EXHIBIT 99.2
PRO FORMA CONDENSED FINANCIAL INFORMATION
On March 29, 1996, F&M National Corporation ("F&M") acquired FB&T
Financial Corporation ("FB&T"), a bank holding company and parent company of
Fairfax Bank & Trust Company, through the merger of FB&T with and into F&M (the
"Merger"). The Merger was accounted for as a pooling of interests business
combination. Based on an exchange ratio of 1.983 shares of F&M common stock for
each outstanding share of FB&T common stock, F&M issued 2,518,087 shares of
common stock, and reserved an additional 172,723 shares of common stock for
issuance in connection with the exercise of FB&T employee stock options assumed
by F&M in the Merger.
PRO FORMA CONDENSED BALANCE SHEET
The following unaudited pro forma condensed balance sheet combines the
consolidated historical balance sheets of F&M and FB&T on the assumption that
the Merger had been effective as of December 31, 1995, giving effect to the
transaction on a pooling of interests accounting basis. The pro forma condensed
balance sheet should be read in conjunction with the consolidated historical
financial statements of F&M and FB&T, including the respective notes thereto,
included in documents incorporated herein by reference.
F&M AND FB&T
PRO FORMA CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1995
(UNAUDITED)
PRO FORMA PRO FORMA
F&M FB&T ADJUSTMENTS COMBINED
(IN THOUSANDS)
ASSETS
Cash and due from banks....... . . . . . . . . . $ 81,626 $ 26,016 $ 107,642
Interest-bearing deposits
in other banks.. . . . . . . . . . . . . . . . 100 - - 100
Securities . . . . . . . . . . . . . . . . . . . 569,269 41,798 611,067
Other short-term investments . . . . . . . . . . 64,408 16,493 80,901
Loans, net of unearned income . . . . . . . . . 1,053,829 149,062 1,202,891
Less allowance for loan losses . . . . . . . . . 15,016 2,195 17,211
------------ ----------- ------------ ----------
Net loans. . . . . . . . . . . . . . . . 1,038,813 146,867 - - 1,185,680
Other assets. . . . . . . . . . . . . . . . . . 79,604 11,895 - - 91,499
------------- ----------- ------------ ------------
Total assets. . . . . . . . . . . . . . $1,833,820 $ 243,069 $ - - $ 2,076,889
============= =========== ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing... . . . . . . . . . . . $ 236,630 $ 55,569 $ 292,199
Interest bearing. . . . . . . . . . . . . . . 1,346,847 135,945 1,482,792
------------- ----------- ------------ ------------
Total deposits. . . . . . . . . . . . . 1,583,477 191,514 - - 1,774,991
Short-term borrowings..... . . . . . . . . . . 38,618 33,377 - - 71,995
Long-term debt.. . . . . . . . . . . . . . . . 3,225 - - - - 3,225
Other liabilities. . . . . . . . . . . . . . . 15,018 1,244 - - 16,262
------------- ----------- ------------ ------------
Total liabilities. . . . . . . . . . . . 1,640,338 226,135 - - 1,866,473
------------- ----------- ------------ ------------
SHAREHOLDERS' EQUITY
Preferred stock. . . . . . . . . . . . . . . . - - - - - - - -
Common stock, par value
$2.00 per share. . . . . . . . . . . . . . . 33,104 - - 5 035 (1) 38,139
Common stock, par value
$1.25 per share. . . . . . . . . . . . . . . - - 1,587 (1 587) (1) - -
Capital surplus. . . . . . . . . . . . . . . . 57,681 8,855 (3 448) (1) 63,088
Unrealized gain (loss) on securities
available for sale, net. . . . . . . . . . . 3,467 (8) - - 3,459
Retained earnings . . . . . . . . . . . . . . 99,230 6,500 - - 105,730
------------- ----------- ------------ ------------
Total shareholders' equity . . . . . . 193,482 16,934 - - 210,416
------------- ----------- ------------ ------------
Total liabilities and
shareholders' equity . . . . . . . . $1,833,820 $ 243,069 $ - - $ 2,076,889
============= =========== ============ ============
(1) See Note (b) of Notes to Pro Forma Condensed Financial Information.
See Notes to Pro Forma Condensed Financial Information.
PRO FORMA CONDENSED STATEMENT OF INCOME
The following unaudited pro forma condensed statement of income
presents the combined statement of income of F&M and FB&T assuming that FB&T was
combined at the beginning of the period presented on a pooling of interests
accounting basis. The unaudited pro forma condensed statement of income should
be read in conjunction with the consolidated historical financial statements of
F&M and FB&T, including the respective notes thereto, included in documents
incorporated herein by reference. The pro forma information is not necessarily
indicative of the results of operations that would have resulted had the Merger
been consummated at the beginning of the periods indicated, nor is it
necessarily indicative of the results of operations of future periods.
F&M AND FB&T
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
PRO FORMA
F&M FB&T COMBINED
(IN THOUSANDS)
INTEREST INCOME
Interest and fees on loans . . . . . . . . . . . . . . . . . . . . $ 96,081 $ 12,801 $ 108,882
Interest and dividends on securities . . . . . . . . . . . . . . . 32,853 2,371 35,224
Federal funds sold and securities purchased under agree-
ments to resell . . . . . . . . . . . . . . . . . . . . . . . . . 4,302 606 4,908
Interest-bearing deposits in other banks . . . . . . . . . . . . 26 - - 26
---------- ---------- ------------
Total interest income. . . . . . . . . . . . . . . . . . . . 133,262 15,778 149,040
---------- ---------- ------------
INTEREST EXPENSE
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,802 5,187 60,989
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . 1,252 695 1,947
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 243 - - 243
---------- ---------- ------------
Total interest expense . . . . . . . . . . . . . . . . . . 57,297 5,882 63,179
---------- ---------- ------------
Net interest income . . . . . . . . . . . . . . . . . . . . 75,965 9,896 85,861
Provision for loan losses . . . . . . . . . . . . . . . . . . . . 1,081 1,068 2,149
---------- ---------- ------------
Net interest income after
provision for loan losses . . . . . . . . . . . . . . . . 74,884 8,828 83,712
----------- ---------- ------------
OTHER INCOME
Service charges on deposit accounts . . . . . . . . . . . . . 6,011 1,499 7,510
Securities gains, net . . . . . . . . . . . . . . . . . . . . . . . . 366 - - 366
Other operating income . . . . . . . . . . . . . . . . . . . . . . 9,843 931 10,774
----------- ---------- ------------
Total other income . . . . . . . . . . . . . . . . . . . . . 16,220 2,430 18,650
----------- ---------- ------------
OTHER EXPENSES
Salaries and employee benefits . . . . . . . . . . . . . . . . . 29,362 3,579 32,941
Net occupancy expense . . . . . . . . . . . . . . . . . . . . . 3,982 1,163 5,145
Furniture and equipment expense . . . . . . . . . . . . . . . 4,253 442 4,695
Other operating expenses . . . . . . . . . . . . . . . . . . . . 18,398 3,773 22,171
----------- ---------- ------------
Total other expenses . . . . . . . . . . . . . . . . . . . 55,995 8,957 64,952
----------- ---------- ------------
Income before income taxes . . . . . . . . . . . . . . . . . . . 35,109 2,301 37,410
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . 11,677 725 12,402
----------- ---------- ------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,432 $ 1,576 $ 25,008
=========== ========== ============
PER SHARE DATA
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.42 $ 1.26 $ 1.32
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.61 0.60 0.61
Average common shares outstanding . . . . . . . . . . . . . . . . . 16,529 1,253 19,014
See Notes to Pro Forma Condensed Financial Information.
F&M AND FB&T
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
PRO FORMA
F&M FB&T COMBINED
(IN THOUSANDS)
INTEREST INCOME
Interest and fees on loans . . . . . . . . . . . . . . . . . . . . $ 85,238 $ 10,186 $ 95,424
Interest and dividends on securities . . . . . . . . . . . . . . 31,233 2,186 33,419
Federal funds sold and securities purchased under agree-
ments to resell . . . . . . . . . . . . . . . . . . . . . . . . . . 3,105 57 3,162
Interest-bearing deposits in other banks . . . . . . . . . . . . 38 - - 38
--------- ---------- ----------
Total interest income. . . . . . . . . . . . . . . . . . . . 119,614 12,429 132,043
--------- ---------- ----------
INTEREST EXPENSE
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,287 3,616 48,903
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . 1,053 556 1,609
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 91 - - 91
--------- ---------- ----------
Total interest expense . . . . . . . . . . . . . . . . . . 46,431 4,172 50,603
--------- ---------- ----------
Net interest income . . . . . . . . . . . . . . . . . . . . 73,183 8,257 81,440
Provision for loan losses . . . . . . . . . . . . . . . . . . . . 2,535 64 2,599
--------- ---------- ----------
Net interest income after
provision for loan losses . . . . . . . . . . . . . . . . 70,648 8,193 78,841
--------- ---------- ----------
OTHER INCOME
Service charges on deposit accounts . . . . . . . . . . . . . 5,676 1,171 6,847
Securities gains, net . . . . . . . . . . . . . . . . . . . . . . . . 748 2 750
Other operating income . . . . . . . . . . . . . . . . . . . . . . 9,888 814 10,702
--------- ---------- ----------
Total other income . . . . . . . . . . . . . . . . . . . . . 16,312 1,987 18,299
--------- ---------- ----------
OTHER EXPENSES
Salaries and employee benefits . . . . . . . . . . . . . . . . . 28,824 2,772 31,596
Net occupancy expense . . . . . . . . . . . . . . . . . . . . . 3,959 895 4,854
Furniture and equipment expense . . . . . . . . . . . . . . . 4,057 316 4,373
Other operating expenses . . . . . . . . . . . . . . . . . . . . 19,443 2,666 22,109
--------- ---------- ----------
Total other expenses . . . . . . . . . . . . . . . . . . . 56,283 6,649 62,932
--------- ---------- ----------
Income before income taxes . . . . . . . . . . . . . . . . . . 30,677 3,531 34,208
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . 9,976 1,167 11,143
--------- ---------- ----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,701 $ 2,364 $ 23,065
========= ========== ==========
PER SHARE DATA
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.25 $ 1.87 $ 1.21
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.54 0.52 0.54
Average common shares outstanding . . . . . . . . . . . . . 16,517 1,266 19,028
See Notes to Pro Forma Condensed Financial Information.
F&M AND FB&T
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
PRO FORMA
F&M FB&T COMBINED
(IN THOUSANDS)
INTEREST INCOME
Interest and fees on loans . . . . . . . . . . . . . . . . . . . . $ 74,616 $ 7,919 $ 82,535
Interest and dividends on securities . . . . . . . . . . . . . . 30,222 1,426 31,648
Federal funds sold and securities purchased under agree-
ments to resell . . . . . . . . . . . . . . . . . . . . . . . . 2,591 153 2,744
Interest-bearing deposits in other banks . . . . . . . . . . . . 105 - - 105
---------- --------- ----------
Total interest income. . . . . . . . . . . . . . . . . . . . 107,534 9,498 117,032
---------- --------- ----------
INTEREST EXPENSE
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,927 2,516 45,443
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . 688 244 932
---------- --------- ----------
Total interest expense . . . . . . . . . . . . . . . . . . 43,615 2,760 46,375
---------- --------- ----------
Net interest income . . . . . . . . . . . . . . . . . . . . 63,919 6,738 70,657
Provision for loan losses . . . . . . . . . . . . . . . . . . . . 2,857 348 3,205
---------- --------- ----------
Net interest income after
provision for loan losses . . . . . . . . . . . . . . . . 61,062 6,390 67,452
---------- --------- ----------
OTHER INCOME
Service charges on deposit accounts . . . . . . . . . . . . . 5,212 1,235 6,447
Securities gains, net . . . . . . . . . . . . . . . . . . . . . . . 1,781 15 1,796
Other operating income . . . . . . . . . . . . . . . . . . . . . . 7,851 502 8,353
---------- --------- ----------
Total other income . . . . . . . . . . . . . . . . . . . . . 14,844 1,752 16,596
---------- --------- ----------
OTHER EXPENSES
Salaries and employee benefits . . . . . . . . . . . . . . . . . 24,361 1,970 26,331
Net occupancy expense . . . . . . . . . . . . . . . . . . . . . 3,576 689 4,265
Furniture and equipment expense . . . . . . . . . . . . . . . 3,649 276 3,925
Other operating expenses . . . . . . . . . . . . . . . . . . . . 16,744 2,276 19,020
---------- --------- ----------
Total other expenses . . . . . . . . . . . . . . . . . . . 48,330 5,211 53,541
---------- --------- ----------
Income before income taxes . . . . . . . . . . . . . . . . . . 27,576 2,931 30,507
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . 8,844 926 9,770
---------- --------- ----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,732 $ 2,005 $ 20,737
========== ========= ==========
PER SHARE DATA
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.16 $ 1.90 $ 1.14
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 0.58 0.23 0.58
Average common shares outstanding . . . . . . . . . . . . . 16,124 1,053 18,212
See Notes to Pro Forma Condensed Financial Information.
NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
(a) The pro forma information presented is not necessarily indicative of
the results of operations or the financial position that would have
resulted had the Merger been consummated at the beginning of the
periods indicated, nor is it necessarily indicative of the results of
operations in future periods or the future financial position of the
combined entities.
(b) It is assumed that the Merger will be accounted for on a pooling of
interests accounting basis and, accordingly, the related pro forma
adjustments have been calculated using an assumed Exchange Ratio,
whereby F&M will issue 1.983 shares of F&M Common Stock for each share
of FB&T Common Stock, which has been computed as follows: $35.00
divided by the average closing price of F&M Common Stock on the NYSE
Composite Transactions List for the ten trading days extending from
March 15 through March 28, 1996 ($17.65) to arrive at an assumed
Exchange Ratio of 1.983 shares of F&M Common Stock for each share of
FB&T Common Stock.
As a result, information was appropriately adjusted for the Merger by
the (i) addition of 2,517,577 shares of F&M Common Stock amounting to
$5,035,000, (ii) elimination of 1,269,580 shares of FB&T Common Stock
amounting to $1,587,000; and (iii) recordation of the remaining amount
of $3,448,000 as a decrease in capital surplus at December 31, 1995.
(c) Per share data has been computed based on the combined historical net
income applicable to common shareholders of F&M and FB&T using the
historical weighted average shares outstanding of F&M Common Stock and
the weighted average shares, adjusted to equivalent shares of F&M
Common Stock, of FB&T, as of the earliest period presented.