Filed by Bedford Bancshares, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Commission File No.: 000-24330
Subject Company: Bedford Bancshares, Inc.
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For Immediate Release
Friday, March 21, 2003
Press Release
FNB Corporation and Bedford Bancshares, Inc.
Announce Agreement to Merge
Christiansburg, Virginia -- FNB Corporation ("FNB"), Christiansburg, Virginia
(NASDAQ: FNBP), parent of First National Bank and FNB Salem Bank & Trust, N.A.
and Bedford Bancshares, Inc. ("Bedford"), Bedford, Virginia (NASDAQ: BFSB),
parent of Bedford Federal Savings Bank, FSB, today jointly announced the signing
of a definitive agreement to merge their companies. When combined, FNB
Corporation and its affiliates will hold nearly $1.3 billion in total assets and
operate 29 branch, retail loan production, and financial services offices.
Stretching along the Interstate 81 corridor from Wytheville to Roanoke, as well
as along U.S. 460 from Pearisburg to the Bedford/Lynchburg/Smith Mountain Lake
region, the company will have more than $1 billion in Virginia deposits, making
it the largest Virginia-based community banking organization. FNB Corporation
also maintains a wholesale mortgage loan production office in Greenville, South
Carolina.
Under the terms of the transaction, Bedford shareholders will receive from
0.8066 to 0.9135 shares of FNB common stock, or the equivalent cash value per
share, for each outstanding share of Bedford common stock. The exchange ratio
will float between FNB's per-share market value of $26.00 to $30.00 and will be
fixed outside of that range. It is anticipated that approximately 20% of the
total transaction consideration will be cash. Based on FNB's recent 30-day
average price of $26.30, the transaction has a total current value of
approximately $23.81 per share or $49.9 million. This value is the equivalent of
approximately 190% of Bedford's recent book value and 16.2X trailing 12-month
earnings. The transaction will be accounted for under the purchase method of
accounting and will be structured as a tax-free reorganization to the extent FNB
shares
are issued. The transaction is expected to be accretive to FNB's cash earnings
per share after the first full year of combined operations and neutral to GAAP
earnings per share, at the midpoint of the price range.
Bedford Federal Savings Bank will operate as a wholly-owned subsidiary of FNB.
Two members of the Bedford Bancshares, Inc. Board of Directors will join the FNB
Corporation Board.
Harold Neal, President and CEO of Bedford said of the transaction, "We are very
excited about this affiliation. The increased resources of the combined
organization, both in management and lending power, will allow us to provide our
customers a wider variety of services and greater technological capabilities."
Sam Tollison, President and CEO of FNB, said, "Bedford's market represents a
strategic extension of our current market and Bedford has maintained the #1
share of that market for some time. The management team at Bedford has
successfully utilized its strong market share to create a highly attractive
franchise returning above-peer profits. We will leverage off Bedford's success
with FNB's expanded product line to achieve even stronger returns for our
shareholders. We believe that FNB's commercial bank products and financial
services will be well received by Bedford's existing customer base and that the
combination with FNB will reinforce Bedford's personal banking touch."
The merger is subject to approval by the shareholders of FNB and Bedford as well
as regulatory authorities and other conditions customary for transactions of
this nature. The parties anticipate closing the transaction in the second half
of 2003.
Trident Securities, a division of McDonald Investments, Inc., is serving as
financial advisor to Bedford Bancshares, Inc. and The Carson Medlin Company is
advising FNB Corporation in this transaction.
Transaction Summary
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Exchange Ratio 0.8066 to 0.9135 based on average market value prior
to closing
Form of Consideration 80% Stock/20% Cash
Collars Exchange ratio floats between FNB price of $26.00 to
$30.00; exchange ratio fixes at 0.8066 above $30.00
and 0.9135 below $26.00
Current Transaction Value $49.9 million, or $23.81 per Bedford share
Price to Book Value 190%
Price to LTM Earnings 16.2X
Premium to Stock Price 30%
FNB will be filing a proxy statement/prospectus and other relevant documents
concerning the merger with the Securities and Exchange Commission ("SEC"). We
urge investors to read the proxy statement/prospectus and other relevant
documents filed with the SEC because they will contain important information.
Investors and security holders may obtain a free copy of the proxy
statement/prospectus when it becomes available, and other documents filed by
Bedford and FNB with the SEC in connection with the merger, at the SEC's web
site at www.sec.gov. Documents that Bedford files with the SEC will also be
available upon written request directed to the Corporate Secretary of Bedford
Bancshares, Inc. at 125 W. Main Street, Bedford, Virginia 24523. In addition,
documents filed by FNB will be available upon written request from the Corporate
Secretary of FNB Corporation, at P.O. Box 600, Christiansburg, Virginia
24068-0600. Read the proxy statement/prospectus carefully before making a
decision concerning the merger.
Bedford and its directors and executive officers may be deemed to be
"participants" in Bedford's solicitation of proxies in connection with the
proposed merger. Information regarding the participants, including their
holdings of Bedford stock, is contained in Bedford's annual proxy materials
filed with the SEC on December 23, 2002. Additional information about the
interests of those participants may be obtained from reading the definitive
proxy statement regarding the transaction when it becomes available.
This news release contains certain forward-looking statements about the proposed
merger of FNB and Bedford. Forward-looking statements can be identified by the
fact that they include words like "believe," "expect," "anticipate," "estimate,"
and "intend," or future or conditional verbs such "will," "would," "should,"
"could," or "may." These forward-looking statements are based upon the current
beliefs and expectations of Bedford's and FNB's management and are inherently
subject to significant business, economic, and competitive uncertainties and
contingencies, many of which are beyond the companies' control. Certain factors
that could cause actual results to differ materially from expected results
include delays in completing the merger, difficulties in achieving cost savings
from the merger or in achieving cost savings within the expected timeframe,
difficulties in integrating FNB and Bedford, increased competitive pressures,
changes in the interest rate environment, changes in general economic
conditions, legislative and regulatory changes that adversely affect the
businesses in which Bedford and FNB are engaged, changes in the securities
markets, and other factors disclosed by Bedford and FNB in their periodic
filings with the SEC. Actual results may differ materially from the anticipated
results discussed in these forward-looking statements. Bedford and FNB do not
undertake, and specifically disclaim, any obligation to publicly release the
results of any revisions that may be made to any forward-looking
statements to reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.
For more information contact:
Samuel H. Tollison Harold K. Neal
President and CEO President and CEO
FNB Corporation Bedford Bancshares, Inc.
(540) 382-6041 (540) 586-2590
Peter A. Seitz
EVP/CAO/Secretary
FNB Corporation
(540) 381-6700