Filed by BB&T Corporation
Pursuant to Rule 425 under the
Securities Act of 1933
Commission File No.: 001-10853
Subject Company: Republic Bancshares, Inc.
Dec. 2, 2003
BB&T to acquire Florida’s Republic Bancshares Inc.
WINSTON-SALEM, N.C. - BB&T Corporation (NYSE: BBT) today said it plans to buy Republic Bancshares Inc. (Nasdaq: REPB) of St. Petersburg, Fla., in a $436 million transaction that represents entry into some of the strongest economic markets in the Southeast.
With $2.8 billion in assets, Republic Bancshares operates 71 banking offices along the Gulf Coast and in central and southern Florida, including key markets in St. Petersburg, Tampa, Clearwater, Orlando, West Palm Beach, Boca Raton and Fort Lauderdale. The merger also will expand BB&T’s presence into the high growth areas of Ocala, Sarasota and Bradenton.
The transaction, approved by the directors of both companies, is valued at $32.12 per Republic Bancshares share based on BB&T’s closing price as of Dec. 1, 2003, of $39.66.
Republic Bancshares’ shareholders may exchange their shares based on one of the following two options: a fixed exchange ratio of 0.81 of a share of BB&T stock for each share of REPB stock or a fixed cash price of $31.79 per share. The aggregate cash available is generally limited to 40 percent of the transaction value. The merger, which is subject to regulatory and shareholder approval, is expected to be completed in the second quarter of 2004.
MORE
The merger would represent BB&T’s second in Florida and increase the number of BB&T branches in the Sunshine state to 89. BB&T acquired Regional Financial Corporation of Tallahassee, Fla., parent to First South Bank, in September 2002. First South branches opened as branches of BB&T in November 2002 – the first banking offices to do business as BB&T in Florida.
Republic Bancshares will give BB&T a presence in several Florida markets that are expected to be among the fasting growing in the nation. According to Newsweek magazine, the Tampa-St. Petersburg-Clearwater metropolitan statistical area will enjoy the nation’s largest employment growth through 2025. And the Sarasota-Bradenton MSA is Florida’s third fastest-growing market and one of the state’s most affluent regions.
“This is a key acquisition because it expands our presence in Florida, which has an underlying growth rate that is faster than that of our core markets,” said BB&T Chairman and Chief Executive Officer John Allison.
“Republic Bancshares’ current management team has done an excellent job revitalizing and energizing their company, resulting in positive momentum and excellent client service. They have the leadership talent to ensure BB&T creates a high performance organization in Florida.”
More jobs were created in Florida in 2003 than any other state in the nation. Nationally, Florida ranks fourth in population, labor force and the number of business establishments. In 2002, Florida was ranked the fifth most entrepreneur-friendly state.
Republic Bancshares customers will be introduced to BB&T’s strong branch-based sales culture and its broad product and services line, including insurance, mutual funds, trust, online banking, annuities, investment banking, retail brokerage, treasury services, leasing and international banking.
BB&T will create two new community banking regions, one in the St. Petersburg area and one to be based on the east coast of Florida. BB&T divides its 11-state banking network into autonomous regions – each with its own president – which operate like community banks. Nearly all lending decisions are made locally.
“Republic Bancshares, like BB&T, has a solid record of strong community commitment and, above all, excellent personal service, which is what makes this partnership so appealing,” said Republic Bancshares President and Chief Executive Officer William R. Klich, who is also chairman and chief executive officer of Republic Bank.
“It’s unusual to find an institution of BB&T’s size as highly focused on quality service as they are. And their community banking strategy allows local bankers to make their own decisions.”
MORE
Klich will become the Florida state president for BB&T as well as the regional president for the new community bank region based in St. Petersburg. J. Kenneth Coppedge, Republic Bank president, will be named regional president for Florida's east coast operations. BB&T’s Florida bank will be headquartered in St. Petersburg.
Two current members of the Republic Bancshares’ board will be offered seats on the Branch Banking and Trust Company board, BB&T’s lead banking subsidiary.
Winston-Salem-based BB&T Corporation operates more than 1,350 banking offices in the Carolinas, Virginia, Maryland, West Virginia, Kentucky, Tennessee, Georgia, Florida, Alabama, Indiana and Washington, D.C.
With $90.4 billion in assets as of Sept. 30, BB&T Corp. is the nation's 11th largest financial holding company. BB&T was named this year to the Forbes Platinum 400 list of America's "Best Big Companies" for the fourth year in a row. More information on the merger is available at www.BBandT.com
_________________
This press release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections.
Please refer to BB&T’s filings with the Securities and Exchange Commission for a summary of important factors that could affect BB&T’s forward-looking statements. BB&T undertakes no obligation to revise these statements following the date of this press release.
BB&T’s news releases are available at no charge through PR Newswire. For a menu of BB&T’s news releases or to retrieve a specific release call 1-800-758-5804, extension 809325.
The foregoing may be deemed to be offering materials of BB&T Corporation in connection with BB&T’s proposed acquisition of Republic Bancshares, on the terms and subject to the conditions in the Agreement and Plan of Reorganization, dated December 1, 2003, between BB&T and Republic Bancshares.
BB&T and Republic Bancshares shareholders and other investors are urged to read the proxy statement/prospectus that will be included in the registration statement on Form S-4, which BB&T will file with the Securities Exchange Commission in connection with the proposed merger because it will contain important information about BB&T, Republic Bancshares, the merger, the persons soliciting proxies in the merger and their interests in the merger and related matters.
After it is filed with the SEC, the proxy statement/prospectus will be available for free, both on the SEC web site (http://www.sec.gov) and from BB&T and Republic Bancshares as follows:
Alan W. Greer, Shareholder Reporting, BB&T Corporation, P.O. Box 1290, Winston-Salem, NC 27102. Telephone: (336) 733-3021.
William R. Falzone, Vice President and Treasurer, Republic Bancshares, 111 2nd Avenue, NE, St. Petersburg, FL 33701. Telephone: (727) 502-3771.
BB&T, Republic Bancshares and their respective directors and executive officers may be deemed participants in the solicitation of proxies from shareholders of Republic in connection with this transaction. Information about the directors and executive officers of BB&T may be found in BB&T’s proxy statement filed with the SEC on March 17, 2003 and will be incorporated by reference in the proxy statement/prospectus. Information about Republic Bancshares’ directors and executive officers may be found in Republic Bancshares’ proxy statement filed with the SEC on March 19, 2003 and will be incorporated by reference in the proxy statement/prospectus. You can obtain free copies of these documents as described above.
In addition to the proposed registration statement and proxy statement/prospectus, BB&T and Republic Bancshares file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information filed by either company at the SEC’s public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. BB&T and Republic Bancshares filings with the SEC are also available to the public from commercial document-retrieval services and on the SEC’s web site at http://www.sec.gov.
BB&T
and
Republic Bancshares, Inc.
St. Petersburg, Florida
Expanding a Great Franchise
Analyst Presentation
December 2, 2003
| 1 | |||||||||||||||||
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 merger or restructuring charges, estimated increases in Republic Bancshares, Inc.‘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 merger or restructuring charges, BB&T has made assumptions about, among other things, the extent of operational overlap between BB&T and Republic Bancshares, Inc., the amount of general and administrative expense consolidation, costs relating to converting Republic Bancshares, Inc.‘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 policies, and the cost related to the merger. The realization of cost savings and the amount of merger or 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 Republic Bancshares, Inc., 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 Republic Bancshares, Inc. are engaged; (8) adverse changes may occur in the securities markets; and (9) competitors of BB&T and Republic Bancshares, Inc. may have greater financial resources and develop products that enable such competitors to compete more successfully than BB&T and Republic Bancshares, Inc.
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 | |||||||||||||||||
Outline
| · | Background and transaction terms |
| · | Financial data |
| · | Rationale for the acquisition |
| · | Investment criteria |
| · | Summary |
| · | Appendix |
| 3 | |||||||||||||||||
BB&T Corporation (BBT)
| · | $90.4 billion financial holding company |
| · | 1,364 branch locations in NC, SC, VA, GA, MD, WV, KY, TN, FL, AL, IN, and the District of Columbia |
| For 9 Months | |||||
|---|---|---|---|---|---|
| Ended 9/30/03* | |||||
| · | ROA | 1.67 | % | ||
| · | Cash Basis ROA | 1.77 | % | ||
| · | ROE | 16.49 | % | ||
| · | Cash Basis ROE | 24.45 | % | ||
| · | Cash Basis Efficiency Ratio | 51.20 | % | ||
*Excluding merger-related and restructuring items
| 4 | |||||||||||||||||
Republic Bancshares, Inc. (REPB)
| · | $2.8 billion bank holding company headquartered in St. Petersburg, FL |
| · | Republic Bank has 71 full-service offices serving 17 counties in key Florida markets |
| For 9 Months | ||||||||
|---|---|---|---|---|---|---|---|---|
| Ended 9/30/03 | ||||||||
| · | ROA | 0.42 | % | |||||
| · | Cash Basis ROA | 0.49 | % | |||||
| · | ROE | 5.90 | % | |||||
| · | Cash Basis ROE | 6.81 | % | |||||
| · | Cash Basis Efficiency Ratio | 78.32 | % | |||||
| 5 | |||||||||||||||||
Company History
| · | Republic Bank was formed in 1973 |
| · | The year 1996 saw the beginning of an aggressive out-of-market lending program by Republic |
| - | Emphasis on high LTV, subprime, and warehouse credits |
| - | Offices in Boston, Atlanta, Virginia Beach, and Irvine, CA |
| - | Sales generated primarily through telemarketing efforts |
| · | In the second half of 1998, the market for subprime credits deteriorated sharply and credit quality at Republic declined rapidly |
| · | New management was brought into the bank in March 2000, headed by William R. Klich |
| · | Republic Bank at this time exited out-of-market lending and focused on rebuilding the balance sheet and serving their core market |
| · | The branch network was rationalized, certain Florida markets were exited and additional concentration was added in the core footprint, resulting in approximately 20 fewer branches and 5 fewer counties |
| · | By September 2003, the challenges created by the out-of-market strategy had been largely resolved; nonperforming assets now stand at .47% of total assets after peaking at 2.73% of total assets in June 2001 |
| · | Currently, Republic has strong market coverage in key Florida markets and the franchise is well positioned for strong growth, lead by a management team with a proven track record of success |
| 6 | |||||||||||||||||
Pro Forma Company Profile
| · | Size: | $93.1 billion in assets | |||
| $22.2 billion in market capitalization* | |||||
| · | Offices: | ||||
| VA | 427 | |||||||
| NC | 335 | |||||||
| MD | 127 | |||||||
| GA | 114 | |||||||
| KY | 104 | |||||||
| SC | 95 | |||||||
| FL | 89 | |||||||
| WV | 85 | |||||||
| TN | 49 | |||||||
| DC | 7 | |||||||
| AL | 2 | |||||||
| IN | 1 | |||||||
| TOTAL | 1,435 | |||||||
*Based on closing price as of 12/01/03
| 7 | |||||||||||||||||
Terms of the Transaction
| 8 | |||||||||||||||||
Terms of the Transaction
| · | Purchase price: $32.12* |
| · | Aggregate value: $436 million* |
| · | Consideration: Republic Bancshares, Inc. shareholders will have the opportunity to make an election to exchange their shares based on one of the following two options: ** |
| 1. | A fixed exchange ratio of .81 of a share of BB&T stock for each share of REPB stock |
| 2. | A fixed cash price of $31.79 per share |
| · | Structure: Tax-free exchange to the extent that stock is received |
| · | Termination fee: $17 million |
| · | Expected closing: Second quarter 2004 |
*Based on BB&T’s closing stock price of $39.66 on 12/01/03 and assuming shareholders choose the stock election (option 1).
**Individual shareholders will be able to elect the proportion of their shares they exchange for option 1 or option 2. To the extent that total
cash elections received from shareholders exceed the aggregate cash available, shares exchanged for the cash election (option 2) will be
reallocated to the stock election (option 1) on a proportional basis. The aggregate cash available is generally limited to 40% of the transaction
value (based on $12.72 per share outstanding). However, in the event of a decline in the value of BB&T’s stock, the aggregate cash available would be further subject to a maximum of 55% of the value of the transaction at closing.
| 9 | |||||||||||||||||
Pricing*
| · | Purchase price | $32.12 | |||
| · | Premium/market | 8.4% | |||
| · | Price/9-30-03 stated book | 2.03x | |||
| · | Price/9-30-03 tangible book | 2.20x | |||
| · | Price/LTM EPS | 44.62x | |||
| · | Price 2004 EPS estimate | 35.30x | |||
| · | BB&T shares issued | 10.99 million | |||
*Assumes 100% stock election by shareholders.
| 10 | |||||||||||||||||
Acquisition Comparables*
Comparable Acquisitions Announced in Florida since June 1, 2001
with Seller Assets over $50 Million
| Deal Pr/ | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Date | Seller | Deal Value/ | Deal Pr/ | Deal | Deal Pr/ | LTM | |||||||||||||
| Buyer | Seller | Announced | Total Assets | Deal Value | Assets | Stock Pr | Pr/Bk | Tg Bk | EPS | ||||||||||
| ($M) | ($M) | (%) | (%) | (%) | (%) | (x) | |||||||||||||
| Colonial BancGroup, Inc. | Manufacturers Bancshares, Inc. | 6/18/2001 | 271.8 | 54.4 | 20.0 | NA | 300.9 | 306.2 | 21.7 | ||||||||||
| Synovus Financial Corp. | FABP Bancshares, Inc. | 6/29/2001 | 294.5 | 100.0 | 34.0 | NA | 391.0 | 391.0 | 22.0 | ||||||||||
| Black Diamond Financial Group, Inc. | Bank of St. Petersburg | 8/2/2001 | 59.8 | 11.0 | 18.4 | NA | 237.1 | 237.1 | 23.0 | ||||||||||
| Banc Corporation | CF Bancshares, Inc. | 8/9/2001 | 99.0 | 15.5 | 15.7 | NA | 214.8 | 214.8 | 17.0 | ||||||||||
| BankAtlantic Bancorp, Inc. | Community Savings Bankshares, Inc. | 9/10/2001 | 948.3 | 170.6 | 18.0 | 31.0 | 141.5 | 141.5 | 28.4 | ||||||||||
| F.N.B. Corp. | Central Bank Shares, Inc. | 11/7/2001 | 232.0 | 80.0 | 34.5 | NA | 340.7 | 340.7 | 28.4 | ||||||||||
| Charter Banking Corporation | Florida Bancorporation, Inc. | 11/10/2001 | 58.1 | 8.2 | 14.1 | NA | 177.7 | 177.7 | 43.1 | ||||||||||
| South Financial Group, Inc. (The) | Gulf West Banks, Inc. | 3/21/2002 | 516.0 | 115.9 | 22.5 | 3.1 | 285.2 | 294.5 | 23.0 | ||||||||||
| BB&T Corp. | Regional Financial Corporation | 5/22/2002 | 1,585.4 | 274.6 | 17.3 | NA | 281.9 | 286.4 | 16.8 | ||||||||||
| Colonial BancGroup, Inc. | Palm Beach National Holding Company | 5/28/2002 | 338.6 | 105.5 | 31.2 | NA | 318.3 | 318.4 | 33.3 | ||||||||||
| Royal Bank of Canada | Admiralty Bancorp, Inc. | 8/29/2002 | 577.8 | 149.7 | 25.9 | 11.5 | 296.1 | 318.2 | 37.7 | ||||||||||
| Synovus Financial Corp. | United Financial Holdings, Inc. | 9/25/2002 | 421.8 | 84.2 | 20.0 | 1.9 | 295.0 | 335.7 | 19.9 | ||||||||||
| South Financial Group, Inc. (The) | Central Bank of Tampa | 10/3/2002 | 214.6 | 68.0 | 31.7 | NA | 236.8 | 237.5 | 16.8 | ||||||||||
| Alabama National BanCorp | Millennium Bank | 1/29/2003 | 95.3 | 25.4 | 26.6 | NA | 311.2 | 311.2 | 34.5 | ||||||||||
| F.N.B. Corp. | Charter Banking Corp. | 2/3/2003 | 645.6 | 150.3 | 23.3 | NA | 328.5 | 391.6 | 36.7 | ||||||||||
| Colonial BancGroup, Inc. | Sarasota Bancorporation , Inc. | 6/26/2003 | 164.5 | 40.6 | 24.7 | NA | 332.3 | 333.8 | 21.6 | ||||||||||
| Alabama National BanCorporation | Cypress Bankshares, Inc. | 10/15/2003 | 108.0 | 26.7 | 24.7 | NA | 315.5 | 315.5 | 36.4 | ||||||||||
| Alabama National BanCorporation | Indian River Banking Company | 10/22/2003 | 516.5 | 113.5 | 22.0 | NA | 307.2 | 307.2 | 22.1 | ||||||||||
| Maximum | 1,585.4 | 274.6 | 34.5 | 31.0 | 391.0 | 391.6 | 43.1 | ||||||||||||
| Minimum | 58.1 | 8.2 | 14.1 | 1.9 | 141.5 | 141.5 | 16.8 | ||||||||||||
| Average | 397.1 | 88.6 | 23.6 | 11.9 | 284.0 | 292.2 | 26.8 | ||||||||||||
| Median | 283.2 | 82.1 | 22.9 | 7.3 | 298.5 | 309.2 | 23.0 | ||||||||||||
| Deal Price: $32.12 | |||||||||||||||||||
| BB&T Corporation | Republic Bancshares, Inc. | 2,776.2 | 436.0 | 15.7 | 8.4 | 203.1 | 220.1 | 44.6 | |||||||||||
| Over/(Under) Average Comparables | (7.9 | ) | (3.5 | ) | (80.9 | ) | (72.0 | ) | 17.8 | ||||||||||
*Source for Acquisition Comparables: SNL Financial
| 11 | |||||||||||||||||
Acquisition Comparables*
Comparable Acquisitions Announced in the Southeast since July 1, 2002
with Seller Assets over $50 Million
| Deal Pr/ | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Date | Seller | Deal Value/ | Deal Pr/ | Deal | Deal Pr/ | LTM | |||||||||||||
| Buyer | Seller | Announced | Total Assets | Deal Value | Assets | Stock Pr | Pr/Bk | Tg Bk | EPS | ||||||||||
| ($M) | ($M) | (%) | (%) | (%) | (%) | (x) | |||||||||||||
| First Bancorp | Carolina Community Bancshares, Inc. | 7/16/2002 | 66.4 | 17.7 | 26.7 | NA | 229.8 | 257.6 | 17.8 | ||||||||||
| United Community Bancorp | Community Bancshares, Inc. | 8/5/2002 | 135.4 | 35.7 | 26.4 | NA | 226.0 | 226.0 | 26.3 | ||||||||||
| Charter Financial Corp. MHC | EBA Bancshares, Inc. | 9/10/2002 | 76.3 | 8.4 | 11.0 | NA | 169.0 | 169.0 | 17.9 | ||||||||||
| First Citizens Bancorporation of South Carolina | First Banks, Inc. | 9/17/2002 | 244.9 | 59.1 | 24.1 | NA | 168.6 | 168.6 | 17.6 | ||||||||||
| Synovus Financial Corp. | FNB Newton Bankshares, Inc. | 9/26/2002 | 340.8 | 96.5 | 28.3 | NA | 297.3 | 297.3 | 23.4 | ||||||||||
| First Bancorp, Inc. | First Commonwealth Bank | 10/2/2002 | 58.1 | 9.7 | 16.7 | NA | 153.2 | 153.2 | 22.2 | ||||||||||
| South Financial Group, Inc. (The) | Central Bank of Tampa | 10/3/2002 | 214.6 | 68.0 | 31.7 | NA | 236.8 | 237.5 | 16.8 | ||||||||||
| SNB Bancshares Inc. | Bank of Gray | 10/25/2002 | 216.4 | 43.3 | 20.0 | NA | 195.7 | 195.7 | 14.5 | ||||||||||
| Bank of Granite Corporation | First Commerce Corporation | 12/18/2002 | 179.6 | 20.8 | 11.6 | 16.9 | 175.7 | 175.7 | 22.3 | ||||||||||
| United Community Banks Inc. | First Central Bancshares,Incorporated | 1/8/2003 | 149.9 | 29.4 | 19.6 | NA | 239.1 | 239.1 | 22.7 | ||||||||||
| BB&T Corporation | First Virginia Banks, Inc. | 1/21/2003 | 11,227.6 | 3,375.5 | 30.1 | 24.7 | 269.7 | 318.6 | 18.5 | ||||||||||
| United Community Banks Inc. | First Georgia Holding Inc. | 1/23/2003 | 260.9 | 42.1 | 16.1 | NA | 201.2 | 205.0 | 27.2 | ||||||||||
| First Community Bancshares, Inc. | CommonWealth Bank | 1/27/2003 | 129.8 | 24.8 | 19.1 | 64.9 | 274.3 | 274.3 | 28.2 | ||||||||||
| Bank of the Ozarks Inc. | RVB Bancshares Inc. | 3/11/2003 | 53.9 | 6.9 | 12.8 | NA | 178.9 | 178.9 | 14.2 | ||||||||||
| FNB Corp. | Bedford Bancshares Inc. | 3/21/2003 | 257.8 | 50.9 | 19.7 | 32.1 | 192.7 | 192.7 | 16.5 | ||||||||||
| GB&T Bancshares, Inc. | Baldwin Bancshares, Inc. | 4/28/2003 | 131.0 | 31.6 | 24.1 | NA | 276.5 | 276.5 | 21.7 | ||||||||||
| South Financial Group, Inc. (The) | MountainBank Financial Corporation | 5/14/2003 | 847.3 | 140.8 | 16.6 | 11.0 | 240.4 | 265.6 | 20.6 | ||||||||||
| BancTrust Financial Group, Inc. | CommerceSouth, Inc. | 5/28/2003 | 312.4 | 73.1 | 23.4 | 64.5 | 234.8 | 244.8 | 23.4 | ||||||||||
| Greene County Bancshares, Inc. | Independent Bankshares Corporation | 6/18/2003 | 168.6 | 29.7 | 17.6 | NA | 197.2 | 197.2 | 25.8 | ||||||||||
| Community Capital Corp. | Abbeville Capital Corporation | 8/19/2003 | 69.1 | 15.0 | 21.7 | NA | 200.6 | 200.6 | 16.4 | ||||||||||
| Simmons First National Corporation | Alliance Bancorporation, Incorporated | 10/8/2003 | 138.6 | 25.5 | 18.4 | NA | 246.5 | 246.5 | 21.3 | ||||||||||
| American Community Bancshares, Inc. | FNB Bancshares, Inc. | 11/5/2003 | 71.7 | 15.8 | 22.0 | 25.4 | 188.5 | 188.5 | 23.3 | ||||||||||
| Maximum | 11,227.6 | 3,375.5 | 31.7 | 64.9 | 297.3 | 318.6 | 28.2 | ||||||||||||
| Minimum | 53.9 | 6.9 | 11.0 | 11.0 | 153.2 | 153.2 | 14.2 | ||||||||||||
| Average | 697.8 | 191.8 | 20.8 | 34.2 | 217.8 | 223.1 | 20.8 | ||||||||||||
| Median | 159.3 | 30.7 | 19.9 | 25.4 | 213.6 | 215.5 | 21.5 | ||||||||||||
| Deal Price: $32.12 | |||||||||||||||||||
| BB&T Corporation | Republic Bancshares, Inc. | 2,776.2 | 436.0 | 15.7 | 8.4 | 203.1 | 220.1 | 44.6 | |||||||||||
| Over/(Under) Average Comparables | (5.1 | ) | (25.8 | ) | (14.8 | ) | (3.0 | ) | 23.8 | ||||||||||
*Source for Acquisition Comparables: SNL Financial
| 12 | |||||||||||||||||
Comparison of Core Deposit Multiples
Franchise Premium to Core Deposits*
| · | BB&T / Republic | 12.7 | % | ||
| · | Florida Median | 26.7 | % | ||
| · | Southeast Median | 16.9 | % | ||
| · | National Median | 14.7 | % | ||
| * | Market comparables are based on the median premium to core deposits for all transactions announced YTD through 11/30/03. Franchise premium is defined as deal value minus tangible book value, divided by core deposits. |
Source for market comparables: SNL Financial |
| 13 | |||||||||||||||||
Financial Data
| 14 | |||||||||||||||||
Financial Summary*
| BB&T | REPB | ||||
|---|---|---|---|---|---|
| For The Year-to-Date Ended: | 9/30/03 | 9/30/03 | |||
| ROA | 1.67 | % | 0.42 | % | |
| Cash Basis ROA | 1.77 | 0.49 | |||
| ROE | 16.49 | 5.90 | |||
| Cash Basis ROE | 24.45 | 6.81 | |||
| Net interest margin (FTE) | 4.12 | 3.03 | |||
| CB Efficiency ratio | 51.20 | 78.32 | |||
| Net charge-offs | .43 | 0.02 | |||
| Reserve/NPLs | 222.70 | 206.44 | |||
| NPAs/assets | .49 | .47 | |||
*Excluding merger-related and restructuring items
| 15 | |||||||||||||||||
Capital Strength
| BB&T | REPB | ||||
|---|---|---|---|---|---|
| 9/30/03 | 9/30/03 | ||||
| Equity/assets | 11.3 | % | 7.6 | % | |
| Leverage capital ratio | 7.2 | % | 7.7 | % | |
| Total risk-based capital | 13.1 | % | 13.2 | % | |
| 16 | |||||||||||||||||
Rationale for Acquisition
| · | BB&T has an announced strategy to pursue in-market (Carolinas/Virginia/West Virginia/ DC/ Maryland/Georgia/ Kentucky/Tennessee/Florida) acquisitions of high quality banks and thrifts in the $250 million to $10 billion range. The acquisition of Republic Bancshares, Inc. is consistent with this strategy. Although Republic’s recent financial performance has not been strong, current management has successfully reorganized the bank with an emphasis on in-market lending while successfully exiting unprofitable businesses. |
| · | Accelerates BB&T’s long term earnings growth rates by expanding into Florida markets which have a faster growth potential than BB&T’s core markets |
| · | Republic represents a unique opportunity to buy a franchise in the state of Florida that will provide BB&T with the following: |
| - | An excellent management team of seasoned Florida commercial bankers that will provide key leadership in our newly expanded Florida franchise and for future strategic acquisitions |
| - | A franchise that has recovered from a challenging period and has refocused its energy on traditional commercial banking and expansion of basic retail deposit services |
| - | Entry into key markets in Florida, specifically the Tampa/St. Petersburg/Clearwater, Orlando, West Palm Beach/Boca Raton, and Fort Lauderdale/Hollywood MSA’s |
| - | Republic Bancshares expands BB&T’s presence in the high growth and economically attractive markets of Ocala, Sarasota, and Bradenton |
| - | BB&T’s extremely successful sales process creates the opportunity to sell a broad array of banking and insurance products to Republic’s client base and expand the reach of the branch beyond Republic’s traditional clients |
| · | Improves efficiency |
| - | 25% cost savings fully realized in the first 12 months of operations following conversion |
| · | This acquisition is very consistent with past acquisitions which we have successfully executed, i.e., it fits our model |
| 17 | |||||||||||||||||
Efficiency Improvement
Targeted Annual Cost Savings
$18.9 million or approximately
25% of Republic’s expense base
| 18 | |||||||||||||||||
One-Time After-Tax Charges
One-time after-tax merger-related charges $19.8 million
| 19 | |||||||||||||||||
| 20 | |||||||||||||||||
| 21 | |||||||||||||||||
Market Characteristics
| · | Florida ranks #1 in total employment growth in the U.S. for the year ending July, 2003. Also, among the ten most populous states, Florida had the fastest employment growth rate. |
| · | Florida ranks #1 in new business development. |
| · | For the period ending in March 2003, Florida is the only state in the nation to have positive job market growth for the previous 13 months. |
| · | Nationally, Florida ranks 4th in population, labor force, and number of business establishments. It also has the 4th largest Gross State Product, making it the 8th largest economy in the western hemisphere and the 15th largest in the world. |
| · | Under the Small Business Survival Index 2002, Florida ranked the 5th most entrepreneur-friendly state. |
| 22 | |||||||||||||||||
Market Characteristics
| · | The Tampa/St. Petersburg/ Clearwater MSA, the 2nd largest MSA in the Southeast, is home to over 2.5 million people. According to Newsweek magazine, Tampa will enjoy the nation’s 10th largest employment growth through 2025. The MSA has an unemployment rate of 4.5% compared to the national average of 6.3%. |
| · | The Sarasota/Bradenton MSA is Florida’s third fastest growing market and one of the state’s most affluent regions. Sarasota’s job growth for the past 18 months was 5.1% versus the national average of 1.7%. |
| · | Pinellas County is #2 in manufacturing employees and #3 in manufacturing firms in the state of Florida. |
| · | More than 33,000 businesses make their home in Pinellas County. |
| · | Pinellas County leads Florida’s 21-county High Tech Corridor with 29.9% of the corridor’s med-tech companies and 22% of the corridor’s microelectronics firms. |
| 23 | |||||||||||||||||
Market Characteristics
| · | The population of the Orlando MSA is projected to increase 14.3% from 2003 to 2008. As home to Walt Disney World, Sea World, and Universal Studios, Orlando is one of the world’s most popular tourist destinations. |
| · | The West Palm Beach/Boca Raton MSA is one of the fastest growing areas of the U.S. Population growth is projected to be 10.2% between 2003 and 2008. The U.S. Bureau of Labor Statistics ranks Palm Beach County as the 4th best job producing region in the nation. |
| · | Located in Broward County is the Fort Lauderdale/Hollywood MSA. Fort Lauderdale was ranked 6th in the nation for job growth by Southern Business and Development magazine as it is one of the nation’s fastest growing communities for small businesses. |
| 24 | |||||||||||||||||
BB&T Investment Criteria
| · | Cash Basis EPS (accretive by year 2) |
| · | GAAP EPS (accretive by year 3) |
| · | Internal rate of return (15% or better) |
| · | Cash Basis ROE (accretive by year 3) |
| · | Cash Basis ROA (accretive by year 3) |
| · | Tangible book value per share (accretive by year 5) |
| · | Must not cause combined leverage capital ratio to go below 7% |
| · | Must create accelerated dividend growth potential by year 5 for current BB&T shareholders |
Criteria are listed in order of importance. There are sometimes trade-offs among criteria. BB&T is primarily concerned with cash basis measures for each of the criterion above.
| 25 | |||||||||||||||||
Assumptions
| · | Closing Stock Price as of December 1, 2003: BB&T - $39.66 REPB - $29.64 |
| · | BB&T Base Model: The projected 2004 financial statement is based on the First Call EPS estimate of $3.00 and subsequent years are based on 10% income statement and balance sheet growth. |
| · | Republic Base Forecast: The 2004 projected financial statement used in the valuation study for Republic is based on the current First Call EPS estimate of $0.91. |
| · | Cost Savings: 25% annual cost savings of Republic’s 2003 noninterest expense base are used in the valuation to be fully realized in the first 12 months following conversion. |
| · | Growth Rates: All of Republic’s balance sheet and income statement items, except for interest income and noninterest income, are grown at the following rates: 10% in year 1 and 12% in all years thereafter. Noninterest income was grown at approximately 29% in order to achieve a core fee income ratio of 30% in year 7, prior to margin enhancement. |
| · | Margin: The 2004 margin for Republic is projected to be 3.12%. Net interest margin was incrementally increased to 4.10% in year 5 of the model. |
| · | Projected Net Charge-Off Rates: The model assumes a charge-off rate for Republic of .05% in 2004, ..25% in 2005, .30% in 2006, and .35% thereafter. |
| · | Projected Loan Loss Allowance: An allowance of 1.30% is assumed for Republic in all years. |
| · | Tax rate: An effective tax rate of 33% is used for Republic in all years. |
| 26 | |||||||||||||||||
Results of the Transaction Assuming Shareholders Elect 100% Stock
(Option 1)
| 27 | |||||||||||||||||
Earnings Per Share Impact
| Accretion | Accretion | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dilution) | Pro Forma | (Dilution) | ||||||||||||
| Pro Forma | Pro Forma | Cash Basis | Pro Forma | |||||||||||
| Full Year | EPS | Shares | EPS | Shares | ||||||||||
| 2005 | $ | 3.28 | $ | (0.01 | ) | $ | 3.39 | $ | (0.01 | ) | ||||
| 2006 | 3.62 | (0.01 | ) | 3.73 | 0.00 | |||||||||
| 2007 | 4.00 | 0.01 | 4.11 | 0.02 | ||||||||||
| 2008 | 4.42 | 0.03 | 4.53 | 0.04 | ||||||||||
| 2009 | 4.90 | 0.06 | 5.00 | 0.07 | ||||||||||
| 2010 | 5.40 | 0.09 | 5.50 | 0.09 | ||||||||||
| 2011 | 5.96 | 0.12 | 6.06 | 0.12 | ||||||||||
| 2012 | 6.56 | 0.13 | 6.66 | 0.13 | ||||||||||
| 2013 | 7.23 | 0.15 | 7.33 | 0.15 | ||||||||||
| 2014 | 7.96 | 0.18 | 8.06 | 0.17 | ||||||||||
| Internal rate of return | 22.56% | |||||||||||||
| 28 | |||||||||||||||||
ROE Impact1
| Pro Forma | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Pro Forma | Cash Basis | |||||||||||||
| Full Year | ROE (%) | Change | ROE (%) | Change | ||||||||||
| 2005 | 15.48 | (0.37 | ) | 26.00 | (0.18 | ) | ||||||||
| 2006 | 15.62 | (0.29 | ) | 24.57 | (0.08 | ) | ||||||||
| 2007 | 15.73 | (0.21 | ) | 23.36 | 0.01 | |||||||||
| 2008 | 15.82 | (0.12 | ) | 22.34 | 0.09 | |||||||||
| 2009 | 15.91 | (0.03 | ) | 21.51 | 0.17 | |||||||||
| 2010 | 15.94 | 0.02 | 20.76 | 0.18 | ||||||||||
| 2011 | 15.98 | 0.06 | 20.15 | 0.21 | ||||||||||
| 2012 | 15.98 | 0.06 | 19.59 | 0.18 | ||||||||||
| 2013 | 15.98 | 0.06 | 19.11 | 0.17 | ||||||||||
| 2014 | 15.97 | 0.06 | 18.71 | 0.15 | ||||||||||
| 1 | The decrease in cash basis 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 repurchases of BB&T’s common stock. |
| 29 | |||||||||||||||||
ROA Impact
| Pro Forma | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Pro Forma | Cash Basis | |||||||||||||
| Full Year | ROA (%) | Change | ROA (%) | Change | ||||||||||
| 2005 | 1.73 | (0.03 | ) | 1.86 | (0.03 | ) | ||||||||
| 2006 | 1.75 | (0.03 | ) | 1.88 | (0.03 | ) | ||||||||
| 2007 | 1.77 | (0.02 | ) | 1.88 | (0.02 | ) | ||||||||
| 2008 | 1.78 | (0.02 | ) | 1.88 | (0.01 | ) | ||||||||
| 2009 | 1.80 | (0.01 | ) | 1.89 | (0.01 | ) | ||||||||
| 2010 | 1.81 | (0.00 | ) | 1.89 | (0.00 | ) | ||||||||
| 2011 | 1.82 | 0.00 | 1.89 | 0.00 | ||||||||||
| 2012 | 1.82 | 0.00 | 1.88 | 0.00 | ||||||||||
| 2013 | 1.82 | 0.00 | 1.88 | 0.00 | ||||||||||
| 2014 | 1.83 | 0.00 | 1.88 | 0.00 | ||||||||||
| 30 | |||||||||||||||||
Book Value/Capital Impact
| Pro Forma | Pro Forma | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Stated Book Value Per Share | Tangible Book Value Per Share | Pro Forma* | |||||||||||||||
| Accretion | Accretion | Leverage | |||||||||||||||
| Full Year | Stated | (Dilution) | Tangible | (Dilution) | Ratio | ||||||||||||
| 2005 | $ | 22.31 | $ | 0.40 | $ | 14.15 | $ | 0.05 | 8.09 | % | |||||||
| 2006 | 24.43 | 0.40 | 16.44 | 0.06 | 8.55 | ||||||||||||
| 2007 | 26.83 | 0.41 | 19.01 | 0.07 | 8.93 | ||||||||||||
| 2008 | 29.51 | 0.43 | 21.85 | 0.10 | 9.29 | ||||||||||||
| 2009 | 32.48 | 0.48 | 24.98 | 0.16 | 9.61 | ||||||||||||
| 2010 | 35.75 | 0.54 | 28.41 | 0.22 | 9.90 | ||||||||||||
| 2011 | 39.37 | 0.63 | 32.19 | 0.31 | 10.16 | ||||||||||||
| 2012 | 43.36 | 0.73 | 36.33 | 0.41 | 10.39 | ||||||||||||
| 2013 | 47.74 | 0.84 | 40.87 | 0.52 | 10.59 | ||||||||||||
| 2014 | 52.57 | 0.97 | 45.86 | 0.64 | 10.78 | ||||||||||||
| * | BB&T’s goal is to manage its leverage ratio to between 7% and 8%. BB&T may choose to maintain its target leverage ratio through future repurchases of BB&T’s common stock. |
| 31 | |||||||||||||||||
Results of the Transaction Assuming Shareholders Elect 40% Cash
(Option 2)
| 32 | |||||||||||||||||
Earnings Per Share Impact
| Accretion | Accretion | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dilution) | Pro Forma | (Dilution) | ||||||||||||
| Pro Forma | Pro Forma | Cash Basis | Pro Forma | |||||||||||
| Full Year | EPS | Shares | EPS | Shares | ||||||||||
| 2005 | $ | 3.30 | $ | (0.00 | ) | $ | 3.41 | $ | 0.00 | |||||
| 2006 | 3.64 | 0.01 | 3.75 | 0.02 | ||||||||||
| 2007 | 4.02 | 0.03 | 4.13 | 0.04 | ||||||||||
| 2008 | 4.45 | 0.05 | 4.55 | 0.06 | ||||||||||
| 2009 | 4.92 | 0.09 | 5.03 | 0.09 | ||||||||||
| 2010 | 5.43 | 0.12 | 5.54 | 0.12 | ||||||||||
| 2011 | 6.00 | 0.15 | 6.10 | 0.15 | ||||||||||
| 2012 | 6.60 | 0.17 | 6.70 | 0.17 | ||||||||||
| 2013 | 7.27 | 0.20 | 7.37 | 0.20 | ||||||||||
| 2014 | 8.01 | 0.23 | 8.11 | 0.23 | ||||||||||
| Internal rate of return | 22.61% | |||||||||||||
| 33 | |||||||||||||||||
ROE Impact1
| Pro Forma | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Pro Forma | Cash Basis | |||||||||||||
| Full Year | ROE (%) | Change | ROE (%) | Change | ||||||||||
| 2005 | 15.65 | (0.19 | ) | 26.55 | 0.37 | |||||||||
| 2006 | 15.79 | (0.13 | ) | 25.03 | 0.37 | |||||||||
| 2007 | 15.89 | (0.05 | ) | 23.74 | 0.39 | |||||||||
| 2008 | 15.97 | 0.03 | 22.67 | 0.41 | ||||||||||
| 2009 | 16.05 | 0.12 | 21.78 | 0.45 | ||||||||||
| 2010 | 16.08 | 0.15 | 21.00 | 0.43 | ||||||||||
| 2011 | 16.11 | 0.19 | 20.36 | 0.42 | ||||||||||
| 2012 | 16.10 | 0.18 | 19.77 | 0.37 | ||||||||||
| 2013 | 16.09 | 0.17 | 19.28 | 0.33 | ||||||||||
| 2014 | 16.08 | 0.17 | 18.85 | 0.30 | ||||||||||
| 1 | The decrease in cash basis 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 repurchases of BB&T’s common stock. |
| 34 | |||||||||||||||||
ROA Impact
| Pro Forma | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Pro Forma | Cash Basis | |||||||||||||
| Full Year | ROA (%) | Change | ROA (%) | Change | ||||||||||
| 2005 | 1.72 | (0.0 | 4) | 1.86 | (0.0 | 4) | ||||||||
| 2006 | 1.75 | (0.0 | 4) | 1.87 | (0.0 | 3) | ||||||||
| 2007 | 1.76 | (0.0 | 3) | 1.87 | (0.0 | 3) | ||||||||
| 2008 | 1.78 | (0.0 | 2) | 1.88 | (0.0 | 2) | ||||||||
| 2009 | 1.79 | (0.0 | 1) | 1.88 | (0.0 | 1) | ||||||||
| 2010 | 1.80 | (0.0 | 1) | 1.88 | (0.0 | 1) | ||||||||
| 2011 | 1.81 | (0.0 | 0) | 1.88 | (0.0 | 0) | ||||||||
| 2012 | 1.82 | (0.0 | 0) | 1.88 | (0.0 | 0) | ||||||||
| 2013 | 1.82 | (0.0 | 0) | 1.88 | (0.0 | 0) | ||||||||
| 2014 | 1.82 | (0.0 | 0) | 1.88 | (0.0 | 0) | ||||||||
| 35 | |||||||||||||||||
Book Value/Capital Impact
| Pro Forma | Pro Forma | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Stated Book Value Per Share | Tangible Book Value Per Share | Pro Forma* | |||||||||||||||
| Accretion | Accretion | Leverage | |||||||||||||||
| Full Year | Stated | (Dilution) | Tangible | (Dilution) | Ratio | ||||||||||||
| 2005 | $ | 22.15 | $ | 0.24 | $ | 13.94 | $ | (0.17 | ) | 7.91 | % | ||||||
| 2006 | 24.29 | 0.25 | 16.23 | (0.15 | ) | 8.38 | |||||||||||
| 2007 | 26.70 | 0.27 | 18.81 | (0.12 | ) | 8.77 | |||||||||||
| 2008 | 29.39 | 0.31 | 21.67 | (0.08 | ) | 9.14 | |||||||||||
| 2009 | 32.37 | 0.37 | 24.81 | (0.01 | ) | 9.47 | |||||||||||
| 2010 | 35.66 | 0.45 | 28.27 | 0.07 | 9.77 | ||||||||||||
| 2011 | 39.30 | 0.56 | 32.06 | 0.18 | 10.04 | ||||||||||||
| 2012 | 43.31 | 0.68 | 36.23 | 0.30 | 10.28 | ||||||||||||
| 2013 | 47.72 | 0.82 | 40.80 | 0.44 | 10.49 | ||||||||||||
| 2014 | 52.58 | 0.98 | 45.82 | 0.60 | 10.68 | ||||||||||||
| * | BB&T’s goal is to manage its leverage ratio to between 7% and 8%. BB&T may choose to maintain its target leverage ratio through future repurchases of BB&T’s common stock. |
| 36 | |||||||||||||||||
Summary
| · | The acquisition of Republic Bancshares, Inc. is a strong strategic fit: |
| - | It helps accomplish our goal of expanding our presence in Florida |
| - | It fits culturally and geographically |
| - | This is the type of merger we have consistently, successfully executed |
| · | Overall Investment Criteria are met: |
| Stock Model | 40% Cash Model | |||||||
|---|---|---|---|---|---|---|---|---|
| (Option 1) | (Option 2) | |||||||
| GAAP EPS accretive | Year 3 | Year 2 | ||||||
| Cash Basis EPS accretive | Year 2 | Year 1 | ||||||
| IRR | 22.56% | 22.61% | ||||||
| Cash ROE accretive | Year 3 | Year 1 | ||||||
| Cash ROA accretive | Year 7 | Dilutive all years | ||||||
| Tangible book value accretive | Year 1 | Year 6 | ||||||
| Combined leverage ratio remains above 7% | Yes | Yes | ||||||
| 37 | |||||||||||||||||
Appendix
| · | Historical financial data |
| · | Glossary |
| · | Where to go for additional information about BB&T, Republic Bancshares, Inc. and the merger |
| 38 | |||||||||||||||||
Republic Bancshares, Inc.
Financial Summary
| Nine months | Nine months | 9/30/03 | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ended | ended | vs. | |||||||||||||||||||||||||||
| % | % | % | September 30, | September 30, | 9/30/02 | ||||||||||||||||||||||||
| 2000 | Change | 2001 | Change | 2002 | Change | 2002 | 2003 | % Change | |||||||||||||||||||||
| Earnings Summary (In thousands) | |||||||||||||||||||||||||||||
| Interest Income (FTE) | |||||||||||||||||||||||||||||
| Interest on loans & leases | $ | 162,776 | -2.3 | % | $ | 124,015 | -23.8 | % | $ | 101,214 | -18.4 | % | $ | 76,483 | $ | 69,924 | -8.6 | % | |||||||||||
| Interest & dividends on securities | 27,757 | 62.0 | % | 34,712 | 25.1 | % | 40,921 | 17.9 | % | 32,067 | 25,066 | -21.8 | % | ||||||||||||||||
| Interest on temporary investments | 6,667 | -4.3 | % | 6,621 | -0.7 | % | 1,110 | -83.2 | % | 851 | 624 | -26.7 | % | ||||||||||||||||
| Total interest income (FTE) | 197,200 | 3.4 | % | 165,348 | -16.2 | % | 143,245 | -13.4 | % | 109,401 | 95,614 | -12.6 | % | ||||||||||||||||
| Interest Expense | |||||||||||||||||||||||||||||
| Interest expense on deposit accounts | 102,893 | 9.3 | % | 92,796 | -9.8 | % | 60,467 | -34.8 | % | 46,998 | 34,284 | -27.1 | % | ||||||||||||||||
| Interest on short-term borrowings | -- | N/A | -- | N/A | 460 | N/A | 372 | 251 | -32.5 | % | |||||||||||||||||||
| Interest on long-term debt | 4,584 | -34.5 | % | 3,990 | -13.0 | % | 4,306 | 7.9 | % | 3,165 | 3,843 | 21.4 | % | ||||||||||||||||
| Total interest expense | 107,477 | 6.3 | % | 96,786 | -9.9 | % | 65,233 | -32.6 | % | 50,535 | 38,378 | -24.1 | % | ||||||||||||||||
| Net interest income (FTE) | 89,723 | 0.1 | % | 68,562 | -23.6 | % | 78,012 | 13.8 | % | 58,866 | 57,236 | -2.8 | % | ||||||||||||||||
| Less taxable equivalency adjustment | -- | N/A | -- | N/A | -- | N/A | -- | -- | N/A | ||||||||||||||||||||
| Net interest income | 89,723 | 0.1 | % | 68,562 | -23.6 | % | 78,012 | 13.8 | % | 58,866 | 57,236 | -2.8 | % | ||||||||||||||||
| Provision for loan losses | 20,700 | 108.6 | % | 16,150 | -22.0 | % | 5,350 | -66.9 | % | 4,750 | (4,517 | ) | -195.1 | % | |||||||||||||||
| Net interest income after provision | 69,023 | -13.4 | % | 52,412 | -24.1 | % | 72,662 | 38.6 | % | 54,116 | 61,753 | 14.1 | % | ||||||||||||||||
| Noninterest Income | |||||||||||||||||||||||||||||
| Service charges on deposit accounts | 8,128 | 15.5 | % | 7,714 | -5.1 | % | 6,285 | -18.5 | % | 4,724 | 5,019 | 6.2 | % | ||||||||||||||||
| Non-deposit fees and commissions | 10,275 | -5.4 | % | 5,897 | -42.6 | % | 2,671 | -54.7 | % | 2,407 | 4,549 | 89.0 | % | ||||||||||||||||
| G / (L) on sale of real estate & securities | (12,709 | ) | -540.1 | % | 2,282 | N/A | 2,980 | 30.6 | % | 1,990 | 3,521 | 76.9 | % | ||||||||||||||||
| Other operating income | 1,617 | -25.3 | % | 7,136 | 341.3 | % | 1,940 | -72.8 | % | 1,548 | 1,122 | -27.5 | % | ||||||||||||||||
| Total noninterest income | 7,311 | -68.1 | % | 23,029 | 215.0 | % | 13,876 | -39.7 | % | 10,669 | 14,211 | 33.2 | % | ||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||||||||||
| Personnel | 37,456 | -10.2 | % | 38,557 | 2.9 | % | 38,164 | -1.0 | % | 28,861 | 30,279 | 4.9 | % | ||||||||||||||||
| Occupancy & equipment | 13,646 | 2.2 | % | 13,362 | -2.1 | % | 14,474 | 8.3 | % | 9,567 | 10,782 | 12.7 | % | ||||||||||||||||
| Intangible amortization | 3,858 | -1.3 | % | 3,449 | -10.6 | % | 2,767 | -19.8 | % | 2,075 | 2,075 | 0.0 | % | ||||||||||||||||
| Other operating expenses | 25,070 | -13.9 | % | 23,597 | -5.9 | % | 20,602 | -12.7 | % | 15,265 | 17,492 | 14.6 | % | ||||||||||||||||
| Total noninterest expense | 80,030 | -9.2 | % | 78,965 | -1.3 | % | 76,007 | -3.7 | % | 55,768 | 60,628 | 8.7 | % | ||||||||||||||||
| Net income before taxes and minority interest 1 | (3,696 | ) | -125.4 | % | (3,524 | ) | 4.7 | % | 10,531 | 398.8 | % | 9,017 | 15,336 | 70.1 | % | ||||||||||||||
| Income taxes | (787 | ) | -114.0 | % | (1,310 | ) | -66.5 | % | 4,068 | 410.5 | % | 3,499 | 5,630 | 60.9 | % | ||||||||||||||
| Net income before minority interest | (2,909 | ) | -132.6 | % | (2,214 | ) | 23.9 | % | 6,463 | 391.9 | % | 5,518 | 9,706 | 75.9 | % | ||||||||||||||
| Minority interest in income from subsidiary trust, net of tax 1 | (1,689 | ) | -195.7 | % | (1,684 | ) | 0.3 | % | (1,684 | ) | 0.0 | % | (1,263 | ) | (1,263 | ) | 0.0 | % | |||||||||||
| Net income | $ | (4,598 | ) | -143.0 | % | $ | (3,898 | ) | 15.2 | % | $ | 4,779 | 222.6 | % | $ | 4,255 | $ | 8,443 | 98.4 | % | |||||||||
| Basic EPS | $ | (0.46 | ) | -146.3 | % | $ | (0.37 | ) | 20.1 | % | $ | 0.42 | 214.2 | % | $ | 0.37 | $ | 0.70 | 87.2 | % | |||||||||
| Diluted EPS | (0.44 | ) | -146.0 | % | (0.36 | ) | 18.3 | % | 0.42 | 217.1 | % | 0.37 | 0.69 | 86.2 | % | ||||||||||||||
| Book value | $ | 16.18 | 1.2 | % | $ | 15.18 | -6.2 | % | $ | 16.12 | 6.2 | % | $ | 15.85 | $ | 15.82 | -0.2 | % | |||||||||||
| EOP shares | 10,556 | 11,335 | 11,398 | 11,398 | 13,267 | ||||||||||||||||||||||||
| Basic shares | 10,556 | 10,955 | 11,372 | 11,364 | 12,046 | ||||||||||||||||||||||||
| Diluted shares | 10,556 | 10,955 | 11,466 | 11,452 | 12,207 | ||||||||||||||||||||||||
1 The minority interest represents the interest expense related to trust preferred securities.
| 39 | |||||||||||||||||
Republic Bancshares, Inc.
Financial Summary
| Nine months | Nine months | 9/30/03 | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ended | ended | vs. | |||||||||||||||||||||||||||
| % | % | % | September 30, | September 30, | 9/30/02 | ||||||||||||||||||||||||
| 2000 | Change | 2001 | Change | 2002 | Change | 2002 | 2003 | % Change | |||||||||||||||||||||
| Average Balance Sheet | |||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Loans | $ | 1,840,150 | -0.5 | % | $ | 1,554,848 | -15.5 | % | $ | 1,453,167 | -6.5 | % | $ | 1,443,539 | $ | 1,545,876 | 7.1 | % | |||||||||||
| Loans held for sale | -- | -100.0 | % | -- | N/A | 15,416 | N/A | 7,868 | 33,657 | 327.8 | % | ||||||||||||||||||
| Securities | 439,658 | 44.6 | % | 577,161 | 31.3 | % | 810,333 | 40.4 | % | 831,181 | 888,699 | 6.9 | % | ||||||||||||||||
| Other earning assets | 102,930 | -22.2 | % | 138,993 | 35.0 | % | 42,131 | -69.7 | % | 27,694 | 24,236 | -12.5 | % | ||||||||||||||||
| Total interest-earning assets | 2,382,738 | 1.3 | % | 2,271,002 | -4.7% | 2,321,047 | 2.2 | % | 2,310,282 | 2,492,468 | 7.9 | % | |||||||||||||||||
| Goodwill & other intangibles | 30,898 | -11.4 | % | 25,046 | -18.9 | % | 19,740 | -21.2 | % | 20,086 | 17,352 | -13.6 | % | ||||||||||||||||
| Other assets | 114,727 | -12.5 | % | 117,165 | 2.1 | % | 146,940 | 25.4 | % | 147,520 | 148,608 | 0.7 | % | ||||||||||||||||
| Total assets | $ | 2,528,363 | 0.4 | % | $ | 2,413,213 | -4.6% | $ | 2,487,726 | 3.1 | % | $ | 2,477,887 | $ | 2,658,428 | 7.3 | % | ||||||||||||
| Net interest margin | 3.76 | % | 2.99 | % | 3.34 | % | 3.37 | % | 3.03 | % | |||||||||||||||||||
| Liabilities & Shareholders' Equity | |||||||||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||||||||
| Money Market & NOW | $ | 460,764 | 21.8 | % | $ | 516,601 | 12.1 | % | $ | 588,803 | 14.0 | % | $ | 588,367 | $ | 606,283 | 3.0 | % | |||||||||||
| Savings | 240,026 | -30.9 | % | 185,812 | -22.6 | % | 181,480 | -2.3 | % | 183,186 | 185,614 | 1.3 | % | ||||||||||||||||
| CD's and other time | 1,409,303 | 2.8 | % | 1,277,733 | -9.3 | % | 1,190,722 | -6.8 | % | 1,193,721 | 1,165,959 | -2.3 | % | ||||||||||||||||
| Total interest-bearing deposits | 2,110,093 | 0.7 | % | 1,980,146 | -6.2 | % | 1,961,005 | -1.0 | % | 1,965,274 | 1,957,856 | -0.4 | % | ||||||||||||||||
| Short-term borrowed funds | -- | N/A | 44,202 | N/A | 36,182 | -18.1 | % | 37,066 | 250,929 | 577.0 | % | ||||||||||||||||||
| Long-term debt | 69,604 | -5.8 | % | 41,175 | -40.8 | % | 124,596 | 202.6 | % | 114,316 | 39,482 | -65.5 | % | ||||||||||||||||
| Total interest-bearing liabilities | 2,179,697 | 0.4 | % | 2,065,523 | -5.2 | % | 2,121,783 | 2.7 | % | 2,116,656 | 2,248,267 | 6.2 | % | ||||||||||||||||
| Demand deposits | 135,985 | -1.8 | % | 143,461 | 5.5 | % | 156,533 | 9.1 | % | 152,876 | 185,146 | 21.1 | % | ||||||||||||||||
| Other liabilities | 40,495 | -4.5 | % | 33,289 | -17.8 | % | 33,436 | 0.4 | % | 33,813 | 34,205 | 1.2 | % | ||||||||||||||||
| Total liabilities | 2,356,176 | 0.2 | % | 2,242,273 | -4.8 | % | 2,311,752 | 3.1 | % | 2,303,345 | 2,467,618 | 7.1 | % | ||||||||||||||||
| Preferred equity | 1,500 | 0.0 | % | 750 | -50.0 | % | -- | -100.0 | % | -- | -- | N/A | |||||||||||||||||
| Common equity | 170,687 | 2.8 | % | 170,190 | -0.3 | % | 175,974 | 3.4 | % | 174,542 | 190,810 | 9.3 | % | ||||||||||||||||
| Total equity | 172,187 | 2.7 | % | 170,940 | -0.7 | % | 175,974 | 2.9 | % | 174,542 | 190,810 | 9.3 | % | ||||||||||||||||
| Total liabilities & shareholders' equity | $ | 2,528,363 | 0.4 | % | $ | 2,413,213 | -4.6 | % | $ | 2,487,726 | 3.1 | % | $ | 2,477,887 | $ | 2,658,428 | 7.3 | % | |||||||||||
| 40 | |||||||||||||||||
Republic Bancshares, Inc.
Financial Summary
| Nine months | Nine months | 9/30/03 | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ended | ended | vs. | |||||||||||||||||||||||||||
| % | % | % | September 30, | September 30, | 9/30/02 | ||||||||||||||||||||||||
| 2000 | Change | 2001 | Change | 2002 | Change | 2002 | 2003 | % Change | |||||||||||||||||||||
| Ratio Analysis | |||||||||||||||||||||||||||||
| ROA | -0.12 | % | -0.09 | % | 0.26 | % | 0.30 | % | 0.42 | % | |||||||||||||||||||
| ROCE | -1.70 | % | -1.30 | % | 3.67 | % | 4.22 | % | 5.90 | % | |||||||||||||||||||
| Efficiency ratio | 72.9 | % | 88.4 | % | 85.5 | % | 82.6 | % | 89.3 | % | |||||||||||||||||||
| Adj. noninterest income / Adj. revenues | 18.2 | % | 23.2 | % | 12.3 | % | 12.8 | % | 15.7 | % | |||||||||||||||||||
| Equity / Assets | 7.0 | % | 7.0 | % | 7.3 | % | 7.2 | % | 7.6 | % | |||||||||||||||||||
| Credit Quality | |||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Beginning | $ | 28,177 | $ | 33,462 | $ | 31,997 | $ | 31,997 | $ | 27,987 | |||||||||||||||||||
| Provision | 20,700 | 16,150 | 5,350 | 4,750 | (4,517 | ) | |||||||||||||||||||||||
| Acquired allowance | (389 | ) | (613 | ) | -- | -- | -- | ||||||||||||||||||||||
| Net charge-offs | (15,026 | ) | (17,002 | ) | (9,360 | ) | (5,152 | ) | (229 | ) | |||||||||||||||||||
| Ending allowance | $ | 33,462 | $ | 31,997 | $ | 27,987 | $ | 31,595 | $ | 23,241 | |||||||||||||||||||
| Allowance | 1.96 | % | 2.25 | % | 1.90 | % | 2.15 | % | 1.42 | % | |||||||||||||||||||
| Charge-off rate | 0.82 | % | 1.09 | % | 0.64 | % | 0.48 | % | 0.02 | % | |||||||||||||||||||
| Period end loans & leases | $ | 1,711,342 | -9.4 | % | $ | 1,421,011 | -17.0 | % | $ | 1,475,869 | 3.9 | % | $ | 1,469,516 | $ | 1,631,475 | 11.0 | % | |||||||||||
| Period end common equity | $ | 170,841 | 1.2 | % | $ | 172,037 | 0.7 | % | $ | 183,684 | 6.8 | % | $ | 180,646 | $ | 209,890 | 16.2 | % | |||||||||||
| Total assets | $ | 2,440,604 | -4.9 | % | $ | 2,459,344 | 0.8 | % | $ | 2,526,349 | 2.7 | % | $ | 2,511,182 | $ | 2,776,226 | 10.6 | % | |||||||||||
| 41 | |||||||||||||||||
Glossary
Return on Assets – Earnings (excluding merger-related and restructuring charges) for the period as a percentage of average assets for the period.
Return on Equity – Earnings (excluding merger-related and restructuring charges) for the period as a percentage of average common equity for the period.
Cash Basis Performance Results and Ratios – These calculations exclude the effect of intangible assets, amortization of intangibles, net amortization of purchase accounting mark-to-market adjustments, merger-related charges, and other nonrecurring charges.
Efficiency Ratio – Calculated as noninterest expense as a percentage of the sum of net interest income on a fully taxable equivalent basis and noninterest income (excludes securities gains/losses, foreclosed property expense, provisions for or the recaptures of the impairment of mortgage servicing rights, gains or losses on mortgage banking-related derivatives, merger-related charges and other nonrecurring charges).
Tier 1 Capital – Calculated as common shareholders’ equity excluding unrealized gains or losses on debt securities available for sale, unrealized gains on equity securities available for sale and unrealized gains or losses on cash flow hedges, net of deferred income taxes; plus certain mandatorily redeemable capital securities, less nonqualifying intangible assets net of applicable deferred income taxes, and certain nonfinancial equity investments.
Leverage Capital Ratio – Tier 1 capital as a percentage of average tangible assets.
Total Risk-Based Capital Ratio – The sum of Tier 1 capital, 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 and lease losses net of recoveries as a percentage of average loans and leases.
Net Revenue – Net interest income FTE before provision for loan losses plus noninterest income.
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.
Certain of the ratios discussed above may be annualized if the applicable periods are less than a full year.
| 42 | |||||||||||||||||
The foregoing may be deemed to be offering materials of BB&T Corporation (“BB&T”) in connection with BB&T’s proposed acquisition of Republic Bancshares, Inc. (“Republic”) on the terms and subject to the conditions in the Agreement and Plan of Reorganization, dated December 1, 2003, between BB&T and Republic.
Shareholders of Republic Bancshares, Inc., BB&T Corporation, and other investors are urged to read the proxy statement/prospectus that will be included in the registration statement on Form S-4 which BB&T will file with the SEC in connection with the proposed merger because it will contain important information about BB&T; Republic Bancshares, Inc.; the merger; the persons soliciting proxies in the merger; and their interests in the merger and related matters. After it is filed with the SEC, the proxy statement/prospectus will be available for free, both on the SEC’s web site (http://www.sec.gov) and from Republic and BB&T, as follows:
| William R. Falzone | Alan Greer | ||
| Vice President and Treasurer | External Reporting Manager | ||
| Republic Bancshares, Inc. | BB&T | ||
| 111 Second Avenue, Northeast | 150 S. Stratford Road, Suite 400 | ||
| St. Petersburg, FL 33701 | Winston-Salem, North Carolina 27104 | ||
| Phone: (727) 502-3771 | Phone: (336) 733-3021 | ||
BB&T, Republic and their respective directors and executive officers may be deemed participants in the solicitation of proxies from shareholders of Republic in connection with this transaction. Information about the directors and executive officers of BB&T may be found in BB&T’s proxy statement filed with the SEC on March 17, 2003 and will be incorporated by reference in the proxy statement/prospectus. Information about Republic’s directors and executive officers may be found in Republic’s proxy statement/prospectus filed with the SEC on March 19, 2003. You can obtain free copies of these documents as described above. In addition to the proposed registration statement and proxy statement/prospectus, BB&T & Republic file annual, quarterly and special reports, proxy statements, and other information with the SEC. These filings also are available on the SEC’s web site at http://www.sec.gov.
| 43 | |||||||||||||||||