<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 24, 1995
Southern National Corporation
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 1-10853 56-0939887
- ------------------------ ------------- --------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
500 North Chestnut Street, Lumberton, North Carolina 28358
- -------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (910) 773-7500
---------------------
<PAGE>
Item 5. Other Events
The purpose of this Current Report on Form 8-K is to file as Exhibit 99
hereto the financial statements of Commerce Bank for the period ended September
30, 1994. This exhibit was prepared by Commerce Bank, was not prepared by
Registrant, and is not to be considered as being filed as part of the
Registrant's disclosure obligations under the Securities Exchange Act of 1934,
as amended.
Such document will be incorporated by reference into future registration
statements of the Registrant.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99 Financial Statements of Commerce Bank for the Quarter Ended
September 30, 1994
-2-
<PAGE>
SIGNATURE
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.
SOUTHERN NATIONAL CORPORATION
(Registrant)
Date: February 24, 1995 By: /s/ David L. Craven
Name: David L. Craven
Title: Secretary
-3-
<PAGE>
EXHIBIT INDEX
Exhibit Number and Description
- ------------------------------
99 Financial statements of Commerce Bank for the Quarter Ended September
30, 1994
-4-
<PAGE>
Exhibit 99
ITEM 1: FINANCIAL STATEMENTS
COMMERCE BANK
BALANCE SHEET
(Unaudited)
(In thousands, except common stock data)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 30,059 $ 32,599 $ 25,800
Temporary investments 15,090 5,260 13,431
Securities:
Held to maturity (Market value September 30, 1994 - $87,230
1993 - $253,534, December 31, 1993 - $251,596) 89,744 246,303 247,175
Available for sale (Market value $114,082) 111,894 - -
-------- -------- --------
Total Securities 201,638 246,303 247,175
Loans:
Commercial 197,358 153,901 185,409
Consumer 108,501 100,196 102,611
Real estate mortgage 101,836 97,299 68,850
Real estate construction & development 16,415 18,086 17,074
Tax-exempt 5,290 6,528 6,477
Less: Unearned income and deferred fees (1,220) (3,120) (2,163)
-------- -------- --------
Loans, net of unearned income and deferred fees 429,180 272,870 376,258
Less: Allowance for loan losses (7,458) (6,965) (6,527)
-------- -------- --------
Loans, net 421,712 365,885 371,731
Bank properties and equipment, net 19,083 17,816 18,384
Foreclosed property 2,751 3,646 2,080
Other assets 10,572 10,376 10,029
-------- -------- --------
Total assets $ 700,905 $ 681,896 $ 659,630
- -------------------------------------------------------------------------------------------------------------------------------
Liabilities
Deposits:
Noninterest bearing demand $ 108,008 $ 113,988 $ 103,197
Interest bearing demand 74,038 59,543 72,221
Money market savings 236,666 219,483 227,751
Certificate of deposit less than $100,000 155,181 172,653 164,122
Regular savings 32,799 34,685 28,389
Certificate of deposit greater than $100,000 36,123 29,340 38,481
-------- -------- --------
Total deposits 643,005 629,692 634,141
Short-term borrowings - 175 1,400
Long-term debt 6,772 6,847 6,828
Other liabilities 3,765 3,266 3,872
-------- -------- --------
Total liabilities 653,542 639,979 646,041
-------- -------- --------
Shareholders' Equity
Common stock, $2.50 par: 10,000,000 shares authorized:
2,734,652, 2,544,254, and 2,666,792 issued and outstanding 6,837 6,361 6,717
Capital surplus 30,070 25,925 20,062
Retained earnings 11,886 9,651 7,810
Unrealized loss on marketable equity securities - (20) -
Net unrealized loss on securities available for sale (1,430) - -
-------- -------- --------
Total shareholders' equity 47,363 41,917 43,589
-------- -------- --------
Total liabilities and shareholders' equity $ 700,905 $ 681,896 $ 689,630
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
1
<PAGE>
COMMERCE BANK
STATEMENT OF INCOME
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest Income
Loans, including fees $ 9,193 $ 7,882 $ 25,897 $ 22,884
Securities held to maturity and
available for sale 3,222 3,841 10,107 11,918
Temporary investments 177 234 520 557
-------- -------- -------- --------
Total interest income 12,592 11,957 36,524 35,359
Interest Expense
Deposits 5,091 5,020 14,693 15,331
Short-term borrowings - 7 30 16
Long-term debt 166 165 497 469
-------- -------- -------- --------
Total interest expense 5,257 5,192 15,220 15,816
-------- -------- -------- --------
Net interest income 7,335 6,765 21,304 19,543
Provision for loan losses 600 700 1,800 2,225
-------- -------- -------- --------
Net interest income After
Provision For Loan Losses 6,735 6,065 19,504 17,318
Noninterest Income
Service charges on deposit accounts 1,007 890 2,967 2,485
Mortgage brokerage income 247 859 1,228 2,227
Credit card merchant fees 304 251 775 653
Securities (losses) gains (28) 1,268 41 1,354
Trust income 162 164 504 479
Other income 372 461 1,311 1,058
-------- -------- -------- --------
Total noninterest income 2,064 3,893 6,826 8,258
Noninterest Expenses
Salaries and benefits 2,755 2,717 8,448 7,928
Occupancy of bank premises 726 632 2,079 1,806
Furniture and equipment 472 484 1,351 1,295
Other expenses 2,179 2,998 6,479 6,682
-------- -------- -------- --------
Total noninterest expenses 6,131 6,831 18,357 17,711
-------- -------- -------- --------
Income Before Income Taxes 2,568 3,127 7,973 7,863
Provision for income taxes 821 1,415 2,524 3,003
-------- -------- -------- --------
Net Income $ 1,847 $ 1,712 $ 5,449 $ 4,860
- ----------------------------------------------------------------------------------------------
Net Income Per Share
Primary $ 0.64 $ 0.52 $ 1.93 $ 1.77
Fully diluted 0.62 0.50 1.85 1.70
Weighted Average Shares Outstanding
Primary 2,854 2,758 2,819 2,735
Fully diluted 3,117 3,022 3,084 3,001
- ----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
2
<PAGE>
COMMERCE BANK
STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended September 30, 1994 1993
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 5,449 $ 4,860
Adjustments to reconcile net income to
cash provided by operating activities:
Provision for loan losses 1,800 2,225
Depreciation and amortization of premises and equipment 1,390 1,247
Net amortization of premiums and accretion of discounts 517 539
Amortization of intangible assets 203 1,151
Gain on sale of securities available for sale (41) -
Gain on sale of securities held to maturity - (1,354)
(Increase) decrease in deferred income tax benefits (880) 6
(Decrease) increase in interest receivable 23 (325)
(Increase) Decrease in interest payable (106) 181
(Increase) Decrease in other liabilities 36 (344)
Decrease in other assets 420 1,480
---------- ----------
Net cash provided by operating activities: 8,831 8,666
---------- ----------
Cash Flows From Investing Activities:
Securities held to maturity:
Proceeds from maturities, calls and prepayments - 23,474
Proceeds from sales - 44,495
Purchases (24,913) (74,777)
Securities available for sale:
Proceeds from maturities, calls and prepayments 35,352 -
Proceeds from sales 33,192 -
Net decrease (increase) in temporary investments (1,659) (7,231)
Purchases of premises and equipment (2,068) (2,319)
Net sale (repurchase) of loan participations 5,219 (813)
Net increase in loans (57,000) (33,656)
---------- ----------
Net cash used in investing activities (11,898) (36,364)
---------- ----------
Cash Flows From Financing Activities:
Net increases in deposit accounts 8,864 31,708
Proceeds from issuance of common stock 1,118 557
Net decrease in short-term borrowing (1,400) 388
Principal payments on capital lease obligations (58) (64)
Cash dividends paid (1,200) (748)
---------- ----------
Net cash provided by financing activities 7,326 31,065
---------- ----------
Net (decrease) increase in cash and due from banks 4,259 4,367
Cash and due from banks at beginning of period 25,500 28,232
---------- ----------
Cash and due from banks at end of period $ 30,069 $ 32,599
- ------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period:
Interest $ 15,114 $ 15,635
Income taxes 2,939 3,386
Noncash financing and investing activities:
Capital lease obligation - 1,285
- ------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
COMMERCE BANK
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Unrealized
Loss on
Common Stock Marketable
------------------- Capital Retained Equity
Shares Amount Surplus Earnings Security Total
-------- -------- --------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Nine months ended September 30, 1993
Balance at January 1, 1993 2,511 $ 8,278 $ 25,460 $ 5,705 $ (30) $ 27,413
Net income - - - 4,860 - 4,860
Issuance of common stock 33 83 465 - - 548
Change in valuation allowance for
marketable equity security - - - - 10 10
Cash dividends declared - - - (914) - (914)
------ ------- -------- ------- --------- --------
Balance at September 30, 1993 2,544 $ 8,361 $ 25,925 $ 9,651 $ (20) $ 41,917
------ ------- -------- ------- --------- --------
Nine months ended September 30, 1994
Balance at January 1, 1994 2,687 $ 6,717 $ 29,062 $ 7,810 $ - $ 43,589
Adjustment to beginning balance for change in
accounting method for net unrealized gain on
securities available for sale, net of tax of $1,253,000 - - - 2,327 - 2,327
Net income - - - 5,449 - 5,449
Issuance of common stock 48 120 1,008 - - 1,128
Changes in net unrealized loss on securities
available for sale, net of tax effect - - - (3,767) - (3,767)
Cash dividends declared - - - (1,363) - (1,363)
------ ------- -------- ------- --------- --------
Balance at September 30, 1994 2,735 $ 6,837 $ 30,070 $10,456 $ - $ 47,363
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
COMMERCE BANK
Form F-4
September 30, 1994
Notes to Financial Statements
- -----------------------------
Note 1. General
-------
The financial statements in this report have not been audited. In the
opinion of management, all adjustments necessary for a fair presentation of the
financial position and results of operations for the interim periods have been
made. All such adjustments are of a normal recurring nature. These statements
should be read in conjunction with the 1993 annual report on Form F-2 and the
1994 reports on Form F-4. Results of operations for the nine months ended
September 30, 1994 are not necessarily indicative of the results of operations
for the full year or any other interim periods.
Note 2. Merger with BB&T Financial Corporation
--------------------------------------
Commerce Bank ("Commerce") entered into an Agreement and Plan of
Reorganization, dated as of June 24, 1994 (the "Agreement"), with BB&T Financial
Corporation, a bank holding company headquartered in Wilson, North Carolina
("BB&T"). The Agreement provides for the merger of Commerce with and into a
subsidiary of BB&T.
As an inducement for BB&T to enter into Agreement, Commerce entered into a
Stock Option Agreement, dated as of June 24, 1994 (the "Option Agreement"),
whereby it granted BB&T an irrevocable option (the "Option") to purchase up to
that number of shares of Commerce's common stock (the "Option Shares") as would
equal 19.9% of the aggregate shares of Commerce common stock that would be
outstanding immediately after the issuance of the Option Shares upon full
exercise of the Option, at a price of $31.50 per Option Share. The Option is
exercisable, in whole or in part, at any time and from time to time for a
designated period of time following the occurrence of a "Purchase Event" (as
defined in the Option Agreement).
Note 3. Commitments
-----------
At September 30, 1994, the amount of off-balance sheet commitments to
extend credit were $73.1 million and standby letters of credit and financial
guarantees were $5.78 million.
5
<PAGE>
COMMERCE BANK
Form F-4
September 30, 1994
Note 4. Accounting Change
-----------------
Effective January 1, 1994, Commerce adopted Statement of Financial
Accounting Standard No. 115 ("SFAS 115") "Accounting for Certain Investments in
Debt and Equity Securities". In accordance with SFAS 115, prior period
financial statements have not been restated to reflect the change in accounting
principle. SFAS 115 requires that certain securities be classified into one of
three categories: held to maturity, available for sale, or trading based on
management's ability and intent at time of purchase. Securities classified as
held to maturity are carried at their amortized cost; securities classified as
available for sale are carried at their fair values with the amount of
unrealized gains or losses, net of income taxes, reported as a separate
component of shareholders' equity; and securities classified as trading are
carried at their fair value with the unrealized gains or losses included in
earnings.
As a result of the adoption of SFAS 115, on January 1, 1994, Commerce
classified securities with a fair value of approximately $155 million as
securities available for sale. The opening balance of shareholders' equity was
increased by $2.32 million relating to net unrealized gain on securities
available for sale of $3.58 million, less applicable income taxes of $1.25
million. Prior to the adoption of SFAS 115, securities deemed available for
sale were carried at the lower of aggregate amortized cost or market value.
Note 5. Earnings Per Share
------------------
Primary earnings per share are calculated on the basis of the weighted
average number of shares outstanding during the period after giving retroactive
effect to the 5% stock dividends declared in 1993 and 1992. Dilutive stock
options have been converted to common stock equivalents for the calculation of
weighted average shares outstanding based upon the average market price of
Commerce's common stock. Fully diluted earnings per share assumes the
conversion of outstanding convertible subordinated capital notes and elimination
of interest paid thereon, after tax effect, and the exercise of dilutive stock
options, as of the beginning of each period. The dilutive effect of outstanding
options and convertible subordinated debt is computed using the greater of the
closing price or the average market price of Commerce's stock. The computation
of earnings per share is provided on the following page.
6
<PAGE>
Earnings per share were determined as follows:
(In thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary
Average common shares outstanding 2,731 2,665 2,713 2,655
Dilutive common stock options assumed exercised 123 93 106 80
- ---------------------------------------------------------------------------------------------------
Average primary shares outstanding 2,854 2,758 2,819 2,735
- ---------------------------------------------------------------------------------------------------
Net Income $1,847 $1,712 $5,449 $4,860
Per Share Amount .64 .52 1.93 1.77
- ---------------------------------------------------------------------------------------------------
Fully diluted
Average common shares outstanding 2,731 2,665 2,713 2,655
Dilutive common stock options 123 94 103 83
Dilutive convertible subordinated capital
notes assumed converted 263 263 263 263
- ---------------------------------------------------------------------------------------------------
Average fully diluted shares outstanding 3,117 3,022 3,084 3,001
- ---------------------------------------------------------------------------------------------------
Net Income $1,847 $1,712 $5,449 $4,860
Add interest on convertible subordinated
capital notes, after taxes 81 81 243 243
- ---------------------------------------------------------------------------------------------------
Adjusted net income $1,928 $1,793 $5,692 $5,103
- ---------------------------------------------------------------------------------------------------
Per share amount $.62 $.60 $1.85 $1.70
- ---------------------------------------------------------------------------------------------------
</TABLE>
Note 6. Non-recurring Charge
--------------------
During the third quarter of 1993, Commerce recorded a special non-recurring,
noncash charge to earnings of $910,000 for the write down of the excess cost
over the fair value of tangible and identified intangible assets of deposits
acquired on September 15, 1990. The adjustment better aligns management's
estimate of the unidentified intangible asset value, given changes in operating
strategy and market and economic conditions. At September 30, 1994 Commerce had
unamortized intangible assets of $821,000.
7
<PAGE>
COMMERCE BANK FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share date)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, (Decrease) September 30, (Decrease)
1994 1993 Increase 1994 1993 Increase
--------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Net interest income $ 7,335 $ 6,765 8.4% $ 21,304 $ 19,543 9.0%
Net income 1,847 $ 1,712 7.9% $ 5,449 $ 4,860 12.1
- ---------------------------------------------------------------------------------------------------
Per Share Data:
Net income:
Primary $ 0.64 $ 0.62 3.2% $ 1.93 $ 1.77 9.0%
Fully diluted 0.62 0.60 3.3 1.85 1.70 8.8
Book value at period and - - 17.32 16.48 5.1
Cash dividends 0.20 0.14 42.9 0.50 0.36 38.9
- ---------------------------------------------------------------------------------------------------
Selected Financial Ratios:
Return on average asset 1.06% 1.02% 1.06% 1.00%
Return on average equity 15.59 16.25 15.61 16.22
Net interest spread 3.92 3.78 3.90 3.79
Net interest margin 4.54 4.36 4.48 4.36
Net overhead ratio 2.50 2.12 2.43 2.21
Average loans/average deposits 65.72 58.88 63.65 57.81
- ---------------------------------------------------------------------------------------------------
Daily Averages:
Assets $ 692,081 $ 665,211 4.0% $ 687,861 $ 649,120 6.0%
Earning assets 640,267 615,549 4.0 636,079 699,973 6.0
Loans, net of unearned income 417,872 364,239 16.0 400,870 340,259 17.8
Investment securities 208,964 240,369 (13.1) 221,779 242,366 (8.5)
Deposits 636,839 612,224 3.9 629,651 598,126 5.3
Shareholders' equity 46,985 41,796 12.4 46,653 40,047 16.5
Primary shares outstanding 2,864 2,758 3.5 2,819 2,735 3.1
Fully diluted shares outstanding 3,117 3,022 3.1 3,084 3,001 2.8
- ---------------------------------------------------------------------------------------------------
At Period End:
Assets $ 699,610 $ 681,896 2.6%
Earning assets 644,842 624,443 3.3
Loans, net of unearned income 426,114 372,870 14.8
Investment securities 201,638 246,303 (18.1)
Deposits 643,005 629,692 2.1
Shareholders' equity 47,363 41,917 13.0
Allowance for loan losses 7,468 6,955 6.9
Nonperforming assets 6,892 4,126 42.8
- ---------------------------------------------------------------------------------------------------
Risk-Based Capital Ratios:
Tier 1 10.51% 10.02%
Total 12.85 12.50
Tier 1 Average 6.77 6.30
Total risk weighted assets $ 467,877 $ 407,517
- ---------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
COMMERCE BANK
Selected Quarterly Financial Data
(Dollars in thousands, except per share date)
<TABLE>
<CAPTION>
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
1994 1994 1994 1993 1993
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Results of operations:
Interest income $ 12,592 $ 12,182 $ 11,750 $ 11,888 $ 11,957
Interest expense 5,257 5,032 4,931 5,167 5,192
- -------------------------------------------------------------------------------------------------
Net interest income 7,335 7,150 6,819 6,721 6,765
Provision for loan losses 600 600 600 600 700
- -------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 6,735 6,550 6,219 6,121 6,065
Noninterest income 2,092 2,358 2,335 2,346 2,625
Securities (losses) gains (28) 10 59 53 1,268
Noninterest expense (1) 6,131 6,262 5,964 5,995 6,831
- -------------------------------------------------------------------------------------------------
Income before income taxes 2,668 2,656 2,649 2,525 3,127
Provision for income taxes 821 815 888 834 1,415
- -------------------------------------------------------------------------------------------------
Net income $ 1,847 $ 1,841 $ 1,761 $ 1,691 $ 1,712
=================================================================================================
Per Share Data:
Net Income:
Primary $ 0.64 $ 0.66 $ 0.63 $ 0.61 $ 0.62
Fully diluted 0.62 0.63 0.60 0.58 0.60
Book value at period end 17.32 17.10 17.09 16.22 16.48
Cash dividends 0.20 0.15 0.15 0.15 0.14
Common stock price:(2)
High 39.50 39.00 27.50 25.50 25.50
Low 36.00 24.50 25.50 23.00 22.75
Close 37.13 39.00 26.50 24.00 23.75
=================================================================================================
Average Balance Sheet Data
Assets:
Loans, net of unearned income $ 417,872 $ 400,133 $ 384,233 $ 369,232 $ 354,239
Investment Securities 208,964 221,782 234,876 245,039 240,369
Temporary Investments 13,431 14,030 12,821 12,356 20,941
- -------------------------------------------------------------------------------------------------
Total earning assets 640,267 635,945 631,930 626,718 615,549
Allowance for loan losses (7,242) (6,912) (6,809) (6,844) (6,713)
Other Assets 59,056 59,251 57,998 58,637 56,375
Total Assets $ 692,081 $ 688,284 $ 683,119 $ 678,511 $ 665,211
=================================================================================================
Liabilities and Shareholders'
Equity:
Interest bearing deposits $ 531,206 $ 532,136 $ 528,279 $ 529,081 $ 516,719
Short-term borrowings - 77 3,623 1,337 818
Long-term borrowings 6.781 6,799 6,818 6,837 6,856
- -------------------------------------------------------------------------------------------------
Total interest bearing liabilities 537,987 539,012 538,720 537,255 524,393
Non interest bearing liabilities 107,109 103,127 93,081 98,291 99,022
Equity 46,385 46,145 46,828 42,965 41,796
- -------------------------------------------------------------------------------------------------
Total liabilities and equity $ 692,081 $ 688,284 $ 683,119 $ 678,511 $ 665,211
=================================================================================================
Financial Ratios:
Return on average assets 1.06% 1.07% 1.05% 0.99% 1.02%
Return on average equity 15.59 16.00 15.25 15.61 16.25
Net interest margin 4.54 4.51 4.38 4.28 4.36
=================================================================================================
</TABLE>
(1) The third quarter of 1993 included a non-recurring, noncash adjustment of
$910,000 for the write down of an intangible asset.
(2) As reported by NASDAQ
9
