<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 1996
-----------------------------
FCNB Corp
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(Exact name of registrant as specified in its charter)
Maryland 0-15645 52-1479635
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(State or other jurisdiction (Commission file (IRS Employer
of incorporation) number) Identification Number)
One North Market Street, Frederick, Maryland 21701
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (301) 662-2191
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<PAGE>
Item 2. Acquisition or Disposition of Assets
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On January 26, 1996, FCNB Corp ("FCNB") consummated its previously
announced merger of Laurel Bancorp, Inc. ("Laurel"), the holding company for
Laurel Federal Savings Bank, Laurel, Maryland, with and into FCNB, and the
merger of Laurel Federal Savings Bank with and into FCNB's wholly owned
subsidiary, Elkridge Bank, Elkridge, Maryland. Certain assets and liabilities
relating to the Monrovia, Maryland branch of Laurel Federal Savings Bank were
also purchased and assumed by FCNB's wholly owed subsidiary, FCNB Bank,
Frederick, Maryland. FCNB and Laurel executed a definitive merger agreement on
May 25, 1995.
As a result of the Merger, each share of the outstanding common stock,
$.01 par value of Laurel, was converted into .7656 shares of the common stock,
$1.00 par value, of FCNB (the "Conversion Ratio"), resulting in the issuance of
approximately 1,307,284 shares of FCNB common stock, subject to adjustment to
account for the elimination of fractional shares. In accordance with the
provisions of the definitive merger agreement, the Conversion Ratio was
determined by dividing $15.78 by $20.6125, the average of the closing price for
the FCNB common stock on Nasdaq, during the twenty trading days commencing
December 26, 1995 and ending January 23, 1996.
The consummation of the acquisition of Laurel, which had approximately
$108 million of total assets, gives FCNB approximately $664 million in total
assets, total deposits of approximately $528 million, and total stockholder's
equity of approximately $66 million.
Item 7. Financial Statements and Exhibits
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(a) Audited Consolidated Financial Statements of Laurel Bancorp, Inc.
for the year ended November 30, 1994 (including consolidated balance sheets for
the years ended November 30, 1994 and 1993, consolidated statements of income
and cash flows for each of the three years in the period ended November 30,
1994) are incorporated by reference to Laurel's Annual Report to Stockholders
for the year ended November 30, 1994, filed as Exhibit 13(d) to FCNB's
Registration Statement (No. 33-95206) on Form S-4.
Unaudited Consolidated Financial Statements of Laurel Bancorp,
Inc for the nine months ended August 31, 1995 and 1994 (including consolidated
balance sheets and statements of income and cash flows for such periods) are
incorporated by reference to Exhibit 13(j) to Post-Effective Amendment No. 1 to
FCNB's Registration Statement (No. 33-95206) on Form S-4.
(b) Pro Forma Financial Information for each of the periods for which
financial information is provided pursuant to Item 7(a) hereof follows.
(c) Exhibit 2 - Agreement and Plan of Merger between FCNB Corp and
Laurel Bancorp, Inc, dated as of May 25, 1995 - Incorporated
by reference to Exhibit 2 to FCNB's Registration Statement
(No. 33-95206) on Form S-4.
Exhibit 23 - Consent of Anderson Associates
Exhibit 99 - Press Release dated January 26, 1996.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The unaudited pro forma combined balance sheets and the unaudited pro
forma combined statements of income of FCNB set forth below give effect, using
the pooling of interests method of accounting, to the merger of Laurel with and
into FCNB based upon the Conversion Ratio of .7656 shares of FCNB common stock
for each share of Laurel common stock outstanding as of each respective period
end. The unaudited pro forma balance sheets are presented as though the merger
had occurred on September 30, 1995. The unaudited pro forma combined income
statements are presented as though the merger had occurred on January 1, 1992.
The financial information for FCNB includes historical results for ENB Financial
Corporation, which was merged into FCNB effective March 24, 1995.
The unaudited pro forma financial information set forth below is for
illustrative purposes only, and therefore is not necessarily indicative of the
financial condition or results of operations of FCNB as they would have been had
the merger occurred during the periods presented or as they may be in the
future.
The unaudited pro forma combined balance sheet and the unaudited
combined statements of income are derived from the consolidated financial
statements of FCNB and Laurel. FCNB uses December 31 as the closing date for its
annual financial reporting period, whereas Laurel uses November 30. The
unaudited pro forma financial information set forth below include the same
number of months for each entity and are not materially affected by the one
month difference in the effective date of the information presented.
Under generally accepted accounting principles, all costs incurred to
effect a combination accounted for as a pooling of interests are expenses of the
combined enterprise and, accordingly, are charged to expense and deducted in
determining the results of operations of the combined entity. Specific one-time
costs associated with the merger that will cause significant reductions to the
combined entity's results of operations for the quarter ended March 31, 1996
include: (1) income tax expense of approximately $1.6 million associated with
accumulated bad debt reserves for income tax purposes in excess of those
maintained for financial reporting purposes; (2) salaries and employee benefits
associated with change-in-control payments to certain executive officers of
Laurel totalling approximately $1.2 million; and (3) other operating expenses of
approximately $300,000 associated with a consulting fee payable to Laurel's
financial advisor. None of these specific one-time merger costs are reflected in
the pro forma financial information set forth below.
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED BALANCE SHEETS
FCNB AND LAUREL
(dollars in thousands)
September 30, 1995 August 31, 1995
------------------ ---------------
FCNB Laurel Adjustments Pro Forma Combined
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ASSETS
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<S> <C> <C> <C> <C>
Cash and due from banks $24,464 $487 $24,951
Interest-bearing deposits in other banks 331 8,537 8,868
Federal funds sold 7,304 - 7,304
-------- -------- --------
Cash and cash equivalents 32,099 9,024 41,123
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Loans held for sale 2,983 - 2,983
Investment securities held to maturity 73,080 16,115 89,195
Investment securities available for sale - at
fair value 61,632 925 62,557
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Loans 350,944 86,763 437,707
Less: Allowance for credit losses (3,737) (1,130) (4,867)
Unearned income (1,359) - (1,359)
--------- -------- ---------
Net loans 345,848 85,633 431,481
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Bank premises and equipment 17,575 163 17,738
Other assets 11,355 3,624 14,979
-------- -------- --------
Total assets $544,572 $115,484 $660,056
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LIABILITIES AND STOCKHOLDERS' EQUITY
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LIABILITIES
Deposits:
Noninterest-bearing deposits $62,701 $(71) $62,630
Interest-bearing deposits 387,932 89,491 477,423
-------- -------- --------
Total deposits 450,633 89,420 540,053
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Short-term borrowings:
Federal funds purchased and securities 15,256 - 15,256
sold under agreements to repurchase
Other short-term borrowings 25,221 2,000 27,221
Long-term debt 2,235 5,000 7,235
Accrued interest and other liabilities 4,326 1,174 5,500
-------- -------- --------
Total liabilities 497,671 97,594 595,265
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STOCKHOLDERS' EQUITY
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Common Stock 4,070 16 1,212 5,298
Surplus 22,536 5,330 (1,212) 26,654
Retained earnings 20,278 12,544 32,822
Net unrealized gains (losses) on securities 17 - 17
-------- -------- --------
available for sale
Total stockholders' equity 46,901 17,890 64,791
-------- -------- --------
Total liabilities and stockholders'
equity $544,572 $115,484 $660,056
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(dollars in thousands, except for per share data)
For the Nine Month Period Ended
---------------------------------------------
September 30, 1995 August 31, 1995 Pro Forma
FCNB Laurel Combined
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $23,294 $5,857 $29,151
Interest and dividends on investment securities:
Taxable 6,505 677 7,182
Tax exempt 996 - 996
Dividends 249 51 300
Interest on federal funds sold 306 - 306
Other interest income 20 306 326
-------- -------- --------
Total interest income 31,370 6,891 38,261
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Interest expense:
Interest on deposits 11,461 2,860 14,321
Interest on federal funds purchased and securities sold 933 - 933
under agreements to repurchase
Interest on other short-term borrowings 1,304 204 1,508
Interest on long-term debt - 282 282
-------- -------- --------
Total interest expense(2) 13,698 3,346 17,044
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Net interest income 17,672 3,545 21,217
Provision for credit losses 278 - 278
-------- -------- ------
Net interest income after provision for credit losses 17,394 3,545 20,939
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Noninterest income:
Service fees 1,535 - 1,535
Net securities gains (losses) 64 - 64
Gain (loss) on sale of loans 167 - 167
Other operating income 783 209 992
-------- -------- -------
Total noninterest income 2,549 209 2,758
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Noninterest expense:
Salaries and employee benefits 7,336 1,026 8,362
Occupancy expenses 1,101 124 1,225
Equipment expenses 962 89 1,051
Other operating expenses 3,830 776 4,606
-------- -------- --------
Total noninterest expense 13,229 2,015 15,244
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Income before provision for income taxes 6,714 1,739 8,453
Provision for income taxes 2,261 680 2,941
-------- -------- --------
Net income $4,453 $1,059 $5,512
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Earnings per Common Share:
Net income per share $1.09(1) $0.63 $1.03
Weighted average number of shares outstanding 4,070,321(1) 1,686,558 5,361,550
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<FN>
(1) Adjusted for a three-for-two stock split, effected in the form of a 50%
stock dividend, declared in April 1995.
(2) FCNB and pro forma combined are net of $120,000 capitalized construction
period interest.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(dollars in thousands, except for per share data)
For the Nine Month Period Ended
--------------------------------------------
September 30, 1994 August 31, 1994 Pro Forma
FCNB Laurel Combined
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<S> <C> <C> <C>
Interest income:
Interest and fees on loans $17,171 $5,463 $22,634
Interest and dividends on investment securities:
Taxable 6,807 737 7,544
Tax exempt 1,394 - 1,394
Dividends 151 39 190
Interest on federal funds sold 330 - 330
Other interest income 6 141 147
------- -------- --------
Total interest income 25,859 6,380 32,239
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Interest expense:
Interest on deposits 8,613 2,079 10,692
Interest on federal funds purchased and securities sold 975 - 975
under agreements to repurchase
Interest on other short-term borrowings 238 308 546
Interest on long-term debt - 124 124
-------- -------- --------
Total interest expense 9,826 2,511 12,337
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Net interest income 16,033 3,869 19,902
Provision for credit losses 285 75 360
-------- -------- --------
Net interest income after provision for credit losses 15,748 3,794 19,542
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Noninterest income:
Service fees 1,386 - 1,386
Net securities gains (losses) 454 - 454
Gain (loss) on sale of loans (258) - (258)
Other operating income 554 100 654
-------- -------- --------
Total noninterest income 2,136 100 2,236
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Noninterest expense:
Salaries and employee benefits 6,263 1,061 7,324
Occupancy expenses 1,150 132 1,282
Equipment expenses 903 85 988
Other operating expenses 3,679 781 4,460
-------- -------- --------
Total noninterest expense 11,995 2,059 14,054
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Income before provision for income taxes 5,889 1,835 7,724
Provision for income taxes 1,707 676 2,383
-------- -------- --------
Net Income $4,182 $1,159 $5,341
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Earnings per Common Share:
Net income per share $1.03(1) $0.69 $1.00
Weighted average number of shares outstanding 4,068,968(1) 1,682,313 5,356,947
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<FN>
(1) Adjusted for a three-for-two stock split, effected in the form of a 50%
stock dividend, declared in April 1995.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(dollars in thousands, except for per share data)
For the Twelve Month Period Ended
------------------------------------------------
December 31, 1994 November 30, 1994 Pro Forma
FCNB Laurel Combined
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $23,804 $7,284 $31,088
Interest and dividends on investment securities:
Taxable 9,119 964 10,083
Tax exempt 1,816 - 1,816
Dividends 217 55 272
Interest on federal funds sold 439 - 439
Other interest income 10 184 194
-------- -------- --------
Total interest income 35,405 8,487 43,892
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Interest expense:
Interest on deposits 11,836 2,790 14,626
Interest on federal funds purchased and securities sold 1,247 - 1,247
under agreements to repurchase
Interest on other short-term borrowings 530 398 928
Interest on long-term debt - 209 209
-------- -------- --------
Total interest expense 13,613 3,397 17,010
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Net interest income 21,792 5,090 26,882
Provision for credit losses 450 75 525
-------- -------- --------
Net interest income after provision for credit losses 21,342 5,015 26,357
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Noninterest income:
Service fees 1,845 - 1,845
Net securities gains (losses) 375 - 375
Gain (loss) on sale of loans (260) - (260)
Other operating income 732 186 918
-------- -------- --------
Total noninterest income 2,692 186 2,878
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Noninterest expense:
Salaries and employee benefits 8,448 1,412 9,860
Occupancy expenses 1,491 176 1,667
Equipment expenses 1,232 113 1,345
Other operating expenses 5,182 1,137 6,319
-------- -------- --------
Total noninterest expense 16,353 2,838 19,191
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Income before provision for income taxes 7,681 2,363 10,044
Provision for income taxes 2,388 884 3,272
-------- -------- --------
Net Income $5,293 $1,479 $6,772
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Earnings per Common Share:
Net income per share $1.30(1) $0.88 $1.26
Weighted average number of shares outstanding 4,068,329(1) 1,681,592 5,355,756
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<FN>
(1) Adjusted for a three-for-two stock split, effected in the form of a 50%
stock dividend, declared in April 1995.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(dollars in thousands, except for per share data)
For the Twelve Month Period Ended
---------------------------------------------
December 31, 1993 November 30, 1993 Pro Forma
FCNB Laurel Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $20,628 $8,007 $28,635
Interest and dividends on investment securities:
Taxable 9,226 915 10,141
Tax exempt 2,103 - 2,103
Dividends 144 47 191
Interest on federal funds sold 403 - 403
Other interest income 14 204 218
-------- -------- --------
Total interest income 32,518 9,173 41,691
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Interest expense:
Interest on deposits 11,488 2,792 14,280
Interest on federal funds purchased and securities sold 617 - 617
under agreements to repurchase
Interest on other short-term borrowings 513 275 788
Interest on long-term debt 9 360 369
-------- -------- --------
Total interest expense 12,627 3,427 16,054
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Net interest income 19,891 5,746 25,637
Provision for credit losses 180 585 765
-------- -------- --------
Net interest income after provision for credit losses 19,711 5,161 24,872
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Noninterest income:
Service fees 1,724 - 1,724
Net securities gains (losses) (1,183) - (1,183)
Gain (loss) on sale of loans 1,975 - 1,975
Other operating income 684 114 798
-------- -------- --------
Total noninterest income 3,200 114 3,314
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Noninterest expense:
Salaries and employee benefits 8,015 1,407 9,422
Occupancy expenses 1,282 184 1,466
Equipment expenses 1,282 116 1,398
Other operating expenses 4,655 1,072 5,727
-------- -------- --------
Total noninterest expense 15,234 2,779 18,013
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Income before provision for income taxes 7,677 2,496 10,173
Provision for income taxes 2,316 985 3,301
-------- -------- --------
Net Income $5,361 $1,511 $6,872
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Earnings per Common Share:
Net income per share $1.32(1) $0.91 $1.29
Weighted average number of shares outstanding 4,058,137(1) 1,665,757 5,333,441
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Adjusted for a three-for-two stock split, effected in the form of a 50%
stock dividend, declared in April 1995.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(dollars in thousands, except for per share data)
For the Twelve Month Periods Ended
---------------------------------------------
December 31, 1992 November 30, 1992 Pro Forma
FCNB Laurel Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $22,172 $8,573 $30,745
Interest and dividends on investment securities:
Taxable 8,970 903 9,873
Tax exempt 2,251 - 2,251
Dividends 24 48 72
Interest on federal funds sold 473 - 473
Other interest income 8 194 202
-------- -------- --------
Total interest income 33,898 9,718 43,616
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Interest expense:
Interest on deposits 13,850 4,443 18,293
Interest on federal funds purchased and securities sold 717 - 717
under agreements to repurchase
Interest on other short-term borrowings 440 208 648
Interest on long-term debt 15 110 125
-------- -------- --------
Total interest expense 15,022 4,761 19,783
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Net interest income 18,876 4,957 23,833
Provision for credit losses 642 434 1,076
-------- -------- --------
Net interest income after provision for credit losses 18,234 4,523 22,757
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Noninterest income:
Service fees 1,597 - 1,597
Net securities gains (losses) (1,576) 66 (1,510)
Gain (loss) on sale of loans 1,363 - 1,363
Other operating income 301 157 458
-------- -------- --------
Total noninterest income 1,685 223 1,908
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Noninterest expense:
Salaries and employee benefits 7,068 1,326 8,394
Occupancy expenses 1,266 123 1,389
Equipment expenses 1,155 172 1,327
Other operating expenses 4,156 1,232 5,388
-------- -------- --------
Total noninterest expense 13,645 2,853 16,498
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Income before provision for income taxes and cumulative
effect of changes in accounting principles 6,274 1,893 8,167
Provision for income taxes 1,577 769 2,346
-------- -------- --------
Income before cumulative effect of changes in accounting principles 4,697 1,124 5,821
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Earnings per Common Share:
Income before cumulative effect of changes in accounting principles $1.16(1) $0.72 $1.11
Weighted average number of shares outstanding 4,051,318(1) 1,570,702 5,253,847
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<FN>
(1) Adjusted for a three-for-two stock split, effected in the form of a 50%
stock dividend, declared in April 1995.
</FN>
</TABLE>
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FCNB CORP
By: /s/ A. Patrick Linton
-----------------------------------
A. Patrick Linton, President
Dated: February 5, 1996
<PAGE>
Exhibit 23
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference and use of our
report dated January 10, 1995 on thE audit of the consolidated financial
statements of Laurel Bancorp, Inc. and Subsidiaries in the Current Report on
Form 8-K filed by FCNB Corp with the Securities and Exchange Commission in
connection with the consummation of the acquisition by FCNB Corp of Laurel
Bancorp, Inc.
ANDERSON ASSOCIATES
/s/Anderson Associates
February 6, 1996
Baltimore, MD
<PAGE>
Exhibit 99
<PAGE>
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: A. Patrick Linton
January 26, 1996 301/662-2191
FCNB CORP ACQUIRES LAUREL BANCORP
---------------------------------
FREDERICK, MD -- FCNB Corp, the bank holding company for FCNB Bank and Elkridge
Bank, has completed the acquisition of Laurel Bancorp, the parent company of
Laurel Federal Savings Bank, Laurel, Maryland. First announced in May of 1995
when a definitive agreement to acquire Laurel Bancorp was signed, the
acquisition increases FCNB Corp assets by $108 million, to over $660 million.
Stockholders from both corporations approved the merger at special
meetings held January 18, 1996. At the consummation of the transaction, FCNB
Corp will exchange .7656 shares of FCNB Corp common stock for each outstanding
share of Laurel Bancorp stock. Approximately 1,321,000 shares will be issued,
according to A. Patrick Linton, President and CEO of FCNB Corp. FCNB Corp trades
on the NASDAQ National Market as FCNB and closed yesterday at $20 per share.
"This merger extends our franchise into a very attractive adjacent
market," states Mr. Linton. "It is an important move for FCNB Corp in terms of
growth opportunities, and will enhance long term shareholder value. The Laurel
market's demographic picture and strategic location, in one of the
Mid-Atlantic's more rapidly growing corridors, create new opportunities. We look
forward to a merger which benefits shareholders and customers." The Laurel
market includes northern Prince George's County and adjacent areas of
Montgomery, Howard and Anne Arundel Counties.
Conceivably the most significant in recent Corp history for its
long-term growth potential, the Laurel Bancorp transaction will incur $3 million
in one time merger-related charges. While these one time charges were factored
into the purchase price, for accounting purposes, they are required to pass
through the consolidated income statement of FCNB Corp in the first quarter of
1996.
Under the terms of the acquisition, Laurel Bancorp has been merged into
FCNB Corp. "Laurel Federal Savings Bank has two full service branches located in
Green Valley and Laurel. The Office located in Green Valley will be a branch of
FCNB Bank, and the Laurel Office will be a branch of Elkridge Bank," continued
Mr. Linton. "The split is somewhat unique, but will allow for improved
efficiency while continuing our community banking philosophy."
In December, FCNB Corp announced plans to acquire Harbor Investment
Corp, the parent company of Odenton Federal Savings and Loan Association, a
transaction valued at about $6.7 million. Odenton Federal has one office,
located in Odenton, Maryland. It is anticipated that this office will become a
branch of Elkridge Bank.
<PAGE>
FCNB Bank and Elkridge Bank are wholly owned subsidiaries of FCNB Corp.
FCNB Bank has fourteen other Offices in Frederick, Carroll and Montgomery
Counties; Elkridge Bank has three other Offices in Howard and Anne Arundel
Counties. FCNB Corp's Bank subsidiaries are Members FDIC and Equal Housing
Lenders.
-END-
