FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 4, 1998
ANCHOR FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
South Carolina 0-13759 57-0778015
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification number)
2002 Oak St., Myrtle Beach, S. C. 29577
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (843) 448-1411
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ITEM 5. OTHER EVENTS
On September 4, 1998, Anchor Financial Corporation ("Anchor Financial") and
Bailey Financial Corporation ("Bailey Financial"), parent company of M.S. Bailey
& Son, Bankers and The Saluda County Bank in Clinton, South Carolina, announced
the signing of a letter of intent to merge.
The proposed merger is subject to due diligence, execution of a definitive
agreement by September 18, 1998, and approval of such agreement by the boards of
directors and shareholders of Bailey Financial and approval by appropriate
regulatory agencies. The proposed merger is expected to be completed in the
fourth quarter of 1998. For information regarding the terms of the proposed
transaction, reference is made to the letter of intent to merge and the news
release, dated September 4, 1998, attached to this Report as Exhibits 2 and 99,
respectively.
The proposed merger is expected to be accounted for as a pooling of interests
and provides for a tax-free exchange of 16.32 shares of Anchor Financial common
stock for each outstanding share of Bailey Financial common stock. Based on
Anchor Financial's September 3rd closing stock price of $36.00 and Bailey
Financial's approximately 95,140 outstanding shares of common stock, the
proposed transaction would have a total value of $55.9 million.
After consummation of the proposed merger, The Saluda County Bank will be merged
into M.S. Bailey & Son, Bankers, which will operate as a subsidiary of Anchor
Financial. Anchor Financial does not anticipate significant changes in Bailey
Financial's current banking routine.
Based on August 31, 1998 figures, Anchor Financial will have more than $1.2
billion in total assets and its banking network will expand to 34 offices in
South Carolina and North Carolina after this proposed merger.
On August 31, 1998, Anchor Financial completed mergers with ComSouth Bankshares,
Inc. and M&M Financial Corporation, and now has assets of $1.0 billion. It is
the parent of The Anchor Bank, the Bank of Charleston, N.A., the Bank of
Columbia, N.A., and First National South. The Bank of Columbia, N.A. and the
Bank of Charleston, N.A. will be merged into and will become offices of The
Anchor Bank on October 19, 1998, and First National South will be merged into
and become offices of The Anchor Bank on November 23, 1998.
Bailey Financial had assets of $172 million at August 31, 1998, and is the
parent of M.S. Bailey & Son, Bankers and The Saluda County Bank. It also
operates the William J. Bailey Insurance Agency.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements - not applicable.
(b) Pro forma financial information - not applicable.
(c) Exhibits:
(2) Letter of Intent to Merge, dated September 4, 1998
(99) News release issued by Anchor Financial Corporation,
dated September 4, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ John J. Moran
John J. Moran, Senior Vice President
and Comptroller
Date: September 10, 1998
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EXHIBIT 2
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(Anchor Financial Corporation
logo appears here)
September 4, 1998
Board of Directors
Bailey Financial Corporation
211 North Broad Street
Clinton, SC 29325
Ladies and Gentlemen:
The purpose of this letter of intent is to confirm our mutual present intentions
with respect to our proposed business combination. We believe that this proposal
offers substantial advantages to Bailey Financial Corporation and its
shareholders, customers and employees. We look forward to working with your
directors and officers to consummate a transaction as soon as possible.
The terms, conditions and understandings of this proposal include:
1. The transaction shall be structured as an exchange of shares of Anchor
Financial Corporation ("Anchor") for 100% of the outstanding common
stock of Bailey Financial Corporation ("Bailey"). Bailey currently has
95,140 shares of common stock outstanding. The exchange of shares shall
be on the basis of 16.32 shares of Anchor's common stock to be
exchanged for each share of Bailey's common stock. Anchor understands
that upon execution of this letter that the Board of Directors of
Bailey is prepared (subject to their approval of a definitive agreement
to be negotiated) to recommend to its stockholders this proposed
exchange transaction.
2. Upon execution of a definitive agreement, the Board of Directors of
Bailey will be prepared to support and recommend to its stockholders
this proposed exchange transaction.
3. Upon the consummation of the exchange transaction, Anchor anticipates
that the subsidiary banks of Bailey will be merged into one bank and
will continue to operate as a separate subsidiary of Anchor for some
period of time. It is also anticipated that the Trust Department and
Insurance Agency will continue to operate as part of the Bailey
subsidiary bank. It is the intent of Anchor that the staff of the
subsidiary banks of Bailey will be retained to the greatest extent
practicable and that dislocation will be avoided wherever possible.
Anchor intends for the banking operations of Bailey to continue to
serve their current markets with adequate operating authority.
4. Anchor will use its best efforts to provide to employees of Bailey and
its subsidiary banks, employee benefits the value of which is
comparable to those employee benefits presently received by such
employees.
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Board of Directors of Bailey Financial Corporation
Page 2
September 4, 1998
5. Anchor or its subsidiary, The Anchor Bank, shall enter into employment
agreements with key executives of the subsidiary banks of Bailey,
including John W. Dickens, William R. Davis, Robert H. Todd, and Norman
W. Dixon, providing in each case for their continued employment on
terms consistent with those provided for executives in comparable
positions with Anchor.
6. This proposed transaction is subject to the following usual conditions:
a. There shall have been no material adverse change in the
financial condition or results of operation of Bailey as
reflected in Bailey's most recent audited financial
statements.
b. Anchor shall have reviewed all information and consulted with
Bailey's counsel regarding any pending legal proceedings, and
Anchor shall have concluded in its sole discretion that such
proceedings do not have the potential to have a material
adverse impact on Anchor's valuation of Bailey.
c. All required approvals by appropriate state and federal
regulatory authorities shall have been obtained without the
imposition of conditions with which Anchor cannot reasonably
comply.
d. Bailey's shareholders shall exchange 100% of the outstanding
common stock of Bailey for Anchor's common shares, and
Anchor's independent accountants shall render a favorable
opinion that the transaction will be accounted for as a
pooling of interests.
e. A definitive agreement shall be negotiated on or before
September 18, 1998, which shall provide for the exchange
transaction and contain such terms, agreements,
representations, warranties and conditions as shall be
consistent herewith and otherwise in form and substance
satisfactory to each party.
f. In the event Bailey takes any action to sell Bailey or any of
its subsidiaries to any other institution or party, the
definitive agreement may be terminated at the option of
Anchor; and if Anchor elects to terminate in such event,
Bailey shall grant Anchor an option to acquire 19.9 percent of
the outstanding capital stock of Bailey.
7. The obligation of Anchor to consummate the proposed exchange
transaction is subject to a thorough due diligence examination of the
books, records, properties and facilities of Bailey and its
subsidiaries. Promptly following the execution of this letter of
intent,
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Board of Directors of Bailey Financial Corporation
Page 3
September 4, 1998
Bailey shall (except as may be prohibited by applicable law)
permit Anchor, its officers, employees, agents and representatives
to all the books, records, properties and facilities of Bailey and its
subsidiaries and, in this connection, shall use its best efforts to
cause the officers, employees, accountants and attorneys of Bailey to
cooperate with any of Anchor's reasonable requests for information.
Bailey and Anchor shall keep, or cause to be kept, confidential all
information so received (other than such information as is publicly
available) and shall use such information, or cause it to be used,
solely for the purpose of evaluating Bailey in connection with the
proposed exchange transaction; provided, Bailey and Anchor may disclose
any such information to the extent required by federal or state
securities laws or otherwise required by any governmental agency or
authority in the United States.
8. From the date hereof, subject only to their fiduciary duty to act in
the best interests of shareholders of Bailey, the officers and
directors of Bailey shall not make any inquiries or proposals with
respect to, or furnish information relating to, or participate in any
negotiations or discussions concerning any direct or indirect
acquisition or purchase of shares of Bailey other than as contemplated
by this letter of intent.
9. Each party will bear its own expenses in connection with the exchange
transaction.
10. Anything herein to the contrary notwithstanding, if the definitive
agreement has not been entered into by September 18, 1998, then any
party hereto may terminate the proposed exchange transaction upon
notice to the other. Each party agrees to use its best efforts to enter
into the definitive agreement by September 18, 1998.
11. Neither party shall disclose the terms of this letter except pursuant
to a press release that is mutually agreed to as to content and timing
of release.
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Board of Directors of Bailey Financial Corporation
Page 4
September 4, 1998
If you find the above terms satisfactory, please sign a copy of this letter and
deliver it to the President of Anchor no later than September 4, 1998, as
evidence that this letter accurately reflects our mutual present intents. Except
as to the provisions set forth in paragraphs 8, 9 and 10 above, this instrument
is not intended to create any contractual obligations on the part of the parties
hereto.
Sincerely,
ANCHOR FINANCIAL CORPORATION
By: /s/ Stephen L. Chryst
Stephen L. Chryst
President & Chief Executive Officer
Agreed:
BAILEY FINANCIAL CORPORATION
By: /s/ Robert M. Vance
Robert M. Vance
Chairman
By: /s/ John W. Dickens
John W. Dickens
President & Chief Executive Officer
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EXHIBIT 99
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ANCHOR FINANCIAL CORPORATION 2002 OAK STREET, MYRTLE BEACH, SC 29577
(803) 448-1411
(Anchor News Release logo appears here)
FOR IMMEDIATE RELEASE
CONTACT: TOMMY E. LOOPER
(843) 946-3164
Anchor Financial Corporation and Bailey Financial Corporation
Announce Intent to Merge
Myrtle Beach, SC, September 4, 1998 - Anchor Financial Corporation and Bailey
Financial Corporation, parent company of M.S. Bailey & Son, Bankers and The
Saluda County Bank in Clinton, South Carolina, today announced the signing of a
letter of intent to merge.
The proposed merger is subject to due diligence, execution of a definitive
agreement, approval of such agreement by the boards of directors, and approval
by the shareholders of Bailey Financial Corporation, as well as approval by
appropriate regulatory agencies. Anchor anticipates that the transaction may be
completed as early as the fourth quarter of 1998.
Upon completion of the Corporate merger, The Saluda County Bank will be merged
into M.S. Bailey & Son, Bankers which will operate as a subsidiary of Anchor
Financial Corporation. As a result of this combination with Bailey Financial
Corporation, Anchor Financial Corporation's asset size will increase to $1.2
billion and its banking network will expand to 34 offices in South Carolina and
North Carolina.
John W. Dickens will continue as president of M.S. Bailey & Son, Bankers and
customers of both banks will continue to be served by the same officers and
employees who have helped them in the past.
The proposed transaction is expected to be accounted for as a pooling of
interests and provides for a tax-free exchange of 16.32 shares of Anchor
Financial Corporation common stock for each outstanding share of Bailey
Financial Corporation common stock. Based on Anchor Financial Corporation's
September 3rd closing stock price of $36.00 and Bailey Financial Corporation's
approximately 95,140 outstanding shares of common stock, the transaction would
have a total value of $55.9 million. The merger is expected to have a positive
impact on Anchor's earnings beginning in 1999.
Stephen L. Chryst, president and chief executive officer of Anchor Financial
Corporation, stated, "The partnership with Bailey Financial Corporation adds
strength to our growing franchise. Their offices in Clinton, Laurens, and Saluda
complement our recent move into the Midlands of
(M O R E)
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Anchor Financial Corporation, Bailey Financial Corporation Announce Intent to
Merge
P. 2
South Carolina, and their style of community banking blends well with ours. We
are particularly pleased with their strong trust business and the fact that they
operate an insurance agency. We believe that both of these specialties will be
very important to the future success of our company. We are pleased to affiliate
with such a sound financial institution with a long standing commitment to
excellence in banking. The combined resources and capabilities assembled here
will benefit both companies."
Robert M. Vance, chairman of Bailey Financial Corporation, said, "Anchor
Financial Corporation shares our commitment to community bank services. We are
pleased to partner with them and believe that our capabilities blend well with
their banking network. The combined strength and offering of services will be
good for customers, employees, and shareholders."
Anchor Financial Corporation recently completed mergers with ComSouth
Bankshares, Inc. and M&M Financial Corporation, and now has assets of $1.0
billion. It is the parent of The Anchor Bank, the Bank of Charleston, the Bank
of Columbia, and First National South, and operates 28 banking offices in South
Carolina and North Carolina. The Bank of Columbia and the Bank of Charleston
will become offices of The Anchor Bank on October 19 and the First National
South offices will become offices of The Anchor Bank on November 23.
Anchor Financial Corporation's common stock trades on the Nasdaq Stock MarketSM
under the symbol AFSC.
Bailey Financial Corporation has assets of $172 million and is the parent of
M.S. Bailey & Son, Bankers and The Saluda County Bank. It also operates the
William J. Bailey Insurance Agency.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Statements in this news release looking forward in time involve risks and
uncertainties, including regulatory approvals, completion of the due diligence
process, success of acquiring new locations and integrating newly-acquired
branches, additional expansion opportunities, the effect of changing economic
conditions, product demand, changes in the regulatory environment, and other
risk factors detailed in Anchor's Securities and Exchange Commission filings.
Note: Transmitted on Business Wire at 12:30 P. M. EST, September 4, 1998.
