================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
July 27, 2000
Date of Report (Date of earliest event recorded)
BB&T Corporation
(Exact name of registrant as specified in its charter)
Commission file number: 1-10853
North Carolina 56-0939887
(State of Incorporation) (I.R.S. Employer Identification No.)
200 West Second Street
Winston-Salem, North Carolina 27101
(Address of Principal Executive Offices) (Zip Code)
(336) 733-2000
(Registrant's Telephone Number, Including Area Code)
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This Form 8-K has 33 pages.
<PAGE>
================================================================================
Item 5. Other Events
BB&T Corporation (NYSE: BBT) today said it plans to buy FCNB Corp
(Nasdaq: FCNB) of Frederick, Md., in a $226.5 million stock swap. The
acquisition would expand BB&T's presence in economically strong central
Maryland and the fast-growing Washington, D.C., corridor.
FCNB Corp, with $1.6 billion in assets, operates 34 banking offices
through its banking subsidiary, FCNB Bank, primarily in Frederick and Montgomery
counties of central Maryland.
The transaction, approved by the directors of both companies, is valued
at $18.13 per FCNB share based on BB&T's closing price Wednesday of $25. The
exchange ratio will be fixed at .725 BB&T share for each FCNB share. The
transaction will be accounted for as a pooling of interests.
"FCNB is a quality institution that will allow us to expand our presence
in the economically vibrant markets of central Maryland and metropolitan
Washington, D.C.," said BB&T Chairman and Chief Executive Officer John Allison.
"Both institutions have solid capital positions, excellent credit
quality, strong branch office networks and very compatible corporate cultures.
This transaction will enable us to grow our franchise value and build on our
momentum in selling fee-based products and services."
MORE
Maryland has the second highest median household income in the United
States while metropolitan Washington, D.C., leads the nation in per capita
income.
BB&T entered the metropolitan Washington area in 1998 by acquiring
Franklin Bancorporation and Maryland Federal Bancorp. It moved into central
Maryland last year with the acquisition of Westminster-based Mason-Dixon
Bancshares.
BB&T would move from sixth to first in market share in central Maryland,
the most economically attractive part of the state.
FCNB operates 31 full-service banking offices in Frederick, Montgomery,
Baltimore, Carroll, Anne Arundel, Howard and Prince George's counties in
Maryland; two offices in the District of Columbia; and one in Fairfax County in
Virginia.
FCNB customers will be introduced to BB&T's strong branch-based sales
culture and new products and services such as capital markets access, cash
management, leasing and international banking.
FCNB, founded in 1818, shares BB&T's reputation for superior customer
service, said FCNB President and CEO A. Patrick Linton, who will be named
president of BB&T's new Frederick-based community bank region. Linton also will
serve as a BB&T liaison with statewide organizations and the Maryland
legislature.
"We have a 182-year history of strong community commitment and, above
all, excellent personal service," Linton said. "BB&T also believes in respecting
the individual and providing the highest level of personal service possible,
which is what makes this partnership so appealing.
"It's rare to find an institution of their size placing that much
emphasis on quality service, but BB&T firmly believes in it. And their community
banking strategy allows local bankers to make their own decisions."
BB&T currently has 20 autonomous regions, each with its own president,
which operate like community banks. Nearly all lending decisions are made
locally.
FCNB acquired Frederick Underwriters Inc., its first insurance agency
and central Maryland's largest, in late 1998. The wholly owned subsidiary offers
a full range of property, casualty and personal insurance products. Frederick
Underwriters also operates an agency in the Baltimore suburb of Pikesville and
another in Carroll County.
FCNB also offers asset management, trust services, mortgage banking and
financial planning, and investment services.
The merger, which is subject to the approval of FCNB shareholders and
banking regulators, is expected to be completed in the first quarter of 2001.
Winston-Salem-based BB&T Corporation, with $55.2 billion in assets,
operates 831 banking offices in the Carolinas, Virginia, Maryland, Georgia, West
Virginia, Kentucky and Washington, D.C.
<PAGE>
Item 7. Exhibits
99.1 Analyst Presentation Materials
<PAGE>
BB&T
and
FCNB Corp
Frederick, MD
Expanding a Great Franchise
Analyst Presentation
July 27, 2000
1
<PAGE>
Forward-Looking Information
BB&T has made forward-looking statements in the accompanying analyst
presentation materials that are subject to risks and uncertainties. These
statements are based on the beliefs and assumptions of the management of BB&T,
and on the information available to management at the time the analyst
presentation materials were prepared. In particular, the analyst materials in
this report include statements regarding estimated earnings per share of BB&T on
a stand alone basis, expected cost savings from the merger, estimated
restructuring charges relating to the merger, estimated increases in FCNB Corp's
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
FCNB Corp, the amount of general and administrative expense consolidation, costs
relating to converting FCNB Corp's 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 cost related to the
merger. The realization of cost savings and the amount of restructuring charges
are subject to the risk that the foregoing assumptions are inaccurate.
Any statements in the accompanying exhibit regarding the anticipated accretive
effect of the merger and BB&T's anticipated performance in future periods are
subject to risks relating to, among other things, the following possibilities:
(1) expected cost savings from this merger or other previously announced mergers
may not be fully realized or realized within the expected time frame; (2)
deposit attrition, customer loss or revenue loss following proposed mergers may
be greater than expected; (3) competitive pressure among depository and other
financial institutions may increase significantly; (4) costs or difficulties
related to the integration of the businesses of BB&T and its merger partners,
including FCNB Corp, may be greater than expected; (5) changes in the interest
rate environment may reduce margins; (6) general economic or business
conditions, either nationally or regionally, may be less favorable than
expected, resulting in, among other things, a deterioration in credit quality,
or a reduced demand for credit; (7) legislative or regulatory changes, including
changes in accounting standards, may adversely affect the businesses in which
BB&T and FCNB Corp are engaged; (8) adverse changes may occur in the securities
markets; and (9) competitors of BB&T and FCNB Corp may have greater financial
resources and develop products that enable such competitors to compete more
successfully than BB&T and FCNB Corp.
BB&T believes these forward-looking statements are reasonable; however, undue
reliance should not be placed on such forward-looking statements, which are
based on current expectations. Such statements are not guarantees of
performance. They involve risks, uncertainties and assumptions. The future
results and shareholder value of BB&T following completion of the merger may
differ materially from those expressed in these forward-looking statements. Many
of the factors that will determine these results and values are beyond
management's ability to control or predict.
2
<PAGE>
Outline
- Background and transaction terms
- Financial data
- Rationale and strategic objectives
- Investment criteria
- Summary
3
<PAGE>
BB&T Corporation (BBT)
- $55.2 billion financial holding company*
- 831 branch locations in NC, SC, VA, GA, MD, WV, KY, and the District of
Columbia*
For 3 months
ended 6/30/00**
---------------
- ROA 1.62%
- Cash Basis ROA 1.76%
- ROE 21.33%
- Cash Basis ROE 27.57%
- Cash Basis Efficiency Ratio 50.23%
* Includes the acquisition of One Valley Bancorp, Inc. on July 6, 2000
** Recurring earnings
4
<PAGE>
FCNB Corp (FCNB)
- $1.6 billion bank holding company
- 31 banking offices in Maryland
- 2 banking offices in DC
- 1 banking office in Virginia
For 3 months
ended 6/30/00
-------------
- ROA 0.92%
- Cash Basis ROA 0.95%
- ROE 16.45%
- Cash Basis ROE 17.08%
- Cash Basis Efficiency Ratio 67.75%
5
<PAGE>
Pro Forma Company Profile
- Size: $56.8 billion in assets
$10.3 billion in market capitalization
- Offices: NC: 336
VA: 152
GA: 102
SC: 90
WV: 84
MD: 83
KY: 10
DC: 8
----------
Total 865
Data as of July 21, 2000.
6
<PAGE>
Terms of the Transaction
<PAGE>
7
Terms of the Transaction
- Purchase price: $18.125 per share*
- Aggregate value: $226.5 million*
- Consideration: Fixed exchange ratio of .725 of a share of BB&T
common stock for each FCNB share
- Structure: Tax-free exchange of stock equal to
100% of purchase price
- Accounting treatment: Transaction will be accounted for as
a pooling-of-interests
- Lock-up provision: Stock option agreement
- Expected closing: First quarter 2001
* Based on BB&T's closing stock price of $25.00 as of 07/26/00.
8
<PAGE>
Pricing
- Purchase Price $18.125
- Premium/market (8.8)%*
- Price/6-30-00 stated book 2.43x
- Price/LTM EPS 19.5x
- Price/LTM Core EPS 15.4x
- BB&T shares issued 9.1 million**
* Based on FCNB's closing stock price of $19.875 as of 07/26/00.
** BB&T shares issued based on FCNB shares outstanding adjusted for stock
options.
<PAGE>
9
<TABLE>
Acquisition Comparables*
Acquisitions Announced since February 1, 2000
with Deal Values between $100 Million and $2 Billion
<CAPTION>
Seller Deal Deal/Pr Deal Pr/
Date Total Deal Value/ Deal Pr/ Deal Deal/Pr LTM LTM Core
Buyer Seller Announced Assets Value Assets Stock Pr Pr/Bk Tg Bk EPS EPS
----- ------ --------- ------ ----- ------ -------- ----- ------- ------- ----
($M) ($M) (%) (%) (%) (%) (x) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wells Fargo & Company First Commerce
& Company Bancshares Inc. 2/2/2000 2,545.6 479.7 18.8 8.9 191.7 197.2 16.2 18.3
BB&T Corporation One Valley
Bancorp Inc. 2/7/2000 6,413.0 1,202.2 18.8 30.1 211.4 232.5 15.1 15.4
Huntington Empire Banc
Bancshares Inc. Corporation 2/7/2000 505.9 138.7 27.4 39.5 304.0 306.1 19.8 25.9
BancorpSouth Inc First United
Bancshares Inc. 4/17/2000 2,666.0 455.7 17.1 42.6 175.3 186.7 13.6 13.7
M&T Bank Corporation Keystone Financial
Inc. 5/17/2000 7,012.3 1,026.7 14.6 33.4 184.5 204.0 21.2 12.5
U.S. Bancorp Scripps Financial
Corporation 6/27/2000 643.3 155.2 24.1 29.5 325.6 325.6 32.9 32.4
Maximum 7,012.3 1,202.2 27.4 42.6 325.6 325.6 32.9 32.4
Minimum 505.9 138.7 14.6 8.9 175.3 186.7 13.6 12.5
Average 3,297.7 576.4 20.1 30.7 232.1 242.0 19.8 19.7
Median 2,605.8 467.7 18.8 31.7 201.6 218.3 18.0 16.8
Deal Price: $18.125
BB&T Corp FCNB Corp 1,593.1 226.5 14.2 (8.8) 243.3 259.7 19.5 15.4
Over/(Under) Average Comparables (349.8) (5.9) (39.5) 11.2 17.7 (0.3) (4.3)
* Source for Acquisition Comparables: SNL Securities
10
</TABLE>
<PAGE>
<TABLE>
BB&T Comparables
Average Comparable Multiples for All BB&T Deals Announce since January 1, 1999
BB&T's
<CAPTION>
BB&T's Deal Pr/ Deal Pr/
Stock Price Deal Value Deal Value/ Deal Pr/ Deal Deal Pr/ LTM LTM Core
At Annc. in Millions Assets Stock Pr Pr/Bk Tg Bk EPS EPS
-------- ----------- ------ -------- ----- ----- --- ---
($) (%) (%) (%) (%) (x) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average based on original deal price $ 35.12 390.6 27.1 32.1 277.9 304.4 22.8 22.1
Average of individual deals based
on adjusted deal price 300.5 19.4 22.4 197.3 215.6 16.2 15.6
----
BB&T Corp/FCNB 266.5 14.2 (8.8) 243.3 259.7 19.5 15.4
----
Over/(Under) Average Adjusted
Comparables (74.0) (5.2) (31.2) 46.0 44.1 3.3 (0.3)
11
</TABLE>
<PAGE>
Financial Data
12
<PAGE>
Financial Summary
For Quarter Ended: 6/30/00 6/30/00
BB&T* FCNB
------- -------
ROA 1.62% 0.92%
ROE 21.33 16.45
Net interest margin (FTE) 4.22 3.54
CB Efficiency ratio 50.23 67.75
Net charge-offs .22 .09
Reserve/NPLs 384.28 117.76
NPAs/assets .29 .59
* Recurring earnings
13
<PAGE>
Capital Strength
BB&T FCNB
(6/30/00) (6/30/00)
--------- ---------
Equity/assets 7.6% 5.6%
Leverage capital ratio 7.1% 8.4%
Total risk-based capital 12.7% 12.2%
14
<PAGE>
Rationale for Acquisition
- BB&T has an announced strategy to pursue in-market (Carolinas/Virginia/West
Virginia/DC/Maryland/Georgia) and contiguous state acquisitions of high
quality banks and thrifts in the $250 million to $10 billion range. The
acquisition of FCNB Corp is consistent with this strategy.
- This acquisition is very consistent with past acquisitions which we have
successfully executed, i.e. it fits our model.
15
<PAGE>
Strategic Objectives
The key strategic objectives achieved in this acquisition:
- Enhances franchise value with an additional $1.6 billion in assets in
Central Maryland and Metro DC and an increased market presence in Central
Maryland - Carroll, Frederick and Howard counties.
- Improves efficiency
- 35.0% annual cost savings fully realized in the first 12 months of
operations following conversion.
- Supplements FCNB's strong banking franchise with BB&T's stronger fee income
product lines (such as Investment Sales, Capital Markets Activities and Cash
Management Services).
- Increases product and market penetration through the use of BB&T's world
standard sales system.
16
<PAGE>
Franchise Enhancement
- Acquisition of a successful $1.6 billion community bank that has an
operating philosophy and core values very similar to those of BB&T.
- Moves BB&T from the number six market share position in economically
attractive Central Maryland to the number one position with a 20.8%
market share.*
- Improves BB&T's market presence in the strategically important
Metro DC area.
- Provides BB&T's insurance agency network with a market leader position in
Frederick, Maryland, and two additional agency locations, one in the
Baltimore suburb of Pikesville and one in Carroll County.
* Based on June 30, 1999 Deposit Information.
17
<PAGE>
Efficiency Improvement
Targeted Annual Cost Savings
----------------------------
$16.5 million or approximately
35.0% of FCNB's expense base
Assumes closing of 8 of 34 locations
or 23% of FCNB's branches
18
<PAGE>
One-Time Charges
After-tax merger-related charges
$22.5 million
19
<PAGE>
Branch Locations
[Map showing location of both existing and pending BB&T branches
throughout MD, VA, WV, KY, NC, SC and GA inserted here]
20
<PAGE>
Branch Locations
[Map showing location of FCNB branches throughout
MD, VA and DC inserted here]
21
<PAGE>
Market Characteristics
[Graphic of State of Maryland with Metro Washington DC region
indicated by two concentric circles inserted on left side of slide]
- Maryland has the 2nd highest median household income and 5th highest per
capita personal income in the U.S.
- Maryland is the 5th most densely populated state in the U.S.
- Maryland has an advanced high tech industrial base concentrated in
biotechnology, telecommunications, and computer science.
- Maryland has the highest concentration of federal research and development
facilities in the nation.
22
<PAGE>
Market Characteristics
[Graphic of State of Maryland with Metro Washington DC region
indicated by two concentric circles inserted on left side of slide]
- With 5 million residents, the Metro DC market is the nation's 5th
largest MSA.
- Metro DC is the nation's leader in per capita income; 44.2% above the
national average.
- Total employment in Metro DC is projected to expand 19.9% (1993-2005).
- The Washington-Baltimore CMSA is the nation's 4th largest CMSA and contains
90% of Maryland's population.
23
<PAGE>
BB&T Investment Criteria
- EPS and Cash Basis EPS (accretive by year 2)
- Internal rate of return (15% or better)
- Return on equity and Cash Basis ROE (accretive by year 3)
- Return on assets and Cash Basis ROA (accretive by year 3)
- Book value per share (accretive by year 5)
- Must not cause combined leverage capital ratio to go below 7%
Criteria are listed in order of importance. There are sometimes trade-offs
among criteria.
24
<PAGE>
Assumptions
- BB&T's 2000 and 2001 EPS are based on the First Call estimates of $2.17 and
$2.47 and subsequent years are based on 12% income statement and balance
sheet growth.
- FCNB's 2000 EPS is based on the First Call estimate of $1.19 and subsequent
years are based on 12% income statement and balance sheet growth except for
the enhancements cited below.
- 35% annual cost savings ($16.5 million) fully realized in the first
12 months of operations following conversion.
- FCNB's core net interest margin (non-FTE) is incrementally increased over
years 2-6 from a projected 3.46% in 2001 to 4.20% in 2006 and held constant
thereafter.
- FCNB's noninterest income is grown at approximately 18% in years 1-5 and
then grown at 12% in the remaining periods.
- FCNB's net charge-off rate for loan losses is raised to 0.28% in 2001, 0.35%
in 2002 and is held constant thereafter.
- FCNB's loan loss allowance is raised to 1.30% to match BB&T's reserve
philosophy.
- Depending upon economic conditions, FCNB may choose, premerger, to
restructure their bond portfolio. Any benefit that may be derived from this
restructuring has not been included in our projections.
25
<PAGE>
Earnings Per Share Impact
Accretion Accretion
(Dilution) Pro Forma (Dilution)
Pro Forma Pro Forma Cash Basis Pro Forma
EPS Shares EPS Shares
--------- --------- ---------- ----------
2001* $2.47 $0.00 $2.61 $0.00
2002 2.77 0.01 2.91 0.01
2003 3.11 0.02 3.25 0.02
2004 3.50 0.03 3.63 0.03
2005 3.93 0.05 4.06 0.05
2006 4.40 0.06 4.54 0.06
2007 4.93 0.07 5.07 0.07
2008 5.52 0.08 5.66 0.07
2009 6.19 0.09 6.32 0.08
2010 6.93 0.10 7.07 0.09
Internal rate of return 23.70%
------
* Recurring earnings
26
<PAGE>
ROE Impact 1
Pro Forma
Pro Forma Cash Basis
ROE (%) Change ROE (%) Change
------- ------ ------- ------
2001 2 21.66 0.11 26.38 0.08
2002 21.88 0.14 25.78 0.12
2003 21.42 0.16 24.46 0.14
2004 20.96 0.17 23.34 0.15
2005 20.55 0.19 22.42 0.17
1 The decrease in ROE results from the build up in equity relative to assets.
If consistent with attaining and maintaining a leverage capital ratio of at
least 7%, BB&T may choose to leverage the balance sheet further through
future purchase acquisitions.
2 Recurring earnings
27
<PAGE>
ROA Impact
Pro Forma
Pro Forma Cash Basis
ROA (%) Change ROA (%) Change
------- ------ ------- ------
2001* 1.64 (0.01) 1.75 (0.01)
2002 1.65 (0.00) 1.74 (0.01)
2003 1.65 0.00 1.74 (0.00)
2004 1.66 0.00 1.73 0.00
2005 1.67 0.01 1.73 0.01
* Recurring earnings
28
<PAGE>
Book Value/Capital Impact
Pro Forma
Book Value Per Share
---------------------- Pro Forma
Accretion Leverage Accretion
Stated (Dilution) Ratio (Dilution)
------ ---------- ------- ----------
2001 $11.96 $(0.04) 7.21% 0.00
2002 13.71 (0.02) 7.55 0.00
2003 15.73 (0.00) 7.88 0.00
2004 18.04 0.03 8.19 0.01
2005 20.64 0.08 8.46 0.02
2006 23.56 0.14 8.70 0.03
2007 26.83 0.20 8.91 0.04
2008 30.49 0.28 9.09 0.04
2009 34.60 0.37 9.25 0.05
2010 39.19 0.46 9.38 0.06
29
<PAGE>
Summary
- The acquisition of FCNB Corp is a strong strategic fit:
- Significantly improves our existing franchise in Central Maryland with a
resulting market share percentage of 20.8%.
- It helps accomplish our goal of expanding and strengthening our position
in the Metro DC market.
- It fits culturally and geographically.
- Overall Investment Criteria are met:
- EPS and Cash Basis EPS accretive in year 1
- IRR 23.70%
- ROE and Cash ROE accretive in year 1
- ROA accretive in year 3 and Cash ROA accretive in year 4
- Book value accretive in year 4
- Combined leverage ratio remains above 7%
30
<PAGE>
Appendix
- Historical Financial Data
- Glossary
31
<PAGE>
<TABLE>
FCNB Corp
Financial Summary
<CAPTION>
1997 1998 1999 6/30/00 YTD
----------------------------------------------------------
Earnings Summary (In thousands)
<S> <C> <C> <C> <C>
Interest Income (FTE)
Interest on loans & leases ................ $ 64,824 $ 71,131 $ 75,100 $ 40,807
Interest & dividends on securities ........ 16,977 22,092 27,616 14,841
Interest on temporary investments ......... 1,332 1,802 1,398 717
--------- --------- --------- ---------
Total interest income (FTE) ........... 83,133 95,025 104,114 56,365
--------- --------- --------- ---------
Interest Expense
Interest expense on deposit accounts ...... 29,424 33,175 34,518 19,171
Interest on short-term borrowings ......... 9,757 13,151 15,974 10,024
Interest on long-term debt ................ 257 1,527 3,378 1,689
--------- --------- --------- ---------
Total interest expense ................ 39,438 47,853 53,870 30,884
--------- --------- --------- ---------
Net interest income (FTE) ................. 43,695 47,172 50,244 25,481
Less taxable equivalency adjustment .. 273 385 391 164
--------- --------- --------- ---------
Net interest income ....................... 43,422 46,787 49,853 25,317
Provision for loan losses ................. 1,809 2,097 2,110 950
--------- --------- --------- ---------
Net interest income after provision ....... 41,613 44,690 47,743 24,367
--------- --------- --------- ---------
Noninterest Income
Service charges on deposit accounts ....... 3,763 4,617 5,544 2,936
Non-deposit fees and commissions .......... 5,668 5,332 5,999 3,250
G / (L) on sale of real estate & securities 1,076 2,271 1,798 425
Other operating income .................... 2,472 4,872 5,743 2,885
--------- --------- --------- ---------
Total noninterest income .............. 12,979 17,092 19,084 9,496
--------- --------- --------- ---------
Noninterest Expense
Personnel ................................. 20,353 23,553 25,603 13,256
Occupancy & equipment ..................... 6,972 8,574 9,852 4,913
FDIC premiums ............................. 403 690 387 105
Other operating expenses .................. 9,529 10,233 10,885 5,270
--------- --------- --------- ---------
Total noninterest expense ............. 37,257 43,050 46,727 23,544
--------- --------- --------- ---------
Net income before taxes ................... 17,335 18,732 20,100 10,319
Income taxes .............................. 5,882 6,145 6,580 3,280
--------- --------- --------- ---------
Net income before nonrecurring charges .... 11,453 12,587 13,520 7,039
--------- --------- --------- ---------
Nonrecurring charges * .................... (285) (3,161) (3,091) (26)
--------- --------- --------- ---------
Net income ............................ $ 11,168 $ 9,426 $ 10,429 $ 7,013
========= ========= ========= =========
Basic EPS ................................. $ 0.97 $ 0.82 $ 0.89 $ 0.59
Diluted EPS ............................... 0.95 0.79 0.87 0.59
Diluted EPS before nonrecurring charges ... 0.97 1.06 1.13 0.59
Book value ................................ $ 8.32 $ 8.52 $ 7.53 $ 7.45
EOP shares ................................ 11,572 11,599 11,924 11,925
Basic shares .............................. 11,497 11,561 11,720 11,925
Diluted shares ............................ 11,738 11,871 11,954 11,950
* Nonrecurring charges from merger-related expenses.
32
</TABLE>
<PAGE>
<TABLE>
FCNB Corp
Financial Summary
<CAPTION>
1997 1998 1999 6/30/00 YTD
------------------------------------------------------------------
Average Balance Sheet (In thousands)
<S> <C> <C> <C> <C>
Assets
Loans .................................. $ 698,966 $ 779,389 $ 855,623 $ 934,397
Securities ............................. 261,095 343,361 441,821 465,654
Other earning assets ................... 24,735 31,978 26,684 23,455
---------- ---------- ---------- ----------
Total interest-earning assets ...... 984,796 1,154,728 1,324,128 1,423,506
---------- ---------- ---------- ----------
Goodwill & other intangibles ........... -- -- 3,625 5,444
Other assets ........................... 79,547 100,889 102,099 89,291
---------- ---------- ---------- ----------
Total assets ....................... $1,064,343 $1,255,617 $1,429,852 $1,518,241
========== ========== ========== ==========
Net interest margin .................... 4.44% 4.09% 3.79% 3.58%
Liabilities & Shareholders' Equity
Interest-bearing deposits:
Money Market & NOW ..................... $ 185,696 $ 223,765 $ 255,801 $ 273,592
Savings ................................ 93,827 92,874 111,850 127,010
CD's and other time .................... 399,168 436,283 453,225 469,458
---------- ---------- ---------- ----------
Total interest-bearing deposits .... 678,691 752,922 820,876 870,060
Short-term borrowed funds .............. 179,001 246,772 309,218 343,609
Long-term debt ......................... -- 18,069 40,250 40,250
---------- ---------- ---------- ----------
Total interest-bearing liabilities . 857,692 1,017,763 1,170,344 1,253,919
Demand deposits ........................ 108,417 127,193 151,229 163,947
Other liabilities ...................... 8,622 11,213 14,705 14,601
---------- ---------- ---------- ----------
Total liabilities .................. 974,731 1,156,169 1,336,278 1,432,467
---------- ---------- ---------- ----------
Common equity .......................... 89,612 99,448 93,574 85,774
---------- ---------- ---------- ----------
Total equity ....................... 89,612 99,448 93,574 85,774
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Total liabilities & shareholders' equity $1,064,343 $1,255,617 $1,429,852 $1,518,241
========== ========== ========== ==========
33
</TABLE>
<PAGE>
<TABLE>
FCNB Corp
Financial Summary
<CAPTION>
1997 1998 1999 6/30/00 YTD
------------------------------------------------------------------
Ratio Analysis
<S> <C> <C> <C> <C>
ROA 1.08% 1.00% 0.95% 0.93%
ROCE 12.78% 12.66% 14.45% 16.41%
Efficiency ratio 67.0% 69.4% 69.2% 68.5%
Adj. noninterest income / Adj. revenues 21.4% 23.9% 25.6% 26.4%
Average equity / Average assets 8.4% 7.9% 6.5% 5.6%
Credit Quality
(In thousands)
Beginning $ 6,816 $ 7,611 $ 8,237 $ 10,043
------------- ------------- -------------- --------------
Provision 1,809 2,097 2,110 950
Allowance adjustment - - 2,898 (1) -
Net charge-offs (1,014) (1,471) (3,202) (2) (1,702)
------------- ------------- -------------- --------------
Ending allowance $ 7,611 $ 8,237 $ 10,043 $ 9,291
------------- ------------- -------------- --------------
Allowance 1.02% 1.01% 1.11% 0.95%
Charge-off rate 0.15% 0.19% 0.38% 0.18%
Period end loans & leases $ 749,273 $ 818,061 $ 903,072 $ 979,079
Period end common equity $ 96,236 $ 98,855 $ 89,765 $ 88,825
(1) Provision adjustment of $2.9 million attributable to the acquisition of First Frederick.
(2) $1.5 million attributable to the acquisition of First Frederick.
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Glossary
Return on Assets - recurring earnings for the period as a percentage of average
assets for the period.
Return on Equity - recurring earnings for the period as a percentage of average
common equity for the period.
Cash Basis Performance Results and Ratios - These calculations exclude the
effect on net income of amortization expense applicable to certain intangible
assets. The ratios also exclude the effect of the unamortized balances of these
intangibles from assets and equity.
Efficiency Ratio - calculated as recurring noninterest expense as a percentage
of the sum of recurring net interest income on a fully taxable equivalent basis
and recurring noninterest income.
Leverage Capital Ratio - Common shareholders' equity excluding unrealized
securities gains and losses and certain intangible assets as a percentage of
average assets for the most recent quarter less certain intangible assets.
Total Risk-Based Capital Ratio - The sum of shareholders' equity, a qualifying
portion of subordinated debt and a qualifying portion of the allowance for loan
and lease losses as a percentage of risk-weighted assets.
Net Charge-Off Ratio - Loan losses net of recoveries as a percentage of average
loans and leases.
Internal Rate of Return - The interest rate that equates the present value of
future returns to the investment outlay. An investment is considered acceptable
if its IRR exceeds the required return. The investment is defined as the market
value of the stock and/or other consideration to be received by the selling
shareholders.
Recurring Results or Ratios - earnings excluding charges and expenses
principally related to completing mergers and acquisitions.
Certain of the ratios discussed above may be annualized if the applicable
periods are less than a full year.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BB&T CORPORATION
(Registrant)
By: /S/ SHERRY A. KELLETT
Sherry A. Kellett
Senior Executive Vice President and Controller
(Principal Accounting Officer)
Date: July 27, 2000.
