<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 1996
___________________
Commission File Number 0-15572
FIRST BANCORP
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
North Carolina 56-1421916
- --------------------------------------- ------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
341 North Main Street, Troy, North Carolina 27371-0508
- -------------------------------------------------- ------------------------
(Address of Principal Executive Offices) (Zip Code)
(Registrant's telephone number, including area code) (910) 576-6171
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[ X ] YES [ ] NO
As of March 31, 1996, 1,504,185 shares of the registrant's Common
Stock, $5 par value, were outstanding. The registrant had no other classes of
securities outstanding.
Transitional Small Business Format [ ] YES [ X ] NO
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EXHIBIT INDEX BEGINS ON PAGE 19
<PAGE>
INDEX
FIRST BANCORP AND SUBSIDIARIES
Page
Part I. Financial Information
Item 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS -
March 31, 1996 and 1995
(With Comparative Amounts at December 31, 1995) 3
STATEMENTS OF CONSOLIDATED INCOME -
For the Periods Ended March 31, 1996 and 1995 4
STATEMENTS OF CONSOLIDATED CASH FLOWS -
For the Periods Ended March 31, 1996 and 1995 5
STATEMENTS OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY -
For the Period Ended March 31, 1996
and for the Year Ended December 31, 1995 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
Item 2 - Management's Discussion and Analysis of Consolidated
Results of Operations and Financial Condition 8
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K 16
Signatures 18
Exhibit Cross Reference Index 19
<PAGE>
Part I. Financial Information
Item 1 - Financial Statements
Consolidated Balance Sheets
FIRST BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Mar 31, Dec 31, Mar 31,
($ in thousands) 1996 1995 1995
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Cash & due from banks, noninterest bearing $ 12,138 $ 12,190 $ 10,094
Federal funds sold 10,690 11,826 6,262
--------- --------- ---------
Total cash and cash equivalents 22,828 24,016 16,356
--------- --------- ---------
Securities available for sale (approximate
costs of $46,461, $49,297 and $48,152) 46,645 49,657 47,618
Securities held-to-maturity (approximate
fair values of $19,614, $20,374 and $22,236) 19,088 19,740 21,999
Presold mortgages in process of settlement 1,219 826 701
Loans, net of unearned income 215,422 211,522 186,414
Less: Allowance for possible loan losses (4,733) (4,587) (4,825)
--------- --------- ---------
Net loans 210,689 206,935 181,589
--------- --------- ---------
Premises and equipment, net 7,939 8,043 7,019
Accrued interest receivable 2,417 2,372 2,376
Intangible assets 6,261 6,306 6,136
Other 3,548 3,844 5,696
--------- --------- ---------
Total assets $ 320,634 $ 321,739 $ 289,490
========= ========= =========
LIABILITIES
Deposits: Demand $ 41,645 $ 41,941 $ 36,655
Savings, NOW and money market 106,062 106,339 102,074
Time deposits of $100,000 or more 29,598 31,961 27,962
Other time deposits 109,108 107,474 90,577
--------- --------- ---------
Total deposits 286,413 287,715 257,268
Accrued interest on deposits 1,803 1,889 1,252
Other 1,580 1,858 1,411
--------- --------- ---------
Total liabilities 289,796 291,462 259,931
--------- --------- ---------
SHAREHOLDERS' EQUITY
Common stock, $5 par value per share
Authorized: 12,500,000 shares
Issued and outstanding: 1,507,085,
1,507,085 and 1,504,185 shares 7,535 7,535 7,521
Capital surplus 11,355 11,355 11,308
Retained earnings 11,825 11,152 11,084
Unrealized gain (loss) on securities
available for sale, net of income taxes 123 235 (354)
--------- --------- ---------
Total shareholders' equity 30,838 30,277 29,559
--------- --------- ---------
Total liabilities and shareholders' equity $ 320,634 $ 321,739 $ 289,490
========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Statements Of Consolidated Income
FIRST BANCORP AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
Three Months Ended
Mar 31,
($ in thousands except per share data) 1996 1995
--------- ---------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 5,121 $ 4,394
Interest on investment securities:
Taxable interest income 646 648
Exempt from income taxes 275 267
Other, principally federal funds sold 166 120
--------- ---------
Total interest income 6,208 5,429
--------- ---------
INTEREST EXPENSE
Time deposits of $100,000 or more 420 359
Other time and savings deposits 2,049 1,580
--------- ---------
Total interest expense 2,469 1,939
--------- ---------
NET INTEREST INCOME 3,739 3,490
Provision for possible loan losses 75 100
--------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 3,664 3,390
--------- ---------
OTHER INCOME
Service charges on deposit accounts 632 537
Commissions from insurance sales 108 98
Other charges, commissions and fees 217 214
Data processing fees 54 17
--------- ---------
Total other income 1,011 866
--------- ---------
OTHER EXPENSES
Salaries 1,280 1,190
Employee benefits 327 353
--------- ---------
Total personnel expense 1,607 1,543
Net occupancy expense 236 209
Equipment related expenses 208 207
Other 1,116 1,273
--------- ---------
Total other expenses 3,167 3,232
--------- ---------
INCOME BEFORE INCOME TAXES 1,508 1,024
Income taxes 503 309
--------- ---------
NET INCOME $ 1,005 $ 715
========= =========
PER SHARE AMOUNTS
Net income $ 0.67 $ 0.48
Cash dividends declared 0.22 0.17
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Statements Of Consolidated Cash Flows
FIRST BANCORP AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
Mar 31,
($ in thousands) 1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,005 $ 715
Adjustments to reconcile net income to
net cash provided by operations:
Provision for loan losses 75 100
Net security premium amortization/discount accretion (15) 2
Loan fees and costs deferred net of amortization (21) (15)
Depreciation of premises and equipment 185 184
Amortization of intangible assets 141 143
Realized and unrealized other real estate losses -- 20
Provision for deferred income taxes 264 (61)
Changes in operating assets and liabilities:
Increase in accrued interest receivable (45) (141)
Increase in intangible assets (96) --
Decrease (increase) in other assets (124) 332
Increase (decrease) in accrued interest payable (86) 108
Increase (decrease) in other liabilities (339) 162
--------- ---------
Net cash provided by operating activities 944 1,549
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available for sale (10,454) (13,263)
Purchase of securities held-to-maturity -- (1,283)
Proceeds from maturities/issuer calls of securities
available for sale 13,329 12,365
Proceeds from maturities/issuer calls of securities
held-to-maturity 635 218
Net increase in loans (3,988) (995)
Net purchases of premises and equipment (81) (65)
--------- ---------
Net cash used in investing activities (559) (3,023)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits (1,302) (1,162)
Cash dividends paid (271) (256)
--------- ---------
Net cash used in financing activities (1,573) (1,418)
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (1,188) (2,892)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,016 19,248
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 22,828 $ 16,356
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 2,555 $ 1,831
Income taxes -- 48
Non-cash transactions:
Foreclosed loans transferred to other real estate 180 61
Loans to facilitate the sale of other real estate 93 --
Increase (decrease) in market value of securities
available for sale (169) 564
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Statements Of Changes In Consolidated Shareholders' Equity
FIRST BANCORP AND SUBSIDIARIES
STATEMENTS OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Share-
------------------- Capital Retained holders'
(in thousands) Shares Amount Surplus Earnings Other Equity
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCES,
January 1, 1995 1,504 $ 7,521 $ 11,308 $ 10,624 $ (663)$ 28,790
Net income 1,582 1,582
Cash dividends
declared (1,054) (1,054)
Common stock issued
under stock option
plans 3 14 47 61
Net adjustment
for securities
available for sale 898 898
--------- --------- --------- --------- --------- ---------
BALANCES,
December 31, 1995 1,507 7,535 11,355 11,152 235 30,277
Net income 1,005 1,005
Cash dividends
declared (332) (332)
Net adjustment
for securities
available for sale (112) (112)
--------- --------- --------- --------- --------- ---------
BALANCES,
March 31, 1996 1,507 $ 7,535 $ 11,355 $ 11,825 $ 123 $ 30,838
========= ========= ========= ========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
FIRST BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Periods Ended March 31, 1996 and 1995
NOTE 1
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the consolidated financial
position of the Company as of March 31, 1996 and 1995 and the consolidated
results of operations and consolidated cash flows for the periods ended
March 31, 1996 and 1995 and changes in consolidated shareholders' equity
for the period ended March 31, 1996. Reference is made to the notes to
consolidated financial statements for the year ended December 31, 1995 filed
with the Annual Report on Form 10-KSB for a discussion of accounting policies
and other relevant information with respect to the financial statements.
NOTE 2
The results of operations for the periods ended March 31, 1996 and 1995
are not necessarily indicative of the results to be expected for the full
year. Earnings per share were computed by dividing net income by average
common shares outstanding. Common stock equivalents resulting from the
Company's stock option plan were not considered in the earnings per share
computation due to immateriality.
NOTE 3
Certain amounts reported in the period ended March 31, 1995 have been
reclassified to conform with the presentation for March 31, 1996. These
reclassifications had no effect on net income or shareholders' equity for
the periods presented.
NOTE 4
Based on management's evaluation of the loan portfolio, current economic
conditions and other risk factors, the Company's allowance for possible loan
losses was $4,733,000 as of March 31, 1996 compared to $4,587,000 and
$4,825,000 as of December 31, 1995 and March 31, 1995, respectively.
These reserve levels represented 2.20%, 2.17% and 2.59% of total loans as of
March 31, 1996, December 31, 1995 and March 31, 1995, respectively.
Nonperforming assets are defined as nonaccrual loans, loans past due 90 or
more days and still accruing interest, restructured loans and foreclosed,
repossessed and idled properties. For each of the periods presented, the
Company had no loans past due 90 or more days and still accruing interest.
Nonperforming assets are summarized as follows:
<TABLE>
<CAPTION>
Mar 31, Dec 31, Mar 31,
($ in thousands) 1996 1995 1995
--------- --------- ---------
<S> <C> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 1,707 $ 772 $ 1,374
Restructured loans 737 668 724
--------- --------- ---------
Total nonperforming loans 2,444 1,440 2,098
Foreclosed, repossessed and idled
properties (included in other assets) 1,450 1,393 2,676
--------- --------- ---------
Total nonperforming assets $ 3,894 $ 2,833 $ 4,774
========= ========= =========
Nonperforming loans as a percentage of total loans 1.13% 0.68% 1.13%
Allowance for possible loan losses as a percentage
of nonperforming loans 193.66% 318.54% 229.98%
Nonperforming assets as a percentage of loans and
foreclosed, repossessed and idled properties 1.80% 1.33% 2.52%
Nonperforming assets as a percentage of
total assets 1.21% 0.88% 1.65%
</TABLE>
<PAGE>
Item 2 - Management's Discussion and Analysis of Consolidated
Results of Operations and Financial Condition
RESULTS OF OPERATIONS
Net income for the quarter ended March 31, 1996 increased 40.6% to
$1,005,000, or $0.67 per share, compared to $715,000, or $0.48 per share,
for the first quarter of 1995. The earnings increase was achieved through
the combination of (i) higher net interest income that resulted from
increasing loan volume, (ii) higher noninterest income in 1996 and (iii)
slightly declining overhead in 1996.
Although not significantly impacting net income, the December 1995
acquisition of two branches of First Scotland Bank ("First Scotland") in
Laurinburg and Rockingham, North Carolina did increase the components of net
income, specifically net interest income and noninterest income and expenses.
See "Completed Acquisition" below for a discussion of the terms of the
purchase.
Net interest income is the largest component of earnings, representing
the difference between interest and fees generated from earning assets and the
interest costs of deposits and other funds needed to support those assets.
Net interest income increased by $249,000, or 7.1%, when comparing the first
quarter of 1996 with the first quarter of 1995, primarily because of growth
in loan volume. The two branches acquired from First Scotland added
approximately $69,000 in net interest income for the first quarter of 1996.
Under current conditions, future increases in market interest rates
could have a negative impact on net interest income if portfolio mixes are
held constant and rate-sensitive liabilities reprice upward more rapidly than
rate-sensitive earning assets. Generally, the Company manages portfolio
mixes to minimize changes in net interest income due to changing rates. The
Company is experiencing a shift to time deposits from savings, NOW and money
market deposits.
The provision for possible loan losses for the first quarter decreased
$25,000 to $75,000 from $100,000 for the first quarter of 1995. Provisions
for possible loan losses are based on management's evaluation of the loan
portfolio, as discussed under "Financial Condition" below.
Noninterest income increased 16.7% for the first quarter primarily
because of growth in service charges on deposit accounts. The transaction
deposit accounts acquired from First Scotland provided an increase of $73,000
in deposit fees. Growth in data processing fees contributed as well. The
Company sold no securities in the first quarters of 1996 or 1995.
<PAGE>
Noninterest expenses, or overhead, decreased 2% to $3,167,000 for the
first quarter of 1996, primarily because of substantial reductions in deposit
insurance premiums and litigation expenses. Personnel expenses increased
$64,000, or 4.2%, of which $55,000 was attributable to personnel acquired
from First Scotland. Other noninterest expenses decreased $157,000, or
12.3%, mainly due to the reductions in deposit insurance premiums and legal
fees mentioned above.
Income taxes increased $194,000 for the first quarter, while the
effective tax rates were 33.4% and 30.2% for the quarters ended March 31,
1996 and 1995, respectively. The increase in the effective tax rate was
primarily attributable to larger levels of nondeductible intangible
amortization.
FINANCIAL CONDITION
The Company's total assets were $320.6 million at March 31, 1996, an
increase of $31.1 million, or 10.8%, from March 31, 1995. Interest-earning
assets increased by 11.3% compared to March 31, 1995. Loans, the primary
interest-earning asset, increased by 15.6% during this same period.
Deposits increased $29.1 million, or 11.3% to support the asset growth.
The increases in deposits were primarily in the categories of time deposits.
The Company is experiencing a shift in the mix of its deposits to time
deposits from savings, NOW and money market accounts. The Company's cost of
funds has remained relatively low compared to that of its competitors. The
Company does not rely heavily on large deposits of $100,000 or more to fund
asset growth and has not traditionally engaged in obtaining deposits through
brokers. In December of 1995, the Company acquired two branch offices of
First Scotland Bank which added assets, earning assets and deposits of
approximately $15.8 million, $14.2 million and $15 million, respectively.
Since December 31, 1995, the Company's earning assets, total assets and
deposits have declined slightly.
<PAGE>
NONPERFORMING ASSETS
Nonperforming assets are defined as nonaccrual loans, loans past due 90
or more days, restructured loans and foreclosed, repossessed and idled
properties. The following table summarizes the Company's nonperforming
assets at the dates indicated.
<TABLE>
<CAPTION>
Mar 31, Dec 31, Mar 31,
($ in thousands) 1996 1995 1995
--------- --------- ---------
<S> <C> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 1,707 $ 772 $ 1,374
Restructured loans 737 668 724
--------- --------- ---------
Total nonperforming loans 2,444 1,440 2,098
Foreclosed, repossessed and idled
properties (included in other assets) 1,450 1,393 2,676
--------- --------- ---------
Total nonperforming assets $ 3,894 $ 2,833 $ 4,774
========= ========= =========
Nonperforming loans as a percentage of total loans 1.13% 0.68% 1.13%
Allowance for possible loan losses as a percentage
of nonperforming loans 193.66% 318.54% 229.98%
Nonperforming assets as a percentage of loans and
foreclosed, repossessed and idled properties 1.80% 1.33% 2.52%
Nonperforming assets as a percentage of
total assets 1.21% 0.88% 1.65%
</TABLE>
Nonperforming assets were $3,894,000, $2,833,000 and $4,774,000 as of
March 31, 1996, December 31, 1995 and March 31, 1995, respectively.
Nonperforming assets as of March 31, 1996 include approximately $609,000
of loans acquired from First Scotland that have been placed on nonaccrual
status since December 31, 1995. Management has reviewed the collateral for
the nonperforming assets, specifically including nonaccrual loans, and has
included this review among the factors considered in the evaluation of the
allowance for possible loan losses discussed below.
A loan is placed on nonaccrual status when, in management's judgment,
the collection of interest appears doubtful. Interest on loans that are
classified as nonaccrual is recognized when received. The accrual of
interest is discontinued on all loans that become 90 days past due with
respect to principal or interest. In some cases, where borrowers are
experiencing financial difficulties, loans may be restructured to provide
terms significantly different from the originally contracted terms. If the
nonaccrual loans and restructured loans as of March 31, 1996 and 1995 had
been current in accordance with their original terms and had been outstanding
throughout the three month periods (or since origination or acquisition if held
for part of the three month periods), gross interest income in the amounts of
approximately $43,000 and $34,000 for nonaccrual loans and $17,000 and
$19,000 for restructured loans would have been recorded for the three months
ended March 31, 1996 and 1995, respectively. Interest income on such
loans that was actually collected and included in net income in the three
months ended March 31, 1996 and 1995 amounted to approximately $10,000 and
less than $1,000 for nonaccrual loans and $13,000 and $8,000 for restructured
loans respectively.
<PAGE>
Nonperforming loans are defined as nonaccrual loans, loans past due 90
or more days and restructured loans. As of March 31, 1996, December 31,
1995 and March 31, 1995, nonperforming loans were approximately 1.13%,
0.68% and 1.13%, respectively, of the total loans outstanding at such dates.
Nonaccrual loans increased $333,000 to approximately $1,707,000 compared to
March 31, 1995 and increased approximately $935,000 since year end.
Approximately $609,000 in loans acquired from First Scotland were placed on
nonaccrual status in the first quarter. As of March 31, 1996, the borrower
with the largest outstanding nonaccrual loans owed an aggregate of $482,000
on such loans while the average balance of all nonaccrual loans was
approximately $31,000. The Company's management believes that collateral
values related to nonperforming loans exceed the loan balances.
In addition to the nonperforming loan amounts discussed above,
management believes that an estimated $2,800,000-$3,000,000 of loans that
are currently performing in accordance with their contractual terms may
potentially develop problems depending upon the particular financial
situations of the borrowers and economic conditions in general. These loans
were considered in determining the appropriate level of the allowance for
possible loan losses. See "Summary of Loan Loss Experience" below.
Loans classified for regulatory purposes as loss, doubtful, substandard,
or special mention that have not been disclosed in the problem loan amounts
above do not represent or result from trends or uncertainties which
management reasonably expects will materially impact future operating
results, liquidity, or capital resources, or represent material credits about
which management is aware of any information which causes management to have
serious doubts as to the ability of such borrowers to comply with the loan
repayment terms.
As of March 31, 1996, the Company owned foreclosed and repossessed
assets totaling approximately $1,450,000, which consisted principally of
several parcels of foreclosed real estate. Three parcels with carrying
values of approximately $195,000, $338,000 and $199,000 accounted for 50% of
the total. The Company's management has reviewed recent appraisals of these
properties and has concluded that their fair values, less estimated costs to
sell, exceed their respective carrying values at March 31, 1996.
SUMMARY OF LOAN LOSS EXPERIENCE
The allowance for possible loan losses is created by direct charges to
operations. Losses on loans are charged against the allowance in the period
in which such loans, in management's opinion, become uncollectible.
Recoveries during the period are credited to this allowance.
The factors that influence management's judgment in determining the
amount charged to operating expense include past loan loss experience,
composition of the loan portfolio, evaluation of possible future losses and
current economic conditions.
<PAGE>
The Company's bank subsidiary uses a loan analysis and grading program to
facilitate its evaluation of possible future loan losses and the adequacy of
its allowance for possible loan losses, otherwise referred to as its loan loss
reserve. In this program, a "watch list" is prepared and monitored monthly
by management and is tested quarterly by the bank's Internal Audit Department.
The list includes loans that management identifies as having potential credit
weaknesses in addition to loans past due 90 days or more, nonaccrual loans and
remaining unpaid loans identified during previous examinations.
Based on management's evaluation of the loan portfolio and economic
conditions, a provision for possible loan losses of $75,000 was added to the
allowance for possible loan losses during the first quarter of 1996. At
March 31, 1996, the allowance stood at $4,733,000, compared to $4,587,000 at
December 31, 1995 and $4,825,000 at March 31, 1995. At March 31, 1996, the
allowance for possible loan losses was approximately 194% of total
nonperforming loans, compared to corresponding percentages of 319% at
December 31, 1995 and 230% at March 31, 1995.
The allowance for possible loan losses was 2.20%, 2.17% and 2.59% of
total loans as of March 31, 1996, December 31, 1995 and March 31, 1995
respectively. Management considers the reserve levels adequate to cover
possible loan losses on the loans outstanding as of each reporting date. It
must be emphasized, however, that the determination of the reserve using the
Company's procedures and methods rests upon various judgments and assumptions
about future economic conditions and other factors affecting loans. No
assurance can be given that the Company will not in any particular period
sustain loan losses that are sizable in relation to the amounts reserved or
that subsequent evaluations of the loan portfolio, in light of conditions and
factors then prevailing, will not require significant changes in the
allowance for possible loan losses or future charges to earnings. In
addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Company's allowances for
possible loan losses and losses on other real estate. Such agencies may
require the Company to recognize additions to the allowances based on their
judgments about information available at the time of such examinations.
For the periods indicated, the following table summarizes the Company's
balances of loans outstanding, average loans outstanding, changes in the
allowance arising from charge-offs and recoveries by category, and additions
to the allowance that have been charged to expense.
<PAGE>
<TABLE>
<CAPTION>
Three Three
Months Year Months
Ended Ended Ended
Mar 31, Dec 31, Mar 31,
($ in thousands) 1996 1995 1995
--------- --------- ---------
<S> <C> <C> <C>
Loans outstanding at period end $ 215,422 $ 211,522 $ 186,414
========= ========= =========
Average loans outstanding during period $ 213,709 $ 192,035 $ 184,305
========= ========= =========
Allowance for possible loan losses at
beginning of period $ 4,587 $ 5,009 $ 5,009
Addition related to acquired bank -- 187 --
Loans charged off:
Commercial, financial and agricultural (45) (885) (200)
Real estate - mortgage (86) (184) (60)
Installment loans to individuals (21) (531) (46)
--------- --------- ---------
Total charge-offs (152) (1,600) (306)
--------- --------- ---------
Recoveries of loans previously charged off:
Commercial, financial and agricultural 6 23 3
Real estate - mortgage 62 6 1
Installment loans to individuals 47 62 18
Other 108 -- --
--------- --------- ---------
Total recoveries 223 91 22
--------- --------- ---------
Net recoveries (charge-offs) 71 (1,509) (284)
Additions to the allowance charged to expense 75 900 100
--------- --------- ---------
Allowance for possible loan losses at
end of period $ 4,733 $ 4,587 $ 4,825
========= ========= =========
Ratios:
Annualized net charge-offs (recoveries)
to average loans during period -0.13% 0.79% 0.62%
Annualized net charge-offs (recoveries)
to loans at end of period -0.13% 0.71% 0.61%
Allowance for possible loan losses to
average loans during period 2.21% 2.39% 2.62%
Allowance for possible loan losses to
loans at end of period 2.20% 2.17% 2.59%
Annualized net charge-offs (recoveries)
to allowance for possible loan losses -6.00% 32.90% 23.54%
Annualized net charge-offs (recoveries)
to provision for possible loan losses -378.67% 167.67% 1136.00%
</TABLE>
Based on the results of the aforementioned loan analysis and grading
program and management's evaluation of the allowance for possible loan losses
at March 31, 1996, there have been no material changes to the allocation
of the allowance for possible loan losses among the various categories of
loans since December 31, 1995.
<PAGE>
LIQUIDITY
The Company's liquidity is determined by its ability to convert assets to
cash or acquire alternative sources of funds to meet the needs of its
customers who are withdrawing or borrowing funds, and to maintain required
reserve levels, pay expenses and operate the Company on an ongoing basis. The
Company's primary liquidity sources are cash and due from banks, federal funds
sold and other short-term investments. In addition, the Company (through its
bank subsidiary) has the ability, on a short-term basis, to purchase federal
funds from other financial institutions. The Company has not traditionally
had to rely on the purchase of federal funds as a source of liquidity. The
Company has increased it loan to deposit ratio to a level more typical of the
Bank's North Carolina peer group. The Company's management believes its
liquidity sources are at an acceptable level and remain adequate to meet
its operating needs.
CAPITAL RESOURCES
The Company is required by its own policies and by applicable federal
regulations to maintain certain capital levels. The Company's ratio of stated
capital to total assets equaled or exceeded 10% as of March 31, 1996
and 1995 and December 31, 1995. In an effort to achieve a measurement of
capital adequacy that is sensitive to the individual risk profiles of
financial institutions, the various financial institution regulators have
minimum capital guidelines that categorize various components of capital and
types of assets and measure capital adequacy in relation to the financial
institution's relative level of those capital components and the level of
risk associated with various types of assets of that financial institution.
The guidelines call for minimum adjusted capital of 8% of risk-adjusted
assets. As of March 31, 1996, the Company's total risk-based capital
ratio was approximately 12.4%.
In addition to the risk-based capital requirements described above, the
Company is subject to a leverage capital requirement, which calls for a
minimum ratio of leverage capital, as defined in the regulations, to quarterly
average total assets of 3-5%. As of March 31, 1996, the Company's
leverage capital ratio was approximately 7.8%.
The Company is not aware of any recommendations of regulatory authorities
or otherwise which, if they were to be implemented, would have a material
effect on its liquidity, capital resources, or operations.
As of March 31, 1996, December 31, 1995 and March 31, 1995, the
Company was in compliance with all existing capital requirements, as
summarized in the following table:
<PAGE>
<TABLE>
<CAPTION>
Mar 31, Dec 31, Mar 31,
($ in thousands) 1996 1995 1995
--------- --------- ---------
<S> <C> <C> <C>
Tier I capital:
Total stated shareholders' equity $ 30,838 $ 30,277 $ 29,559
Less: Intangible assets 6,261 6,306 6,136
Unrealized holding gain (loss)
on securities available for
sale, net of income taxes 123 235 (354)
--------- --------- ---------
Total Tier I leverage capital 24,454 23,736 23,777
--------- --------- ---------
Tier II capital:
Allowable allowance for loan losses 2,793 2,661 2,448
--------- --------- ---------
Tier II capital additions 2,793 2,661 2,448
--------- --------- ---------
Total capital $ 27,247 $ 26,397 $ 26,225
========= ========= =========
Risk-adjusted assets $ 223,424 $ 219,439 $ 195,827
Tier I risk-adjusted assets (includes Tier I
capital adjustments) 217,040 212,898 190,045
Tier II risk-adjusted assets (includes Tiers I
and II capital adjustments) 219,833 215,559 192,493
Quarterly average total assets 318,630 309,996 287,487
Adjusted quarterly average total assets
(includes Tier I capital adjustments) 312,246 303,455 281,705
Risk-based capital ratios:
Tier I capital 11.27% 11.15% 12.51%
Minimum required Tier I capital 4.00% 4.00% 4.00%
Total risk-based capital 12.39% 12.25% 13.62%
Minimum required total risk-based capital 8.00% 8.00% 8.00%
Leverage capital ratios:
Tier I leverage capital ratio 7.83% 7.82% 8.44%
Minimum required Tier I leverage capital 3-5.00% 3-5.00% 3-5.00%
</TABLE>
COMPLETED ACQUISITION
On December 15, 1995, First Bank completed its cash acquisition of the
Laurinburg and Rockingham branch offices of First Scotland Bank. As of
December 15, 1995, assets acquired were approximately $15.8 million. The
acquisition included earning assets of approximately $14.2 million, of which
approximately $8.9 million were loans. Deposit liabilities assumed were
approximately $15 million.
<PAGE>
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K
a Exhibits
The following exhibits are filed with this report or, as noted, are
incorporated by reference.
3.i Copy of Articles of Incorporation of the Registrant and amendments
thereto, was filed as Exhibit 3(a) to the Registrant's Registration
Statement Number 33-12692, and is incorporated herein by reference.
ii Copy of the Bylaws of the Registrant and amendments thereto, was
filed as Exhibit 3(b) to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1994, and is incorporated herein by
reference.
10 Material Contracts
.a Data processing Agreement dated October 1, 1984 by and between Bank
of Montgomery (First Bank) and Montgomery Data Services, Inc. was
filed as Exhibit 10(k) to the Registrant's Registration Statement
Number 33-12692, and is incorporated herein by reference.
.b First Bank Salary and Incentive Plan, as amended, was filed as
Exhibit 10(m) to the Registrant's Registration Statement Number
33-12692, and is incorporated herein by reference.
.c First Bancorp Savings Plus and Profit Sharing Plan (401(k) savings
incentive plan and trust), as amended January 25, 1994 and July 19,
1994, was filed as Exhibit 10(c) to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1994, and is
incorporated herein by reference.
.d Directors and Officers Liability Insurance Policy of First Bancorp,
dated July 16, 1991, was filed as Exhibit 10(g) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991,
and is incorporated herein by reference.
.e Indemnification Agreement between the Company and its Directors and
Officers was filed as Exhibit 10(t) to the Registrant's Registration
Statement Number 33-12692, and is incorporated herein by reference.
.f Employment and Consulting Agreement between the Company and John C.
Wallace dated January 1, 1993, was filed as Exhibit 10(i) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993, and is incorporated herein by reference.
.g First Bancorp Employees' Pension Plan, as amended on August 16,
1994, was filed as Exhibit 10(g) to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1994, and is
incorporated herein by reference.
<PAGE>
.h First Bancorp Senior Management Supplemental Executive Retirement
Plan dated May 31, 1993, was filed as Exhibit 10(k) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993, and is incorporated herein by reference.
.i First Bancorp Senior Management Split-Dollar Life Insurance
Agreements between the Company and the Executive Officers, as
amended on December 22, 1994, was filed as Exhibit 10(i) to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1994, and is incorporated herein by reference.
.j Software License and Equipment Purchase and Software Maintenance
Agreements between First Bancorp and Systematics, Inc. for the
procurement and use of data processing equipment and software dated
May 17, 1993, was filed as Exhibit 10(m) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993, and is
incorporated herein by reference.
.k First Bancorp 1994 Stock Option Plan was filed as Exhibit 10(n) to
the Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1994, and is incorporated herein by reference.
.l Purchase and Assumption Agreement between First Bank and Cabarrus
Bank of North Carolina, dated February 23, 1996.
27 Financial Data Schedules pursuant to Article 9 of Regulation S-X.
b There were no reports filed on Form 8-K during the quarter ended
March 31, 1996.
<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 thereunto duly authorized.
FIRST BANCORP
May 8, 1996 BY: James H. Garner
------------------- -----------------------------
James H. Garner
President
(Principal Executive Officer),
Treasurer and Director
May 8, 1996 BY: Anna G. Hollers
------------------- -----------------------------
Anna G. Hollers
Executive Vice President
and Secretary
May 8, 1996 BY: Kirby A. Tyndall
------------------- -----------------------------
Kirby A. Tyndall
Senior Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT CROSS REFERENCE INDEX
Exhibit Page(s)
3.i Copy of Articles of Incorporation of the Registrant *
.ii Copy of the Bylaws of the Registrant *
10.a Data processing Agreement by and between Bank of
Montgomery (First Bank) and Montgomery Data Services, Inc. *
.b First Bank Salary and Incentive Plan, as amended *
.c First Bancorp Savings Plus and Profit Sharing Plan (401(k)
savings incentive plan and trust), as amended *
.d Directors and Officers Liability Insurance Policy of
First Bancorp *
.e Indemnification Agreement between the Company and its
Directors and Officers *
.f Employment and Consulting Agreement between the Company
and John C. Wallace *
.g First Bancorp Employees' Pension Plan *
.h First Bancorp Senior Management Supplemental Executive
Retirement Plan *
.i First Bancorp Senior Management Split-Dollar Life Insurance
Agreements between the Company and the Executive Officers *
.j Software License and Equipment Purchase and Software
Maintenance Agreements between First Bancorp and
Systematics, Inc. *
.k First Bancorp 1994 Stock Option Plan *
.l Purchase and Assumption Agreement between First Bank and
Cabarrus Bank of North Carolina 20-53
27 Financial Data Schedules pursuant to Article 9 of
Regulation S-X 54
* Incorporated herein by reference.
Exhibit 10.l
BRANCH PURCHASE AND ASSUMPTION AGREEMENT
BY AND BETWEEN
FIRST BANK,
AS SELLER,
AND
CABARRUS BANK OF NORTH CAROLINA,
AS PURCHASER
Dated as of February 23, 1996
<PAGE>
TABLE OF CONTENTS
Page Number
-----------
ARTICLE I - TRANSFER OF ASSETS AND LIABILITIES
Section 1.1 Transferred Assets 1
Section 1.2 Purchase Price 2
Section 1.3 Deposit Liabilities 3
Section 1.4 Loans Transferred 6
Section 1.5 Safe Deposit Business 8
Section 1.6 Employee Matters 8
Section 1.7 Records and Data Processing 9
Section 1.8 Security 9
Section 1.9 Taxes and Fees, Proration of Certain Expenses 9
Section 1.10 Real Property 10
ARTICLE II - CLOSING AND EFFECTIVE TIME
Section 2.1 Dates 11
Section 2.2 Closing 11
Section 2.3 Adjustments 14
ARTICLE III - INDEMNIFICATION
Section 3.1 Seller's Indemnification of Purchaser 14
Section 3.2 Purchaser's Indemnification of Seller 15
Section 3.3 Claims for Indemnity 15
Section 3.4 Limitations on Indemnification 16
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1 Corporate Organization 16
Section 4.2 No Violation 16
Section 4.3 Corporate Authority 17
Section 4.4 Enforceable Agreement 17
Section 4.5 Personal Property 17
Section 4.6 Real Property 17
Section 4.7 Condition of Property 18
Section 4.8 Proceedings and Information 18
Section 4.9 Limitation of Representation and Warranties 18
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.1 Corporate Organization 18
Section 5.2 No Violation 18
Section 5.3 Corporate Authority 19
Section 5.4 Enforceable Agreement 19
<PAGE>
ARTICLE VI - OBLIGATIONS OF PARTIES PRIOR TO AND
AFTER EFFECTIVE TIME
Section 6.1 Full Access 19
Section 6.2 Delivery of Magnetic Media Records 19
Section 6.3 Application for Approval to Effect Purchase
of Assets and Assumption of Liabilities 20
Section 6.4 Conduct of Business; Maintenance of
Properties 20
Section 6.5 No Solicitation by Seller, Etc. 20
Section 6.6 Further Actions 21
Section 6.7 Breaches with Third Parties 21
Section 6.8 Insurance 21
Section 6.9 Public Announcements 21
Section 6.10 Tax Reporting 22
ARTICLE VII - CONDITIONS TO PURCHASER'S OBLIGATIONS
Section 7.1 Representations and Warranties True 22
Section 7.2 Obligations Performed 22
Section 7.3 No Adverse Proceedings 22
Section 7.4 Regulatory Approval 22
Section 7.5 Consent to Lease Assignment 23
ARTICLE VII - CONDITIONS TO SELLER'S OBLIGATIONS
Section 8.1 Representations and Warranties True 23
Section 8.2 Obligations Performed 23
Section 8.3 No Adverse Proceedings 23
Section 8.4 Regulatory Approvals 24
Section 8.5 Consent to Lease Assignment 24
ARTICLE IX - TERMINATION
Section 9.1 Methods of Termination 24
Section 9.2 Procedure Upon Termination 25
Section 9.3 Payment of Expenses 26
ARTICLE X - MISCELLANEOUS PROVISIONS
Section 10.1 Amendment and Modification 26
Section 10.2 Waiver or Extension 26
Section 10.3 Assignment 26
Section 10.4 Confidentiality 27
Section 10.5 Addresses for Notices, Etc. 27
Section 10.6 Counterparts 27
ii
<PAGE>
Section 10.7 Headings 28
Section 10.8 Governing Law 28
Section 10.9 Expenses 28
Section 10.10 Time is of the Essence 28
Section 10.11 Cover, Index and Headings, Etc. 28
Section 10.12 Broker, Finder, and Investment Banker Fees 28
Section 10.13 Severability 29
Section 10.14 No Third Party Beneficiaries 29
Section 10.15 Entire Agreement 29
iii
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit Number Description
- -------------- -----------
1.6(b) Employee Benefit Plans
2.2(b)(1) Form of Lease Assignment Agreement
2.2(b)(2) Form of Bill of Sale
2.2(b)(3) Form of Assignment and Assumption Agreement
2.2(b)(14) Form of Settlement Statement
<PAGE>
BRANCH PURCHASE AND ASSUMPTION AGREEMENT
----------------------------------------
THIS BRANCH PURCHASE AND ASSUMPTION AGREEMENT (this "Agreement")
is made and entered into as of the 23rd day of February, 1996, by and
between FIRST BANK ("Seller"), a bank organized and existing under
the laws of the State of North Carolina, with its principal office
located in Troy, North Carolina; and CABARRUS BANK OF NORTH CAROLINA
("Purchaser"), a bank organized and existing under the laws of the
State of North Carolina, with its principal offices located in
Concord, North Carolina.
Preamble
--------
The Boards of Directors of Purchaser and the Seller have
determined that the transactions described herein are in their
respective best interests. The Agreement provides for the purchase
by Purchaser of certain assets from Seller and the assumption by
Purchaser of certain liabilities of Seller related to Seller's
banking office located at U.S. Highway 29 and Country Club Road,
Concord, North Carolina (the "Branch Office").
In consideration of the premises and the respective
representations, warranties, covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, agree as follows:
ARTICLE I
---------
TRANSFER OF ASSETS AND LIABILITIES
----------------------------------
Section 1.1. Transferred Assets.
- ------------ -------------------
(a) As of the Effective Time (as defined in Section 2.1) and upon
the terms and conditions set forth herein, Seller will sell,
assign, transfer, convey and deliver to Purchaser, and Purchaser
will purchase from Seller, all of the following assets
associated with the Branch Office and identified in this
Agreement and the Exhibits hereto, and not otherwise excluded
from sale pursuant to the provisions of Subsection 1.1(b) below:
(1) all Seller's right, title and interest in and to all Branch
Office real estate and improvements thereon, whether held as
lessee or otherwise (the "Real Property");
(2) except as provided in Exhibit 1.1(b), the furniture,
fixtures, leasehold improvements and other tangible personal
property (the "Personal Property");
(3) all safe deposit contracts and leases for the safe deposit
boxes located at the Branch Office as of the Effective Time
(the "Safe Deposit Contracts");
<PAGE>
(4) all loans transferred pursuant to Section 1.4;
(5) all coins and currency located at the Branch Office as of
the Effective Time (the "Coins and Currency"); and
(6) Seller's rights in any equipment leased by the Seller and
used at the Branch Office ("Leased Equipment") and not
among the Excluded Assets, and Seller's rights as lessee in
and to the real property used for the Branch Office
("Leased Realty").
(b) The assets, properties and rights listed below are specifically
excluded from the sale under this Agreement (the "Excluded
Assets"):
(1) any of Seller and its affiliates' logos, trademarks, trade
names, signs, paper stock, forms and other supplies
containing any such logos, trademarks or trade names; and
(2) Seller's automated teller machine ("ATM") located at the
Branch Office.
(c) The Seller shall remove the Excluded Assets from the Branch
Office at or prior to the Effective Time. The Seller shall
remove the Excluded Assets at its own cost and, apart from
restoring, prior to Closing, the premises to the reasonable
satisfaction of Purchaser as a result of the removal of the
Seller's ATM and also making any repairs necessitated by
Seller's negligence in removing the Excluded Assets, Seller
shall be under no obligation to restore the Branch Office
premises to their original condition, which shall be the
Purchaser's responsibility.
Section 1.2. Purchase Price.
- ------------ ---------------
(a) In consideration for the purchase of the Branch Office, the
Purchaser shall pay Seller a purchase price equal to the sum of
the following:
(1) the Net Book Value (as defined in Subsection 1.2(d) hereof)
for the Real Property (owned by Seller and excluding the
Leased Realty) and the Personal Property at the Branch
Office;
(2) a premium for the Deposit Liabilities (as defined in
Subsection 1.3(a) hereof) equal to 8.0% of the Deposit
Liabilities (the "Deposit Premium");
(3) the Net Book Value (as defined in Subsection 1.2(d) hereof),
including accrued but unpaid interest, for the Loans as set
forth in Section 1.4 hereof; and
(4) the face amount of the Coins and Currency.
-2-
<PAGE>
(b) In addition, Purchaser shall assume, as of the Effective Time,
all of the duties, obligations and liabilities of Seller
relating to Leased Realty, Leased Equipment, the Safe Deposit
Contracts and the Deposit Liabilities (including all accrued
interest on such Deposit Liabilities); provided, that any cash
items paid by Seller and not cleared prior to the Effective Time
shall be the responsibility of Seller, subject to the terms of
Section 1.3 below.
(c) Seller shall prepare a balance sheet (the "Pre-Closing Balance
Sheet") in accordance with generally accepted accounting
principles as of a date not earlier than 30 days prior to the
Effective Time (the "Pre-Closing Balance Sheet Date") reflecting
the assets to be sold, assigned and transferred hereunder and the
liabilities to be transferred and assumed hereunder. Seller
agrees to pay to Purchaser at the Closing (as defined in Section
2.1 hereof), in immediately available funds, the excess amount,
if any, of the amount of Deposit Liabilities assumed by Purchaser
pursuant to Subsection 1.2(b) above, as reflected by the
Pre-Closing Balance Sheet, over the aggregate purchase price
computed in accordance with Subsection 1.2(a) above, as
reflected by the Pre-Closing Balance Sheet. Purchaser agrees to
pay Seller at the Closing, in immediately available funds, the
excess, if any, of the aggregate purchase price computed in
accordance with Subsection 1.2(a) above, as reflected by the
Pre-Closing Balance Sheet, over the amount of Deposit Liabilities
assumed by Purchaser pursuant to Subsection 1.2(b) above, as
reflected by the Pre-Closing Balance Sheet. Amounts paid at
Closing shall be subject to subsequent adjustment based on the
Post-Closing Balance Sheet.
(d) For purposes of this Agreement, "Net Book Value" means the value
determined from the Post-Closing Balance Sheet and in all cases
shall be net of accumulated depreciation and amortization, and
with respect to doubtful and substandard Loans ("Classified
Loans") with related specific reserves, shall include any loan
loss reserve specifically attributable to each such Classified
Loan; provided, however, that such value shall not include any
general or other allowances or reserves for loan loss maintained
by Seller.
Section 1.3. Deposit Liabilities.
- ------------ --------------------
(a) "Deposit Liabilities" shall mean all of Seller's duties,
obligations and liabilities relating to the deposit accounts,
including Individual Retirement Accounts, located at the Branch
Office as of the Effective Time.
(b) Except for those liabilities and obligations specifically
assumed by Purchaser under Subsection 1.2(b) above, Purchaser is
not assuming any other liabilities or obligations. Liabilities
not assumed include, but are not limited to, the following:
(1) Seller's cashier checks, official and teller's checks,
letters of credit, money orders, interest checks and expense
-3-
<PAGE>
checks issued prior to Closing, consignments of U.S.
Government "E" and "EE" bonds and any and all traveler's
checks;
(2) Liability or obligations with respect to any litigation,
suits, claims, demands or governmental proceedings arising,
commenced or made known to Seller prior to Closing and
related to the operation of the Branch Office prior to the
Effective Time, or which thereafter arise with respect to
matters occurring prior to the Effective Time;
(3) Deposit accounts associated with lines of credit where a
line of credit is excluded in accordance with Subsection
1.4(b); and
(4) Deposit accounts associated with qualified retirement plans
where Seller is the trustee of such plan or the sponsor of a
prototype plan used by such plan.
(c) Purchaser agrees to pay in accordance with law and customary
banking practices all properly drawn and presented checks,
drafts and withdrawal orders presented to Purchaser by mail,
through automated teller machines, over the counter or through
the check clearing system or any other clearing system of the
banking industry, by depositors of the accounts assumed, whether
drawn on the checks, withdrawal or draft forms provided by
Seller or by Purchaser, and in all other respects to discharge,
in the usual course of the banking business, the duties and
obligations of Seller with respect to the balances due and owing
to the depositors whose accounts are assumed by Purchaser.
(d) If, after the Effective Time, any depositor, instead of
accepting the obligation of Purchaser to pay the Deposit
Liabilities assumed, shall demand payment from Seller for all or
any part of any such assumed Deposit Liabilities, Seller shall
not be liable or responsible for making such payment; provided,
that, for purposes of maintaining relationships of the Branch
Office customers, if Seller shall pay the same pursuant to
mutually agreed upon procedures, Purchaser agrees to reimburse
Seller for any such payments, Seller shall not be deemed to have
made any representations or warranties to Purchaser with respect
to any such checks, drafts or withdrawal orders, and any such
representations or warranties implied by law are hereby
expressly disclaimed. Seller and Purchaser shall make
arrangements to provide for the daily settlement with
immediately available funds by Purchaser of checks, drafts,
withdrawal orders, returns and other items presented to and paid
by Seller within 60 days after the Effective Time and drawn on
or chargeable to accounts that have been assumed by Purchaser;
provided, however, that Seller shall be held harmless and
indemnified by Purchaser for acting in accordance with such
arrangements.
(e) Purchaser agrees, at its cost and expense, (1) to assign new
account numbers to depositors of assumed accounts, (2) to notify
-4-
<PAGE>
such depositors, on or before the Effective Time, in a form and
on a date mutually acceptable to Seller and Purchaser, of
Purchaser's assumption of Deposit Liabilities, and (3) to
furnish such depositors with checks on the forms of Purchaser
and with instructions to utilize Purchaser's checks and to
destroy unused check, draft and withdrawal order forms of
Seller. (If Purchaser so elects, Purchaser may offer to buy
from such depositors their unused Seller check, draft and
withdrawal order forms.) In addition, Purchaser and Seller will
jointly notify Seller's affected customers by letter of the
pending assignment of Seller's deposit accounts to Purchaser,
which notice shall be at Seller's cost and expense and in a form
mutually agreeable to Seller and Purchaser. The Purchaser may
provide, at its sole expense, such customers with notices of
changes in terms and other information regarding the transaction
contemplated hereby. The parties shall cooperate and coordinate
such notices and shall, to the extent practicable, combine
mailings and share the costs of any combined mailings.
(f) Purchaser agrees to pay promptly to Seller an amount
equivalent to the amount of any checks, drafts or withdrawal
orders credited to assumed Deposit Liabilities as of the
Effective Time that are returned to Seller after the Effective
Time.
(g) On and after the Effective Time, Purchaser will assume and
discharge Seller's duties and obligations in accordance with the
terms and conditions and laws, rules and regulations that apply
to the certificates, accounts and other Deposit Liabilities
assumed pursuant to this Agreement.
(h) On and after the Effective Time, Purchaser will maintain and
safeguard in accordance with applicable law and sound banking
practices, all account documents, deposit contracts, signature
cards, deposit slips, canceled items and other records related
to the Deposit Liabilities assumed under this Agreement, subject
to Seller's right of access to such records as provided in this
Agreement.
(i) Seller will render a final statement to each depositor of an
account assumed under this Agreement as to transactions
occurring through the Effective Time. Seller will be entitled
to impose normal fees and service charges on a per item basis
through Closing, but Seller will not impose periodic fees or
blanket charges in connection with such final statements.
(j) The Purchaser, at its expense, will timely notify all
Automated Clearing House ("ACH") originators of the transfers
and assumptions to be made pursuant to the Agreement as of the
Closing Date. For a period of 30 days beginning on the
Effective Time, Seller will honor all ACH items related to
accounts assumed under this Agreement which are mistakenly
routed or presented to Seller. Seller will make no charge to
Purchaser for honoring such items, and will transmit such ACH
data to Purchaser electronically or via facsimile. If Purchaser
cannot receive an electronic transmission, Seller will make
available to Purchaser at Seller's operations center receiving
items from the ACH tapes containing such ACH data. Items
-5-
<PAGE>
mistakenly routed or presented after the 30-day period will be
returned to the presenting party.
(k) After the Effective Time, Purchaser agrees to use its
reasonable efforts to collect from Purchaser's customers amounts
equal to any debit card connected with a deposit account and any
Visa or MasterCard chargebacks under the MasterCard and Visa
Merchant Agreements between Seller and its customers or amounts
equal to any deposit items returned to Seller after the
Effective Time which were honored by Seller prior to the
Effective Time and remit such amounts so collected to Seller.
Purchaser agrees to immediately remit to Seller any funds held
in the customer's related transferred account when the Purchaser
receives such notice from the Seller, up to the amount of the
charged back or returned item that had been previously credited
by Seller, if such funds are available at the time of
notification by Seller to Purchaser of the charged back or
returned item. Notwithstanding the foregoing, Purchaser shall
have no duty to remit funds for any item or charge that has been
improperly returned or charged to Seller.
Section 1.4. Loans Transferred.
- ------------ ------------------
(a) Seller will transfer to Purchaser at the Effective Time,
subject to the terms and conditions of this Agreement, all of
Seller's right, title and interest in (including all collateral
relating thereto) loans maintained, serviced and listed in
Seller's general ledger as loans of the Branch Office
(collectively the "Loans").
(b) Notwithstanding the provisions of subsection 1.4(a) above,
the Loans shall not, except to the extent the parties hereto may
mutually agree otherwise upon mutually acceptable terms, include:
(1) nonaccruals (which term shall include loans in which the
collateral securing same has been repossessed or in which
litigation or other dispute resolution proceedings with a
view to enforcing the Seller's rights or remedies in such
loans have been instituted or foreclosure proceedings have
been filed);
(2) loans 90 days or more past due or charged off;
(3) loans upon which insurance with respect to collateral has
been force-placed;
(4) loans in connection with which the borrower has filed a
petition for relief under the United States Bankruptcy Code
prior to the Effective Time; and
(5) any loans that Purchaser selects for exclusion during the
due diligence period provided in Section 6.1 hereof, during
which period Seller shall provide Purchaser with reasonable
access to all documentation and collateral files, wherever
-6-
<PAGE>
located, related to any loans attributable to the Branch
Office.
(c) Seller and Purchaser agree that Seller will assign to
Purchaser, and Purchaser will become the beneficiary of, credit
life insurance written on direct consumer installment loans, and
coverage will continue to be the obligation of the current
insurer after the Effective Time and for the duration of such
insurance as provided under the terms of the policy or
certificate to the extent permitted under such insurance
policies and without further cost to the Seller. If Purchaser
becomes the beneficiary of credit life insurance written on
consumer installment loans, Seller and Purchaser agree to
cooperate in good faith to develop a mutually satisfactory
method by which the current insurer will make rebate payments to
and satisfy claims of the holders of such certificates or
policies of insurance after the Effective Time. The parties'
obligations in this subsection 1.4(c) are subject to any
restrictions contained in existing insurance contracts and to
applicable law.
(d) In connection with the transfer of any Loans requiring
notice to the related borrower, Purchaser and Seller agree to
comply with all notice and reporting requirements of the loan
documents or of any law or regulation.
(e) All Loans transferred to Purchaser (other than as specified
in Section 1.4(b)) shall be valued at their Net Book Value, such
value to include accrued but unpaid interest and other charges.
(f) All Loans will be transferred without recourse and without
any warranties or representations as to their collectibility or
the creditworthiness of any of the obligors of such Loans. To
Seller's knowledge, the Loans were, when originated, made
consistent in all material respects with applicable laws then in
effect.
(g) Purchaser, at its expense, will issue new coupon books for
payment of Loans for which Seller provides coupon books with
instructions to utilize Purchaser's coupons and to destroy
unused coupons furnished by Seller.
(h) For a period of 120 days after the Effective Time, Seller
will forward to Purchaser, loan payments on the Loans received
by Seller. Purchaser shall reimburse Seller upon demand for
checks submitted by Borrowers to Seller, but returned on
payments forwarded by Seller to Purchaser; however, to the
extent possible, Seller will deduct the amount of such returned
checks from payments received and shall settle with Purchaser by
an official check.
(i) As of the Effective Time and upon receipt from the Seller,
Purchaser will be responsible for maintaining and safeguarding
all Loan files, documents and records related to the Loans in
accordance with applicable law and sound banking practices.
-7-
<PAGE>
(j) If the balance due on any Loan to be purchased pursuant to
this Section 1.4 has been reduced by Seller as a result of a
payment by check received prior to the Effective Time, which
item is returned after the Effective Time, the asset value
represented by the Loan transferred shall be correspondingly
increased, and an amount in cash equal to such increase shall be
paid by Purchaser to Seller promptly upon demand.
(k) Purchaser may notify Seller 45 days or more prior to Closing
of any consumer Loan files that lack the collateral specified in
the underlying Loan documents, and Purchaser will have the
option not to purchase such Loans where Seller cannot deliver
the specified collateral at Closing with the related Loan.
Section 1.5. Safe Deposit Business.
- ------------ ----------------------
(a) As of the Effective Time, Purchaser will assume and
discharge Seller's obligations with respect to the safe deposit
box business at the Branch Office in accordance with the terms
and conditions of contracts or rental agreements related to such
business, and Purchaser will maintain all facilities necessary
for the use of such safe deposit boxes by persons entitled to
use them.
(b) As of the Effective Time, Purchaser shall maintain and
safeguard the records related to such safe deposit box business,
and Purchaser shall be responsible for granting access to and
protecting the contents of safe deposit boxes at the Branch
Office.
Section 1.6. Employee Matters.
- ------------ -----------------
(a) Purchaser shall have the option, in its sole discretion, to
hire the manager of the Branch Office. In the event that
Purchaser does not hire such manager, Seller shall continue to
employ such manager at another location of Seller. Purchaser
shall hire all other employees employed by Seller at the Branch
Office at the Effective Time (the "Employees"), in their then
current functional positions at the Branch Office with
remuneration consistent with Purchaser's compensation practices
generally not less than current levels (subject to normal salary
increases) and benefits generally equivalent to similarly
situated employees of Purchaser. Except as expressly provided
otherwise below, Employees shall receive full credit for their
prior service with Seller under Purchaser's benefit plans and
policies, including its vacation and sick leave policies. As of
the Effective Time, the Employees and their dependents, if any,
previously covered under Seller's health insurance plan shall be
covered under Purchaser's health insurance plan without being
subject to any pre-existing condition limitations or exclusions,
except those excluded under Seller's health insurance plans, to
the extent permitted under Purchaser's existing health insurance
plans without amendment or material increase in the cost per
Employee. Employees shall receive full credit for their prior
service with Seller for purposes of determining their
participation in, and eligibility and vesting rights under,
-8-
<PAGE>
Purchaser's vacation and other employee benefit and welfare
plans. Purchaser only has a profit sharing plan and a 401(k)
plan.
(b) Purchaser agrees that for a period of 12 months after the
Effective Time, it will not terminate a transferred Employee
without cause. Seller shall pay and/or cause its employee
benefit plans specified on Exhibit 1.6(b) hereto to pay all
persons employed by the Seller on the date of Closing who have
become participants in such plans by that time and who terminate
their employment with the Seller as a result of the transactions
contemplated by this Agreement (the "Affected Participants")
their accrued benefits under such plans, when and as provided in
such plans, as if their accrued benefits thereunder were fully
(100%) vested on the date of Closing, whether or not such
benefits are actually vested at Closing under the terms of such
plans. For purposes of determining when such benefits become
payable, the Affected Participants shall be deemed to have
separated from service of Seller on the date of Closing.
Section 1.7. Records and Data Processing.
- ------------ ----------------------------
(a) As of the Effective Time, Purchaser shall become responsible
for maintaining the files, documents and records referred to in
this Agreement. Purchaser will preserve and safekeep them as
required by applicable law and sound banking practice for the
joint benefit of Seller and Purchaser. After the Effective
Time, Purchaser will permit Seller and its representatives, for
reasonable cause, at reasonable times and upon reasonable notice
and at Seller's expense, to examine, inspect, copy and reproduce
any such files, documents or records as Seller deems reasonably
necessary.
(b) As of and following the Effective Time, Seller will permit
Purchaser and its representatives, for reasonable cause, at
reasonable times and upon reasonable notice and at Purchaser's
expense, to examine, inspect, copy and reproduce files,
documents or records retained by Seller regarding the assets and
liabilities transferred under this Agreement as Purchaser deems
reasonably necessary.
Section 1.8. Security.
- ------------ ---------
As of the Effective Time, Purchaser shall be solely responsible
for the security of and insurance on all persons and property
located in or about the Branch Office.
Section 1.9. Taxes and Fees, Proration of Certain Expenses.
- ------------ ----------------------------------------------
Purchaser shall be responsible and liable for the payment of all
filing and recordation fees and taxes related to this
transaction; except that Purchaser shall not be responsible for,
or have any liability with respect to, income or similar taxes
upon the Seller arising out of this transaction, if any, and
Seller agrees that it shall pay, or represents that it has paid,
in a timely manner any and all such taxes. Purchaser shall not
-9-
<PAGE>
be responsible for any tax liabilities of Seller arising from
the business or operations of the Branch Office before the
Effective Time, and Seller shall not be responsible for any tax
liabilities of Purchaser arising from the business or operations
of the Branch Office after the Effective Time. Utility payments,
telephone charges, real property taxes, personal property taxes,
rent, salaries, deposit insurance premiums, other ordinary
operating expenses of the Branch Office and other expenses and
taxes related to the liabilities assumed or assets purchased
hereunder shall be prorated between the parties as of the
Effective Time. To the extent any such item has been prepaid by
Seller for a period extending beyond the Effective Time, there
shall be a proportionate monetary adjustment in favor of Seller.
Section 1.10. Real Property.
- ------------- --------------
(a) Seller agrees to deliver to Purchaser as soon as reasonably
possible after the execution of this Agreement copies of all
title information in possession of or available to Seller,
including but not limited to title insurance policies,
attorneys' opinions on title, surveys, covenants, deeds, notes
and deeds of trust and easements relating to the Real Property.
Such delivery shall constitute no warranty by Seller as to the
accuracy or completeness thereof or that Purchaser is entitled
to rely thereon.
(b) Purchaser agrees to obtain, and provide Seller within 45
days of the date of this Agreement, a title opinion on the Real
Property and to notify Seller in writing within such 45 day
period of any mortgages, pledges, environmental matters,
material liens, encumbrances, restrictions, reservations,
tenancies, encroachments, overlaps or other title exceptions or
zoning or similar land use violations related to the Real
Property and materially and adversely affecting its value or use
as a bank branch office to which Purchaser reasonably objects
(collectively, the "Title Defects"). Purchaser agrees that
Title Defects shall not include real property taxes not yet due
and payable and easements and rights of way of record which do
not materially interfere with the use of the Real Property as a
bank branch office. Seller shall make a good faith effort to
correct any such Title Defect to Purchaser's reasonable
satisfaction at least 10 days prior to Closing; provided,
however, that Seller shall not be obligated to bring any lawsuit
or make any payments of money (except to pay liens that Seller
does not dispute in good faith) to cure a Title Defect. If
Seller is unable to cure any such Title Defects to Purchaser's
reasonable satisfaction, Purchaser shall have the option either
to receive title in its then-existing condition or to terminate
this Agreement pursuant to Section 9.1(g).
(c) Purchaser shall have the right to update title matters at
Closing for any changes which may have arisen since the date of
Purchaser's original title search. If such update indicates any
new Title Defects, Purchaser may elect upon notice to Seller
specifying the new Title Defects, if any, to delay the Closing
with respect to the Real Property for up to 30 days while Seller
makes a good faith effort to cure any such Title Defect to
Purchaser's reasonable satisfaction; provided that Seller shall
not be obligated to bring any suit or action or make any
-10-
<PAGE>
payments of money (except to pay liens that Seller does not
dispute in good faith) to cure a Title Defect. If Seller is
unable to cure any such Title Defect within such 30 day period,
Purchaser shall have the option either to receive title in its
then-existing condition or to terminate this Agreement pursuant
to Section 9.1(g).
(d) Purchaser shall have the right to conduct, at Purchaser's
expense, such investigation of environmental matters with
respect to the Real Property as it may reasonably require and
shall report the results of any such investigation to Seller no
later than 30 days after the date of this Agreement; provided,
however, that without the prior written consent of Seller,
Purchaser shall not, prior to the Effective Time, conduct any
ground water monitoring or install any test well or undertake
any other investigation which requires a permit or license from,
or the reporting of the investigation or the results thereof to,
a local or state environmental regulatory authority or the
United States Environmental Protection Agency. Seller shall
have the right, but not the obligation, to cure any violation of
law relating to the environment which is discovered by
Purchaser's investigation. If Seller either refuses to give
such written consent or refuses to cure any material violation
of law relating to the environment, Purchaser shall have the
option either to purchase the Real Property in its then-existing
condition or to terminate this Agreement pursuant to Section
9.1(h).
ARTICLE II
----------
CLOSING AND EFFECTIVE TIME
--------------------------
Section 2.1. Dates.
- ------------ ------
The purchase of assets and assumption of liabilities provided
for in this Agreement shall occur at a closing (the "Closing")
to be held at 10:00 A.M. local time at the offices of Purchaser
as soon as practicable following the date all necessary
approvals by the applicable regulatory agencies have been
issued, and all statutory waiting periods related to such
regulatory approvals have expired. All regulatory approvals
necessary to Purchaser's acquisition of the Branch Office and
the transactions contemplated herein shall have been received by
Purchaser no later than September 15, 1996, and all related
statutory waiting periods shall have expired by no later than
September 30, 1996. The transactions contemplated herein shall
become effective at 2:00 p.m. local time, or such other time as
the parties may mutually agree, on the business day on which the
Closing occurs (the "Effective Time").
Section 2.2. Closing.
- ------------ --------
(a) All actions taken and documents delivered at the Closing
shall be deemed to have been taken and executed simultaneously,
and no action shall be deemed taken nor any document delivered
until all have been taken and delivered.
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<PAGE>
(b) At the Closing, subject to all the terms and conditions of
this Agreement, Seller shall deliver to Purchaser or, in the
case of subsections (b)(5), (6), (7), (9) and (10), make
reasonably available to Purchaser:
(1) an assignment and assumption agreement with respect to the
Leased Realty, in substantially the form attached hereto as
Exhibit 2.2(b)(1) (the "Lease Assignment"), and limited
warranty deeds transferring title to the Real Property to
Purchaser;
(2) a Bill of Sale, in substantially the form attached hereto as
Exhibit 2.2(b)(2) (the "Bill of Sale"), transferring to
Purchaser all of Seller's interest in the Personal Property
and in the Loans;
(3) an Assignment and Assumption Agreement, in substantially the
form attached hereto as Exhibit 2.2(b)(3) (the "Assignment
and Assumption Agreement"), assigning Seller's interest in
the Leased Equipment, the Safe Deposit Contracts, and in
the Deposit Liabilities;
(4) consents from third persons that are necessary to effect the
assignments set forth in the Assignment and Assumption
Agreement, including, but not limited to, the lessors of the
Leased Equipment (to the extent required by such leases);
(5) Seller's keys to the safe deposit boxes and Seller's records
related to the safe deposit box business at the Branch
Office;
(6) Seller's files and records related to the Loans;
(7) Seller's records related to the Deposit Liabilities assumed
by Purchaser;
(8) immediately available funds in the net amount shown as owing
to Purchaser by Seller on the Settlement Statement, if any;
(9) the Coins and Currency;
(10) such of the other assets to be purchased as are capable of
physical delivery;
(11) a certificate of a proper officer of Seller, dated as of
the Effective Time, certifying to the fulfillment of all
conditions which are the obligation of Seller and that all
of the representations and warranties of Seller set forth
in this Agreement remain true and correct in all material
respects as of the Effective Time;
(12) certified copies of (A) the Articles of Incorporation and
Bylaws of Seller and (B) a resolution of the Seller's Board
of Directors, or its Executive Committee, approving the
-12-
<PAGE>
sale of the assets and the transfer of the liabilities
contemplated hereby;
(13) such certificates and other documents as Purchaser and its
counsel may reasonably require to evidence the receipt by
Seller of all necessary corporate and regulatory
authorizations and approvals for the consummation of the
transactions provided for in this Agreement; and
(14) a Settlement Statement, substantially in the form attached
hereto as Exhibit 2.2(b)(14) (the "Settlement Statement").
(c) At the Closing, subject to all the terms and conditions of
this Agreement, Purchaser shall deliver to Seller:
(1) the Lease Assignment;
(2) the Assignment and Assumption Agreement;
(3) a certificate of receipt acknowledging the delivery and
receipt of possession of the property and records referred
to in this Agreement, and final title opinion(s) with
respect to the Real Property;
(4) immediately available funds in the net amount shown as owing
to Seller by Purchaser on the Settlement Statement, if any;
(5) a certificate of a proper officer of Purchaser, dated as of
the date of Closing, certifying to the fulfillment of all
conditions which are the obligation of Purchaser and that
all of the representations and warranties of Purchaser set
forth in this Agreement remain true and correct in all
material respects as of the Effective Time;
(6) certified copies of (A) the Articles of Incorporation and
Bylaws of the Purchaser and (B) a resolution of the Board of
Directors, or its Executive Committee, of Purchaser
approving the purchase of the assets and the assumption of
the liabilities contemplated hereby;
(7) such certificates and other documents as Seller and its
counsel may reasonably require to evidence the receipt of
Purchaser of all necessary corporate and regulatory
authorizations and approvals for the consummation of the
transactions provided for in this Agreement; and
(8) the Settlement Statement.
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<PAGE>
(d) All instruments, agreements and certificates described in
this Section 2.2 shall be in form and substance reasonably
satisfactory to the parties and their respective legal counsel.
Section 2.3. Adjustments.
- ------------ ------------
(a) Not later than 15 business days after the Effective Time
(the "Post-Closing Balance Sheet Delivery Date"), Seller shall
deliver to Purchaser a balance sheet dated as of the Effective
Time and prepared in accordance with generally accepted
accounting principles reflecting the assets sold and assigned
and the liabilities transferred and assumed hereunder (the
"Post-Closing Balance Sheet"). Additionally, Seller shall
deliver to Purchaser a list of loans purchased, individually
identified by account number, which list shall be appended to
the Bill of Sale. Seller shall afford Purchaser and its
accountants and attorneys the opportunity to review all work
papers and documentation used by Seller in preparing the
Post-Closing Balance Sheet. Within 15 business days following
the Post-Closing Balance Sheet Delivery Date (the "Adjustment
Payment Date"), Seller and Purchaser shall effect the transfer
of any funds as may be necessary to reflect changes in such
assets and liabilities between the Pre-Closing Balance Sheet and
the Post-Closing Balance Sheet together with interest thereon
computed from the Effective Time to the Adjustment Payment Date
at the applicable Federal Funds Rate (as hereinafter defined).
(b) In the event that a dispute arises as to the appropriate
amounts to be paid to either party on the Adjustment Payment
Date, each party shall pay to the other on such Adjustment
Payment Date all amounts other than those as to which a dispute
exists. Any disputed amounts retained by a party which are
later found to be due to the other party shall be paid to such
other party promptly upon resolution with interest thereon from
the Adjustment Payment Date to the date paid at the Federal
Funds Rate.
(c) The "Federal Funds Rate" shall be the mean of the high and
low rates quoted for Federal Funds under "Money Rates" in The
Wall Street Journal, Eastern Edition adjusted daily as such mean
may increase or decrease during the period between the Effective
Time and the Adjustment Payment Date.
ARTICLE III
-----------
INDEMNIFICATION
---------------
Section 3.1. Seller's Indemnification of Purchaser.
- ------------ --------------------------------------
Seller shall indemnify, defend and hold harmless Purchaser from
and against any breach by Seller of any representation or
warranty contained herein and in the Exhibits hereto and all
claims, losses, liabilities, demands and obligations, including
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reasonable attorneys' fees and expenses, arising out of any
actions, suits or proceedings commenced or which arise from
matters occurring prior to the Effective Time (other than
proceedings, actions, suits or protests seeking to prevent or
limit the consummation of the transactions contemplated
hereunder) relating to operations at the Branch Office; and,
except as otherwise provided in this Agreement, Seller shall
further indemnify, hold harmless and defend Purchaser from and
against all claims, losses, liabilities, demands and
obligations, including reasonable attorneys' fees and expenses,
real estate taxes, intangibles and franchise taxes, sales and
use taxes, social security and unemployment taxes, all accounts
payable and operating expenses (including salaries, rents and
utility charges) relating to operations at the Branch Office
prior to the Effective Time and which are claimed or demanded on
or after the Effective Time, or which arise out of any actions,
suits or proceedings commenced on or after the Effective Time,
and which relate to operations at the Branch Office prior to the
Effective Time.
Section 3.2. Purchaser's Indemnification of Seller.
- ------------ --------------------------------------
Purchaser shall indemnify, defend and hold harmless Seller from
and against any breach by Purchaser of any representation or
warranty contained herein and in the Exhibits hereto and all
claims, losses, liabilities, demands and obligations, including
reasonable attorneys' fees and expenses, real estate taxes,
intangibles and franchise taxes, sales and use taxes, social
security and unemployment taxes, all accounts payable and
operating expenses (including salaries, rents and utility
charges), which Seller may (i) incur in connection with
operations and transactions occurring after the Effective Time
and (ii) which involve, subsequent to the Effective Time, the
Branch Office, the assets transferred or the liabilities assumed
pursuant to this Agreement.
Section 3.3. Claims for Indemnity.
- ------------ ---------------------
(a) A claim for indemnity under Sections 3.1 or 3.2 of this
Agreement may be made by the claiming party at any time prior to
the first anniversary of the Effective Time by the giving of
written notice thereof to the other party. Such written notice
shall set forth in reasonable detail the basis upon which such
claim for indemnity is made. In the event that any such claim
is made within such prescribed 12 month period, the indemnity
relating to such claim shall survive until such claim is finally
resolved. The foregoing indemnities shall terminate and be of
no further force and effect as to any claims not made within
such 12 month period.
(b) In the event that any person or entity not a party to this
Agreement shall make or threaten any demand, claim, action,
suit, protest, or other proceeding or litigation which may
result in any liability, damage or loss to one party hereto of
the kind for which such party is entitled to indemnification
pursuant to Section 3.1 or 3.2 hereof, then, after written
notice is provided by the indemnified party to the indemnifying
party of such demand, claim or lawsuit, the indemnifying party
shall have the option, at its cost and expense, to retain
counsel for the indemnified party to defend any such demand,
claim, action, suit, protest, or other proceeding or litigation.
-15-
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In the event that the indemnifying party shall fail to respond
within five days after receipt of such notice of any such
demand, claim, action, protest, or other proceeding or
litigation, then the indemnified party shall retain counsel and
conduct the defense of such demand, claim, action, protest, or
other proceeding or litigation as it may in its discretion deem
proper, at the cost and expense of the indemnifying party. In
effecting the settlement or compromise of any such proceeding,
an indemnified party shall act in good faith, shall consult with
the indemnifying party and shall enter into only such settlement
as the indemnifying party shall approve (the indemnifying
party's approval will be implied if it does not respond within
ten days of its receipt of the notice of such proposed
settlement or compromise).
Section 3.4. Limitations on Indemnification.
- ------------ -------------------------------
The parties shall have no obligations under this Article III for
any consequential liability, damage or loss the indemnified
party may suffer.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Purchaser as follows,
which representations and warranties shall survive the Effective
Time for a period of 12 months:
Section 4.1. Corporate Organization.
- ------------ -----------------------
Seller is a bank duly organized, validly existing and in good
standing under the laws of the State of North Carolina. Seller
has the corporate power and authority to own its properties, to
carry on its business as currently conducted and to effect the
transactions contemplated herein.
Section 4.2. No Violation.
- ------------ -------------
The Branch Office has been operated in all material respects in
accordance with applicable laws, rules and regulations. Neither
the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein, will
violate or conflict with (a) Seller's Articles of Incorporation
or Bylaws; (b) any material provision of any material agreement
or any other material restriction of any kind to which Seller is
a party or by which Seller is bound; (c) any material statute,
law, decree, regulation or order of any governmental authority,
or (d) any material provision which will result in a default
under, or which cause the acceleration of the maturity of, any
material obligation or loan to which Seller is a party.
-16-
<PAGE>
Section 4.3. Corporate Authority.
- ------------ --------------------
The execution and delivery of this Agreement, and the
consummation of the transactions contemplated herein, have been
duly authorized by Seller's Board of Directors. No further
corporate authorization is necessary for Seller to consummate
the transactions contemplated hereunder.
Section 4.4. Enforceable Agreement.
- ------------ ----------------------
This Agreement has been duly authorized, executed and delivered
by Seller and is the legal, valid and binding agreement of
Seller, enforceable in accordance with its terms.
Section 4.5. Personal Property.
- ------------ ------------------
Seller owns, and will convey to Purchaser at the Closing, all of
Seller's right, title and interest to all of the Personal
Property and Loans free and clear of any claims, mortgages,
liens, security interests, pledges or encumbrances thereon of
any kind, except as may otherwise be set forth in this Agreement
and the Exhibits hereto.
Section 4.6. Real Property.
- ------------ --------------
Seller makes the following representations and warranties
regarding the Real Property:
(a) Seller has no knowledge of any condemnation proceedings
pending against the Real Property.
(b) Seller has not entered into any agreement regarding the Real
Property, and neither Seller nor the Real Property is subject to
any claim, demand, suit, unfiled lien, proceeding or litigation
of any kind, pending or outstanding, or to the knowledge of
Seller, threatened or likely to be made or instituted, which
would in any way be binding upon Purchaser or its successors or
assigns or materially affect or limit Purchaser's or its
successors' or assigns' use and enjoyment of the Real Property
or which would materially limit or restrict Purchaser's right or
ability to enter into this Agreement and consummate the
transactions contemplated hereby.
(c) Seller has or will have at Closing good and marketable fee
simple title to the Real Property and, at Closing, will own the
Real Property outright, or have the right to assign its leases
upon Leased Realty, subject to no mortgage, pledge, lien,
security interest, lease or sublease (except for Seller's lease
as lessee of the Leased Realty), charge, encumbrance or
conditional sales or other title retention agreement except for
real property taxes not yet due and payable, and easements and
rights of way of record which do not materially interfere with
the use of the Real Property and Leased Realty as a bank branch
office. Purchaser's sole remedy for a breach of the
representations and warranties in this Section 4.6 shall be to
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elect either to receive title in its then-existing condition or
to terminate this Agreement pursuant to Section 9.1(i).
Section 4.7. Condition of Property.
- ------------ ----------------------
The Real Property and Personal Property to be purchased by
Purchaser hereunder are sold AS IS, WHERE IS, with no warranties
or representations whatsoever, except as may be expressly
represented or warranted in this Agreement.
Section 4.8. Proceedings and Information
- ------------ ---------------------------
Except as specifically disclosed on the attached disclosure
schedule, there are no proceedings, actions, claims, suits or
liabilities with respect to the Branch Office or any of the
assets to be purchased by Purchaser hereunder or the liabilities
to be assumed by Purchaser hereunder with respect to the Branch
Office; and there are no Employee disputes or labor relations
problems with respect to any Branch Office Employees.
Section 4.9. Limitation of Representations and Warranties.
- ------------ ---------------------------------------------
Except as may be expressly represented or warranted in this
Agreement by Seller, Seller makes no representations or
warranties whatsoever with regard to any asset being transferred
to Purchaser or any liability or obligation being assumed by
Purchaser or as to any other matter, or transaction.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTEES OF PURCHASER
-------------------------------------------
Purchaser hereby represents and warrants to Seller as follows,
which representations and warranties shall survive the Effective
Time for a period of 12 months:
Section 5.1. Corporate Organization.
- ------------ -----------------------
Purchaser is a bank duly organized, validly existing and in good
standing under the laws of the State of North Carolina.
Purchaser has the corporate power and authority to own the
properties and assets being acquired, to assume the liabilities
being transferred and to effect the transactions contemplated
herein, subject to receipt of all necessary regulatory approvals.
Section 5.2. No Violation.
- ------------ -------------
Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein, will
violate or conflict with (a) the Articles of Incorporation or
Bylaws of Purchaser, (b) any material provision of any material
agreement or any other material restriction of any kind to which
-18-
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Purchaser is a party or by which Purchaser is bound, (c) any
material statute, law, decree, regulation or order of any
governmental authority, or (d) any material provision which will
result in a default under, or cause the acceleration of the
maturity of, any material obligation or loan to which Purchaser
is a party.
Section 5.3. Corporate Authority.
- ------------ --------------------
The execution and delivery of this Agreement, and the
consummation of the transactions contemplated herein, have been
duly authorized by the Board of Directors (or Executive
Committee) of Purchaser. No further corporate authorization on
the part of Purchaser is necessary to consummate the
transactions contemplated hereunder.
Section 5.4. Enforceable Agreement.
- ------------ ----------------------
This Agreement has been duly authorized, executed and delivered
by Purchaser and is the legal, valid and binding agreement of
Purchaser enforceable in accordance with its terms.
ARTICLE VI
----------
OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME
--------------------------------------------------------
Section 6.1. Full Access.
- ------------ ------------
Seller shall afford to the officers and authorized
representatives of Purchaser, upon prior notice and subject to
Seller's normal security requirements, access to the properties,
books and records pertaining to the Branch Office in order that
Purchaser may have full opportunity to make reasonable
investigations, at reasonable times, without interfering with
the normal business and operations of the Branch Office or the
affairs of Seller relating to the Branch Office. The officers
of Seller shall furnish Purchaser with such additional financial
and operating data and other information as to its business and
properties at the Branch Office, or where otherwise located, as
Purchaser may, from time to time, reasonably request and as
shall be available, including, without limitation, information
required for inclusion in all governmental applications
necessary to effect this transaction. Nothing in this Section
6.1 shall require Seller to breach any obligation of
confidentiality or to reveal any proprietary information, trade
secrets or marketing or strategic plans. Records, including
credit information and collateral files, relating to the Loans
will be made available for review by Purchaser.
Section 6.2. Delivery of Magnetic Media Records.
- ------------ -----------------------------------
Seller shall prepare at its expense and make available to
Purchaser at Seller's data processing center magnetic media
records in Seller's field format not later than 30 days prior to
the anticipated Closing Date and further shall make available to
Purchaser such records updated as of the Closing Date, which
records shall contain the information related to the items
described in Subsections 2.2(b)(6) and (b)(7) above. Such
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updated records shall be made available at such other times
before and after Closing as agreed to by the parties.
Section 6.3. Application for Approval to Effect Purchase of
- ------------ ----------------------------------------------
Assets and Assumptions of Liabilities.
--------------------------------------
Purchaser shall use its best efforts to prepare and file, as
soon as practicable and in any event within 30 days from the
date hereof, all applications required by law with the
appropriate regulatory authorities for approval to purchase and
assume the aforesaid assets and liabilities, to establish a
branch at the location of the Branch Office, and to effect in
all other respects the transactions contemplated herein.
Purchaser agrees to process such applications diligently and on
a priority basis and to provide Seller promptly with a copy of
such applications as filed (except for any confidential portions
thereof) and all material notices, orders, opinions,
correspondence and other documents with respect thereto, and to
use its best efforts to obtain all necessary regulatory
approvals. On the date hereof, Purchaser knows of no reason why
such applications should not receive all such approvals.
Purchaser shall promptly notify Seller upon receipt by Purchaser
of notification that any application provided for hereunder has
not been accepted for processing or has been denied. Seller
shall provide such assistance and information to Purchaser as
shall be reasonably requested by Purchaser to comply with the
requirements or reasonable requests of the applicable regulatory
authorities.
Section 6.4. Conduct of Business; Maintenance of Properties.
- ------------ -----------------------------------------------
From the date hereof until the Effective Time, Seller covenants
that it will:
(a) except as expressly provided herein, carry on the business
of the Branch Office substantially in the same manner as on the
date hereof, use all reasonable efforts to preserve intact its
current business organization and preserve its business
relationships with depositors, customers and others having
business relationships with it and whose accounts or loans will
be retained at the Branch Office; provided, however, Seller will
not advertise or promote new or substantially new customer
services or products in Concord, North Carolina, except where it
deems it necessary to meet competition in the market areas
served by the Branch Office;
(b) cooperate with and assist Purchaser in assuring the orderly
transition of the business of the Branch Office to Purchaser
from Seller; and
(c) maintain the Real Property and the Personal Property in its
current condition, ordinary wear and tear excepted.
Section 6.5. No Solicitation by Seller; Etc.
- ------------ -------------------------------
For a period of 24 months after the Effective Time, Seller will
not specifically target and solicit customers of the Branch
Office utilizing any customer or mailing list which includes
-20-
<PAGE>
customers of the Branch Office based upon their status as
customers or former customers of the Branch Office; provided,
however, these restrictions shall not restrict general mass
mailings, telemarketing calls, statement stuffers and other
similar communications directed generally to then-current
customers of Seller or Seller's affiliates, or to the public or
newspaper, radio or television advertisements of a general
nature or otherwise prevent Seller from taking such actions as
may be required to comply with any applicable federal or state
laws, rules or regulations. In addition, these restrictions
shall not restrict the solicitation of commercial accounts
normally established and maintained in offices other than the
Branch Office.
Section 6.6. Further Actions.
- ------------ ----------------
The parties hereto shall execute and deliver such documents and
instruments and take such other actions as the other party may
reasonably require in order to carry out the intent of this
Agreement. The parties shall cooperate with each other in
furtherance of this Agreement and the transactions contemplated
hereunder.
Section 6.7. Breaches with Third Parties.
- ------------ ----------------------------
If the assignment of any material claim, contract, license,
lease or commitment (or any benefit arising thereunder) without
the consent of a third party would constitute a breach thereof
or materially affect the rights of Purchaser or Seller
thereunder, then such assignment contemplated hereby is subject
to such consent or approval being obtained.
Section 6.8. Insurance.
- ------------ ----------
As of the Effective Time, Seller will discontinue its insurance
coverage maintained in connection with the Branch Office and the
activities conducted thereon. Purchaser shall be responsible
for all insurance protection for the Branch Office premises and
the activities conducted thereon immediately following the
Effective Time. Pending the Closing, risk of loss shall be the
responsibility of Seller.
Section 6.9. Public Announcements.
- ------------ ---------------------
Seller and Purchaser agree that, from the date hereof, neither
shall make any public announcement or public comment regarding
this Agreement or the transactions contemplated herein without
first consulting with the other party hereto and reaching an
agreement upon the substance and timing of such announcement or
comment. Seller and Purchaser acknowledge and agree that these
transactions are not deemed a material transaction so as to
result in the necessity of an immediate public announcement by
either of them, and acknowledge and agree that the transactions
contemplated hereby do not require public disclosure except in
connection with any statutory notices required under the Bank
Merger Act and North Carolina law. Further, Seller and
Purchaser acknowledge the sensitivity of this transaction to the
Employees of the Branch Office, and no announcements to or
-21-
<PAGE>
communications with the public or these Employees shall be made
without the prior approval of the Seller and Purchaser.
Section 6.10. Tax Reporting.
- ------------- --------------
Seller shall comply with all tax reporting obligations in
connection with transferred assets and liabilities on or before
the Effective Time, and Purchaser shall comply with all tax and
other reporting obligations with respect to the holding of
transferred assets and liabilities after the Effective Time.
The Purchaser does not intend to and shall not hereby assume any
liability for any failure by the Seller to meet such obligations
hereunder.
ARTICLE VII
-----------
CONDITIONS TO PURCHASER'S OBLIGATIONS
-------------------------------------
The obligation of Purchaser to complete the transactions
contemplated in this Agreement are conditioned upon fulfillment,
on or before the Effective Time, of each of the following
conditions:
Section 7.1. Representations and Warranties True.
- ------------ ------------------------------------
The representations and warranties made by Seller in this
Agreement shall be true in all material respects at and as of
the Effective Time as though such representations and warranties
were made at and as of such time, except for any changes
permitted by the terms hereof or consented to by Purchaser.
Section 7.2. Obligations Performed.
- ------------ ----------------------
Seller shall (a) deliver or make available to Purchaser those
items required by Section 2.2 hereof and (b) perform and comply
in all material respects with all obligations and agreements
required by this Agreement to be performed or complied with by
it prior to or at the Effective Time.
Section 7.3. No Adverse Proceedings.
- ------------ -----------------------
As of the Effective Time, no actions, suits or proceedings shall
be pending or threatened against Seller which are reasonably
likely to materially and adversely affect the business,
properties and assets of the Branch Office.
Section 7.4. Regulatory Approval.
- ------------ --------------------
(a) Purchaser shall have received all necessary regulatory
approvals of the transactions contemplated in this Agreement,
all notice and waiting periods required by law to pass shall
have passed, and no judicial, regulatory or other governmental
-22-
<PAGE>
orders or actions enjoining, restraining, prohibiting or
invalidating such transactions shall have been issued and remain
in effect or unstayed.
(b) Such approvals shall not have imposed any condition which is
materially disadvantageous or burdensome to Purchaser.
Section 7.5. Consent to Lease Assignment.
- ------------ ----------------------------
Seller shall have received the consent and estoppels of all
persons required to consent to the transfer of Seller's interest
in the Leased Realty pursuant to this Agreement or the Lease
Assignment, including, without limitation, the consent of the
lessor of the Branch Office, and such consent shall include the
execution or assignment of any related contracts or leases with
or to Purchaser upon the same (or more beneficial) terms,
conditions, and prices as presently enjoyed by Seller.
ARTICLE VIII
------------
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligation of Seller to complete the transactions
contemplated in this Agreement are conditioned upon fulfillment,
on or before the Effective Time, of each of the following
conditions:
Section 8.1. Representations and Warranties True.
- ------------ ------------------------------------
The representations and warranties made by Purchaser in this
Agreement shall be true in all material respects at and as of
the Effective Time as though such representations and warranties
were made at and as of such time, except for any changes
permitted by the terms hereof or consented to by Seller.
Section 8.2. Obligations Performed.
- ------------ ----------------------
Purchaser shall (a) deliver or make available to Seller those
items required by Section 2.2 hereof and (b) perform and comply
in all material respects with all obligations and agreements
required by this Agreement to be performed or complied with by
it prior to or at the Effective Time.
Section 8.3. No Adverse Proceedings.
- ------------ -----------------------
As of the Effective Time, no actions, suits or other proceedings
shall be pending or threatened against Purchaser or Seller which
might materially and adversely affect the transactions
contemplated herein.
-23-
<PAGE>
Section 8.4. Regulatory Approvals.
- ------------ ---------------------
(a) Purchaser shall have received from the appropriate
regulatory authorities all regulatory approvals required by law
to purchase and assume the assets and liabilities, to establish
a branch at the location of the Branch Office, and to effect in
all other respects the transactions contemplated herein, all
waiting periods required by law to pass shall have passed, no
actions, suits, protests or other proceedings to enjoin,
restrain, prohibit or invalidate such transactions shall have
been instituted or threatened, and all conditions of any
regulatory approval shall have been met.
(b) Such approvals shall not have imposed any condition which is
materially disadvantageous or burdensome to Seller, would impose
any additional costs to Seller, or would delay the transactions
contemplated herein.
Section 8.5. Consent to Lease Assignment.
- ------------ ----------------------------
Seller shall have received the consent and estoppels of all
persons required to consent to the transfer of Seller's interest
in the Leased Realty pursuant to this Agreement or the Lease
Assignment, including, without limitation, the consent of the
lessor of the Branch Office, and such consent shall include the
execution or assignment of any related contracts or leases with
or to Purchaser upon the same (or more beneficial) terms,
conditions, and prices as presently enjoyed by Seller.
ARTICLE IX
----------
TERMINATION
-----------
Section 9.l. Methods of Termination.
- ------------ -----------------------
This Agreement may be terminated in any of the following ways:
(a) by either Purchaser or Seller, in writing 15 days in advance
of such termination, if the Closing has not occurred by
September 30, 1996;
(b) at any time on or prior to the Effective Time by the mutual
consent in writing of Purchaser and Seller;
(c) by Purchaser in writing if the conditions set forth in
Article VII of this Agreement shall not have been met by Seller
or waived in writing by Purchaser within 15 days following the
date of all approvals by regulatory agencies and after all
statutory waiting periods have expired, and in no event later
than September 30, 1996;
(d) by Seller in writing if the conditions set forth in Article
VIII of this Agreement shall not have been met by Purchaser or
-24-
<PAGE>
waived in writing by Seller within 15 days following the date of
all approvals by regulatory agencies and after all statutory
waiting periods have expired, and in no event later than
September 30, 1996;
(e) any time on or prior to the Effective Time, by Purchaser or
Seller in writing if the other shall have been in breach of any
representation and warranty in any material respect (as if such
representation and warranty had been made on and as of the date
hereof and on the date of the notice of breach referred to
below), or in breach of any covenant, undertaking or obligation
contained herein, and such breach has not been cured by the
earlier of 30 days after the giving of notice to the breaching
party of such breach or the Effective Time; provided, however,
that there shall be no cure period in connection with any breach
of Section 6.3 hereof, so long as any breach by Purchaser was
not caused by any action or inaction of Seller, and Seller may
terminate this Agreement immediately if regulatory applications
are not filed within 30 days after the date of this Agreement as
provided in that Section;
(f) by Seller in writing at any time after any applicable
regulatory authority has denied by final action any application
of Purchaser for approval of the transactions contemplated
herein, or in the event of any action, suit, protest or
proceeding (excluding any third-party protests that do not name
Seller or affect Seller's operations) that seeks to delay, limit
or prohibit the transactions contemplated herein;
(g) by Purchaser, if Seller fails to cure any Title Defects to
Purchaser's reasonable satisfaction pursuant to Sections 1.10(b)
and (c) hereof;
(h) by Purchaser, if Seller either refuses to give written
consent to the investigation of environmental matters requiring
Seller's consent under Section 1.10(d) hereof or refuses to cure
any material violation of law relating to the environment, as
set forth in Section 1.10(d) hereof;
(i) by Purchaser, in the event of a breach of the
representations and warranties in Section 4.6 hereof; or
(j) by Purchaser, in the event that the conditions set forth in
Sections 7.5 and 8.5 hereof have not been met within 15 calendar
days after the date hereof, and such failure has not been cured
within 30 calendar days after giving written notice to Seller of
such failure.
Section 9.2. Procedure Upon Termination.
- ------------ ---------------------------
In the event of termination pursuant to Section 9.1 hereof, and
except as otherwise stated therein, written notice thereof shall
be given to the other party, and this Agreement shall terminate
immediately upon receipt of such notice unless an extension is
consented to by the party having the right to terminate.
-25-
<PAGE>
If this Agreement is terminated as provided herein,
(a) each party will return all documents, work papers and other
materials of the other party, including photocopies or other
duplications thereof, relating to this transaction, whether
obtained before or after the execution hereof, to the party
furnishing the same; and
(b) all information received by either party hereto with respect
to the business of the other party (other than information which
is a matter of public knowledge or which has heretofore been
published in any publication for public distribution or filed as
public information with any governmental authority) shall not at
any time be used for any business purpose by such party or
disclosed by such party to third persons.
Section 9.3. Payment of Expenses.
- ------------ --------------------
Should the transactions contemplated herein not be consummated
because of a party's breach of this Agreement, in addition to
such damages as may be recoverable in law or equity, the other
party shall be entitled to recover from the breaching party upon
demand, itemization and documentation, its reasonable outside
legal, accounting, consulting and other out-of-pocket expenses.
ARTICLE X
---------
MISCELLANEOUS PROVISIONS
------------------------
Section 10.1. Amendment and Modification.
- ------------- ---------------------------
The parties hereto, by mutual consent of their duly authorized
officers, may amend, modify and supplement this Agreement in
such manner as may be agreed upon by them in writing.
Section 10.2. Waiver or Extension.
- ------------- --------------------
Except with respect to required approvals of the applicable
governmental authorities, either party, by written instrument
signed by a duly authorized officer, may extend the time for the
performance of any of the obligations or other acts of the other
party and may waive (a) any inaccuracies in the representations
and warranties contained herein or in any document delivered
pursuant hereto or (b) compliance with any of the undertakings,
obligations, covenants or other acts contained herein.
Section 10.3. Assignment.
- ------------- -----------
This Agreement and all of the provisions hereof shall be binding
upon, and shall inure to the benefit of, the parties hereto and
their permitted assigns, but neither this Agreement nor any of
-26-
<PAGE>
the rights, interests or obligations hereunder shall be assigned
by either of the parties hereto without the prior written
consent of the other.
Section 10.4. Confidentiality.
- ------------- ----------------
Seller and Purchaser covenant and agree that all information
received by either of them with respect to the business of the
other is subject to a Confidentiality Agreement, and shall not
at any time be used for any business purpose or disclosed by
such party to third persons. This covenant and the
Confidentiality Agreement shall survive in full force and effect
the consummation of the transactions contemplated herein or the
earlier termination of this Agreement.
Section 10.5. Addresses for Notices, Etc.
- ------------- ---------------------------
All notices, requests, demands, consents and other
communications provided for hereunder and under the related
documents shall be in writing and mailed (by registered or
certified mail, return receipt requested), telegraphed, telexed,
telecopied or personally delivered (with receipt thereof
acknowledged) to the applicable party at the address indicated
below, and shall be deemed to have been delivered as of the date
so delivered:
If to Seller: James H. Garner
President
First Bank
341 North Main Street
Troy, North Carolina 27371
Facsimile (910) 576-1070
If to Purchaser: Ronald D. Smith
President
Cabarrus Bank of North Carolina
71 McCachern Boulevard
Concord, North Carolina 28026
Facsimile (704) 788-7911
or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section 10.5.
Section 10.6. Counterparts.
- ------------- -------------
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
-27-
<PAGE>
Section 10.7. Headings.
- ------------- ---------
The headings of the Sections and Articles of this Agreement are
inserted for convenience only and shall not constitute a part
thereof.
Section 10.8. Governing Law.
- ------------- --------------
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of North Carolina.
Section 10.9. Expenses.
- ------------- ---------
Except as otherwise specifically provided in this Agreement, all
legal, accounting and other costs and expenses, including
attorneys' and other professional fees and charges incurred in
connection with the execution, delivery and performance of this
Agreement and of the transactions contemplated hereby shall be
borne and paid by the party incurring such costs and expenses,
and neither party shall be obligated for any cost or expense
incurred by the other party. Purchaser shall be responsible for
the costs of all title examinations and opinions, title
insurance fees (if the Purchaser, in its sole discretion, elects
to obtain title insurance), surveys, its own attorneys' and
accountants' fees and expenses, recording costs, transfer fees,
documentary stamps, and other expenses it incurs in connection
with its purchase of the Branch Office and the transactions
contemplated hereby.
Section 10.10. Time is of the Essence.
- -------------- -----------------------
The parties hereto acknowledge that time is of the essence with
respect to the performance of this Agreement, and the
consummation of the transactions contemplated herein.
Section 10.11. Cover, Index and Headings, Etc.
- -------------- -------------------------------
The cover, index and headings contained in this Agreement are
for convenience and reference only and shall not effect the
meaning or interpretation thereof. The use of the singular in
this Agreement shall be deemed to be or include the plural (and
vice-versa), as appropriate. Wherever the words "include,"
"including" or any derivations thereof are used, each shall mean
including without limitation by reason of any enumeration.
Section 10.12. Broker, Finder and Investment Banker Fees.
- -------------- ------------------------------------------
Purchaser and Seller each represent to each other that no
broker, finder, investment banker, or similar person has been
employed by or has acted for and in connection with this
Agreement of the transactions contemplated hereby, except as
provided in this paragraph. Each party agrees to indemnify and
hold harmless and defend the other against all losses, costs,
damages and expenses arising out of any claims or proceedings
-28-
<PAGE>
from fees or commissions of brokers, finders, investment bankers
or similar persons who claim to have been employed or engaged by
such party or entitled to compensation as a result of the
transactions contemplated herein.
Section 10.13. Severability.
- -------------- -------------
If any provision of this Agreement is invalid or unenforceable,
the balance of this Agreement shall remain in effect.
Section 10.14. No Third Party Beneficiaries.
- -------------- -----------------------------
Nothing in this Agreement, express or implied including Section
1.6, is intended to or shall be construed to confer upon or give
to any person not a party hereto any rights or remedies
hereunder, whether as a third party beneficiary or otherwise.
Section 10.15. Entire Agreement.
- -------------- -----------------
This Agreement and the exhibits and attachments hereto represent
the sole agreement between the parties hereto respecting the
matters addressed herein, and all prior or contemporaneous
written or oral proposals, agreements in principle,
representations, warranties and understandings between the
parties are superseded hereby and merged herein.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective duly
authorized officers as of the date first written above.
ATTEST FIRST BANK
By: /s/ Anna G. Hollers By: /s/ James H. Garner
-------------------- --------------------
Name: Anna G. Hollers James H. Garner
Title: Secretary President
[ SEAL OF ]
[FIRST BANK]
ATTEST CABARRUS BANK OF NORTH CAROLINA
By: /s/ Judy E. Hartis By: /s/ Ronald D. Smith
-------------------- --------------------
Name: Judy E. Hartis Ronald D. Smith
Title: Corporate Secretary President
[SEAL OF ]
[CABARRUS]
[BANK OF ]
[ NORTH ]
[CAROLINA]
-29-
<TABLE> <S> <C>
<PAGE>
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<PERIOD-TYPE> 3-MOS
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<PERIOD-END> MAR-31-1996
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0
0
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</TABLE>