MULTIPLES OF $.125) AT WHICH THEIR SHARES ARE BEING TENDERED, OR
INDICATE THAT THEY ARE WILLING TO SELL THEIR SHARES AT ANY PRICE WITHIN THE
FOREGOING RANGE. Shareholders who desire to tender Shares at more than one price
must complete a separate Letter of Transmittal for each price at which shares
are tendered, provided that the same Shares cannot be tendered (unless properly
withdrawn previously in accordance with the terms of the Offer) at more than one
price. IN ORDER TO PROPERLY TENDER SHARES, ONE AND ONLY ONE PRICE BOX MUST BE
CHECKED IN THE APPROPRIATE SECTION ON EACH LETTER OF TRANSMITTAL.
SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required (i) if the Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company or Philadelphia Depository Trust
Company (collectively, the "Book-Entry Transfer Facilities") whose name appears
on a security position listing as the owner of the Shares) tendered therewith
and such holder has not completed either the section captioned "Special Payment
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal;
or (ii) if Shares are tendered for the account of a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., a commercial bank, a trust company, a savings bank, a savings and
loan association, or a credit union which has membership in an approved
signature guarantee program and has an office, branch or agency in the United
States (each such entity being hereinafter referred to as an "Eligible
Institution"). See Instructions 1, 4, and 10 of the Letter of Transmittal. If a
certificate for Shares is registered in the name of a person other than the
person executing a Letter of Transmittal, or if payment is to be made, or Shares
not purchased or tendered are to be issued, to a person other than the
registered holder, then the certificate must be endorsed or accompanied by an
appropriate stock power, in either case, signed exactly as the name of the
registered holder appears on the certificate, and the signature(s) on the stock
power and the Letter of Transmittal must be guaranteed by an Eligible
Institution.
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of certificates for such Shares (or a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility as described above), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS,
INCLUDING CERTIFICATES
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FOR SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT
THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, THEN
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with
respect to the Shares for purposes of the Offer at each Book-Entry Transfer
Facility within two business days after the date of this Offer to Purchase, and
any financial institution that is a participant in a Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing such
facility to transfer Shares into the Depositary's account in accordance with the
Book-Entry Transfer Facility's procedures for transfer. Although delivery of
Shares may be effected through a book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility, either (i) a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof)
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or (ii) the guaranteed delivery procedure described below must
be followed. DELIVERY OF DOCUMENTS TO A BOOK- ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant
to the Offer and such shareholder's Share certificates cannot be delivered to
the Depositary prior to the Expiration Date (or the procedures for book-entry
transfer cannot be completed on a timely basis) or if time will not permit all
required documents to reach the Depositary prior to the Expiration Date, such
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand, mail, telegram or facsimile
transmission, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery
substantially in the form the Company has provided with this
Offer to Purchase (specifying the price at which the Shares
are being tendered); and
(c) the certificates for all tendered Shares, in proper form for
transfer (or confirmation of book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities), together with a properly completed and
duly executed Letter of Transmittal (or a manually signed
facsimile thereof) and any required signature guarantees or
other documents required by the Letter of Transmittal, are
received by the Depositary within three trading days after the
date of receipt by the Depositary of such Notice of Guaranteed
Delivery.
RETURN OF SHARES. If any tendered Shares are not purchased, or if less
than all Shares evidenced by a shareholder's certificates are tendered,
certificates for unpurchased Shares will be returned as promptly as practicable
after the expiration or termination of the Offer or, in the case of Shares
tendered by book-entry transfer at a Book-Entry Transfer Facility, such Shares
will be credited to the appropriate account maintained by the tendering
shareholder at the appropriate Book-Entry Transfer Facility, in each case
without expense to such shareholder. See, however, Section 1 relating to
Fiduciary Shares tendered subject to Fiduciary Approval.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME
TAX WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE TO SHAREHOLDERS FOR
SHARES PURCHASED PURSUANT TO THE OFFER, EACH SHAREHOLDER WHO DOES NOT OTHERWISE
ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH
THE SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN
OTHER INFORMATION BY COMPLETING THE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL. Foreign shareholders may be required to submit Form W-8, certifying
non- United States status, to avoid backup withholding. See Instructions 14 and
15 of the Letter of Transmittal. For a discussion of certain federal income tax
consequences to tendering shareholders, see Section 14.
WITHHOLDING FOR FOREIGN SHAREHOLDERS. Even if a foreign shareholder
has provided the required certification
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to avoid backup withholding, the Depositary will withhold federal income taxes
equal to 30% of the gross payments payable to a foreign shareholder or his or
her agent unless the Depositary determines that an exemption from or a reduced
rate of withholding is available pursuant to a tax treaty or that an exemption
from withholding is applicable because such gross proceeds are effectively
connected with the conduct of a trade or business in the United States. In order
to obtain an exemption from or a reduced rate of withholding pursuant to a tax
treaty, a foreign shareholder must deliver to the Depositary a properly
completed Form 1001. For this purpose, a "foreign shareholder" is a shareholder
that is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States, any State or any political subdivision thereof or (iii) any
estate or trust the income of which is subject to United States federal income
taxation regardless of the source of such income. In order to obtain an
exemption from withholding on the grounds that the gross proceeds paid pursuant
to the Offer are effectively connected with the conduct of a trade or business
within the United States, a foreign shareholder must deliver to the Depositary a
properly completed Form 4224. The Depositary will determine a shareholder's
status as a foreign shareholder and eligibility for a reduced rate of, or an
exemption from, withholding by reference to any outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., Form 1001 or Form 4224) unless facts and circumstances
indicate that such reliance is not warranted. A foreign shareholder may be able
to obtain a refund of all or a portion of any tax withheld if such shareholder
meets one of the three tests for sale treatment described in Section 14 or is
otherwise able to establish that no tax or a reduced amount of tax is due.
Backup withholding generally will not apply to amounts subject to the 30% or
treaty-reduced rate of withholding.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance of any tender of
Shares will be determined by the Company, in its sole discretion, and its
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payment for
which may be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender with
respect to any particular Shares or any particular shareholder. No tender of
Shares will be deemed to have been properly made until all defects or
irregularities have been cured by the tendering shareholder or waived by the
Company. None of the Company, the Dealer Manager, the Depositary, or any other
person shall be obligated to give notice of any defects or irregularities in
tenders, nor shall any of them incur any liability for failure to give any such
notice.
TENDERING SHAREHOLDER'S REPRESENTATION AND WARRANTY; COMPANY'S
ACCEPTANCE CONSTITUTES AN AGREEMENT. A tender of Shares pursuant to any of the
procedures described above will constitute the tendering shareholder's
acceptance of the terms and conditions of the Offer, as well as the tendering
shareholder's representation and warranty to the Company that (a) such
shareholder has a net long position in the Shares being tendered within the
meaning of Rule 14e-4 promulgated by the Commission under the Exchange Act and
(b) the tender of such Shares complies with Rule 14e-4. It is a violation of
Rule 14e-4 for a person, directly or indirectly, to tender shares for such
person's own account unless, at the time of tender and at the end of the
proration period or period during which shares are accepted by lot (including
any extensions thereof), the person so tendering (i) has a net long position
equal to or greater than the amount of (x) Shares tendered or (y) other
securities convertible into or exchangeable or exercisable for the Shares
tendered and will acquire such Shares for tender by conversion, exchange or
exercise and (ii) will deliver or cause to be delivered such Shares in
accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. The Company's acceptance for payment of Shares tendered pursuant
to the Offer will constitute a binding agreement between the tendering
shareholder and the Company upon the terms and conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be withdrawn
at any time after 12:00 midnight, New York City time, on June 5, 1997. For a
withdrawal to be effective, a notice of withdrawal must be in written,
telegraphic or facsimile transmission form and must be received in a timely
manner by the
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Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the tendering
shareholder, the name of the registered holder, if different from that of the
person who tendered such Shares, the number of Shares tendered and the number of
Shares to be withdrawn. If the certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such certificates, the tendering shareholder must also submit the certificate
numbers shown on the particular certificates evidencing the Shares to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3, the notice of withdrawal also must
specify the name and the number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with the procedures of such facility. None of the Company, the Dealer Manager,
the Depositary or any other person shall be obligated to give notice of any
defects or irregularities in any notice of withdrawal nor shall any of them
incur liability for failure to give any such notice. All questions as to the
form and validity (including time of receipt) of notices of withdrawal will be
determined by the Company, in its sole discretion, which determination shall be
final and binding.
Withdrawals may not be rescinded and any Shares withdrawn will
thereafter be deemed not properly tendered for purposes of the Offer unless such
withdrawn Shares are properly retendered prior to the Expiration Date by again
following one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares
or is unable to purchase Shares pursuant to the Offer for any reason (including
without limitation, that certain Shares are subject to the Fiduciary Approval
process described in Section 1 and such process has not then been completed),
then, without prejudice to the Company's rights under the Offer, the Depositary
may, subject to applicable law, retain tendered Shares on behalf of the Company,
and such Shares may not be withdrawn except to the extent tendering shareholders
are entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly
as practicable following the Expiration Date, the Company (i) will determine the
Purchase Price it will pay for the Shares properly tendered and not withdrawn
prior to the Expiration Date, taking into account the number of Shares so
tendered and the prices specified by tendering shareholders, and (ii) will
accept for payment and pay for (and thereby purchase) Shares properly tendered
at prices at or below the Purchase Price and not withdrawn prior to the
Expiration Date. For purposes of the Offer, the Company will be deemed to have
accepted for payment (and therefore purchased) Shares that are tendered at or
below the Purchase Price and not withdrawn (subject to the proration and
conditional tender provisions of the Offer) only when, as and if it gives oral
or written notice to the Depositary of its acceptance of such Shares for payment
pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date the Company will accept for payment and pay a
single Purchase Price per Share for 250,000 Shares (subject to increase or
decrease as provided in Section 15) or such lesser number of Shares as are
properly tendered at prices not in excess of $27.00 nor less than $25.00 per
Share and not withdrawn as permitted in Section 4.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering shareholders.
In the event of proration, the Company will determine the proration
factor and pay for those tendered Shares accepted for payment as soon as
practicable after the Expiration Date; however, the Company does not expect to
be able to announce the final results of any proration and commence payment for
Shares purchased until approximately seven trading days after the Expiration
Date. Certificates for all Shares tendered and not purchased, including all
Shares tendered at prices in excess of the Purchase Price and Shares not
purchased due to proration or conditional tender, will be returned (or, in the
case of Shares tendered by book-entry transfer, such Shares will
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be credited to the account maintained with the Book-Entry Transfer Facility by
the participant therein who so delivered such Shares) to the tendering
shareholder at the Company's expense as promptly as practicable after the
Expiration Date without expense to the tendering shareholders. Under no
circumstances will interest on the Purchase Price be paid by the Company by
reason of any delay in making payment. In addition, if certain events occur, the
Company may not be obligated to purchase Shares pursuant to the Offer. See
Section 7.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered holder or such other person), payable on account of the transfer to
such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 7 of the Letter of Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY,
SIGN AND RETURN TO THE DEPOSITARY THE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO
THE OFFER. SEE SECTION 3. ALSO SEE SECTION 3 REGARDING FEDERAL INCOME TAX
CONSEQUENCES FOR FOREIGN SHAREHOLDERS.
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances set forth in Section 1 above, the Company
may prorate the number of Shares purchased pursuant to the Offer. As discussed
in Section 14, the number of Shares to be purchased from a particular
shareholder might affect the tax consequences to such shareholder of such
purchase and such shareholder's decision whether to tender. Accordingly, a
shareholder may tender Shares subject to the condition that a specified minimum
number, if any, must be purchased, and any shareholder wishing to make such a
conditional tender should so indicate in the section captioned "Conditional
Tender" on the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery. It is the tendering shareholder's responsibility to
calculate such minimum number of Shares and each shareholder is urged to consult
his or her own tax advisor. If the effect of accepting tenders on a pro rata
basis is to reduce the number of Shares to be purchased from any shareholder
below the minimum number so specified, such tender will automatically be deemed
withdrawn, except as provided in the next paragraph, and Shares tendered by such
shareholder will be returned as soon as practicable after the Expiration Date.
However, if so many conditional tenders would be deemed withdrawn that
the total number of Shares to be purchased falls below 250,000 Shares, then to
the extent feasible, the Company will select enough of such conditional tenders,
which would otherwise have been deemed withdrawn, to purchase such desired
number of Shares. In selecting among such conditional tenders, the Company will
select by random lot and will limit its purchase in each case to the designated
minimum number of Shares to be purchased.
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall not
be required to accept for payment, purchase or pay for any Shares tendered, and
may terminate or amend the Offer or may postpone the acceptance for payment of,
or the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after April 9, 1997 and prior to
the time of payment for any such Shares (whether any Shares have theretofore
been accepted for payment, purchased or paid for pursuant to the Offer) any of
the following events shall have occurred (or shall have been determined by the
Company to have occurred) that, in the Company's reasonable judgment in any such
case and regardless of the circumstances giving rise thereto (including any
action or omission to act by the Company), makes it inadvisable to proceed with
the Offer or with such acceptance for payment or payment:
12
<PAGE>
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or administrative
agency, authority or tribunal or any other person, domestic or foreign, before
any court, authority, agency or tribunal that directly or indirectly (i)
challenges the making of the Offer, the acquisition of some or all of the Shares
pursuant to the Offer or otherwise relates in any manner to the Offer, or (ii)
in the Company's reasonable judgment, could materially and adversely affect the
business, condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or otherwise materially impair
in any way the contemplated future conduct of the business of the Company or any
of its subsidiaries or materially impair the contemplated benefits of the Offer
to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered, amended,
enforced or deemed to be applicable to the Offer or the Company or any of its
subsidiaries, by any court or any authority, agency or tribunal that, in the
Company's reasonable judgment, would or might directly or indirectly (i) make
the acceptance for payment of, or payment for, some or all of the Shares
illegal, or otherwise restrict or prohibit consummation of the Offer; (ii) delay
or restrict the ability of the Company, or render the Company unable, to accept
for payment or pay for some or all of the Shares; (iii) materially impair the
contemplated benefits of the Offer to the Company; or (iv) materially and
adversely affect the business, condition (financial or other), income,
operations or prospects of the Company and its subsidiaries, taken as a whole,
or otherwise materially impair in any way the contemplated future conduct of the
business of the Company or any of its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market; (ii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States; (iii) the
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States; (iv) any limitation
(whether or not mandatory) by any governmental, regulatory or administrative
agency or authority on, or any event that, in the Company's reasonable judgment,
might affect, the extension of credit by banks or other lending institutions in
the United States; (v) any significant decrease in the market price of the
Shares or in the general level of market prices of equity securities in the
United States or abroad or any change in the general political, market, economic
or financial conditions in the United States or abroad that could, in the
reasonable judgment of the Company, have a material adverse effect on the
Company's business, operations or prospects or the trading in the Shares; (vi)
in the case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof; or (vii) any decline in
either the Standard and Poor's Index of 500 Industrial Companies or the Standard
and Poor's Bank Index by an amount in excess of 10 percent measured from the
close of business on April 9, 1997;
(d) a tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by another person or shall
have been publicly disclosed, the Company shall have received an offer, or an
indication of interest, from a third party with respect to the acquisition of
all or substantially all of the Company's assets; or the Company shall have
learned that (i) any person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) shall have acquired or proposed to acquire beneficial
ownership of more than five percent of the outstanding Shares, or (ii) any new
group shall have been formed that beneficially owns more than five percent of
the outstanding Shares; or
(e) any change or changes shall have occurred in the business,
financial condition, assets, income, operations, prospects or stock ownership of
the Company or its subsidiaries that, in the reasonable judgment of the
Company's Board of Directors, is or may be material to the Company or its
subsidiaries.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances (including any
action or inaction by the Company) giving rise to any such condition, and may be
waived by the Company, in whole or in part, at any time and from time to time in
its sole discretion. The Company's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described above will be final and binding.
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<PAGE>
Fiduciary Shares tendered pursuant to the Offer may be tendered subject
to obtaining the applicable Fiduciary Approval as described in Section 1.
8. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded over the counter and listed on the OTC Bulletin
Board. The following table sets forth, for the periods indicated, the high and
low sales prices known to management per Share as reported on the OTC Bulletin
Board and the cash dividends paid per Share in each such fiscal quarter:
Dividends
1995 High Low Declared
1st Quarter $30.50 $26.00 $ .00
2nd Quarter 30.50 27.00 .27
3rd Quarter 30.50 27.00 .00
4th Quarter 31.00 28.00 .29
1996
1st Quarter $30.00 $26.00 $ .15
2nd Quarter 27.00 23.00 .18
3rd Quarter 26.00 23.25 .18
4th Quarter 26.38 24.00 .18
1997
1st Quarter $24.88 $23.25 $ .18
TENDER OFFER RANGE $27.00 $25.00
On April 7, 1997, the last full day of listing prior to the
announcement of the Offer, the bid price was $23.50 per Share, the ask price was
$24.75 per Share and the last known sales price on the OTC Bulletin Board was
$23.625 per Share. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES. Current market quotations for the Shares may be obtained from
the Dealer Manager or from your broker.
All decisions with respect to the payment of future dividends will be
made by the Board of Directors based upon the Company's earnings, financial
condition, anticipated cash needs and such other considerations as the Board of
Directors deems relevant. The Company anticipates that quarterly dividend
payments subsequent to the termination of the Offer will continue to be made in
amounts not less than the most recent quarter. However, future dividend payments
are subject to future earnings results and other financial considerations, and
the Board of Directors may in its discretion increase or decrease the quarterly
dividend. There can be no assurance that the level of dividends will be
consistent with the current dividends.
9. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases 250,000 Shares pursuant to the
Offer at a price not in excess of $27.00 nor less than $25.00 per Share, the
cost to the Company (excluding fees and expenses related to the Offer) is
estimated to be between $6,250,000 and $6,750,000. The Company plans to obtain
funds needed for the Offer from cash expected to be on hand derived primarily
from dividends from the Bank. The Bank is expected to pay to the Company
dividends from the Bank's earnings and, if necessary, from other liquid assets,
including the sale of securities classified as "available for sale" on the books
of the Bank.
14
<PAGE>
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL. The Company was organized in 1984 for the purpose of acquiring
all of the outstanding shares of the Bank, a commercial bank organized in 1909
in Danville, Virginia. The Company regularly seeks reasonable opportunities to
expand its asset base and trade area and related business endeavors.
On March 14, 1996, the Company completed the merger of Mutual Savings
Bank, F.S.B. (the "Mutual Merger") into the Bank and, on October 25, 1996, the
Company closed the acquisition of the Yanceyville, North Carolina branch of
FirstSouth Bank of Burlington, North Carolina.
The Bank's operations are conducted at eleven offices, where it offers
all services normally offered by a full-service commercial bank, including
commercial and individual demand and time deposit accounts, commercial and
individual loans and trust services. The Bank also operates eight automatic
teller machines ("ATM's") and is currently in the process of constructing an
additional ATM facility.
FINANCIAL INFORMATION. Additional financial information concerning the
Company is contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, copies of which can be obtained from the Company
upon request. See "Additional Information".
FINANCIAL RESULTS FOR THE CURRENT QUARTER. Financial results for the
quarter ended March 31, 1997 are not available and are not included herein. The
Company expects to make public its earnings results and other relevant financial
information for that quarter and the year to date in a news release on or about
April 16, 1997. Copies of that news release will be sent to shareholders by mail
shortly thereafter and will otherwise be available to shareholders from the
Company by calling (804) 773-2220. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
SUMMARY FINANCIAL INFORMATION. The following table presents a summary
of consolidated financial and operating data of the Company and should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated historical financial information
of the Company and related notes thereto included in the Company's Annual Report
on Form 10-K, which is incorporated by reference herein. The summary historical
consolidated financial data are derived from the consolidated financial
statements of the Company, which have been audited by Arthur Andersen LLP.
Summary Financial Information
(Dollars in Thousands, Except Per Share Data)
For the Year Ended December 31,
---------------------------------
1996 1995
---------------- ---------------
INCOME STATEMENT DATA
Interest Income $ 29,932 $ 25,934
Interest Expense 14,370 11,484
------------- -----------
Net Interest Income 15,562 14,450
Provision for Loan Losses 673 484
Non-interest Income 2,691 2,035
Non-interest Expense 10,167 8,702
Provision for Income Tax Expense 2,381 2,283
------------ -----------
Net Income $ 5,032 $ 5,016
Net Income Per Share $ 1.54 $ 1.56
Dividends Declared Per Share $ 0.69 $ 0.56
15
<PAGE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------
1996 1995
-------- ------------
<S> <C>
BALANCE SHEET DATA
Assets $ 440,158 $ 388,479
Earnings Assets 412,535 367,044
Investment Securities:
Available for Sale 87,371 51,106
Held to Maturity 88,386 98,102
Loans, Net of Unearned Income 236,579 215,442
Deposits 361,983 327,342
Shareholder's Equity 52,218 48,912
Book Value per Share $ 15.92 $ 15.22
Shares Outstanding (actual) 3,279,798 3,213,641
SELECTED FINANCIAL RATIOS
Return on Average Assets 1.24% 1.43%
Return on Average Equity 10.12% 10.62%
Average Equity to Average Assets 12.22% 13.43%
Net Interest Margin, Taxable Equivalent 4.15% 4.40%
Allowance for Loan Losses to Loans, Net of Unearned Income 1.30% 1.28%
Non-Performing Assets to Total Assets 0.01% 0.08%
Annualized Net Loan Losses to Average Loans 0.17% 0.09%
</TABLE>
NOTES TO SUMMARY FINANCIAL INFORMATION
(1) The merger of Mutual Savings Bank, F.S.B. into the Bank was accounted
for as a pooling of interests. The financial position and results of operations
of the Company and Mutual were combined and the fiscal year of Mutual was
conformed to the Company's fiscal year. In addition, all prior periods presented
were restated to give effect to the merger.
ADDITIONAL INFORMATION. Additional information concerning the Company is
set forth in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996. The Company has also filed a Schedule 13E-4 with the
Commission, which includes certain additional information related to the Offer.
Forms 10-K, as well as periodic reports, proxy statements and other information,
are regularly filed by the Company with the Commission. Such material may be
inspected and copied at prescribed rates at the Commission's Public Reference
Facilities at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the New York regional office of the Commission located at
Suite 1300, Seven World Trade Center, New York, New York 10048, and copies of
such material may be obtained at prescribed rates from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains an internet web site at
http://www.sec.gov containing reports, proxy and informational statements and
other information regarding companies who file reports electronically with the
Commission. In addition, reports, proxy statements and other information
concerning the Company may be obtained by contacting the Company at the
addresses and telephone numbers shown on the back cover page of this Offer to
Purchase.
16
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION. The following unaudited pro
forma financial information for the year ended December 31, 1996 shows the
effect of the purchase of 250,000 Shares pursuant to the Offer as if it were
completed as of January 1, 1996. The pro forma financial information should be
read in conjunction with the audited financial statements and related notes
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996. The pro forma financial information does not purport to be
indicative of the results that would have actually been attained had the
purchase of the Shares been completed on January 1, 1996 or that may be attained
in the future.
Selected Pro Forma Financial Information (Dollars in Thousands, Except Per Share
Data)
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996
-----------------------------------------------------------
Pro Forma Pro Forma
Historical $ 25.00 $ 27.00
------- -------
<S> <C>
INCOME STATEMENT DATA
Net Interest Income $ 15,562 $ 15,199 $ 15,169
Net Income 5,032 4,792 4,773
Net Income per Share $ 1.54 $ 1.59 $ 1.58
Average Number of Shares 3,267,038 3,017,038 3,017,038
BALANCE SHEET DATA
Assets $ 440,158 $ 433,840 $ 433,321
Debt to Purchase Shares -- -- --
Shareholders' Equity 52,218 45,900 45,381
Book Value per Share $ 15.92 $ 15.15 $ 14.98
Shares Outstanding 3,279,798 3,029,798 3,029,798
SELECTED FINANCIAL RATIOS
Return on Average Assets 1.24% 1.20% 1.19%
Return on Average Equity 10.12% 11.04% 11.13%
Average Equity to Average 12.22% 10.84% 10.72%
Assets
</TABLE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
(1) The pro forma financial information reflects the purchase of 250,000
Shares of common stock at $25.00 and $27.00 per share, as appropriate.
(2) The funds used to purchase Shares were considered to have been
obtained from the sale of U.S. Government securities available for sale. The
income statement data reflects the reduction in interest income as if the sale
occurred at the beginning of the period presented. The income statement does not
reflect a savings by the Bank of state franchise tax as a result of reducing
capital, which the Company expects will be approximately $16,000 annually,
commencing in the year following such reduction of capital by the Bank.
(3) Costs incurred in connection with the Offer will be capitalized as
part of the cost of the Shares purchased and, consequently, no effect of such
costs is reflected in the Pro Forma Income Statement data. Such costs are
estimated to be $91,000.
11. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING SHARES.
As of April 7, 1997, the Company had issued and outstanding 3,279,798
Shares. The 250,000 Shares that
17
<PAGE>
the Company is offering to purchase represent approximately 7.62% of the
outstanding Shares. As of March 28, 1997, the Company's directors and executive
officers as a group (16 persons) beneficially owned an aggregate of 293,684
Shares representing approximately 8.96% of the outstanding Shares. The Company
has been advised that no director or executive officer of the Company intends to
tender any Shares pursuant to the Offer.
If the Company purchases 250,000 Shares pursuant to the Offer, then
after the purchase of Shares pursuant to the Offer, the Company's executive
officers and directors as a group would own beneficially approximately 9.69% of
the outstanding Shares immediately after the Offer.
Except as set forth in Schedule A, neither the Company, nor any
subsidiary of the Company nor, to the best of the Company's knowledge, any of
the Company's directors or executive officers, nor any affiliates of any of the
foregoing, had any transactions involving the Shares during the 40 business days
prior to the date hereof.
Neither the Company nor, to the best of the Company's knowledge, any of
its affiliates, directors or executive officers, or any of the directors or
executive officers of any of its affiliates is a party to any contract,
arrangement, understanding or relationship with any other person relating,
directly or indirectly, to the Offer with respect to any securities of the
Company including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any such securities,
joint ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations.
Notwithstanding the foregoing, the Company has been advised that the
Carrington Trust, for which the Bank, the Company's wholly-owned subsidiary
serves as a co-trustee, may tender some or all of its Shares, subject to
obtaining Fiduciary Approval as described in Section 1. B. Carrington Bidgood, a
co-trustee of the Carrington Trust, serves as a director of the Company.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER
THE EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of shareholders. Nonetheless, the Company anticipates that there will be
a sufficient number of Shares outstanding and publicly traded following
consummation of the Offer to ensure a continued trading market for the Shares.
Based upon published guidelines of the OTC Bulletin Board, the Company believes
that following its purchase of Shares pursuant to the Offer, the Company's
remaining Shares will continue to qualify to be quoted on the OTC Bulletin
Board.
The Shares are currently not "margin securities" under the rules of the
Federal Reserve Board. This has the effect, among other things, of not allowing
brokers to extend credit to their customers using such Shares as collateral. The
Company believes that, following the purchase of Shares pursuant to the Offer,
the Shares will continue to not be "margin securities" for purposes of the
Federal Reserve Board's margin requirements.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its shareholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's shareholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Company's
remaining shares becoming eligible for deregistration under the Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that
appears to be material to the Company's business that might be adversely
affected by the Company's acquisition of Shares as contemplated herein or of any
approval or other action by, or any filing with, any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, that
would be required for the acquisition or ownership of Shares by the Company as
contemplated herein, other than the Fiduciary Approval which may be sought for
any Fiduciary Shares tendered pursuant to the Offer by the Carrington Trust or
other applicable trust or estate, as described in Section 1.
18
<PAGE>
Should any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of or payment for Shares tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that the failure to obtain any such approval
or other action might not result in adverse consequences to the Company's
business. The Company's obligations under the Offer to accept for payment and
pay for Shares is subject to certain conditions. See Section 7.
The Bank serves as trustee or co-trustee of several tax-exempt
charitable trusts, including the Carrington Trust, that are classified as
private foundations ("Foundations") under Sections 501(c)(3) and 509(a) of the
Code. Section 4941(d)(1)(A) prohibits the Bank or the Company from purchasing
certain assets from a Foundation to the extent that such purchase constitutes an
act of self-dealing (an "Act of Self-Dealing") triggering federal excise taxes
under Section 4941 of the Code. A purchase of stock or other property by a
trustee from a Foundation, for which the Bank serves as trustee or co-trustee,
is not an Act of Self-Dealing if it occurs pursuant to a redemption or other
corporate adjustment, organization or reorganization so long as all securities
of the same class as that held by the Foundation are subject to the same terms
and such terms provide for receipt by the Foundation of no less than fair market
value. Securities are considered subject to the same terms if, pursuant to the
transaction, the corporation makes a bona fide offer on a uniform basis to the
Foundation and every other person who holds such securities.
For each Act of Self-Dealing, the excise tax on the purchaser of the
Foundation assets is 5% per year of the amount involved (generally, the greater
of (i) the amount of money and fair market value of other property given and
(ii) the amount of money and fair market value of other property received). A
separate tax equal to the lesser of $10,000 and 2.5% of the amount involved may
be assessed against each fiduciary who wilfully and knowingly participates in
the Act of Self-Dealing. In all events, moreover, the parties also have an
obligation to promptly correct an Act of Self-Dealing by undoing the transaction
to the extent possible and placing the Foundation in a financial position not
worse than that in which it would be if the purchaser had dealt under the
highest fiduciary standards.
The Company has structured the Offer as a bona fide offer on a uniform
basis to all Foundations and every other person who holds the Shares, and
therefore believes that the purchase of Shares from the Carrington Trust or any
other Foundation for which the Bank serves as trustee or co-trustee would not
constitute an Act of Self- Dealing under the Code. However, this determination
is based on laws, regulations, rulings and court decisions currently in effect,
all of which are subject to change, possibly with retroactive effect. The
Company has neither requested nor obtained a written opinion of counsel or a
ruling from the Internal Revenue Service (the "Service") with respect to whether
any purchase made under the Offer would constitute an Act of Self-Dealing.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
GENERAL. The federal income tax discussion set forth below summarizes
the principal federal income tax consequences to U. S. shareholders of sales of
Shares pursuant to the Offer and is included for general information only. The
discussion does not address all aspects of federal income taxation that may be
relevant to a particular shareholder or any relevant foreign, state, local or
other tax laws. Certain shareholders (including insurance companies, tax-exempt
entities, foreign persons, financial institutions, broker dealers, employee
benefit plans, personal holding companies and persons who acquired their Shares
upon the exercise of employee stock options or as compensation) may be subject
to special rules not discussed below. The discussion is based on laws,
regulations, rulings and court decisions currently in effect, all of which are
subject to change, possibly with retroactive effect. The Company has neither
requested nor obtained a written opinion of counsel or a ruling from the Service
with respect to the tax matters discussed below. EACH SHAREHOLDER IS URGED TO
CONSULT AND RELY ON THE SHAREHOLDER'S OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO THE SHAREHOLDER OF SELLING SHARES PURSUANT TO THE OFFER,
INCLUDING THE APPLICATION OF FOREIGN, STATE, LOCAL OR OTHER TAX LAWS.
A sale of Shares pursuant to the Offer will constitute a "redemption"
under the Internal Revenue Code of 1986 (the "Code") and will be a taxable
transaction for federal income tax purposes. If the redemption qualifies as a
sale of Shares by a shareholder under Section 302 of the Code, the shareholder
will recognize gain or loss equal
19
<PAGE>
to the difference between (i) the cash received pursuant to the Offer and (ii)
the shareholder's tax basis in the Shares surrendered pursuant to the Offer. If
the redemption does not qualify as a sale of Shares under Section 302, the
shareholder will not be treated as having sold Shares but will be treated as
having received a dividend taxable as ordinary income in an amount equal to the
cash received pursuant to the Offer. As described below, whether a redemption
qualifies for sale treatment will depend largely on the total number of the
shareholder's Shares (including any Shares constructively owned by the
Shareholder) that are purchased. A shareholder desiring to obtain sale treatment
therefore may want to make a conditional tender, as described in Section 6, to
make sure that a minimum number of his or her Shares (if any) are purchased.
SALE TREATMENT. Under Section 302 of the Code, a redemption of Shares
pursuant to the Offer will be treated as a sale of such Shares for federal
income tax purposes if such redemption (i) results in a "complete redemption" of
all of the shareholder's stock in the Company, (ii) is "substantially
disproportionate" with respect to the shareholder, or (iii) is "not essentially
equivalent to a dividend" with respect to the shareholder. In determining
whether any of these three tests under Section 302 is satisfied, a shareholder
must take into account not only Shares that the shareholder actually owns, but
also any Shares that the shareholder is treated as owning pursuant to the
constructive ownership rules of Section 318 of the Code. Under these rules, a
shareholder generally is treated as owning (i) Shares owned by the shareholder's
spouse, children, grandchildren, and parents, (ii) Shares owned by certain
trusts of which the shareholder is a beneficiary in proportion to the
shareholder's interest, (iii) Shares owned by any estate of which the
shareholder is a beneficiary in proportion to the shareholder's interest, (iv)
Shares owned by any partnership or "S corporation" in which the shareholder is a
partner or shareholder in proportion to the shareholder's interest, (v) Shares
owned by any non-S corporation of which the shareholder owns at least 50% in
value of the stock and (vi) Shares that the shareholder has an option or similar
right to acquire. A shareholder that is a partnership or S corporation, estate,
trust, or non-S corporation is treated as owning stock owned (as the case may
be) by partners or S corporation shareholders, by estate beneficiaries, by
certain trust beneficiaries, and by 50% shareholders of a non-S corporation.
Stock constructively owned by a person generally is treated as being owned by
that person for the purpose of attributing ownership to another person.
A redemption of Shares from a shareholder pursuant to the Offer will
result in a "complete redemption" of all the shareholder's stock in the Company
if either (i) the Company purchases all of the Shares actually and
constructively owned by the shareholder, or (ii) the shareholder actually owns
no Shares after all transfers of Shares pursuant to the Offer, constructively
owns only Shares owned by certain family members, and the shareholder qualifies
to and does waive (pursuant to Section 302(c)(2) of the Code) constructive
ownership of Shares owned by family members. Any shareholder desiring to waive
such constructive ownership of Shares should consult a tax advisor about the
applicability of Section 302(c)(2).
A redemption of Shares from a shareholder pursuant to the Offer will be
"substantially disproportionate" with respect to the shareholder if the number
of Shares actually and constructively owned by the shareholder (expressed as a
percentage of all Shares outstanding) immediately after all redemptions of
Shares pursuant to the Offer is less than 80% of the number of Shares actually
and constructively owned by the shareholder (expressed as a percentage of all
Shares outstanding) immediately before such redemptions. If exactly 250,000
Shares are redeemed pursuant to the Offer, the number of Shares outstanding
after consummation of the Offer will be approximately 92.377% of the number of
Shares currently outstanding. Consequently, in that case a shareholder must
dispose of more than 26.1% (i.e., 100% minus 80% of 92.377%) of the number of
Shares the shareholder actually and constructively owns in order possibly to
qualify for a substantially disproportionate redemption. If the Company were to
exercise its right to purchase an additional 2% of the outstanding Shares, a
shareholder would have to dispose of more than 27.7% (i.e., 100% minus 80% of
90.377%) of the number of Shares the shareholder actually and constructively
owns in order possibly to qualify for a substantially disproportionate
redemption.
A redemption of Shares from a shareholder pursuant to the Offer will be
"not essentially equivalent to a dividend" if pursuant to the Offer, the
shareholder experiences a "meaningful reduction" in his or her proportionate
interest in the Company, including voting rights, participation in earnings, and
liquidation rights, arising from the actual and constructive ownership of
Shares. The Service has indicated in a published ruling that a very small
reduction in the proportionate interest of a small minority shareholder who does
not exercise any control over corporate affairs generally constitutes a
"meaningful reduction" in the shareholder's interest in the company. The
20
<PAGE>
fact that the redemption fails to qualify as a sale pursuant to the other two
tests is not taken into account in determining whether the redemption is "not
essentially equivalent to a dividend." If exactly 250,000 Shares are redeemed
pursuant to the Offer, the number of Shares outstanding will be reduced by
approximately 7.623%. Consequently, in that case a shareholder must dispose of
more than 7.623% of the number of Shares the shareholder actually and
constructively owns in order to have any reduction in the shareholder's
proportionate stock interest in the Company. If the Company were to exercise its
right to purchase an additional 2% of the outstanding Shares, a shareholder
would have to dispose of more than 9.623% of the number of Shares the
shareholder actually and constructively owns in order to have any reduction in
the shareholder's proportionate interest.
Shareholders should be aware that their ability to satisfy any of the
foregoing tests also may be affected by proration pursuant to the Offer.
THEREFORE, UNLESS A SHAREHOLDER MAKES A CONDITIONAL TENDER (SEE SECTION 6), THE
SHAREHOLDER CAN BE GIVEN NO ASSURANCE, EVEN IF HE OR SHE TENDERS ALL OF THE
SHAREHOLDER'S SHARES, THAT THE COMPANY WILL PURCHASE A SUFFICIENT NUMBER OF SUCH
SHARES TO PERMIT THE SHAREHOLDER TO SATISFY ANY OF THE FOREGOING TESTS.
Shareholders also should be aware that an acquisition or disposition of Shares
in the market or otherwise as part of a plan that includes the shareholder's
tender of Shares pursuant to the Offer might be taken into account in
determining whether any of the foregoing tests is satisfied. Shareholders are
urged to consult their own tax advisors with regard to whether acquisitions from
or sales to third parties, including market sales, and a tender may be so
integrated.
If any of the foregoing three tests is satisfied, the shareholder will
recognize gain or loss equal to the difference between the amount of cash
received pursuant to the Offer and the shareholder's tax basis in the Shares
sold. Such gain or loss must be determined separately for each block of Shares
sold (i.e., Shares that were acquired in a single transaction), and will be
capital gain or loss if the shareholder held the Shares as a capital asset.
Capital gain or loss generally will be long-term capital gain or loss if, when
the Company accepts the Shares for payment, the shareholder held the Shares for
more than one year. Long-term capital gains of individuals, estates and trusts
currently are subject to federal income tax at a maximum rate of 28%. Short-term
capital gains of individuals, estates and trusts generally are subject to a
maximum federal income tax rate of 39.6%. Capital gains of corporations
generally are taxed at the federal income tax rates applicable to corporate
ordinary income.
DIVIDEND TREATMENT. If none of the foregoing three tests under Section
302 of the Code is satisfied, the shareholder generally will be treated as
having received a dividend taxable as ordinary income in an amount equal to the
amount of cash received by the shareholder pursuant to the Offer, to the extent
the Company has sufficient accumulated or current earnings and profits. The
Company expects that its current and accumulated earnings and profits will be
sufficient to cover the amount of any payments pursuant to the Offer that are
treated as dividends.
Dividend income of individuals, estates and trusts generally is subject
to federal income tax at a maximum rate of 39.6%. Dividend income of
corporations, subject to the provisions discussed below, generally is subject to
federal income tax at a maximum rate of 35%. To the extent that the purchase of
Shares from any shareholder pursuant to the Offer is treated as a dividend, the
shareholder's tax basis in any Shares that the shareholder actually or
constructively owns after consummation of the Offer should be increased by the
shareholder's tax basis in the Shares surrendered pursuant to the Offer.
TREATMENT OF DIVIDEND INCOME FOR CORPORATE SHAREHOLDERS. In the case of
a corporate shareholder, if the cash received for Shares pursuant to the Offer
is treated as a dividend, the dividend income may be eligible for the 70%
dividends-received deduction under Section 243 of the Code. The
dividends-received deduction is subject to certain limitations; for example, the
deduction may not be available if the corporate shareholder does not satisfy
certain holding period requirements with respect to its tendered Shares or if
the Shares are "debt-financed portfolio stock." If a dividends-received
deduction is available, the dividend (having arisen in a non-pro rata
redemption) also likely will be treated as an "extraordinary dividend" under
Section 1059 of the Code. In that case the corporate shareholder's tax basis in
its remaining Shares (for purposes of determining gain or loss on a future
disposition) will be reduced (but not below zero) by the amount of any
"extraordinary dividend" not taxed because of the dividends-received deduction.
Any amount of the "extraordinary dividend" not taxed because of the
dividends-received deduction and in excess of the corporate shareholder's tax
basis for the remaining Shares generally will be subject to tax, under current
law, as gain on a subsequent sale or disposition of those Shares.
21
<PAGE>
If enacted into law as proposed, certain pending legislation would
apply to corporate shareholders whose receipt of cash for Shares pursuant to the
Offer is treated as a dividend. Under such legislation, (i) any excess of the
portion of an extraordinary dividend not otherwise taxed because of the
dividends-received deduction over the shareholder's tax basis in its remaining
Shares generally would be taxable currently as gain on the sale of Shares and
(ii) if a redemption of Shares from a corporate shareholder pursuant to the
Offer is treated as a dividend as a result of the shareholder's constructive
ownership of other Shares that it has an option or other right to acquire, the
portion of the extraordinary dividend not otherwise taxed because of the
dividends-received deduction would reduce the shareholder's basis only in its
Shares sold pursuant to the Offer, and any excess of such non-taxed portion over
such basis would be currently taxable as gain on the sale of such Shares. In
addition, under proposed legislation that generally would be effective thirty
days after enactment, (i) the percentage of dividends potentially qualifying for
the dividends-received deduction would be reduced to 50% and (ii) the
holding-period requirements for the dividends-received deduction would be more
difficult to satisfy. Corporate shareholders should consult their tax advisors
as to the availability of the dividends-received deduction, the application of
Section 1059 of the Code, and the potential impact of the proposed legislation.
SEE SECTION 3 WITH RESPECT TO THE APPLICATION OF BACKUP FEDERAL INCOME
TAX WITHHOLDING.
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at
any time and from time to time, and regardless of whether or not any of the
events set forth in Section 7 shall have occurred or shall be deemed by the
Company to have occurred, to extend the period of time during which the Offer is
open and thereby delay acceptance for payment of, and payment for, any Shares by
giving oral or written notice of such extension to the Depositary and making a
public announcement thereof. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer. The Company also
expressly reserves the right, in its sole discretion, to terminate the Offer and
not accept for payment or pay for any Shares not theretofore accepted for
payment or paid for or, subject to applicable law, to postpone payment for
Shares upon the occurrence of any of the conditions specified in Section 7
hereof prior to the Expiration Date by giving oral or written notice of such
termination or postponement to the Depositary and making a public announcement
thereof. The Company's reservation of the right to delay payment for Shares
which it has accepted for payment is limited by Rule 13e-4(f)(5) promulgated
under the Exchange Act, which requires that the Company must pay the
consideration offered or return the Shares tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law, the
Company further reserves the right, in its sole discretion, and regardless of
whether any of the events set forth in Section 7 shall have occurred or shall be
deemed by the Company to have occurred, to amend the Offer in any respect
(including, without limitation, by increasing or decreasing the number of Shares
the Company may purchase or the range of prices it may pay pursuant to the
Offer). Amendments to the Offer may be made at any time and from time to time
effected by public announcement thereof, such announcement, in the case of an
extension, to be issued no later than 9:00 a.m., New York City time, on the next
business day after the last previously scheduled or announced Expiration Date.
Any public announcement made pursuant to the Offer will be disseminated promptly
to shareholders in a manner reasonably designed to inform shareholders of such
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Company materially changes the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will extend the Offer to the extent required by Rules
13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act. These rules
require that the minimum period during which an offer must remain open following
material changes in the terms of the offer or information concerning the offer
(other than a change in price or a change in percentage of securities sought)
will depend on the facts and circumstances, including the relative materiality
of such terms or information. If (i) the Company increases or decreases the
price to be paid for Shares or the number of Shares being sought in the Offer or
the Dealer Manager's soliciting fees and, in the event of an increase in the
number of Shares being sought, such increase exceeds two percent of the
outstanding Shares and (ii) the Offer is scheduled to expire at any time earlier
22
<PAGE>
than the expiration of a period ending on the tenth business day from, and
including, the date that such notice of an increase or decrease is first
published, sent or given in the manner specified in this Section 15, the Offer
will be extended until the expiration of such period of ten business days.
The Company reserves the right, in its sole discretion, to purchase
more than 250,000 Shares pursuant to the Offer. The acceptance for payment by
the Company of additional Shares not to exceed two percent (2%) of the Shares
outstanding (65,595 Shares) shall not be deemed an increase requiring the Offer
to be extended.
16. FEES AND EXPENSES.
The Company has retained Scott & Stringfellow, Inc. ("Scott &
Stringfellow") to act as the Dealer Manager in connection with the Offer. Scott
& Stringfellow will be remunerated on an hourly basis and its fee is expected to
be approximately $12,500 for its services as Dealer Manager. The Company also
has agreed to reimburse Scott & Stringfellow for certain reasonable
out-of-pocket expenses incurred in connection with the Offer, including fees and
expenses of counsel, and to indemnify Scott & Stringfellow against certain
liabilities in connection with the Offer, including liabilities under the
federal securities laws. Scott & Stringfellow have rendered various investment
banking and other advisory services to the Company in the past, for which they
have received customary compensation, and can be expected to render similar
services to the Company in the future.
The Company has retained American National Bank and Trust Company to
act as Depositary in connection with the Offer. The Depositary may contact
holders of Shares by mail, telephone, telegraph and personal interviews and may
request brokers, dealers and other nominee shareholders to forward materials
relating to the Offer to beneficial owners. The Depositary will receive a fee of
$4,000 as compensation for its services, will be reimbursed by the Company for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities in connection with the Offer, including certain liabilities
under the federal securities laws.
No fees or commissions will be payable to brokers, dealers or other
persons (other than fees to the Dealer Managers, and the Depositary as described
above) for soliciting tenders of Shares pursuant to the Offer. The Company,
however, upon request, will reimburse brokers, dealers and commercial banks for
customary mailing and handling expenses incurred by such persons in forwarding
the Offer and related materials to the beneficial owners of Shares held by any
such person as a nominee or in a fiduciary capacity. No broker, dealer,
commercial bank or trust company has been authorized to act as the agent of the
Company, the Dealer Manager or the Depositary for purposes of the Offer. The
Company will pay or cause to be paid all stock transfer taxes, if any, on its
purchase of Shares except as otherwise provided in Instruction 7 of the Letter
of Transmittal.
17. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of the
Offer is not in compliance with applicable law. If the Company becomes aware of
any jurisdiction where the making of the Offer is not in compliance with any
valid applicable law, the Company will make a good faith effort to comply with
such law. If, after such good faith effort, the Company cannot comply with such
law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. In any
jurisdiction the securities or blue sky laws of which require the Offer to be
made by a licensed broker or dealer, the Offer is being made on the Company's
behalf by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4 which contains additional information with respect
to the Offer. Such Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be obtained, at the same places and in
the same manner as is set forth in Section 10 with respect to information
concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION
23
<PAGE>
WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE
RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE DEALER MANAGER.
American National Bankshares Inc.
April 9, 1997
24
<PAGE>
SCHEDULE A
CERTAIN TRANSACTIONS INVOLVING THE COMPANY'S SHARES
BY THE COMPANY'S EXECUTIVE OFFICERS AND DIRECTORS
During the 40 business days prior to April 9, 1997, the only transactions
effected in the Shares by the Company's executive officers and directors were as
follows:
Number
Person who Date of of Where and How
Effected Transaction Transaction Shares Price the Transaction was Effected
None
A-1
<PAGE>
GLOSSARY
Aid and Guidance Action. The process necessary to obtain court approval of
the sale of trust or fiduciary property by a bank,
acting as a fiduciary for such trust or estate, in
a transaction with such bank or an affiliate of
such bank.
Bank. American National Bank and Trust Company, P.O. Box
191, Danville, Virginia 24543-0191 (mailing
address), 628 Main Street, Danville, Virginia
24541 (street address).
Book-entry Transfer
Facilities. The Depository Trust Company and The Philadelphia
Depository Company facilities.
Carrington Trust. The Alexander Berkeley Carrington, Jr. and Ruth
Simpson Carrington Charitable Trust.
Code. The Internal Revenue Code of 1986, as amended.
Commission. The Securities and Exchange Commission.
Company. American National Bankshares Inc., P.O. Box 191,
628 Main Street, Danville, Virginia 24543.
Dealer Manager. The Dealer Manager for the Offer is Scott &
Stringfellow, Inc. and is available to answer
questions regarding the Offer and the procedure for
tendering Shares. You may call the Dealer Manager
at (800) 552-7757, ext. 230.
Depositary. American National Bank and Trust Company. Your
Letter of Transmittal (and share certificates, if
applicable) must be received by the Depositary by
the Expiration Date.
Eligible
Institution. Any member firm of a registered national securities
exchange, member of the National Association of
Securities Dealers, Inc., a commercial bank, a
trust company, a savings bank, a savings and loan
association, or a credit union with membership in
an approved signature guarantee program, having an
office, branch or agency in the United States.
Exchange Act. The Securities Exchange Act of 1934, as amended.
Expiration Date. The time and date at which the Offer shall
expire, which shall be 5:00 P.M., New York City
time, on Thursday, May 8, 1997, unless extended by
the Company.
Fiduciary Approval. The process for approval of the sale of trust or
fiduciary property by a bank, acting as a fiduciary
for a trust or estate, in a transaction with such
bank or an affiliate of such bank, which process
may involve an Aid and Guidance Action.
Fiduciary Shares. Shares tendered by any trust or estate made subject
to obtaining Fiduciary Approval, pursuant to the
Offer.
Foreign Shareholder. A shareholder that is not (i) a citizen or resident
of the United States, (ii) a corporation,
partnership or other entity created or organized in
or under the laws of the United States, any State
or any political subdivision thereof, or (iii) any
estate or
A-2
<PAGE>
trust the income of which is subject to United
States federal income taxation regardless of the
source of such income.
Offer. The Company's Offer to Purchase for cash up to
250,000 Shares of its common stock at a Purchase
Price not in excess of $27.00 nor less than $25.00
per Share, together with the related Letter of
Transmittal.
Plan. The Company's proposed Employee Stock Option Plan,
which was approved by the Board of Directors, and
is subject to Shareholder approval at the Company's
annual meeting on April 22, 1997.
Purchase Price. The single per Share price, not in excess of $27.00
nor less than $25.00 per Share, that the Company
will pay for Shares properly tendered pursuant to
the Offer, taking into account the number of Shares
so tendered and the prices specified by tendering
shareholders. The Company will select the lowest
Purchase Price that will allow it to buy 250,000
Shares.
Service. The Internal Revenue Service.
Shares. Shares of American National Bankshares Inc. common
stock, par value $1.00 per share.
A-3
<PAGE>
LIST OF CERTAIN FORMS
Letter of
Transmittal. The blue form which accompanies this Offer to
Purchase. Shareholders wishing to Tender Shares
must complete, sign and return the Letter of
Transmittal (and Share certificates, if applicable)
to the Depositary by the Expiration Date.
Notice of
Guaranteed
Delivery. The orange form for use if you desire to tender
Shares, but cannot deliver your Share certificates
to the Depositary (or complete procedures for
book-entry transfer) prior to the Expiration Date.
Note that this document does require a signature
guarantee by an Eligible Institution (such as your
broker).
Transmittal
Form. The yellow form for use if you wish to tender
Shares held in "street" name by your broker. For
such Shares, you must use the broker instruction
letter, not the Letter of Transmittal.
A-4
<PAGE>
Manually signed photocopies of the Letter of Transmittal will be
accepted from Eligible Institutions. The Letter of Transmittal and certificates
for Shares and any other required documents should be sent or delivered by each
shareholder or his or her broker, dealer, commercial bank, trust company or
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
AMERICAN NATIONAL BANK AND TRUST COMPANY
BY MAIL:
P. O. Box 191
Danville, Virginia 24543-0191
BY FACSIMILE (for Notice of Guaranteed Delivery only):
(804) 792-1582
CONFIRM FACSIMILE BY TELEPHONE:
(804) 773-2220
BY HAND/OVERNIGHT DELIVERY:
628 Main Street
Danville, Virginia 24541
Any questions or requests for assistance or additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Company or the Dealer Manager at the telephone
numbers listed below. Shareholders may also contact their local broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
AMERICAN NATIONAL BANKSHARES INC.
Carolyn H. Compton
(804) 773-2220
Charles H. Majors
(804) 773-2219
David Hyler
(804) 773-2242
The Dealer Manager for the Offer is:
SCOTT & STRINGFELLOW, INC.
G. Jacob Savage III
(800) 552-7757 (ext. 230)
April 9, 1997
A-6
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
AMERICAN NATIONAL BANKSHARES INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED APRIL 9, 1997
- --------------------------------------------------------------------------------
YOUR PROMPT ATTENTION TO THIS OFFER IS REQUESTED. THE OFFER, PRORATION PERIOD
AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON THURSDAY, MAY
8, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
TO: AMERICAN NATIONAL BANK AND TRUST COMPANY
BY HAND: BY OVERNIGHT COURIER: BY MAIL:
628 Main Street 628 Main Street P. O. Box 191
Danville, Virginia 24541 Danville, Virginia 24541 Danville, Virginia 24543-0191
(804) 773-2220
Delivery of this instrument and all other documents to the address or
transmission of instructions to a facsimile number other than as set forth above
does not constitute a valid delivery.
PLEASE READ THE ENTIRE LETTER
OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS,
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
This Letter of Transmittal is to be used only if (a) certificates for
Shares (as defined below) are to be forwarded herewith or (b) a tender of Shares
is being made concurrently by book-entry transfer to the account maintained by
American National Bank and Trust Company (the "Depositary") at The Depository
Trust Company or The Philadelphia Depository Company (each, a "Book-Entry
Transfer Facility") pursuant to Section 3 of the Offer to Purchase. See
Instruction 2.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- ----------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED CERTIFICATES
(PLEASE USE PREADDRESSED LABEL OR FILL IN (ATTACH SIGNED ADDITIONAL LIST IF NECESSARY)
EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)
- ----------------------------------------------------------------------------------------------------
<S> <C>
CERTIFICATE NO. OF NO. OF SHARES
NUMBER(S) SHARES* TENDERED**
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
TOTAL SHARES
TENDERED
</TABLE>
- --------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are to be
purchased in event of proration. (Attach additional list if necessary.)***
See Instruction 9
1st: 2nd: 3rd:
4th: 5th: 6th:
- --------------------------------------------------------------------------------
* Does not need to be completed if Shares are tendered by book-entry
transfer.
** If you desire to tender fewer than all Shares evidenced by any certificates
listed above, please indicate in this column the number of Shares you wish
to tender. Otherwise, all Shares evidenced by such certificates will be
deemed to have been tendered. See Instruction 4.
*** If you do not designate an order, in the event less than all Shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary.
- --------------------------------------------------------------------------------
NOTE: SIGNATURE MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
Shareholders who desire to tender Shares pursuant to the Offer (as defined
below) and who cannot deliver their certificates for their Shares (or who are
unable to comply with the procedures for book-entry transfer on a timely basis)
and all other documents required by this Letter of Transmittal to the Depositary
at or before the Expiration Date (as defined in the Offer to Purchase) may
tender their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to
a Book-Entry Transfer Facility does not constitute delivery to the Depositary.
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK ENTRY-TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
------------------------------------------
Account Number:
-----------------------------------------------------
Transaction Code Number:
--------------------------------------------
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
----------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
---------------------
Name of Institution which Guaranteed Delivery:
--------------------------
Give Account Number if Delivered by Book-Entry Transfer:
----------------
Account Number:
---------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDITIONAL TENDER
(SEE INSTRUCTION 8)
[ ] check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:
---------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIDUCIARY SHARES
(SEE INSTRUCTION 8)
[ ] check here if undersigned is a fiduciary tendering Fiduciary Shares
(defined in Instruction 8) subject to obtaining Fiduciary Approval (defined
in Instruction 8)
- --------------------------------------------------------------------------------
2
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
TO: AMERICAN NATIONAL BANK AND TRUST COMPANY
The undersigned hereby tenders to American National Bankshares Inc., a
Virginia corporation (the "Company"), the above described shares of the
Company's common stock, $1.00 par value per share (the "Shares"), at the price
per Share indicated in this Letter of Transmittal, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Company's Offer to
Purchase, dated April 9, 1997 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "Offer").
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company, all right, title and interest
in and to all the Shares that are being tendered hereby and orders the
registration of all such Shares if tendered by book-entry transfer and hereby
irrevocably constitutes and appoints the Depositary as the true and lawful agent
and attorney-in-fact of the undersigned (with full knowledge that said
Depositary also acts as the agent of the Company) with respect to such Shares
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to:
(a) deliver certificate(s) for such Shares or transfer ownership of such
Shares on the account books maintained by the Book-Entry Transfer Facility,
together in either such case with all accompanying evidences of transfer
and authenticity, to, or upon the order of, the Company upon receipt by the
Depositary, as the undersigned's agent, of the aggregate Purchase Price (as
defined below) with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer
on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares, subject to the next paragraph, all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that:
(i) the undersigned has a net long position in Shares or equivalent
securities at least equal to the Shares tendered within the meaning of
Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and
(ii) such tender of Shares complies with Rule 14e-4;
(b) when and to the extent the Company accepts such Shares for purchase,
the Company will acquire good, marketable and unencumbered title to them,
free and clear of all security interests, liens, charges, encumbrances,
conditional sales agreements or other obligations relating to their sale or
transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any additional
documents the Depositary or the Company deems necessary or desirable to
complete the assignment, transfer and purchase of the Shares tendered
hereby; and
(d) the undersigned has read and agrees to all of the terms of the
Offer.
All authorities conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors, assigns,
trustees in bankruptcy, and legal representatives of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed
above, if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares that
the undersigned wishes to tender, should be set forth in the appropriate boxes
above. The price at which such Shares are being tendered should be indicated in
the box below.
3
<PAGE>
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price (not
in excess of $27.00 nor less than $25.00 per Share) net to the seller in cash
(the "Purchase Price") that it will pay for Shares properly tendered and not
withdrawn prior to the Expiration Date pursuant to the Offer, taking into
account the number of Shares so tendered and the prices (in multiples of $.125)
specified by tendering shareholders. The undersigned understands that the
Company will select the lowest Purchase Price that will allow it to buy 250,000
Shares (or such lesser number of Shares as are properly tendered at prices not
in excess of $27.00 nor less than $25.00 per Share) pursuant to the Offer. The
undersigned understands that all Shares properly tendered at prices at or below
the Purchase Price and not withdrawn prior to the Expiration Date will be
purchased at the Purchase Price, upon the terms and subject to the conditions of
the Offer, including its proration and conditional tender provisions, and that
the Company will return all other Shares not purchased pursuant to the Offer,
including Shares tendered at prices greater than the Purchase Price and not
withdrawn prior to the Expiration Date and Shares not purchased because of
proration or conditional tender.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares delivered
herewith but not tendered or not purchased will be returned to the undersigned
at the address indicated above, unless otherwise indicated under the "Special
Payment Instructions" or "Special Delivery Instructions" below. The undersigned
recognizes that the Company has no obligation, pursuant to the Special Payment
Instructions, to transfer any certificate for Shares from the name of its
registered holder, or to order the registration or transfer of Shares tendered
by book-entry transfer, if the Company purchases none of the Shares represented
by such certificate or tendered by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Company for payment
will constitute a binding agreement between the undersigned and the Company upon
the terms and subject to the conditions of the Offer.
The check for the aggregate Purchase Price for such of the Shares tendered
hereby as are purchased will be issued to the order of the undersigned and
mailed to the address indicated above, unless otherwise indicated under the
Special Payment Instructions or the Special Delivery Instructions below.
4
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED
BY TERMS OF OFFER
[ ] By checking this one box INSTEAD OF ONE OF THE PRICE BOXES BELOW, the
shareholder hereby tenders Shares and indicates his or her willingness to
accept the Purchase Price resulting from the modified Dutch Auction tender
process under the terms of the Offer, resulting in the shareholder
receiving a price per Share of as low as $25.00 or as high as $27.00.
OR
SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER
By checking one of the boxes below INSTEAD OF THE BOX ABOVE, the shareholder
hereby tenders Shares at the price checked below. This action could result in
none of the shareholder's shares being purchased if the Purchase Price for the
Shares is less than the price checked.
Price (in dollars) per Share at which Shares are being tendered.
[ ] $25.000 [ ] $25.500 [ ] $26.000 [ ] $26.375 [ ] $26.750
[ ] $25.125 [ ] $25.625 [ ] $26.125 [ ] $26.500 [ ] $26.875
[ ] $25.250 [ ] $25.750 [ ] $26.250 [ ] $26.625 [ ] $27.000
[ ] $25.375 [ ] $25.875
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
5
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 10) (SEE INSTRUCTIONS 1, 4, 6, 7 AND 10)
<S> <C>
To be completed ONLY if certificates To be completed ONLY if certificates
for Shares not tendered or not purchased for Shares not tendered or not purchased
and/or any check for the aggregate Purchase and/or any check for the aggregate Purchase
Price of Shares purchased are to be issued Price of Shares purchased, issued in the name
in the name of and sent to someone other of the undersigned, are to be mailed to someone
than the undersigned. other than the undersigned, or to the undersigned
at an address other than that shown above.
Issue:
[ ] Check to:
[ ] Certificates to: Issue:
[ ] Check to:
Name(s): [ ] Certificates to:
----------------------------------------
(Please Print)
Name(s):
Address: ----------------------------------------
(Please Print)
----------------------------------------
Address:
- ------------------------------------------------ -----------------------------------------
(Zip Code)
-------------------------------------------------
- ------------------------------------------------ (Zip Code)
(Taxpayer Identification or Social Security No.)
- ------------------------------------------------------------ -------------------------------------------------
</TABLE>
6
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL SHAREHOLDERS)
(PLEASE COMPLETE AND RETURN THE ENCLOSED FORM W-9)
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificate(s) and documents transmitted with
this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or another
person acting in a fiduciary or representative capacity, please set forth full
title and see Instruction 6.)
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
- --------------------------------------------------------------------------------
Dated: ____________________1997
Name(s):
------------------------------------------------------------------------
(Please Print)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
(Include Zip Code)
Area Code(s) and
Telephone Number(s):
------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(See Instructions 1, 6 and 10)
Name of Firm:
-------------------------------------------------------------------
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
(Please Print)
Title:
--------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
(Include Zip Code)
Area Code and
Telephone Number:
---------------------------------------------------------------
Dated: , 1997
-------------------------------------------
- --------------------------------------------------------------------------------
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the
Shares (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of such Shares) exactly as the name
of the registered holder appears on the certificate tendered with this
Letter of Transmittal and payment and delivery are to be made directly to
such owner unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust
company (not a savings bank or savings and loan association) having an
office, branch or agency in the United States (each such entity, an
"Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures on
this Letter of Transmittal. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. Shareholders may tender some or all of their Shares. This Letter of
Transmittal is to be used only if certificates for Shares are delivered with it
to the Depositary (or such certificates will be delivered pursuant to a Notice
of Guaranteed Delivery previously sent to the Depositary) or if a tender for
Shares is being made concurrently pursuant to the procedure for tender by
book-entry transfer set forth in Section 3 of the Offer to Purchase.
Certificates for all physically tendered Shares or confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of
Shares tendered electronically, together in each case with a properly completed
and duly executed Letter of Transmittal or duly executed and manually signed
facsimile of it, and any other documents required by this Letter of Transmittal,
should be mailed or delivered to the Depositary at the appropriate address set
forth herein and must be delivered to the Depositary on or before the Expiration
Date (as defined in the Offer to Purchase). Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Depositary.
Shareholders who desire to tender Shares pursuant to the Offer and whose
certificates are not immediately available or who cannot deliver certificates
for their Shares and all other required documents to the Depositary before the
Expiration Date, or whose Shares cannot be delivered on a timely basis pursuant
to the procedures for book-entry transfer, must, in any such case, tender their
Shares by or through any Eligible Institution by properly completing and duly
executing and delivering a Notice of Guaranteed Delivery (or facsimile of it)
and by otherwise complying with the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. Pursuant to such procedure, certificates for
all physically tendered Shares or book-entry confirmations, as the case may be,
as well as a properly completed and duly executed Letter of Transmittal (or
facsimile of it) and all other documents required by this Letter of Transmittal,
must be received by the Depositary within three trading days after receipt by
the Depositary of such Notice of Guaranteed Delivery, all as provided in Section
3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
8
<PAGE>
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering shareholders, by execution of
this Letter of Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their tender.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to shareholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered," in the box
captioned "Description of Shares Tendered." In such case, if any tendered Shares
are purchased, a new certificate for the remainder of the Shares (including any
Shares not purchased) evidenced by the old certificate(s) will be issued and
sent to the registered holder(s), unless otherwise specified in either the
"Special Payment Instructions" or "Special Delivery Instructions" box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. Unless
otherwise indicated, all Shares represented by the certificate(s) listed and
delivered to the Depositary will be deemed to have been tendered.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be
properly tendered, the shareholder MUST check the box indicating the price per
Share at which he or she is tendering Shares, or indicate that they are willing
to sell their shares at any price within the foregoing range, under "Price (In
Dollars) Per Share at Which Shares Are Being Tendered" on this Letter of
Transmittal. By checking the appropriate box therein, the shareholder may either
(a) accept the price per Share determined pursuant to the terms of the Offer, in
which case the price per Share that the shareholder will receive may be as low
as $25.00 or as high as $27.00, or (b) designate the price per Share at which he
or she is tendering Shares, in which case the shareholder will receive the
Purchase Price per Share determined in accordance with the terms of the Offer if
the price so designated by the shareholder does not exceed the Purchase Price.
ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS
CHECKED, THERE IS NO PROPER TENDER OF SHARES. A shareholder wishing to tender
portions of his or her Share holdings at different prices must complete a
separate Letter of Transmittal for each price at which he or she wishes to
tender each such portion of his or her Shares. The same Shares cannot be
tendered (unless previously properly withdrawn as provided in Section 4 of the
Offer to Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered holder(s)
of the Shares tendered hereby, the signature(s) must correspond exactly with
the name(s) as written on the face of the certificate(s) without any change
whatsoever.
(b) If the Shares are registered in the names of two or more joint
holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles of it) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered
holder(s) of the Shares listed and transmitted hereby, no endorsement(s) of
certificate(s) representing such Shares or separate stock power(s) are
required unless payment is to be made or the certificate(s) for Shares not
tendered or not purchased are to be issued to a person other than the
registered holder(s). If this Letter of Transmittal is signed by a person
other than the registered holder(s) of the certificate(s) listed, or if
payment is to be made or their certificate(s) for Shares not tendered or not
purchased are to be issued to a person other than the registered holder(s),
the certificate(s) must be endorsed or accompanied by appropriate stock
power(s), in either case signed exactly as the name(s) of the registered
holder(s) appears on the certificate(s). SIGNATURE(S) ON SUCH CERTIFICATE(S)
OR STOCK POWER(S) MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. See
Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock
power(s) are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing and
must submit proper evidence satisfactory to the Company of their authority
so to act.
7. STOCK TRANSFER TAXES. Except as provided in this Instruction 7, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. The Company will pay or cause to be paid any stock transfer taxes
payable on the transfer to it of Shares purchased pursuant to the Offer. If,
however:
9
<PAGE>
(a) payment of the aggregate Purchase Price for Shares tendered hereby
and accepted for purchase is to be made to any person other than the
registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be
registered in the name(s) of any person(s) other than the registered
holder(s); or
(c) tendered certificates are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from such aggregate Purchase Price the amount of
any stock transfer taxes (whether imposed on the registered holder, such other
person or otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption from them is
submitted.
8. CONDITIONAL TENDERS AND FIDUCIARY SHARES.
(a) Conditional Tenders. As described in Sections 1 and 6 of the Offer
to Purchase, shareholders may condition their tenders on all or a minimum
number of their tendered Shares being purchased ("Conditional Tenders"). If
the Company is to purchase less than all Shares tendered before the
Expiration Date and not withdrawn, the Depositary will perform a preliminary
proration, and any Shares tendered at or below the Purchase Price pursuant
to a Conditional Tender for which the condition was not satisfied shall be
deemed withdrawn, subject to reinstatement if such Conditionally Tendered
Shares are subsequently selected by random lot for purchase subject to
Sections 1 and 6 of the Offer to Purchase. Conditional tenders will be
selected by lot only from shareholders who tender all of their Shares. All
tendered Shares shall be deemed unconditionally tendered unless the
"Conditional Tender" box is completed. The Conditional Tender alternative is
made available so that a shareholder may assure that the purchase of Shares
from the shareholder pursuant to the Offer will be treated as a sale of such
Shares by the shareholder, rather than the payment of a dividend to the
shareholder, for federal income tax purposes. It is the tendering
shareholder's responsibility to calculate the minimum number of Shares that
must be purchased from the shareholder in order for the shareholder to
qualify for sale (rather than dividend) treatment, and each shareholder is
urged to consult his or her own tax advisor.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE
ACCEPTED AND THEREBY DEEMED WITHDRAWN.
(b) Fiduciary Shares. As described in Section 1 of the Offer to
Purchase, certain Shares of the Company are held by American National Bank
and Trust Company, a wholly-owned federally chartered bank subsidiary of the
Company (the "Bank"), in a fiduciary capacity (either alone or jointly with
others, as the case may be) in connection with the trust business conducted
by the Bank. Applicable law provides that the sale of trust or fiduciary
property by a bank, acting as a fiduciary for such trust or estate, in a
transaction with such bank or an affiliate of such bank shall be a breach of
trust and voidable at the election of any beneficiary or successor trustee
unless such transaction is approved by, among other things, appropriate
court order (hereinafter referred to as "Fiduciary Approval"). The process
necessary to obtain such court approval in Virginia is generally known as an
"Aid and Guidance Action." Any Shares tendered by any such trust or estate
(collectively, "Fiduciary Shares") pursuant to the Offer may be made subject
to such trust or estate obtaining Fiduciary Approval. All tendered Shares
shall be deemed tendered without being subject to obtaining Fiduciary
Approval unless the "Fiduciary Shares" box is completed. In the event that
the applicable Fiduciary Approval is obtained before the time that the other
Shares tendered are accepted for payment and purchased in accordance with
the terms of the Offer, the Fiduciary Shares to which the Fiduciary Approval
applies will be accepted for payment and purchased at the same time as other
Shares tendered, all in accordance with the terms of the Offer. In the event
that the applicable Fiduciary Approval is not obtained before the time that
other Shares tendered are accepted for payment and purchased in accordance
with terms of the Offer, then, subject to the requirements of Rule 13e-4
under the Exchange Act, the Depositary will retain such Fiduciary Shares
while the applicable Aid and Guidance Action is pending and the Company will
accept for payment and purchase such Fiduciary Shares as soon as practical
after the applicable Fiduciary Approval is obtained, all in accordance with
the terms of the Offer. In the event that the Aid and Guidance Action is
terminated without obtaining Fiduciary Approval or if Fiduciary Approval is
denied, such Fiduciary Shares to which such Aid and Guidance Action applies
will not be purchased by the Company pursuant to the Offer and, in such
event, will be returned to the tendering shareholders at the Company's
expense as promptly as practicable following such termination or denial.
ALL PRORATIONS REQUIRED UNDER THE TERMS OF THE OFFER WILL BE MADE ASSUMING
THAT ALL FIDUCIARY SHARES WILL BE PURCHASED. IN THE EVENT THAT ANY SUCH
FIDUCIARY SHARES ARE NOT PURCHASED BECAUSE THE APPLICABLE FIDUCIARY APPROVAL
WAS NOT OBTAINED, OR SUCH
10
<PAGE>
FIDUCIARY SHARES WERE WITHDRAWN, AFTER THE TIME AT WHICH OTHER SHARES WERE
ACCEPTED FOR PAYMENT AND PURCHASED PURSUANT TO THE TERMS OF THE OFFER, SUCH
PRORATION WILL NOT BE ADJUSTED OR OTHERWISE AFFECTED.
9. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of the
Offer to Purchase, shareholders may designate the order in which their Shares
are to be purchased in the event of proration. The order of purchase may have an
effect on the federal income tax treatment of the Purchase Price for the Shares
purchased. See Sections 1 and 14 of the Offer to Purchase.
10. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in the name of a
person other than the signer of the Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing the Letter of Transmittal or to the signer at a different address, the
boxes captioned "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal should be completed as applicable
and signatures must be guaranteed as described in Instructions 1 and 6.
11. IRREGULARITIES. All questions as to the number of Shares to be accepted,
the price to be paid therefor and the validity, form, eligibility (including
time of receipt) and acceptance for payment of any tender of Shares will be
determined by the Company in its sole discretion, which determinations shall be
final and binding on all parties. The Company reserves the absolute right to
reject any or all tenders of Shares it determines not to be in proper form or
the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer and any defect or irregularity in the
tender of any particular Shares, and the Company's interpretation of the terms
of the Offer (including these instructions) will be final and binding on all
parties. No tender of Shares will be deemed to be properly made until all
defects and irregularities have been cured or waived. Unless waived, any defects
or irregularities in connection with tenders must be cured within such time as
the Company shall determine. None of the Company, the Dealer Manager (as defined
in the Offer to Purchase), the Depositary, or any other person is or will be
obligated to give notice of any defects or irregularities in tenders and none of
them will incur any liability for failure to give any such notice.
12. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Company or the Dealer Manager at their
addresses and telephone numbers set forth at the end of this Letter of
Transmittal or from your broker, dealer, commercial bank or trust company.
13. FORM W-9 AND FORM W-8. Shareholders other than corporations and certain
foreign persons may be subject to backup federal income tax withholding. Each
tendering shareholder who does not otherwise establish to the satisfaction of
the Depositary an exemption from backup federal income tax withholding is
required to provide the Depositary with a correct taxpayer identification number
("TIN") on Form W-9, which is provided with this Letter of Transmittal. For an
individual, his or her TIN will generally be his or her social security number.
Failure to provide the information requested or to make the certification on the
Form W-9 may subject the tendering shareholder to 31% backup federal income tax
withholding on the payments made to or for the shareholder with respect to
Shares purchased pursuant to the Offer. Failing to furnish a correct TIN may
subject the shareholder to a $50.00 penalty imposed by the Internal Revenue
Service. Providing false information may result in additional penalties. Backup
withholding is not an additional tax. Rather, the tax liability of a person
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained.
Shareholders who are foreign persons should submit Form W-8 to certify that they
are exempt from backup withholding. Form W-8 may be obtained from the
Depositary.
14. WITHHOLDING ON FOREIGN SHAREHOLDERS. Even if a foreign shareholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold federal income taxes equal to 30% of the gross payments payable to
a foreign shareholder or his agent unless the Depositary determines that an
exemption from or a reduced rate of withholding is available pursuant to a tax
treaty or an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business in
the United States. In order to obtain an exemption from or a reduced rate of
withholding pursuant to a tax treaty, a foreign shareholder must deliver to the
Depositary a properly completed Form 1001. For this purpose, a foreign
shareholder is a shareholder that is not (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States, any State or any political subdivision
thereof or (iii) any estate or trust the income of which is subject to United
States federal income taxation regardless of the source of such income. In order
to obtain an exemption from withholding on the grounds that the gross proceeds
paid pursuant to the Offer are effectively connected with the conduct of a trade
or business within the United States, a foreign shareholder must deliver to the
Depositary a properly completed Form 4224. The Depositary will determine a
shareholder's status as a foreign shareholder and eligibility for a reduced rate
of, or an exemption from, withholding by reference to outstanding certificates
or statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., Form 1001 or Form 4224) unless facts and circumstances
indicate that such reliance is not warranted. A foreign
11
<PAGE>
shareholder may be eligible to obtain a refund of all or a portion of any tax
withheld if such shareholder meets one of the tests for sale treatment described
in Section 14 of the Offer to Purchase or is otherwise able to establish that no
tax or a reduced amount of tax is due. Backup withholding generally will not
apply to amounts subject to the 30% or treaty-reduced rate of withholding.
Foreign shareholders are urged to consult their tax advisors regarding the
application of federal income tax withholding, including eligibility for a
withholding tax reduction or exemption and refund procedures.
12
<PAGE>
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN NATIONAL BANK AND TRUST COMPANY
BY HAND: BY OVERNIGHT COURIER: BY MAIL:
628 Main Street 628 Main Street P. O. Box 191
Danville, Virginia 24541 Danville, Virginia 24541 Danville, Virginia 24543-0191
(804) 773-2220
THE DEALER MANAGER FOR THE OFFER IS:
SCOTT & STRINGFELLOW, INC.
909 East Main Street
Richmond, Virginia 23219
(800) 552-7757 ext. 230
G. Jacob Savage III
IMPORTANT: This Letter of Transmittal or a facsimile hereof (together with
certificates for the Shares being tendered and all other required documents), or
a Notice of Guaranteed Delivery must be received prior to 5:00 p.m., New York
City time, on the Expiration Date. SHAREHOLDERS ARE ENCOURAGED TO RETURN A
COMPLETED FORM W-9 WITH THEIR LETTER OF TRANSMITTAL.
AMERICAN NATIONAL BANKSHARES INC.
Carolyn H. Compton
(804) 773-2220
David Hyler
(804) 773-2242
Charles H. Majors
(804) 773-2219
13
Exhibit (a)(3)
AMERICAN NATIONAL BANKSHARES INC.
NOTICE OF GUARANTEED DELIVERY OF SHARES OF COMMON STOCK
This form or a facsimile hereof must be used to accept the Offer (as
defined below) if:
(a) certificates for shares of common stock, $1.00 par value
per share (the "Shares"), of American National Bankshares Inc., a
Virginia corporation (the "Company"), cannot be delivered to the
Depositary prior to the Expiration Date (as defined in Section 1 of the
Company's Offer to Purchase dated April 9, 1997 (the "Offer to
Purchase")); or
(b) the procedure for book-entry transfer (set forth in
Section 3 of the Offer to Purchase) cannot be completed on a timely
basis; or
(c) the Letter of Transmittal (or a facsimile thereof) and all
other required documents cannot be delivered to the Depositary prior to
the Expiration Date.
This form, properly completed and duly executed, may be delivered by
hand, mail or facsimile transmission to the Depositary. See Section 3 of the
Offer to Purchase. Shareholders may tender all or some of their Shares.
TO: AMERICAN NATIONAL BANK AND TRUST COMPANY
BY HAND: BY OVERNIGHT COURIER: BY MAIL:
628 Main Street 628 Main Street P. O. Box 191
Danville, Virginia 24541 Danville, Virginia 24541 Danville, Virginia 24543-0191
BY FACSIMILE:
(804) 792-1582
CONFIRM BY TELEPHONE:
(804) 773-2220
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on
a Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of both of which is
hereby acknowledged, __________________ Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase.
- --------------------------------------------------------------------------------
CONDITIONAL TENDER
(SEE INSTRUCTION 8 OF THE LETTER OF TRANSMITTAL)
[ ] check here if tender of Shares is conditional on the Company purchasing
all or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:
--------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIDUCIARY SHARES
(SEE INSTRUCTION 8 OF THE LETTER OF TRANSMITTAL)
[ ] check here if undersigned is a fiduciary tendering Fiduciary Shares
(defined in Instruction 8 of the Letter of Transmittal) subject to
obtaining Fiduciary Approval (defined in Instruction 8 of the Letter of
Transmittal)
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED
BY TERMS OF OFFER
[ ] By checking this one box INSTEAD OF ONE OF THE PRICE BOXES BELOW, the
shareholder hereby tenders Shares and indicates his or her willingness to
accept the Purchase Price resulting from the modified Dutch Auction tender
process under the terms of the Offer, resulting in the shareholder
receiving a price per Share of as low as $25.00 or as high as $27.00.
OR
SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER
By checking one of the boxes below INSTEAD OF THE BOX ABOVE, the shareholder
hereby tenders Shares at the price checked below. This action could result in
none of the shareholder's Shares being purchased if the Purchase Price for the
Shares is less than the price checked.
Price (In Dollars) Per Share At Which Shares Are Being Tendered:
[ ] $25.000 [ ] $25.500 [ ] $26.000 [ ] $26.375 [ ] $26.750
[ ] $25.125 [ ] $25.625 [ ] $26.125 [ ] $26.500 [ ] $26.875
[ ] $25.250 [ ] $25.750 [ ] $26.250 [ ] $26.625 [ ] $27.000
[ ] $25.375 [ ] $25.875
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE NOTICE OF GUARANTEED DELIVERY FOR EACH PRICE AT WHICH SHARES ARE
TENDERED.)
- --------------------------------------------------------------------------------
3
<PAGE>
(Please type or print) SIGN HERE
Certificate Nos. (if available):
------------------------------
Signature(s)
- -------------------------------------------
Dated:
-----------------------
- -------------------------------------------
Name(s) If Shares will be tendered by
book-entry transfer, check one
box and provide your account
number:
- -------------------------------------------
[ ] Address(es) The Depository Trust Company
[ ] The Philadelphia Depository
Company
- -------------------------------------------
- -------------------------------------------
Account Number:
---------------------
- -------------------------------------------
Area code(s) and Telephone Number(s)
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned is a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office, branch, or agency in the United States
and represents that: (a) the above-named person(s) "own(s)" the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (b) such tender of Shares complies with
such Rule 14e-4, and guarantees that the Depositary will receive (i)
certificates of the Shares tendered hereby in proper form for transfer, or (ii)
confirmation that the Shares tendered hereby have been delivered pursuant to the
procedure for book-entry transfer (set forth in Section 3 of the Offer to
Purchase) into the Depositary's account at the Book- Entry Transfer Facility,
together with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal, all within three New York Stock Exchange trading days after the
date the Depositary receives this Notice of Guaranteed Delivery.
Authorized Signature: Address:
------------------ -----------------------------
Name:
---------------------------------- -------------------------------------
(Please Print) (Including Zip Code)
Title: Area Code and Telephone Number:
--------------------------------- ------
Name of Firm: Date: , 1997
-------------------------- --------------------------
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE
SENT WITH THE LETTER OF TRANSMITTAL.
4
Exhibit (a)(4)
Scott & Stringfellow, Inc.
909 East Main Street
Richmond, Virginia 23219
AMERICAN NATIONAL BANKSHARES INC.
Offer To Purchase For Cash Up To
250,000 Shares Of Its Common Stock
At A Purchase Price Not In Excess Of $27.00
Nor Less Than $25.00 Per Share
- --------------------------------------------------------------------------------
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON THURSDAY, MAY 8, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
American National Bankshares Inc. a Virginia corporation (the
"Company"), has appointed us to act as Dealer Manager in connection with its
offer to purchase for cash 250,000 shares (or such lesser number of shares as
are properly tendered) of its Common Stock, $1.00 par value per share (the
"Shares"), at prices not in excess of $27.00 nor less than $25.00 per Share,
specified by its shareholders, upon the terms and subject to the conditions set
forth in its Offer to Purchase, dated April 9, 1997, and in the related Letter
of Transmittal (which together constitute the "Offer"). Shareholders may tender
all or some their Shares.
The Company will determine the single per Share price, not in excess of
$27.00 nor less than $25.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 250,000 Shares (or such lesser number of Shares as are
properly tendered). All Shares acquired in the Offer will be acquired at the
Purchase Price. All Shares properly tendered at prices at or below the Purchase
Price and not withdrawn will be purchased at the Purchase Price, upon the terms
and subject to the conditions of the Offer, including the proration and
conditional tender provisions. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration will be returned.
The Company reserves the right, in its sole discretion, to purchase more than
250,000 Shares pursuant to the Offer. See Sections 1 and 15 of the Offer to
Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase),
more than 250,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will
accept Shares for purchase on a pro rata basis from all shareholders whose
Shares are properly tendered at or below the Purchase Price and not withdrawn.
If any shareholder tenders Shares and does not wish to have such Shares
purchased subject to proration, such shareholder may tender Shares subject to
the condition that a specified minimum number of Shares (which may be
represented by designated stock certificates) or none of such Shares be
purchased. See Sections 1, 3 and 6 of the Offer to Purchase.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 7 OF THE OFFER TO PURCHASE.
For your information and for forwarding to your clients for whom you
hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase, dated April 9, 1997;
2. Letter to Clients which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name
of your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer;
3. Letter, dated April 9, 1997, from Charles H. Majors,
President and Chief Executive Officer of the Company, to shareholders
of the Company;
4. Letter of Transmittal for your use and for the information
of your clients (together with accompanying Form W-9); and
1
<PAGE>
5. Notice of Guaranteed Delivery to be used to accept the
Offer if the Share certificates and all other required documents cannot
be delivered to the Depositary by the Expiration Date or if the
procedure for book-entry transfer cannot be completed on a timely
basis.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON THURSDAY, MAY 8, 1997, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any
person for soliciting tenders of Shares pursuant to the Offer other than fees
paid to the Dealer Manager or the Depositary as described in the Offer to
Purchase. The Company will, however, upon request, reimburse you for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to the beneficial owners of Shares held by you as a nominee or in a
fiduciary capacity. The Company will pay or cause to be paid any stock transfer
taxes applicable to its purchase of Shares, except as otherwise provided in
Instruction 7 of the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3, "Procedures for Tendering Shares," of the
Offer to Purchase, tenders may be made without the concurrent deposit of stock
certificates or concurrent compliance with the procedure for book-entry
transfer, if such tenders are made by or through a broker or dealer which is a
member firm of a registered national securities exchange, or a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States. Certificates
for Shares so tendered (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the "Book-Entry Transfer
Facilities" described in the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal, must be received by the Depositary within
three New York Stock Exchange trading days after timely receipt by the
Depositary of a properly completed and duly executed Notice of Guaranteed
Delivery.
Any inquiries you may have with respect to the Offer should be
addressed to Scott & Stringfellow, Inc. or to the Company at their respective
addresses and telephone numbers set forth on the back cover page of the Offer to
Purchase.
Additional copies of the enclosed material may be obtained from the
undersigned, telephone: (800) 552-7757, ext. 230 (G. Jacob Savage III) or from
the Company, telephone: (804) 773-2220 (Carolyn H. Compton).
Very truly yours,
SCOTT & STRINGFELLOW, INC.
Enclosures
- --------------------------------------------------------------------------------
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE DEALER
MANAGER OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED
THEREIN.
- --------------------------------------------------------------------------------
2
Exhibit (a)(5)
AMERICAN NATIONAL BANKSHARES INC.
Offer To Purchase For Cash Up To
250,000 Shares Of Its Common Stock
At A Purchase Price Not In Excess Of $27.00
Nor Less Than $25.00 Per Share
- --------------------------------------------------------------------------------
YOUR PROMPT ATTENTION TO THIS OFFER IS REQUESTED. THE OFFER, PRORATION
PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, MAY 8, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated April
9, 1997, and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the Offer by American National Bankshares Inc., a
Virginia corporation (the "Company"), to purchase 250,000 shares (or such lesser
number of shares as are properly tendered) of its Common Stock, $1.00 par value
per share (the "Shares"), at prices not in excess of $27.00 nor less than $25.00
per Share, specified by tendering shareholders, upon the terms and subject to
the conditions set forth in the Offer.
The Company will determine the single per Share price, not in excess of
$27.00 nor less than $25.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 250,000 Shares (or such lesser number of Shares as are
properly tendered). All Shares acquired in the Offer will be acquired at the
Purchase Price. Shareholders may tender all or some of their Shares. All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proration and conditional tender
provisions. Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration will be returned. The Company reserves the
right, in its sole discretion, to purchase more than 250,000 Shares pursuant to
the Offer. See Sections 1 and 3 of the Offer to Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase),
more than 250,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will,
upon the terms and subject to the conditions of the Offer, accept Shares for
purchase on a pro rata basis from all shareholders whose Shares are properly
tendered at or below the Purchase Price and not withdrawn. If any shareholder
tenders Shares and does not wish to have such Shares purchased subject to
proration, such shareholder may tender Shares subject to the condition that a
specified minimum number of Shares (which may be represented by designated stock
certificates) or none of such Shares be purchased. See Sections 1, 3 and 6 of
the Offer to Purchase.
We are the owner of record of Shares held for your account. As such, we
are the only ones who can tender your Shares, and then only pursuant to your
instructions. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION
ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
1
<PAGE>
Please instruct us as to whether you wish us to tender any or all of
the Shares we hold for your account on the terms and subject to the conditions
of the Offer.
We call your attention to the following:
1. You may tender Shares at prices not in excess of $27.00 nor
less than $25.00 per Share as indicated in the attached Instruction
Form, net to you in cash.
2. You may condition your tender of Shares on the Company
purchasing all or a minimum number of your Shares.
3. You may designate the priority in which your Shares shall
be purchased in the event of proration.
4. The Offer is not conditioned upon any minimum number of
Shares being tendered.
5. The Offer, proration period and withdrawal rights will
expire at 5:00 P.M., New York City time, on Thursday, May 8, 1997,
unless the Company extends the Offer.
6. The Offer is for 250,000 Shares, constituting
approximately 7.62% of the Shares outstanding as of April 8, 1997.
7. Tendering shareholders will not be obligated to pay any
brokerage commissions, solicitation fees, or, subject to Instruction 7
of the Letter of Transmittal, stock transfer taxes on the Company's
purchase of Shares pursuant to the Offer.
8. If you wish to tender portions of your Shares at different
prices, you must complete a separate Instruction Form for each price at
which you wish to tender each such portion of your Shares. We must
submit separate Letters of Transmittal on your behalf for each price
you will accept.
If you wish to have us tender any or all of your Shares, please so
instruct us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, we will tender all such Shares unless
you specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT
US TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE
OFFER. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, MAY 8, 1997, UNLESS THE COMPANY EXTENDS THE
OFFER.
As described in Section 1 of the Offer to Purchase, if more than
250,000 Shares have been properly tendered at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase), the Company will purchase properly tendered Shares on the basis set
forth below:
(a) FIRST, all Shares conditionally tendered in accordance
with Section 6 of the Offer to Purchase, for which the condition was
satisfied, and all other Shares tendered properly and unconditionally
at prices at or below the Purchase Price and not withdrawn prior to the
Expiration Date, on a pro rata basis (with appropriate adjustments to
avoid purchases of fractional Shares) as described in Section 1 of the
Offer to Purchase; and
2
<PAGE>
(b) SECOND, if necessary, Shares conditionally tendered, for
which the condition was not satisfied, at or below the Purchase Price
and not withdrawn prior to the Expiration Date, selected by random lot
in accordance with Section 6 of the Offer to Purchase.
You may condition your tender on the Company purchasing a minimum
number of your tendered Shares. In such case, if as a result of the preliminary
proration provisions in the Offer to Purchase the Company would purchase less
than such minimum number of your Shares, then the Company will not purchase any
of your Shares, except as provided in the next sentence. In such case, if as a
result of conditionally tendered Shares not being purchased the total number of
Shares that would have been purchased is less than 250,000, the Company will
select, by random lot, for purchase from shareholders who conditionally tendered
Shares for which the condition, based on a preliminary proration, has not been
satisfied. See Section 1 of the Offer to Purchase.
The Offer is being made to all holders of Shares. The Company is not
aware of any state where the making of the Offer is prohibited by administrative
or judicial action pursuant to a valid state statute. If the Company becomes
aware of any valid state statute prohibiting the making of the Offer, the
Company will make a good faith effort to comply with such statute. If, after
such good faith effort, the Company cannot comply with such statute, the Offer
will not be made to, nor will tenders be accepted from or on behalf of, holders
of Shares in such state. In those jurisdictions whose securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Company by the Dealer Manager
or one or more registered brokers or dealers licensed under the laws of such
jurisdictions.
INSTRUCTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF AMERICAN NATIONAL BANKSHARES INC.
Please tender to American National Bankshares Inc. (the "Company"), on
(our) (my) behalf, the number of Shares indicated below, which are beneficially
owned by (us) (me) and registered in your name, upon terms and subject to the
conditions contained in the Offer to Purchase of the Company dated April 9,
1997, and the related Letter of Transmittal, the receipt of both of which is
acknowledged.
- --------------------------------------------------------------------------------
Number of Shares to be tendered:___________________________________ Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDITIONAL TENDER
(SEE INSTRUCTION 8)
[ ] check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:_______________________________________
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED
BY TERMS OF OFFER
[ ] By checking this one box INSTEAD OF ONE OF THE PRICE BOXES BELOW, the
shareholder hereby tenders Shares and indicates his or her willingness to
accept the Purchase Price resulting from the modified Dutch Auction tender
process under the terms of the Offer, resulting in the shareholder
receiving a price per Share of as low as $25.00 or as high as $27.00.
OR
SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER
By checking one of the boxes below INSTEAD OF THE BOX ABOVE, the shareholder
hereby tenders Shares at the price checked below. This action could result in
none of the shareholder's Shares being purchased if the Purchase Price for the
Shares is less than the price checked.
Price (In Dollars) Per Share At Which Shares Are Being Tendered:
[ ] $25.000 [ ] $25.500 [ ] $26.000 [ ] $26.375 [ ] $26.750
[ ] $25.125 [ ] $25.625 [ ] $26.125 [ ] $26.500 [ ] $26.875
[ ] $25.250 [ ] $25.750 [ ] $26.250 [ ] $26.625 [ ] $27.000
[ ] $25.375 [ ] $25.875
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE NOTICE OF GUARANTEED DELIVERY FOR EACH PRICE AT WHICH SHARES ARE
TENDERED.)
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
FIDUCIARY SHARES
(SEE INSTRUCTION 8)
[ ] check here if undersigned is a fiduciary tendering Fiduciary Shares
(defined in Instruction 8) subject to obtaining Fiduciary approval (defined
in Instruction 8)
- --------------------------------------------------------------------------------
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF
THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED UNANIMOUSLY THE
OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
THEIR SHARES. EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES
AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE
TENDERED.
Signature(s): Address:
------------------------- ---------------------------
- --------------------------------------- ------------------------------------
(Including Zip Code)
Signature(s):
--------------------------
Area Code and Telephone Number:
- --------------------------------------- -----
(Please Print)
Date: , 1997
-------------------------
- ---------------------------------------
(Taxpayer Identification or
Social Security Number)
IMPORTANT: SHAREHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED FORM W-9 WITH
THEIR INSTRUCTION FORM.
5
Exhibit (a)(6)
FOR IMMEDIATE RELEASE
April 7, 1997
Contact: Charles Ellis
804-773-2260 Day
804-836-0649 Night
The Board of Directors of American National Bankshares Inc. (OTC
Bulletin Board: AMNB) today authorized a "modified Dutch Auction" self-tender
offer for up to 250,000 shares of the company's common stock. The tender price
range will be $25 to $27 per share. The offer is expected to begin on April 9
and is subject to the terms and conditions described in the offering materials.
As of April 7, American National had 3,279,798 shares of common stock
outstanding. The closing price for American National common stock today was
$23.625.
Under the terms of a modified Dutch Auction offer, shareholders are
given an opportunity to specify prices, within a stated range, at which they are
willing to tender their shares. Upon receipt of the tenders, a final price will
be determined that enables the purchase of up to the stated amount of shares
from those shareholders who agreed to sell at or below the determined price.
American National said the offer will give shareholders who are
considering the sale of all or a portion of their shares an opportunity to
determine the price, within a range, at which they are willing to sell. If
American National purchases their shares, sellers will avoid the normal
transaction costs associated with market sales. The company is not making any
recommendation to its shareholders regarding the tendering of shares.
According to Charles H. Majors, President and Chief Executive Officer,
"The Company believes that the purchase of shares pursuant to this offer is an
attractive use of a portion of the Company's available capital on behalf of its
shareholders and is consistent with the Company's long-term goal of increasing
shareholder value. The Offer is designed to restructure the Company's balance
sheet in order to increase return on equity and earnings per share by reducing
the amount of equity and shares outstanding, while still maintaining the highest
regulatory capital rating."
The dealer manager for the offer is Scott & Stringfellow, Inc.
American National Bankshares Inc. is the holding company of American
National Bank and Trust Company, an eleven-office bank headquartered in
Danville, Virginia.
###
Exhibit (a)(7)
[American National Bankshares Inc. Letterhead]
Charles H. Majors
PRESIDENT AND CHIEF EXECUTIVE OFFICER
April 9, 1997
TO OUR SHAREHOLDERS:
American National Bankshares Inc., (the "Company") is offering to
purchase 250,000 shares (or such lesser number as are properly tendered), or
approximately 7.62% of the currently outstanding shares, of its common stock
(the "Shares") from existing shareholders. The price will not be in excess of
$27.00 nor less than $25.00 per Share. The Company is conducting the tender
offer through a procedure commonly referred to as a modified "Dutch Auction."
This allows you to select the price within the specified price range at which
you are willing to sell all or some of your Shares to the Company.
On April 7, 1997, the last trading day prior to the announcement of the
offer, the bid price was $23.50 per share and the ask price was $24.75 per share
for the Company's common stock on the OTC Bulletin Board. The last reported
sales price on April 7, 1997 was $23.625. Any shareholder whose Shares are
purchased in the offer will receive the total purchase price in cash and will
not incur the usual transaction costs associated with open-market sales.
The Company will pay the same per Share price (the "Purchase Price")
for all Shares it purchases in the offer. If the number of Shares properly
tendered is equal to or less than the number of Shares the Company seeks to
purchase through the offer, the Purchase Price will be the highest price of
those specified by tendering shareholders.
If tendering shareholders properly tender more than the number of
Shares the Company seeks to purchase through the offer, the Company will take
into account the number of Shares so tendered and certain other factors
described in the Offer to Purchase and select the Purchase Price that will allow
the Company to buy the number of Shares that it seeks to purchase through the
offer. In such circumstances, the Company would not purchase the Shares of any
tendering shareholder who specified a price per Share above the Purchase Price.
All Shares properly tendered at prices at or below the Purchase Price
and not withdrawn on or prior to the Expiration Date (as defined in the Offer to
Purchase) will be purchased at the Purchase Price, net to the seller in cash,
subject to the terms and conditions described in the Offer to Purchase and the
related Letter of Transmittal. Those terms and conditions include, among other
things, provisions relating to possible proration and conditional tenders. All
stock certificates representing Shares that are tendered and not purchased will
be returned promptly to the shareholder.
The offer is explained in detail in the Offer to Purchase and Letter of
Transmittal. I encourage you to read these materials carefully before making any
decision with respect to the offer. If you want to tender all or some of your
Shares, the process of how to tender Shares is also explained in detail in the
accompanying materials.
Neither the Company nor its Board of Directors makes any recommendation
to any shareholder whether to tender all or any Shares.
Sincerely,
Charles H. Majors
President and Chief Executive Officer
Exhibit (g)(1)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
To the Shareholders and the Board of Directors of
American National Bankshares Inc.:
We have audited the accompanying consolidated balance sheets of
American National Bankshares Inc. (a Virginia corporation) and Subsidiary as of
December 31, 1996 and 1995, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
American National Bankshares Inc. and Subsidiary as of December 31, 1996 and
1995, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Greensboro, North Carolina,
January 15, 1997
<PAGE>
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
AMERICAN NATIONAL BANKSHARES INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
ASSETS 1996 1995
--------------- --------------
<S> <C>
Cash and due from banks ...........................................$ 14,622,925 $ 10,394,143
Interest-bearing deposits in other banks........................... 198,978 1,294,696
Federal funds sold ................................................ - 1,100,000
Investment securities:
Securities available for sale (at market value).................. 87,370,469 51,105,690
Securities held to maturity (market value of $88,621,066
in 1996 and $98,195,684 in 1995)............................... 88,386,136 98,101,877
--------------- --------------
Total investment securities.................................. 175,756,605 149,207,567
--------------- --------------
Loans ............................................................. 237,039,181 216,355,333
Less--
Unearned income................................................ (460,156) (913,753)
Reserve for loan losses........................................ (3,069,624) (2,757,401)
--------------- --------------
Net loans.................................................. 233,509,401 212,684,179
--------------- --------------
Bank premises and equipment, at cost, less accumulated
depreciation of $6,147,665 in 1996 and $5,649,988 in 1995........ 6,384,751 5,837,775
Accrued interest receivable and other assets....................... 9,685,018 7,960,483
--------------- --------------
Total assets...............................................$ 440,157,678 $ 388,478,843
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits -- non-interest bearing..........................$ 41,891,451 $ 32,577,952
Demand deposits -- interest bearing.............................. 46,776,481 41,601,855
Money market deposits............................................ 21,810,145 22,408,567
Savings deposits................................................. 69,997,457 66,084,475
Time deposits ................................................... 181,507,058 164,669,538
--------------- --------------
Total deposits............................................. 361,982,592 327,342,387
--------------- --------------
Federal funds purchased.......................................... 8,425,000 -
Repurchase agreements............................................ 15,059,281 9,572,035
Accrued interest payable and other liabilities................... 2,473,111 2,652,305
--------------- --------------
Total liabilities.......................................... 387,939,984 339,566,727
--------------- --------------
Stockholders' equity:
Preferred stock, $5 par, 200,000 shares authorized,
none outstanding............................................... - -
Common stock, $1 par,10,000,000 shares authorized,
3,279,798 and 3,213,641 shares outstanding in 1996 and 1995.... 3,279,798 3,213,641
Capital in excess of par value................................... 10,631,585 9,966,711
Retained earnings................................................ 37,992,700 35,103,697
Net unrealized gains ............................................ 313,611 628,067
--------------- --------------
Total stockholders' equity................................. 52,217,694 48,912,116
--------------- --------------
Total liabilities and stockholders' equity.................$ 440,157,678 $ 388,478,843
=============== ==============
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
<PAGE>
Consolidated Statements of Income
For The Years Ended December 31, 1996, 1995 and 1994
American National Bankshares Inc. and Subsidiary
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C>
Interest Income:
Interest and fees on loans....................... $ 20,334,588 $ 18,431,601 $ 14,922,579
Interest on federal funds sold and other......... 434,674 201,787 210,302
Income on investment securities:
U. S. Government............................... 6,022,023 3,860,228 3,203,707
Federal agencies............................... 1,711,974 2,315,000 2,404,794
State and municipal ........................... 988,159 694,565 678,055
Other investments.............................. 440,374 430,192 414,768
---------------- --------------- -------------
Total interest income........................ 29,931,792 25,933,373 21,834,205
---------------- --------------- -------------
Interest Expense:
Interest on deposits:
Demand......................................... 1,245,678 1,084,850 829,520
Money market................................... 637,954 695,495 689,315
Savings........................................ 2,012,717 2,170,799 2,444,627
Time........................................... 9,670,514 7,192,868 4,903,718
Interest on short-term borrowed funds............ 803,099 339,672 52,043
---------------- --------------- -------------
Total interest expense....................... 14,369,962 11,483,684 8,919,223
---------------- --------------- -------------
Net Interest Income................................ 15,561,830 14,449,689 12,914,982
Provision for Loan Losses.......................... 673,291 483,930 271,802
---------------- --------------- -------------
Net Interest Income After Provision
For Loan Losses.................................. 14,888,539 13,965,759 12,643,180
---------------- --------------- -------------
Non-Interest Income:
Trust department income.......................... 1,896,266 1,343,015 1,396,072
Service charges on deposit accounts.............. 600,606 447,898 359,150
Non-deposit fees and insurance commissions....... 106,015 113,842 128,167
Other income..................................... 88,355 130,296 238,342
---------------- --------------- -------------
Total non-interest income.................... 2,691,242 2,035,051 2,121,731
---------------- --------------- -------------
Non-Interest Expense:
Salaries......................................... 4,083,106 3,786,607 3,520,037
Pension and other employee benefits.............. 912,935 1,073,453 918,131
Occupancy and equipment expense.................. 1,211,974 1,044,086 1,033,543
FDIC insurance expense........................... 466,663 406,624 636,986
Postage and printing............................. 397,409 283,591 259,748
Merger related expense........................... 1,055,695 140,000 -
Other expenses................................... 2,039,282 1,967,850 1,782,145
---------------- --------------- -------------
Total non-interest expense................... 10,167,064 8,702,211 8,150,590
---------------- --------------- -------------
Income Before Income Tax Provision................. 7,412,717 7,298,599 6,614,321
Income Tax Provision............................... 2,380,529 2,282,836 2,105,682
---------------- --------------- -------------
Net Income......................................... $ 5,032,188 $ 5,015,763 $ 4,508,639
================ =============== =============
Net Income Per Common Share, based on weighted
average shares outstanding of 3,267,038 for 1996
and 3,213,641 for 1995 and 1994..................... $ 1.54 $ 1.56 $ 1.40
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
25
<PAGE>
CONSOLIDATED STATEMENTS of CHANGES in STOCKHOLDERS' EQUITY
FOR the YEARS ENDED DECEMBER 31, 1996, 1995 and 1994
American National Bankshares Inc. and Subsidiary
<TABLE>
<CAPTION>
Common Stock
-------------------------- Capital in Net Total
Excess of Retained Unrealized Stockholders'
Shares Amount Par Value Earnings Gains (Losses) Equity
------------ ------------- -------------- -------------- --------------- --------------
<S> <C>
Balance, December 31, 1993............. 3,213,641 $ 3,213,641 $ 9,966,711 $ 29,634,185 $ - $ 42,814,537
Net income............................. - - 4,508,639 - - 4,508,639
Cash dividends, at $.75 per share...... - - - (1,800,000) - (1,800,000)
Cash dividends declared by merged
company ............................ - - - (461,640) - (461,640)
ESOP loan payments..................... - - - 12,390 - 12,390
Net unrealized loss.................... - - - - (28,641) (28,641)
------------ ------------- -------------- -------------- --------------- --------------
Balance, December 31, 1994............. 3,213,641 3,213,641 9,966,711 31,893,574 (28,641) 45,045,285
Net income............................. - - - 5,015,763 - 5,015,763
Cash dividends, at $.56 per share...... - - - (1,344,000) - (1,344,000)
Cash dividends declared by merged
company ............................. - - - (461,640) - (461,640)
Net unrealized gain.................... - - - - 656,708 656,708
------------ ------------- -------------- -------------- --------------- --------------
Balance, December 31, 1995............. 3,213,641 3,213,641 9,966,711 35,103,697 628,067 48,912,116
MSB fiscal year to calendar year
adjustment:
Net income........................... - - - 235,485 - 235,485
Cash dividends....................... - - - (115,610) - (115,610)
Exercise of stock options.............. 66,270 66,270 668,192 - - 734,462
Cash paid for fractional shares........ (113) (113) (3,318) - - (3,431)
Net income............................. - - - 5,032,188 - 5,032,188
Cash dividends, at $.69 per share...... - - - (2,263,060) - (2,263,060)
Net unrealized loss.................... - - - - (314,456) (314,456)
------------ ------------- -------------- -------------- --------------- --------------
Balance, December 31, 1996............. 3,279,798 $ 3,279,798 $ 10,631,585 $ 37,992,700 $ 313,611 $ 52,217,694
============ ============= ============== ============== =============== ==============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
26
<PAGE>
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1996, 1995 and 1994
American National Bankshares Inc. and Subsidiary
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C>
Cash Flows from Operating Activities:
Net income................................................. $ 5,032,188 $ 5,015,763 $ 4,508,639
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses.............................. 673,291 483,930 271,802
Depreciation........................................... 562,299 575,649 513,192
Amortization of intangibles............................ 317,961 102,774 -
Amortization of premiums and (discounts)
on investment securities............................. 36,737 (2,340) 96,219
Loss (gain) on sale of securities...................... 338,103 (24,037) (42,673)
Gain on sale of property and equipment................. (32,015) - -
Gain on sale of real estate owned...................... - - (126,029)
Federal Home Loan Bank stock dividends................. - - (10,300)
Deferred income taxes benefit.......................... (61,225) (79,218) (133,869)
Reconciliation of fiscal year of merged company to
calendar year ........................................ (379,006) - -
Increase in interest receivable........................ (227,123) (1,001,503) (353,418)
(Increase) decrease in other assets.................... (112,123) 42,021 163,255
Increase in interest payable........................... 522,644 389,520 5,489
(Decrease) increase in other liabilities............... (324,563) 269,762 158,341
--------------- --------------- --------------
Net cash provided by operating activities.............. 6,347,168 5,772,321 5,050,648
--------------- --------------- --------------
Cash Flows from Investing Activities:
Acquisition of branch operations......................... 14,866,883 30,716,425 -
Proceeds from maturities, calls, and sales of securities 56,166,496 34,211,253 48,693,621
Purchases of securities available for sale............... (28,709,857) (2,733,960) -
Purchases of securities held to maturity................. (53,916,004) (57,278,228) (43,913,715)
Net increase in loans.................................... (16,108,172) (22,985,274) (11,175,700)
Purchases of property and equipment...................... (993,541) (488,557) (643,347)
Proceeds from sale of real estate owned.................. - - 194,500
Proceeds from sale of property and equipment............. 158,047 - 40,000
--------------- --------------- --------------
Net cash used in investing activities.................... (28,536,148) (18,558,341) (6,804,641)
--------------- --------------- --------------
Cash Flows from Financing Activities:
Net increase (decrease) in demand, money market, and
savings deposits....................................... 8,929,414 (22,181,491) (3,242,487)
Net increase in certificates of deposit.................. 3,186,875 30,558,646 2,711,500
Borrowings (repayments) from Federal Home Loan Bank...... - (1,500,000) 1,500,000
Net increase in federal funds purchased
and repurchase agreements............................ 13,912,246 3,467,240 6,104,795
Cash dividends paid...................................... (2,263,060) (1,805,640) (2,261,640)
Cash paid in lieu of fractional shares................... (3,431) - -
Proceeds from exercise of stock options.................. 460,000 - -
--------------- --------------- --------------
Net cash provided by financing activities................ 24,222,044 8,538,755 4,812,168
--------------- --------------- --------------
Net Increase (Decrease) in Cash and Cash Equivalents..... 2,033,064 (4,247,265) 3,058,175
Cash and Cash Equivalents at Beginning of Period......... 12,788,839 17,036,104 13,977,929
--------------- --------------- --------------
Cash and Cash Equivalents at End of Period............... $ 14,821,903 $ 12,788,839 $ 17,036,104
--------------- --------------- --------------
Supplemental Schedule of Cash and Cash Equivalents:
Cash:
Cash and due from banks.................................. $ 14,622,925 $ 10,394,143 $ 10,030,326
Federal funds sold....................................... - 1,100,000 4,650,000
Interest-bearing deposits in other banks................. 198,978 1,294,696 2,355,778
--------------- --------------- --------------
$ 14,821,903 $ 12,788,839 $ 17,036,104
============== ================ ==============
Supplemental Disclosure of Cash Flow Information:
Interest paid............................................ $ 13,746,911 $ 11,220,366 $ 8,903,826
Income taxes paid........................................ $ 2,600,939 $ 2,326,530 $ 2,262,255
</TABLE>
27
<PAGE>
Notes To Consolidated Financial Statements
December 31, 1996, 1995 and 1994
American National Bankshares Inc. and Subsidiary
1. Summary of Accounting Policies:
Consolidation
The consolidated financial statements include the amounts and
results of operations of American National Bankshares Inc. (the
Corporation) and its wholly-owned subsidiary, American National Bank
and Trust Company (the Bank). The Bank offers a wide variety of retail,
commercial and trust banking services through its offices located in
the trade area of the City of Danville, Virginia, the Counties of
Pittsylvania and Henry in Virginia and the County of Caswell in North
Carolina. Mutual Mortgage of the Piedmont, Inc., a wholly owned
subsidiary of the Bank, commenced mortgage lending operations in
December 1996. All significant intercompany transactions and accounts
are eliminated in consolidation.
Investment Securities
The Bank classifies investment securities in one of three
categories: held to maturity, available for sale and trading.
Debt securities acquired with both the intent and ability to
be held to maturity are classified as held to maturity and reported at
amortized cost. Gains or losses realized from the sale of any
securities held to maturity are determined by specific identification
and are included in non-interest income.
Securities which may be used to meet liquidity needs arising
from unanticipated deposit and loan fluctuations, changes in regulatory
capital and investment requirements, or unforeseen changes in market
conditions, including interest rates, market values or inflation rates,
are classified as available for sale. Securities available for sale are
reported at estimated fair value, with unrealized gains and losses
reported as a separate component of stockholders' equity, net of tax.
Gains or losses realized from the sale of securities available for sale
are determined by specific identification and are included in
non-interest income.
Trading account securities, of which none were held on
December 31, 1996 and 1995, are reported at fair value. Market
adjustments, fees, gains or losses and income earned on trading account
securities are included in non-interest income. Gains or losses
realized from the sale of trading securities are determined by specific
identification and are included in non-interest income.
During the fourth quarter of 1995, the Bank transferred
$2,631,000 of securities which were previously classified as held to
maturity to the available for sale category. The Financial Accounting
Standards Board (FASB) provided enterprises the opportunity to make a
one time reassessment of the classification of all investment
securities held at that time, such that the reclassification of any
security from the held to maturity category would not call into
question the enterprise's intent to hold other debt securities to
maturity in the future. Management anticipates that this classification
will allow more flexibility in the day-to-day management of the overall
portfolio than the prior classifications.
Loans
Loans are stated at the principal amount outstanding, net of
unearned income. Mortgage and commercial loans accrue interest on the
unpaid balance of the loans. Consumer installment loans made prior to
April 1, 1994 earn interest on the level yield method based on the
daily outstanding balance. Consumer loans made subsequent to April 1,
1994 accrue interest on the unpaid balance of the loans. The net amount
of nonrefundable loan origination fees and direct costs associated with
the lending process are deferred and amortized to interest income over
the contractual lives of the loans using the effective interest method.
Reserve for Loan Losses
The reserve for loan losses is an estimate of losses inherent
in the loan portfolio as determined by management taking into
consideration historical loan loss experience, diversification of the
loan portfolio, amount of secured and unsecured loans, banking industry
standards and averages, and general economic conditions. Ultimate
losses may vary from current estimates. These estimates are reviewed
periodically and as adjustments become necessary, they are reported in
earnings in the periods in which they become reasonably estimable.
Bank Premises and Equipment
Additions and major replacements are added to bank premises
and equipment at cost. Maintenance and repair costs are charged to
expense when incurred. Premises and equipment are depreciated over
their estimated useful lives using primarily accelerated methods.
Intangible Assets
Premiums paid on acquisitions of deposits (core deposit
intangibles) are included in other assets in the "Consolidated Balance
Sheets". Such assets are being amortized on a straight line basis over
10 years. At December 31, 1996, the Bank had $4,083,000 recorded as
core deposit intangibles, net of amortization. For the years ended
December 31, 1996 and 1995, the Bank recorded amortization expense of
$318,000 and $103,000, respectively. No amortization expense was
recorded during 1994.
Income and Expense Recognition
The Bank utilizes the accrual method of accounting in
recognizing items of income and expense.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial
28
<PAGE>
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Statement of Cash Flows
Cash and cash equivalents include cash and amounts due from
banks and Federal funds sold. Generally, Federal funds are purchased
and sold for one-day periods.
Income Taxes
Deferred income taxes have been provided where different
accounting methods have been used for reporting income for income tax
and for financial reporting purposes.
New Accounting Pronouncements
During 1995, the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of". This statement establishes accounting standards for
long-lived assets, certain identifiable intangibles and goodwill
related to those assets to be held and to be disposed of. The statement
requires such assets to be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Any resulting impairment loss is required to be
reported in the period in which the recognition criteria are first
applied and met. The Bank adopted the provisions of the statement on
January 1, 1996. The implementation did not have a material impact on
the consolidated financial position or consolidated results of
operations.
During 1995, the FASB issued SFAS No. 122, "Accounting for
Mortgage Servicing Rights" and SFAS No. 123, "Accounting for Stock
Based Compensation". The Bank adopted the provisions of these
statements on January 1, 1996. The adoption of these statements did
not have a material impact on the Bank's consolidated financial
position or consolidated results of operations.
In June 1996, the FASB issued SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities", which provides accounting and reporting standards for
such transactions based on consistent application of a financial
components approach. This approach recognizes the financial and
servicing assets an entity controls and the liabilities it has
incurred, as well as derecognizes financial assets when control has
been surrendered and liabilities when they are extinguished. The
statement requires that liabilities and derivatives incurred or
obtained by transferors as part of a transfer of financial assets be
initially measured at fair value, if practicable. It also requires that
servicing assets and other retained interests in the transferred assets
be measured by allocating the previous carrying amount between the
assets sold, if any, and retained interests, if any, based on their
relative fair values at the date of transfer. In December 1996, the
FASB issued SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125." This statement allows the
implementation of certain provisions of SFAS No. 125 to be deferred for
one year. American National Bank adopted SFAS No. 125, as amended by
SFAS No. 127, effective January 1, 1997. The implementation of the
statements did not have a material impact on the Bank's consolidated
financial position or consolidated results of operations.
2. Parent Company Financial Information:
Condensed parent company financial information is as follows
(in thousands):
<TABLE>
<CAPTION>
As of December 31
Condensed Balance Sheets 1996 1995
------------------------ ---- ----
<S> <C>
Assets:
Investment in Subsidiary $52,180 $48,889
Other Assets 38 23
--
----------- -----------
Total Assets $52,218 $48,912
=========== ===========
Stockholders' Equity $52,218 $48,912
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended
December 31
Condensed Statements of Income 1996 1995 1994
------------------------------ ---- ---- ----
<S> <C>
Dividends from Subsidiary $2,283 $1,806 $2,266
Expenses (2) (1) (1)
--------- ---------- ----------
Income Before Equity in Undistributed 2,281 1,805 2,265
Earnings of Subsidiary
Equity in Undistributed Earnings of
Subsidiary 2,751 3,211 2,244
--------- ---------- ----------
Net Income $5,032 $5,016 $4,509
========= ========== ==========
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended
December 31
Condensed Statements of Cash Flows 1996 1995 1994
---------------------------------- ---- ---- ----
<S> <C>
Cash provided by dividends received from
Subsidiary $ 2,283 $1,806 $2,266
Cash used for payment of dividends (2,263) (1,806) (2,261)
Other (11) (1) (1)
--------- ---------- ----------
Net increase (decrease) in cash $ 9 $ (1) $ 4
========= ========== ==========
</TABLE>
3. Mergers and Acquisitions
On March 14, 1996, the Corporation completed the acquisition
of Mutual Savings Bank, F.S.B. ("Mutual") upon the approval of the
stockholders of each company. The Corporation exchanged approximately
879,805 common shares, at an exchange ratio of .705 of a share of the
Corporation's common stock, for each of Mutual's 1,248,100 common
shares (which includes the exercise of all outstanding stock options).
The transaction was accounted for as a pooling of interests.
The financial position and results of operations of the Corporation and
Mutual were combined and the fiscal year of Mutual was conformed to the
Corporation's fiscal year. In addition, all prior periods presented
were restated to give effect to the merger.
29
<PAGE>
In August 1995, the Corporation acquired the branch office of
Crestar Bank in Gretna, Virginia. In addition to the branch facilities
at Gretna, the Corporation acquired $2,150,000 in loans and assumed
deposits of $36,295,000. This transaction was accounted for as a
purchase.
In October 1996, the Corporation acquired the branch office of
FirstSouth Bank located in Yanceyville, North Carolina. In addition to
the branch facilities and an ATM located in Yanceyville, the
Corporation acquired $4,775,000 in loans and assumed deposits of
$21,405,000. This transaction was accounted for as a purchase.
4. Investment Securities:
The amortized cost and estimated fair value of investments in
debt securities at December 31, 1996 and 1995 were as follows (in
thousands):
<TABLE>
<CAPTION>
1996
----------------------------------- --------------------------------------
AMORTIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------------- ---------------- ---------------- ----------------
<S> <C>
Securities held to maturity:
U.S. Government $ 40,948 $ 52 $ (49) $ 40,951
Federal agencies 34,615 102 (136) 34,581
State and municipal 12,823 291 (25) 13,089
---------------- ---------------- ---------------- ----------------
Total securities held
to maturity 88,386 445 (210) 88,621
---------------- ---------------- ---------------- ----------------
Securities available for sale:
U.S. Government 53,753 290 (10) 54,033
Federal agencies 18,175 189 (122) 18,242
State and municipal 9,061 171 (38) 9,194
Other 5,907 28 (33) 5,902
---------------- ---------------- ---------------- ----------------
Total securities
available for sale 86,896 678 (203) 87,371
---------------- ---------------- ---------------- ----------------
Total securities $ 175,282 $ 1,123 $ (413) $ 175,992
================ ================ ================ ================
</TABLE>
<TABLE>
<CAPTION>
1995
--------------------------------------------------------------------------
AMORTIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------------- ---------------- ---------------- ----------------
<S> <C>
Securities held to maturity:
U.S. Government $ 54,347 $ 306 $ (70) $ 54,583
Federal agencies 30,738 284 (745) 30,277
State and municipal 10,227 341 (27) 10,541
Other 2,790 40 (35) 2,795
---------------- ---------------- ---------------- ----------------
Total securities held
to maturity 98,102 971 (877) 98,196
---------------- ---------------- ---------------- ----------------
Securities available for sale:
U.S. Government 38,783 848 - 39,631
Federal agencies 2,500 3 (43) 2,460
State and municipal 5,319 115 (1) 5,433
Other 3,552 32 (3) 3,581
---------------- ---------------- ---------------- ----------------
Total securities
available for sale 50,154 998 (47) 51,105
---------------- ---------------- ---------------- ----------------
Total securities $ 148,256 $ 1,969 $ (924) $ 149,301
================ ================ ================ ================
</TABLE>
The amortized cost and estimated fair value of investments in
debt securities at December 31, 1996, by contractual maturity, are
shown below (in thousands). Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
------------------------------------ -------------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
------------------------------------ -------------------------------
<S> <C>
Due in one year or less $ 25,799 $ 25,791 $ 7,747 $ 7,768
Due after on year
-------------- ------------------- ------------- ---------------
through five years 33,759 33,874 62,366 62,769
Due after five years
through ten years 26,192 26,295 9,172 9,227
Due after ten years 2,636 2,661 7,611 7,607
-------------
------------------- ------------- ---------------
$ 88,386 $ 88,621 $86,896 $87,371
============== =================== ============= ===============
</TABLE>
Proceeds from calls exercised by the issuers of investments in
debt securities were $1,804,000 in 1996, $2,045,000 in 1995 and
$6,905,000 in 1994. Proceeds from sales of investments in debt
securities were $19,234,000 in 1996, $9,021,000 in 1995 and $543,000 in
1994. The Bank recognized losses of $592,000 and gains of $254,000 on
sales of securities during 1996 and gains of $61,000 and losses of
$37,000 on sales of securities during 1995 and gains of $43,000 and no
losses on sales of securities in 1994.
Investment securities with a book value of approximately
$42,708,000 at December 31, 1996 were pledged to secure deposits of the
U. S. Government, state and political sub-divisions and for other
purposes as required by law. Of this amount, $30,716,000 was pledged to
secure repurchase agreements.
5. Loans:
Outstanding loans at December 31, 1996 and 1995 were composed
of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C>
Real Estate loans:
Construction and land development $ 3,640 $ 5,499
Secured by farmland 1,169 1,032
Secured by 1 - 4 family residential properties 90,495 81,667
Secured by multi-family (5 or more)
residential properties 772 751
Secured by nonfarm, nonresidential properties 35,289 33,950
Loans to farmers 2,672 2,529
Commercial and industrial loans 49,247 46,902
Loans to individuals for personal expenditures 51,066 42,063
Loans for nonrated industrial development obligations 2,565 1,901
All other loans 124 61
------------ ------------
Total loans $237,039 $216,355
============= ============
</TABLE>
30
<PAGE>
Loans, other than consumer, are generally placed on nonaccrual
status when any portion of principal or interest is 90 days past due or
collectability is uncertain. Unless loans are in the process of
collection, income recognition on consumer loans is discontinued and
the loans are charged off after a delinquency of 90 days. At December
31, 1996, 1995 and 1994, loans in a nonaccrual or restructured status
totaled approximately $33,000, $306,000 and $184,000, respectively.
Interest income on nonaccrual loans, if recognized, is
recorded on a cash basis. For the years 1996, 1995 and 1994, the gross
amount of interest income that would have been recorded on nonaccrual
loans and restructured loans at December 31, if all such loans had been
accruing interest at the original contractual rate, was $40,000,
$25,000 and $20,000, respectively. No interest payments were recorded
in 1996, 1995 or 1994 as interest income for all such nonperforming
loans.
Under the Corporation's policy a nonaccruing loan may be
restored to accrual status when none of its principal and interest is
due and unpaid and the Corporation expects repayment of the remaining
contractual principal and interest or when it otherwise becomes well
secured and in the process of collection.
As of January 1, 1995, the Bank adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan", which was amended
by SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures". SFAS No. 114, as amended,
requires that impaired loans be measured based on the present value of
expected future cash flows discounted at the loan's effective interest
rate, or as a practical expedient, at the loan's observable market
price or the fair value of the collateral, if the loan is
collateral-dependent. When the measure of the impaired loan is less
than the recorded investment in the loan, the impairment is recorded
through a valuation allowance. The Bank had previously measured the
reserve for loan losses using methods similar to those prescribed in
SFAS No. 114. As a result of adopting these statements, no additional
reserve for loan losses was required as of January 1, 1995.
For purposes of applying SFAS No. 114, commercial loans on
nonaccrual status are evaluated for impairment on an individual basis.
Management assesses the current economic condition and the historical
repayment patterns of the creditor in determining whether delays in
repayment on the loans are considered to be insignificant shortfalls or
indicators of impairment. Those loans for which management considers it
probable that the Bank will be unable to collect all amounts due
according to the contractual terms of the loan agreement are considered
to be impaired. All loans made by the Bank other than commercial loans
are excluded from the scope of SFAS No. 114 as they are considered
smaller-balance homogeneous loans that are collectively evaluated for
impairment. Interest income is recognized on impaired loans in the same
manner as loans on nonaccrual status.
During 1996, the Bank did not identify any loans as impaired.
The loan portfolio is concentrated primarily in the immediate
geographic region which is the Corporation's trade area consisting of
the City of Danville, City of Martinsville, Pittsylvania and Henry
Counties in Virginia, Town of Yanceyville and the northern half of
Caswell County in North Carolina. There were no concentrations of loans
to any individual, group of individuals, businesses or industry that
exceeded 10% of the outstanding loans at December 31, 1996.
An analysis of the reserve for loan losses is as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C>
Balance, beginning of year $2,757 $2,454 $2,256
Provision for loan losses charged to expense 673 484 272
Charge-offs (502) (241) (131)
Recoveries 117 60 57
Other 25 - -
----------- ---------- -----------
Balance, end of year $3,070 $2,757 $2,454
=========== ========== ===========
</TABLE>
6. Time Deposits:
Included in time deposits are certificates of deposit in
denominations of $100,000 or more totaling $34,472,000, $28,654,000 and
$16,573,000 at December 31, 1996, 1995 and 1994, respectively. Interest
expense on such deposits during 1996, 1995 and 1994 was $1,392,000,
$788,000 and $468,000, respectively.
7. Income Taxes:
The components of the Corporation's net deferred tax assets as
of December 31, 1996 and December 31, 1995, were as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C>
Deferred tax assets: $ 840 $ 697
Reserve for loan losses 219 184
Deferred compensation 150 301
----------- ----------
Other 1,209 1,182
Valuation allowance (121) (194)
----------- ----------
Total deferred tax assets 1,088 988
Deferred tax liabilities:
Depreciation 211 195
Net unrealized gains 162 324
Prepaid pension 75 91
Other 346 131
----------- ==========
Total deferred tax liabilities 794 741
=========== ==========
Net deferred tax assets $ 294 $247
=========== ==========
</TABLE>
31
<PAGE>
The provision for income taxes consists of the following (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C>
Taxes currently payable $2,442 $2,362 $2,240
Deferred tax benefit (61) (79) (134)
---------- ---------- ----------
$2,381 $2,283 $2,106
========== ========== ==========
</TABLE>
The effective rates of the provision differ from the
statutory federal income tax rates due to the
following items:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C>
Federal statutory rate 34.0% 34.0% 34.0%
Non-taxable interest income (3.6) (3.5) (3.2)
Non-deductible merger expenses 2.3 .8 -
Other (.6) - 1.0
---------- ---------- ----------
32.1% 31.3% 31.8%
========== ========== ==========
</TABLE>
8. Commitments and Contingent Liabilities:
The consolidated financial statements do not reflect various
commitments and contingent liabilities which arise in the normal course
of business to meet the financing needs of customers. These include
commitments to extend credit and standby letters of credit. These
instruments involve, to varying degrees, elements of credit, interest
rate and liquidity risk in excess of the amount recognized in the
consolidated balance sheets. The extent of the Bank's involvement in
various commitments or contingent liabilities is expressed by the
contract or notional amounts of such instruments.
Commitments to extend credit, which amounted to $65,030,000
and $33,967,000 at December 31, 1996 and 1995, represent legally
binding agreements to lend to a customer with fixed expiration dates or
other termination clauses. Since many of the commitments are expected
to expire without being funded, the total commitment amounts do not
necessarily represent future liquidity requirements.
There were no commitments at December 31, 1996 to purchase
securities when issued. Commitments to purchase securities when issued
amounted to $3,250,000 at December 31, 1995.
Standby letters of credit are conditional commitments issued
by the Bank guaranteeing the performance of a customer to a third
party. Those guarantees are primarily issued to support public and
private borrowing arrangements. At December 31, 1996 and 1995 the Bank
had $705,000 and $632,000 in outstanding standby letters of credit.
Management and the Corporation's counsel are not aware of any
pending litigation against the Corporation and believe that there are
no contingent liabilities outstanding that will result in a material
adverse effect on the Corporation's consolidated financial position and
consolidated results of operations.
The Bank is a member of the Federal Reserve System and is
required to maintain certain levels of its cash and due from bank
balances as reserves based on regulatory requirements. At December 31,
1996, this reserve requirement was approximately $3,942,000.
9. Related Party Transactions:
The Directors provide the Bank with substantial amounts of
business, and many are among its largest depositors and borrowers. The
total amount of loans outstanding to the executive officers, directors
and their business interests was $14,025,000, $13,845,000 and
$12,527,000 at December 31, 1996, 1995 and 1994, respectively. The
maximum amount of loans outstanding to the officers, directors and
their business interests at any month-end during 1996, 1995 and 1994
was approximately 6.8% of gross loans. Management believes that all
such loans are made on substantially the same terms, including interest
rates, as those prevailing at the time for comparable loans to similar,
unrelated borrowers, and do not involve more than a normal risk of
collectability. As of December 31, 1996, none of these loans were
restructured, nor were any related party loans charged off during 1996.
An analysis of these loans for 1996 is as follows (in thousands):
Balance, beginning of year $12,106
Additions 24,236
Repayments (24,119)
Other changes (related to changes
in directors' related party
interests) 1,802
---------------
Balance, end of year $14,025
===============
10. Employee Benefit Plans:
The Bank's retirement plan is a non-contributory defined
benefit pension plan which covers substantially all employees of the
Bank who are 21 years of age or older and who have had at least one
year of service. Advanced funding is accomplished by using the
actuarial cost method known as the collective aggregate cost method.
The following table sets forth the plan's funded status as of
December 31, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $2,518 in 1996 and $2,190 in 1995 $(2,604) $(2,218)
=========== ===========
Projected benefit obligation at December 31 $(3,913) $(3,100)
Plan assets at fair value 3,782 3,271
----------- -----------
Plan assets greater than (less than) projected benefit (131) 171
obligation
Unrecognized net asset, at date of adoption, (79) (91)
being recognized over 16.4 years
Unrecognized net loss 666 447
Unrecognized prior service cost (240) (264)
----------- -----------
Prepaid pension cost included in other assets $ 216 $ 263
=========== ===========
</TABLE>
32
<PAGE>
Net periodic pension cost for 1996 and 1995, based on the
above valuation included the following components (in
thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C>
Service cost - benefits earned during the period $125 $106
Interest cost on projected benefit obligation 186 169
Actual return (gain) loss on plan assets (601) (752)
Net amortization and deferral 370 (662)
----------- -----------
Net periodic pension cost $ 80 $185
=========== ===========
</TABLE>
During 1996, a rate of increase in future compensation levels
of 4.0%, and a discount rate of 7.0% were used in determining the
actuarial present value of the projected benefit obligation. During
1995, a rate of increase in future compensation levels of 4.0%, and a
discount rate of 6.0% were used in determining the actuarial present
value of the projected benefit obligation. The expected long-term rate
of return on assets was 6.25% in 1996 and 1995.
Pension plan cost were $80,000, $185,000 and $150,000, for years 1996,
1995 and 1994, respectively. Additional pension expense of $95,000 was
recognized in 1994 related to lump-sum settlements of accrued benefit
obligations.
During 1996, Mutual's non-contributory defined benefit pension plan was
terminated and settled with payments to Mutual employees. As a result
of this transaction, the Bank recorded a net curtailment and settlement
gain of $102,000 during 1996. For the years ended December 31, 1995 and
1994, the Bank recorded pension expense of $86,000 and $112,000
respectively, related to this plan.
Presently the Bank has no postretirement benefits that are not charged
to expense during the years that the employees render service.
A non-contributory deferred compensation plan was adopted in 1982 by
the Board of Directors of the Bank which covers certain key executives.
This plan is being funded primarily by insurance and the expense is
provided on a current basis.
A 401-(k) savings plan was adopted in 1995 which covers substantially
all full-time employees of the Bank who have at least one year of
service. The Bank matches a portion of the contribution made by
employee participants. The Bank contributed $83,000 in 1996 and $41,000
in 1995. These amounts are included in pension and other employee
benefits expense for the respective years.
11. Fair Value of Financial Instruments:
The estimated fair values of the Corporation's financial
instruments are as follows (in thousands):
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
-------------------------- --------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
<S> <C>
Financial assets:
Cash and federal funds sold $ 14,822 $ 14,822 $ 12,789 $ 12,789
Investment securities 175,757 175,992 149,208 149,301
Other 16,070 16,070 13,798 13,798
Loans, net 233,509 235,121 212,684 220,405
Financial liabilities:
Deposits (361,983) (362,937) (327,342) (327,496)
Federal funds purchased and
repurchase agreements (23,484) (23,484) (9,572) (9,572)
Unrecognized financial
instruments:
Commitments to extend
credit (65,030) - (33,967) -
Standby letters of credit (705) (11) (632) (10)
</TABLE>
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which it is
practical to estimate that value:
Cash and federal funds sold
For short-term instruments, the carrying amount is a
reasonable estimate of fair value.
33
<PAGE>
Investment securities and other
For marketable securities held for investment purposes, fair
values are based on quoted market prices or dealer quotes. For other
securities held as investments, fair value equals market price, if
available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.
Loans
Due to the repricing characteristics of revolving credit
lines, home equity loans and adjustable demand loans, the carrying
amount of these loans is a reasonable estimate of fair value. The fair
value of other types of loans is estimated by discounting the future
cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings and for the same remaining
maturities. Prepayment rates are taken into consideration in the
calculation. The interest rates used to discount future cash flows are
those in effect at period-end or an average of such for the 10 working
days surrounding that date. The fair value of non-performing loans
represents an estimate by Management after considering the
collectability of each loan, taking into account the financial position
of the borrower, the value of supporting collateral and the portion of
the reserve for loan losses allocated to each of these loans.
Deposits
The fair value of demand deposits, savings deposits, and money
market deposits is the amount payable on demand at the reporting date.
The fair value of fixed-maturity certificates of deposit is estimated
by discounting the future cash flows using the current rates at which
similar deposit instruments would be offered to depositors for the same
remaining maturities at current rates.
Repurchase Agreements
The fair value of repurchase agreements is estimated by
discounting the future cash flows using the current rates at which
similar repurchase agreements would be offered to depositors for the
same remaining maturities at current rates.
Unrecognized financial instruments
The fair value of commitments to extend credit is estimated
using the fees currently charged (if any) to enter into agreements,
taking into account the remaining terms of the agreements and the
present creditworthiness of the counterparties. At December 31, 1996 no
fees were charged for commitments to extend credit and all such
commitments were subject to current market rates; therefore, no fair
value has been estimated for these commitments.
The fair value of letters of credit is based on fees currently
charged for similar agreements or on the estimated cost to terminate
them or otherwise settle the obligations with the counterparties at the
reporting date.
12. Dividend Restrictions and Capital:
The approval of the Comptroller of the Currency is required if
the total of all dividends declared by a national bank in any calendar
year exceeds the bank's net income, as defined, for that year combined
with its retained net income for the preceding two calendar years.
Under this formula, the Bank can distribute as dividends, without the
approval of the Comptroller of the Currency, $5,864,000 plus an
additional amount equal to the Bank's net income for 1997 up to the
date of any dividend declaration.
Effective March 14, 1996, the stockholders of the Corporation
approved an amendment to the articles of incorporation to increase the
number of authorized shares of the Corporation's common stock from
3,000,000 shares to 10,000,000 shares.
The Bank is required by the Federal Reserve Board and the
Comptroller of the Currency to maintain certain capital to assets
ratios. At December 31, 1996 and 1995 these ratios were above the
minimums prescribed for holding companies and banks, as follows (in
thousands).
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
--------------------------- -------------------------- -----------------------------
Amount Ratio Amount Ratio Amount Ratio
-------------- ----------- --------------- --------- --------------- ------------
<S> <C>
As of December 31, 1996:
Total Capital
(to Risk Weighted Assets) $ 50,891 20.66% $ 19,703 >8.0% $ 24,628 >10.0%
Tier I Capital
(to Risk Weighted Assets) 47,821 19.42% 9,851 >4.0% 19,703 >8.0%
Tier I Capital
(to Average Assets) 47,821 11.76% 16,268 >4.0% 32,536 >8.0%
As of December 31, 1995:
Total Capital
(to Risk Weighted Assets) 47,999 23.67% 16,223 >8.0% 20,279 >10.0%
Tier I Capital
(to Risk Weighted Assets) 45,461 22.42% 8,112 >4.0% 16,223 >8.0%
Tier I Capital
(to Average Assets) 45,461 12.92% 14,071 >4.0% 28,143 >8.0%
</TABLE>
