SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): March 16, 1999
FCNB CORP
(Exact name of registrant as specified in its charter)
MARYLAND 52-1479635
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7200 FCNB COURT, FREDERICK, MARYLAND 21703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301)662-2191
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Item 5. Other Items.
FCNB Corp (the "Company") and First Frederick Financial Corp have announced a
definitive agreement through which First Frederick Financial Corp. and its
wholly-owned banking subsidiary, First Bank of Frederick, will merge with and
into the Company and its wholly-owned banking subsidiary FCNB Bank, both
headquartered in Frederick, Maryland. The merger is valued at approximately $37
million based on closing stock prices as of March 11, 1999. Through First Bank
of Frederick, First Frederick Financial operates 6 full-service banking offices
and had $123 million in assets as of December 31, 1998.
In the merger, shareholders of First Frederick Financial Corp. common stock will
receive 1.0434 shares of the Company's common stock, valuing the deal at $20.74
per First Frederick Financial Corp. share as of March 11, 1999.
The merger is expected to be accretive to both the Company's earnings per share
and return on average equity in the first year following consummation of the
deal, which is expected in the third quarter of 1999. The Company anticipates
gaining significant operating efficiencies through consolidation of both branch
locations and back office operations. As a result of the transaction, The
Company expects to realize approximately $2.7 million of after-tax, one-time
charges.
Upon completion of the transaction, The Company will have approximately $1.46
billion in assets.
FCNB Bank, The Company's financial services franchise, has 32 full-service
offices in Frederick, Carroll, Montgomery, Baltimore, Howard, Anne Arundel, and
Prince George's Counties of Maryland, Washington, DC, and Fairfax County,
Virginia. FCNB Bank is a member FDIC and an Equal Housing Lender.
The Company has made forward-looking statements in the accompanying analyst
presentation materials that are subject to risks and uncertainties. These
statements are based on the beliefs and assumptions of the management of The
Company, and on the information available to management at the time the analyst
presentation materials were prepared. In particular, the analyst materials in
this report include statements regarding estimated earnings per share of The
Company on a stand alone basis, expected cost savings from the merger, estimated
restructuring charges relating to the merger, estimated increases in First
Frederick Financial Corp's fee income ratio, the anticipated accretive effect of
the merger, and The Company's anticipated performance in future periods. With
respect to estimated cost savings and restructuring charges, The Company has
made assumptions about, among other things, the extent of operational overlap
between The Company and First Frederick Financial Corp, the amount of general
and administrative expense consolidation, costs relating to converting First
Frederick Financial Corp operations and data processing to The Company's
systems, the size of anticipated reductions in fixed labor costs, the amount of
severance expenses, the extent of the charges that may be necessary to align the
companies' respective accounting reserve policies, and the cost related to the
merger. The realization of cost savings and the amount of restructuring charges
are subject to the risk that the foregoing assumptions are inaccurate.
Any statements in the accompanying exhibit regarding the anticipated accretive
effect of the merger and The Company's anticipated performance in future periods
are subject to risks relating to, among other things, the following
possibilities: (1) expected cost savings from this merger or other previously
announced mergers may not be fully realized or realized within the expected time
frame;
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(2) deposit attrition, customer loss or revenue loss following proposed mergers
may be greater than expected; (3) competitive pressure among depository and
other financial institutions may increase significantly; (4) costs or
difficulties related to the integration of the businesses of The Company and its
merger partners, including First Frederick Financial Corp, may be greater than
expected; (5) changes in the interest rate environment may reduce margins; (6)
general economic or business conditions, either nationally or regionally, may be
less favorable than expected, resulting in, among other things, a deterioration
in credit quality, or a reduced demand for credit; (7) legislative or regulatory
changes, including changes in accounting standards, may adversely affect the
businesses in which The Company and First Frederick Financial Corp are engaged;
(8) adverse changes may occur in the securities markets; and (9) competitors of
The Company and First Frederick Financial Corp may have greater financial
resources and develop products that enable such competitors to compete more
successfully than The Company and First Frederick Financial Corp.
The Company believes these forward-looking statements are reasonable; however,
undue reliance should not be placed on such forward-looking statements, which
are based on current expectations. Such statements are not guarantees of
performance. They involve risks, uncertainties and assumptions. The future
results and shareholder values of The Company following completion of the merger
may differ materially from those expressed in these forward-looking statements.
Many of the factors that will determine these results and values are beyond
management's ability to control or predict.
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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 hereunto duly authorized.
FCNB CORP
By: /s/ A. Patrick Linton
-----------------------------
A. Patrick Linton, President
Dated: March 16, 1999
