Exhibit 99.1
News Release
CONTACT:
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James A. Beck
President & Chief Executive Officer
Capital Bank Corporation
Phone: (919) 645-6313
Email: jbeck@capitalbank-nc.com
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William R. Gilliam
Chairman, President & Chief Executive Officer
First Community Financial Corporation
FOR IMMEDIATE RELEASE Phone: (336) 227-3631
October 5, 2001 Email: wgilliam@csbob.com
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CAPITAL BANK CORPORATION AND FIRST COMMUNITY FINANCIAL
CORPORATION TO MERGE
CAPITAL BANK CORPORATION ANNOUNCES NEW DIVIDEND POLICY AND EXPANDS
STOCK REPURCHASE PROGRAM
RALEIGH AND BURLINGTON, N. C. - Capital Bank Corporation (NASDAQ: CBKN) in
Raleigh and First Community Financial Corporation (NASDAQ: FCFN) in Burlington
today announced that they have entered into a definitive agreement under which
Capital would acquire First Community in a transaction valued at approximately
$54 million in cash and stock. The combination would mark Capital Bank
Corporation's entry into Alamance County and the Piedmont Triad metropolitan
region. The resulting company would have total assets in excess of $600 million
and 18 banking offices in seven counties focused in central North Carolina.
First Community Financial Corporation, with $213 million in assets as of June
30, 2001, is the holding company for Community Savings Bank, Inc., which
operates four banking offices in Burlington and Graham, North Carolina.
Capital Bank Corporation, with $377 million in assets as of June 30, 2001, is
the financial holding company for Capital Bank, which operates 14 banking
offices in Wake, Lee, Chatham, Granville, Warren and Northampton Counties of
North Carolina.
The transaction, which has been approved by the directors of both companies
subject to shareholder and regulatory approval, is valued at $31.12 per First
Community share based on Capital's average closing price for the 10 day period
ending yesterday of $11.45. Each First Community share of common stock will be
exchanged for 1.30275 shares of Capital Bank Corporation common stock plus
$16.20 cash. Alternatively, shareholders may elect to receive all cash or all
stock for their shares. To the extent that First Community shareholders elect to
receive more aggregate stock or cash consideration than permitted by the
agreement, pro rata allocations will be made. The transaction will be accounted
for under the purchase method and is intended to qualify as a tax-free
reorganization under Section 368(a) of the
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Internal Revenue Code. The agreement provides that, in order to preserve that
tax treatment, the exchange ratio for stock may be adjusted upward such that not
less than 40% of the aggregate transaction value will be paid in stock.
Upon consummation of the transaction, which is expected to occur in the first
quarter of 2002, the board of directors of Capital Bank Corporation will be made
up of nine members, three of whom will come from the current board of First
Community and six from Capital's current board of directors. William R. Gilliam,
currently Chairman, President and Chief Executive Officer of First Community and
of Community Savings Bank, will become Vice Chairman of Capital Bank
Corporation, while O. A. Keller, III, Chairman of the Board of Capital Bank
Corporation will continue in that capacity. James A. Beck will continue in his
current role of President and Chief Executive Officer of Capital Bank
Corporation.
Capital Bank Corporation also announced today that its board of directors has
approved a new dividend policy whereby the company would pay quarterly cash
dividends to its shareholders of approximately 20% of its earnings, excluding
extraordinary items, subject to capital requirements, regulatory limitations,
and other factors. This policy is to be implemented during the first quarter
following the completion of the acquisition of First Community Financial
Corporation. For the first year following the completion of the merger only, the
dividend is anticipated to be the greater of 20% of earnings or $.20 per share,
with a minimum of $.05 per share on a quarterly basis.
In another action, Capital Bank Corporation's board of directors authorized the
company to repurchase up to 450,000 shares of its common stock, or about 20% of
the number of shares the company plans to issue to complete the acquisition.
These repurchases may take place from time-to-time in the open market or
privately negotiated transactions, depending on market conditions and subject to
compliance with all applicable securities laws and regulations. This represents
an expansion of, and includes, the stock repurchase plan of up to 100,000 shares
that the company announced in April 2001.
"Community Savings Bank has enjoyed an excellent reputation for serving the
financial needs of its customers and for contributing to the economic well-being
of Alamance County and surrounding areas since 1934," said James A. Beck,
President of Capital Bank Corporation. "We are excited to have the opportunity
to join with them and look forward to carrying on their tradition of nearly 70
years. I am also quite pleased that Bill Gilliam has agreed to serve as Vice
Chairman of our board of directors. His experience, wisdom and knowledge of the
Burlington and Graham communities will make him an invaluable asset to our
company."
Beck added, "The combination of our companies creates a larger, stronger, and
more efficient Capital Bank Corporation, with banking offices concentrated in
the Research Triangle and Piedmont Triad regions, two of the three largest
metropolitan areas of North Carolina. The combined company will have assets in
excess of $600 million, equity capital exceeding $60 million and will be the
10th largest publicly traded banking company headquartered in North Carolina. We
believe we are now well positioned to continue our history of strong internal
growth and to take advantage of the opportunities presented by the ongoing
consolidation of the banking industry."
William R. Gilliam, First Community's Chairman, President and Chief Executive
Officer commented, "We are delighted to be joining the Capital Bank Corporation
team because the company and its employees share our core values and, like us,
are committed to providing only the finest level of customer
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care and service. Our customers are going to be able to take advantage of
additional products and services, such as Internet banking. Capital's impressive
growth record, combined with the strong, enduring relationships we have
established with customers and the community during the past seven decades
points to a promising future for our merged companies."
"We think the merger of First Community Financial Corporation into Capital Bank
Corporation is great news for the customers, shareholders and communities served
by both organizations," said Mr. Beck. "The resulting company will offer a broad
array of products and services, delivered with exceptional personalized service,
which we at Capital Bank refer to as Service Worth Talking About. Moreover, the
combination results in financial synergies creating a stronger, more efficient
company. As a result, we expect this transaction to be accretive to our earnings
once the combination is completed next year. We are eager to begin working
together with our new associates at First Community"
First Community Financial Corporation, headquartered in Burlington, North
Carolina, had approximately $213 million in total assets as of June 30, 2001,
and offers a broad range of financial services through its subsidiary Community
Savings Bank. Community Savings Bank operates four banking offices in Burlington
(3) and Graham. The company's website is www.realpeoplerealanswers.com.
Capital Bank Corporation, headquartered in Raleigh North Carolina, has over $377
million in total assets and offers a broad range of financial services through
its two subsidiaries, Capital Bank and Capital Bank Investment Services, Inc.
Capital Bank operates 14 banking offices in Raleigh (3), Sanford (3), Cary (2),
Oxford (2), Siler City, Warrenton, Woodland and Seaboard. The company's website
is www.capitalbank-nc.com.
This news release contains forward-looking statements, including estimates of
future operating results and other forward-looking financial information for
Capital Bank Corporation and First Community Financial Corporation within the
meaning of the Private Securities Litigation Reform Act of 1995. As such, the
statements involve significant risks and uncertainties. Actual results may
differ materially from the statements due to such factors as: (1) expected cost
savings from the merger not materializing within the expected time frame; (2)
revenues following the merger not meeting expectations (3) failure to retain the
customer bases of the two institutions following the merger; (4) competitive
pressures among financial institutions increasing significantly; (5) costs or
difficulties related to the integration of the businesses of Capital and First
Community being greater than anticipated; (6) general economic conditions being
less favorable than anticipated; (7) legislation or regulatory changes adversely
affecting the business in which the combined company will be engaged; and (8)
the timing of the completion of the transactions. Additional factors that could
cause actual results to differ materially are discussed in the companies' recent
filings with the SEC, including but not limited to Annual Reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K.
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