-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DdAnblY2TD9fZk2Vivc8tNb4kyt2XoTtk6BPv80zmzgSZPwdA5edQdI1e1CQV4cr 2wGCwkZWYfsGgmBHgI+vMw== 0000950109-99-004166.txt : 19991118 0000950109-99-004166.hdr.sgml : 19991118 ACCESSION NUMBER: 0000950109-99-004166 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991117 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BB&T CORP CENTRAL INDEX KEY: 0000092230 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 560939887 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10853 FILM NUMBER: 99759490 BUSINESS ADDRESS: STREET 1: 200 WEST SECOND STREET CITY: WINSTON-SALEM STATE: NC ZIP: 27101 BUSINESS PHONE: 3367332000 MAIL ADDRESS: STREET 1: 200 WEST SECOND STREET CITY: WINSTON-SALEM STATE: NC ZIP: 27101 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHERN NATIONAL CORP /NC/ DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K ================================================================================ 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 November 17, 1999 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) ___________________________________________________ This Form 8-K has xx pages. ================================================================================ Item 5. Other Events The purpose of this Current Report on Form 8-K is to announce that BB&T Corporation ("BB&T") has entered into a definitive agreement to acquire Hardwick Holding Company ("Hardwick"), of Dalton, Georgia, and to file certain analyst presentation materials related to this transaction as Exhibit 99.1. BB&T will acquire Hardwick in a $138.7 million stock swap that will give BB&T its fourth Georgia bank. Hardwick, with $518.3 million in assets, operates nine banking offices in northwest Georgia. Its two banking subsidiaries are Hardwick Bank & Trust and First National Bank of Northwest Georgia. Hardwick Bank & Trust serves Whitfield County. First National Bank of Northwest Georgia does business in Gordon County under the name, Calhoun First National Bank, and in Bartow County under the name, Peoples First National Bank. The transaction is valued at $32.94 per Hardwick share based on BB&T's November 15, 1999 closing price of $36.56 per share. The final exchange ratio will be determined based on the average closing price of BB&T common stock during a pricing period prior to closing. The ratio will be fixed at .9010 BB&T share for each Hardwick share if BB&T's closing price averages $36 or higher. The ratio will be fixed at .9320 BB&T share for each Hardwick share if BB&T's closing price averages $33.50 or lower. If BB&T's closing price averages between $36 and $33.50, the exchange ratio will float between .9010 and .9320 share of BB&T for each Hardwick share. The transaction, approved by the directors of both companies, will be accounted for as a pooling of interests. The acquisition will increase BB&T's Georgia assets to $4.6 billion. Hardwick Chairman and CEO Kenneth Boring will serve on BB&T's Georgia advisory board and North Carolina bank board. The merger, which is subject to the approval of Hardwick shareholders and banking regulators, is expected to be completed in the second quarter of 2000. Item 7. Exhibits 99.1 Analyst Presentation Materials 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: November 17, 1999. EX-99.1 2 ANALYST PRESENTATION MATERIALS BB&T and Hardwick Holding Company Dalton, Georgia Expanding a Great Franchise Analyst Presentation November 17, 1999 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 Hardwick's fee income ratio, 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 Hardwick, the amount of general and administrative expense consolidation, costs relating to converting Hardwick'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 Hardwick, 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 Hardwick are engaged; (8) adverse changes may occur in the securities markets; and (9) competitors of BB&T and Hardwick may have greater financial resources and develop products that enable such competitors to compete more successfully than BB&T and Hardwick. 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 values 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 Outline . Background and transaction terms . Financial data . Rationale and strategic objectives . Investment criteria . Summary 3 BB&T Corporation (BBT) . $44.8 billion bank holding company* . 691 branch locations in NC, SC, VA, GA, MD, WV, KY and the District of Columbia* For 3 months Ended 9/30/99** ------------- . ROA 1.55% . Cash Basis ROA 1.69% . ROE 21.20% . Cash Basis ROE 27.88% . Cash Basis Efficiency Ratio 51.17% * Includes the pending acquisitions of Premier Bancshares, Inc. and First Liberty Financial Corp. ** Recurring earnings 4 Hardwick Holding Company . $518.3 million bank holding company . 9 banking offices in Georgia For 3 months Ended 9/30/99 ------------- . ROA 1.16% . ROE 10.98% . Efficiency ratio 61.39% 5 Pro Forma Company Profile September 30, 1999 . Size: $45.3 billion in assets $12.8 billion in market capitalization* . Offices NC: 341 VA: 104 SC: 90 GA: 91 MD: 51 KY: 10 WV: 7 DC: 6 ---------- Total 700 * Based on closing prices as of 11/15/99. Includes outstanding shares for First Liberty Corp., Premier Bancshares, Inc., and Hardwick Holding Company. 6 Terms of the Transaction 7 Consideration . The exchange ratio will be based on BB&T's average closing price during a pricing period. The exchange ratio will be fixed at .9010 BB&T shares per Hardwick share if BB&T's price closes at or above $36.00. The exchange ratio will be fixed at .9320 BB&T shares per Hardwick share if BB&T's price closes at or below $33.50. The exchange ratio will float between .9010 and .9320 if BB&T's price closes between $36.00 and $33.50. 8 Terms of the Transaction . Purchase price: $32.94 per share/1/ . Aggregate value: $138.7 million/1/ . 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: Second quarter of 2000 /1/ Based on BB&T's closing stock price of $36.5625 as of 11/15/99. 9 Pricing . Purchase price $32.94 . Premium/market N/A* . Price/9-30-99 stated book 2.53x . Price/LTM EPS 26.35x . BB&T shares issued 3.79 million** * Hardwick Holding Company's stock is not publicly traded. ** BB&T shares issued based on Hardwick shares outstanding including unreleased restricted shares outstanding. 10 Acquisition Comparables* Bank Acquisitions with Deal Values over $50 Million Announced Since 8/15/99
- ------------------------------------------------------------------------------------------------------------------------------------ Total Deal Pr/ Deal/Pr Date Assets Deal Deal Deal/Pr LTM Estimated Buyer Seller Announced Seller Value Pr/Bk Tg Bk EPS EPS $000 ($M) (%) (%) (x) (x) First Charter Corporation Carolina First BancShares Inc. 11/08/1999 762,687 263.2 401.00 439.57 32.95 28.34 Wells Fargo & Company Michigan Financial Corporation 11/03/1999 833,592 209.3 208.86 208.86 18.12 N/A Gold Banc Corporation Inc. CountryBanc Holding Company 10/25/1999 463,313 82.7 211.03 286.12 16.83 N/A Wachovia Corp. B.C. Bankshares Incorporated 10/07/1999 369,703 133.9 360.37 360.37 21.76 N/A F&M National Corporation State Bank of the Alleghenies 10/06/1999 155,411 53.3 310.53 310.53 21.45 N/A Summit Bancorp NMBT CORP 10/04/1999 391,930 76.1 245.75 247.15 21.31 20.31 Wells Fargo & Company North County Bancorp 09/30/1999 349,003 112.0 348.13 350.39 23.42 N/A City National Corporation Pacific Bank NA 09/22/1999 728,622 151.4 197.14 220.20 42.03 18.13 InterWest Bancorp Inc. Liberty Bay Financial Corporation 09/15/1999 179,518 50.7 260.70 262.95 18.33 N/A Old Kent Financial Corp. Grand Premier Financial 09/10/1999 1,574,959 393.1 206.44 225.44 12.34 19.37 Old National Bancorp. Heritage Financial Services Inc. 09/10/1999 206,794 63.3 381.83 382.38 21.49 N/A Gold Banc Corporation Inc. American Bancshares Inc. 09/07/1999 484,828 93.1 338.55 339.18 45.45 34.96 U.S. Bancorp Peninsula Bank of San Diego 09/02/1999 453,828 104.4 347.58 348.87 22.69 N/A Centura Banks Inc. Triangle Bancorp Inc. 08/23/1999 2,285,333 607.7 356.16 412.70 24.38 21.67 Staten Island Bancorp Inc. First State Bancorp 08/18/1999 352,365 84.0 212.26 212.26 18.72 N/A NBT Bancorp Inc. Lake Ariel Bancorp Inc. 08/16/1999 492,894 92.6 255.88 272.06 25.00 24.67 Maximum 2,285,333 607.7 401.0 439.6 45.5 35.0 Minimum 155,411 50.7 197.1 208.9 12.3 18.1 Average 630,265 160.7 290.1 304.9 24.1 23.9 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- BB&T Corp. Hardwick Holding Company 518,251 138.7 252.8 270.4 26.4 25.1 Over (Under)Average Comparable (37.3) (34.5) 2.2 1.2 - ----------------------------------------------------------------------------------------------------------------------------------
* Source for Acquisition Comparables: SNL Securities. 11 Financial Data 12 Financial Summary For Quarter Ended: 9/30/99 9/30/00 BB&T/1/ Hardwick/1/ --------- ----------- ROA 1.55% 1.16% ROE 21.20 10.98 Net interest margin (FTE) 4.25 4.59 Efficiency ratio 53.15 61.39 Net charge-offs .26 .13 Reserve/NPLs 410.36 486.00 NPAs/assets .28 .29 /1/ Recurring earnings 13 Capital Strength BB&T Hardwick (9/30/99) (9/30/99) --------- --------- Equity/assets 7.4% 10.6% Leverage capital ratio 6.6% 10.0% Total risk-based capital 13.4% 14.0% 14 Rationale for Acquisition . BB&T has an announced strategy to pursue in-market (Carolinas/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 Hardwick Holding Company is consistent with this strategy. . This acquisition is very consistent with past acquisitions which we have successfully executed, i.e. it fits our model. . Hardwick provides BB&T with an enhanced market presence in the high growth northwestern counties of Georgia. 15 Strategic Objectives The key strategic objectives in this acquisition are: - Extension of BB&T's Georgia franchise - Improve efficiency . 25% cost savings to be realized in the year 2001 - Supplement Hardwick's primarily commercial lending expertise in additional segments such as: . Mortgage lending . BB&T's strong retail banking emphasis . BB&T's extensive array of fee related businesses - Increase productivity and market penetration through the use of BB&T's successful "Decathlon" sales management system 16 Franchise Enhancement . Enhancement of BB&T's Georgia operations . Provides added presence in markets contiguous to the Atlanta Metro area . Provides BB&T with a branch distribution system in the most attractive markets in Northwest Georgia . Expands BB&T's penetration along the Interstate 75 corridor between Atlanta, GA and Chattanooga, TN . Increases BB&T's asset base in Georgia to $4.6 billion 17 Efficiency Improvement Targeted Annual Cost Savings ---------------------------- $5 million or approximately 25% of Hardwick's expense base 18 After-Tax One-Time Charges One-time merger-related charges ------------------------------- $6.5 million 19 Branch Locations [map of mid-atlantic United States showing branch locations] [Legend] [dark triangle] BB&T Corporation [light triangle] First Liberty Financial Corp. (BB&T pending acquisition) [diamond] Premier Bancshares, Inc. (BB&T pending acquisition) [square] Hardwick Holding Company 20 Branch Locations [map of Georgia showing branch locations] [Legend] [square] Hardwick Holding Company Branches 21 Market Characteristics Northwest Georgia . Dalton is the county seat of Whitfield County and is known as the "Carpet Capital of the World." . Dalton ranks third in the state of Georgia in terms of manufacturing, capital investment growth, and per capita income growth. . 1999 unemployment rate in Whitfield county is 3.4% (24% below national rate). . Dalton is located on I-75 between Atlanta, GA and Chattanooga, TN. 22 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. 23 Assumptions . BB&T's 1999 and 2000 EPS are based on First Call estimates of $1.97 and $2.20 respectively, and subsequent years are based on 12% income statement and balance sheet growth. . Hardwick's 1999 EPS is based on management's estimate of $1.31. Hardwick's 2000 EPS estimate (on a stand-alone basis) is $1.35. Subsequent to the acquisition, we have assumed that performance can be enhanced through more effective management of Hardwick's balance sheet. For the years 2001 and thereafter, we have assumed 12% income statement and balance sheet growth except for the enhancements cited below. . $5.0 million in cost savings (25% of Hardwick's expense base), 60% realized in the year 2000 and 40% realized in 2001. . Hardwick's core net interest margin (non-FTE) is maintained annually at 4.60%. . Hardwick's core fee income ratio is increased to 25% by 2005. 24 Earnings Per Share Impact -------------------------- Accretion Accretion (Dilution) Pro Forma (Dilution) Pro Forma Pro Forma Cash Basis Pro Forma EPS Shares EPS Shares --------- ---------- ---------- ---------- 2000* $2.20 $0.001 $2.34 $0.001 2001 2.47 0.002 2.61 0.003 2002 2.76 0.004 2.91 0.004 2003 3.10 0.006 3.24 0.006 2004 3.47 0.008 3.61 0.008 2005 3.89 0.011 4.03 0.011 2006 4.36 0.013 4.49 0.012 2007 4.88 0.015 5.02 0.013 2008 5.46 0.017 5.60 0.015 2009 6.12 0.019 6.25 0.017 2010 6.85 0.021 6.99 0.019 -------------------------- --------- Internal rate of return 18.64% ----- --------- * Recurring earnings 25 ROE Impact/1/ --------------------------- Pro Forma Pro Forma Cash Basis ROE (%) Change ROE (%) Change ----------- -------- ----------- -------- 2000/2/ 19.22 (0.060) 23.75 (0.109) 2001 19.10 (0.025) 22.76 (0.055) 2002 18.95 (0.015) 21.88 (0.038) 2003 18.77 (0.008) 21.12 (0.027) 2004 18.58 (0.003) 20.45 (0.018) 2005 18.36 0.004 19.86 (0.011) --------------------------- /1/ The decrease in ROE results from the build up in equity relative to assets. /2/ Recurring earnings 26 ROA Impact ------------------------- Pro Forma Pro Forma Cash Basis ROA (%) Change ROA (%) Change ----------- ------- ------------ ------- 2000* 1.61 (0.003) 1.74 (0.004) 2001 1.62 (0.002) 1.73 (0.003) 2002 1.62 (0.002) 1.72 (0.002) 2003 1.62 (0.001) 1.71 (0.001) 2004 1.62 (0.001) 1.70 (0.001) 2005 1.63 0.000 1.69 (0.000) ------------------------- * Recurring earnings 27 Book Value/Capital Impact Pro Forma Book Value Per Share Pro Forma --------------------- Accretion Leverage Accretion Stated (Dilution) Ratio (Dilution) ------ ---------- -------- ---------- 2000 $12.13 $0.029 7.85% 0.007 2001 13.69 0.031 8.14 0.005 2002 15.48 0.036 8.40 0.004 2003 17.52 0.041 8.65 0.004 2004 19.85 0.049 8.88 0.004 2005 22.51 0.060 9.11 0.004 2006 25.57 0.073 9.33 0.005 2007 29.07 0.088 9.54 0.005 2008 33.07 0.105 9.76 0.005 2009 37.65 0.123 9.97 0.005 2010 42.88 0.144 10.18 0.005 28 Summary . The acquisition of Hardwick Holding Company is a strong strategic fit: - It helps accomplish our goal of expanding the Georgia market - It fits culturally and geographically - This is the type of merger we have consistently successfully executed . Overall Investment Criteria are met: - EPS and Cash Basis EPS accretive in all years - IRR 18.64% - ROE accretive by year 5 and Cash ROE dilutive in all years - ROA accretive by year 5 and Cash ROA dilutive in all years - Book value accretive in all years - Combined leverage ratio remains above 7% 29 Appendix . Historical Financial Data . Glossary 30 [[Insert Financial summary]] Hardwick Holding Company Financial Summary
Estimated 1997 1998 1999 ----------------------------------------------------------- Earnings Summary (In thousands) Interest Income (FTE) Interest on loans & leases $ 27,671 $ 28,764 $ 26,629 Interest & dividends on securities 7,322 8,108 8,937 Interest on temporary investments 693 870 827 ----------------- ----------------- ----------------- Total interest income (FTE) 35,686 37,742 36,393 ----------------- ----------------- ----------------- Interest Expense Interest expense on deposit accounts 14,232 15,154 13,517 Interest on short-term borrowings 331 654 889 Interest on long-term debt 100 30 17 ----------------- ----------------- ----------------- Total interest expense 14,663 15,838 14,423 ----------------- ----------------- ----------------- Net interest income (FTE) 21,023 21,904 21,970 Less taxable equivalency adjustment 490 474 - ----------------- ----------------- ----------------- Net interest income 20,533 21,430 21,970 Provision for loan losses 800 500 200 ----------------- ----------------- ----------------- Net interest income after provision 19,733 20,930 21,770 ----------------- ----------------- ----------------- Noninterest Income Service charges on deposit accounts 2,711 2,589 2,706 Non-deposit fees and commissions 430 467 - G / (L) on sale of real estate & securities 71 189 (3) Other operating income 3,610 1,680 2,489 ----------------- ----------------- ----------------- Total noninterest income 6,822 4,925 5,192 ----------------- ----------------- ----------------- Noninterest Expense Personnel 9,000 8,614 9,191 Occupancy & equipment 3,162 3,186 3,184 FDIC premiums 48 43 - Other operating expenses 6,354 6,519 6,746 ----------------- ----------------- ----------------- Total noninterest expense 18,564 18,362 19,121 ----------------- ----------------- ----------------- 7,991 7,493 7,841 Income taxes 2,765 2,406 2,395 ----------------- ----------------- ----------------- Net income before nonrecurring charges 5,226 5,087 5,446 ----------------- ----------------- ----------------- Nonrecurring charges - - - ----------------- ----------------- ----------------- Net income $ 5,226 $ 5,087 $ 5,446 ================= ================= ================= Basic EPS $ 1.32 $ 1.27 $ 1.32 Diluted EPS 1.29 1.26 1.31 Diluted EPS before nonrecurring charges 1.29 1.26 1.31 Book value $ 12.58 $ 13.40 $ 13.24 EOP shares 4,021 4,188 4,197 Basic shares 3,973 4,009 4,139 Diluted shares 4,047 4,033 4,157
31 [Insert Financial Summary] Hardwick Holding Company Financial Summary
Estimated 1997 1998 1999 ----------------------------------------------------------- Average Balance Sheet (In thousands) Assets Loans $290,500 $308,487 $306,728 Securities 116,674 130,779 153,108 Other earning assets 12,832 16,736 21,198 ----------------- ----------------- ----------------- Total interest-earning assets 420,006 456,002 481,034 ----------------- ----------------- ----------------- Goodwill & other intangibles 5,259 4,267 3,761 Other assets 36,920 35,468 36,697 ----------------- ----------------- ----------------- Total assets $462,184 $495,737 $521,492 ================= ================= ================= Net interest margin 5.01% 4.80% 4.57% Securities as a percent of earning assets 28% 29% 32% Liabilities & Shareholders' Equity Interest-bearing deposits: Money Market & NOW $ 93,698 $100,398 $113,250 Savings 29,144 29,581 29,553 CD's and other time 193,825 205,103 197,775 ----------------- ----------------- ----------------- Total interest-bearing deposits 316,667 335,082 340,578 Short-term borrowed funds 6,572 13,343 23,437 Long-term debt 1,377 368 181 ----------------- ----------------- ----------------- Total interest-bearing liabilities 324,616 348,793 364,196 Demand deposits 83,956 89,216 96,994 Other liabilities 4,093 4,440 4,816 ----------------- ----------------- ----------------- Total liabilities 412,665 442,449 466,006 ----------------- ----------------- ----------------- Preferred equity - - - Common equity 49,519 53,288 55,486 ----------------- ----------------- ----------------- Total equity 49,519 53,288 55,486 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- Total liabilities & shareholders' equity $462,184 $495,737 $521,492 ================= ================= ================= Other int-liab. as a percent of total 1.7% 2.8% 4.5% assets
32 [[Insert Financial Summary]] Hardwick Holding Company Financial Summary
Estimated 1997 1998 1999 ------------------------------------------------ Ratio Analysis ROA 1.13% 1.03% 1.04% ROCE 10.55% 9.55% 9.81% Efficiency ratio 66.8% 68.9% 70.4% Adj. noninterest income / Adj. revenues 24.3% 17.8% 19.1% Average equity / Average assets 10.7% 10.7% 10.6% Credit Quality (In thousands) Beginning $ 6,778 $ 6,984 $ 7,119 --------- --------- --------- Provision 800 500 200 Acquired allowance - - - Net charge-offs (594) (365) (613) ---------- --------- --------- Ending allowance $ 6,984 $ 7,119 $ 6,706 ---------- --------- --------- Allowance 2.20% 2.33% 2.09% Charge-off rate 0.20% 0.12% 0.20% Period end loans & leases $317,556 $305,891 $321,308 Period end common equity $ 50,603 $ 56,117 $ 55,589
33 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. 34 -----END PRIVACY-ENHANCED MESSAGE-----