SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) October 16, 1999
----------------
FNB Corp.
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
North Carolina 0-13823 56-1456589
- ----------------------------------------------------------------------
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
101 Sunset Avenue, Asheboro, North Carolina 27203
- -------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (336) 626-8300
--------------
N/A
-----------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
<PAGE>
ITEM 5. Other Events
On October 16, 1999, FNB Corp. ("FNB") and Carolina Fincorp, Inc.
("Carolina") entered into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which FNB will acquire Carolina. The Boards of
Directors of FNB and Carolina approved the Merger Agreement and the transactions
contemplated thereby at separate meetings held on October 15, 1999 and October
16, 1999, respectively.
In accordance with the terms of the Merger Agreement, a yet to be
formed, wholly owned subsidiary of FNB will merge with and into Carolina (the
"Merger"), and Carolina will be the surviving corporation resulting from the
Merger and a wholly owned subsidiary of FNB.
Upon consummation of the Merger, each share of common stock, no par
value, of Carolina ("Carolina Stock") issued and outstanding as of the effective
time of the Merger (excluding shares held by FNB or Carolina or any of their
subsidiaries, in each case other than in a fiduciary capacity or as a result of
debts previously contracted) shall be converted into .79 (subject to possible
adjustment as described below, the "Exchange Ratio") of a share of common stock,
par value $2.50, of FNB ("FNB Stock"), with cash being paid in lieu of any
fractional shares. In addition, outstanding options to purchase Carolina Stock
under its existing stock option plan will be assumed by FNB except that FNB
Stock will be substituted for Carolina Stock on a basis that reflects the
Exchange Ratio. Restricted stock that has been granted to employees of
Carolina's subsidiaries under its existing management recognition plan will be
converted into FNB Stock under the terms of the Merger Agreement.
The Merger is intended to constitute a tax-free transaction under the
Internal Revenue Code of 1986, as amended, and be accounted for as a pooling of
interests.
Two members of Carolina's Board of Directors will join the Board of
Directors of FNB following the Merger and the other Carolina Directors will be
appointed to a local advisory board of First National Bank and Trust Company,
FNB's wholly owned, national bank subsidiary.
Consummation of the Merger is subject to various conditions, including:
(i) receipt of the approvals of the shareholders of FNB and Carolina; (ii)
receipt of certain federal and state regulatory approvals; (iii) receipt of
opinion of counsel as to the tax-free nature of the Merger; (iv) receipt of
letters from the independent accountants of FNB to the effect that the Merger
will qualify for pooling-of-interests accounting treatment and from the
independent accountants of Carolina that such accountants are not aware of any
matters relating to Carolina or its subsidiaries that would preclude the Merger
from qualifying for pooling-of-interests accounting treatment; and (v)
satisfaction of certain other conditions.
Under the Merger Agreement, Carolina has the right to terminate the
Merger Agreement if the Average Closing Price (as defined below) of FNB Stock
(i) is less than 0.80
2
<PAGE>
times the Starting Price (as defined below) and (ii) reflects a decline, on the
Determination Date (as defined below), of more than 15% below a weighted index
of the stock prices of a group of ten bank holding companies designated in the
Merger Agreement. In the event Carolina gives notice of its intention to
terminate the Merger Agreement based on this provision, FNB has the right to
elect to adjust the Exchange Ratio in accordance with the terms of the Merger
Agreement, which would preclude a termination of the Merger Agreement.
For purposes of the Merger Agreement, "Average Closing Price" means the
average of the daily last sales prices of FNB Stock as reported on the Nasdaq
National Market System (as reported by The Wall Street Journal or, if not
reported thereby, by another authoritative source as chosen by FNB) for the ten
consecutive full trading days in which such shares are traded on Nasdaq ending
at the close of trading on the Determination Date. "Determination Date" means
the later of the dates on which both (i) all requisite consents or approvals of
applicable federal and state regulatory authorities having jurisdiction over the
Merger are obtained (without regard to any waiting periods) and (ii) the
shareholders of both Carolina and FNB shall have approved the Merger. "Starting
Price" means the last sale price per share of FNB Stock as reported on Nasdaq
(as reported by The Wall Street Journal or, if not reported thereby, by another
authoritative source as chosen by FNB) on October 18, 1999.
In connection and concurrently with the execution of the Merger
Agreement, Carolina and FNB entered into an option agreement pursuant to which
Carolina granted to FNB an option to purchase up to 19.9% of the outstanding
shares of Carolina Stock at a purchase price of $10.50 per share upon the
occurrence of certain events and conditions (the "Option Agreement"). Under the
terms of the Option Agreement, the total profit that FNB may realize under the
option may not exceed $1.2 million.
The Merger Agreement and the Merger will be submitted for approval at
separate meetings of the shareholders of FNB and Carolina (the "Shareholders'
Meetings"). Prior to the Shareholders' Meetings, FNB will file a registration
statement with the Securities and Exchange Commission (the "SEC") registering
the shares of FNB Stock to be issued in connection with the Merger. In
connection with the Shareholders' Meetings, FNB and Carolina will prepare and
file with the SEC a joint proxy statement and mail such joint proxy statement to
their respective shareholders.
A copy of the joint press release (the "Press Release") relating to the
Merger is being filed as Exhibit 99.1 to this report and is incorporated herein
by reference. The Press Release contains forward-looking statements, including
estimates of future operating results and other forward-looking financial
information for FNB and Carolina. These estimates constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. As such, the estimates involve significant risks and uncertainties. Actual
results may differ materially due to such factors as: (1) expected cost savings
from the Merger not materializing within the expected time frame; (2) revenues
following the Merger not meeting expectations; (3) competitive pressures among
financial institutions increasing significantly; (4)
3
<PAGE>
costs or difficulties related to the integration of the businesses of FNB and
Carolina being greater than expected; (5) general economic conditions being less
favorable than anticipated; and (6) legislation or regulatory changes adversely
affecting the business in which FNB and Carolina will engage after the Merger.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
Exhibit 99.1 Text of Joint Press Release dated October 18,
1999 issued by FNB and Carolina
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.
FNB CORP.
Date: October 22, 1999 By /s/Jerry A. Little
-------------------
Jerry A. Little
Secretary and Treasurer
4
<PAGE>
INDEX TO EXHIBITS
The following exhibit is filed as part of this report:
Exhibit No. Description
99.1 Text of Joint Press Release dated October 18, 1999,
issued by FNB Corp. and Carolina Fincorp, Inc.
5
Exhibit 99.1
FNB CORP. [GRAPHIC] CAROLINA FINCORP, INC.
FOR IMMEDIATE RELEASE
October 18, 1999
FNB Corp. and Carolina Fincorp, Inc. Agree to Merge
Asheboro, N.C. -- Michael C. Miller, Chairman and President of FNB
Corp. (Nasdaq: FNBN) and R. Larry Campbell, President and Chief Executive
Officer of Carolina Fincorp, Inc., today announced the signing of a definitive
agreement for the merger of the two institutions. The agreement provides that
FNB will issue .79 shares of its common stock for each share of Carolina common
stock. Based on Friday's closing for FNB, the transaction represents a price of
$15.01 per share of Carolina common stock and a deal value of approximately
$29.1 million. The merger will result in an institution with combined assets of
approximately $500 million and a market capitalization in excess of $100
million.
"This is a very positive step for FNB," noted Mr. Miller. "Carolina
Fincorp's markets complement those of FNB perfectly. Moore, Richmond and
Scotland counties are immediately adjacent to our existing franchise in
Randolph, Montgomery and Chatham and together we hold the number one deposit
market share in the markets where we have offices. With presence in communities
such as Pinehurst and Southern Pines, Carolina broadens our strong demographic
base and positions us well for future growth as these six counties sit at the
heart of the planned expansion of the Interstate 73 and 74 corridors."
Mr. Campbell added, "We are extremely pleased to join forces with FNB Corp.
and First National. We share a common heritage of serving our communities for
nearly a century. This merger creates growth opportunities in commercial banking
and noninterest income areas that would have taken us longer to develop
individually and thereby promotes the best interests of Carolina Fincorp's
customers, employees and shareholders."
Subject to certain conditions including the approval of both companies'
shareholders and applicable regulatory authorities, the merger is anticipated to
close late in the first quarter or early in the second quarter of 2000. The
transaction is intended to be tax-free to the shareholders of Carolina Fincorp
and will be accounted for as a pooling of interests.
Two members of Carolina's Board of Directors will join the FNB Board, and the
<PAGE>
remainder of Carolina's Board will be asked to serve as Advisory Directors.
Carolina has granted FNB the option, exercisable under certain circumstances, to
purchase up to 19.9% of Carolina shares outstanding.
FNB Corp. is the $380 million bank holding company for First National
Bank and Trust Company, which operates twelve offices in Chatham, Montgomery and
Randolph counties in central North Carolina. First National Bank and Trust
offers a complete line of financial services, including deposit, loan,
investment and trust services. Carolina Fincorp, a bank holding company for
Richmond Savings Bank, Inc. SSB, operates five offices in Richmond, Moore and
Scotland counties.
This news release contains forward-looking statements, including
estimates of future operating results and other forward-looking financial
information for FNB Corp. and Carolina Fincorp, Inc. These estimates constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. As such, the estimates involve significant risks
and uncertainties. Actual results may differ materially due to such factors as:
(1) expected cost savings from the merger not materializing within the expected
time frame; (2) revenues following the merger not meeting expectations; (3)
competitive pressures among financial institutions increasing significantly; (4)
costs or difficulties related to the integration of the businesses of FNB and
Carolina Fincorp being greater than anticipated; (5) general economic conditions
being less favorable than anticipated; and (6) legislation or regulatory changes
adversely affecting the business in which the combined company will be engaged.
For additional information, contact:
FNB Corp.
Michael C. Miller
or
Jerry A. Little
(336) 626-8300
Carolina Fincorp, Inc.
R. Larry Campbell
or
John W. Bullard
(910) 997-6245
