BB&T
AND
MASON-DIXON BANCSHARES, INC.
WESTMINSTER, MARYLAND
EXPANDING A GREAT FRANCHISE
ANALYST PRESENTATION
JANUARY 28, 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
Mason-Dixon'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 Mason-Dixon,
the amount of general and administrative expense consolidation, costs relating
to converting Mason-Dixon 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 Mason-Dixon, 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 Mason-Dixon are engaged; (8) adverse changes may occur in the
securities markets; and (9) competitors of BB&T and Mason-Dixon may have greater
financial resources and develop products that enable such competitors to compete
more successfully than BB&T and Mason-Dixon.
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
o BACKGROUND AND TRANSACTION TERMS
o FINANCIAL DATA
o RATIONALE AND STRATEGIC OBJECTIVES
o INVESTMENT CRITERIA
o SUMMARY
3
BB&T Corporation
(BBT)
o $37.0 billion bank holding company*
o 597 branch locations in NC, SC, VA, MD
and the District of Columbia*
FOR THE YEAR ENDED
12/31/98**
----------
o ROA 1.58%
o Cash Basis ROA 1.67%
o ROE 20.16%
o Cash Basis ROE 23.70%
o Efficiency ratio 51.57%
*Includes the pending acquisitions of Scott & Stringfellow Financial, Inc.,
MainStreet Financial Corporation and First Citizens Corporation
**Excludes nonrecurring items
4
MASON-DIXON BANCSHARES, INC.
(MSDX)
o $1.1 BILLION BANK HOLDING COMPANY
o 23 BANKING OFFICES IN CENTRAL MARYLAND
o 3 MORTGAGE LOAN PRODUCTION OFFICES
o 12 CONSUMER FINANCE OFFICES
FOR YEAR ENDED
12/31/98*
----------------
o ROA .95%
o ROE 12.97%
o EFFICIENCY RATIO 67.54%
*EXCLUDES NONRECURRING ITEMS
5
PRO FORMA COMPANY PROFILE
DECEMBER 31, 1998
o SIZE: $38.1 BILLION IN ASSETS*
$12.1 billion in market capitalization**
o OFFICES NC: 347
SC: 90
VA: 109
DC: 6
MD: 55
GA: 13
----------
TOTAL: 620
* INCLUDES TOTAL ASSETS FOR SCOTT & STRINGFELLOW FINANCIAL, INC., MAINSTREET
FINANCIAL CORPORATION, MASON-DIXON BANCSHARES, INC. AND FIRST CITIZENS
CORPORATION
**BASED ON BB&T'S 1/26/99 CLOSING PRICE OF $38.44 AND INCLUDES SHARES
OUTSTANDING FOR SCOTT & STRINGFELLOW FINANCIAL, INC., MAINSTREET FINANCIAL
CORPORATION, MASON-DIXON BANCSHARES, INC. AND FIRST CITIZENS CORPORATION
6
TERMS OF THE TRANSACTION
7
TERMS OF THE TRANSACTION
o PURCHASE PRICE: $49.97 PER SHARE *
o AGGREGATE VALUE: $256.9 MILLION * (INCLUDING OPTIONS)
o CONSIDERATION: FIXED EXCHANGE RATIO OF 1.30 BB&T SHARES
FOR EACH MASON-DIXON SHARE
o STRUCTURE: TAX-FREE EXCHANGE OF STOCK EQUAL TO 100%
OF PURCHASE PRICE
o ACCOUNTING TREATMENT: TRANSACTION WILL BE ACCOUNTED FOR AS A
POOLING-OF-INTERESTS
o LOCK-UP PROVISION: STOCK OPTION AGREEMENT
*BASED ON JANUARY 26, 1999 BB&T CLOSING STOCK PRICE OF $38.44.
8
PRICING
o PURCHASE PRICE $49.97
o PREMIUM / MARKET 85.50%
o PRICE / 12-31-98 STATED BOOK 3.08 x
o PRICE / 1998 EPS 25.0 x
o BB&T SHARES ISSUED (FIXED
EXCHANGE RATIO OF 1.30) 6.7 MILLION*
*BB&T SHARES ISSUED BASED ON MSDX SHARES OUTSTANDING ADJUSTED FOR STOCK OPTIONS.
9
ACQUISITION COMPARABLES*
BANK ACQUISITIONS ANNOUNCED AFTER 3/31/98
DEAL VALUES FROM $175 - $500 MILLION
Total Deal Pr/
Assets Date Deal Deal Deal Pr/ 4-Qtr
Buyer Seller Seller Announced Value Pr/Bk Tg Bk EPS
- -------------------------------------------------------------------------------------------------------------------
($000) ($M) (%) (%) (x)
Chittenden Corp. Vermont Financial 2,110,300 12/16/98 454.2 208.2 285.6 27.9
Sky Financial Group First Western Bncp 2,203,139 12/14/98 424.5 280.0 479.9 22.0
FirstMerit Corp Signal Corp. 1,519,719 08/11/98 481.8 321.9 466.9 23.4
City Holding Company Horizon Bancorp Inc. 1,043,327 08/07/98 413.4 360.9 378.8 29.4
Banknorth Group Inc. Evergreen Bancorp 1,048,307 07/31/98 318.7 351.3 352.0 26.9
Sky Financial Group Ohio Bank 590,932 07/21/98 191.0 377.7 402.9 30.2
First Commonwealth Southwest Natl Corp. 742,106 07/16/98 269.8 325.5 326.2 30.8
Compass Bancshares Arizona Bank 758,280 07/06/98 243.2 456.7 456.7 37.6
First American Corp. Pioneer Bancshares 993,087 05/28/98 292.0 284.3 300.8 29.7
Investor Group East-West Bank 1,731,481 05/25/98 237.8 179.4 185.9 21.6
Old Kent Financial First Evergreen Corp 1,933,096 04/21/98 482.3 243.5 247.8 26.7
Union Planters Corp. AMBANC Corp 759,395 04/01/98 211.1 268.3 273.9 25.3
Maximum 2,203,139 482.3 456.7 479.9 37.6
Minimum 590,932 191.0 179.4 185.9 21.6
Average 1,286,097 335.0 304.8 346.4 27.6
Median 1,045,817 305.4 303.1 339.1 27.4
BB&T Model Mason-Dixon
Bancshares, Inc.** 1,102,242 256.9 308.4 335.8 25.0
Over/(Under) Average Comparables 3.6 (10.6) (2.6)
- -------------------------------------------------------------------------------------------------------------------
*Source for acquisition comparables: SNL Securities
** Based on 12/31/98 data
10
FINANCIAL DATA
11
FINANCIAL SUMMARY
FOR THE YEAR ENDED: 12/31/98 12/31/98
BB&T* MSDX*
-------- --------
ROA 1.58% .95%
ROE 20.16 12.97
NET INTEREST MARGIN (FTE) 4.34 4.07
EFFICIENCY RATIO 51.57 67.54
NET CHARGE-OFFS / AVG. LOANS .28 .60
ALLOWANCE / NONPERF. LOANS 367.75 223.92
NONPERF. ASSETS / TOTAL ASSETS .33 .38
* EXCLUDES NONRECURRING ITEMS
12
CAPITAL STRENGTH
BB&T MSDX
(12/31/98) (12/31/98)
---------- ---------
SHAREHOLDERS' EQUITY / TOTAL ASSETS 8.0% 7.5%
LEVERAGE CAPITAL RATIO 6.8% 8.9%
TOTAL RISK-BASED CAPITAL RATIO 14.7% 18.1%
13
RATIONALE FOR ACQUISITION
o BB&T HAS AN ANNOUNCED STRATEGY TO PURSUE IN-MARKET
(CAROLINAS/VIRGINIA/MARYLAND/METRO DC) AND CONTIGUOUS STATE (GEORGIA/WEST
VIRGINIA/TENNESSEE) ACQUISITIONS OF HIGH QUALITY BANKS AND THRIFTS IN THE
$250 MILLION TO $10 BILLION RANGE. THE ACQUISITION OF MASON-DIXON IS
CONSISTENT WITH THIS STRATEGY.
o THIS ACQUISITION IS VERY CONSISTENT WITH PAST ACQUISITIONS WHICH WE HAVE
SUCCESSFULLY EXECUTED, I.E. IT FITS OUR MODEL.
o BB&T AND MASON-DIXON SHARE SIMILAR CULTURES.
o MASON-DIXON'S BRANCH NETWORK EXPANDS BB&T'S MARYLAND FRANCHISE INTO THE
ECONOMICALLY VIBRANT MARKETS IN CENTRAL MARYLAND.
14
STRATEGIC OBJECTIVES
o The key strategic objectives in this acquisition are:
- Entry into the central Maryland market
- Grow fee income using BB&T's wider array of fee-based services
- Improve efficiency
o Cost savings equal to 25% of MSDX's noninterest expenses, fully realized in
the year 2000
- Develop additional commercial relationships using BB&T's product offerings
15
FRANCHISE ENHANCEMENT
o MARKET EXPANSION MERGER INTO CENTRAL MARYLAND
o #1 MARKET SHARE IN ECONOMICALLY VIBRANT CARROLL COUNTY, MARYLAND
o PRO FORMA MARYLAND ASSETS OF $2.4 BILLION
o ESTABLISHMENT OF NEW CENTRAL MARYLAND REGIONAL BANK
o ADDITIONAL NETWORK OF 12 ROSE SHANIS CONSUMER LENDING OFFICES (TOTAL ASSETS
OF $47 MILLION)
16
GROW FEE INCOME
BB&T MSDX
(12/31/98) (12/31/98)
---------- ----------
FEE INCOME RATIO 28.4% 18.8%
GOAL TO RAISE MSDX'S FEE INCOME RATIO BY LEVERAGING BB&T'S SALES MANAGEMENT
SYSTEM AND BROADER PRODUCT SELECTION
17
EFFICIENCY IMPROVEMENT
TARGETED ANNUAL COST SAVINGS
----------------------------
$9.3 MILLION OR APPROXIMATELY 25%
OF MSDX'S EXPENSE BASE
18
AFTER-TAX ONE-TIME CHARGES
ONE-TIME MERGER-RELATED CHARGES
-------------------------------
$10.4 MILLION
19
BRANCH LOCATIONS
[MAP APPEARS HERE]
[triangle here] BB&T Branches
[diamond here] MainStreet Financial Branches (BB&T Pending Acquisition)
[upside down First Citizens Corporation Branches (BB&T Pending Acquisition)
triangle here]
[octogon here] Mason-Dixon Bancshares Branches
20
MARKET CHARACTERISTICS
MARYLAND
[MARYLAND GRAPHIC APPEARS HERE]
o 3RD HIGHEST MEDIAN HOUSEHOLD INCOME AND 5TH HIGHEST PER CAPITA PERSONAL
INCOME IN THE U.S.
o 5TH MOST DENSELY POPULATED STATE IN THE U.S.
o ADVANCED HIGH TECH INDUSTRIAL BASE CONCENTRATED IN BIOTECHNOLOGY,
TELECOMMUNICATIONS, AND COMPUTER SCIENCE.
o 6 FORTUNE 500 COMPANIES ARE HEADQUARTERED WITHIN BALTIMORE COUNTY.
o WITH A POPULATION OF 2.5 MILLION, THE BALTIMORE MSA IS THE 18TH LARGEST IN
THE U.S.
21
BB&T INVESTMENT CRITERIA
o CASH BASIS EPS (ACCRETIVE BY YEAR 2)
o INTERNAL RATE OF RETURN (15% OR BETTER)
o RETURN ON EQUITY AND CASH BASIS ROE (ACCRETIVE BY
YEAR 3)
o RETURN ON ASSETS AND CASH BASIS ROA (ACCRETIVE BY
YEAR 3)
o BOOK VALUE PER SHARE (ACCRETIVE BY YEAR 5)
o 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.
22
ASSUMPTIONS
o BB&T'S 1999 EPS IS BASED ON A FIRST CALL ESTIMATE OF $1.93 AND SUBSEQUENT
YEARS ARE BASED ON 9% INCOME STATEMENT AND BALANCE SHEET GROWTH.
o $9.3 MILLION COST SAVINGS (25% OF MSDX'S EXPENSE BASE). COST SAVINGS WILL BE
RECOGNIZED OVER 2 YEARS WITH 25% OF TOTAL COST SAVINGS ACHIEVED IN 1999 AND
THE REMAINING 75% IN 2000.
o FEE INCOME IMPROVEMENT - RAISE MSDX'S FEE INCOME RATIO FROM 18.8% FOR 1998
TO 25% FOR FULL-YEAR 2004 BY LEVERAGING BB&T'S SALES MANAGEMENT SYSTEM AND
EXPANDED PRODUCT OFFERINGS.
o MSDX'S NET INTEREST MARGIN (NON-FTE) IS MAINTAINED ANNUALLY AT 4.03%.
o FOR MSDX, WE HAVE ASSUMED INCOME STATEMENT AND BALANCE SHEET GROWTH RATES OF
9% ANNUALLY FOR ALL YEARS MODELED EXCEPT FOR THE ENHANCEMENTS CITED ABOVE.
23
IMPACT ON EARNINGS PER SHARE
ACCRETION ACCRETION
(DILUTION) PRO FORMA (DILUTION)
PRO FORMA PRO FORMA CASH BASIS PRO FORMA
EPS SHARES EPS SHARES
--------- --------- ---------- -----------
1999* $ 1.93 $(0.00) $ 2.05 $ (0.00)
2000 2.11 0.01 2.23 0.01
2001 2.31 0.01 2.42 0.02
2002 2.52 0.02 2.63 0.02
2003 2.75 0.02 2.86 0.03
2004 3.00 0.03 3.10 0.03
2005 3.27 0.04 3.37 0.04
2006 3.57 0.04 3.66 0.04
2007 3.89 0.04 3.98 0.04
2008 4.24 0.05 4.33 0.05
2009 4.62 0.05 4.71 0.05
INTERNAL RATE OF RETURN 16.08%
* EXCLUDES NONRECURRING ITEMS
24
IMPACT ON ROE *
PRO FORMA
PRO FORMA CASH BASIS
ROE (%) CHANGE ROE (%) CHANGE
--------- ------ ---------- ------
1999** 19.87 (0.17) 24.31 (0.37)
2000 19.34 (0.00) 22.99 (0.01)
2001 18.80 0.03 21.71 0.02
2002 18.32 0.03 20.65 0.03
2003 17.91 0.04 19.77 0.04
2004 17.53 0.06 18.97 0.06
* THE DECREASE IN ROE RESULTS FROM THE BUILD UP IN EQUITY RELATIVE TO ASSETS.
** EXCLUDES NONRECURRING ITEMS
25
IMPACT ON ROA
PRO FORMA
PRO FORMA CASH BASIS
ROA(%) CHANGE ROA(%) CHANGE
--------- ------ ---------- -------
1999* 1.51 (0.02) 1.61 (0.03)
2000 1.52 (0.01) 1.62 (0.01)
2001 1.53 (0.01) 1.61 (0.01)
2002 1.53 (0.00) 1.61 (0.00)
2003 1.53 (0.00) 1.60 (0.00)
2004 1.54 0.00 1.59 0.00
* EXCLUDES NONRECURRING ITEMS
26
IMPACT ON BOOK VALUE / LEVERAGE RATIO
PRO FORMA
BOOK VALUE PER SHARE
------------------------ PRO FORMA
ACCRETION LEVERAGE ACCRETION
STATED (DILUTION) RATIO (DILUTION)
-------- ---------- --------- ----------
1999 $ 10.28 $ 0.05 7.19% 0.03
2000 11.57 0.06 7.61 0.02
2001 12.98 0.07 7.99 0.02
2002 14.51 0.09 8.34 0.02
2003 16.20 0.11 8.65 0.02
2004 18.05 0.15 8.93 0.03
2005 20.10 0.18 9.20 0.03
2006 22.36 0.22 9.45 0.03
2007 24.86 0.27 9.70 0.03
2008 27.63 0.31 9.93 0.04
2009 30.70 0.37 10.16 0.04
27
SUMMARY
o THE ACQUISITION OF MASON-DIXON BANCSHARES, INC. IS A STRONG STRATEGIC FIT:
- IT HELPS ACCOMPLISH OUR GOAL OF EXPANSION IN THE MARYLAND MARKET
- IT FITS CULTURALLY AND GEOGRAPHICALLY
- THIS IS THE TYPE OF MERGER WE HAVE CONSISTENTLY SUCCESSFULLY EXECUTED
o OVERALL INVESTMENT CRITERIA ARE MET:
- EPS AND CASH BASIS EPS ACCRETIVE IN YEAR 2000
- IRR 16.08%
- ROE AND CASH BASIS ROE POSITIVE BY YEAR 2001
- BOOK VALUE ACCRETIVE IN YEAR 1999
- COMBINED LEVERAGE RATIO REMAINS ABOVE 7%
- ACCELERATED DIVIDEND GROWTH POTENTIAL IN YEAR 2000
28
APPENDIX
o HISTORICAL FINANCIAL DATA
o GLOSSARY
29
MASON-DIXON BANCSHARES, INC.
FINANCIAL SUMMARY
1996 1997 1998
-------- -------- --------
EARNINGS SUMMARY (In thousands)
INTEREST INCOME (FTE)
Interest on loans & leases $ 34,122 $ 39,175 $ 48,618
Interest & dividends on
securities 25,697 29,675 35,016
Interest on temporary investments 1,192 1,133 1,553
-------- -------- --------
Total interest income (FTE) 61,011 69,983 85,187
-------- -------- --------
INTEREST EXPENSE
Interest expense on deposit accounts 23,002 24,198 24,165
Interest on short-term borrowings 2,511 4,882 3,780
Interest on long-term debt 3,731 7,095 16,246
-------- -------- --------
Total interest expense 29,244 36,175 44,191
-------- -------- --------
Net interest income (FTE) 31,767 33,808 40,996
Less taxable equivalency adjustment 2,215 2,548 3,121
-------- -------- --------
Net interest income 29,552 31,260 37,875
Provision for loan losses 836 138 758
-------- -------- --------
Net interest income after provision 28,716 31,122 37,117
-------- -------- --------
NONINTEREST INCOME
Service charges on deposit accounts 2,128 2,228 2,045
Non-deposit fees and commissions 1,407 1,471 1,666
G / (L) on sale of securities 1,740 554 792
Other operating income 2,206 3,737 5,794
-------- -------- --------
Total noninterest income 7,481 7,990 10,297
-------- -------- --------
NONINTEREST EXPENSE
Personnel 14,433 16,109 21,236
Occupancy & equipment 3,923 4,187 4,702
FDIC premiums 4 78 76
Other operating expenses 6,398 6,417 8,093
-------- -------- --------
Total noninterest expense 24,758 26,791 34,107
-------- -------- --------
Net income before taxes 11,439 12,321 13,307
Income taxes 3,003 3,162 3,161
-------- -------- --------
Net income before nonrecurring charges 8,436 9,159 10,146
-------- -------- --------
Nonrecurring income / (expense) - - 665
-------- -------- --------
Net income $ 8,436 $ 9,159 $ 10,811
======== ======== ========
Basic EPS $ 1.60 $ 1.77 $ 2.13
Diluted EPS 1.60 1.77 2.13
Diluted EPS before nonrecurring charges 1.60 1.77 2.00
Book value $ 13.71 $ 14.86 $ 16.20
EOP shares 5,303 5,077 5,072
Basic shares 5,285 5,184 5,074
Diluted shares 5,285 5,185 5,078
30
MASON-DIXON BANCSHARES, INC.
Financial Summary
1996 1997 1998
-------- -------- --------
AVERAGE BALANCE SHEET
(In thousands)
ASSETS
Loans $ 365,778 $ 432,581 $ 482,300
Securities 360,522 411,768 498,977
Other earning assets 22,036 20,359 24,151
-------- -------- --------
Total interest-earning assets 748,336 864,708 1,005,428
-------- -------- --------
Goodwill & other intangibles 5,046 3,878 6,906
Other assets 51,694 51,212 50,713
-------- -------- --------
Total assets $ 805,075 $ 919,797 $ 1,063,047
======== ======== =========
Net interest margin 4.25% 3.91% 4.07%
Secutities as a % of earning assets 48% 48% 50%
LIABILITIES & SHAREHOLDERS' EQUITY
Interest-bearing deposits:
Money Market & NOW $ 58,676 $ 58,169 $ 58,315
Savings 182,857 184,972 174,830
CD's and other time 286,557 302,205 317,714
-------- -------- --------
Total interest-bearing deposits 528,090 545,346 550,859
Short-term borrowed funds 45,823 87,173 68,729
Long-term debt 70,096 117,435 263,920
-------- -------- --------
Total interest-bearing liabilities 644,009 749,954 883,508
Demand deposits 83,825 89,488 90,660
Other liabilities 8,471 7,858 10,627
-------- -------- --------
Total liabilities 736,305 847,300 984,795
-------- -------- --------
Preferred equity - - -
Common equity 68,770 72,497 78,252
-------- -------- --------
Total equity 68,770 72,497 78,252
-------- -------- --------
-------- -------- --------
Total liabilities & shareholders' equity $ 805,075 $ 919,797 $1,063,047
======== ======== =========
Other int-liab. as a percent of total assets 14% 22% 31%
31
MASON-DIXON BANCSHARES, INC.
FINANCIAL SUMMARY
1996 1997 1998
-------- -------- ----------
RATIO ANALYSIS
ROA 1.05% 1.00% 0.95%
ROCE 12.27% 12.63% 12.97%
Efficiency ratio 66.0% 65.0% 67.5%
Adj. noninterest income / Adj. revenues 15.3% 18.0% 18.8%
Average equity / Average assets 8.5% 7.9% 7.4%
CREDIT QUALITY
(In thousands)
Beginning $ 4,729 $ 5,167 $ 5,231
-------- -------- ----------
Provision 836 138 3,677
Acquired allowance - - 2,877
Net charge-offs (398) (74) (2,892)
-------- -------- ----------
Ending allowance $ 5,167 $ 5,231 $ 8,893
-------- -------- ----------
Allowance 1.30% 1.14% 1.92%
Charge-off rate 0.11% 0.02% 0.60%
Period end loans & leases $398,164 $ 460,391 $ 462,557
Period end common equity $ 72,699 $ 75,449 $ 82,139
32
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.
33