Filed by FCNB Corp
Pursuant to Rule 425 under the
Securities Act of 1933 Commission File No.: 0-15645
Subject Company: FCNB Corp
Setting the pace
[customer/employee photo omitted]
FCNB Corp
Third
Quarter Report
2000
[A. Patrick Linton - photo omitted]
To Our Shareholders:
FCNB Corp's third quarter earnings of $4.17 million, or $0.35 per basic share,
yielded a 24.2% increase over results for the same period last year. For the
first nine months of the year, earnings of $11.21 million, or $0.94 per basic
share, increased 12.7% year-over-year. Our return on average equity improved to
17.2% in the first nine months of 2000 from 13.9% last year. At the end of the
quarter, our total assets stood at $1.61 billion, and marked a 9.8%
year-over-year increase. Earnings and asset growth were accented by continued
solid loan growth in the third quarter. Results were also bolstered by gains in
noninterest income, led by insurance revenues that grew by nearly 12% for the
first nine months. Noninterest income represents 28% of net revenues, a measure
significantly better than that for our peer group of comparable banks.
Additionally, the Board of Directors declared a quarterly cash dividend of $0.16
per share.
The most significant event in the third quarter was the July announcement of
FCNB Corp's agreement to merge with BB&T Corporation, based in Winston-Salem,
North Carolina. Subject to shareholder approval at a meeting of shareholders and
other conditions, FCNB Corp shareholders will receive 0.725 shares of BB&T
common stock for every one share of FCNB common stock owned, in a tax-free
exchange. The actual dollar value of the shares you will receive fluctuates
daily with BB&T's stock price. What will not change is the number of BB&T shares
you will receive for each share of FCNB Corp stock you own. Until the merger is
completed, FCNB common stock will continue to trade on the NASDAQ National
Market under the symbol "FCNB." After completion of the merger, your investment
will then be in BB&T common stock. To determine the value of your investment on
any given day, assuming completion of the merger, find BB&T's stock price (the
stock trades on the New York Stock Exchange under the ticker symbol "BBT") and
multiply it by 0.725. The result will give you the equivalent value as of that
day of one share of FCNB stock after the merger is completed. We anticipate
holding a special shareholders' meeting to consider this merger in mid-December,
and merger closing is expected in January 2001.
We believe BB&T, which has $55 billion in assets and operates over 800 banking
offices in the Mid-Atlantic and Southeast, is a high-quality institution. We
anticipate a smooth transition, and FCNB Bank customers will soon be introduced
to BB&T's strong branch-based sales culture and new products and services such
as capital markets access, expanded cash management, leasing, and international
banking.
We chose to partner with BB&T based on their firm commitment to community
banking and delivering superior customer service and products. BB&T's community
banking strategy allows local bankers to make their own decisions. Currently,
BB&T has 22 autonomous regions, each with its own president. After completion of
the merger, our headquarters will remain a regional office of BB&T, and I will
serve our customers as the Regional President for BB&T's new Frederick region.
Sincerely,
/s/ A. Patrick Linton
President & CEO
<PAGE>
FCNB URGES SHAREHOLDERS AND INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND
OTHER DOCUMENTS THAT WILL BE SENT TO SHAREHOLDERS IN CONNECTION WITH THE SPECIAL
MEETING AFTER IT IS FINALIZED, AND WHICH WILL BE FILED WITH THE SEC BY BB&T IN
CONNECTION WITH THE PROPOSED MERGER, BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION ABOUT BB&T, FCNB, THE MERGER, AND RELATED MATTERS. THE FINAL PROXY
STATEMENT/PROSPECTUS, WHEN AVAILABLE, WHICH WILL BE INCLUDED IN BB&T'S
REGISTRATION STATEMENT ON FORM S-4, AND OTHER RELEVANT DOCUMENTS FILED BY FCNB
OR BB&T IN CONNECTION WITH THE MERGER, WILL BE AVAILABLE FOR FREE, BOTH ON THE
SEC'S WEB SITE (http://www.sec.gov) AND FROM FCNB AND BB&T AS FOLLOWS:
SHAREHOLDER RELATIONS SHAREHOLDER RELATIONS
FCNB CORP BB&T CORPORATION
7200 FCNB COURT POST OFFICE BOX 1290
FREDERICK, MD 21703 WINSTON-SALEM, NC 27102
(301) 662-2191 (336) 733-3021
FCNB CORP AND ITS DIRECTORS, EXECUTIVE OFFICERS AND EMPLOYEES MAY BE SOLICITING
PROXIES FROM SHAREHOLDERS IN FAVOR OF THE MERGER. COLLECTIVELY, FCNB'S DIRECTORS
AND EXECUTIVE OFFICERS OWN APPROXIMATELY 13% OF THE OUTSTANDING SHARES OF FCNB
COMMON STOCK AS OF JULY 31, 2000. ADDITIONAL INFORMATION REGARDING THE INTERESTS
OF SUCH PERSONS IN THE MERGER, AS SHAREHOLDERS AND OTHERWISE, CAN BE OBTAINED
FROM THE FINAL PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, AND FROM
FCNB'S PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS HELD ON APRIL 18,
2000.
Board of Directors
George B. Callan Gail T. Guyton
President Vice Chairman of the Board*
Associates in Management Chairman
Morgan-Keller, Inc.
Miles M. Circo
General Manager Frank L. Hewitt, III
Patapsco Designs, Inc. President
Frank L. Hewitt Company
Shirley D. Collier
President A. Patrick Linton
Paragon Computer Services, Inc. President & Chief Executive Officer*
Clyde C. Crum Jacob R. Ramsburg, Jr.
Chairman of the Board* Retired
Dairy Farmer
Kenneth W. Rice
James S. Grimes President
President Donald B. Rice Tire Co., Inc.
James S. Grimes, Inc.
Bernard L. Grove, Jr. Rand D. Weinberg
Advisor, Genstar Attorney-at-Law & Partner
Weinberg & Weinberg
<PAGE>
DeWalt J. Willard, Jr. Catonsville Office
President 919 Frederick Road
Ideal Buick-GMC Catonsville, MD 21228
Nevin S. Baker Columbia Office
Chairman Emeritus 5585 Twin Knolls Road
Columbia, MD 21045
Ramona C. Remsberg
Director Emeriti Damascus Office
9815 Main Street
* Titles are for both Damascus, MD 20872
FCNB Corp & FCNB Bank
East Frederick Office
FCNB Corp Officers 1303 East Patrick Street
Frederick, MD 21701
Chairman of the Board
Clyde C. Crum Eldersburg Office
6229 Sykesville Road
Vice Chairman of the Board Eldersburg, MD 21784
Gail T. Guyton
Elkridge Office
President & Chief Executive Officer 7290 Montgomery Road
A. Patrick Linton Elkridge, MD 21075
Executive Vice President Englar Road Office
Martin S. Lapera Route 140 & Englar Road
Westminster, MD 21157
Senior Vice President & Treasurer
Mark A. Severson, CPA 40 West Offices
1370 West Patrick Street
Senior Vice President Frederick, MD 21702
Charles E. Weller
Farragut Square Office
Vice President & Secretary 815 Connecticut Avenue, NW
Helen G. Hahn Washington, DC 20006
Vice President Fox Chapel Office
Fern W. Mercer 19801 Frederick Road
Germantown, MD 20876
Comptroller & Assistant Treasurer
William R. Talley, Jr., CPA Friendship Heights Office
5200 Wisconsin Avenue, NW
Auditor Washington, DC 20015
Jay M. House
FSK Mall Walk-Up
Corporate 5500 Buckeystown Pike
Headquarters Frederick, MD 21703
7200 FCNB Court
Frederick, MD 21703 Glen Burnie Office
(301 or 800) 662-2191 7381 Baltimore-Annapolis Boulevard
Glen Burnie, MD 21061
FCNB Bank
Locations Green Valley Office
Brunswick Office 11801 Fingerboard Road
94 Souder Road Monrovia, MD 21770
Brunswick, MD 21716
<PAGE>
Headquarters Office Silver Spring Office
7200 FCNB Court 8121 Georgia Avenue
Frederick, MD 21703 Silver Spring, MD 20910
Kentlands Office Square Corner Office
265 Kentlands Boulevard 1 North Market Street
Gaithersburg, MD 20878 Frederick, MD 21701
Laurel Office Tysons Corner Office
380 Main Street 2230 Gallows Road
Laurel, MD 20707 Dunn Loring, VA 22027
Middletown Office Walkersville Office
819 East Main Street 100 Commerce Drive
Middletown, MD 21769 Walkersville, MD 21793
Mt. Airy Office FCNB Mortgage
400 Ridgeville Boulevard Frederick Office
Mt. Airy, MD 21771 9 North Market Street
Frederick, MD 21701
Odenton Office
1219 Annapolis Road
Odenton, MD 21113 Administrative Offices
Pikesville Office 7200 FCNB Court
1777 Reisterstown Road Frederick, MD 21703
Pikesville, MD 21208
1 North Market Street
Poolesville Office Frederick, MD 21701
19645 Fisher Avenue
Poolesville, MD 20837 6810 Deerpath Road
Suite #325
Reisterstown Office Elkridge, MD 21075
11702 Reisterstown Road
Reisterstown, MD 21136 One Church Street
Rockville, MD 20850
Rockville Office
One Church Street Winchester Exchange Bldg.
Rockville, MD 20850 15 East Main Street
Westminster, MD 21157
Rose Hill Office
1562 Opossumtown Pike Remote ATM Locations
Frederick, MD 21702
Military Road & 7th Street
Rosemont Office Frederick, MD 21702
1602 Rosemont Avenue
Frederick, MD 21702 7402 Shockley Drive
Frederick, MD 21704
Route 85 Office
5602 Buckeystown Pike 6590 Old Waterloo Road
Frederick, MD 21704 Elkridge, MD 21075
7th Street Office Frederick
1305 West 7th Street Underwriters, Inc.
Frederick, MD 21702 1201 East Street
Frederick, MD 21701
(301) 662-1147
<PAGE>
50 Souder Road
Brunswick, MD 21716
Carroll County Insurance
125 Airport Drive, #20
Westminster, MD 21157
Customer Service
(301 or 800) 662-2191
24-Hour
Telephone Banking
(301) 631-0102
TDD Phone
Assistance for Hearing Impaired
(301 or 888) 698-6127
Internet
www.fcnbbank.com
Member:
Federal Deposit Insurance Corporation
Federal Reserve System
<PAGE>
FCNB Corp and Subsidiary
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
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(Dollars in thousands, except per share amounts) 2000 1999 % Change 2000 1999 % Change
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income $4,155 $598 594.82% $11,168 $6,969 60.25%
Net income before merger-related expenses 4,168 3,355 24.23% 11,207 9,943 12.71%
Per share data (1):
Basic earnings $0.35 $0.06 483.33% $0.94 $0.60 56.67%
Diluted earnings 0.35 0.05 600.00% 0.93 0.58 60.34%
Basic earnings before merger-related expenses 0.35 0.28 25.00% 0.94 0.85 10.59%
Diluted earnings before merger-related expenses 0.35 0.28 25.00% 0.94 0.83 13.25%
Cash dividends declared 0.160 0.139 15.11% 0.480 0.438 9.59%
Shares outstanding at period-end 11,924,214 11,903,657
Weighted-average shares outstanding:
Basic 11,924,443 11,752,285 11,924,492 11,655,706
Diluted 11,981,393 11,937,239 11,960,604 11,915,845
Return on average assets 1.05% 0.17% 0.97% 0.66%
Return on average assets
before merger-related expenses 1.05% 0.95% 0.97% 0.94%
Return on average shareholders' equity 18.56% 2.68% 17.11% 9.77%
Return on average shareholders' equity
before merger-related expenses 18.62% 15.02% 17.17% 13.94%
Net interest margin 3.44% 3.63% 3.53% 3.78%
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<CAPTION>
September 30,
---------------------------------------------------------------------------------
2000 1999 % Change
---------------------------------------------------------------------------------
Third quarter end:
Total assets $1,606,868 $1,463,251 9.81%
Loans, net of unearned income 997,229 874,475 14.04%
Investment securities 448,069 438,019 2.29%
Deposits 1,078,950 1,003,803 7.49%
Shareholders' equity 94,098 91,419 2.93%
---------------------------------------------------------------------------------
Capital & credit quality ratios
Average equity to average assets 5.65% 6.73%
Allowance for credit losses to loans 0.92% 1.10%
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Common stock data - per share:
------------------------------------------------------------------------------------------------------------------------------------
2000 1999
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3 2 1 4 3 2 1
Market value:
High $21.56 $18.06 $17.94 $20.00 $21.88 $22.44 $22.50
Low 15.25 12.19 13.00 14.50 17.63 18.50 18.88
Close 21.19 18.06 14.44 15.25 18.59 21.88 19.13
Book value at period-end 7.89 7.45 7.36 7.53 7.68 8.18 8.50
Dividends declared (1) 0.160 0.160 0.160 0.160 0.139 0.152 0.147
</TABLE>
(1) First Frederick Financial Corporation did not declare a dividend in the
third quarter of 1999, therefore, there is a decrease in the dividends declared.
<PAGE>
FCNB CORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands)
SEPTEMBER 30, DECEMBER 31,
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ASSETS 2000 1999 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and due from banks $32,910 $32,601 $39,323
Interest-bearing deposits in other banks 740 4,045 28,737
Federal funds sold 36,264 26,042 8,317
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Cash and cash equivalents 69,914 62,688 76,377
------------------------------------------------------------------------------------------------------------------------------------
Loans held for sale 704 3,159 878
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Investment securities held to maturity 18,376 21,768 21,263
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Investment securities available for sale-at fair value 429,693 416,251 420,879
------------------------------------------------------------------------------------------------------------------------------------
Loans - net of unearned income 997,229 874,475 903,072
Less: Allowance for credit losses (9,178) (9,648) (10,043)
------------------------------------------------------------------------------------------------------------------------------------
Net loans 988,051 864,827 893,029
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Bank premises and equipment 25,244 25,975 25,543
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Other assets 74,886 68,583 67,827
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Total assets $1,606,868 $1,463,251 $1,505,796
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LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
Noninterest-bearing deposits $179,602 $158,069 $163,581
Interest-bearing deposits 899,348 845,734 865,278
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Total deposits 1,078,950 1,003,803 1,028,859
Short-term borrowings:
Federal funds purchased and securities sold under
agreements to repurchase 67,814 60,958 59,995
Other short-term borrowings 310,507 252,270 269,268
Long term debt:
Guaranteed preferred beneficial interests in the
Company's subordinated debentures 40,250 40,250 40,250
Accrued interest and other liabilities 15,249 14,551 17,659
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Total liabilities 1,512,770 1,371,832 1,416,031
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SHAREHOLDERS' EQUITY
Common stock 11,924 11,904 11,924
Capital surplus 54,416 52,064 54,316
Retained earnings 38,004 33,011 32,581
Accumulated other comprehensive income (10,246) (5,560) (9,056)
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Total shareholders' equity 94,098 91,419 89,765
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Total liabilities and shareholders' equity $1,606,868 $1,463,251 $1,505,796
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FCNB CORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts)
------------------------------------------------------------------------------------------------------------------------------------
For 3 months ended For 9 months ended
September 30, September 30,
2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $22,338 $18,898 $63,121 $55,329
Interest and dividends on investment securities:
Taxable 6,996 6,288 20,573 19,005
Tax exempt 130 131 390 421
Dividends 467 378 1,331 1,145
Interest on federal funds sold 267 299 870 647
Other interest income 10 42 124 131
------------------------------------------------------------------------------------------------------------------------------------
Total interest income 30,208 26,036 86,409 76,678
------------------------------------------------------------------------------------------------------------------------------------
Interest expense:
Interest on deposits 10,763 8,686 29,934 25,187
Interest on federal funds purchased and
securities sold under agreements to repurchase 1,075 892 2,832 2,301
Interest on other short-term borrowings 4,873 3,284 13,140 9,650
Interest on long term debt 844 844 2,533 2,533
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Total interest expense 17,555 13,706 48,439 39,671
------------------------------------------------------------------------------------------------------------------------------------
Net interest income 12,653 12,330 37,970 37,007
------------------------------------------------------------------------------------------------------------------------------------
Provision for credit losses:
Operating activities 450 390 1,400 1,278
Merger-related - 2,900 - 2,900
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Total provision for credit losses 450 3,290 1,400 4,178
------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for credit losses 12,203 9,040 36,570 32,829
------------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Service fees 1,546 1,369 4,482 3,971
Insurance commissions 1,727 1,564 4,977 4,457
Net securities gains 523 159 855 805
Gain on sale of loans 39 343 132 832
Income from bank-owned life insurance 413 393 1,206 1,164
Other operating income 1,151 1,079 3,243 2,823
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Total noninterest income 5,399 4,907 14,895 14,052
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Noninterest expenses:
Salaries and employee benefits 6,387 6,405 19,643 19,246
Occupancy expenses 1,456 1,523 4,234 4,348
Equipment expenses 1,047 985 3,182 3,002
Merger-related expenses 21 1,516 64 1,688
Other operating expenses 2,605 2,860 7,980 8,371
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Total noninterest expenses 11,516 13,289 35,103 36,655
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Income before provision for income taxes 6,086 658 16,362 10,226
Provision for income taxes 1,931 60 5,194 3,257
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Net income $4,155 $598 $11,168 $6,969
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Net income - before merger-related expenses $4,168 $3,355 $11,207 $9,943
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Basic earnings per share $0.35 $0.06 $0.94 $0.60
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Diluted earnings per share $0.35 $0.05 $0.93 $0.58
------------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share - before merger related expenses $0.35 $0.28 $0.94 $0.85
------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share - before merger related expenses $0.35 $0.28 $0.94 $0.83
------------------------------------------------------------------------------------------------------------------------------------
Basic weighted average number of shares outstanding 11,924,443 11,752,285 11,924,492 11,655,706
------------------------------------------------------------------------------------------------------------------------------------
Diluted weighted average number of shares outstanding 11,981,393 11,937,239 11,960,604 11,915,845
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</TABLE>
