<PAGE>
As Filed with the Securities and Exchange Commission on May 24, 1999
Registration No. 333-78819
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
BB&T CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 6060 56-0939887
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code Number) Identification Number)
of incorporation or
organization)
----------------
200 West Second Street
Winston-Salem, North Carolina 27101
(336) 733-2000
(Address, including Zip Code, and telephone number, including
area code, of registrant's principal executive offices)
Jerone C. Herring, Esq.
200 West Second Street, 3rd Floor
Winston-Salem, North Carolina 27101
(336) 733-2180
(Name, address, including Zip Code, and telephone number,
including area code, of agent for service)
----------------
The Commission is requested to send copies of
all communications to:
Peter A. Zorn Walter G. Moeling, IV
Womble Carlyle Sandridge & Rice, PLLC Powell, Goldstein, Frazer & Murphy LLP
200 West Second Street, 17th Floor 191 Peachtree Street, N.E., Sixteenth
Winston-Salem, North Carolina 27101 Floor
Atlanta, Georgia 30303
----------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
----------------
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>
FIRST CITIZENS CORPORATION
19 Jefferson Street
Newnan, Georgia 30263
----------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 30, 1999
----------------------------------------------
TO THE SHAREHOLDERS OF FIRST CITIZENS CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of First Citizens Corporation, a Georgia corporation ("First
Citizens"), will be held in the Municipal Auditorium of the City of Newnan,
located at 25 Jefferson Street, Newnan, Georgia, on Wednesday, June 30, 1999
at 10:00 a.m. Eastern Time, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and Plan
of Reorganization, dated as of January 26, 1999 (the "Merger
Agreement"), between First Citizens and BB&T Corporation, a North
Carolina corporation ("BB&T"), and a related plan of merger, pursuant to
which First Citizens will merge with and into BB&T (the "Merger") and
each share of common stock of First Citizens then outstanding will be
converted into the right to receive 1.0789 shares of common stock of
BB&T, plus cash in lieu of any fractional share interest. A copy of the
Merger Agreement and the plan of merger set forth therein is attached to
the accompanying proxy statement/prospectus as Appendix A.
2. To transact such other business as may be properly brought before the
Meeting or at any and all adjournments or postponements thereof.
Shareholders of First Citizens of record at the close of business on May 17,
1999 are entitled to notice of and to vote at the Meeting. You are cordially
invited to attend the Meeting in person; however, whether or not you plan to
attend, we urge you to complete, date and sign the accompanying proxy card and
to return it promptly in the enclosed postage prepaid envelope.
BY ORDER OF THE BOARD OF DIRECTORS
Douglas J. Hertha
Secretary
Newnan, Georgia
June 2, 1999
Please complete, sign, date and return the enclosed proxy card promptly
whether or not you plan to be present at the Meeting. Failure to return a
properly executed proxy or to vote at the Meeting will have the same effect as
a vote against the Merger Agreement and the plan of merger. Please do not send
in any certificates for your shares at this time.
<PAGE>
(LOGO OF FIRST CITIZENS APPEARS HERE)
SPECIAL MEETING OF SHAREHOLDERS
MERGER PROPOSAL--YOUR VOTE IS VERY IMPORTANT
The Board of Directors of First Citizens Corporation has unanimously
approved a merger combining First Citizens and BB&T Corporation. In the
merger, First Citizens shareholders will receive 1.0789 shares of BB&T common
stock for each share of First Citizens common stock and generally will not
recognize federal income tax gain or loss for the BB&T common stock they
receive. The merger will join First Citizens' strengths as a community banking
system covering the south metropolitan Atlanta area with BB&T's position as a
leading bank throughout the Carolinas, Virginia, the District of Columbia and
parts of Maryland, enabling the combined company to offer First Citizens'
customers a broad range of financial products and services.
At the Special Meeting, you will consider and vote on the merger agreement.
The merger cannot be completed unless holders of at least a majority of First
Citizens common stock approve it. The Board of Directors believes the merger
is in the best interests of First Citizens shareholders and unanimously
recommends that shareholders vote to approve the merger agreement. No vote of
BB&T shareholders is required to approve the merger agreement.
On May 17, 1999, the closing price of BB&T common stock was $38.06, making
the value of 1.0789 shares of BB&T common stock (which is what First Citizens
shareholders will receive for each share of First Citizens common stock) equal
to $41.06. The closing price of First Citizens common stock on that date was
$40.00. These prices will, however, fluctuate between now and the merger.
The date, time and place of the meeting are:
June 30, 1999
10:00 a.m.
Municipal Auditorium of the
City of Newnan
25 Jefferson Street
Newnan, Georgia
This proxy statement/prospectus provides you with detailed information about
the proposed merger. We encourage you to read this entire document carefully.
You can also obtain other information about First Citizens and BB&T from
documents filed with the Securities and Exchange Commission.
Whether or not you plan to attend the meeting, if you are a holder of First
Citizens common stock please take the time to vote by completing and mailing
the enclosed proxy card to us. If you fail to return your card or vote in
person, the effect will be a vote against approval of the merger agreement.
Your vote is very important. You can revoke your proxy by writing to First
Citizens' Secretary any time before the meeting or by attending the meeting
and voting in person.
On behalf of the Board of Directors of First Citizens, we urge you to vote
"FOR" approval and adoption of the merger agreement.
J. Littleton Glover, Jr.
Chairman of the Board of Directors
Tom Moat
President and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
regulators have approved the BB&T common stock to be issued in the merger or
determined if this proxy statement/prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated May 24, 1999 and is expected to be
first mailed to shareholders of First Citizens on or about June 2, 1999.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A WARNING ABOUT FORWARD-LOOKING INFORMATION................................ iv
SUMMARY.................................................................... 1
MEETING OF SHAREHOLDERS.................................................... 8
General.................................................................. 8
Record Date, Voting Rights and Vote Required............................. 8
Voting and Revocation of Proxies......................................... 8
Solicitation of Proxies.................................................. 9
Recommendation of the First Citizens Board............................... 9
THE MERGER................................................................. 10
General.................................................................. 10
Background of and Reasons for the Merger................................. 10
Opinion of Financial Advisor to First Citizens........................... 12
Exchange Ratio........................................................... 17
Exchange of First Citizens Common Stock Certificates..................... 19
The Merger Agreement..................................................... 20
Interests of Certain Persons in the Merger............................... 25
Regulatory Considerations................................................ 27
Material Federal Income Tax Consequences of the Merger................... 29
Accounting Treatment..................................................... 30
The Option Agreement..................................................... 30
Effect on Employees, Employee Benefit Plans and Stock Options............ 33
Restrictions on Resales by Affiliates.................................... 35
INFORMATION ABOUT BB&T..................................................... 35
General.................................................................. 35
Operating Subsidiaries................................................... 35
Acquisitions............................................................. 36
Capital.................................................................. 38
Deposit Insurance Assessments............................................ 38
INFORMATION ABOUT FIRST CITIZENS........................................... 39
DESCRIPTION OF BB&T CAPITAL STOCK.......................................... 39
General.................................................................. 39
BB&T Common Stock........................................................ 40
BB&T Preferred Stock..................................................... 40
Shareholder Rights Plan.................................................. 40
Certain Provisions of the NCBCA, BB&T Articles and BB&T Bylaws........... 42
COMPARISON OF SHAREHOLDERS' RIGHTS......................................... 43
Authorized Capital Stock................................................. 43
Special Meetings of Shareholders and Action by Shareholders without a
Meeting................................................................. 44
Directors................................................................ 44
Dividends and Other Distributions........................................ 44
Notice of Shareholder Nominations and Shareholder Proposals.............. 45
Exculpation and Indemnification.......................................... 45
Mergers, Share Exchanges and Sales of Assets............................. 46
Anti-takeover Statutes................................................... 46
Amendments to Articles of Incorporation and Bylaws....................... 47
Shareholders' Rights of Dissent and Appraisal............................ 48
Liquidation Rights....................................................... 49
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SHAREHOLDER PROPOSALS....................................................... 50
OTHER BUSINESS.............................................................. 50
LEGAL MATTERS............................................................... 50
EXPERTS..................................................................... 50
WHERE YOU CAN FIND MORE INFORMATION......................................... 50
Appendix A--Agreement and Plan of Reorganization and Plan of Merger
Appendix B--Opinion of Morgan Keegan & Company, Inc.
</TABLE>
iii
<PAGE>
A WARNING ABOUT FORWARD-LOOKING INFORMATION
BB&T and First Citizens have each made forward-looking statements in this
document and in certain documents that we refer to in this document that are
subject to risks and uncertainties. These statements are based on the beliefs
and assumptions of the management of BB&T and First Citizens, and on
information currently available to them or, in the case of information that
appears under the heading "The Merger--BB&T's Reasons for the Merger" at page
10, information that was available to management of BB&T as of the date of the
merger agreement. Forward-looking statements include the information
concerning possible or assumed future results of operations of BB&T or First
Citizens set forth under "Summary," "The Merger--Background of, and Reasons
for, the Merger" and "The Merger--BB&T's Reasons for the Merger" and
statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "intends," "plans," "estimates" or similar
expressions.
We have made statements in this document regarding estimated earnings per
share of BB&T and First Citizens on a stand alone basis, expected cost savings
from the merger, estimated restructuring charges relating to the merger,
estimated increases in First Citizens' fee income ratio and net interest
margin, the anticipated accretive effect of the merger and BB&T's anticipated
performance in future periods. With respect to estimated cost savings and
restructuring charges, BB&T has made assumptions about, among other things,
the extent of operational overlap between BB&T and First Citizens, the amount
of general and administrative expense consolidation, costs relating to
converting First Citizens' bank operations and data processing to BB&T's
systems, the size of anticipated reductions in fixed labor costs, the amount
of severance expenses, the extent of the charges that may be necessary to
align the companies' respective accounting reserve policies, and the costs
related to the merger. The realization of cost savings and the amount of
restructuring charges are subject to the risk that the foregoing assumptions
are inaccurate, and actual results may be materially different from those
expressed or implied by the forward-looking statements.
Moreover, any statements in this document about the anticipated accretive
effect of the merger and BB&T's anticipated performance in future periods are
subject to risks relating to, among other things, the following:
1. expected cost savings from the merger or other previously announced
mergers may not be fully realized or realized within the expected time-
frame;
2. deposit attrition, customer loss or revenue loss following the merger or
other previously announced mergers may be greater than expected;
3. competitive pressures among depository and other financial institutions
may increase significantly;
4. costs or difficulties related to the integration of the businesses of
BB&T and its merger partners, including First Citizens, may be greater
than expected;
5. changes in the interest rate environment may reduce margins;
6. general economic or business conditions, either nationally or in the
states or regions in which BB&T and First Citizens do business, may be
less favorable than expected, resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit;
7. legislative or regulatory changes, including changes in accounting
standards, may adversely affect the businesses in which BB&T and First
Citizens are engaged;
8. adverse changes may occur in the securities markets; and
9. competitors of BB&T and First Citizens may have greater financial
resources and develop products that enable those competitors to compete
more successfully than BB&T and First Citizens.
Management of each of BB&T and First Citizens believes the forward-looking
statements about its company are reasonable; however, shareholders of First
Citizens should not place undue reliance on them. Forward-looking statements
are not guarantees of performance. They involve risks, uncertainties and
assumptions. The future results and shareholder values of BB&T following
completion of the merger may differ materially from those expressed or implied
in these forward-looking statements. Many of the factors that will determine
these results and values are beyond BB&T's and First Citizens' ability to
control or predict.
iv
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should read carefully this
entire document and the documents to which we refer you. See "Where You Can
Find More Information" on page 50.
Exchange Ratio to be 1.0789 Shares of BB&T Common Stock for each First Citizens
Share (Page 17)
If the merger is completed, you will receive 1.0789 shares of BB&T common
stock for each share of First Citizens stock you own, plus cash instead of any
fractional share. On May 17, 1999, the closing price of BB&T common stock was
$38.06, making the value of 1.0789 shares of BB&T common stock (which is what
First Citizens shareholders will receive for each share of First Citizens
common stock) equal to $41.06. Because the market price of BB&T stock
fluctuates, you will not know when you vote what the shares will be worth when
issued in the merger.
If the price of BB&T common stock is below $32.67 just before the merger and
the stock prices of certain other bank holding companies have not experienced
similar relative declines since the time that the companies agreed to merge,
First Citizens may terminate the merger agreement. If this were to happen, BB&T
could choose to proceed with the merger by increasing the consideration that
you would receive in the merger so that you would receive BB&T common stock
valued, shortly before the merger, at $35.25 for each share of First Citizens
common stock.
No Federal Income Tax on Shares Received in Merger (Page 29)
First Citizens shareholders generally will not recognize gain or loss for
federal income tax purposes for the shares of BB&T common stock they receive in
the merger. BB&T's attorneys have issued a legal opinion to this effect, which
we have included as an exhibit to the registration statement filed with the SEC
for the shares to be issued in the merger. First Citizens shareholders will be
taxed on cash received instead of any fractional share of BB&T common stock.
Tax matters are complicated, and tax results may vary among shareholders.We
urge you to contact your own tax advisor to understand fully how the merger
will affect you.
BB&T Dividend Policy Following the Merger
BB&T currently pays quarterly dividends of $.175 per share of common stock.
BB&T expects that it will continue to pay at least this amount in quarterly
dividends, but may change that policy based on business conditions, BB&T's
financial condition and earnings or other factors.
First Citizens Board Recommends Shareholder Approval (Page 9)
The First Citizens Board believes that the merger is in the best interests of
First Citizens shareholders and unanimously recommends that the shareholders
vote "FOR" approval of the merger agreement. The First Citizens Board believes
that, as a result of the merger, First Citizens shareholders will have less
financial risk and will experience greater stock value appreciation than they
would if First Citizens remained independent.
Exchange Ratio Fair to Shareholders According to First Citizens' Financial
Advisor (Page 12)
Morgan Keegan & Company, Inc. has given an opinion to the First Citizens
Board that, as of the date of this proxy statement/prospectus, the exchange
ratio in the merger is fair from a financial point of view to First Citizens
shareholders. The full text of this opinion is attached as Appendix B to this
proxy statement/prospectus. We encourage you to read the opinion carefully.
First Citizens has paid Morgan Keegan a retainer fee of $7,500 per quarter and
an initial advisory and opinion fee of $75,000 and has agreed to pay a final
advisory and opinion fee equal to 1.0% of the overall deal value, which amount
includes the retainer fee and the initial advisory and opinion fees.
Meeting to be held June 30, 1999 (Page 8)
First Citizens will hold the special shareholders' meeting at 10:00 a.m. on
Wednesday, June 30, 1999 at the Municipal Auditorium of the City of Newnan in
Newnan, Georgia. At the meeting, you will vote on
1
<PAGE>
the merger agreement. You will also conduct any other business that properly
arises.
The Companies (Page 35)
BB&T Corporation
200 West Second Street
Winston-Salem, NC 27101
(336) 733-2000
BB&T Corporation is a multi-bank holding company with more than $37.8 billion
in assets. It is the sixth largest bank holding company in the Southeast, and
through its banking subsidiaries operates 581 branch offices in the Carolinas,
Virginia, Maryland and Washington, D.C. BB&T ranks second in deposit market
share in North Carolina and third in South Carolina and maintains a significant
market presence in much of Virginia, as well as in Maryland and in Washington,
D.C.
First Citizens Corporation
19 Jefferson Street
Newnan, GA 30263
(770) 253-5017
First Citizens Corporation is the holding company for two subsidiary
financial institutions with approximately $410 million in assets and 13 branch
offices in the south metropolitan Atlanta area.
The Merger (Page 10)
In the merger, First Citizens will merge into BB&T, and First Citizens'
banking subsidiaries, through which it operates, will become wholly owned
subsidiaries of BB&T. In addition, First Citizens' indirect subsidiaries,
through which it offers mortgage banking and real estate appraisal services,
will become indirect subsidiaries of BB&T. The merger requires the approval of
the holders of at least a majority of the First Citizens common stock. If we
obtain this approval, we currently expect to complete the merger in the third
quarter of 1999.
We have attached the merger agreement and the related plan of merger
(Appendix A) at the back of this proxy statement/prospectus. We encourage you
to read the merger agreement, as it is the legal document that governs the
merger.
Majority First Citizens Shareholder Vote Required (Page 8)
Approval of the merger agreement requires the affirmative vote of the holders
of at least a majority of the outstanding shares of First Citizens common
stock. Your failure to vote will have the effect of a vote against approval of
the merger agreement. The directors and executive officers of First Citizens
together own about 19.07% of the shares entitled to be cast at the meeting, and
we expect them to vote their shares in favor of the merger.
Brokers who hold shares of First Citizens common stock as nominees will not
have authority to vote such shares with respect to the merger unless
shareholders provide voting instructions.
The merger does not require the approval of BB&T's shareholders.
Record Date Set at May 17, 1999; One Vote per Share of First Citizens Stock
(Page 8)
If you owned shares of First Citizens common stock at the close of business
on May 17, 1999, the record date, you are entitled to vote on the merger
agreement and any other matters considered at the meeting.
On the record date, there were 2,878,350 shares of First Citizens common
stock outstanding. You will have one vote at the meeting for each share of
First Citizens common stock you own on the record date.
Monetary Benefits to Management in the Merger (Page 25)
When considering the recommendation of the First Citizens Board, you should
be aware that some First Citizens directors and officers have interests in the
merger that differ from the interests of other First Citizens shareholders.
First Citizens' President and CEO Tom Moat has been offered a 5-year employment
agreement with a banking subsidiary of BB&T at his current salary (plus an
amount equal to the value of the benefits he will lose in the merger). Three
other members of management have been offered 3-year employment agreements at
their current salaries. These agreements will provide severance payments and
other benefits if there is a change in control of BB&T.
2
<PAGE>
Also, J. Littleton Glover, Jr., First Citizens' Chairman, will be elected to
the board of BB&T's North Carolina bank and will earn annual fees of $5,000
plus $1,000 per meeting attended, and Mr. Glover and the other First Citizens
directors will be offered positions on BB&T's advisory board for the Atlanta,
Georgia area and will receive annual fees not less than what they are now
receiving as First Citizens directors for at least two years after the merger.
The First Citizens Board was aware of these and other interests and
considered them before approving and adopting the merger agreement.
Conditions that Must be Satisfied for the Merger to Occur (Page 20)
The following conditions must be met for us to complete the merger:
. approval of the merger agreement by First Citizens shareholders;
. the absence of legal restraints that prevent the completion of the
merger;
. receipt of a legal opinion concerning the tax consequences of the
merger;
. the continuing accuracy of the parties' representations in the merger
agreement;
. the continuing effectiveness of the registration statement filed with
the SEC; and
. the ability to account for the merger as a pooling of interests.
We have received the approval of the Board of Governors of the Federal
Reserve System, the Georgia Department of Banking and Finance and the Virginia
Bureau of Financial Institutions, which are all of the required regulatory
approvals for the merger.
Termination and Amendment of the Merger Agreement (Page 24)
We can agree at any time to terminate the merger agreement without completing
the merger. Either company can also terminate the merger agreement in the
following circumstances:
. the merger is not completed by August 31, 1999;
. any of the conditions described above is not met; or
. the other company violates, in a material way, any of its
representations, warranties or obligations under the merger agreement.
Generally, the company seeking to terminate cannot itself be in violation of
the merger agreement so as to allow the other party to terminate.
We can agree to amend the merger agreement in any way, except that after the
shareholders' meeting we cannot decrease the consideration you will receive in
the merger. Either company can waive any of the requirements of the other
contained in the merger agreement, except that neither company can waive any
required regulatory approval. Neither company intends to waive the condition
that it receives a tax opinion. If a tax opinion is not available and the First
Citizens Board wishes to proceed with the merger, First Citizens will resolicit
its shareholders.
Option Agreement (Page 30)
As a condition to its offer to acquire First Citizens, and to discourage
other companies from acquiring First Citizens, BB&T required First Citizens to
grant BB&T a stock option that allows BB&T to buy up to 560,483 shares of First
Citizens' common stock. The exercise price of the option is $27.50 per share.
BB&T can exercise the option only if another party attempts to acquire control
of First Citizens. As of the date of this document, we do not believe that has
occurred.
BB&T to Use Pooling-of-Interests Accounting Treatment (Page 30)
BB&T will account for the merger as a pooling of interests. This will enhance
future earnings by avoiding the creation of goodwill relating to the merger and
enable BB&T to avoid charges against future earnings that would result from
amortizing goodwill. This accounting method also means that, after the merger,
BB&T will report financial results as if First Citizens had always been
combined with BB&T.
No Appraisal Rights (Page 48)
Under Georgia law, you have no right to an appraisal of your shares in
connection with the merger.
3
<PAGE>
Share Price Information (Page 5)
First Citizens common stock is listed on the Nasdaq National Market, and BB&T
common stock is listed on the New York Stock Exchange. On January 26, 1999, the
last full trading day before public announcement of the proposed merger, First
Citizens common stock closed at $30.125 and BB&T common stock closed at
$38.4375. On May 17, 1999, First Citizens common stock closed at $40.00 and
BB&T common stock closed at $38.06.
Listing of BB&T Stock
BB&T will list the shares of its common stock to be issued in the merger on
the New York Stock Exchange.
4
<PAGE>
Comparative Market Prices and Dividends
BB&T common stock is listed on the NYSE under the symbol "BBT." First
Citizens common stock is included on the Nasdaq National Market under the
symbol "FSTC." The table below shows the high and low closing prices of BB&T
common stock and First Citizens common stock and cash dividends paid per share
for the last two fiscal years plus the interim period. For BB&T, prices reflect
a 2-for-1 stock split on August 3, 1998. Shareholders should note that the
merger agreement restricts First Citizens' ability to pay dividends. See
page 22.
<TABLE>
<CAPTION>
BB&T First Citizens
---------------------- ----------------------
Cash Cash
High Low Dividend High Low Dividend
------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended
March 31, 1999.......... $40.44 $34.94 $.175 $40.88 $25.50 $.10
June 30, 1999 (through
May 17)................ 40.25 36.31 .175 42.00 37.13 .10
Quarter Ended
March 31, 1998.......... 33.84 29.03 .155 35.00 29.25 .08
June 30, 1998........... 34.06 32.03 .155 35.00 29.00 .08
September 30, 1998...... 36.03 28.00 .175 30.80 22.00 .09
December 31, 1998....... 40.63 27.31 .175 29.00 25.00 .10
For year 1998........... 40.63 27.31 .66 35.00 22.00 .35
Quarter Ended
March 31, 1997.......... 20.38 17.63 .135 17.17 14.17 .07
June 30, 1997........... 23.56 17.88 .135 18.00 15.50 .07
September 30, 1997...... 27.56 22.66 .155 23.33 17.50 .07
December 31, 1997....... 32.50 25.97 .155 35.50 22.67 .08
For year 1997........... 32.50 17.63 .58 35.50 14.17 .29
</TABLE>
The table below shows the closing price of BB&T common stock and First
Citizens common stock on January 26, 1999, the last full trading day before
public announcement of the proposed merger.
<TABLE>
<S> <C>
BB&T historical....................................................... $38.4375
First Citizens historical............................................. $ 30.125
First Citizens pro forma equivalent*.................................. $ 41.47
</TABLE>
- --------
* Calculated by multiplying BB&T's per share closing price by the exchange
ratio of 1.0789
5
<PAGE>
Selected Consolidated Financial Data
We are providing the following information to help you analyze the financial
aspects of the merger. We derived this information from audited financial
statements for 1994 through 1998, in the case of BB&T, and 1995 through 1999,
in the case of First Citizens, and unaudited financial statements, in the case
of BB&T, for the three months ended March 31, 1999. The information provided
for BB&T has been restated to include the account of MainStreet Financial
Corporation, which was acquired by BB&T on March 5, 1999 in a transaction
accounted for as a pooling of interests. This information is only a summary,
and you should read it in conjunction with our historical financial statements
(and related notes) contained in the annual and quarterly reports and other
documents that we have filed with the SEC. See "Where You Can Find More
Information" on page 50. You should not rely on the three-month information for
BB&T as being indicative of results expected for the entire year.
BB&T--Historical Financial Information
<TABLE>
<CAPTION>
As of/For the Three
Months Ended
March 31, As of/For the Years Ended December 31,
----------------------- -----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income..... $ 344,377 $ 319,340 $ 1,317,129 $ 1,221,658 $ 1,119,910 $ 1,027,390 $ 988,203
Net income.............. 138,423 120,445 513,021 378,287 361,448 255,255 292,030
Diluted earnings per
share.................. .44 .39 1.65 1.23 1.17 .81 .94
Cash dividends paid per
share.................. .175 .155 .66 .58 .50 .43 .37
Book value per share.... 9.59 8.68 9.53 8.50 7.80 7.39 6.59
Total assets............ 37,791,490 34,243,806 36,388,330 33,165,141 29,134,267 27,396,168 25,868,138
Long-term debt.......... 5,187,639 3,942,804 4,964,797 3,750,484 2,392,688 1,544,236 1,104,699
</TABLE>
First Citizens--Historical Financial Information
<TABLE>
<CAPTION>
As of/For the Years Ended March 31,
--------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(Dollars in thousands, except for per share
amounts)
<S> <C> <C> <C> <C> <C>
Net interest income............... $ 15,725 $14, 931 $ 9,396 $ 5,900 $ 5,338
Net income........................ 3,376 7,215 2,652 4,050 1,620
Diluted earnings per share........ 1.13 2.42 1.05 1.81 .76
Cash dividends paid per share..... .37 .31 .29 .23 .15
Book value per share.............. 14.01 13.15 10.94 9.26 7.67
Total assets...................... 411,268 367,812 326,365 182,010 169,477
Long-term debt.................... 6,171 5,038 5,804 8,193 8,199
</TABLE>
6
<PAGE>
Comparative Per Share Data
We have summarized below the per share information for our companies on an
historical, pro forma combined and equivalent basis. You should read this
information in conjunction with our historical financial statements (and
related notes) contained in the annual and quarterly reports and other
documents we have filed with the SEC. See "Where You Can Find More Information"
on page 50. In order to conform to the per share data relating to BB&T common
stock, the per share data relating to First Citizens common stock has been
prepared by utilizing financial information at the calendar dates and periods
indicated rather than the fiscal dates and periods utilized by First Citizens
for financial reporting purposes. The BB&T pro forma information gives effect
to the merger accounted for as a pooling of interests, assuming that 1.0789
shares of BB&T common stock are issued for each outstanding share of First
Citizens common stock. First Citizens equivalent share amounts are calculated
by multiplying the pro forma basic and diluted earnings per share, historical
per share dividend and historical shareholders' equity by the exchange ratio of
1.0789 shares of BB&T common stock so that the per share amounts equate to the
respective values for one share of First Citizens common stock. You should not
rely on the pro forma information as being indicative of the historical results
that we would have had if we had been combined or the future results that we
will experience after the merger, nor should you rely on the three-month
information as being indicative of results expected for the entire year.
<TABLE>
<CAPTION>
As of/For the Year
As of/For the Ended
Three Months December 31,
Ended March 31, --------------------
1999 1998 1997 1996
--------------- ------ ------ ------
<S> <C> <C> <C> <C>
Earnings per common share
Basic
BB&T historical......................... $ 0.45 $ 1.69 $ 1.25 $ 1.19
First Citizens historical............... 0.46 1.05 2.31 1.83
Pro forma combined...................... 0.45 1.68 1.26 1.19
First Citizens pro forma equivalent..... 0.49 1.81 1.36 1.28
Diluted
BB&T historical......................... 0.44 1.65 1.23 1.17
First Citizens historical............... 0.44 1.00 2.17 1.71
Pro forma combined...................... 0.44 1.65 1.24 1.17
First Citizens pro forma equivalent..... 0.47 1.78 1.34 1.26
Cash dividends declared per common share
BB&T historical........................... .175 .66 .58 .50
First Citizens historical................. .10 .35 .30 .29
Pro forma combined........................ .175 .66 .58 .50
First Citizens pro forma equivalent....... .189 .71 .63 .54
Shareholders' equity per common share
BB&T historical........................... 9.59 9.53 8.50 7.80
First Citizens historical................. 14.03 13.64 12.68 10.12
Pro forma combined........................ 9.63 9.56 8.53 7.82
First Citizens pro forma equivalent....... 10.39 10.31 9.20 8.44
</TABLE>
7
<PAGE>
MEETING OF SHAREHOLDERS
General
We are providing this proxy statement/prospectus to the shareholders of
First Citizens as of the record date of May 17, 1999, along with a form of
proxy that the First Citizens Board is soliciting for use at a special meeting
of shareholders of First Citizens to be held on Wednesday, June 30, 1999 at
10:00 a.m., Eastern Time, at the Municipal Auditorium of the City of Newnan,
located at 25 Jefferson Street, Newnan, Georgia. At the meeting, the
shareholders of First Citizens will vote upon a proposal to approve the merger
agreement, which is dated as of January 26, 1999 and pursuant to which First
Citizens would merge with and into BB&T. Proxies may be voted on such other
matters as may properly come before the meeting at the discretion of the proxy
holders. The First Citizens Board knows of no such other matters except those
incidental to the conduct of the meeting. The merger agreement and the related
plan of merger are attached as Appendix A.
We request holders of the common stock of First Citizens to complete, date
and sign the accompanying proxy and return it promptly to First Citizens in
the enclosed postage prepaid envelope.
Record Date, Voting Rights and Vote Required
Only the holders of First Citizens common stock on the record date are
entitled to receive notice of and to vote at the meeting. On the record date,
there were 2,878,350 shares of First Citizens common stock outstanding, held
by approximately 750 holders of record. Each such share of First Citizens
common stock is entitled to one vote on each matter submitted at the meeting.
Approval of the merger agreement and the plan of merger requires the
affirmative vote of the holders of at least a majority of the outstanding
shares of First Citizens common stock. Failure of a holder of First Citizens
common stock to vote such shares will have the same effect as a vote "against"
the merger agreement and the plan of merger.
Except as described in the immediately preceding paragraph, action on any
other matters that shareholders consider at the meeting will be approved if a
quorum is present and the votes in favor of the matter constitute a majority
of the shares represented at the meeting and entitled to vote. Presence in
person or by proxy of a majority of the outstanding shares of First Citizens
common stock entitled to vote at the meeting will constitute a quorum.
As of the record date, the directors and executive officers of First
Citizens and their affiliates beneficially owned a total of 548,891 shares, or
19.07%, of the issued and outstanding shares of First Citizens common stock
(exclusive of shares that may be acquired pursuant to the exercise of stock
options). As of the record date, neither the directors and executive officers
of BB&T or their affiliates nor BB&T or its subsidiaries beneficially owned
any shares of First Citizens common stock.
Voting and Revocation of Proxies
The shares of First Citizens common stock represented by properly completed
proxies received at or before the time for the meeting will be voted as
directed by the shareholders unless revoked as described below. If no
instructions are given, executed proxies will be voted "FOR" approval of the
merger agreement and the plan of merger. Proxies marked "FOR" approval of the
merger agreement and the plan of merger and executed but unmarked proxies will
be voted in the discretion of the persons named therein as to any proposed
adjournment of the meeting. Proxies which are voted "AGAINST" approval of the
merger agreement and the plan of merger will not be voted in favor of any
motion to adjourn the meeting to solicit more votes in favor of the merger.
Shares held in street name that have been designated by brokers on proxy
cards as not voted with respect to a proposal ("Broker Shares") will not be
counted as votes cast on the proposal. Shares with respect to which proxies
have been marked as abstentions also will not be counted as votes cast on the
proposal. Shares with
8
<PAGE>
respect to which proxies have been marked as abstentions and Broker Shares,
however, will be treated as shares present for purposes of determining whether
a quorum is present.
The proposal to adopt the merger agreement and the plan of merger is a "non-
discretionary" item, meaning that brokerage firms may not vote shares in their
discretion on behalf of a client if the client has not furnished voting
instructions. Because the proposal to adopt the merger agreement and the plan
of merger must be approved by the holders of at least a majority of the
outstanding shares of First Citizens common stock, abstentions and Broker
Shares will have the same effect as a vote against the merger at the meeting.
If any other matters are properly presented at the meeting and voted upon,
the proxies solicited hereby will be voted on such matters at the discretion
of the proxy holders named therein. The First Citizens Board is not aware of
any other business to be presented at the meeting other than matters
incidental to the conduct of the meeting.
A shareholder's attendance at the meeting will not automatically revoke his
or her proxy. A shareholder may, however, revoke a proxy any time before its
exercise by filing a written notice of revocation with, or by delivering a
duly executed proxy bearing a later date to, the Secretary of First Citizens
at First Citizens' principal executive offices before the meeting, or by
attending the meeting and voting in person. A shareholder's proxy will not be
revoked by his or her death or incapacity unless, before the shares are voted,
the Secretary of First Citizens or other person authorized to tabulate the
votes receives notice of the death or incapacity.
Because approval of the merger agreement and the plan of merger requires the
affirmative vote of the holders of at least a majority of the outstanding
shares of First Citizens common stock, abstentions and Broker Shares will have
the same effect as negative votes. Accordingly, the First Citizens Board urges
First Citizens' shareholders to complete, date and sign the accompanying proxy
and return it promptly in the enclosed postage prepaid envelope.
Solicitation of Proxies
BB&T and First Citizens will each pay 50% of the cost of printing this proxy
statement/prospectus, and First Citizens will pay all other costs of
soliciting proxies. Directors, officers and other employees of First Citizens
or its subsidiaries may solicit proxies personally or by telephone or
facsimile. None of these people will receive any special compensation for
solicitation activities. First Citizens will arrange with brokerage firms and
other custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of stock held of record by such persons, and
First Citizens will reimburse these record holders for their reasonable out-
of-pocket expenses.
Recommendation of the First Citizens Board
The First Citizens Board has unanimously adopted the merger agreement and
the plan of merger and believes that the proposed transaction is fair to and
in the best interests of First Citizens and its shareholders. The First
Citizens Board unanimously recommends that First Citizens' shareholders vote
"FOR" approval of the merger agreement and the plan of merger. See "The
Merger--Background of and Reasons for the Merger."
Shareholders should not send in stock certificates with their proxy cards.
See "The Merger--Exchange of First Citizens Common Stock Certificates."
9
<PAGE>
THE MERGER
The following information describes the material aspects of the merger. This
description does not purport to be complete and is qualified in its entirety
by reference to the appendices hereto, including the merger agreement and the
plan of merger, which are attached to this proxy statement/prospectus as
Appendix A and incorporated herein by reference. All shareholders are urged to
read the appendices in their entirety.
General
In the merger, First Citizens will be merged with and into BB&T and BB&T
will be the surviving corporation. Shareholders of First Citizens will receive
shares of the common stock of BB&T in exchange for their shares of First
Citizens common stock. During the second quarter of 2000, BB&T intends to
merge First Citizens' subsidiary banks into a subsidiary bank of BB&T.
Background of and Reasons for the Merger
Background of the Merger; First Citizens' Reasons for the Merger
During the fourth quarter of 1998, First Citizens engaged Morgan Keegan and
Company, Inc. ("Morgan Keegan") to assist First Citizens in assessing its
strategic options and to serve as a financial advisor to First Citizens
concerning the financial aspects of a potential merger with one of several
different banking companies. Morgan Keegan maintains relationships with
regional banks interested in expanding into the Atlanta market and identified
several banks that were noted high performers in building and expanding
community bank franchises. Morgan Keegan then narrowed the list to two banks,
including BB&T, that it felt would be most interested in acquiring First
Citizens. Representatives of both banks had the opportunity to visit First
Citizens and the market area. Both banks verbally indicated a price range that
they would pay for First Citizens. Only the verbal offer of BB&T was deemed
sufficient to warrant further discussion. After negotiation regarding the
price and exchange ratio, BB&T then made a formal offer on January 4, 1999
which was negotiated through Morgan Keegan and resulted in the final offer and
definitive agreement. On January 25, 1999, the First Citizens Board
unanimously approved the merger and determined that the merger was in the best
interests of First Citizens and its shareholders.
Without assigning any relative or specific weights to the factors, the First
Citizens Board considered the following material factors:
. The value of the consideration to be received by First Citizens
shareholders relative to the book value and earnings per share of First
Citizens Common Stock;
. Certain information concerning the financial condition, results of
operations and business prospects of BB&T;
. The financial terms of recent business combinations in the financial
services industry and a comparison of the multiples of selected
combinations with the terms of the proposed transaction with BB&T and
the potential future impact of a change in the rules relating to
pooling-of-interests accounting;
. The alternatives to the merger, including remaining an independent
institution;
. The competitive and regulatory environment for financial institutions
generally;
. The fact that the merger will enable First Citizens shareholders to
exchange their shares, in a tax-free transaction, for shares of common
stock of a regional company, the stock of which is widely held and
actively traded;
. The opinion of Morgan Keegan that the consideration to be received by
First Citizens shareholders as a result of the merger, or the exchange
ratio, is fair from a financial point of view; and
. The philosophy of BB&T regarding the treatment of employees and
customers as evidenced by other acquisitions.
10
<PAGE>
Each member of the First Citizens Board has agreed to vote his shares of
First Citizens stock in favor of the merger.
The First Citizens Board recommends that First Citizens shareholders vote
FOR approval of the merger agreement and the related plan of merger.
BB&T's Reasons for the Merger
One of BB&T's announced objectives is to pursue in-market and contiguous
state acquisitions of banks and thrifts within the $250 million to $10 billion
range. BB&T management believes that First Citizens is a well-run organization
that stresses customer service and loyalty and that its acquisition by BB&T
represents a substantial and beneficial expansion of BB&T's franchise into the
rapidly growing, metropolitan Atlanta area, the largest metropolitan
statistical area in the Southeast and a major financial center, and a base for
future market expansion opportunities in Georgia.
In connection with BB&T's consideration of the merger, management of BB&T
analyzed certain investment criteria designed to assess the impact of the
merger on BB&T and its shareholders. For the purpose of this analysis, BB&T
made the following assumptions:
. BB&T's and First Citizens' 1999 earnings per share on a stand alone
basis would be in line with the estimates published by First Call
Corporation.
. BB&T's earnings per share on a stand alone basis for periods after 1999
would increase at an assumed annual rate, determined solely for the
purpose of assessing the impact of the merger as described above, of
approximately 9%.
. First Citizens' earnings on a stand alone basis for periods after 1999
would increase at an assumed rate, determined solely for the purpose of
assessing the impact of the merger as described above, of approximately
12% from 2000 through 2003 and 9% thereafter, before applying the effect
of the assumptions described below.
. Annual cost savings of approximately $2.8 million, or 20% of First
Citizens' expense base, would be realized as a result of the merger,
with 25% of such cost savings achieved in 1999 and the remaining 75% in
2000.
. First Citizens' fee income ratio would ratably increase from 16.5% for
year-to-date as of September 1998 to 25% of total revenue for the full-
year 2003.
. First Citizens' net interest margin (non-FTE) would be maintained
annually at 4.58% of average earning assets.
Using the above assumptions, BB&T analyzed the merger to determine whether
it would have an accretive or dilutive effect on estimated earnings per share,
return on equity, return on assets and book value per share. This analysis
indicated that the merger would be accretive to book value in 1999 and to
estimated earnings per share and return on assets in 2000. BB&T excluded the
effect of an estimated one-time charge of $2.8 million, after income tax
benefits, related to consummating the merger from calculations of earnings per
share, return on equity and return on assets.
In addition to the analysis described above, BB&T performed an internal rate
of return analysis for this transaction. The purpose of this analysis was to
determine if the projected performance of First Citizens, after applying the
assumptions described above, would conform to BB&T's criteria. BB&T's current
minimum internal rate of return requirement for this type of investment is
15%. The analysis performed in connection with the First Citizens merger
indicated that the projected internal rate of return is 15.52%.
None of the above information has been updated since the date of the merger
agreement. There can be no certainty that the results reflected in the above
information will be achieved or that actual results will not vary
11
<PAGE>
materially from the estimated results. For more information concerning the
factors that could affect actual results, see "A Warning About Forward-Looking
Information" on page iv.
Opinion of Financial Advisor to First Citizens
First Citizens retained Morgan Keegan as its financial advisor to render an
opinion to the First Citizens Board concerning the fairness, from a financial
point of view, to First Citizens shareholders of the exchange ratio pursuant
to the merger agreement. Morgan Keegan was retained by First Citizens on the
basis of, among other things, its experience and expertise in the bank and
thrift industries. As part of its investment banking business, Morgan Keegan
is regularly engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for other various purposes.
On January 25, Morgan Keegan delivered its written opinion to the First
Citizens Board to the effect that, as of January 25, 1999 and based upon and
subject to certain matters stated in such opinion, the exchange ratio is fair,
from a financial point of view, to First Citizens shareholders. Morgan
Keegan's opinion was reconfirmed in writing as of the date of this proxy
statement/prospectus.
The full text of the written opinion of Morgan Keegan, confirmed as of the
date of this proxy statement/prospectus, which sets forth the assumptions
made, matters considered and limitations on the review undertaken, is attached
hereto as Appendix B and is incorporated herein by reference. First Citizens
shareholders are urged to read this opinion carefully in its entirety. Morgan
Keegan's opinion is directed only to the fairness to the First Citizens
shareholders, from a financial point of view, of the exchange ratio and does
not address any other aspect of the merger or related transactions and does
not constitute a recommendation to any shareholder as to how such shareholder
should vote at the meeting. The summary of the opinion of Morgan Keegan set
forth in this proxy statement/prospectus is qualified in its entirety by
reference to the full text of such opinion.
In arriving at its January 25, 1999 opinion, Morgan Keegan reviewed the
merger agreement and held discussions with certain senior officers, directors
and other representatives and advisors of First Citizens and certain senior
officers and other representatives and advisors of BB&T concerning the
businesses, operations and prospects of First Citizens and BB&T. Morgan Keegan
examined certain publicly available business and financial information
relating to First Citizens and BB&T as well as certain financial forecasts, to
the extent publicly available, and other data for First Citizens and BB&T
which were provided to Morgan Keegan by or otherwise discussed with the
respective management teams of First Citizens and BB&T, including information
relating to certain strategic implications and operational benefits
anticipated from the merger. Morgan Keegan reviewed the financial terms of the
merger as set forth in the merger agreement in relation to, among other
things: current and historical market prices and trading volumes of First
Citizens and BB&T common stock; the historical and publicly available
projected earnings and operating data of First Citizens and BB&T; and the
capitalization and financial condition of First Citizens and BB&T. Morgan
Keegan considered, to the extent publicly available, the financial terms of
certain other similar transactions recently effected which Morgan Keegan
considered relevant in evaluating the merger and analyzed certain financial,
stock market and other publicly available information relating to the
businesses of other companies whose businesses Morgan Keegan considered
relevant in evaluating those of First Citizens and BB&T. Morgan Keegan also
considered the relative contributions of First Citizens and BB&T to the
combined company. In addition to the foregoing, Morgan Keegan conducted such
other analyses and examinations and considered such other financial, economic
and market criteria as Morgan Keegan deemed appropriate to arrive at its
opinion. Morgan Keegan noted that its opinion was necessarily based upon
information available, and financial, stock market and other conditions and
circumstances existing and disclosed, to Morgan Keegan as of the date of its
opinion.
In conducting its review and rendering its opinion, Morgan Keegan assumed
and relied, without independent verification, upon the accuracy and
completeness of all financial and other information publicly available or
furnished to or otherwise reviewed by or discussed with Morgan Keegan. With
respect to financial forecasts and other information provided to or otherwise
reviewed by or discussed with Morgan Keegan, the management
12
<PAGE>
teams of First Citizens and BB&T advised Morgan Keegan that such forecasts and
other information were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the respective management teams
of First Citizens and BB&T as to the future financial performance of First
Citizens and BB&T and the strategic implications and operational benefits
anticipated from the Merger. Morgan Keegan assumed, with the consent of the
First Citizens Board, that the merger will be accounted for as a pooling of
interests in accordance with generally accepted accounting principles and as a
tax-free reorganization for federal income tax purposes. Morgan Keegan did not
express any opinion as to what the value of BB&T common stock actually will be
when issued pursuant to the merger or the price at which BB&T common stock
will trade subsequent to the merger. In addition, Morgan Keegan did not make
or obtain an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of First Citizens or BB&T nor did Morgan Keegan make
any physical inspection of the properties or assets of First Citizens or BB&T.
Morgan Keegan was not asked to consider, and its opinion does not address, the
relative merits of the merger as compared to any alternative business
strategies that might exist for First Citizens or the effect of any other
transaction in which First Citizens might engage. In addition, Morgan Keegan
was asked to and did assist in recommending the specific consideration payable
in the merger, along with First Citizens and BB&T through arms'-length
negotiations. No other limitations were imposed by First Citizens on Morgan
Keegan with respect to the investigations made or procedures followed by
Morgan Keegan in rendering its opinion.
The following is a summary of the principal analyses performed by Morgan
Keegan in connection with its January 25, 1999 opinion.
Summary Transaction Analysis. Morgan Keegan reviewed the terms of the
proposed transaction, including the consideration to be received and the
aggregate transaction value. Morgan Keegan reviewed the implied value of the
consideration offered based upon a market price per share of $39.25, which is
the average of the closing price per share of BB&T common stock on the New
York Stock Exchange (as reported by Bloomberg) during the twenty (20) trading
day period from December 23, 1998 through January 22, 1999. This indicates an
implied value of $42.35 per share of First Citizens common stock (assuming
2,811,550 shares outstanding, 296,097 options outstanding and an exchange
ratio of 1.0789 BB&T common stock shares for one (1) share of First Citizens
common stock, including any stock equivalents). The implied aggregate
transaction value was $129.4 million. Morgan Keegan calculated that, as of
January 25, 1999, the aggregate transaction value represented 33.56% of the
total assets of First Citizens at September 30, 1998, 3.31x First Citizens'
stated book value at September 30, 1998 and 24.48x First Citizens' earnings
for the trailing twelve months ended September 30, 1998.
Contribution Analysis. Morgan Keegan reviewed certain historical financial
and operating information for First Citizens, BB&T and the pro forma combined
entity resulting from the merger based on financial data reported by First
Citizens and BB&T. Morgan Keegan analyzed the relative balance sheet
contribution of First Citizens and BB&T for certain data to the combined
company on a pro forma basis as of December 31, 1998. This analysis indicated
that First Citizens would have contributed 1.21% to combined total assets,
1.27% to combined loans (net of allowances for loan losses), 1.56% to deposits
and 1.39% to tangible equity. Morgan Keegan also analyzed the relative income
statement contribution of First Citizens and BB&T for certain data to the
combined company on a pro forma basis. This analysis indicated that First
Citizens would have contributed 1.31% to combined net interest income for the
latest twelve months ("LTM") ended December 31, 1998, 1.03% to combined pretax
income and 1.02% to combined net income. Based on the consideration to be
received, the holders of outstanding First Citizens common stock would own
approximately 1.03% of the outstanding shares of BB&T common stock and 1.09%
of the outstanding shares of BB&T common stock on a fully diluted basis.
Comparable Company Analysis for First Citizens. Morgan Keegan reviewed and
compared certain financial information relating to First Citizens to
corresponding financial information, public market multiples and ratios for
eight publicly traded banks headquartered in the Southeast that it deemed to
be comparable to First Citizens. The companies Morgan Keegan used for the
purposes of this analysis were Community Federal Bancorp, Inc., First Bancorp,
First Federal Financial Corp., FNB Corp., Merit Holding Corporation, PAB
13
<PAGE>
Bankshares, Inc., South Alabama Bancorp., Inc. and SouthBancShares, Inc. These
are called the "comparable companies". Morgan Keegan calculated a range of
market multiples for the comparable companies by dividing market value per
share as of January 22, 1999 by each such company's LTM earnings per share
ended September 30, 1998 and by dividing market value by tangible book value
reported September 30, 1998. For the LTM results ended September 30, 1998,
Morgan Keegan also compared certain ratios (including, among other things,
return on latest assets, return on latest equity, loan loss reserve to total
loans, total equity capital to total assets and total loans to total deposits)
of the comparable companies to First Citizens.
First Citizens Comparable Company Table
<TABLE>
<CAPTION>
Market Value/
-----------------
LTM Tangible Return on Return on LLR/Total Equity/ Total Loans/
EPS Book Value Latest Assets Latest Equity Loans Total Assets Total Deposits
------ ---------- ------------- ------------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
High.................... 71.14x 3.46x 1.64% 16.20% 1.68% 20.91% 106.97%
Low..................... 15.23x 1.01x 0.35% 1.70% 0.53% 7.15% 65.82%
Mean.................... 26.44x 2.26x 1.15% 10.82% 1.12% 12.60% 87.25%
Median.................. 20.32x 2.38x 1.20% 13.17% 1.17% 10.74% 87.31%
First Citizens.......... 16.29x 2.67x 1.37% 16.38% 1.46% 8.37% 79.95%
</TABLE>
Comparable Company Analysis for BB&T. Morgan Keegan reviewed and compared
certain financial information relating to BB&T to corresponding financial
information, public market multiples and ratios for twelve publicly traded
banks that it deemed to be comparable to BB&T. The companies Morgan Keegan
used for the purposes of this analysis were AmSouth Bancorporation, Comerica
Incorporated, Fifth Third Bancorp, First Security Corporation, Huntington
Bancshares, Inc., Marshall & Ilsley Corporation, Mercantile Bancorporation,
Inc., Regions Financial Corporation, SouthTrust Corporation, Summit Bancorp,
Union Planters Corporation and Wachovia Corporation. These are called the
"BB&T comparable companies." Morgan Keegan calculated a range of market
multiples for the comparable companies by dividing market value per share as
of January 22, 1999 by each such company's LTM earnings per share ended
September 30, 1998 and by dividing market value by tangible book value
reported September 30, 1998. For the LTM results ended September 30, 1998,
Morgan Keegan also compared certain ratios (including, among other things,
return on latest assets, return on latest equity, loan loss reserve to total
loans, total equity capital to total assets and total loans to total deposits)
of the comparable companies to BB&T.
BB&T Comparable Company Table
<TABLE>
<CAPTION>
Market Value/
-----------------
LTM Tangible Return on Return on LLR/Total Equity/ Total Loans/
EPS Book Value Latest Assets Latest Equity Loans Total Assets Total Deposits
------ ---------- ------------- ------------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
High.................... 35.78x 6.58x 1.78% 24.46% 1.79% 9.68% 128.04%
Low..................... 15.10x 2.42x 0.82% 9.79% 1.20% 5.80% 84.39%
Mean.................... 20.54x 3.72x 1.30% 18.31% 1.48% 7.21% 98.63%
Median.................. 18.47x 3.54x 1.32% 18.39% 1.50% 7.03% 94.62%
BB&T.................... 22.29x 4.59x 1.43% 20.60% 1.40% 6.92% 101.61%
</TABLE>
Highly-Valued Comparable Company Analysis for BB&T. Morgan Keegan reviewed
and compared certain financial information relating to BB&T to corresponding
financial information, public market multiples and ratios for eight highly-
valued publicly traded banks that it deemed to be comparable to BB&T. The
companies Morgan Keegan used for the purposes of this analysis were AmSouth
Bancorporation, Fifth Third Bancorp, Firstar Corporation, Northern Trust
Corporation, State Street Corporation, SunTrust Corporation, Wachovia
Corporation and Zions Bancorporation. These are called the "highly valued
comparable companies." Morgan Keegan calculated a range of market multiples
for the comparable companies by dividing market value per share as of
14
<PAGE>
January 22, 1999 by each such company's LTM earnings per share ended September
30, 1998 and by dividing market value by tangible book value reported
September 30, 1998. For the LTM results ended September 30, 1998, Morgan
Keegan also compared certain ratios (including, among other things: return on
latest assets, return on latest equity, loan loss reserve to total loans,
total equity capital to total assets and total loans to total deposits) of the
comparable companies to BB&T.
BB&T Highly-Valued Comparable Company Table
<TABLE>
<CAPTION>
Market Value/
-----------------
LTM Tangible Return on Return on LLR/Total Equity/ Total Loans/
EPS Book Value Latest Assets Latest Equity Loans Total Assets Total Deposits
------ ---------- ------------- ------------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
High.................... 42.99x 7.84x 1.78% 21.41% 1.79% 9.68% 117.58%
Low..................... 20.07x 2.99x 0.84% 14.90% 1.08% 3.94% 22.76%
Mean.................... 28.22x 5.38x 1.28% 19.01% 1.43% 6.84% 87.16%
Median.................. 27.62x 5.77x 1.23% 19.25% 1.45% 6.77% 94.89%
BB&T.................... 22.29x 4.59x 1.43% 20.60% 1.40% 6.92% 101.61%
</TABLE>
Stock Return Analysis. Morgan Keegan reviewed and analyzed the price
performance and the historical trading volume for First Citizens and BB&T's
common stock as well as the indices of the comparable companies and the highly
valued comparable companies and the Nasdaq Bank index, S&P Bank index and the
S&P 500.
Compound Annual Growth Rate--excluding dividends
(period ending 12/31/98)
<TABLE>
<CAPTION>
1 Year 3 Year 10 Year Volume(1)
------ ------ ------- ---------
<S> <C> <C> <C> <C>
First Citizens............................... (17.50) 40.66 15.22 0.07%
Comparable Companies......................... 6.66 27.19 16.96 0.03%
BB&T......................................... 22.47 45.36 20.25 0.13%
Comparable Companies......................... (2.81) 29.10 19.67 0.23%
Highly Valued Comparable Companies........... 34.89 46.47 26.74 0.24%
Nasdaq Bank index............................ (11.65) 22.19 15.37 NM
S&P Bank..................................... 3.94 27.90 21.53(2) NM
S&P 500...................................... 26.07 25.85 15.92 NM
</TABLE>
- --------
(1) Average daily volume divided by average diluted shares outstanding.
(2) Began on May 21, 1993.
Morgan Keegan considers the stock of First Citizens and BB&T to be liquid and
marketable.
Analysis of Selected Comparable Mergers and Acquisitions. In order to assess
market pricing for comparable mergers, Morgan Keegan reviewed overall merger
transactions in the banking industry using four different sets of parameters.
Morgan Keegan selected 19 transactions occurring between January 1, 1998 and
January 13, 1999, involving the sale of banks and thrifts located in the
Southeast with total assets between $200 million and $1 billion, 20
transactions occuring between July 1, 1998 and January 13, 1999, involving the
sale of banks and thrifts located in the United States with deal values
between $75 million and $150 million, 8 transactions occurring between July 1,
1998 and January 13, 1999, involving the sale of thrifts with deal values
between $75 million and $150 million and 25 transactions occurring between
January 1, 1998 and January 13, 1999, involving the sale of banks and thrifts
in Georgia. Because no transaction was considered identical to the merger, the
medians of the overall transaction multiples were considered more relevant
than the multiples for any specific transaction.
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<PAGE>
Summary of Comparable Merger Medians
<TABLE>
<CAPTION>
U.S. U.S. First
Banks Thrifts Southeast Georgia Citizens(1)
----- ------- --------- ------- -----------
<S> <C> <C> <C> <C> <C>
Price/EPS (x)....................... 24.47 18.18 20.53 23.33 24.48
Price/Book (x)...................... 2.89 2.08 2.82 3.15 3.31
Price/Tangible Book (x)............. 2.98 2.42 3.12 3.15 4.01
Price/Assets (%).................... 23.73 20.34 28.79 30.76 33.56
Price/Deposits (%).................. 30.75 29.18 35.33 34.71 38.66
</TABLE>
- --------
(1) First Citizens ratios based on 9/30/98 actual results.
No company or transaction used in the comparable companies and comparable
transactions analyses for comparative purposes is identical to First Citizens
or the merger. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations concerning differences in
financial and operating characteristics of the companies and other factors.
Mathematical analysis (such as determining the average or median) is not, in
itself, a meaningful method of using comparable company or transaction data.
Discounted Cash Flow Analysis. Morgan Keegan performed a discounted cash
flow analysis of the projected cash flow available for dividends of First
Citizens for fiscal years 1999 through 2003, based on projections provided by
First Citizens management. Using this information, Morgan Keegan calculated a
range of equity values for First Citizens based on the sum of (a) the present
value of the cash flow available for dividends to First Citizens and (b) the
present value of the estimated terminal value for First Citizens assuming that
it was sold at the end of fiscal year 2003. In performing its discounted cash
flow analysis, Morgan Keegan assumed, among other things, discount rates of
11.0% to 15.0% and terminal multiples of net income of 12.0x to 16.0x. Those
discount rates and terminal multiples reflect Morgan Keegan's qualitative
judgements concerning the specific risk associated with such an investment and
the historical and projected operating performance of First Citizens. This
analysis resulted in a range of equity values for First Citizens of $96.07
million to $142.49 million, with a median of $117.58, or $31.74 to $47.07 per
diluted share, with a median of $38.84 per share.
In connection with its opinion confirmed as of the date of this proxy
statement/prospectus, Morgan Keegan performed procedures to update, as
necessary, certain of the analyses described above. Morgan Keegan reviewed the
assumptions on which the analyses described above were based and the factors
considered in connection therewith. Morgan Keegan did not perform any analyses
in addition to those described above in confirming its January 25, 1999
opinion.
The summary of the Morgan Keegan opinion set forth above does not purport to
be a complete description of the analyses performed by Morgan Keegan. The
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. Morgan Keegan believes that its analyses and
the summary set forth above must be considered as a whole and that selecting
portions of its analyses, without considering all analyses, or of the above
summary, without considering all factors and analyses, would create an
incomplete view of the process underlying the analyses set forth in the
opinion. In addition, Morgan Keegan may have deemed various assumptions more
or less probable than other assumptions, so that the ranges of valuations
resulting from any particular analysis described above should not be taken to
represent the actual value of First Citizens or the combined company.
In performing its analyses, Morgan Keegan made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of First Citizens or BB&T.
The analyses performed by Morgan Keegan are not necessarily indicative of
actual values or actual future results, which may be significantly more or
less favorable than suggested by such analyses. Such analyses were prepared
solely as part of Morgan Keegan's analysis of the fairness, from a financial
point of view, of the consideration to be paid by BB&T. The analyses do not
purport to be appraisals or to reflect the prices at which a company might
actually be sold or the prices at which any securities may trade at the
present time or at any time in the future.
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<PAGE>
First Citizens has agreed to pay Morgan Keegan a retainer fee of $7,500 per
quarter, payable in advance upon the signing of its engagement letter, an
initial advisory and opinion fee of $75,000, payable in cash upon delivery by
Morgan Keegan of the fairness opinion at the signing of the definitive
agreement, and a final advisory and opinion fee equal to 1.0% of the overall
deal value, which includes the retainer fee and the initial advisory and
opinion fee, payable in cash at closing. First Citizens has also agreed to
reimburse Morgan Keegan for its reasonable out-of-pocket expenses and to
indemnify Morgan Keegan against certain liabilities, including liabilities
under the federal securities laws.
Exchange Ratio
At the effective time of the merger, First Citizens will be merged with and
into BB&T, and BB&T will be the surviving corporation in the merger. In the
merger, each share of First Citizens common stock outstanding at the effective
time will be converted into the right to receive BB&T common stock at the
exchange ratio of 1.0789 shares of BB&T common stock for each share of First
Citizens common stock.
An upward adjustment to the exchange ratio could occur only if First
Citizens elected to terminate the merger agreement as described below, and
BB&T then elected to avoid termination of the merger agreement by increasing
the exchange ratio. Under no circumstances would the exchange ratio be less
than 1.0789 shares of BB&T common stock for each share of First Citizens
common stock.
First Citizens may elect to terminate the merger agreement and abandon the
merger if both of the following circumstances exist:
. the average closing price per share of BB&T common stock on the NYSE on
the five trading days (determined by excluding days on which the NYSE is
closed) before the Determination Date (defined below) (the "Closing
Value") is less than $32.67, and
. (a) the amount obtained by dividing the Closing Value by $38.4375 (such
amount, the "BB&T Ratio") is less than (b) 90% of the amount obtained by
dividing the Index Price on the Determination Date by the Index Price on
January 26, 1999 (these terms are defined below) (the amount determined
pursuant to clause (b), the "Index Ratio").
First Citizens may refuse to complete the merger pursuant to this provision
by giving notice to BB&T during the five-day period following the
Determination Date. BB&T will thereafter have a five-day period in which it
could elect to increase the exchange ratio so that holders of First Citizens
common stock would receive for each share of First Citizens common stock the
consideration that they would have received had the Closing Value been $32.67
(i.e., BB&T common stock having an implied market value of approximately
$35.25). Such an election would be made by giving notice to First Citizens of
the election and the revised exchange ratio, whereupon First Citizens would be
required to proceed with the merger with the adjusted exchange ratio in
accordance with all other terms of the merger agreement. First Citizens could
withdraw its notice of termination at any time during the ten-day period
following the Determination Date and elect to proceed with the merger at the
exchange ratio of 1.0789 if BB&T were to determine not to adjust the exchange
ratio. In no event would BB&T have any obligation to increase the exchange
ratio.
For purposes of the rights of termination and adjustment described above,
the following terms are defined as follows:
"Determination Date" means the tenth calendar day preceding the date
designated by BB&T as the closing date of the merger.
"Index Group" means 12 bank holding companies comparable to BB&T and
designated in the merger agreement, the common stocks of all of which must
be publicly traded and as to which there may not have been, since January
26, 1999 and before the Determination Date, any public announcement of a
proposal for such company to be acquired or for such company to acquire
another company or companies in transactions with a value exceeding 25% of
the acquiror's market capitalization. If any such company or
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<PAGE>
companies are removed from the Index Group, the weights (which have been
determined based upon the number of shares of outstanding common stock)
will be redistributed proportionately in determining the Index Price. If
any company belonging to the Index Group, or BB&T, declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between January 26, 1999 and the
Determination Date, the prices for the common stock of such company or BB&T
will be appropriately adjusted.
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above and in the merger agreement) of
the closing sales prices of the companies composing the Index Group.
These conditions reflect the parties' agreement that First Citizens'
shareholders will assume certain risks of decline in the market value of BB&T
common stock. If the value of BB&T common stock were to decline so that the
Closing Value was below $32.67, but the Closing Value did not reflect a
decline in the price of BB&T common stock from $38.4375 (the closing price of
BB&T common stock on January 26, 1999) (the "Starting Price") of more than 10%
in comparison to the stock prices of the Index Group as measured from January
26, 1999 to the Determination Date, then First Citizens' shareholders would
continue to assume the risk of decline in the value of BB&T common stock.
First Citizens will have the right to terminate the merger agreement only when
both (a) the Closing Value is less than $32.67 and (b) the decline from the
value of the Starting Price to the Closing Value exceeds by more than 10% the
decline in value for the group of comparable bank holding companies from
January 26, 1999 to the Determination Date.
If the First Citizens Board elects to terminate the merger agreement because
of a decline in the price of BB&T common stock, BB&T may avoid termination by
increasing the exchange ratio. In deciding whether to increase the exchange
ratio, the principal factors BB&T would consider include the projected effect
of the merger on BB&T's pro forma earnings and book value per share and
whether BB&T's assessment of First Citizens' earning potential as part of BB&T
justifies the issuance of a greater number of shares of BB&T common stock. If
BB&T should decline to adjust the exchange ratio, First Citizens may elect to
withdraw its election to terminate and to proceed with the merger without
adjustment. In making this determination, the principal factors the First
Citizens Board would consider include whether the merger remains in the best
interest of First Citizens and its shareholders, despite the decline in the
BB&T common stock price, and whether the consideration to be received by First
Citizens shareholders remains fair from a financial point of view. Prior to
making any decision to terminate the merger agreement or to proceed with the
merger without adjustment of the exchange ratio, the First Citizens Board
would consult with its financial and other advisors and would consider all
financial and other information it deemed relevant to its decision, including
considerations relating to the necessity or desirability of resoliciting First
Citizens shareholders under the circumstances. If First Citizens elected not
to exercise its right to terminate the merger agreement, the exchange ratio
would remain 1.0789 and the dollar value of the consideration which the First
Citizens shareholders would receive for each share of First Citizens common
stock would be the value of 1.0789 shares of BB&T common stock at the
effective time. If the termination right were triggered and BB&T did not
increase the exchange ratio, the First Citizens Board could determine to
proceed with the merger at the 1.0789 exchange ratio. If First Citizens
decided to proceed on this basis, it would resolicit shareholders only if the
First Citizens Board believed that it had a fiduciary duty or otherwise
decided to do so.
The operation of the exchange ratio and the adjustment mechanism can be
illustrated by three scenarios. (For purposes of the numerical examples, the
Index Price, as of January 26, 1999, is deemed to be $100.)
. The first scenario is that the Closing Value of the BB&T common stock is
not less than $32.67. Under this scenario, the exchange ratio would be
1.0789 and there would be no potential adjustment to the exchange ratio
and no right on the part of First Citizens to terminate the merger
agreement due to a decline in the price of BB&T common stock. The
implied market value (based on the Closing Value) of the consideration
to be received by First Citizens shareholders would be not less than
$32.67.
. The second scenario is that the Closing Value is less than $32.67 but
the BB&T Ratio is equal to or above the Index Ratio. In this case, the
exchange ratio would be 1.0789 and there would be no right on
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<PAGE>
the part of First Citizens to terminate the merger agreement due to the
decline in the value of BB&T common stock and therefore no potential
adjustment to the exchange ratio, even though the implied market value
of the consideration to be received by First Citizens shareholders would
have fallen from a pro forma $41.47 as of January 26, 1999 to less than
$35.25 per share. For example, if the Closing Value were $25.75 and the
Index Price were $70.00, the BB&T Ratio would be 0.67, or $25.75
/ $38.4375, and the Index Ratio would be 0.63, or 0.9 times
($70.00 / $100.00). Based upon the assumed $25.75 Closing Value, the
consideration to be received by First Citizens shareholders would have
an implied market value of $27.78 per share.
. The third scenario is that both the Closing Value is less than $32.67
and the BB&T Ratio is less than the Index Ratio. In this case, First
Citizens would have the right to terminate the merger agreement. BB&T
would have the right, but not the obligation, to reinstate the merger
agreement by increasing the exchange ratio so that First Citizens
shareholders would receive shares of BB&T common stock having an implied
market value (based upon the Closing Value) equal to approximately
$35.25 per share. For example, if the Closing Value were $25.15 and the
Index Price were $90.00, the BB&T Ratio would be 0.65, or
$25.15 / $38.4375, and the Index Ratio would be 0.81, or 0.9 times
($90.00 / $100.00). Based upon the assumed $25.15 Closing Value, the
consideration to be received by First Citizens shareholders would have
an implied market value of $27.13 per share. If the First Citizens Board
elected to terminate the merger agreement, BB&T would have the right,
but not the obligation, to reinstate the merger agreement by increasing
the exchange ratio within five days to 1.4016, which represents $35.25
divided by the Closing Value. Based upon the assumed $25.15 Closing
Value, the new exchange ratio would represent a value to First Citizens
shareholders of $35.25 per share.
First Citizens shareholders should be aware that the actual market value of a
share of BB&T common stock at the effective time and at the time certificates
for those shares are delivered following surrender and exchange of certificates
for shares of First Citizens common stock may be more or less than the Closing
Value. First Citizens shareholders are urged to obtain information on the
market value of BB&T common stock that is more recent than that provided in
this proxy statement/prospectus. See "Summary--Comparative Market Prices and
Dividends."
No fractional shares of BB&T common stock will be issued in the merger.
Holders of First Citizens common stock otherwise entitled to a fractional share
will be paid an amount in cash determined by multiplying the fractional part of
such share of BB&T common stock by the Closing Value.
Exchange of First Citizens Common Stock Certificates
At the effective time, by virtue of the merger and without any action on the
part of First Citizens or the holders of First Citizens common stock, each
share of First Citizens common stock issued and outstanding immediately before
the effective time will be converted into and will represent the right to
receive, upon surrender of the certificate representing such share of First
Citizens common stock as described below, whole shares of BB&T common stock and
cash in lieu of any fractional share interest. Promptly after the effective
time, BB&T will deliver or mail to each First Citizens shareholder a form of
letter of transmittal and instructions for use in effecting the surrender of
the certificates that, immediately before the effective time, represented any
shares of First Citizens common stock. Upon surrender of these certificates or
other satisfactory evidence of ownership, together with such letter of
transmittal duly executed and completed in accordance with its instructions and
such other documents as may be reasonably requested, BB&T will promptly
transfer the merger consideration to the persons entitled to receive it.
Holders of First Citizens common stock should not send in their stock
certificates until they receive transmittal forms and instructions.
Until surrendered as described above, each outstanding certificate that prior
to the effective time represented one or more shares of First Citizens common
stock will be deemed upon the effective time for all purposes to
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<PAGE>
represent only the right to receive the merger consideration. No interest will
be paid or accrued on the merger consideration upon the surrender of the
certificate or certificates representing shares of First Citizens common
stock. With respect to any certificate for First Citizens common stock that
has been lost or destroyed, BB&T will pay the merger consideration
attributable to such certificate upon receipt of a surety bond or other
adequate indemnity, as required in accordance with BB&T's standard policy, and
evidence reasonably satisfactory to BB&T of ownership of the shares in
question. After the effective time, no transfer of the shares of First
Citizens common stock outstanding immediately before the effective time will
be made on the stock transfer books of BB&T.
BB&T will pay any dividends or other distributions with a record date before
the effective time that have been declared or made by First Citizens in
respect of shares of First Citizens common stock in accordance with the terms
of the merger agreement and that remain unpaid at the effective time. To the
extent permitted by law, former shareholders of record of First Citizens will
be entitled to vote after the effective time at any meeting of BB&T
shareholders the number of whole shares of BB&T common stock into which their
respective shares of First Citizens common stock are converted, regardless of
whether such holders have exchanged their certificates representing First
Citizens common stock for certificates representing BB&T common stock.
Whenever a dividend or other distribution is declared by BB&T on the BB&T
common stock, the record date for which is at or after the effective time, the
declaration will include dividends or other distributions on all shares of
BB&T common stock issuable pursuant to the merger agreement, but after the
effective time no dividend or other distribution payable to the holders of
record of BB&T common stock as of any time subsequent to the effective time
will be delivered to the holder of any certificate representing First Citizens
common stock until such holder surrenders such certificate for exchange as
described above. Upon surrender of such certificate, both the BB&T common
stock certificate and any undelivered dividends and cash payments payable
under the merger agreement (without interest) will be delivered and paid with
respect to each share of First Citizens common stock represented by such
certificate.
The Merger Agreement
Effective Date and Time of the Merger
The merger agreement provides that the closing of the merger will take place
on the business day designated by BB&T that is within 30 days following the
satisfaction of the conditions to the completion of the merger, or such later
date as the parties may otherwise agree. The effective time will occur at the
time and date specified in the articles of merger to be filed with the
Secretary of State of North Carolina and the Secretary of State of Georgia. It
is currently anticipated that the filing of the articles of merger will take
place as soon as practicable following the date on which the merger agreement
and the plan of merger is approved by the First Citizens shareholders and all
other conditions to the respective obligations of BB&T and First Citizens to
complete the merger have been satisfied. If the merger is approved at the
meeting, it is currently anticipated that the filing of the articles of merger
and the effective time will occur during the third quarter of 1999.
Conditions to the Merger
The obligations of BB&T and First Citizens to carry out the merger are
subject to satisfaction (or, if permissible, waiver) of the following
conditions at or before the effective time:
. all corporate action necessary to authorize the performance of the
merger agreement and the plan of merger must have been duly and validly
taken, including the approval of the shareholders of First Citizens of
the merger agreement and the plan of merger;
. BB&T's registration statement on Form S-4 relating to the merger
(including any post-effective amendments) must be effective under the
Securities Act of 1933, as amended (the "Securities Act"), no
proceedings may be pending or threatened by the SEC to suspend the
effectiveness of the registration statement and the BB&T common stock to
be issued in the merger must either have been registered or be subject
to exemption from registration under applicable state securities laws;
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<PAGE>
. the parties must have received all regulatory approvals required in
connection with the transactions in the merger agreement, all notice
periods and waiting periods required with respect to the approvals must
have passed and all approvals must be in effect;
. neither BB&T nor First Citizens nor any of their respective subsidiaries
may be subject to any order, decree or injunction of a court or agency
of competent jurisdiction that enjoins or prohibits completion of the
transactions in the merger agreement;
. First Citizens and BB&T must have received an opinion of BB&T's legal
counsel, Womble Carlyle Sandridge & Rice, PLLC, in form and substance
satisfactory to First Citizens and BB&T, substantially to the effect
that the merger will constitute one or more reorganizations under
Section 368 of the Internal Revenue Code of 1986, as amended, and that
the shareholders of First Citizens will not recognize any gain or loss
to the extent that they exchange shares of First Citizens common stock
for shares of BB&T common stock; and
. BB&T must have received letters from Arthur Andersen, LLP, dated as of
the filing of the registration statement and as of the effective time,
to the effect that the merger will qualify for pooling-of-interests
accounting treatment.
The obligations of First Citizens to carry out the transactions in the
merger agreement are also subject to the satisfaction of the following
additional conditions at or before the effective time, unless, where
permissible, waived by First Citizens:
. BB&T must have performed in all material respects all obligations and
complied in all material respects with all covenants required by the
merger agreement;
. the shares of BB&T common stock to be issued in the merger must have
been approved for listing on the NYSE, subject to official notice of
issuance; and
. First Citizens must have received certain closing certificates and legal
opinions from BB&T and its counsel.
In addition, all representations and warranties of BB&T will be evaluated as
of the date of the merger agreement and as of the effective time as though
made on and as of the effective time (or on the date designated, in the case
of any representation and warranty that specifically relates to an earlier
date), except as otherwise provided in the merger agreement or consented to in
writing by First Citizens. The representations and warranties of BB&T
concerning
. its capitalization,
. its and its subsidiaries' organization and authority to conduct
business,
. its authorization and the binding nature of the merger agreement and
. the absence of any conflict between the transactions in the merger
agreement and BB&T's articles of incorporation or bylaws
must be true and correct (except for inaccuracies that are de minimis in
amount). Moreover, there must not exist inaccuracies in any of the
representations and warranties of BB&T set forth in the merger agreement such
that the aggregate effect of such inaccuracies has, or is reasonably likely to
have, a material adverse effect on BB&T.
The obligations of BB&T to carry out the transactions in the merger
agreement are also subject to satisfaction of the following additional
conditions at or before the effective time, unless, where permissible, waived
by BB&T:
. no regulatory approval may have imposed any condition or requirement
that, in the reasonable opinion of the BB&T Board, would so materially
adversely affect the business or economic benefits to BB&T of the
transactions in the merger agreement as to render their completion
inadvisable or unduly burdensome;
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<PAGE>
. First Citizens must have performed in all material respects all
obligations and complied in all material respects with all covenants
required by the merger agreement;
. BB&T must have received agreements from certain affiliates of First
Citizens concerning the shares of BB&T common stock to be received by
them; and
. BB&T must have received certain closing certificates and legal opinions
from First Citizens and its counsel.
In addition, all representations and warranties of First Citizens will be
evaluated as of the date of the merger agreement and as of the effective time
as though made on and as of the effective time (or on the date designated, in
the case of any representation and warranty that specifically relates to an
earlier date), except as otherwise provided in the merger agreement or
consented to in writing by BB&T. The representations and warranties of First
Citizens concerning
. its capitalization,
. its and its subsidiaries' organization and authority to conduct
business,
. its ownership of its subsidiaries,
. its authorization and the binding nature of the merger agreement,
. the absence of conflict between the transactions in the merger agreement
and First Citizens' articles of incorporation or bylaws,
. its forbearance from taking any actions that would negatively affect the
pooling-of-interest or tax-free elements of the merger or the receipt of
necessary regulatory approvals and
. actions taken to exempt the merger from any applicable anti-takeover
laws
must be true and correct (except for inaccuracies that are de minimis in
amount). Moreover, there must not exist inaccuracies in any of the
representations and warranties of First Citizens set forth in the merger
agreement such that the effect of such inaccuracies individually or in the
aggregate has, or is reasonably likely to have, a material adverse effect on
First Citizens.
Conduct of First Citizens' and BB&T's Business Prior to the Effective Time of
the Merger
Except with the prior consent of BB&T, before the effective time First
Citizens may not, and must cause each of its subsidiaries not to:
. carry on its business except in the ordinary course and in substantially
the same manner as previously conducted, or establish or acquire any new
subsidiary or engage in any new type of activity or expand any existing
activities;
. declare or pay any distribution on its capital stock, other than
regularly scheduled quarterly dividends of $0.10 per share of First
Citizens common stock payable on record dates and in amounts consistent
with past practices (except that any dividend declared or payable in the
quarterly period during which the effective time occurs may, unless
otherwise agreed, be declared with a record date before the effective
time only if the normal record date for payment of the corresponding
quarterly dividend on BB&T common stock is before the effective time);
. issue any shares of capital stock except under its stock option plans or
the option granted to BB&T in connection with the merger agreement;
. issue or authorize any rights to acquire capital stock or effect any
recapitalization, reclassification, stock dividend, stock split or
similar change in capitalization;
. amend its articles of incorporation or bylaws;
. impose or permit the imposition or existence of any lien, charge or
encumbrance on any share of stock held by it in any First Citizens
subsidiary or release any material right or cancel or compromise any
debt or claim, in each case other than in the ordinary course of
business;
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. merge with any other entity or permit any other entity to merge into it,
acquire control over any other entity or dispose of any assets or
acquire any assets, in each case other than in the ordinary course of
its business consistent with past practice;
. fail to comply in any material respect with any legal requirements
applicable to it and to the conduct of its business;
. increase the compensation of any of its directors, officers or employees
(excluding increases resulting from the exercise of outstanding
compensatory stock options), or pay or agree to pay any bonus or provide
any new employee benefit or incentive, except for increases or payments
made in the ordinary course under existing arrangements;
. enter into or substantially modify (except as may be required by law)
any employee benefit, incentive or welfare arrangement, or any related
trust agreement, relating to any of its directors, officers or other
employees (other than renewal of any of arrangement consistent with past
practice);
. solicit inquiries or proposals with respect to, furnish any information
relating to, or participate in any discussions concerning, any other
business combination with First Citizens or any First Citizens
subsidiary, or fail to notify BB&T immediately if any such inquiries or
proposals are received, any such information is requested or required or
any such discussions are sought (except that this would not apply to an
unsolicited offer if First Citizens is advised by legal counsel that in
its opinion the failure to furnish information or negotiate would likely
constitute a breach of the fiduciary duty of the First Citizens Board to
the First Citizens shareholders);
. enter into (a) any material agreement or commitment not made in the
ordinary course, (b) any agreement, indenture or other instrument not
made in the ordinary course relating to the borrowing of money by First
Citizens or a First Citizens subsidiary or guarantee by First Citizens
or a First Citizens subsidiary of any obligation, (c) any agreement or
commitment relating to the employment or severance of a consultant or
the employment, severance or retention in office of any director,
officer or employee (except for the election of directors or the
reappointment of officers in the normal course) or (d) any contract,
agreement or understanding with a labor union;
. change its lending, investment or asset liability management policies in
any material respect, except as required by applicable law and except
that after shareholder approval of the merger agreement and receipt of
necessary regulatory approvals, First Citizens will cooperate with BB&T
to adopt policies, practices and procedures consistent with those used
by BB&T;
. change its methods of accounting in effect at March 31, 1998, except as
required by changes in accounting principles reasonably concurred in by
BB&T, or change any of its federal income tax reporting methods from
those used in the preparation of its tax returns for the year ended
March 31, 1998, except as required by changes in law;
. incur any commitments for capital expenditures or obligation to make
capital expenditures in excess of $25,000 for any one expenditure or
$100,000 in the aggregate;
. incur any new indebtedness other than deposits from customers, advances
from the Federal Home Loan Bank or Federal Reserve Bank and reverse
repurchase arrangements, in each case in the ordinary course;
. take any action that could reasonably be expected to (a) cause the
merger not to be accounted for as a pooling of interests or not to
constitute a tax-free reorganization as determined by BB&T, (b) result
in any inaccuracy of a representation or warranty that would permit
termination of the merger agreement or (c) cause any of the conditions
to the merger to fail to be satisfied;
. sell or agree to sell all or any part of the real property owned by
Jefferson Ventures, Inc., except as set forth in the Agreement for the
Sale and Purchase of Real Estate dated July 16, 1996 by and between
Peachtree City Holdings, L.L.C. and Jefferson Ventures, Inc., as amended
in December 1996 and on February 25, 1997;
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. dispose of any material assets other than in the ordinary course; or
. agree to do any of the foregoing.
Except with the prior consent of First Citizens, before the effective time
neither BB&T nor any subsidiary of BB&T may take any action that would or
might be expected to
. cause the merger not to constitute a pooling of interests or a tax-free
reorganization;
. result in any inaccuracy of a representation or warranty that would
allow for termination of the merger agreement;
. cause any of the conditions precedent to the transactions in the merger
agreement to fail to be satisfied;
. exercise the option agreement executed concurrently with the merger
agreement other than in accordance with its terms or dispose of shares
of First Citizens common stock acquired under that agreement other than
in accordance with its terms; or
. fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and to the conduct
of its business.
Waiver; Amendment; Termination; Expenses
Except with respect to any required regulatory approval, BB&T or First
Citizens may at any time (whether before or after approval of the merger
agreement and the plan of merger by the First Citizens shareholders) extend
the time for the performance of any of the obligations or other acts of the
other party and may waive (a) any inaccuracies of the other party in the
representations or warranties contained in the merger agreement, the plan of
merger or any document delivered pursuant thereto, (b) compliance with any of
the covenants, undertakings or agreements of the other party, or satisfaction
of any of the conditions precedent to its obligations, contained in the merger
agreement or in the plan of merger or (c) the performance by the other party
of any of its obligations set out therein. The parties may also mutually amend
or supplement the merger agreement in writing at any time. No such extension,
waiver, amendment or supplement after approval by the First Citizens
shareholders of the merger agreement and the plan of merger, however, may
modify either the amount or the form of the consideration to be provided to
holders of First Citizens common stock upon completion of the merger.
If any of the conditions to the obligation of either party to complete the
merger is not fulfilled, such party will consider the materiality of such
nonfulfillment. In the case of the nonfulfillment of a condition to First
Citizens' obligations, First Citizens will, if it believes appropriate under
the circumstances, resolicit shareholder approval of the merger agreement and
the plan of merger and in connection therewith provide appropriate information
concerning such nonfulfillment.
The merger agreement may be terminated, and
. at any time before the effective time, by the mutual consent in writing
of BB&T and First Citizens;
. at any time before the effective time, by either party (a) in the event
of a material breach by the other party of any covenant or agreement
contained in the merger agreement or (b) in the event of an inaccuracy
of any representation or warranty of the other party contained in the
merger agreement that would provide the nonbreaching party the ability
to refuse to complete the merger under the applicable standard set forth
in the merger agreement (see "--Conditions to the Merger"); and, in the
case of (a) or (b), if such breach or inaccuracy has not been cured by
the earlier of 30 days following notice of such breach to the party
committing such breach or inaccuracy or the effective time;
. at any time before the effective time, by either party in writing, if
any of the conditions precedent to the obligations of the other party to
complete the transactions in the merger agreement cannot be satisfied or
fulfilled before the date on which the effective time is to occur, and
the party giving the notice is not in breach of any of its
representations, warranties, covenants or undertakings;
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. at any time, by either party in writing, if any of the applications for
prior regulatory approval are denied, and the time period for appeals
and requests for reconsideration has run;
. at any time, by either party in writing, if the shareholders of First
Citizens do not approve the merger agreement and the plan of merger;
. at any time following August 31, 1999, by either party in writing, if
the effective time has not occurred by the close of business on such
date and the party giving the notice is not in breach of any of its
representations, warranties, covenants or undertakings; or
. by First Citizens, pursuant to the provisions of the merger agreement
described above under "--Exchange Ratio."
If the merger agreement is terminated pursuant to any of the provisions
described above, both the merger agreement and the plan of merger will become
void and have no effect, except that (a) provisions in the merger agreement
relating to confidentiality and expenses will survive any such termination and
(b) a termination for an uncured breach of a covenant or agreement or
inaccuracy in a representation or warranty will not relieve the breaching
party from liability for that breach or inaccuracy.
Each party to the merger agreement will pay all expenses incurred by it in
connection with the merger agreement and the merger, except that printing
expenses and SEC registration fees incurred in connection with the
registration statement will be paid 50% by BB&T and 50% by First Citizens.
Interests of Certain Persons in the Merger
Certain members of First Citizens' management, including all of its
directors, have interests in the merger that are in addition to their
interests as shareholders of First Citizens generally. The First Citizens
Board was aware of these factors and considered them, among other matters, in
approving the merger agreement.
Employment Agreements
In connection with the merger, it is anticipated that Branch Banking and
Trust Company, BB&T's North Carolina banking subsidiary ("BB&T-NC" or the
"Employer") will enter into a five-year employment agreement with Tom Moat and
a three-year employment agreement with each of Charles M. Barnes, Donald C.
Phillips and Douglas J. Hertha (with Mr. Moat, the "Executives"). The
employment agreements will provide for the employment of Mr. Moat as a Senior
Vice President of BB&T-NC and Messrs. Barnes, Phillips and Hertha as Vice
Presidents of BB&T-NC.
Each of the employment agreements provides that the Executive in question
will receive a base salary at least equal to that previously received from
First Citizens, with the potential for an annual increase based on the
Employer's performance and the Executive's performance (except that Mr. Moat
will also receive an amount equal to the value of the benefits he will lose in
the merger).
Each of the Executives will be entitled to participate in any bonus or
incentive plan, whether it provides for awards in cash or securities, made
available to similarly situated officers, or such other similar plans for
which the Executive may become eligible and designated a participant. Each
Executive also will receive, on the same basis as other similarly situated
officers of the Employer, employee pension and welfare benefits and group
employee benefits such as sick leave, vacation, group disability and health,
dental, life and accident insurance and similar indirect compensation that may
be extended to similarly situated officers.
Each Executive's employment agreement provides that, if the Employer
terminates the Executive's employment other than because of disability or for
cause, the Executive will, if he complies with certain noncompetition
provisions, be entitled to receive an annual salary equal to the highest
amount of cash compensation (including bonuses) received during any of the
preceding three calendar years ("Termination Compensation") for the remainder
of what would otherwise have been the term of the agreement. In addition,
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each Executive would continue to receive health insurance coverage and other
group employee benefits from the Employer on the same terms as were in effect
before the termination, either under the Employer's plans or comparable
coverage, during the time payments of Termination Compensation are made.
Each of the employment agreements provides that the Executive may
voluntarily terminate employment for "Good Reason" (defined below) until
twelve months after a "Change of Control" (defined below) of the Employer or
BB&T and (a) be entitled to receive in a lump sum (1) any compensation due but
not yet paid through the date of termination and (2) in lieu of any further
salary payments from the date of termination to the end of the term of the
agreement, an amount equal to the Termination Compensation times 2.99, and (b)
continue to receive health insurance coverage and other group employee
benefits for a period of three years following termination of employment by
the Executive on the same terms as were in effect either (1) at the date of
termination or (2) at the date of the Change of Control, if such plans and
programs in effect before the Change of Control were, considered together as a
whole, materially more generous to the officers of the Employer than such
plans and programs at the date of termination.
"Good Reason" means any of the following events occurring without the
Executive's consent:
. the assignment to the Executive of duties inconsistent with the position
and status of the Executive's title;
. a reduction in the Executive's pay grade or base salary as then in
effect, or the exclusion of the Executive from participation in benefit
plans in which he previously participated;
. an involuntary relocation of the Executive more than 100 miles (35 miles
for Mr. Moat) from the location where the Executive worked immediately
before a Change in Control, or the breach by the Employer of any
material provision of the employment agreement; or
. any purported termination of the employment of the Executive by the
Employer not effected in accordance with the employment agreement.
A "Change of Control" would be deemed to occur if
. any person or group of persons (as defined in the Securities Exchange
Act of 1934, as amended, the "Securities Exchange Act") together with
its affiliates, excluding employee benefit plans of the Employer or
BB&T, is or becomes the beneficial owner of securities of the Employer
or BB&T representing 20% or more of the combined voting power of the
Employer's or BB&T's then outstanding securities;
. as a result of a tender offer or exchange offer for the purchase of
securities of the Employer or BB&T (other than an offer by BB&T for its
own securities), or as a result of a proxy contest, merger,
consolidation or sale of assets, or as a result of any combination of
the foregoing, individuals who at the beginning of any two-year period
constitute the BB&T Board, plus new directors whose election or
nomination for election by BB&T's shareholders is approved by a vote of
at least two-thirds of the directors still in office who were directors
at the beginning of the two-year period, cease for any reason during the
two-year period to constitute at least two-thirds of the members of the
BB&T Board;
. the shareholders of BB&T approve a merger or consolidation of BB&T with
any other corporation or entity, regardless of which entity is the
survivor, other than a merger or consolidation that would result in the
voting securities of BB&T outstanding immediately beforehand continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 40% of the combined
voting power of the voting securities of BB&T or the other surviving
entity outstanding immediately after the merger or consolidation;
. the shareholders of BB&T approve a plan of complete liquidation or
winding-up of BB&T or an agreement for the sale or disposition by BB&T
of all or substantially all of BB&T's assets; or
. any other event occurs that the BB&T Board determines should constitute
a Change of Control.
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In addition, Mr. Moat's agreement provides that, if he were to resign from
employment during the period beginning with the one year anniversary of his
employment agreement and ending twelve months thereafter, other than for "Good
Reason" or disability, he would be entitled to receive Termination
Compensation and the other benefits described above for the 36-month period
beginning with the date of his resignation.
If any of the payments to be made under the employment agreements would
constitute a "parachute payment," as defined in Section 280G of the Internal
Revenue Code, the payments would be reduced by the smallest amount necessary
so that no portion of such payments would be a "parachute payment." A
"parachute payment" generally is a payment which is contingent on a change in
the control of the corporation and the present value of which equals or exceed
three times the "base amount," which is generally defined as the Executive's
annualized includable compensation for the "base period," which is generally
the most recent five taxable years of the Executive ending before the date of
the change in control. Sections 280G and 4999 of the Internal Revenue Code
generally provide that if "parachute payments" are paid to an individual,
everything above the base amount will be subject to a 20% excise tax payable
by the individual (in addition to the payment of regular income taxes on the
payments), as well as be nondeductible by the employer for federal income tax
purposes.
The Executives' employment agreements will supersede any of their existing
employment agreements and change of control arrangements with First Citizens
or its subsidiaries. Any dispute arising under any of the employment
agreements that is not resolved by the parties will be submitted to binding
arbitration.
First Citizens Board of Directors
In connection with the merger, BB&T will offer each member of the First
Citizens Board a seat on its Advisory Board for the Atlanta, Georgia area. For
two years after the effective time, those members will receive, as
compensation for service on the Advisory Board, member's fees (annual retainer
and attendance fees) equal in amount each year to the annual retainer and
schedule of attendance fees for directors of First Citizens in effect on
January 1, 1999. These Advisory Board members will thereafter receive fees in
accordance with BB&T's standard schedule of Advisory Board service fees. For
two years after the effective time, no such member may be prohibited from
serving because he or she has reached the maximum age for Advisory Board
service (currently age 70). In addition to the foregoing, J. Littleton Glover,
Jr. will be appointed to the BB&T-NC Board. Members of the BB&T-NC board
receive an annual retainer of $5,000 plus $1,000 for each meeting attended.
Indemnification of Directors and Officers
The merger agreement provides that BB&T or one of its subsidiaries will
maintain for three years after the effective time directors' and officers'
liability insurance covering directors and officers of First Citizens for acts
or omissions before the effective time. This insurance will provide at least
the same coverage and amounts as contained in First Citizens' policy on the
date of the merger agreement, unless the annual premium on the policy would
exceed 150% of the annual premium payments on First Citizens' policy, in which
case BB&T would maintain the most advantageous policies of directors' and
officers' liability insurance obtainable for a premium equal to this amount.
BB&T has also agreed to indemnify all individuals who are or have been
officers, directors or employees of First Citizens or any First Citizens
subsidiary before the effective time from any acts or omissions in these
capacities before the effective time to the fullest extent that such
indemnification is provided under First Citizens' articles of incorporation or
bylaws on the date hereof and is permitted under North Carolina law.
Regulatory Considerations
Bank holding companies (such as BB&T and First Citizens) and their
depository institution subsidiaries are highly regulated institutions, with
numerous federal and state laws and regulations governing their activities.
Among these laws and regulations are requirements of prior approval by
applicable government regulatory authorities in connection with acquisition
and merger transactions such as the merger, as summarized below. In
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addition, these institutions are subject to ongoing supervision, regulation
and periodic examination by various federal and state financial institution
regulatory agencies. Detailed discussions of such ongoing regulatory oversight
and the laws and regulations under which it is carried out can be found in the
Annual Reports on Form 10-K of BB&T and Form 10-KSB of First Citizens
incorporated by reference herein. See "Where You Can Find More Information" on
page 50. Those discussions are qualified in their entirety by the actual
language of the laws and regulations, which are subject to change based on
possible future legislation and action by regulatory agencies.
The merger and the subsidiary bank mergers are subject to certain regulatory
approvals, as set forth below. To the extent that the following information
describes statutes and regulations, it is qualified in its entirety by
reference to those particular statutes and regulations.
The Merger
The merger is subject to approval by the Board of Governors of the Federal
Reserve System under Sections 3 and 4 of the Bank Holding Company Act of 1956.
In considering the approval of a transaction such as the merger, this act
requires the Federal Reserve to review the financial and managerial resources
and future prospects of the bank holding companies and the banks concerned and
the convenience and needs of the communities to be served. The Federal Reserve
also is required to evaluate whether the merger would result in a monopoly or
would be in furtherance of any combination or conspiracy or attempt to
monopolize the business of banking in any part of the United States or
otherwise would substantially lessen competition or tend to create a monopoly
or which in any manner would be in restraint of trade, unless it finds the
anti-competitive effects of the proposed transaction are clearly outweighed in
the public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served.
Where a transaction, such as the merger, is the acquisition by a bank
holding company of a bank located in a state other than the home state of the
bank holding company (in this case North Carolina), the Bank Holding Company
Act authorizes the Federal Reserve to approve the transaction without regard
to whether such transaction is prohibited under the laws of any state,
provided the bank holding company is adequately capitalized and adequately
managed and certain other limitations are not exceeded. BB&T is considered
well-capitalized and well-managed under the Federal Reserve's Regulation Y,
and the transaction does not exceed the other limitations.
The Federal Reserve also must review the nonbanking activities being
acquired in the merger (such as operating a savings institution and a service
corporation) to determine whether the acquisition of such activities
reasonably can be expected to produce benefits to the public (such as greater
convenience, increased competition or gains in efficiency) that outweigh
possible adverse effects (such as undue concentration of resources, decreased
or unfair competition, conflicts of interest or unsound banking practices).
This consideration includes an evaluation by the Federal Reserve of the
financial and managerial resources of BB&T and its subsidiaries and First
Citizens Bank, and the effect of the proposed transaction on those resources,
as well as whether the merger would result in a monopoly or otherwise would
substantially lessen competition. By statute, the Federal Reserve is required
to forward a copy of the notice required to be filed by BB&T to the Office of
Thrift Supervision for its review and comment. However, because bank holding
companies that acquire savings institutions are exempt from the provisions of
federal law relating to savings and loan holding companies, BB&T is not
required to file a separate application with the Office of Thrift Supervision
for approval of the merger.
The Georgia Department of Banking and Finance also must approve the merger
under the bank holding company act provisions of the Official Code of Georgia,
which permit an out-of-state bank holding company to acquire a bank having
banking offices in Georgia. In evaluating the transaction, the Department will
consider the effect of the transaction upon competition, the convenience and
needs of the community to be served, the financial history of the acquiring
holding company and the bank to be acquired, the condition of the acquiring
holding company and the bank to be acquired including capital, management and
earnings prospects, the existence of insider transactions, the adequacy of
disclosure of the terms of the acquisition and the equitable treatment of
minority shareholders of the bank to be acquired.
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BB&T also is required to provide notice to the Virginia Bureau of Financial
Institutions under the bank holding company act provisions of the Virginia
Code, which permit an out-of-state bank holding company that controls a
Virginia bank, such as BB&T, to acquire a bank outside of Virginia, such as
First Citizens Bank of Georgia, if the Bureau approves the transaction. The
Bureau is required to approve the transaction if it determines that the
transaction would not be detrimental to the safety and soundness of the
Virginia bank.
All of the required applications and notices for the merger have been
submitted to the appropriate regulatory agencies and have been obtained.
However, there is no assurance that the U.S. Department of Justice or a state
attorney general will not challenge the merger (or the subsidiary bank mergers
discussed below) or, if such a challenge is made, as to the results thereof.
The Subsidiary Bank Mergers
Although not required by the terms of the merger agreement or the plan of
merger, BB&T expects to effect the subsidiary bank mergers during the second
quarter of 2000. The subsidiary bank mergers are each subject to approval of
the Federal Deposit Insurance Corporation under the Bank Merger Act. In
granting its approval under the Bank Merger Act, the FDIC must consider the
financial and managerial resources and future prospects of the existing and
proposed institutions and the convenience and needs of the communities to be
served. Further, the FDIC may not approve any subsidiary bank merger if it
would result in a monopoly, if it would be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the business of
banking in any part of the United States, if the effect of the subsidiary bank
merger in any section of the country may be to substantially lessen
competition or to tend to create a monopoly or if it would be in any other
manner in restraint of trade, unless the FDIC finds that the anticompetitive
effects of the subsidiary bank merger are clearly outweighed in the public
interest by the probable effect of such merger in meeting the convenience and
needs of the communities to be served. In addition, the FDIC must take into
account the record of performance of the existing and proposed institution
under the Community Reinvestment Act of 1977 in meeting the credit needs of
the community, including low- and moderate-income neighborhoods, served by
such institution. Applicable regulations also require publication of notice of
the application for approval of the subsidiary bank mergers and an opportunity
for the public to comment on the applications in writing and to request a
hearing.
The North Carolina Commissioner of Banks also must approve the subsidiary
bank mergers under the bank merger act provisions of the North Carolina
General Statutes. In its review of the subsidiary bank mergers, the N.C.
Commissioner is required to consider whether the interests of the depositors,
creditors and shareholders of each institution are protected, whether the
merger is in the public interest and whether the merger is for legitimate
purposes.
BB&T-NC also is required under Georgia law to provide prior notice of the
subsidiary bank mergers to the Georgia Department of Banking and Finance.
BB&T and First Citizens are not aware of any other governmental approvals or
actions that are required for completion of the merger or the subsidiary bank
mergers, except as described above. Should any other approval or action be
required, it is currently expected that such approval or action would be
sought. There can be no assurance that any such approval or action, if needed,
could be obtained, would not delay completion of the merger or would not be
conditioned in a manner that would cause BB&T to abandon the merger in the
manner permitted by the merger agreement.
Material Federal Income Tax Consequences of the Merger
The following is a summary description of the material anticipated federal
income tax consequences of the merger generally applicable to the shareholders
of First Citizens and to BB&T and First Citizens. This summary is not intended
to be a complete description of all of the federal income tax consequences of
the merger. No information is provided with respect to the tax consequences of
the merger under any other tax laws, including applicable state, local and
foreign tax laws. In addition, the following discussion may not be applicable
with respect to certain specific categories of shareholders, including but not
limited to persons who are corporations,
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trusts, dealers in securities, financial institutions, insurance companies or
tax exempt organizations; persons who are not United States citizens or
resident aliens or domestic entities (partnerships or trusts); persons who are
subject to alternative minimum tax (to the extent that tax affects the tax
consequences of the merger) or are subject to the "golden parachute"
provisions of the Internal Revenue Code (to the extent that tax affects the
tax consequences of the merger); persons who acquired First Citizens common
stock pursuant to employee stock options or otherwise as compensation if such
shares are subject to any restriction related to employment; persons who do
not hold their shares as capital assets; or persons who hold their shares as
part of a "straddle" or "conversion transaction." No ruling has been or will
be requested from the IRS with respect to the tax effects of the merger. The
federal income tax laws are complex, and a shareholder's individual
circumstances may affect the tax consequences to the shareholder.
Consequently, each First Citizens shareholder is urged to consult his or her
own tax advisor regarding the tax consequences, including the applicable
United States federal, state, local, and foreign tax consequences, of the
merger to him or her.
In the opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to BB&T:
(a) the merger will constitute a reorganization under Section 368 of the
Internal Revenue Code; (b) no gain or loss will be recognized by BB&T or First
Citizens by reason of the merger; (c) the shareholders of First Citizens will
recognize no gain or loss for federal income tax purposes to the extent BB&T
common stock is received in the merger in exchange for First Citizens common
stock; (d) a shareholder of First Citizens who receives cash in lieu of a
fractional share of BB&T common stock will recognize gain or loss as if the
shareholder received the fractional share and it was then redeemed for cash in
an amount equal to the amount paid by BB&T in respect of such fractional
share; (e) the tax basis in the BB&T common stock received by a shareholder
(including any fractional share interest deemed received) will be the same as
the tax basis in the First Citizens common stock surrendered in exchange
therefor; and (f) the holding period for BB&T common stock received (including
any fractional share interest deemed received) in exchange for shares of First
Citizens common stock will include the period during which the shareholder
held the shares of First Citizens common stock surrendered in the exchange,
provided that the First Citizens common stock was held as a capital asset at
the effective time.
The completion of the merger is conditioned upon the receipt by BB&T and
First Citizens of the legal opinion of Womble Carlyle Sandridge & Rice, PLLC,
counsel to BB&T, dated as of the closing date to the effect of items (a) and
(c) as described above. Neither party intends to waive this condition. If the
tax opinion were not available and the First Citizens Board wished to proceed
with the merger, First Citizens would resolicit its shareholders.
Accounting Treatment
It is anticipated that the merger will be accounted for as a pooling-of-
interests transaction under generally accepted accounting principles. Under
such accounting method, holders of First Citizens common stock will be deemed
to have combined their existing voting common stock interest with that of
holders of BB&T common stock by exchanging their shares for shares of BB&T
common stock. Accordingly, the book value of the assets, liabilities and
shareholders' equity of First Citizens, as reported on its consolidated
balance sheet, will be carried over to the consolidated balance sheet of BB&T,
and no goodwill will be created. BB&T will be able to include in its
consolidated income the consolidated income of First Citizens for the entire
fiscal year in which the merger occurs; however, certain expenses incurred to
effect the merger must be treated by BB&T as current charges against income
rather than adjustments to its balance sheet. The unaudited pro forma
financial information contained in this proxy statement/prospectus has been
prepared using the pooling-of-interests method of accounting. If the merger
does not qualify for pooling-of-interests accounting treatment, BB&T may, in
its discretion, terminate the transaction.
The Option Agreement
General
As a condition to BB&T entering into the merger agreement, First Citizens
(as issuer) entered into an agreement with BB&T (as grantee), pursuant to
which First Citizens granted an option to BB&T to purchase
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from First Citizens up to 560,483 shares of First Citizens common stock
(subject to adjustment in certain circumstances) at a price of $27.50 per
share (subject to adjustment under certain circumstances). The purchase of any
shares of First Citizens common stock pursuant to the option is subject to
compliance with applicable law, including the receipt of necessary approvals
under the Bank Holding Company Act of 1956, and to BB&T's compliance with its
covenants in the merger agreement.
The option agreement is intended to increase the likelihood that the merger
will be completed in accordance with the terms set forth in the merger
agreement. Consequently, certain aspects of the option agreement may have the
effect of discouraging persons who, before the effective time, might be
interested in acquiring all of or a significant interest in First Citizens
from considering or proposing such an acquisition, even if they were prepared
to offer to pay consideration to shareholders of First Citizens with a higher
current market price than the BB&T common stock to be received for First
Citizens common stock pursuant to the merger agreement.
The option agreement is filed as an exhibit to the registration statement,
and the following discussion is qualified in its entirety by reference to the
option agreement. See "Where You Can Find More Information" on page 50.
Exercisability
If BB&T is not in material breach of the option agreement or its covenants
and agreements contained in the merger agreement and if no injunction or other
court order against delivery of the shares covered by the option is in effect,
BB&T may generally exercise the option, in whole or in part, at any time and
from time to time prior to its termination, as described below, following the
happening of either of the following events (each a "Purchase Event"):
. without BB&T's prior consent, First Citizens authorizes, recommends,
publicly proposes (or publicly announces an intention to authorize,
recommend or propose) or enters into an agreement with any third party
to effect any of the following (each an "Acquisition Transaction"): (a)
a merger, consolidation or similar transaction involving First Citizens
or any of its significant subsidiaries, (b) the sale, lease, exchange or
other disposition of 15% or more of the consolidated assets or deposits
of First Citizens and its subsidiaries or (c) the issuance, sale or
other disposition of securities representing 15% or more of the voting
power of First Citizens or any of its significant subsidiaries; or
. any third party or group of third parties acquires or has the right to
acquire beneficial ownership of securities representing 20% or more of
the outstanding shares of First Citizens common stock.
The obligation of First Citizens to issue shares of First Citizens common
stock upon exercise of the option will be deferred (but will not terminate)
(a) until the receipt of all required governmental or regulatory approvals or
consents, or until the expiration or termination of any waiting period
required by law, or (b) so long as any injunction or other order, decree or
ruling issued by any federal or state court of competent jurisdiction is in
effect that prohibits the sale or delivery of the shares.
Termination
The option will terminate upon the earliest to occur of the following
events: (a) the effective time; (b) the termination of the merger agreement
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
(as defined below) (other than a termination by BB&T based on either a
material breach by First Citizens of a covenant or agreement in the merger
agreement or an inaccuracy in First Citizens' representations or warranties in
the merger agreement of a nature entitling BB&T to terminate (a "Default
Termination"); (c) 12 months after a Default Termination; (d) 12 months after
termination of the merger agreement (other than a Default Termination)
following the occurrence of a Purchase Event or a Preliminary Purchase Event;
or (e) 12 months after a termination of the merger agreement based on the
failure of the shareholders of First Citizens to approve the merger agreement
and the plan of merger.
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A "Preliminary Purchase Event" is defined as either of the following:
. the commencement by any third party of a tender or exchange offer such
that it would thereafter own 20% or more of the outstanding shares of
First Citizens common stock or the filing of a registration statement
with respect to such an offer, or
. the failure of the shareholders of First Citizens to approve the merger
agreement, the failure of the meeting to have been held, the
cancellation of the meeting prior to the termination of the merger
agreement or the First Citizens Board having withdrawn or modified in
any manner adverse to BB&T its recommendations with respect to the
merger agreement, in any case after a third party: (a) proposes to
engage in an Acquisition Transaction, (b) commences a tender offer or
files a registration statement under the Securities Act with respect to
an exchange offer such that it would thereafter own 20% or more of the
outstanding shares of First Citizens common stock or (c) files an
application or notice under federal or state statutes relating to the
regulation of financial institutions or their holding companies to
engage in an Acquisition Transaction.
To the knowledge of BB&T and First Citizens, no Purchase Event or
Preliminary Purchase Event has occurred as of the date of this proxy
statement/prospectus.
Adjustments
The option agreement provides for certain adjustments in the option in the
event of any change in First Citizens common stock by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction or in the event of the issuance of any
additional shares of First Citizens common stock before termination of the
option.
Repurchase Rights
At the request of the holder of the option any time during the 12 months
after the first occurrence of a Repurchase Event (as defined below), First
Citizens must, if the option has not terminated, and subject to any required
regulatory approval, repurchase from the holder (a) the option and (b) all
shares of First Citizens common stock purchased by the holder pursuant to the
option with respect to which the holder then has beneficial ownership. The
repurchase will be at an aggregate price equal to the sum of:
. the aggregate purchase price paid by the holder for any shares of First
Citizens common stock acquired pursuant to the option with respect to
which the holder then has beneficial ownership, plus
. the excess, if any, of (a) the Applicable Price (as defined in the
option agreement) for each share of First Citizens common stock over the
purchase price, multiplied by (b) the number of shares of First Citizens
common stock with respect to which the option has not been exercised,
plus
. the excess, if any, of (a) the Applicable Price over the purchase price
paid (or, in the case of shares of First Citizens common stock covered
by the option with respect to which the option has been exercised but
the closing date for the purchase has not occurred, payable) by the
holder for each share of First Citizens common stock with respect to
which the option has been exercised and with respect to which the holder
then has beneficial ownership, multiplied by (b) the number of such
shares.
A "Repurchase Event" occurs if: (a) any third party acquires actual
ownership or control of, or any "group" (as such term is defined under the
Securities Exchange Act) is formed that has acquired actual ownership or
control of, 50% or more of the then outstanding shares of First Citizens
common stock, or (b) any of the merger or other business combination
transactions set forth in the paragraph below describing substitute options is
completed.
Substitute Options
If, before the termination of the option agreement, First Citizens enters
into an agreement:
. to consolidate with or merge into any third party and will not be the
continuing or surviving corporation of the consolidation or merger;
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. to permit any third party to merge into First Citizens with First
Citizens as the continuing or surviving corporation, but, in connection
therewith, the then outstanding shares of First Citizens common stock
are changed into or exchanged for stock or other securities of First
Citizens or any other person or cash or any other property, or the
outstanding shares of First Citizens common stock after the merger
represent less than 50% of the outstanding shares and share equivalents
of the merged company;
. to permit any third party to acquire all of the outstanding shares of
First Citizens common stock pursuant to a statutory share exchange; or
. to sell or otherwise transfer all or substantially all of its assets or
deposits to any third party,
then the agreement must provide that the option will be converted or exchanged
for an option to purchase shares of common stock of, at the holder's option,
either (x) the continuing or surviving corporation of a merger or
consolidation or the transferee of all or substantially all of First Citizens'
assets or (y) any person controlling the continuing or surviving corporation
or transferee. The number of shares subject to the substitute option and the
exercise price per share will be determined in accordance with a formula in
the option agreement. To the extent possible, the substitute option will
contain terms and conditions that are the same as those in the option
agreement.
Registration Rights
The option agreement grants to BB&T and any permitted transferee of the
option certain rights to require First Citizens to prepare and file a
registration statement under the Securities Act if registration is necessary
in order to permit the sale or other disposition of any or all shares of First
Citizens common stock or other securities that have been acquired by or are
issuable upon exercise of the option.
Effect on Employees, Employee Benefit Plans and Stock Options
Employees
Each employee of First Citizens at the effective time who becomes an
employee of BB&T or a BB&T subsidiary immediately following the effective time
will be eligible to participate in the group hospitalization, medical, dental,
life, disability and other welfare benefit plans and programs available to
employees of the BB&T employer, subject to the terms of such plans and
programs. Service with First Citizens will be deemed to be service with the
BB&T employer for the purpose of determining eligibility to participate and
vesting (if applicable) in such welfare plans and programs, but not for the
purpose of computing benefits, if any, determined in whole or in part with
reference to service. In addition, if the first plan year of participation by
First Citizens employees and their dependents in a group health plan of the
BB&T employer is a partial plan year, the BB&T employer will cause its group
health plan to credit toward deductible and other out-of-pocket limitations
any expenses incurred by such persons under First Citizens' group health plan
during that portion of the BB&T employer's plan year during which such persons
were covered under First Citizens' group health plan.
Each employee of First Citizens or a First Citizens subsidiary who becomes
an employee of BB&T or a BB&T subsidiary and who is terminated after the
effective time (excluding any employee who has an existing employment or
special termination agreement) will be entitled to severance pay in accordance
with the general severance policy maintained by BB&T if and to the extent such
employee is entitled to severance pay under the policy. An employee's service
with First Citizens or a First Citizens subsidiary will be treated as service
with BB&T for purposes of determining the amount of severance pay, if any,
under BB&T's severance policy.
BB&T has agreed to honor all employment agreements, severance agreements and
deferred compensation agreements that First Citizens and its subsidiaries have
with their current and former employees and directors and which have been
disclosed to BB&T, except to the extent any such agreements are superseded or
terminated at or after the effective time.
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BB&T will provide, to the extent required by Section 4980B of the Internal
Revenue Code and Section 601 et seq. of ERISA, health continuation coverage
satisfying for any First Citizens employee and eligible dependents thereof who
incur a "qualifying event", as defined therein, on or prior to the effective
time.
401(k) Plan
BB&T shall cause the 401(k) plan of First Citizens to be merged with the
401(k) plan maintained by BB&T and its subsidiaries, and the account balances
of former employees of First Citizens or its subsidiaries who are participants
in the First Citizens plan will be transferred to the accounts of such
employees under the BB&T 401(k) plan. Following the merger and transfer, these
accounts will be governed and controlled by the terms of the BB&T 401(k) plan
as in effect from time to time, except as required to comply with the
provisions of Section 411(d)(6) of the Internal Revenue Code and the
regulations thereunder (and subject to BB&T's right to terminate such plan).
For purposes of administering the 401(k) plan, service with First Citizens and
its subsidiaries will be deemed to be service with BB&T or its subsidiaries
for eligibility and vesting purposes, but not for purposes of benefit accrual.
Stock Options
At the effective time, each stock option granted under the First Citizens
Stock Option and Incentive Plan and the First Citizens Directors' Nonincentive
Stock Option Plan then outstanding, whether or not exercisable, will be
converted into rights with respect to BB&T common stock. Unless it elects to
substitute options as described below, BB&T will assume each of these stock
options in accordance with the terms of the applicable First Citizens stock
option plan, except that (a) BB&T and the compensation committee of the BB&T
Board will be substituted for First Citizens and the First Citizens Board
administering the stock option plans, (b) each stock option may be exercised
solely for shares of BB&T common stock, (c) the number of shares of BB&T
common stock subject to each stock option will be the number of whole shares
(omitting any fractional share) determined by multiplying the number of shares
of First Citizens common stock subject to the stock option by the exchange
ratio and (d) the per share exercise price for each stock option will be
adjusted by dividing the per share exercise price for the stock option by the
exchange ratio and rounding up to the nearest cent.
As an alternative to assuming the stock options, BB&T may choose to
substitute as of the effective time options under the BB&T Corporation 1995
Omnibus Stock Incentive Plan or any other duly adopted comparable plan for all
or a part of the stock options, subject to the conditions that the
requirements of (c) and (d) in the preceding paragraph will apply, the
substitution may not constitute a modification, extension or renewal of any
stock options that are incentive stock options and the substituted options
will continue in effect on the same terms and conditions as provided in the
stock options and the stock option plan granting each stock option.
Each stock option that is an incentive stock option will be adjusted as
required by Section 424 of the Internal Revenue Code to continue as an
incentive stock option and not to constitute a modification, extension or
renewal within the meaning of Section 424(h) of the Internal Revenue Code.
BB&T has reserved and will continue to reserve adequate shares of BB&T
common stock for the exercise of any converted or substitute options. As soon
as practicable after the effective time, if it has not already done so, and to
the extent First Citizens has a registration statement in effect or an
obligation to file a registration statement, BB&T will file a registration
statement under the Securities Act with respect to the shares of BB&T common
stock subject to converted or substitute options and will use its reasonable
efforts to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as such converted or substitute options remain
outstanding.
BB&T will deliver to each participant in the stock option plans who receives
converted or substitute options an appropriate notice setting forth the
participant's rights in this regard.
Based on stock options outstanding as of the date of execution of the merger
agreement and subsequent exercises, options to purchase an aggregate of up to
approximately 229,303 shares of First Citizens common
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stock may be outstanding at the effective time. Any shares of First Citizens
common stock issued pursuant to the exercise of stock options under the stock
option plans before the effective time will be converted into shares of BB&T
common stock and cash in lieu of any fractional share interest in the same
manner as other outstanding shares of First Citizens common stock.
Restrictions on Resales by Affiliates
All shares of BB&T common stock issuable in the merger will be registered
under the Securities Act and will be freely transferable, except that any such
shares received by "persons" who are deemed to be "affiliates" (as such terms
are defined under the Securities Act) of First Citizens at the effective time
may be resold by them (a) only in transactions registered under the Securities
Act or permitted by the resale provisions of Rule 145 under the Securities Act
or as otherwise permitted by the Securities Act and (b) following the
satisfaction of the requirements of the SEC's Accounting Series Release Nos.
130 and 135 relating to publication of financial results of the post-merger
combined operations of BB&T and First Citizens. Those who may be deemed
affiliates of First Citizens generally include individuals or entities that
directly, or indirectly through one or more intermediaries, control, are
controlled by or are under common control with First Citizens and include
directors and certain executive officers of First Citizens. The restrictions
on resales by an affiliate extend also to certain related parties of the
affiliate, including spouse, relatives and spouse's relatives who in each case
have the same home as the affiliate.
The merger agreement requires First Citizens to use its best efforts to
cause each of its affiliates to deliver to BB&T a written agreement to the
effect generally that such person will not offer or otherwise dispose of any
shares of BB&T common stock issued to that person in the merger, except in
compliance with (a) the Securities Act and the rules and regulations
promulgated thereunder and (b) the requirements of the accounting releases
described above.
INFORMATION ABOUT BB&T
General
BB&T is a multi-bank holding company headquartered in Winston-Salem, North
Carolina. BB&T conducts operations in North Carolina, South Carolina,
Virginia, Maryland and the District of Columbia primarily through its
commercial banking subsidiaries and, to a lesser extent, through its other
subsidiaries. Substantially all of BB&T's loans are to businesses and
individuals in the Carolinas, Virginia, Maryland and the District of Columbia.
BB&T's principal commercial bank subsidiaries are BB&T-NC, Branch Banking and
Trust Company of South Carolina ("BB&T-SC") and Branch Banking and Trust
Company of Virginia ("BB&T-VA"). The principal assets of BB&T are all of the
issued and outstanding shares of common stock of BB&T-NC, BB&T Financial
Corporation of South Carolina, Greenville, South Carolina (which in turn owns
all of the issued and outstanding shares of BB&T-SC), BB&T Financial
Corporation of Virginia (which in turn owns all of the issued and outstanding
shares of BB&T-VA and all of the issued and outstanding shares of the eleven
affiliate banks of the former MainStreet Financial Corporation ("MainStreet"))
and Scott and Stringfellow, Inc.
Operating Subsidiaries
BB&T-NC, BB&T's largest subsidiary, is the oldest bank in North Carolina and
currently operates through 345 banking offices throughout North Carolina and
35 offices in metropolitan Washington, D.C. and Maryland. BB&T-NC provides a
wide range of banking services in its local market for retail and commercial
customers, including small and mid-size businesses, public agencies and local
governments, trust customers, and individuals. BB&T Leasing Corporation, a
wholly owned subsidiary of BB&T-NC, located in Charlotte, North Carolina,
offers lease financing to commercial businesses and municipal governments.
BB&T Investment Services, Inc., also a wholly owned subsidiary of BB&T-NC,
located in Charlotte, North Carolina, offers customers investment
alternatives, including discount brokerage services, fixed-rate and variable-
rate annuities, mutual funds, and
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government and municipal bonds. BB&T Insurance Services, Inc., located in
Raleigh, North Carolina, is also a subsidiary of BB&T-NC and offers life,
property and casualty and title insurance on an agency basis. Additional
subsidiaries of BB&T-NC include Prime Rate Premium Finance Corporation, Inc.,
which provides insurance premium financing and services to customers in
Virginia and the Carolinas.
BB&T-SC serves South Carolina through 90 banking offices. BB&T-SC provides a
wide range of banking services in its local market for retail and commercial
customers, including small and mid-size businesses, public agencies, local
governments, trust customers and individuals. BB&T-SC's subsidiaries include
BB&T Investment Services of South Carolina, Inc., which is licensed as a
general broker/dealer of securities and is currently engaged in retailing of
mutual funds, U.S. Government securities, municipal securities, fixed and
variable insurance annuity products and unit investment trusts.
BB&T-VA offers a full range of commercial and retail banking services
through 62 banking offices in the Hampton Roads and Richmond areas and the
southern, central and southwestern regions of Virginia.
The eleven affiliate banks (including a trust company subsidiary) of
MainStreet provide full-service banking and trust services throughout
Virginia, southern Maryland and metropolitan Washington, D.C.
Regional Acceptance Corporation ("RAC"), of Greenville, North Carolina, was
acquired on September 1, 1996. RAC, which has 28 branch offices in North
Carolina, South Carolina, Tennessee and Virginia, specializes in indirect
financing for consumer purchases of mid-model and late-model used automobiles.
Scott & Stringfellow, Inc. ("Scott & Stringfellow"), a full-service retail
brokerage, institutional equity and debt underwriting, investment advisory
services, corporate finance, equity trading and equity research firm, was
acquired on March 26, 1999 and was merged with Craigie Incorporated, which
specialized in the origination, trading and distribution of fixed income
securities and equity products in both the public and private capital markets,
on May 5, 1999.
Phillips Factors Corporation buys and manages account receivables primarily
in the furniture, textiles and home furnishings-related industries. W.E.
Stanley & Company, Inc. is primarily engaged in actuarial and employee group,
health and welfare benefit plan consulting, plan administration, and the
design, communication and administration of all types of corporate retirement
plans. Sheffield Financial Corp. ("Sheffield") specializes in loans to small
commercial lawn care businesses across the country. BB&T Bankcard Corporation
is a special purpose credit card bank.
Acquisitions
BB&T's profitability and market share have been enhanced through both
internal growth and acquisitions of both financial and nonfinancial
institutions during recent years. BB&T's most recent acquisitions include the
following:
On June 18, 1998, BB&T completed the acquisition of Dealers Credit Inc.
("DCI"), a commercial finance company based in Menomonee Falls, Wisconsin that
specializes in extending secured, installment loan credit and direct financing
lease credit to commercial, agricultural, municipal and consumer end-users of
turf care equipment, outdoor power equipment, agricultural equipment and
related products. DCI was merged into Refloat, Inc., the holding company for
Sheffield, and its assets were transferred to Sheffield immediately
thereafter.
On June 30, 1998, BB&T completed the acquisition of W.E. Stanley & Company,
Inc. and two of its sister companies (collectively, "W.E. Stanley"). W.E.
Stanley operates as a wholly owned subsidiary of BB&T-NC under the name W.E.
Stanley & Company, Inc.
On July 1, 1998, BB&T completed the acquisition of Franklin Bancorporation,
Inc. ("Franklin") in a transaction accounted for as a pooling-of-interests.
Franklin National Bank of Washington D.C., the banking
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subsidiary of Franklin, operated ten banking offices in the metropolitan
Washington, D.C. area and was merged into BB&T-NC on February 22, 1999.
BB&T completed the acquisition of Maryland Federal Bancorp, Inc., a unitary
savings and loan holding company and the sole shareholder of Maryland Federal
Bank ("MFB"), on September 30, 1998 and effected the merger of MFB, which had
28 branch offices in the metropolitan Washington D.C. and southern Maryland
areas, into BB&T-NC in November 1998. MFB specialized in the business of
attracting deposits from the general public and investing such deposits
primarily in permanent loans secured by first liens on one-to-four family
residential properties and, to a lesser extent, commercial real estate located
in MFB's market area and in consumer loans.
On March 5, 1999, BB&T acquired MainStreet. With $2.3 million in assets,
MainStreet operated 46 full-service banking offices in Virginia and three in
Maryland.
BB&T acquired Scott & Stringfellow Financial, Inc., the holding company of
Scott & Stringfellow, on March 26, 1999. Scott & Stringfellow has 32 offices
in the Carolinas, Virginia and West Virginia and manages more than $10 billion
in total assets for clients.
On January 28, 1999, BB&T announced that it had agreed to acquire Mason-
Dixon Bancshares, Inc. ("Mason-Dixon") in a tax-free transaction to be
accounted for as a pooling of interests in which Mason-Dixon shareholders
would receive 1.30 shares of BB&T common stock for each share of Mason-Dixon
common stock. The transaction is valued, based on BB&T's closing price of
$38.44 on January 26, at $256.9 million. Mason-Dixon's branch network includes
23 banking offices, 12 consumer finance offices and three mortgage loan
offices in Maryland and is expected to extend BB&T's presence in the
economically strong markets in central Maryland.
On February 25, 1999, BB&T announced that it had agreed to acquire Matewan
BancShares Inc. ("Matewan") in a tax-free transaction. In the transaction,
Matewan common shareholders would receive 0.67 shares of BB&T common stock for
each share of Matewan common stock and Matewan preferred shareholders would
receive 0.8375 shares of BB&T common stock for each share of Matewan preferred
stock. Through its banking subsidiaries, Matewan National Bank and Matewan
FSB, Matewan operates 22 banking offices and one mortgage loan office in
southwestern Virginia, southern West Virginia and eastern Kentucky and is
expected to strengthen BB&T's western Virginia franchise and to expand such
franchise into southern West Virginia and eastern Kentucky.
On April 28, 1999, BB&T announced that it had agreed to acquire First
Liberty Financial Corp. ("First Liberty") in a tax-free transaction to be
accounted for as a pooling-of-interests. Based on BB&T's closing price of $39
per share on April 26, 1999, First Liberty shareholders would receive 0.8525
of a share of BB&T common stock for each share of First Liberty common stock,
or $33.25 per share. The final exchange ratio will be determined based on a
pricing period prior to closing and will be not less than 0.85 shares of BB&T
common stock for each share of First Liberty common stock or more than 0.87
shares of BB&T common stock for each share of First Liberty common stock.
First Liberty, which has approximately $1.7 billion in assets and operates 39
banking offices and 13 consumer finance offices in Macon and Savannah,
Georgia, is expected to expand BB&T's presence into economically strong
markets in Georgia.
BB&T expects to continue to take advantage of the consolidation of the
financial services industry by developing its franchise through the
acquisition of financial institutions. Such acquisitions may entail the
payment by BB&T of consideration in excess of the book value of the underlying
net assets acquired, may result in the issuance of additional shares of BB&T
capital stock or the incurring of an additional indebtedness by BB&T, and
could have a dilutive effect on the per share earnings or book value of BB&T
common stock. Moreover, such acquisitions sometimes result in significant
front-end charges against earnings, although cost savings, especially incident
to in-market acquisitions, also are frequently anticipated.
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Capital
The Federal Reserve has established a minimum requirement for a bank holding
company's ratio of capital to risk-weighted assets (including on-balance sheet
activities and certain off-balance sheet activities, such as standby letters
of credit) of 8%. At least half of a bank holding company's total capital is
required to be composed of common equity, retained earnings, and qualifying
perpetual preferred stock, less certain intangibles ("Tier 1 capital"). The
remainder may consist of certain subordinated debt, certain hybrid capital
instruments and other qualifying preferred stock, and a limited amount of the
loan loss allowance ("Tier 2 capital" and, together with Tier 1 capital,
"total capital"). At March 31, 1999, BB&T's Tier 1 and total capital ratios
were 9.7% and 14.2%, respectively. Effective January 1, 1998, the Federal
Reserve is also requiring certain bank holding companies that engage in
trading activities to adjust their risk-based capital to take into
consideration market risk that may result from movements in market prices of
covered trading positions in trading accounts, or from foreign exchange or
commodity positions, whether or not in trading accounts, including changes in
interest rates, equity prices, foreign exchange rates or commodity prices. Any
capital required to be maintained pursuant to these provisions may consist of
new "Tier 3 capital" consisting of certain short term subordinated debt. In
addition, the Federal Reserve has issued a policy statement, pursuant to which
a bank holding company that is determined to have weaknesses in its risk
management processes or a high level of interest rate risk exposure may be
required to hold additional capital.
The Federal Reserve also has established minimum leverage ratio requirements
for bank holding companies. These requirements provide for a minimum leverage
ratio of Tier 1 capital to adjusted average quarterly assets ("leverage
ratio") equal to 3% for bank holding companies that meet certain specified
criteria, including that they have the highest regulatory rating. All other
bank holding companies generally are required to maintain a leverage ratio of
from at least 100 to 200 basis points above the stated minimum. BB&T's
leverage ratio at March 31, 1999 was 6.9%. Bank holding companies experiencing
internal growth or making acquisitions are expected to maintain strong capital
positions substantially above the minimum supervisory levels without
significant reliance on intangible assets. Furthermore, these capital
requirements indicate that the Federal Reserve will continue to consider a
"tangible Tier 1 leverage ratio" (deducting all intangibles) in evaluating
proposals for expansion or new activity.
The FDIC has adopted minimum risk-based and leverage ratio regulations to
which BB&T's state bank subsidiaries are subject that are substantially
similar to those requirements established by the Federal Reserve described
above. The Office of the Comptroller of the Currency also has similar
regulations that would apply to BB&T's national bank subsidiaries. Under
federal banking laws, failure to meet the minimum regulatory capital
requirements could subject a banking institution to a variety of enforcement
remedies available to federal regulatory authorities, including, in the most
severe cases, the termination of deposit insurance by the FDIC and placing the
institution into conservatorship or receivership. The capital ratios of each
of BB&T's bank subsidiaries exceeded all minimum regulatory capital
requirements as of March 31, 1999.
Deposit Insurance Assessments
The deposits of each of BB&T's bank subsidiaries are insured by the FDIC up
to the limits set forth under applicable law. A majority of the deposits of
the banks are subject to the deposit insurance assessments of the Bank
Insurance Fund ("BIF") of the FDIC. However, approximately 34% of the deposits
of BB&T-NC and BB&T-SC and a portion of the deposits of BB&T-VA (related to
the banks' acquisition of various savings associations) are subject to
assessments imposed by the Savings Association Insurance Fund ("SAIF") of the
FDIC.
The FDIC has established the same assessment rates for both BIF-insured and
SAIF-insured deposits, effective January 1, 1997. For the semi-annual period
beginning December 30, 1998, the effective rate of assessments imposed on all
FDIC deposits for deposit insurance ranges from 0 to 27 basis points per $100
of insured deposits, depending on the institution's capital position and other
supervisory factors. However, because legislation enacted in 1996 requires
that both SAIF-insured and BIF-insured deposits pay a pro rata portion of
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the interest due on the obligations issued by the Financing Corporation, the
FDIC is currently assessing BIF-insured deposits an additional 1.22 basis
points per $100 of deposits, and SAIF-insured deposits an additional 6.10
basis points per $100 of deposits, in each case on an annualized basis, to
cover those obligations.
INFORMATION ABOUT FIRST CITIZENS
First Citizens is a Georgia corporation and a bank/thrift holding company
located on the south side of the metropolitan Atlanta area. First Citizens
provides financial services through its two subsidiary financial institutions,
a federal savings bank and a state-chartered commercial bank, which offer a
variety of banking and other financial services to individuals and businesses
in the counties of Coweta, Fayette, Henry, Clayton and Troup in Georgia.
First Citizens was formed on August 22, 1996 when Newnan Savings Bank, FSB
(now First Citizens Bank) reorganized into a holding company structure. In
this reorganization, each shareholder of Newnan Savings Bank received stock in
the new parent company on a one-for-one basis. At the same time, the new
holding company acquired Southside Financial Group, Inc., the parent company
of Citizens Bank & Trust of Fayette County (now known as First Citizens Bank
of Georgia). In connection with this acquisition, First Citizens issued
136,990 shares of stock to Southside shareholders.
As of March 31, 1997, First Citizens acquired Tara Bankshares Corporation,
the parent company of Tara State Bank, issuing 221,773 shares of its stock to
Tara shareholders. First Citizens operated the three banking subsidiaries as
separate entities until February 12, 1999, when First Citizens Bank of Clayton
County (formerly Tara State Bank) merged into First Citizens Bank of Georgia.
First Citizens Bank of Georgia operates banking offices in Fayetteville,
Riverdale, and Jonesboro, Georgia.
First Citizens' savings bank subsidiary, First Citizens Bank, is a federally
chartered thrift located in Newnan, Georgia. It maintains a total of 10
offices in Newnan, Peachtree City, LaGrange, Stockbridge, and Hogansville,
Georgia. First Citizens Bank also has two wholly owned subsidiaries, Citizens
Mortgage Group, Inc., an operating subsidiary, and Newnan Financial Services,
Inc., a service corporation which offers real estate appraisal services.
Newnan Financial's subsidiary, Jefferson Ventures, Inc., holds certain tracts
of undeveloped land at White Oak Golf and Lake Community in Newnan, Georgia.
Additional information about First Citizens can be found in First Citizens'
Annual Report on Form 10-KSB for the fiscal year ended March 31, 1998,
Quarterly Report on Form 10-Q for the quarter ended December 31, 1998 and
audited financial statements for the fiscal year ended March 31, 1999, all of
which accompany this Proxy Statement/Prospectus.
DESCRIPTION OF BB&T CAPITAL STOCK
General
The authorized capital stock of BB&T consists of 500,000,000 shares of BB&T
common stock, par value $5.00 per share and 5,000,000 shares of preferred
stock, par value $5.00 per share. As of May 14, 1999, there were 307,875,228
shares of BB&T common stock issued and outstanding. There were no shares of
BB&T preferred stock issued and outstanding as of such date, although
2,000,000 shares of BB&T preferred stock have been designated as Series B
Junior Participating Preferred Stock (the "BB&T Junior Preferred Stock") and
are reserved for issuance in connection with BB&T's shareholder rights plan.
See "--Shareholder Rights Plan." Based on the number of shares of First
Citizens common stock outstanding at the record date, it is estimated that
approximately 3,105,451 shares of BB&T common stock would be issued in the
merger.
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BB&T Common Stock
Each share of BB&T common stock is entitled to one vote on all matters
submitted to a vote at any meeting of shareholders. Holders of BB&T common
stock are entitled to receive dividends when, as, and if declared by the BB&T
Board out of funds legally available therefor and, upon liquidation, to
receive pro rata all assets, if any, of BB&T available for distribution after
the payment of necessary expenses and all prior claims. Holders of BB&T common
stock have no preemptive rights to subscribe for any additional securities of
any class that BB&T may issue, nor any conversion, redemption or sinking fund
rights. Holders of BB&T common stock have no right to cumulate votes in the
election of directors. The rights and privileges of holders of BB&T common
stock are subject to any preferences provided for by resolution of the BB&T
Board for any series of BB&T preferred stock that BB&T may issue in the
future. The terms of the BB&T Junior Preferred Stock reserved for issuance in
connection with BB&T's shareholders rights plan provide that holders of such
shares will have rights and privileges that are substantially identical to
those of holders of BB&T common stock.
The transfer agent and registrar for BB&T common stock is BB&T-NC. BB&T
intends to apply for the listing on the NYSE, subject to official notice of
issuance, of the shares of BB&T common stock to be issued in the merger.
BB&T Preferred Stock
Under BB&T's articles of incorporation, BB&T may issue shares of BB&T
preferred stock in one or more series as may be determined by the BB&T Board
or a duly authorized committee. The BB&T Board or committee may also
establish, from time to time, the number of shares to be included in each
series and may fix the designation, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof, and may increase or decrease the number of shares of any series
without any further vote or action by the shareholders. Any BB&T preferred
stock issued may rank senior to BB&T common stock with respect to the payment
of dividends or amounts paid upon liquidation, dissolution or winding up of
BB&T, or both. In addition, any shares of BB&T preferred stock may have class
or series voting rights. Under certain circumstances, the issuance of BB&T
preferred stock or the existence of the unissued BB&T preferred stock may tend
to discourage or render more difficult a merger or other change in control of
BB&T. See "--Shareholder Rights Plan."
Shareholder Rights Plan
BB&T has adopted a shareholder rights plan pursuant to which holders of
shares of BB&T common stock also hold rights to purchase securities or other
property that may be exercised upon the occurrence of certain "triggering
events." Shareholder rights plans such as BB&T's plan are intended to
encourage potential hostile acquirors of a "target" corporation to negotiate
with the board of directors of the target corporation in order to avoid
occurrence of the "triggering events" specified in such plans. Shareholder
rights plans are intended to give the directors of a target corporation the
opportunity to assess the fairness and appropriateness of a proposed
transaction in order to determine whether or not it is in the best interests
of the corporation and its shareholders. Notwithstanding these purposes and
intentions of shareholder rights plans, such plans, including that of BB&T,
could have the effect of discouraging a business combination that shareholders
believe to be in their best interests. The provisions of BB&T's shareholder
rights plan are discussed below.
On December 17, 1996, the BB&T Board declared a dividend distribution of one
right (a "Right," and collectively the "Rights") for each outstanding share of
BB&T common stock to shareholders of record at the close of business on
January 17, 1997. One Right will also be distributed for each share of BB&T
common stock issued between January 17, 1997 and the occurrence of a
"Distribution Date" (described in the next paragraph). Each Right entitles the
registered holder to purchase from BB&T a unit consisting of one-hundredth of
a share (a "Unit") of BB&T Junior Preferred Stock at a Purchase Price of
$145.00 per Unit, subject to adjustment, or, under certain circumstances,
other securities or property. The description and terms of the Rights are set
forth in the Rights Agreement, dated as of December 17, 1996, between BB&T and
BB&T-NC in the capacity of Rights Agent (the "Rights Agreement").
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Initially, the Rights will be attached to all BB&T common stock certificates
representing shares then outstanding, and no separate Rights Certificates (as
defined in the Rights Agreement) will be distributed. A "Distribution Date"
will occur, and the Rights will separate from shares of BB&T common stock,
upon the earliest of (a) 10 business days following a public announcement that
a person or group of affiliated or associated persons (an "Acquiring Person")
has acquired, or obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding shares of BB&T common stock (the "Stock Acquisition
Date"), (b) 10 business days following the commencement of a tender offer or
exchange offer that would if completed result in a person or group
beneficially owning 20% or more of such outstanding shares of BB&T common
stock or (c) 10 business days after the BB&T Board declares any Person to be
an "Adverse Person," as described in the following paragraph.
The BB&T Board will declare a person to be an Adverse Person upon its
determinations (a) that such person, alone or together with its affiliates and
associates, has or will become the beneficial owner of 10% or more of the
outstanding shares of BB&T common stock (provided that any such determination
will not be effective until such person has in fact become the beneficial
owner of 10% or more of the outstanding shares of BB&T common stock) and (b)
following consultation with such persons as the BB&T Board deems appropriate,
that (1) such beneficial ownership by such person is intended to cause, is
reasonably likely to cause or will cause BB&T to repurchase the BB&T common
stock beneficially owned by such person or to cause pressure on BB&T to take
action or enter into a transaction or series of transactions intended to
provide such person with short-term financial gain under circumstances where
the BB&T Board determines that the best long-term interests of BB&T and its
shareholders would not be served by taking such action or entering into such
transactions or series of transactions at that time or (2) such beneficial
ownership is causing or is reasonably likely to cause a material adverse
impact (including, but not limited to, impairment of relationships with
customers or impairment of BB&T's ability to maintain its competitive
position) on the business or prospects of BB&T or (iii) such beneficial
ownership otherwise is determined to be not in the best interests of BB&T and
its shareholders, employees, customers and communities in which BB&T and its
subsidiaries do business.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 31, 2006, subject to extension by the
BB&T Board, or unless earlier redeemed by BB&T as described below.
As soon as practicable after the Distribution Date, Rights Certificates will
be mailed to holders of record of BB&T common stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except for certain issuances in
connection with outstanding options and convertible securities and as
otherwise determined by the BB&T Board, only shares of BB&T common stock
issued before the Distribution Date will be issued with Rights.
If the BB&T Board determines that a person is an Adverse Person or, at any
time following the Distribution Date, a person becomes the beneficial owner of
25% or more of the then outstanding shares of BB&T common stock, each holder
of a Right will thereafter have the right to receive at the time specified in
the Rights Agreement, (a) upon exercise and payment of the exercise price,
BB&T common stock (or, in certain circumstances, cash, property or other
securities of BB&T) having a value equal to two times the exercise price of
the Right or (b) at the discretion of the BB&T Board, upon exercise and
without payment of the exercise price, BB&T common stock (or, in certain
circumstances, cash, property or other securities of BB&T) having a value
equal to the difference between the exercise price of the Right and the value
of the consideration that would be payable under clause (a). Notwithstanding
any of the foregoing, following the occurrence of any of the events set forth
in this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person or Adverse Person will be null and void. Rights will not become
exercisable following the occurrence of either of the events set forth above,
however, until such time as the Rights are no longer redeemable by BB&T as set
forth below.
For example, at an exercise price of $145.00 per Right, each Right not owned
by an Acquiring Person or an Adverse Person (or by certain related parties)
following an event set forth in the preceding paragraph would
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entitle its holder to purchase $290.00 worth of BB&T common stock (or other
consideration, as noted above) for $145.00. Assuming that the BB&T common
stock had a per share value of $36.25 at such time, the holder of each valid
Right would be entitled to purchase eight shares of BB&T common stock for
$145.00. Alternatively, at the discretion of the BB&T Board, each Right
following an event set forth in the preceding paragraph, without payment of
the exercise price, would entitle its holder to BB&T common stock (or other
consideration, as noted above) worth $145.00.
If, at any time following the Stock Acquisition Date, (a) BB&T is acquired
in a merger, statutory share exchange or other business combination
transaction in which BB&T is not the surviving corporation or (b) 50% or more
of BB&T's assets or earning power is sold or transferred, each holder of a
Right (except Rights that previously have been voided as set forth above) will
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of the
Right. The Purchase Price payable, and the number of Units of BB&T Junior
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution if
certain events occur.
In general, BB&T may redeem the Rights in whole, but not in part, at a price
of $0.01 per Right at any time until 10 business days following the earlier of
the Stock Acquisition Date or the effective date of any declaration by the
BB&T Board that any person is an Adverse Person. After the redemption period
has expired, BB&T's right of redemption may be reinstated if an Acquiring
Person or Adverse Person reduces his or her beneficial ownership to less than
10% of the outstanding shares of BB&T common stock in a transaction or series
of transactions not involving BB&T and if there are no other Acquiring Persons
or Adverse Persons.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of BB&T, including, without limitation, the right to vote or
to receive dividends. While the distribution of the Rights will not be taxable
to shareholders or to BB&T, shareholders may, depending upon the
circumstances, recognize taxable income if the Rights become exercisable for
stock (or other consideration) of BB&T or for common stock of the acquiring
company as set forth above.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
BB&T Board before the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the BB&T Board in order
to cure any ambiguity, to make changes that do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person or Adverse Person) or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time
period governing redemption may be made when the Rights are not redeemable.
The Rights Agreement is filed as an exhibit to a registration statement on
Form 8-A dated January 10, 1997 that has been filed by BB&T with the SEC. This
registration statement and the Rights Agreement are incorporated by reference
in this proxy statement/prospectus, and reference is made to them for the
complete terms of the Rights Agreement and the Rights. The foregoing
discussion is qualified in its entirety by reference to the Rights Agreement.
See "Where You Can Find More Information" on page 50.
Certain Provisions of the NCBCA, BB&T Articles and BB&T Bylaws
Provisions of the North Carolina Business Corporation Act (the "NCBCA") and
BB&T's articles of incorporation and bylaws may be deemed to have an anti-
takeover effect and, together with the ability of the BB&T Board to issue
shares of BB&T preferred stock and to set the voting rights, preferences and
other terms thereof, may delay or prevent takeover attempts not first approved
by the BB&T Board. These provisions also could delay or deter the removal of
incumbent directors or the assumption of control by shareholders. BB&T
believes that these provisions are appropriate to protect the interests of
BB&T and all of its shareholders. The following describes the principal
provisions of the NCBCA and BB&T's articles of incorporation and bylaws that
may be deemed to have anti-takeover effects on BB&T.
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Control Share Acquisition Act
The Control Share Acquisition Act of the NCBCA may make an unsolicited
attempt to gain control of BB&T more difficult by restricting the right of
certain shareholders to vote newly acquired large blocks of stock. For a
description of this statute, see "Comparison of Shareholders' Rights--Anti-
takeover Statutes."
Provisions Regarding the BB&T Board
BB&T's articles of incorporation and bylaws classify the BB&T Board and
permit the removal of directors only for cause. This could make it more
difficult for a third party to acquire, or discourage a third party from
acquiring, control of BB&T. For a description of such provisions, see
"Comparison of Shareholders' Rights--Directors."
Meeting of Shareholders; Shareholders' Nominations and Proposals
Under BB&T's bylaws, meetings of the shareholders may be called only by the
Chief Executive Officer, President, Secretary or the BB&T Board. Shareholders
of BB&T may not request that a special meeting of shareholders be called. This
provision could delay until the next annual shareholders' meeting shareholder
actions that are favored by the holders of a majority of the outstanding
voting securities of BB&T.
Certain procedures governing the submission of nominations for directors and
other proposals by shareholders may have some deterrent effect on shareholder
actions designed to result in change of control in BB&T. See "Comparison of
Shareholders' Rights--Notice of Shareholder Nominations and Shareholder
Proposals."
COMPARISON OF SHAREHOLDERS' RIGHTS
At the effective time, holders of First Citizens common stock will become
shareholders of BB&T. The following is a summary of material differences
between the rights of holders of BB&T common stock and holders of First
Citizens common stock. Since BB&T is organized under the laws of the State of
North Carolina and First Citizens is organized under the laws of the State of
Georgia, differences in the rights of holders of BB&T common stock and those
of holders of First Citizens common stock arise from differing provisions of
the NCBCA and the Georgia Business Corporation Code (the "GBCC") in addition
to differing provisions of their respective articles of incorporation and
bylaws.
The following summary does not purport to be a complete statement of the
provisions affecting, and differences between, the rights of holders of BB&T
common stock and holders of First Citizens common stock. The identification of
specific provisions or differences is not meant to indicate that other equally
or more significant differences do not exist. This summary is qualified in its
entirety by reference to the NCBCA and the GBCC and the governing corporate
instruments of BB&T and First Citizens, to which the shareholders of First
Citizens are referred.
Authorized Capital Stock
BB&T
BB&T's authorized capital stock consists of 500,000,000 shares of BB&T
common stock and 5,000,000 shares of BB&T preferred stock. BB&T's articles of
incorporation authorize the BB&T Board to issue shares of BB&T preferred stock
in one or more series and to fix the designation, powers, preferences, and
rights of the shares of BB&T preferred stock in each such series. As of May
14, 1999, there were 307,875,228 shares of BB&T common stock outstanding. No
shares of BB&T preferred stock were issued and outstanding as of such date,
although 2,000,000 shares of BB&T preferred stock have been designated as BB&T
Junior Preferred Stock and are reserved for issuance in connection with BB&T's
shareholder rights plan. See "Description of BB&T Capital Stock--Shareholder
Rights Plan."
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First Citizens
First Citizens' authorized capital stock consists of 8,000,000 shares of
First Citizens common stock, par value $1.00 per share and 8,000,000 shares of
First Citizens preferred stock, without par value. As of May 17, 1999, there
were 2,878,350 shares of First Citizens common stock outstanding. No shares of
First Citizens preferred stock were issued and outstanding as of such date.
Special Meetings of Shareholders and Action by Shareholders without a Meeting
BB&T
Special meetings of the shareholders of BB&T may be called at any time by
BB&T's Chief Executive Officer, President or Secretary or by the BB&T Board.
Under the NCBCA, shareholders of a North Carolina corporation may take action
without a meeting by one or more written consents signed by all shareholders
entitled to vote on the matter in question, provided that any required notice
is given to any shareholders not entitled to vote on such matter.
First Citizens
Special meetings of the shareholders of First Citizens may be called at any
time by the First Citizens Board, by the President or upon the written request
of shareholders owning an aggregate of not less than 25% of the outstanding
shares of capital stock entitled to vote. First Citizens' bylaws provide that
any action required or permitted to be taken by First Citizens shareholders
may be taken without a meeting by consent in writing setting forth the action
to be taken and signed by those persons who would be entitled to vote at a
meeting those shares having voting power to cast at least the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote were present and voted.
Directors
BB&T
BB&T's articles of incorporation and bylaws provide for a board of directors
having not less than three nor more than 30 members as determined from time to
time by vote of a majority of the members of the BB&T Board or by resolution
of the shareholders of BB&T. Currently, the BB&T Board consists of 21
directors. The BB&T Board is divided into three classes, with directors
serving staggered three-year terms. Under BB&T's articles of incorporation and
bylaws, BB&T directors may be removed only for cause and only by the vote of a
majority of the outstanding shares entitled to vote in the election of
directors. Holders of BB&T common stock do not have cumulative voting rights
in the election of directors.
First Citizens
First Citizens' articles of incorporation state that the board of directors
shall consist of not less than five nor more than 25 directors. The bylaws
provide that the number of directors within this range may be fixed from time
to time by the First Citizens Board or by the shareholders. The First Citizens
Board presently consists of five members. Like the BB&T Board, the First
Citizens Board is divided into three classes, with directors serving staggered
three-year terms. Also like BB&T, holders of First Citizens stock do not have
cumulative voting rights in the election of directors. First Citizens' bylaws
provide that any director may be removed from office without cause only upon
the affirmative vote of the holders of at least two-thirds of the outstanding
shares and may be removed with cause upon the affirmative vote of the holders
of a majority of the outstanding shares.
Dividends and Other Distributions
BB&T
The NCBCA prohibits a North Carolina corporation from making any
distributions to shareholders, including the payment of cash dividends, that
would render it insolvent or unable to meet its obligations as they
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become due in the ordinary course of business. BB&T is not subject to other
express regulatory restrictions on payments of dividends and other
distributions. The ability of BB&T to pay distributions to the holders of BB&T
common stock will depend, however, to a large extent upon the amount of
dividends its bank subsidiaries, which are subject to restrictions imposed by
regulatory authorities, pay to BB&T. In addition, the Federal Reserve could
oppose a distribution by BB&T if it determined that such a distribution would
harm BB&T's ability to support its bank subsidiaries. There can be no
assurances that dividends will be paid in the future. The declaration, payment
and amount of any such future dividends would depend on business conditions,
operating results, capital, reserve requirements and the consideration of
other relevant factors by the BB&T Board.
First Citizens
First Citizens shareholders are entitled to dividends when declared by the
First Citizens Board unless the company is insolvent or the dividend payment
would render it insolvent. As in the case of BB&T, the ability of First
Citizens to pay dividends depends on the earnings of its subsidiary bank, and
management cannot predict with any certainty whether and to what extent
dividends would be paid to shareholders in the future if First Citizens
remained independent.
Notice of Shareholder Nominations and Shareholder Proposals
BB&T
BB&T's bylaws establish advance notice procedures for shareholder proposals
and the nomination, other than by or at the direction of the BB&T Board or a
committee thereof, of candidates for election as directors. BB&T's bylaws
provide that a shareholder wishing to nominate a person as a candidate for
election to the BB&T Board must submit such nomination in writing to the
Secretary of BB&T not later than 60 days before one year after the date of the
immediately preceding annual meeting of shareholders, together with
biographical information about the candidate and the shareholder's name and
shareholdings. Nominations not made in accordance with the foregoing
provisions may be ruled out of order by the presiding officer or the chairman
of the meeting. In addition, a shareholder intending to make a proposal for
consideration at a regularly scheduled annual meeting of shareholders that is
not intended to be included in the proxy statement for such meeting must
notify the Secretary of BB&T in writing not later than 60 days before one year
after the date of the immediately preceding annual meeting of shareholders of
such shareholder's intention. The notice must contain: (a) a brief description
of the proposal, (b) the name and shareholdings of the shareholder submitting
the proposal and (c) any material interest of the shareholder in such
proposal.
In accordance with Rule 14a-8, as promulgated by the SEC pursuant to the
Securities Exchange Act, shareholder proposals intended to be included in the
proxy statement and presented at a regularly scheduled annual meeting must be
received by BB&T no later than 120 days before the anniversary of the date
that the previous year's proxy statement was first mailed to shareholders.
Where the annual meeting has been changed by more than 30 days from the date
of the prior year's meeting, or for special meetings, the proposal must be
submitted within a reasonable time before BB&T begins to print and mail its
proxy materials.
First Citizens
First Citizens' bylaws do not establish advance notice procedures for
shareholder proposals or the nomination, other than by direction of the First
Citizens Board, of candidates for election as directors.
Exculpation and Indemnification
BB&T
The NCBCA requires that a director of a North Carolina corporation discharge
the duties as a director (a) in good faith, (b) with the care an ordinarily
prudent person in a like position would exercise under similar
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circumstances and (c) in a manner the director reasonably believes to be in
the best interests of the corporation. The NCBCA expressly provides that a
director facing a change of control situation shall not be subject to any
different duties or a higher standard of care. BB&T's articles of
incorporation provide that, to the fullest extent permitted by applicable law,
no director of BB&T will have any personal liability for monetary damage for
breach of a duty as a director. BB&T's bylaws require BB&T to indemnify its
directors and officers against liabilities arising out of such person's status
as such, excluding any liability relating to activities that were at the time
taken known or believed by such person to be clearly in conflict with the best
interests of BB&T.
First Citizens
First Citizens' bylaws contain certain provisions which provide
indemnification to directors and officers of First Citizens that is broader
than the protection expressly mandated in the GBCC. The indemnification
provisions in the bylaws require First Citizens to indemnify persons who are
parties to any civil, criminal, administrative or investigative action, suit
or proceeding by reason of the fact that the person was or is a director,
officer, employee or agent of First Citizens. These persons would be
indemnified against expenses (including, but not limited to, attorneys' fees
and court costs) and against any judgments, fines and amounts paid in
settlement incurred by them. These persons may also be entitled to the advance
of any such expenses prior to the final disposition of the proceeding if they
have provided an undertaking to repay First Citizens if it is ultimately
determined that they are not entitled to indemnification. The bylaws provide
that First Citizens shall indemnify a director, officer, employee or agent if
that individual acted in a manner he or she believed in good faith to be in or
not opposed to the best interests of First Citizens and, in the case of a
criminal proceeding, he or she had no reasonable cause to believe his or her
conduct was unlawful.
Mergers, Share Exchanges and Sales of Assets
BB&T
The NCBCA generally requires that any merger, share exchange or sale of all
or substantially all the assets of a corporation not in the ordinary course of
business be approved by the affirmative vote of the majority of the issued and
outstanding shares of each voting group entitled to vote. Approval of a merger
by the shareholders of the surviving corporation is not required in certain
instances, however, including (as in the case of the merger with First
Citizens) a merger in which the number of voting shares outstanding
immediately after the merger, plus the number of voting shares issuable as a
result of the merger, does not exceed by more than 20% the number of voting
shares outstanding immediately before the merger. BB&T is also subject to
certain statutory anti-takeover provisions. See "--Anti-takeover Statutes."
First Citizens
The articles of incorporation of First Citizens provide that, with certain
exceptions, any merger or consolidation involving First Citizens or the sale
or disposition of all or substantially all of its assets will require the
affirmative vote of the holders of at least two-thirds of the outstanding
shares of First Citizens stock. However, if (a) two-thirds of the First
Citizens Board approves the merger or similar transaction prior to its
consummation or (b) First Citizens is engaged in a merger or similar
transaction with a subsidiary, the applicable provisions of the GBCC would
govern and the shareholder approval of the transaction would require a
favorable vote by a majority of all votes entitled to be cast.
Anti-takeover Statutes
BB&T
The North Carolina Control Share Acquisition Act applies to BB&T. This act
is designed to protect shareholders of publicly owned North Carolina
corporations based within the state against certain changes in control and to
provide shareholders with the opportunity to vote on whether to afford voting
rights to certain
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shareholders. The act is triggered upon the acquisition by a person of shares
of voting stock of a covered corporation that, when added to all other shares
beneficially owned by the person, would result in that person holding one-
fifth, one-third or a majority of the voting power in the election of
directors. Under the act, the shares acquired that result in the crossing of
any of these thresholds ("Control Shares") have no voting rights until such
rights are conferred by the affirmative vote of the holders of a majority of
all outstanding voting shares, excluding those shares held by any person
involved or proposing to be involved in the acquisition of Control Shares, any
officer of the corporation and any employee of such corporation who is also a
director of such corporation. If voting rights are conferred on Control
Shares, all shareholders of such corporation have the right to require that
their shares be redeemed at the highest price paid per share by the acquiror
for any Control Shares.
In accordance with the provisions of such statute, BB&T has elected not to
be governed by the North Carolina Shareholder Protection Act, which requires
that certain business combinations with existing shareholders either be
approved by a supermajority of the other shareholders or meet certain "fair
price" requirements.
First Citizens
The GBCC provides for certain voting rules and fair price requirements
concerning business combinations with "interested shareholders." This
provision is designed to protect shareholders of Georgia corporations against
the inequities of certain tactics which have been utilized in hostile takeover
attempts. Under the fair price provisions, business combinations with
interested shareholders (generally, an interested shareholder is the
beneficial owner of 10% or more of the corporation's voting shares) must meet
one of three criteria designed to protect minority shareholders: (a) the
transaction must be unanimously approved by the "continuing directors" of the
corporation (generally, directors who served prior to the time the interested
shareholder acquired 10% ownership and who are unaffiliated with the
interested shareholder), or (b) the transaction must be approved by two-thirds
of the continuing directors and a majority of shares held by shareholders
other than the interested shareholder, or (c) the terms of the transaction
must meet specified fair pricing criteria and certain other tests which are
intended to assure that all shareholders receive a fair price and equivalent
consideration for their shares regardless at which point in time they sell to
the acquiring party.
Fair price requirements are not applicable to any corporation unless they
are specifically incorporated in the bylaws of the corporation. First
Citizens' bylaws do not contain the requirements.
Amendments to Articles of Incorporation and Bylaws
BB&T
The NCBCA provides generally that a North Carolina corporation's articles of
incorporation may be amended if the amendment is approved by a majority of the
votes cast within each voting group entitled to vote. BB&T's articles of
incorporation and bylaws also require the affirmative vote of more than two-
thirds of the outstanding shares entitled to vote to approve an amendment to
BB&T's articles of incorporation or bylaws amending, altering or repealing the
portions of such articles of incorporation or bylaws relating to
classification and staggered terms of the BB&T Board, removal of directors or
any requirement for a supermajority vote on such an amendment. The NCBCA
provides that a North Carolina corporation's bylaws may be amended by its
shareholders, and BB&T's articles of incorporation authorize the BB&T Board to
amend BB&T's bylaws.
First Citizens
The GBCC provides that a Georgia corporation's articles of incorporation and
bylaws may be amended if the amendment is approved by a majority of the shares
entitled to vote. However, First Citizens' articles and bylaws require the
affirmative vote of two-thirds of the outstanding shares entitled to vote to
approve an amendment to any article or bylaw amending, altering or repealing a
portion of an article or bylaw relating to
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classification and staggered terms of the board, number of directors, removal
of directors, limitation of directors' liability, supermajority voting
requirements for certain mergers or other business combinations, relevant
factors for board consideration on such a transaction, or any requirement for
a supermajority vote on such an amendment. Except as described above, the
affirmative vote of a majority of all directors or a majority of all shares
entitled to elect directors is required to amend the bylaws. The bylaws of
First Citizens provide for amendment by the shareholders at any annual or
special meeting or by the First Citizens Board.
Shareholders' Rights of Dissent and Appraisal
BB&T
Under the NCBCA, a shareholder of a North Carolina corporation is entitled
to dissent from, and obtain payment of the "full value" of his or her shares
in the event of any of the following corporate transactions:
. completion of a plan of merger to which the corporation is a party,
unless (a) the corporation is a parent merging with a subsidiary
pursuant to a particular NCBCA provision for such transactions; (b) the
merger is subject to an NCBCA provision that exempts from the
shareholder approval requirement certain mergers that do not result in a
substantial change to the corporation or the rights of its shareholders;
or (c) the shares in question are then redeemable by the corporation at
a price not greater than the cash to be received for such shares;
. completion of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, unless such
shares are then redeemable by the corporation at a price not greater
than the cash to be received in exchange for such shares;
. completion of a sale or exchange of all or substantially all of the
property of the corporation other than in the regular course of
business, including a sale in dissolution but not including a sale
pursuant to court order or a sale pursuant to a plan by which all or
substantially all of the net proceeds are to be distributed in cash to
shareholders within one year;
. an amendment to the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it
(a) alters or abolishes a preferential right of the shares; (b) creates,
alters or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of
the shares; (c) alters or abolishes a preemptive right of the holder of
the shares to acquire shares or other securities; (d) excludes or limits
the right of shares to vote on any matter; (e) reduces the number of
shares owned by the shareholder to a fraction of a share if the
fractional share so created is to be acquired for cash; or (f) changes
the corporation into a nonprofit corporation or cooperative
organization; or
. any corporate action taken pursuant to a shareholder vote to the extent
the articles of incorporation, bylaws or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
With respect to corporations that have a class or series of shares either
listed on a national securities exchange or held by more than 2,000 record
shareholders, dissenters' rights are not available to the holders of these
shares by reason of a merger, share exchange or sale or exchange of property
unless (a) the articles of incorporation of the corporation that issued the
shares provide otherwise or (b) in the case of a merger or share exchange, the
holders of the shares are required to accept anything other than (1) cash, (2)
shares in another corporation that are either listed on a national securities
exchange or held by more than 2,000 record shareholders or (3) a combination
of cash and such shares.
A shareholder who has the right to dissent from a transaction and receive
payment of the "fair value" of his or her shares must follow specific
procedural requirements as set forth in the NCBCA in order to maintain such
right and obtain such payment.
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First Citizens
Under the GBCC (subject to certain exceptions), any shareholder of a Georgia
corporation who objects to a merger and who fully complies with all of the
dissenters' provisions (but not otherwise) shall be entitled to demand and
receive payment for all (but not less than all) of his or her shares if the
proposed merger is consummated. A shareholder who objects to a merger and
desires to receive payment of the "fair value" of his or stock:
. must file a written objection to the merger with the corporation either
prior to the shareholders' meeting, or at the meeting but before the
vote is taken, and the written objection must contain a statement that
the shareholder intends to demand payment for his or her shares if the
merger is approved;
. must either abstain from voting or vote against approval of the merger;
and
. must demand payment and deposit his or her certificate(s) in accordance
with the terms of the dissenters' notice sent to the dissenting
shareholder following approval of the merger.
If all of the above conditions are satisfied in full, the resulting
corporation is required to make a written offer within 10 days of receiving
the payment demand, or within 10 days after the consummation of the merger,
whichever is later, to each dissenting shareholder to purchase all of such
shareholder's shares at a specific price. If the resulting corporation and any
dissenting shareholder are unable to agree on the fair value of the shares
within 60 days, the resulting corporation will commence a proceeding in the
superior court of the county in which the resulting corporation is
headquartered to determine the rights of the dissenting shareholder and the
fair value of his or her shares. The court may appoint appraisers to receive
evidence and to recommend a decision on fair value.
However, holders of First Citizens common stock do not have appraisal rights
in connection with the BB&T merger because, as of the record date, shares of
First Citizens common stock were listed on the Nasdaq National Market and the
shares of BB&T common stock are held by at least 2,000 record shareholders.
Liquidation Rights
BB&T
In the event of the liquidation, dissolution or winding-up of the affairs of
BB&T, holders of outstanding shares of BB&T common stock are entitled to
share, in proportion to their respective interests, in BB&T's assets and funds
remaining after payment, or provision for payment, of all debts and other
liabilities of BB&T.
Because BB&T is a bank holding company, its rights, the rights of its
creditors and of its shareholders, including the holders of the shares of any
BB&T preferred stock that may be issued, to participate in the assets of any
subsidiary upon the latter's liquidation or recapitalization may be subject to
the prior claims of (a) the subsidiary's creditors, except to the extent that
BB&T may itself be a creditor with recognized claims against the subsidiary,
and (b) any interests in the liquidation accounts established by savings
associations or savings banks acquired by BB&T for the benefit of eligible
account holders in connection with conversion of such savings associations
from mutual to stock form.
First Citizens
In the event of the liquidation, dissolution or winding up of the affairs of
First Citizens, after the payment in full of debts and other liabilities, the
remaining assets would be distributed to the shareholders in proportion to
their respective interests.
Like BB&T, since First Citizens is a bank holding company, its rights and
the rights of its creditors and of its shareholders to participate in the
assets of any subsidiary upon the latter's liquidation or recapitalization may
be subject to the prior claims of (a) the subsidiary's creditors, except to
the extent that First Citizens may itself
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be a creditor with recognized claims against the subsidiary, and (b) any
interests in the liquidation account established by First Citizens Bank
(formerly Newnan Savings Bank, FSB) for the benefit of eligible account
holders in connection with its conversion from mutual to stock form.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder wishes to have presented at the next annual
meeting of shareholders, which will not be held if the merger is completed,
and included in First Citizens' proxy materials must be received at the main
office of First Citizens, 19 Jefferson Street, Newnan, Georgia 30263, no later
than April 30, 2000. If such proposal is in compliance with all of the
requirements of Rule 14a-8 of the Securities Exchange Act, it will be included
in First Citizens' proxy statement and set forth on the form of proxy issued
for the next annual meeting of shareholders, if applicable. Shareholders
wishing to present proposals at such meeting (but not include them in First
Citizens' proxy materials) must also give notice of such proposals to First
Citizens no later than June 15, 2000. It is urged that any proposals be sent
by certified mail, return receipt requested.
OTHER BUSINESS
The First Citizens Board is not aware of any business to come before the
meeting other than those matters described in this proxy statement/prospectus.
However, if any other matters should properly come before the meeting, it is
intended that the proxies solicited hereby will be voted with respect to those
other matters in accordance with the judgment of the persons voting the
proxies.
LEGAL MATTERS
The validity of the shares of BB&T common stock offered hereby will be
passed upon by Womble Carlyle Sandridge & Rice, PLLC, Charlotte, North
Carolina, as counsel to BB&T. As of the date of this proxy
statement/prospectus, certain members of Womble Carlyle Sandridge & Rice, PLLC
owned an aggregate of approximately 38,000 shares of BB&T common stock.
EXPERTS
The consolidated financial statements of BB&T Corporation and its
subsidiaries which are incorporated by reference in this proxy
statement/prospectus from BB&T's Current Report on Form 8-K dated April 30,
1999, which restates the consolidated financial statements that are
incorporated by reference from BB&T's Annual Report on Form 10-K for the year
ended December 31, 1998 to reflect the acquisition by BB&T of MainStreet
Financial Corporation on March 5, 1999, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
The consolidated financial statements of First Citizens Corporation and its
subsidiaries which are incorporated by reference in this proxy
statement/prospectus from First Citizens' Annual Report on Form 10-KSB for the
year ended March 31, 1998 have been audited by Mauldin & Jenkins, LLC,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report.
WHERE YOU CAN FIND MORE INFORMATION
BB&T and First Citizens file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or certain other information that the companies file with
the SEC at the SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago,
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Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. These SEC filings are also available to the public
from commercial document retrieval services and at the Internet world wide web
site maintained by the SEC at "http://www.sec.gov." Reports, proxy statements
and other information should also be available for inspection at the offices
of the NYSE, for BB&T, and Nasdaq, for First Citizens.
BB&T has filed the registration statement to register with the SEC the BB&T
common stock to be issued to First Citizens shareholders in the merger. This
proxy statement/prospectus is a part of that registration statement and
constitutes a prospectus of BB&T. As allowed by SEC rules, this proxy
statement/prospectus does not contain all the information you can find in
BB&T's registration statement or the exhibits to the registration statement.
The SEC allows First Citizens and BB&T to "incorporate by reference"
information into this proxy statement/prospectus, which means that the
companies can disclose important information to you by referring you to
another document filed separately with the SEC. The information incorporated
by reference is considered part of this proxy statement/prospectus, except for
any information superseded by information contained directly in this proxy
statement/prospectus or in later filed documents incorporated by reference in
this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents set
forth below that First Citizens and BB&T have previously filed with the SEC.
These documents contain important information about First Citizens and BB&T
and their businesses.
BB&T SEC Filings (File No. 1-10853)
<TABLE>
<S> <C>
Annual Report on Form 10-K For the fiscal year ended December 31, 1998
Quarterly Reports on Form 10-Q For the fiscal quarter ended March 31, 1999
Current Reports on Form 8-K Filed January 8, 1999, January 14, 1999,
January 27, 1999 (two filings), January 28,
1999, February 25, 1999 (amended on April 28,
1999), April 9, 1999, April 12, 1999, April
28, 1999 (three filings) and April 30, 1999
Registration Statement on Form Filed January 10, 1997
8-A (concerning BB&T's
shareholder rights plan)
First Citizens SEC Filings (File No. 333-4304)
Annual Report on Form 10-KSB For the fiscal year ended March 31, 1998
Quarterly Reports on Form 10-Q For the fiscal quarters ended June 30, 1998,
September 30, 1998 and December 31, 1998
Current Reports on Form 8-K Filed July 2, 1998 and February 8, 1999
The description of First Filed July 1, 1996
Citizens common stock in First
Citizens' Registration
Statement on Form S-4
</TABLE>
First Citizens and BB&T also incorporate by reference additional documents
that may be filed with the SEC between the date of this proxy
statement/prospectus and the completion of the merger or the termination of
the merger agreement. These include periodic reports, such as Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K,
as well as proxy statements.
BB&T has supplied all information contained or incorporated by reference in
this proxy statement/prospectus relating to BB&T, and First Citizens has
supplied all such information relating to First Citizens before the merger.
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If you are a shareholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through the
companies, the SEC or the SEC's Internet web site as described above.
Documents incorporated by reference are available from the companies without
charge, excluding all exhibits except those that the companies have
specifically incorporated by reference in this proxy statement/prospectus.
Shareholders may obtain documents incorporated by reference in this proxy
statement/prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses:
Shareholder Reporting Douglas J. Hertha
BB&T Corporation Corporate Secretary
Post Office Box 1290 19 Jefferson Street
Winston-Salem, North Carolina 27104 Newnan, Georgia 30264
(336) 733-3021 (770) 253-5017
If you would like to request documents from us, please do so by June 23, 1999
to receive them before the meeting.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus. BB&T and First Citizens have not
authorized anyone to provide you with information that is different from what
is contained in this proxy statement/prospectus. This proxy
statement/prospectus is dated May 24, 1999. You should not assume that the
information contained in this proxy statement/prospectus is accurate as of any
date other than that date. Neither the mailing of this proxy
statement/prospectus to shareholders nor the issuance of BB&T common stock in
the merger creates any implication to the contrary.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRST CITIZENS CORPORATION
and
BB&T CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<C> <S> <C>
ARTICLE I DEFINITIONS..................................................... A-1
ARTICLE II THE MERGER..................................................... A-5
2.1 Merger........................................................... A-5
2.2 Filing; Plan of Merger........................................... A-5
2.3 Effective Time................................................... A-6
2.4 Closing.......................................................... A-6
2.5 Effect of Merger................................................. A-6
2.6 Further Assurances............................................... A-6
2.7 Merger Consideration............................................. A-6
2.8 Conversion of Shares; Payment of Merger Consideration............ A-7
2.9 Conversion of Stock Options...................................... A-8
2.10 No Right to Dissent.............................................. A-9
2.11 Merger of Subsidiaries........................................... A-9
2.12 Anti-Dilution.................................................... A-9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FIRST CITIZENS.............. A-9
3.1 Capital Structure................................................ A-9
3.2 Organization, Standing and Authority............................. A-10
3.3 Ownership of Subsidiaries........................................ A-10
3.4 Organization, Standing and Authority of the Subsidiaries......... A-10
3.5 Authorized and Effective Agreement............................... A-10
3.6 Securities Filings; Financial Statements; Statements True........ A-11
3.7 Minute Books..................................................... A-11
3.8 Adverse Change................................................... A-11
3.9 Absence of Undisclosed Liabilities............................... A-11
3.10 Properties....................................................... A-12
3.11 Environmental Matters............................................ A-12
3.12 Loans; Allowance for Loan Losses................................. A-12
3.13 Tax Matters...................................................... A-13
3.14 Employees; Compensation; Benefit Plans........................... A-14
3.15 Certain Contracts................................................ A-16
3.16 Legal Proceedings; Regulatory Approvals.......................... A-16
3.17 Compliance with Laws; Filings.................................... A-17
3.18 Brokers and Finders.............................................. A-17
3.19 Repurchase Agreements; Derivatives............................... A-17
3.20 Deposit Accounts................................................. A-18
3.21 Related Party Transactions....................................... A-18
3.22 Certain Information.............................................. A-18
3.23 Tax and Regulatory Matters....................................... A-18
3.24 State Takeover Laws.............................................. A-18
3.25 Labor Relations.................................................. A-18
3.26 Fairness Opinion................................................. A-18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BB&T......................... A-19
4.1 Capital Structure of BB&T........................................ A-19
4.2 Organization, Standing and Authority of BB&T..................... A-19
4.3 Authorized and Effective Agreement............................... A-19
4.4 Organization, Standing and Authority of BB&T Subsidiaries........ A-19
4.5 Securities Documents; Statements True............................ A-20
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
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<C> <S> <C>
4.6 Financial Statements............................................. A-20
4.7 Certain Information.............................................. A-20
4.8 Tax and Regulatory Matters....................................... A-20
4.9 Share Ownership.................................................. A-20
4.10 Legal Proceedings; Regulatory Approvals.......................... A-20
ARTICLE V COVENANTS....................................................... A-21
5.1 First Citizens Shareholder Meeting............................... A-21
5.2 Registration Statement; Proxy Statement/Prospectus............... A-21
5.3 Plan of Merger; Reservation of Shares............................ A-21
5.4 Additional Acts.................................................. A-21
5.5 Best Efforts..................................................... A-22
5.6 Certain Accounting Matters....................................... A-22
5.7 Access to Information............................................ A-22
5.8 Press Releases................................................... A-23
5.9 Forbearances of First Citizens................................... A-23
5.10 Employment Agreements............................................ A-24
5.11 Affiliates....................................................... A-25
5.12 Section 401(k) Plan; Other Employee Benefits..................... A-25
5.13 Directors and Officers Protection................................ A-26
5.14 Forbearances of BB&T............................................. A-26
5.15 Reports.......................................................... A-26
5.16 Exchange Listing................................................. A-26
5.17 Advisory Board for Georgia Market Area........................... A-27
5.18 Board of Directors of BB&T....................................... A-27
5.19 No Sale of Jefferson Property.................................... A-27
ARTICLE VI CONDITIONS PRECEDENT........................................... A-27
6.1 Conditions Precedent--BB&T and First Citizens.................... A-27
6.2 Conditions Precedent--First Citizens............................. A-28
6.3 Conditions Precedent--BB&T....................................... A-28
ARTICLE VII TERMINATION, DEFAULT, WAIVER AND AMENDMENT.................... A-29
7.1 Termination...................................................... A-29
7.2 Effect of Termination............................................ A-31
7.3 Survival of Representations, Warranties and Covenants............ A-31
7.4 Waiver........................................................... A-32
7.5 Amendment or Supplement.......................................... A-32
ARTICLE VIII MISCELLANEOUS................................................ A-32
8.1 Expenses......................................................... A-32
8.2 Entire Agreement................................................. A-32
8.3 No Assignment.................................................... A-32
8.4 Notices.......................................................... A-32
8.5 Specific Performance............................................. A-33
8.6 Captions......................................................... A-33
8.7 Counterparts..................................................... A-33
8.8 Governing Law.................................................... A-34
ANNEXES
Annex A Articles of Merger...............................................
Annex B Employment Agreement with Tom Moat...............................
Annex C Employment Agreement with Charles M. Barnes......................
Annex D Employment Agreement with Donald C. Phillips.....................
Annex E Employment Agreement with Doug Heartha...........................
</TABLE>
A-ii
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of January
26, 1999, is among FIRST CITIZENS CORPORATION (including, with respect to all
periods prior to its inception on August 22, 1996, its predecessor, Newnan
Savings Bank, FSB, "First Citizens"), a Georgia corporation having its
principal office at Newnan, Georgia, and BB&T CORPORATION ("BB&T"), a North
Carolina corporation having its principal office at Winston-Salem, North
Carolina;
R E C I T A L S:
The parties desire that First Citizens shall be merged with and into BB&T
(said transaction being hereinafter referred to as the "Merger") pursuant to a
plan of merger (the "Plan of Merger") substantially in the form attached as
Annex A hereto, and the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby. As a condition and inducement to BB&T's
willingness to enter into the Agreement, First Citizens is concurrently
granting to BB&T an option to acquire, under certain circumstances, 560,483
shares of the common stock, par value $1.00 per share, of First Citizens.
Now, Therefore, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
Definitions
1.1 Definitions
When used herein, the capitalized terms set forth below shall have the
following meanings:
"Affiliate" means, with respect to any Person, any Person, who directly or
indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with such Person and, without limiting the
generality of the foregoing, includes any executive officer or director of
such Person and any Affiliate of such executive officer or director.
"Articles of Merger" shall mean the Articles of Merger required to be filed
with the office of the Secretary of State of North Carolina, as provided in
Section 55-11-05 of the NCBCA, and with the office of the Secretary of State
of Georgia, as provided in Section 14-2-1105 of the GBCC.
"Bank Holding Company Act" shall mean the Federal Bank Holding Company Act
of 1956, as amended.
"BB&T Common Stock" shall mean the shares of voting common stock, par value
$5.00 per share, of BB&T, with rights attached issued pursuant to Rights
Agreement dated December 17, 1996 between BB&T and Branch Banking and Trust
Company, as Rights Agent, relating to BB&T's Series B Junior Participating
Preferred Stock, $5.00 par value per share.
"BB&T Option Agreement" shall mean the Stock Option Agreement dated as of
even date herewith, as amended from time to time, under which BB&T has an
option to purchase shares of First Citizens Common Stock, which shall be
executed immediately following execution of this Agreement.
"BB&T Subsidiaries" shall mean Branch Banking and Trust Company, Branch
Banking and Trust Company of South Carolina and Branch Banking and Trust
Company of Virginia.
A-1
<PAGE>
"Business Day" shall mean all days other than Saturdays, Sundays and Federal
Reserve holidays.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosed" shall mean disclosed in the First Citizens Disclosure
Memorandum, referencing the Section number herein pursuant to which such
disclosure is being made.
"Environmental Claim" means any notice from any governmental authority or
third party alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup or remediation costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based upon, or resulting from
a violation of the Environmental Laws or the presence or release into the
environment of any Hazardous Substances.
"Environmental Laws" means all applicable federal, state and local laws and
regulations, as amended, relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground water, land
surface, or subsurface strata) and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over and including common law in respect of,
pollution or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42 U.S.C.
9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. 6901 et seq., and other laws and regulations relating to
emissions, discharges, releases, or threatened releases of any Hazardous
Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of any
Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Advisor" shall mean Morgan Keegan & Company, Inc.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheet (including related notes and schedules, if any) of
BB&T as of December 31, 1997, 1996, and 1995, and the related consolidated
statements of income, shareholders' equity and cash flows (including related
notes and schedules, if any) for each of the three years ended December 31,
1997, 1996, and 1995, as filed by BB&T in Securities Documents and (ii) the
consolidated balance sheets of BB&T (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity
and cash flows (including related notes and schedules, if any) included in
Securities Documents filed by BB&T with respect to periods ended subsequent to
December 31, 1997, and (b) with respect to First Citizens, (i) the
consolidated statements of financial condition (including related notes and
schedules, if any) of First Citizens as of March 31, 1998, March 31, 1997 and
March 31, 1996, and the related consolidated statements of income and retained
earnings, and cash flows (including related notes and schedules, if any) for
each of the three years ended March 31, 1998, March 31, 1997 and March 31,
1996 as filed by First Citizens in Securities Documents and (ii) the
consolidated statements of financial condition of First Citizens (including
related notes and schedules, if any) and the related consolidated statements
of income and retained earnings, and cash flows (including related notes and
schedules, if any) included in Securities Documents filed by First Citizens
with respect to periods ended subsequent to March 31, 1998.
A-2
<PAGE>
"First Citizens Common Stock" shall mean the shares of voting common stock,
par value $1.00 per share, of First Citizens. The First Citizens Common Stock
has no Rights attached, except as provided in Section 3.1.
"First Citizens Disclosure Memorandum" shall mean the written information in
one or more documents, each of which is entitled "First Citizens Disclosure
Memorandum" and dated on or before the date of this Agreement and delivered
not later than ten days following the date of execution of this Agreement by
First Citizens to BB&T, and describing in reasonable detail the matters
contained therein. Each disclosure made therein shall be in existence on the
date of this Agreement and shall specifically reference each Section of this
Agreement under which such disclosure is made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced.
"First Citizens Subsidiaries" shall mean First Citizens Bank, First Citizens
Bank of Fayette County, First Citizens Bank of Clayton County, Citizens
Mortgage Group, Inc., Newnan Financial Services, Inc., Jefferson Ventures,
Inc., and any and all other Subsidiaries of First Citizens as of the date
hereof and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of First Citizens after the date hereof and held as a
Subsidiary by First Citizens at the Effective Time.
"GAAP" shall mean generally accepted accounting principles applicable to
financial institutions and their holding companies, as in effect at the
relevant date.
"GBCC" shall mean the Georgia Business Corporation Code, as amended.
"Hazardous Substances" means any substance or material (i) identified in
CERCLA; (ii) determined to be toxic, a pollutant or a contaminant under any
applicable federal, state or local statutes, law, ordinance, rule or
regulation, including but not limited to petroleum products; (iii) asbestos;
(iv) radon; (v) poly-chlorinated biphiphenyls and (vi) such other materials,
substances or waste which are otherwise dangerous, hazardous, harmful to human
health or the environment.
"IRS" shall mean the Internal Revenue Service.
"Material Adverse Effect" on BB&T or First Citizens shall mean an event,
change, or occurrence which, individually or together with any other event,
change or occurrence, (i) has a material adverse effect on the financial
condition, results of operations, business or business prospects of BB&T and
the BB&T Subsidiaries taken as a whole, or First Citizens and the First
Citizens Subsidiaries taken as a whole, or (ii) materially impairs the ability
of BB&T or First Citizens to perform its obligations under this Agreement or
to consummate the Merger and the other transactions contemplated by this
Agreement; provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) actions and omissions of BB&T or First Citizens
taken with the prior written consent of the other in contemplation of the
transactions contemplated hereby and (b) the direct effects of compliance with
this Agreement on the operating performance of the parties, including expenses
incurred by the parties in consummating the transactions contemplated by this
Agreement or relating to any litigation arising as a result of the Merger.
"NCBCA" shall mean the North Carolina Business Corporation Act, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OTS" shall mean the Office of Thrift Supervision.
"Proxy Statement/Prospectus" shall mean the proxy statement and prospectus,
together with any supplements thereto, to be sent to shareholders of First
Citizens to solicit their votes in connection with a proposal to approve this
Agreement and the Plan of Merger.
"Registration Statement" shall mean the registration statement of BB&T as
declared effective by the Commission under the Securities Act, including any
post-effective amendments or supplements thereto as filed
A-3
<PAGE>
APPENDIX B
January 25, 1999
Board of Directors
First Citizens Corporation
19 Jefferson Street
Newnan, GA 30263
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of First Citizens Corporation (the "Company") of the
Exchange Ratio in connection with its proposed merger with BB&T Corporation
("BB&T") (the "Transaction") pursuant to and in accordance with the terms of
the Agreement and Plan of Reorganization (the "Agreement") entered into by and
between BB&T and the Company. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Agreement.
You have advised us that, pursuant to the Agreement, BB&T and the Company
will merge (the "Merger") with and into BB&T and that the Company's banking
subsidiary will become a wholly owned bank subsidiary of BB&T. Each share of
the Company's Common Stock (excluding shares held by Company shareholders who
have perfected their dissenter' rights of appraisal) issued and outstanding at
the Effective Time shall be converted into 1.0789 shares of BB&T Common Stock.
In addition, each stock option outstanding shall be converted at the above
Exchange Ratio into and become rights with respect to BB&T Common Stock.
Morgan Keegan & Company, Inc. ("Morgan Keegan"), as part of its investment
banking business, is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for various purposes. We have been retained by the Board of
Directors of the Company to serve as its financial advisor. Morgan Keegan will
receive a fee for serving as financial advisor and for rendering this opinion.
We have not advised any party in connection with the Transaction other than
the Company and we make no recommendation to the shareholders of the Company.
In connection with our opinion, we have (1) reviewed the Agreement; (2) held
discussions with various members of management and representatives of the
Company and BB&T concerning each company's historical and current operations,
financial condition and prospects; (3) reviewed historical consolidated
financial and operating data that was publicly available or furnished to us by
the Company and BB&T; (4) reviewed internal financial analyses, financial and
operating forecasts, reports and other information prepared by officers and
representatives of the Company; (5) reviewed certain publicly available
information with respect to certain other companies that we believe to be
comparable to the Company and BB&T and the trading markets for such other
companies' securities; (6) reviewed certain publicly available information
concerning the terms of certain other transactions that we deemed relevant to
our inquiry; (7) considered the relative contributions of the Company and BB&T
to the combined company; and (8) conducted such other financial studies,
analyses and investigations as we deemed appropriate for the purpose of this
opinion.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and
other information provided us or publicly available and have assumed and
relied upon the representations and warranties of the Company and BB&T
contained in the Agreement. We have not been engaged to, and have not
independently attempted to, verify any of such information. We have also
relied upon the managements of the Company and BB&T as to the reasonableness
and achievability of the financial and operating projections and the
assumptions and bases therefor provided to us and, with your consent, we have
assumed that such projections reflect the best currently available estimates
and judgments of such respective managements of the Company and BB&T and that
such projections and forecasts will be realized in the amounts and time
periods currently estimated by the managements of the Company and BB&T. We
have not been engaged to assess the achievability of such projections or the
assumptions on which they were based and
B-1
<PAGE>
express no view as to such projections or assumptions. In addition, we have
not conducted a physical inspection or appraisal of any of the assets,
properties or facilities of either the Company or BB&T nor have we been
furnished with any such evaluation or appraisal. We have also assumed that the
conditions to the Transaction would be consummated on a timely basis in the
manner contemplated in the Agreement. Our opinion is based upon analyses of
the foregoing factors in light of our assessment of general economic,
financial and market conditions as they exist and can be evaluated by us as of
the date hereof. We express no opinion as to the price or trading range at
which shares of BB&T Common Stock will trade following the date hereof, or the
price or trading range at which BB&T Common Stock will trade upon completion
of the Transaction.
Morgan Keegan has not previously provided investment banking services, but
has provided fixed income services, to the Company. In the ordinary course of
business, we do not serve as a market maker for the Company or BB&T Common
Stock and do not trade shares for our own account. However, we may trade
shares for our customers.
It is understood that this opinion is not to be quoted or referred to, in
whole or in part (including excerpts or summaries), in any filing, report,
document, release or other communication used in connection with the
Transaction (unless required to be quoted or referred to by applicable
regulatory requirements), nor shall this opinion be used for any other
purposes, without our prior written consent, which consent shall not be
unreasonably withheld. Furthermore, our opinion is directed to the Board of
Directors of the Company and does not constitute a recommendation to any
shareholder of the Company as to how such shareholder should vote at the
shareholders' meeting to be held in connection with the Transaction.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that, as of the date hereof, the
Exchange Ratio is fair, from a financial point of view, to the Company's
shareholders.
Yours very truly,
/s/ Morgan Keegan & Company, Inc.
_____________________________________
Morgan Keegan & Company, Inc.
B-2
<PAGE>
May 24, 1999
Board of Directors
First Citizens Corporation
19 Jefferson Street
Newman, GA 30263
Gentlemen:
By letter of January 25, 1999 (the "Prior Opinion"), we provided to you our
opinion relating to the proposed merger with BB&T Corporation. Subject to the
qualifications, conditions, and assumptions contained therein, we hereby
confirm to you the matters stated in our Prior Opinion, as if restated in
their entirety, as of this date.
Very truly yours,
/s/ Morgan Keegan & Company, Inc.
Morgan Keegan & Company, Inc.
B-3
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Sections 55-8-50 through 55-8-58 of the North Carolina Business Corporation
Act contain specific provisions relating to indemnification of directors and
officers of North Carolina corporations. In general, such sections provide
that: (i) a corporation must indemnify a director or officer who is wholly
successful in his defense of a proceeding to which he is a party because of
his status as such, unless limited by the articles of incorporation, and (ii)
a corporation may indemnify a director or officer if he is not wholly
successful in such defense if it is determined as provided by statute that the
director or officer meets a certain standard of conduct, except that when a
director or officer is liable to the corporation or is adjudged liable on the
basis that personal benefit was improperly received by him, the corporation
may not indemnify him. A director or officer of a corporation who is a party
to a proceeding may also apply to a court for indemnification, and the court
may order indemnification under certain circumstances set forth in statute. A
corporation may, in its articles of incorporation or bylaws or by contract or
resolution of the board of directors, provide indemnification in addition to
that provided by statute, subject to certain conditions.
The registrant's bylaws provide for the indemnification of any director or
officer of the registrant against liabilities and litigation expenses arising
out of his status as such, excluding: (i) any liabilities or litigation
expenses relating to activities that were at the time taken known or believed
by such person to be clearly in conflict with the best interest of the
registrant and (ii) that portion of any liabilities or litigation expenses
with respect to which such person is entitled to receive payment under any
insurance policy.
The registrant's articles of incorporation provide for the elimination of
the personal liability of each director of the registrant to the fullest
extent permitted by law.
The registrant maintains directors' and officers' liability insurance that,
in general, insures: (i) the registrant's directors and officers against loss
by reason of any of their wrongful acts and (ii) the registrant against loss
arising from claims against the directors and officers by reason of their
wrongful acts, all subject to the terms and conditions contained in the
policy.
Certain rules of the Federal Deposit Insurance Corporation limit the ability
of certain depository institutions, their subsidiaries and their affiliated
depository institution holding companies to indemnify affiliated parties,
including institution directors. In general, subject to the ability to
purchase directors and officers liability insurance and to advance
professional expenses under certain circumstances, the rules prohibit such
institutions from indemnifying a director for certain costs incurred with
regard to an administrative or enforcement action commenced by any federal
banking agency that results in a final order or settlement pursuant to which
the director is assessed a civil money penalty, removed from office,
prohibited from participating in the affairs of an insured depository
institution or required to cease and desist from or take an affirmative action
described in Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. (S)
1818(b)).
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<PAGE>
Item 21. Exhibits and Financial Statement Schedules
(a) The following documents are filed as exhibits to this registration
statement on Form S-4:
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
2 Agreement and Plan of Reorganization dated as of January 25, 1999
between BB&T Corporation and First Citizens Corporation (included as
Appendix A to the Proxy Statement/Prospectus)
5 Opinion of Womble Carlyle Sandridge & Rice, PLLC*
8 Opinion of Womble Carlyle Sandridge & Rice, PLLC*
23(a) Consent of Womble Carlyle Sandridge & Rice, PLLC (included in Exhibit
5)*
23(b) Consent of McGuire, Woods, Battle & Boothe, LLP (included in Exhibit
8)*
23(c) Consent of Arthur Andersen LLP*
23(d) Consent of Mauldin & Jenkins, LLC*
23(e) Consent of Morgan Keegan & Company, Inc.*
24 Power of Attorney*
99(a) Form of First Citizens Corporation Proxy Card*
99(b) Option Agreement, dated January 26, 1999, between BB&T Corporation and
First Citizens Corporation*
</TABLE>
- --------
* Previously filed
(b) Financial statement schedules: Not applicable.
Item 22. Undertakings
A. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
C. The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
D. The registrant undertakes that every prospectus (i) that is filed
pursuant to Paragraph (C) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
E. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
F. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
G. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 1 to Registration Statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Winston-Salem, State of North Carolina, on May 24,
1999.
BB&T Corporation
/s/ Jerone C. Herring
By: _________________________________
Jerone C. Herring
Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to Registration Statement on Form S-4 has been signed by the
following persons in the capacities indicated on May 24, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ John A. Allison IV* Chairman of the Board and Chief Executive
______________________________________ Officer (principal executive officer)
John A. Allison IV
/s/ Scott E. Reed* Senior Executive Vice President and Chief
______________________________________ Financial Officer (principal financial
Scott E. Reed officer)
/s/ Sherry A. Kellett* Executive Vice President and Controller
______________________________________ (principal accounting officer)
Sherry A. Kellett
/s/ Paul B. Barringer* Director
______________________________________
Paul B. Barringer
/s/ Alfred E. Cleveland* Director
______________________________________
Alfred E. Cleveland
/s/ W. R. Cuthbertson, Jr.* Director
______________________________________
W. R. Cuthbertson, Jr.
/s/ Ronald E. Deal* Director
______________________________________
Ronald E. Deal
/s/ A. J. Dooley, Sr.* Director
______________________________________
A. J. Dooley, Sr.
Director
______________________________________
Tom D. Efird
/s/ Paul S. Goldsmith* Director
______________________________________
Paul S. Goldsmith
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ L. Vincent Hackley* Director
______________________________________
L. Vincent Hackley
/s/ Jane P. Helm* Director
______________________________________
Jane P. Helm
/s/ Richard Janeway, M.D.* Director
______________________________________
Richard Janeway, M.D.
/s/ J. Ernest Lathem, M.D.* Director
______________________________________
J. Ernest Lathem, M.D.
/s/ James H. Maynard* Director
______________________________________
James H. Maynard
/s/ Joseph A. McAleer, Jr.* Director
______________________________________
Joseph A. McAleer, Jr.
/s/ Albert O. McCauley* Director
______________________________________
Albert O. McCauley
/s/ Richard L. Player, Jr.* Director
______________________________________
Richard L. Player, Jr.
/s/ C. Edward Pleasants, Jr.* Director
______________________________________
C. Edward Pleasants, Jr.
/s/ Nido R. Qubein* Director
______________________________________
Nido R. Qubein
/s/ E. Rhone Sasser* Director
______________________________________
E. Rhone Sasser
/s/ Jack E. Shaw* Director
______________________________________
Jack E. Shaw
/s/ Harold B. Wells* Director
______________________________________
Harold B. Wells
/s/ Jerone C. Herring
*By: _________________________________
Jerone C. Herring
Attorney-in-Fact
</TABLE>
II-5
