As filed with the Securities and Exchange Commission on June 28, 1995
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CRESTAR FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 6711 54-0722175
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation Classification Code Number) Identification No.)
or organization)
919 East Main Street
P.O. Box 26665
Richmond, Virginia 23261-6665
(804) 782-5000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JOHN C. CLARK, III
Corporate Senior Vice President, General Counsel
and Secretary
Crestar Financial Corporation
919 East Main Street
P.O. Box 26665
Richmond, Virginia 23261-6665
(804) 782-7445
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies To:
LATHAN M. EWERS, JR. JAMES J. WINN, JR.
Hunton & Williams Piper & Marbury L.L.P.
951 East Byrd Street 36 South Charles Street
Richmond, Virginia 23219-4074 Baltimore, Maryland 21201-3018
(804) 788-8269 (410) 576-1675
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. ( )
CALCULATION OF REGISTRATION FEE
<TABLE>
TITLE OF EACH CLASS MAXIMUM PROPOSED PROPOSED
OF AMOUNT MAXIMUM MAXIMUM
SECURITIES TO BE TO BE OFFERING AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $5.00
par value per share
shares(1) 7,000,000 shares $39.71(2) $277,947,000(2) $95,844
Preferred Share
Purchase Rights(3) 7,000,000 rights N/A N/A N/A
</TABLE>
(1) This Registration Statement covers the maximum number of shares of
common stock of the Registrant which are expected to be issued in
connection with the transactions described herein.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f)(1) with the market value of Loyola Capital
Corporation Common Stock being exchanged in the transaction for Crestar
Financial Corporation Common Stock based on the average of the high and low
prices for Loyola Capital Corporation Common Stock on The Nasdaq National
Market on June 21, 1995.
(3) The Rights to purchase Participating Cumulative Preferred Stock,
Series C will be attached to and will trade with shares of the Common
Stock of Crestar Financial Corporation.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
CRESTAR FINANCIAL CORPORATION
CROSS-REFERENCE SHEET
Item of Form S-4 Location in Prospectus
1. Forepart of Facing Page; Cross Reference
Registration Sheet; Outside Front Cover
Statement and Page of Prospectus
Outside Front
Cover Page of
Prospectus
2. Inside Front and Inside Front Cover Page of
Outside Back Cover Prospectus; Table of Contents;
Pages of Available Information;
Prospectus Incorporation of Certain
Information by Reference
3. Risk Factors, Summary; Comparative Per Share
Ratio of Earnings Data
to Fixed Charges
and Other
Information
4. Terms of the Summary; The Merger;
Transaction Comparative Rights of
Stockholders; Annex I; Annex
II; Annex III
5. ProForma Financial Pro Forma Condensed Financial
Information Information
6. Material Contracts Not Applicable
with the Company
Being Acquired
7. Additional Not Applicable
Information
Required for
Reoffering by
Persons and
Parties Deemed to
be Underwriters
8. Interests of Named Not Applicable
Experts and
Counsel
9. Disclosure of Not Applicable
Commission's
Position on
Indemnification
for Securities Act
Liabilities
10. Information with Available Information;
Respect to S-3 Incorporation of Certain
Registrants Information by Reference;
Summary
11. Incorporation of Incorporation of Certain
Certain Information by Reference
Information by
Reference
12. Information with Not Applicable
Respect to S-2 or
S-3 Registrants
13. Incorporation of Not Applicable
Certain
Information by
Reference
14. Information with Not Applicable
Respect to
Registrants Other
than S-2 or S-3
Registrants
15. Information with Available Information;
Respect to S-3 Incorporation of Certain
Companies Information by Reference;
Summary; Supervision and
Regulation; Business of
Loyola; Price Range of Loyola
Common Stock and Dividend
Policy; Experts
16. Information with Not Applicable
Respect to S-2 or
S-3 Companies
17. Information with Not Applicable
Respect to
Companies other
than S-2 or S-3
Companies
18. Information if Incorporation of Certain
Proxies, Consents Information By Reference;
or Authorizations Summary -- Stockholder
are to be Solicited Meeting; The Merger; Summary --
No Appraisal Rights
19. Information if Not Applicable
Proxies, Consents
or Authorizations
are not to be
Solicited, or in
an Exchange Offer
<PAGE>
[Loyola Capital Corporation Letterhead]
August , 1995
Dear Fellow Stockholders:
You are cordially invited to attend a Special Meeting of Stockholders
(the "Special Meeting") of Loyola Capital Corporation ("Loyola") on
September 19, 1995 at 2:00 p.m., Eastern Time, at The University of
Baltimore, Langsdale Auditorium, 1420 Maryland Avenue at Oliver Street,
Baltimore, Maryland. This is a very important meeting regarding your
investment in Loyola.
At the Special Meeting you will be asked to consider and vote upon the
Agreement and Plan of Merger, dated as of May 16, 1995, by and between
Loyola and Crestar Financial Corporation ("Crestar"), and related Plan of
Merger (together, the "Agreement"), pursuant to which, among other things,
Loyola will be merged with and into Crestar (the "Merger"). In connection
with the Merger, each share of Loyola Common Stock outstanding immediately
prior to consummation of the Merger will, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
represent the right to receive a fraction of a share of Crestar Common
Stock determined in accordance with the Agreement (the "Exchange Ratio"),
as described in the accompanying Proxy Statement/Prospectus. Based on the
closing price of Crestar Common Stock on the New York Stock Exchange on
August , 1995 of $ , each share of Loyola Common Stock would
have been exchanged for shares of Crestar Common Stock, if such
price had been the "Average Closing Price" (as defined in the Agreement).
Such number of shares of Crestar Common Stock may increase or decrease
depending on the Average Closing Price of Crestar Common Stock. Cash will
be paid in lieu of fractional shares of Crestar Common Stock.
Your Board of Directors unanimously recommends that you vote in favor
of the Agreement and the Merger, which the Board believes is in the best
interests of Loyola and its stockholders. The Board of Directors has
received the opinion of Alex. Brown & Sons Incorporated that the Exchange
Ratio is fair to stockholders of Loyola from a financial point of view.
The exchange of Loyola Common Stock for Crestar Common Stock (other
than for cash paid in lieu of fractional shares) will be a tax-free
transaction for federal income tax purposes.
Enclosed is a Notice of the Special Meeting, a Proxy
Statement/Prospectus containing a discussion of the Agreement and the
Merger and a proxy card to record your vote on the matter. Please
complete, sign and date the enclosed proxy card and return it as soon as
possible in the envelope provided. If you decide to attend the Special
Meeting, you may vote your shares in person whether or not you have
previously submitted a proxy. It is important to understand that the
Agreement and Merger must be approved by the holders of a majority of all
outstanding shares of Loyola Common Stock and that the failure to vote will
have the same effect as a vote against the proposal. On behalf of the
Board, thank you for your attention to this important matter.
Very truly yours,
Joseph W. Mosmiller
Chairman of the Board and Chief
Executive Officer
<PAGE>
LOYOLA CAPITAL CORPORATION
1300 NORTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(401) 332-7210
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 19, 1995
TO THE STOCKHOLDERS OF LOYOLA CAPITAL CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders has been
called by the Board of Directors of Loyola Capital Corporation ("Loyola")
and will be held at The University of Baltimore, Langsdale Auditorium, 1420
Maryland Avenue at Oliver Street, Baltimore, Maryland, on September 19,
1995 at 2:00 p.m. for the purpose of considering and voting upon the
following matters:
1. Proposed Merger. To consider and vote upon the Agreement and
Plan of Merger dated as of May 16, 1995 and a related Plan of Merger
(together, the "Agreement") providing for the merger of Loyola with and
into Crestar Financial Corporation (the "Merger"). In connection with the
Merger, each share of Loyola Common Stock outstanding immediately prior to
consummation of the Merger will, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and represent
the right to receive a fraction of a share of Crestar Common Stock
determined in accordance with the Agreement, as described in the
accompanying Proxy Statement/Prospectus. The Agreement is attached to the
accompanying Proxy Statement/Prospectus as Annex I; and
2. Other Business. To consider and vote upon such other matters as
may properly come before the meeting or any adjournments or postponements
thereof.
Only those holders of Loyola common stock of record at the close of
business on August 3, 1995 shall be entitled to notice of and to vote at
the Special Meeting or any adjournments or postponements thereof. The
affirmative vote of the holders of a majority of the issued and outstanding
shares of Loyola Common Stock entitled to vote at the meeting is required
to approve the Merger.
By Order of the Board of Directors,
Linda A. Stadtler
Secretary
August , 1995
Baltimore, Maryland
<PAGE>
THE BOARD OF DIRECTORS OF LOYOLA UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF
LOYOLA COMMON STOCK VOTE TO APPROVE THE PROPOSED MERGER.
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING. STOCKHOLDERS
ATTENDING THE MEETING MAY PERSONALLY VOTE ON ALL MATTERS WHICH ARE
CONSIDERED, IN WHICH EVENT THE SIGNED PROXIES ARE REVOKED. ANY PROXY MAY
BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME.
<PAGE>
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
OF
LOYOLA CAPITAL CORPORATION
TO BE HELD ON SEPTEMBER 19, 1995
PROSPECTUS OF
CRESTAR FINANCIAL CORPORATION
COMMON STOCK
PAR VALUE $5.00
This Proxy Statement/Prospectus is being furnished to the holders of
common stock, par value $0.10 per share (the "Loyola Common Stock"), of
Loyola Capital Corporation, a Maryland corporation ("Loyola"), in
connection with the solicitation of proxies by the Loyola Board of
Directors (the "Loyola Board") for use at the Special Meeting of Loyola
stockholders to be held at 2:00 p.m. on September 19, 1995, at The
University of Baltimore, Langsdale Auditorium, 1420 Maryland Avenue at
Oliver Street, Baltimore, Maryland (the "Loyola Stockholder Meeting" or the
"Special Meeting").
At the Loyola Stockholder Meeting, stockholders of record of Loyola
Common Stock as of the close of business on August 3, 1995, will consider
and vote upon a proposal to approve the Agreement and Plan of Merger (the
"Agreement"), dated as of May 16, 1995, by and between Crestar Financial
Corporation ("Crestar"), and Loyola, pursuant to which, among other things,
Loyola will merge with and into Crestar (the "Merger"). Upon consummation
of the Merger, which is expected to occur in late December, 1995 or early
January, 1996, each outstanding share of Loyola Common Stock (other than
shares held directly by Crestar, excluding shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted) shall, by
virtue of the Merger and without any action on the part of the holder
thereof, be converted into and represent the right to receive a number of
shares of Crestar common stock, par value $5.00 per share (the "Crestar
Common Stock"), determined by the average closing price of Crestar Common
Stock (the "Average Closing Price") as reported on the New York Stock
Exchange ("NYSE") for each of the 10 trading days ending on the tenth day
prior to the Closing Date (as defined herein). The exchange ratio
("Exchange Ratio") shall be calculated as follows: (i) if the Average
Closing Price is between $43.478 and $46.375, the Exchange Ratio shall be
0.690; (ii) if the Average Closing Price is greater than $46.375, the
Exchange Ratio shall be the quotient of (a) $32.00 divided by (b) the
Average Closing Price, rounded to the nearest one-one thousandth of a
share, provided that the Exchange Ratio shall not be less than 0.640; and
(iii) if the Average Closing Price is less than $43.478, the Exchange Ratio
shall be the quotient of (a) $30.00 divided by (b) the Average Closing
Price, rounded to the nearest one-one thousandth of a share, provided that
the Exchange Ratio shall not be greater than 0.750, subject to adjustment
as set forth in the Agreement. Based on the closing price of Crestar
Common Stock on the NYSE on , 1995 of $ , each share
of Loyola Common Stock would have been exchanged for shares of
Crestar Common Stock if such price had been the Average Closing Price.
Such number of shares of Crestar Common Stock may increase or decrease
depending on the Average Closing Price. See "The Merger -- Determination
of Exchange Ratio and Exchange for Crestar Common Stock." For a
description of the Agreement, which is included herein in its entirety as
Annex I to this Proxy Statement/Prospectus, see "The Merger." Crestar
expects that immediately or sometime after the Merger Loyola Federal
Savings Bank, a federally chartered stock savings bank ("Loyola F.S.B."),
will be merged into Crestar Bank MD ("Crestar Bank MD"), a Maryland banking
corporation wholly owned by Crestar, (the "Bank Merger").
The information presented in this Proxy Statement/Prospectus
concerning Loyola has been supplied by Loyola and the information
concerning Crestar has been supplied by Crestar.
This Proxy Statement/Prospectus and the accompanying proxy card are
first being mailed to stockholders of Loyola on or about August , 1995.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF CRESTAR COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
The date of this Proxy Statement/Prospectus is August , 1995.
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . .
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Parties to the Merger . . . . . . . . . . . . . . . . . . . . . .
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Meeting . . . . . . . . . . . . . . . . . . . . . . .
Vote Required; Record Date . . . . . . . . . . . . . . . . . . . .
Reasons For The Merger; Recommendation of the Loyola Board . . . .
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . .
No Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . .
Conditions to Consummation . . . . . . . . . . . . . . . . . . . .
Business of Loyola and Crestar Pending the Merger . . . . . . . .
Interests of Certain Persons in the Merger . . . . . . . . . . . .
Resale of Crestar Common Stock . . . . . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences of the Merger . . . . . .
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . .
Market Prices Prior to Announcement of the Merger . . . . . . . .
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data -- Crestar, Loyola and Chase MD . . . . .
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Background of the Merger . . . . . . . . . . . . . . . . . . . . .
Reasons for the Merger; Recommendation of the Loyola Board . . . .
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . .
Effective Time of the Merger . . . . . . . . . . . . . . . . . . .
Determination of Exchange Ratio and Exchange for Crestar Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business of Loyola and Crestar Pending the Merger . . . . . . . .
Conditions to Consummation of the Merger . . . . . . . . . . . . .
Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . .
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . .
Operations After the Merger . . . . . . . . . . . . . . . . . . .
Interests of Certain Persons in the Merger . . . . . . . . . . . .
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect on Loyola Employee Benefits Plans . . . . . . . . . . . . .
Certain Federal Income Tax Consequences . . . . . . . . . . . . .
PRO FORMA CONDENSED FINANCIAL INFORMATION . . . . . . . . . . . . . . .
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRO FORMA CONDENSED FINANCIAL INFORMATION --
CRESTAR, LOYOLA AND CHASE MD . . . . . . . . . . . . . . . .
BUSINESS OF CRESTAR . . . . . . . . . . . . . . . . . . . . . . . . . .
Recent Developments . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS OF LOYOLA . . . . . . . . . . . . . . . . . . . . . . . . . .
PRICE RANGE OF LOYOLA COMMON STOCK AND DIVIDEND POLICY . . . . . . . .
LOYOLA SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS . . . . . . . .
SUPERVISION AND REGULATION OF CRESTAR . . . . . . . . . . . . . . . . .
Bank Holding Companies . . . . . . . . . . . . . . . . . . . . . .
Capital Requirements . . . . . . . . . . . . . . . . . . . . . . .
Limits on Dividends and Other Payments . . . . . . . . . . . . . .
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Safety and Soundness Regulations . . . . . . . . . . . . . .
DESCRIPTION OF CRESTAR CAPITAL STOCK . . . . . . . . . . . . . . . . .
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . .
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Virginia Stock Corporation Act . . . . . . . . . . . . . . . . . .
COMPARATIVE RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . .
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . .
Amendment of Articles or Bylaws . . . . . . . . . . . . . . . . .
Required Stockholder Vote for Certain Actions . . . . . . . . . .
Director Nominations . . . . . . . . . . . . . . . . . . . . . . .
Directors and Classes of Directors; Vacancies and Removal of
Directors . . . . . . . . . . . . . . . . . . . . . . . . . .
Anti-Takeover Provisions . . . . . . . . . . . . . . . . . . . . .
Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . .
Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion; Redemption; Sinking Fund . . . . . . . . . . . . . . .
Liquidation Rights . . . . . . . . . . . . . . . . . . . . . . . .
Dividends and Other Distributions . . . . . . . . . . . . . . . .
Special Meetings of Stockholders . . . . . . . . . . . . . . . . .
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Proposals . . . . . . . . . . . . . . . . . . . . . .
Stockholder Inspection Rights; Stockholder Lists . . . . . . . . .
Stockholder Rights Plan . . . . . . . . . . . . . . . . . . . . .
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . .
RESALE OF CRESTAR COMMON STOCK . . . . . . . . . . . . . . . . . . . .
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNEX I -- Agreement and Plan of Merger dated as of May 16, 1995
and related Plan of Merger
ANNEX II -- Stock Option Agreement dated April 27, 1995.
ANNEX III -- Fairness Opinion of Alex. Brown & Sons Incorporated.
<PAGE>
AVAILABLE INFORMATION
Crestar and Loyola are subject to the reporting and informational
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith file reports, proxy statements
and other information with the Securities and Exchange Commission (the
"SEC"). Reports, proxy statements and other information filed with the SEC
can be inspected and copied at the public reference facilities maintained
by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at its Regional Offices located at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60611-2511 or Seven World
Trade Center (13th Floor), New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
reports, proxy statements and other information also may be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005 for Crestar and at the offices of the National Association of
Securities Dealers, Inc. located at 1735 K Street, N.W., Washington, D.C.
20006 for Loyola. As permitted by the Rules and Regulations of the SEC,
this Proxy Statement/Prospectus does not contain all the information set
forth in the Registration Statement on Form S-4, of which this Proxy
Statement/Prospectus is a part, and exhibits thereto (together with the
amendments thereto, the "Registration Statement"), which has been filed by
Crestar with the SEC under the Securities Act of 1933, as amended (the
"1933 Act"), with respect to Crestar Common Stock and to which reference is
hereby made.
No person has been authorized to give any information or to make any
representation other than as contained herein in connection with the offer
contained in this Proxy Statement/Prospectus, and if given or made, such
information or representation must not be relied upon as having been
authorized by Crestar or Loyola. This Proxy Statement/Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any
securities other than the securities to which it relates, nor does it
constitute an offer to or solicitation of any person in any jurisdiction to
whom it would be unlawful to make such an offer or solicitation. Neither
the delivery of this Proxy Statement/Prospectus nor the distribution of any
of the securities to which this Proxy Statement/Prospectus relates shall,
at any time, imply that the information herein is correct as of any time
subsequent to the date hereof.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE CERTAIN
DOCUMENTS RELATING TO CRESTAR AND LOYOLA THAT ARE NOT PRESENTED HEREIN OR
DELIVERED HEREWITH. CRESTAR DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON
REQUEST FROM CRESTAR'S INVESTOR RELATIONS DEPARTMENT, CRESTAR FINANCIAL
CORPORATION, 919 EAST MAIN STREET, RICHMOND, VIRGINIA 23261-6665, (804)
782-7152. LOYOLA DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON REQUEST FROM
THE SECRETARY, LOYOLA CAPITAL CORPORATION, 1300 NORTH CHARLES STREET,
BALTIMORE, MARYLAND, 21201-5705, (410) 332-7210. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUESTS SHOULD BE MADE BY SEPTEMBER 12,
1995.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by Crestar with the SEC are incorporated
by reference in this Proxy Statement/Prospectus: (i) Crestar's Annual
Report on Form 10-K for the year ended December 31, 1994; (ii) Crestar's
Quarterly Report on Form 10-Q for the period ended March 31, 1995; (iii)
the description of Crestar Common Stock in Crestar's registration statement
filed under the Exchange Act with respect to Crestar Common Stock,
including all amendments and reports filed for the purpose of updating such
description.
The following documents filed by Loyola with the SEC are incorporated
by reference in this Proxy Statement/Prospectus: (i) Loyola's Annual
Report on Form 10-K for the year ended December 31, 1994; (ii) Loyola's
Quarterly Report on Form 10-Q for the period ended March 31, 1995; and
(iii) Loyola's Current Reports on Form 8-K dated April 27, 1995 and May 16,
1995.
All documents filed by Crestar and Loyola pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the date of the Loyola Stockholder Meeting are hereby incorporated
by reference in this Proxy Statement/Prospectus and shall be deemed a part
hereof from the date of filing of such documents. Any statement contained
in any supplement hereto or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Proxy
Statement/Prospectus to the extent that a statement contained herein, in
any supplement hereto or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of the
Registration Statement, this Proxy Statement/Prospectus or any supplement
hereto.
Also incorporated by reference herein is the Agreement and Plan of
Merger by and between Crestar and Loyola, dated as of May 16, 1995, which
is attached to this Proxy Statement/Prospectus as Annex I.
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS NOT INTENDED TO BE A COMPLETE DESCRIPTION OF
ALL MATERIAL FACTS REGARDING CRESTAR, LOYOLA AND THE MATTERS TO BE
CONSIDERED AT THE LOYOLA STOCKHOLDER MEETING AND IS QUALIFIED IN ALL
RESPECTS BY THE INFORMATION APPEARING ELSEWHERE OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS, THE ANNEXES HERETO AND THE
DOCUMENTS REFERRED TO HEREIN. STOCKHOLDERS ARE URGED TO CAREFULLY READ ALL
SUCH INFORMATION.
PARTIES TO THE MERGER
Crestar. Crestar is the holding company for Crestar Bank (Virginia),
Crestar Bank N.A. (Washington, D.C.) and Crestar Bank MD (Maryland). At
March 31, 1995 Crestar had approximately $14.4 billion in total assets,
$11.1 billion in total deposits and $1.2 billion in total stockholders'
equity.
In 1963, six Virginia banks combined to form United Virginia
Bankshares Incorporated ("UVB"), a bank holding company formed under the
Bank Holding Company Act of 1956 (the "BHCA"). UVB (parent company of
United Virginia Bank) extended its operations into the District of Columbia
by acquiring NS&T Bank, N.A. on December 27, 1985 and into Maryland by
acquiring Bank of Bethesda on April 1, 1986. On September 1, 1987, UVB
became Crestar Financial Corporation and its bank subsidiaries adopted
their present names.
Crestar serves customers through a network of 349 banking offices and
293 automated teller machines (as of March 31, 1995). Crestar offers a
broad range of banking services, including various types of deposit
accounts and instruments, commercial and consumer loans, trust and
investment management services, bank credit cards and international banking
services. Crestar's subsidiary, Crestar Insurance Agency, Inc., offers a
variety of personal and business insurance products. Securities brokerage
and investment banking services are offered by Crestar's subsidiary,
Crestar Securities Corporation. Mortgage loan origination, servicing and
wholesale lending are offered by Crestar Mortgage Corporation, and
investment advisory services are offered by Capitoline Investment Services
Incorporated, both of which are subsidiaries of Crestar Bank. These
various Crestar subsidiaries provide banking and non-banking services
throughout Virginia, Maryland and Washington, D.C., as well as certain non-
banking services to customers in other states.
Crestar had pending at the date of this Proxy Statement/Prospectus
the acquisition of all the deposits and customer accounts, plus selected
loans, of six branches of the Chase Manhattan Bank of Maryland ("Chase
MD").
The executive offices of Crestar are located in Richmond, Virginia at
Crestar Center, 919 East Main Street. Regional headquarters are located in
Norfolk and Roanoke, Virginia and in Washington, D.C. Crestar's principal
Operations Center is located in Richmond. See "Business of Crestar."
Loyola. Loyola is the holding company for Loyola F.S.B., a federally
chartered stock savings bank which was founded in 1879 and is headquartered
in Baltimore, Maryland. At March 31, 1995, Loyola had approximately $2.5
billion in total assets, $1.5 billion in total deposits, and $172.3 million
in total stockholders' equity. Loyola serves customers through a network
of 35 banking centers and 17 automated teller machines spread across the
Baltimore-Washington corridor and on Maryland's Eastern Shore. Lending
facilities are located in south central Pennsylvania, central Delaware,
eastern South Carolina, southern Florida, Alabama and Virginia. Loyola is
a financial intermediary which accepts deposits from the general public and
invests such deposits, together with other borrowings, primarily in real
estate loans secured by liens on residential and other real property and in
consumer and other loans. Loyola also engages in securities brokerage
activities, develops real estate and provides real estate appraisals and
insurance brokerage services.
The executive offices of Loyola are located at 1300 North Charles
Street, Baltimore, Maryland 21201-5705. See "Business of Loyola."
THE MERGER
Pursuant to the Agreement, at the Effective Time (as defined herein)
of the Merger, Loyola will merge into Crestar in accordance with the Plan
of Merger whereby the separate existence of Loyola will cease. At the
Effective Time of the Merger, each outstanding share of Loyola Common Stock
(other than shares held directly by Crestar, excluding shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted)
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and represent the right to receive a
number of shares of Crestar Common Stock, determined by the Exchange Ratio,
subject to adjustment as set forth in the Agreement. Cash will be paid in
lieu of fractional shares of Crestar Common Stock. At the Effective Time
of the Merger each share of Loyola Common Stock held by Crestar, excluding
shares held in a fiduciary capacity or in satisfaction of a debt previously
contracted, shall be canceled, retired and cease to exist, and no exchange
or payment shall be made with respect thereto.
THE EXCHANGE RATIO
The number of shares of Crestar Common Stock to be delivered for each share
of Loyola Common Stock will be determined by the average closing price of
Crestar Common Stock as reported on the NYSE for each of the ten trading days
ending on the tenth day prior to the Closing Date. The exchange ratio
("Exchange Ratio") shall be calculated as follows: (i) if the Average Closing
Price is between $43.478 and $46.375, the Exchange Ratio shall be 0.690; (ii) if
the Average Closing Price is greater than $46.375, the Exchange Ratio shall be
the quotient of (a) $32.00 divided by (b) the Average Closing Price, rounded to
the nearest one-one thousandth of a share, provided that the Exchange Ratio
shall not be less than 0.640; and (iii) if the Average Closing Price is less
than $43.478, the Exchange Ratio shall be the quotient of (A) $30.00 divided by
(B) the Average Closing Price, rounded to the nearest one-one thousandth of a
share, provided that the Exchange Ratio shall not be greater than 0.750, subject
to possible adjustment as set forth in the Agreement. See "The Merger --
Termination" below. The Exchange Ratio would be appropriately adjusted to
reflect any consolidation, split-up, other subdivisions or combinations of
Crestar Common Stock, any dividend payable in Crestar Common Stock, or any
capital reorganization involving the reclassification of Crestar Common Stock
subsequent to the date of the Agreement. Loyola may terminate the Agreement at
any time during the five-day period prior to the fifth day prior to the Closing
Date, if the Average Closing Price is less than $40.00; provided, however, that
Crestar shall have the option of preventing termination on such ground by
increasing the consideration to be received by holders of Loyola Common Stock by
adjusting the Exchange Ratio to a number equal to the quotient, the numerator of
which is the product of $40.00 times the Exchange Ratio then in effect and the
denominator of which is the Average Closing Price. See "The Merger --
Determination of Exchange Ratio and Exchange for Crestar Common Stock."
At the Effective Time of the Merger, each outstanding and unexercised
option to purchase Loyola Common Stock (the "Loyola Options"), other than
the option held by Crestar as described under "Summary Stock Option
Agreement," shall be converted as to each whole share subject to such
Loyola Option into an option (each, an "Exchange Option") to purchase such
number of shares of Crestar Common Stock at an exercise price determined as
follows: (i) the number of shares of Crestar Common Stock to be subject to
the Exchange Option shall be equal to the product of (A) the number of
shares of Loyola Common Stock subject to the Loyola Option multiplied by
(B) the Exchange Ratio, the product being rounded, if necessary, up or
down, to the nearest whole share; and (ii) the per share exercise price
under the Exchange Option shall be equal to (A) the per share exercise
price under the Loyola Option divided by (B) the Exchange Ratio, with any
fractional cent rounded to the nearest whole cent. The Exchange Option
shall otherwise have the same duration and other terms as the Loyola
Option. Adjustments to any Loyola Options which are "incentive stock
options" under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") shall be effected in a manner consistent with Section 424(a)
of the Code.
STOCKHOLDER MEETING
The Loyola Stockholders Meeting will be held on September 19, 1995 at
2:00 p.m., at The University of Baltimore, Langsdale Auditorium, 1420
Maryland Avenue at Oliver Street, Baltimore, Maryland, for the purpose of
considering and voting upon (i) a proposal to approve the Agreement and
related Plan of Merger and (ii) such other business as may properly come
before the meeting or any adjournments or postponements thereof.
VOTE REQUIRED; RECORD DATE
Only Loyola stockholders of record at the close of business on August
3, 1995 (the "Record Date") will be entitled to notice of and to vote at
the Loyola Stockholder Meeting or any adjournments or postponements
thereof. Each holder of shares of Loyola Common Stock on the Record Date
is entitled to cast one vote per share, in person or by properly executed
proxy, on any matter that may properly come before the Loyola Stockholder
Meeting. The presence, in person or by properly executed proxy, of the
holders of a majority of the shares of Loyola Common Stock outstanding on
the Record Date is necessary to constitute a quorum at the Loyola
Stockholder Meeting.
The affirmative vote of the holders of a majority of the shares
outstanding on such date is required to approve the Merger. Under the
rules of the New York Stock Exchange, the proposal to adopt the Agreement
is considered a "non-discretionary item" whereby brokerage firms may not
vote in their discretion on behalf of their clients if such clients have
not furnished voting instructions. Abstentions and such broker "non-votes"
will be considered in determining the presence of a quorum at the Loyola
Stockholder Meeting but will not be counted as a vote cast for a proposal.
BECAUSE THE REQUIRED VOTE OF LOYOLA STOCKHOLDERS TO APPROVE THE MERGER IS
BASED UPON THE TOTAL NUMBER OF OUTSTANDING SHARES OF LOYOLA COMMON STOCK,
THE FAILURE TO SUBMIT A PROXY CARD (OR THE FAILURE TO VOTE IN PERSON AT THE
LOYOLA STOCKHOLDER MEETING), THE ABSTENTION FROM VOTING AND ANY BROKER NON-
VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER. Cumulative
voting is not permitted. As of the Record Date, there were
shares of Loyola Common Stock entitled to be voted, held by approximately
stockholders of record.
The directors and executive officers of Loyola and their affiliates
beneficially owned, as of the Record Date, shares or
approximately % of the outstanding shares of Loyola Common
Stock. The directors of Loyola have agreed with Crestar to recommend the
approval of the Merger to the stockholders of Loyola, and the directors and
executive officers of Loyola have agreed to vote the shares of Loyola
Common Stock beneficially owned by them, and with respect to which they
have the power to vote, in favor of the Merger. See "Loyola Security
Ownership of Certain Beneficial Owners."
All shares of Loyola Common Stock represented by properly executed
proxies will, unless such proxies have been previously revoked, be voted in
accordance with the instructions indicated in such proxies. If no
instructions are indicated, such shares of Loyola Common Stock will be
voted to approve the Merger.
Loyola does not know of any matters other than as described in the
Notice of the Special Meeting that are to be considered at the Special
Meeting. If any other matter or matters are properly presented for action
at the Loyola Stockholder Meeting, the persons named in the enclosed form
of proxy and acting thereunder will have the discretion to vote such
matters in accordance with their best judgment, unless such authorization
is withheld. Any holder of Loyola Common Stock giving a proxy may revoke
it at any time before it is exercised by: (i) filing written notice of
revocation on or prior to the date of the Loyola Stockholder Meeting with
the secretary of Loyola (Linda A. Stadtler, Secretary, Loyola Capital
Corporation, 1300 North Charles Street, Baltimore, Maryland 21201-5705);
(ii) submitting a duly executed proxy bearing a later date; or (iii)
appearing at the Loyola Stockholder Meeting and notifying the Secretary of
his or her intention to vote in person; however, attendance at the Loyola
Stockholder Meeting will not in and of itself have the effect of revoking
the proxy. Proxies solicited by this Proxy Statement/Prospectus may be
exercised only at the Loyola Stockholder Meeting and any adjournments or
postponements thereof.
The Board of Directors of Crestar has approved the Merger. Approval
of the Merger by Crestar stockholders is not required by the Virginia Stock
Corporation Act (the "VSCA").
REASONS FOR THE MERGER; RECOMMENDATION OF THE LOYOLA BOARD
The Loyola Board believes that the terms of the Merger and the Agreement
are advisable and are fair to, and in the best interests of, Loyola and its
stockholders and has unanimously adopted the Agreement. In considering the
terms and conditions of the Merger, the Loyola Board considered, among other
things: the financial terms of the Merger; the fact that the Merger would
qualify as a tax-free reorganization under the Code; the financial condition and
history of performance of Crestar; the advantage of risk diversification
associated with ownership in an institution operating in a broader geographic
area; the opinion of its financial advisor, Alex. Brown & Sons Incorporated
("Alex. Brown"), that the consideration to be received in the Merger is fair to
the holders of Loyola Common Stock from a financial point of view; and the
operational and competitive benefits of the Merger. The Loyola Board also
considered that the historical dividends per share and net income per share of
the Crestar Common Stock to be received by the holders of Loyola Common Stock,
after giving effect to the Exchange Ratio, represent a substantial increase in
the historical dividends per share and net income per share of Loyola Common
Stock, although there can be no assurance that pro forma amounts are indicative
of future dividends or income per share of Crestar. See "The Merger --
Background to the Merger," "--Reasons for the Merger; Recommendation of the
Loyola Board," and "--Opinion of Financial Advisor."
THE LOYOLA BOARD UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF LOYOLA COMMON
STOCK VOTE TO APPROVE THE PROPOSED MERGER.
OPINION OF FINANCIAL ADVISOR
Loyola has received the opinion of Alex. Brown that the Exchange Ratio
is fair to the holders of Loyola Common Stock from a financial point of view.
Alex. Brown's opinion is directed only to the Exchange Ratio and does not
constitute a recommendation to any holders of Loyola Common Stock as to how
such holders should vote at the Loyola Stockholder Meeting or as to any
other matter. Alex. Brown will be paid a fee for its services at the
closing of the Merger. For additional information concerning Alex. Brown
and its opinion, see "The Merger -- Opinion of Financial Advisor." The
opinion of such firm, which sets forth the assumptions made, matters
considered and limits on the review undertaken, is attached as Annex III to
this Proxy Statement/Prospectus.
NO APPRAISAL RIGHTS
Holders of Loyola Common Stock entitled to vote on the Agreement and
the related Plan of Merger will not receive appraisal rights in accordance
with Title 3, Subtitle 2 of the Maryland General Corporation Law (the
"MGCL") even if they dissent from the Merger.
CONDITIONS TO CONSUMMATION
Consummation of the Merger would be accomplished by the statutory
merger of Loyola into Crestar. The Merger is contingent upon the approvals
of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), the Office of Thrift Supervision (the "OTS"), the State
Corporation Commission of Virginia (the "SCC") and Maryland Bank
Commissioner (the "MBC"), which approvals have been applied for and are
expected to be received. The Merger is also subject to other usual
conditions, including receipt by Crestar and Loyola of the legal opinions
of Piper & Marbury L.L.P., counsel to Loyola, and of Hunton & Williams,
counsel to Crestar, that the Merger will constitute a tax-free
reorganization under Section 368(a)(1)(A) of the Code and receipt by
Crestar of a letter from KPMG Peat Marwick LLP stating that the Merger may
be accounted for under the pooling-of-interests accounting method. See
"The Merger -- Conditions to Consummation of the Merger."
BUSINESS OF LOYOLA AND CRESTAR PENDING THE MERGER
Pursuant to the terms of the Agreement, Loyola has agreed not to take
certain actions relating to the operation of its business pending
consummation of the Merger, including the payment of cash dividends, other
than the regular quarterly cash dividend not exceeding $0.12 per share of
Loyola Common Stock, without the prior approval of Crestar, except as
otherwise permitted by the Agreement. PURSUANT TO THE TERMS OF THE
AGREEMENT, CRESTAR HAS AGREED THAT IT WILL CONDUCT ITS OPERATIONS ONLY IN
THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE AND THAT IT
WILL NOT TAKE CERTAIN ACTIONS. See "The Merger -- Business of Loyola and
Crestar Pending the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Loyola's management and the Loyola Board have
interests in the Merger in addition to their interests as stockholders of
Loyola generally. These include, among other things, provisions in the
Agreement requiring Crestar to honor existing employment agreements,
including their severance provisions, the offering to all members of the
Loyola Board of a position on Crestar Bank MD's Baltimore, Maryland local
advisory board, indemnification for Loyola directors and officers, and
eligibility for certain Crestar employee benefits. See "The
Merger -- Interests of Certain Persons in the Merger."
RESALE OF CRESTAR COMMON STOCK
Shares of Crestar Common Stock received in the Merger will be freely
transferable by the holders thereof, except for those shares held by those
holders who may be deemed to be "affiliates" (generally including
directors, executive officers and ten percent or more stockholders) of
Loyola or Crestar under applicable federal securities laws. See "Resale of
Crestar Common Stock."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The Merger is intended to be a tax-free "reorganization" as defined in
Section 368(a) of the Code with the result that Loyola stockholders will
not recognize gain or loss on the exchange of Loyola Common Stock for
Crestar Common Stock, except with respect to the receipt of cash by Loyola
stockholders in lieu of fractional shares. A condition to consummation of
the Merger is the receipt by Crestar and Loyola of opinions from Piper &
Marbury L.L.P., counsel to Loyola, and from Hunton & Williams, counsel to
Crestar, as to the qualification of the Merger as a tax-free reorganization
and certain other federal income tax consequences of the Merger. See "The
Merger -- Certain Federal Income Tax Consequences."
EFFECTIVE TIME
The Merger shall become effective at the time the Articles of Merger
for the Merger are filed and made effective (the "Effective Time"). The
Effective Time of the Merger is expected to occur in late December, 1995 or
early January, 1996. Loyola and Crestar each has the right, acting
unilaterally, to terminate the Agreement should the Merger not be
consummated by March 31, 1996. See "The Merger -- Termination."
STOCK OPTION AGREEMENT
Crestar and Loyola have entered into a Stock Option Agreement, dated
as of April 27, 1995 (the "Option Agreement"), pursuant to which Loyola
issued to Crestar an option (the "Option") to purchase up to 1,613,442
shares of Loyola Common Stock at a purchase price of $25.00 per share. The
Option may be exercised in whole or in part, at one or more closings,
before the Option Agreement is terminated, if a Purchase Event (as defined
therein) shall have occurred and be continuing, unless Crestar shall have
breached in any material respect any material covenant or representation
contained in the Agreement and such breach has not been cured. The Option
Agreement provides that to the extent that it shall have not been
exercised, the Option shall terminate (i) on the Effective Date of the
Merger; (ii) upon the termination of the Agreement in accordance with the
provisions thereof (other than a termination resulting from a willful
breach by Loyola of certain specified covenants contained therein or,
following the occurrence of a Purchase Event (as defined therein), failure
of Loyola's stockholders to approve the Merger by the vote required under
applicable law); or (iii) 12 months after termination of the Agreement due
to a willful breach by Loyola of certain specified covenants contained
therein or, following the occurrence of a Purchase Event (as defined
therein), failure of Loyola's stockholders to approve the Merger by the
vote required under applicable law. The Stock Option Agreement is attached
hereto as Annex II. See also "The Merger -- Stock Option Agreement."
MARKET PRICES PRIOR TO ANNOUNCEMENT OF THE MERGER
The following table discloses the price per share of Crestar Common
Stock and Loyola Common Stock based on the last reported sales prices per
share of Crestar Common Stock on the NYSE Composite Transactions Tape and
of Loyola Common Stock on The Nasdaq National Market on (i) March 24, 1995,
one month prior to the date the Loyola Board Meeting was held to consider the
binding letter agreement between Crestar and Loyola relating to the Merger
dated April 27, 1995 (the "Binding Letter Agreement") and prior to an
increase in the price of Loyola Common Stock believed to be due to takeover
rumors during the early part of April, 1995, (ii) on April 27, 1995, the last
day prior to the public announcement of the execution of the Binding Letter
Agreement, and (iii) on August , 1995 the latest practicable date prior to
the mailing of this Proxy Statement/Prospectus. See "Price Range of Loyola
Common Stock and Dividend Policy" for information concerning recent market
prices of the Loyola Common Stock.
Equivalent
Historical Pro Forma
Crestar Loyola Loyola(a)
March 24, 1995 $42.125 $22.875 $29.993
April 27, 1995 $45.50 $32.125 $31.395
August , 1995 $ $ $
(a) Computed by multiplying the historical sale price of Crestar Common
Stock by an assumed Exchange Ratio of 0.712 for March 24, 1995, 0.690
for April 27, 1995 and for August , 1995.
COMPARATIVE PER SHARE DATA
The following table presents historical and pro forma per share data
for Crestar, and historical and equivalent pro forma per share data for
Loyola. The pro forma combined per Crestar common share amounts give
effect to an assumed Exchange Ratio of 0.690 shares of Crestar Common Stock
for each share of Loyola Common Stock (based on the last sale price of
Crestar Common Stock on , 1995 of $ ). The equivalent
pro forma per Loyola common share amounts allow comparison of historical
information regarding one share of Loyola Common Stock to the corresponding
data regarding what one share of Loyola Common Stock will equate to in the
combined corporation; such amounts are computed by multiplying the pro
forma combined per Crestar common share amounts by an assumed Exchange
Ratio of 0.690. As discussed in "The Merger -- Determination of Exchange
Ratio and Exchange for Crestar Common Stock," the final Exchange Ratio will
be determined based on the Average Closing Price for Crestar Common Stock.
The following table is based on the assumption that all issued and
outstanding shares of Loyola Common Stock are converted into shares of
Crestar Common Stock. The Merger is reflected under the pooling-of-
interests method of accounting and pro forma information is derived
accordingly.
The per share data included in the following table should be read in
conjunction with the consolidated financial statements of Crestar and the
consolidated financial statements of Loyola incorporated by reference
herein and the notes accompanying all such financial statements. The data
presented below are not necessarily indicative of the results of operations
which would have been obtained if the Merger had been consummated in the
past or which may be obtainable in the future.
COMPARATIVE PER SHARE DATA
Three Months Ended Years Ended
March 31, December 31,
1995 1994 1994 1993
Book Value Per Share at Period End:(1)
Crestar historical . . . . . . . . . . . . . . . $31.66 $28.88 $30.16 $28.32
Loyola historical . . . . . . . . . . . . . . . 21.25 19.83 20.90 19.50
Pro forma combined per Crestar common share(2) . 30.80 28.86 30.18 28.31
Equivalent pro forma per Loyola common share . . 21.25 19.91 20.82 19.54
Cash Dividends Declared Per Common Share:(1)
Crestar historical . . . . . . . . . . . . . . . $ .40 $ .33 $ 1.53 $ 1.14
Loyola historical . . . . . . . . . . . . . . . .12 .10 .40 .24
Pro forma combined per Crestar common share(3) . .40 .33 1.53 1.14
Equivalent pro forma per Loyola common share . . .28 .23 1.06 .79
Net Income Per Share:
Crestar historical . . . . . . . . . . . . . . . $ 1.18 $ 1.07 $ 4.47 $ 3.68
Loyola historical . . . . . . . . . . . . . . . .47 .41 1.74 1.42
Pro forma combined per Crestar common share(4) . 1.12 1.00 4.20 3.46
Equivalent pro forma per Loyola common share . . .77 .69 2.90 2.39
(1) Pro forma combined book value per share and cash dividends declared
per share for Crestar and Loyola do not reflect exercise of options to
acquire shares of Loyola Common Stock. Options to acquire 1,080,567
Loyola common shares at an average price per share of $8.17 were
outstanding at March 31, 1995. Assumed exercise of these options does
not have a significant impact upon the combined stockholders' equity
of Crestar and Loyola or the pro forma combined cash dividends
declared per share.
(2) Pro forma combined book value per Crestar common share at March 31,
1995 represents combined common stockholders' equity amounts, less
amounts representing material, non-recurring adjustments expected to
be recorded in conjunction with the Merger, divided by pro forma
combined period-end common shares outstanding. Certain material, non-
recurring adjustments of approximately $26 million, on an after-tax
basis, are expected to be recorded in conjunction with the Merger.
These adjustments include approximately $13 million for the tax
liability arising from the recapture of tax bad debt reserves at
December 31, 1987 of Loyola, approximately $5 million for the
settlement of obligations under existing employment contracts,
severance pay for involuntary terminations, early retirement and
related employee benefits; approximately $2 million associated with
branch closings; and approximately $6 million of expenses related to
effecting the Merger.
Additional non-recurring adjustments include an increase in the
allowance for loan losses of approximately $11 million and an increase
in the reserve for foreclosed properties of approximately $1 million.
Such adjustments will be taken to conform Loyola's methodology of
evaluating the allowance for loan losses and reserve for foreclosed
properties, and manner of disposition of certain assets, to Crestar's
methodology and manner of disposition of certain assets. The impact
of each of the adjustments described above has been reflected in the
Pro Forma Condensed Statement of Financial Condition as of March 31,
1995. The loan loss provision and write-down of foreclosed properties
ultimately recorded will be based on the facts, circumstances and
external events operative at the time, and may be more or less than
the amounts reflected in the pro forma information.
Pro forma combined book value per Crestar common share at March 31,
1994 and December 31, 1994 and 1993 represents combined common
stockholder's equity amounts, divided by pro forma combined period-end
common shares outstanding.
(3) Pro forma combined dividends declared per Crestar common share
represent historical dividends per share declared by Crestar.
(4) Pro forma combined net income per Crestar common share represents
combined net income available to common stockholders, divided by pro
forma combined average primary common shares outstanding.
SELECTED FINANCIAL DATA
The following consolidated financial data of Crestar and consolidated
financial data of Loyola is qualified in its entirety by the information
included in the documents incorporated in this Proxy Statement/Prospectus
by reference. Interim financial results for Crestar, in the opinion of
Crestar management, reflect all adjustments necessary for a fair
presentation of the results of operations, including adjustments related to
completed acquisitions. All such adjustments are of a normal nature.
Interim financial results for Loyola, in the opinion of Loyola management,
reflect all adjustments necessary for a fair presentation of the results of
operations. The results of operations for an interim period are not
necessarily indicative of results that may be expected for a full year or
any other interim period. The Merger is reflected under the pooling-of-
interests method of accounting and pro forma information is derived
accordingly. See "Incorporation of Certain Information by Reference."
<TABLE>
<CAPTION>
Selected Financial Data
(unaudited)
Three Months
Ended March 31, Years ended December 31,
1995 1994 1994 1993 1992 1991 1990
(Dollars in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS: (1)
Net interest income
Crestar $151.7 $140.7 $581.8 $527.0 $482.1 $421.1 $414.2
Loyola 17.8 16.7 67.3 61.9 66.1 62.3 49.1
Crestar and Loyola pro forma 169.4 157.4 649.2 588.9 548.2 483.5 463.3
Provision for loan losses
Crestar 10.1 10.0 29.7 48.8 99.2 209.5 131.1
Loyola 0.2 0.2 0.7 3.1 7.1 11.4 11.5
Crestar and Loyola pro forma 10.3 10.2 30.3 51.9 106.3 220.9 142.5
Net interest income after
provision for loan losses
Crestar 141.6 130.6 552.1 478.2 382.9 211.6 283.1
Loyola 17.6 16.6 66.7 58.8 59.0 50.9 37.7
Crestar and Loyola pro forma 159.1 147.2 618.8 537.1 441.9 262.5 320.8
Noninterest income
Crestar 64.7 63.5 254.3 248.3 218.4 233.8 166.8
Loyola 2.7 2.9 12.7 11.5 15.5 14.2 17.7
Crestar and Loyola pro forma 67.4 66.3 266.9 259.8 233.9 248.1 184.5
Noninterest expense
Crestar 137.8 134.0 551.7 523.0 501.8 405.6 378.8
Loyola 13.4 13.6 54.3 49.9 55.6 46.5 41.1
Crestar and Loyola pro forma 151.3 147.6 606.0 572.9 557.4 452.1 420.0
Income before income taxes
Crestar 68.4 60.1 254.7 203.5 99.5 39.8 71.1
Loyola 6.8 5.8 25.1 20.4 18.9 18.7 14.2
Crestar and Loyola pro forma 75.2 65.9 279.8 223.9 118.4 58.5 85.3
Income tax expense
Crestar 23.3 19.6 85.6 63.0 19.7 6.1 9.9
Loyola 2.7 2.3 10.0 8.2 7.5 8.0 7.2
Crestar and Loyola pro forma 26.1 21.9 95.6 71.1 27.1 14.1 17.1
Net income
Crestar 45.1 40.5 169.1 140.5 79.8 33.8 61.1
Loyola (2) 4.1 3.5 15.0 12.3 11.4 10.6 7.0
Crestar and Loyola pro forma 49.2 44.0 184.1 152.8 91.2 44.4 68.2
Net income applicable to
common shares
Crestar 45.1 40.5 169.1 138.3 77.3 31.2 58.5
Loyola (2) 4.1 3.5 15.0 12.3 11.4 10.6 7.0
Crestar and Loyola pro forma 49.2 44.0 184.1 150.5 88.7 41.8 65.5
PER COMMON SHARE DATA:
Net income (primary)
Crestar $1.18 $1.07 $4.47 $3.68 $2.32 $0.98 $1.87
Loyola (2), (3) 0.47 0.41 1.74 1.42 1.30 1.18 0.75
Crestar and Loyola pro
forma (4) 1.12 1.00 4.20 3.46 2.26 1.10 1.74
Net income (fully diluted)
Crestar 1.18 1.07 4.47 3.67 2.32 0.98 1.87
Loyola (2), (3) 0.47 0.40 1.73 1.42 1.29 1.18 0.75
Crestar and Loyola pro
forma (4) 1.11 1.00 4.20 3.45 2.25 1.10 1.74
Dividends declared
Crestar (5) 0.40 0.33 1.53 1.14 0.80 0.86 1.32
Loyola (3) 0.12 0.10 0.40 0.24 0.22 0.00 0.00
Crestar and Loyola pro
forma (6) 0.40 0.33 1.53 1.14 0.80 0.86 1.32
Book value
Crestar 31.66 28.88 30.16 28.32 25.24 23.23 23.15
Loyola (3) 21.25 19.83 20.90 19.50 18.22 16.59 14.74
Crestar and Loyola pro
forma (4), (7) 30.80 28.86 30.18 28.31 25.40 23.35 22.85
Average primary shares
(thousands)
Crestar 38,097 37,835 37,864 37,587 33,286 31,921 31,218
Loyola (3) 8,663 8,597 8,646 8,620 8,776 9,002 9,432
Crestar and Loyola pro
forma (4) 44,075 43,766 43,830 43,534 39,342 38,132 37,726
Average fully diluted shares
(thousands)
Crestar 38,178 37,850 37,867 37,665 33,369 31,946 31,238
Loyola (3) 8,704 8,633 8,660 8,630 8,811 9,040 9,433
Crestar and Loyola pro
forma (4) 44,184 43,806 43,842 43,620 39,449 38,184 37,747
SELECTED PERIOD-END BALANCES:
Total assets
Crestar $14,426.9 $14,380.5 $14,010.0 $13,286.9 $12,674.7 $11,828.3 $11,881.2
Loyola 2,493.5 2,274.0 2,472.8 2,367.2 1,785.9 2,002.9 2,078.3
Crestar and Loyola pro
forma (7) 16,908.6 16,654.5 16,482.9 15,654.1 14,460.6 13,831.2 13,959.5
Loans (net of unearned income)
Crestar 9,752.9 8,235.2 9,285.6 7,287.1 6,581.7 7,065.8 7,680.2
Loyola 2,022.0 1,595.6 1,966.0 1,605.8 1,298.4 1,614.0 1,773.5
Crestar and Loyola pro forma 11,774.9 9,830.9 11,251.6 8,893.0 7,880.2 8,679.8 9,453.8
Allowance for loan losses
Crestar 222.7 226.6 219.2 211.0 205.0 210.0 149.4
Loyola 13.8 14.3 13.7 14.6 15.2 14.3 14.0
Crestar and Loyola pro
forma (7) 247.4 240.8 232.9 225.6 220.2 224.3 163.4
Nonperforming assets (8)
Crestar 94.7 114.0 94.9 96.8 220.8 350.0 237.2
Loyola 19.2 30.8 21.4 32.0 40.8 49.5 34.7
Crestar and Loyola pro
forma (7) 113.0 144.8 116.3 128.7 261.6 399.5 271.9
Total deposits
Crestar 11,055.3 11,093.0 10,913.2 10,165.8 9,581.5 8,889.6 8,506.1
Loyola 1,485.9 1,406.8 1,469.9 1,425.5 1,466.5 1,615.7 1,566.2
Crestar and Loyola pro forma 12,541.2 12,499.8 12,383.1 11,591.2 11,048.0 10,505.3 10,072.2
Long-term debt
Crestar 385.8 217.1 367.0 191.2 210.4 161.9 168.4
Loyola 330.1 340.8 348.2 412.9 124.0 121.5 11.1
Crestar and Loyola pro forma 715.8 557.9 715.1 604.0 334.4 283.4 179.6
Common shareholders' equity
Crestar 1,215.6 1,082.4 1,126.1 1,062.5 913.9 749.9 726.3
Loyola 172.3 159.7 169.1 157.0 149.1 140.6 133.7
Crestar and Loyola pro
forma (7) 1,354.8 1,242.1 1,295.2 1,219.4 1,063.0 890.5 860.0
Total shareholders' equity
Crestar 1,215.6 1,082.4 1,126.1 1,062.5 958.9 794.9 771.3
Loyola 172.3 159.7 169.1 157.0 149.1 140.6 133.7
Crestar and Loyola pro
forma (7) 1,354.8 1,242.1 1,295.2 1,219.4 1,108.0 935.5 905.0
AVERAGE BALANCES:
Total assets
Crestar $13,845.4 $13,309.2 $13,632.0 $12,585.4 $11,920.4 $11,440.7 $11,673.7
Loyola 2,483.6 2,340.8 2,321.1 1,979.9 1,877.4 2,083.4 2,136.3
Crestar and Loyola pro forma 16,329.0 15,650.0 15,953.1 14,565.3 13,797.8 13,524.1 13,810.0
Loans (net of unearned income)
Crestar 9,447.8 7,565.6 8,305.3 6,836.5 6,725.3 7,275.3 7,767.2
Loyola 1,969.1 1,556.5 1,701.5 1,396.6 1,386.8 1,629.1 1,732.2
Crestar and Loyola pro forma 11,416.9 9,122.1 10,006.8 8,233.1 8,112.1 8,904.4 9,499.4
Total deposits
Crestar 10,844.2 10,385.0 10,876.2 9,682.8 9,540.6 8,596.9 8,296.8
Loyola 1,508.5 1,441.6 1,463.2 1,470.0 1,576.3 1,649.2 1,563.3
Crestar and Loyola pro forma 12,352.7 11,826.6 12,339.4 11,152.8 11,116.9 10,246.1 9,860.1
Long-term debt
Crestar 368.1 203.4 234.9 215.4 185.9 162.8 170.1
Loyola 337.6 403.0 353.4 248.2 121.9 97.9 3.0
Crestar and Loyola pro forma 705.7 606.4 588.3 463.6 307.8 260.7 173.1
Common shareholders' equity
Crestar 1,168.9 1,091.7 1,099.2 994.8 794.6 744.1 731.7
Loyola 170.9 158.1 162.6 152.6 146.4 137.7 132.6
Crestar and Loyola pro forma 1,339.8 1,249.8 1,261.8 1,147.4 941.0 881.8 864.3
Total shareholders' equity
Crestar 1,168.9 1,091.7 1,099.2 1,038.7 839.6 789.1 776.7
Loyola 170.9 158.1 162.6 152.6 146.4 137.7 132.6
Crestar and Loyola pro forma 1,339.8 1,249.8 1,261.8 1,191.3 986.0 926.8 909.3
RATIOS:
Return on average assets
Crestar 1.30 % 1.22 % 1.24 % 1.12 % 0.67 % 0.30 % 0.52 %
Loyola 0.66 0.60 0.65 0.62 0.61 0.51 0.33
Crestar and Loyola pro forma 1.20 1.12 1.15 1.03 0.64 0.31 0.47
Return on average
shareholders' equity
Crestar 15.43 14.83 15.38 13.53 9.50 4.28 7.87
Loyola 9.52 8.83 9.25 8.04 7.79 7.72 5.31
Crestar and Loyola pro forma 14.67 14.07 14.59 12.64 9.00 4.51 7.21
Return on average common
shareholders' equity
Crestar 15.43 14.83 15.38 13.90 9.73 4.19 7.99
Loyola 9.52 8.83 9.25 8.04 7.79 7.72 5.31
Crestar and Loyola pro forma 14.67 14.07 14.59 13.12 9.43 4.74 7.58
Net interest margin (9)
Crestar 4.92 4.78 4.83 4.78 4.67 4.29 4.22
Loyola 2.93 2.96 3.03 3.28 3.74 3.13 2.41
Crestar and Loyola pro forma 4.64 4.50 4.55 4.57 4.54 4.11 3.93
Nonperforming assets to
loans and foreclosed
properties at period end
Crestar 0.97 1.38 1.02 1.32 3.32 4.90 3.08
Loyola 0.94 1.91 1.08 1.97 3.08 3.00 1.94
Crestar and Loyola pro
forma (7) 0.96 1.47 1.03 1.44 3.28 4.54 2.87
Net charge-offs to average
loans
Crestar 0.52 0.53 0.45 0.95 1.69 2.07 0.99
Loyola 0.03 0.14 0.09 0.26 0.45 0.68 0.30
Crestar and Loyola pro forma 0.43 0.46 0.39 0.83 1.48 1.82 0.86
Allowance for loan losses to
loans at period end
Crestar 2.28 2.75 2.36 2.89 3.11 2.97 1.94
Loyola 0.68 0.89 0.70 0.91 1.17 0.89 0.79
Crestar and Loyola pro
forma (7) 2.10 2.45 2.07 2.54 2.79 2.58 1.73
Allowance for loan losses to
nonperforming loans at
period end
Crestar 305 253 287 264 144 78 68
Loyola 177 128 150 126 124 112 86
Crestar and Loyola pro
forma (7) 306 239 273 247 143 79 69
Allowance for loan losses to
nonperforming assets at
period end
Crestar 235 199 231 218 93 60 63
Loyola 72 46 64 46 37 29 40
Crestar and Loyola pro
forma (7) 219 166 200 175 84 56 60
Total shareholders' equity
to total assets at period end
Crestar 8.43 7.53 8.04 8.00 7.57 6.72 6.49
Loyola 6.91 7.02 6.84 6.63 8.35 7.02 6.43
Crestar and Loyola pro
forma (7) 8.01 7.46 7.86 7.79 7.66 6.76 6.48
Capital ratios at period end:
Tier 1 risk-adjusted capital
Crestar 9.2 9.5 9.4 10.5 10.4 7.9 7.5
Loyola 9.5 9.9 9.5 9.6 10.8 8.2 7.3
Crestar and Loyola pro
forma (7) 9.2 9.5 9.4 10.4 10.4 8.0 7.5
Total risk-adjusted capital
Crestar 13.0 12.3 13.3 13.5 13.7 10.6 10.1
Loyola 10.2 10.7 10.2 10.3 11.8 8.8 8.0
Crestar and Loyola pro
forma (7) 12.7 12.1 13.0 13.1 13.5 10.4 10.0
Tier 1 leverage
Crestar 7.9 7.6 7.9 7.9 7.7 6.7 6.2
Loyola 6.0 6.1 5.9 5.7 7.4 6.1 5.5
Crestar and Loyola pro
forma (7) 7.6 7.4 7.6 7.5 7.6 6.6 6.2
</TABLE>
Notes to Selected Financial Data
(unaudited)
(1) Amounts may not add due to rounding.
(2) Net income and primary and fully diluted net income per share for the
year ended December 31, 1992 does not include the cumulative effect of
a change in accounting principle resulting from the adoption by Loyola,
effective January 1, 1992, of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). The
cumulative effect of adopting SFAS 109 on Loyola's net income and
primary and fully diluted net income per share was an increase of $2.8
million and $0.31 and $0.31, respectively, for the year ended December
31, 1992.
(3) Per share data for Loyola has been retroactively adjusted to reflect a
two-for-one stock split issued in September 1992.
(4) Based on an Exchange Ratio of 0.690 for conversion of Loyola Common
Stock into Crestar Common Stock. See "Summary - The Exchange Ratio" and
"The Merger - Determination of Exchange Ratio and Exchange for Crestar
Common Stock" for additional discussion regarding calculation of the
Exchange Ratio.
(5) In April 1991, Crestar announced that, thereafter, its dividend
declaration would be made in the month following the end of each quarter
instead of in the last month of each quarter. As a result, 1991
included only three dividend declarations; however, four dividend
payments were made.
(6) Pro forma dividends declared represent historical dividends per share
declared by Crestar.
(7) Ratios derived from the Pro Forma Condensed Statement of Financial
Condition as of March 31, 1995 reflect certain material, non-recurring
adjustments of approximately $26 million, on an after-tax basis,
expected to be recorded in conjunction with the Merger. These
adjustments include approximately $13 million for the tax liability
associated with the tax bad debt reserves of Loyola, approximately $5
million for the settlement of obligations under existing employment
contracts, severance pay for involuntary terminations, early retirement
and related employee benefits; approximately $2 million associated with
branch closings; and approximately $6 million of expenses related to
effecting the Merger.
Additional non-recurring adjustments include an increase in the
allowance for loan losses of approximately $11 million and an increase in
the reserve for foreclosed properties of approximately $1 million. Such
adjustments will be taken to conform Loyola's methodology of evaluating
the allowance for loan losses and reserve for foreclosed properties, and
manner of disposition of certain assets, to Crestar's methodology and
manner of disposition of certain assets. The impact of each of the
adjustments described above has been reflected in the Pro Forma Condensed
Statement of Financial Condition as of March 31, 1995. The loan loss
provision and write-down of foreclosed properties ultimately recorded will
be based on the facts, circumstances and external events operative at the
time, and may be more or less than the amounts reflected in the pro forma
financial information as of March 31, 1995.
(8) Nonperforming assets include nonaccrual loans, restructured loans and
foreclosed properties.
(9) Net interest margin is calculated on a taxable equivalent basis, using
a tax rate of 35% for 1995, 1994 and 1993 and 34% for 1992, 1991 and
1990.
SELECTED FINANCIAL DATA - CRESTAR, LOYOLA AND CHASE MD
The following consolidated financial data presents on a
historical basis selected unaudited financial data for Crestar
and Loyola, and unaudited pro forma amounts for both (a) Crestar
and Loyola combined, and (b) Crestar, Loyola and Chase MD
combined, as of March 31, 1995. The consolidated financial data
of Crestar and the consolidated financial data of Loyola is
qualified in its entirety by the information included in the
documents incorporated in this Proxy Statement/Prospectus by
reference. The Merger is reflected under the pooling-of-
interests method of accounting and the pro forma selected
financial data is derived accordingly. See "Incorporation of
Certain Information by Reference."
The Chase MD purchase agreement will involve the purchase of selected
Chase MD assets, and the assumption of selected Chase MD liabilities, by
Crestar in a transaction expected to be completed during the fourth quarter of
1995. Additional assets and liabilities of Chase MD will be excluded from the
purchase transaction, and therefore have been excluded from the pro forma data
for Chase MD presented in the following table under the caption "Crestar,
Loyola and Chase MD pro forma". Such pro forma data has been based on the pro
forma statement of financial condition of Crestar, Loyola and Chase MD
combined, including adjustments related to the purchase of selected assets and
liabilities of Chase MD by Crestar. See "Pro Forma Condensed
Financial Information - Crestar, Loyola and Chase MD".
The historical statements of operations for Chase MD are not material in
comparison to the historical statements of operations for Crestar, or in
comparison to the pro forma statements of operations for Crestar and Loyola
combined.
Selected Financial Data - Crestar, Loyola and Chase MD
(Unaudited)
As of
March 31, 1995
(Dollars in millions)
SELECTED PERIOD-END BALANCES:
Total assets
Crestar $ 14,426.9
Loyola 2,493.5
Crestar and Loyola pro forma (1) 16,908.6
Crestar, Loyola and Chase MD pro forma (1) 17,357.3
Loans (net of unearned income)
Crestar 9,752.9
Loyola 2,022.0
Crestar and Loyola pro forma 11,774.9
Crestar, Loyola and Chase MD pro forma 12,035.4
Allowance for loan losses
Crestar 222.7
Loyola 13.8
Crestar and Loyola pro forma (1) 247.4
Crestar, Loyola and Chase MD pro forma (1) 250.4
Nonperforming assets (2)
Crestar 94.7
Loyola 19.2
Crestar and Loyola pro forma (1) 113.0
Crestar, Loyola and Chase MD pro forma (1) 113.0
Total deposits
Crestar 11,055.3
Loyola 1,485.9
Crestar and Loyola pro forma 12,541.2
Crestar, Loyola and Chase MD pro forma 12,963.0
Long-term debt
Crestar 385.8
Loyola 330.1
Crestar and Loyola pro forma 715.8
Crestar, Loyola and Chase MD pro forma 715.8
Common shareholders' equity
Crestar 1,215.6
Loyola 172.3
Crestar and Loyola pro forma (1) 1,354.8
Crestar, Loyola and Chase MD pro forma (1) 1,354.8
Total shareholders' equity
Crestar 1,215.6
Loyola 172.3
Crestar and Loyola pro forma (1) 1,354.8
Crestar, Loyola and Chase MD pro forma (1) 1,354.8
SELECTED RATIOS:
Nonperforming assets to
loans and foreclosed
properties at period end
Crestar 0.97%
Loyola 0.94
Crestar and Loyola pro forma (1) 0.96
Crestar, Loyola and Chase MD pro forma (1) 0.94
Allowance for loan losses to
loans at period end
Crestar 2.28
Loyola 0.68
Crestar and Loyola pro forma (1) 2.10
Crestar, Loyola and Chase MD pro forma (1) 2.08
Allowance for loan losses to
nonperforming loans at
period end
Crestar 305
Loyola 177
Crestar and Loyola pro forma (1) 306
Crestar, Loyola and Chase MD pro forma (1) 310
Allowance for loan losses to
nonperforming assets at
period end
Crestar 235
Loyola 72
Crestar and Loyola pro forma (1) 219
Crestar, Loyola and Chase MD pro forma (1) 222
Total shareholders' equity
to total assets at period end
Crestar 8.43
Loyola 6.91
Crestar and Loyola pro forma (1) 8.01
Crestar, Loyola and Chase MD pro forma (1) 7.81
Capital ratios at period end:
Tier 1 risk-adjusted capital
Crestar 9.2
Loyola 9.5
Crestar and Loyola pro forma (1) 9.2
Crestar, Loyola and Chase MD pro forma (1) 8.8
Total risk-adjusted capital
Crestar 13.0
Loyola 10.2
Crestar and Loyola pro forma (1) 12.7
Crestar, Loyola and Chase MD pro forma (1) 12.5
Tier 1 leverage
Crestar 7.9
Loyola 6.0
Crestar and Loyola pro forma (1) 7.6
Crestar, Loyola and Chase MD pro forma (1) 7.4
See Notes to Selected Financial Data- Crestar, Loyola and Chase MD.
Notes to Selected Financial Data- Crestar, Loyola and Chase MD
(Unaudited)
(1) Ratios derived from the Pro Forma Condensed Statement of Financial
Condition as of March 31, 1995 reflect certain material,
non-recurring adjustments of approximately $26 million, on an after-tax
basis, expected to be recorded in conjunction with the Merger with
Loyola. These adjustments include approximately $13 million for the tax
liability associated with the tax bad debt reserves of Loyola,
approximately $5 million for the settlement of obligations under
existing employment contracts, severance pay for involuntary
terminations, early retirement and related employee benefits;
approximately $2 million associated with branch closings; and
approximately $6 million of expenses related to effecting the Merger
with Loyola.
Additional non-recurring adjustments relating to the Merger with
Loyola include an increase in the allowance for loan losses of
approximately $11 million and an increase in the reserve for
foreclosed properties of approximately $1 million. Such adjustments
will be taken to conform Loyola's methodology of evaluating the
allowance for loan losses and reserve for foreclosed properties,
and manner of disposition of certain assets, to Crestar's methodology
and manner of disposition of certain assets. The impact of each of the
adjustments described above has been reflected in the Pro Forma
Condensed Statement of Financial Condition as of March 31, 1995. The
loan loss provision and write-down of foreclosed properties ultimately
recorded will be based on the facts, circumstances and external events
operative at the time, and may be more or less than the amounts
reflected in the pro forma financial information as of March 31, 1995.
(2) Nonperforming assets include nonaccrual loans, restructured loans and
foreclosed properties.
GENERAL INFORMATION
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Loyola Board, to be voted at the Loyola
Stockholder Meeting to be held at The University of Baltimore, Langsdale
Auditorium, 1420 Maryland at Oliver Street, Baltimore, Maryland, on
September 19, 1995, at 2:00 p.m. and at any adjournment thereof. At the
Loyola Stockholder Meeting, stockholders will consider and vote upon: (i)
the Agreement and the related Plan of Merger, pursuant to which Loyola will
merge with and into Crestar, and Crestar will succeed to the business of
Loyola; and (ii) such other matters as may properly come before the Special
Meeting or any adjournments or postponements thereof. Only stockholders of
record of Loyola at the close of business on August 3, 1995 are entitled to
notice of and to vote at the Special Meeting. This Proxy
Statement/Prospectus is being mailed to all such holders of record of
Loyola Common Stock on or about August , 1995.
The holders of the Loyola Common Stock are entitled to one vote for
each share outstanding in such holder's name on the books of Loyola.
Cumulative voting is not permitted. The affirmative vote of the holders of
a majority of the outstanding shares entitled to vote is required for
approval of the Merger.
Under rules of the New York Stock Exchange, the proposal to adopt the
Agreement is considered a "non-discretionary item" whereby brokerage firms
may not vote in their discretion on behalf of their clients if such clients
have not furnished voting instructions. Abstentions and such broker "non-
votes" will be considered in determining the presence of a quorum at the
Special Meeting but will not be counted as a vote cast for a proposal.
BECAUSE THE PROPOSAL TO ADOPT THE AGREEMENT IS REQUIRED TO BE APPROVED BY
THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF LOYOLA COMMON STOCK,
ABSTENTIONS AND BROKER "NON-VOTES" WILL HAVE THE SAME EFFECT AS A VOTE
AGAINST THIS PROPOSAL.
The proxies solicited hereby, if properly signed and returned and not
revoked prior to their use, will be voted in accordance with the
instructions given thereon by the stockholders. If no instructions are so
specified, the proxies will be voted FOR the proposed Merger, and otherwise
at the discretion of the proxies. Any stockholder giving a proxy has the
power to revoke it at any time before it is exercised by (i) filing written
notice of revocation with the Secretary of Loyola (Linda A. Stadtler,
Secretary, Loyola Capital Corporation, 1300 North Charles Street,
Baltimore, Maryland 21201-5705); (ii) submitting a duly executed proxy
bearing a later date; or (iii) appearing at the Loyola Stockholder Meeting
and notifying the Secretary of his or her intention to vote in person;
however, attendance at the Loyola Stockholder Meeting will not in and of
itself have the effect of revoking the proxy. Proxies solicited by this
Proxy Statement/Prospectus may be exercised only at the Loyola Stockholder
Meeting and any adjournments or postponements of the Loyola Stockholder
Meeting and will not be used for any other meeting.
The accompanying proxy is being solicited by the Loyola Board. The
cost of such solicitation will be borne by Loyola. In addition to the use
of the mails, proxies may be solicited by personal interview, telephone or
telegram by directors, officers and employees of Loyola or Crestar without
additional compensation. Arrangements may also be made with brokerage
houses and custodians, nominees and fiduciaries for forwarding of
solicitation material to beneficial owners of stock held of record by such
persons and obtaining proxies from the beneficial owners of Loyola Common
Stock entitled to vote at the Loyola Stockholder Meeting, and Loyola will
reimburse such persons for their reasonable expenses incurred in doing so.
The Loyola Board has no information that other matters will be brought
before the meeting. If, however, other matters are presented, the
accompanying proxy will be voted in accordance with the recommendations of
the Loyola Board with respect to such matters.
As of the Record Date, the directors and executive officers of Loyola
and their affiliates beneficially owned a total of shares
(representing % of the outstanding shares of Loyola Common Stock),
and the directors of Crestar owned no Loyola Common Stock. The Loyola
directors have agreed with Crestar to recommend that Loyola stockholders
vote in favor of the Merger, and the directors and executive officers have
agreed to vote shares beneficially owned by such directors and executive
officers, and shares with respect to which they have the power to vote, in
favor of the Merger. See "Loyola Security Ownership of Certain Beneficial
Owners."
For the reasons described below, the Loyola Board has adopted the
Agreement, believes the Merger is in the best interest of Loyola and its
stockholders and recommends that stockholders of Loyola vote FOR approval
of the Agreement. In making its recommendation, the Loyola Board
considered, among other things, the opinion of Alex. Brown that the
Exchange Ratio was fair to holders of Loyola Common Stock from a financial
point of view. See "The Merger -- Background of the Merger," " -- Reasons for
the Merger; Recommendation of the Loyola Board," and " Opinion of Financial
Advisor."
The address of Crestar is 919 East Main Street, Richmond, Virginia
23261-6665, and its telephone number is (804) 782-5000. The address of
Loyola is 1300 North Charles Street, Baltimore, Maryland 21201-5705, and
its telephone number is (410) 332-7210.
THE MERGER
The detailed terms of the Merger are contained in the Agreement and
Plan of Merger, attached as Annex I to this Proxy Statement/Prospectus.
The following discussion describes the more important aspects of the Merger
and the terms of the Agreement. This description is not complete and is
qualified by reference to the Agreement which is incorporated by reference
herein.
GENERAL
The Agreement provides that, subject to the satisfaction or waiver of
the conditions set forth therein, Loyola will be merged with and into
Crestar. In connection with the Merger, each share of Loyola Common Stock
outstanding immediately prior to consummation of the Merger will, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into and represent the right to receive a fraction of a share of
Crestar Common Stock determined in accordance with the Agreement, as
described in this Proxy Statement/Prospectus. Based on the closing price
of Crestar Common Stock on the New York Stock Exchange on August , 1995
of $ , each share of Loyola Common Stock would have been
exchanged for shares of Crestar Common Stock, if such price
had been the Average Closing Price. Such number of shares of Crestar
Common Stock may increase or decrease depending on the Average Closing
Price of Crestar Common Stock. Cash will be paid in lieu of fractional
shares of Crestar Common Stock.
Based upon the capitalization of Crestar and Loyola as of March 31,
1995, Loyola stockholders would own approximately 13% of the outstanding
Crestar Common Stock following consummation of the Merger. Based upon the
financial statements of Crestar and Loyola at March 31, 1995, upon
consummation of the Merger, the percentage of total assets and the
percentage of total liabilities represented by Loyola in the combined
entity would each be less than 15%.
AS DISCUSSED BELOW IN "REASONS FOR THE MERGER; RECOMMENDATION OF THE
LOYOLA BOARD," THE LOYOLA BOARD HAS CONCLUDED THAT THE TERMS OF THE MERGER
AND THE AGREEMENT ARE ADVISABLE AND ARE FAIR TO, AND IN THE BEST INTERESTS
OF, LOYOLA AND ITS STOCKHOLDERS.
BACKGROUND OF THE MERGER
Since Loyola is one of the larger independent financial institutions
in Maryland, its management has been informally approached from time to
time by other financial institutions seeking to initiate or expand their
activities in Maryland. In March, 1994, pursuant to inquiries initiated by
a large out-of-market depository holding company, management held a few
informal discussions with representatives of that institution. The
indication of interest expressed at these informal meetings caused management
of Loyola to report the discussions to the Loyola Board.
The Loyola Board appointed a Special Projects Committee (the
"Committee"), initially composed of three independent directors and later
expanded in January, 1995 to include all of the independent directors of
Loyola, to monitor the discussions and evaluate these discussions against
the objectives of Loyola. Further, management of Loyola developed a five
year plan intended to provide some basis for the Loyola Board to compare
potential values generated through remaining independent against possible
merger proposals. Finally, an estimate of value of Loyola was obtained
from a financial advisor to inform the Loyola Board of ranges of value
which might be achieved by the stockholders of Loyola in a merger of Loyola
with another depository institution. The larger depository holding company
requested access to certain financial and other information from Loyola,
and some information was sent to them. Based upon the indication of value
proffered by the larger depository holding company, it appeared that a
potential merger would result in a significant increase in shareholder
value. The potential suitor's interest in Loyola, however, appeared to
wane, and these preliminary discussions produced no tangible results.
In September, 1994, after management of Loyola was approached by
representatives of Crestar, the Loyola Board decided to establish a more
formal process for the project. It engaged Piper & Marbury L.L.P. as its
legal counsel, and directed management to interview and hire a financial
advisor for the project. After conducting interviews with several firms,
Alex. Brown was engaged as financial advisor for the project. As such,
Alex. Brown assisted management in identifying financial institutions who
would be likely candidates for acquiring Loyola, worked with management of
Loyola and its counsel in preparing a Confidential Offering Memorandum (the
"Memorandum") for delivery to the potential acquirors, prepared an analysis
of Loyola and the market for its securities to provide a basis for
evaluating any offers received by Loyola, and assisted management of Loyola
to develop a Dutch auction process in the event the Loyola Board ultimately
decided that a merger was in the best interests of Loyola, its stockholders
and its other constituents. The Dutch auction process involved several
steps including the identification of potential acquirors, an informal
approach to the potential acquirors to determine their interest in
participating in the process, the delivery of the Memorandum to those
potential acquirors which indicated a desire to participate in the process,
the receipt of preliminary indications of interest from the potential
acquirors, the detailed on-site due diligence by potential acquirors with
indications of interest of a magnitude deemed acceptable to the Loyola
Board, and the receipt of final bid proposals. While it was initially
anticipated that the Memorandum would be delivered to potential acquirors
in December, 1994 and that the entire process would be concluded with an
agreement by early 1995, market conditions for bank stocks and appetite for
acquisitions from potential acquirors had deteriorated during the fourth
quarter of 1994, and Alex. Brown recommended to Loyola that the process be
delayed until the market recovered.
By late February, 1995, the Board had determined that the market had
recovered sufficiently for the process to commence again. After receiving
a full report from Alex. Brown, the Loyola Board authorized an approach to
ten potential acquirors (six, including Crestar, were in-market
institutions and four were out-of-market institutions). Eight of the ten
prospective acquirors, including Crestar, expressed an initial interest in
an affiliation with Loyola, and received copies of the Memorandum.
After the review period only Crestar, however, submitted a preliminary
indication of value to Loyola. The other seven were contacted by Alex.
Brown concerning their failure to give a preliminary indication of value,
and most indicated various internal reasons for not wishing to continue in
the process. The preliminary indication of value received from Crestar was
$28 a share; however, the Committee agreed to invite Crestar to conduct due
diligence only if the preliminary indication of value was increased to at
least $30 a share. After agreeing to the increase, Crestar conducted
extensive due diligence at Loyola. At the conclusion of due diligence,
negotiations on price and other issues continued, culminating in an
announcement on April 27, 1995 that Loyola and Crestar had entered into the
Binding Letter Agreement on price and general principles to govern the
remaining issues. The Loyola Board approved the Agreement on May 16, 1995.
REASONS FOR THE MERGER; RECOMMENDATION
OF THE LOYOLA BOARD
The Loyola Board believes that the terms of the Merger and the
Agreement are advisable and are fair to, and in the best interests of,
Loyola and its stockholders. As explained below, this conclusion is
supported by the opinion of its independent financial advisor that the
consideration to be received in the Merger is fair to Loyola's stockholders
from a financial point of view. In considering the terms and conditions of
the Agreement, the Loyola Board considered a number of factors. The Loyola
Board did not assign any relative or specific weights to the factors
considered. The material factors considered were:
(i) The Financial Terms and Structure of the Merger. The
Loyola Board was of the view that, based on historical and anticipated
trading ranges for Crestar Common Stock, the value of the
consideration to be received by Loyola stockholders resulting from the
Exchange Ratio represented a fair multiple of Loyola's per share book
value and earnings. The Loyola Board also considered that, under the
proposed Exchange Ratio and based on the Loyola Board's belief that
Crestar would continue to pay dividends at its current rate, the
Merger would result in a substantial increase in dividend income to
Loyola stockholders, although there can be no assurance that current
dividends are indicative of future dividends. See
"Summary -- Comparative Per Share Data." The Loyola Board also
considered that the Merger would qualify as a tax-free reorganization
under the Code. See " -- Certain Federal Income Tax Consequences."
(ii) The Non-Financial Terms of the Merger. The Loyola Board
considered the social and economic effect on the employees, depositors
and customers of, and others dealing with Loyola and on the
communities in which Loyola is located or operates.
(iii) Certain Financial and Other Information Concerning
Crestar. The Loyola Board considered the business and financial
condition of Crestar and its favorable position among its peer group
of national and regional financial institutions in terms of
profitability, capital adequacy and asset quality. The Loyola Board
also considered that the historical dividends per share and net income
per share of Crestar Common Stock to be received by Loyola
stockholders after giving effect to the Exchange Ratio, would
represent a substantial increase in the historical dividends per share
and net income per share of Loyola Common Stock, although there can be
no assurance that pro forma amounts are indicative of future dividends
or income per share of Crestar. The Loyola Board further considered
the reputation and business practices of Crestar and its management as
they would affect the employees of Loyola.
(iv) Other Possible Alternatives. The Loyola Board
considered, based in part on the advice of Alex. Brown, possible
alternatives to the transaction with Crestar, including possible
affiliations with others.
(v) Opinion of Financial Advisor. The Loyola Board
considered the opinion of Alex. Brown as to the fairness of the
consideration to be received in the Merger to Loyola stockholders from
a financial point of view. See " -- Opinion of Financial Advisor."
(vi) Certain Other Considerations. The Loyola Board further
determined that the addition of resources resulting from the Merger
will enable Loyola to provide a wider and improved array of financial
services to consumers and businesses and to achieve added flexibility
in dealing with the changing competitive environment in its market
area. In addition, the Loyola Board concluded that the Merger will
help provide Loyola with the financial resources needed to meet the
competitive challenges arising from recent and anticipated changes in
the banking and financial services industry.
THE LOYOLA BOARD BELIEVES THAT THE MERGER AND THE AGREEMENT ARE
ADVISABLE AND ARE FAIR TO, AND IN THE BEST INTEREST OF, LOYOLA AND ITS
STOCKHOLDERS. THE LOYOLA BOARD UNANIMOUSLY RECOMMENDS THAT LOYOLA'S
STOCKHOLDERS VOTE FOR THE AGREEMENT AND THE MERGER CONTEMPLATED THEREBY.
OPINION OF FINANCIAL ADVISOR
Loyola retained Alex. Brown to act as Loyola's financial advisor in
connection with the Merger. Alex. Brown has historically provided, and
continues to provide, certain other financial advisory and agency services
to Loyola. Alex. Brown was selected to act as Loyola's financial advisor
based upon its qualifications, expertise and reputation, as well as Alex.
Brown's prior investment banking relationship and familiarity with Loyola.
Alex. Brown regularly publishes research reports regarding the financial
services industry and the businesses and securities of publicly-owned
companies in that industry.
On April 24, 1995, at the meeting at which the Loyola Board approved
and adopted the Binding Letter Agreement, Alex. Brown delivered a written
opinion to the Loyola Board that, as of such date, the Exchange Ratio to be
received by the stockholders of Loyola, 0.690 shares of Crestar Common
Stock for each share of Loyola Common Stock (subject to adjustment as
detailed in the Binding Letter Agreement), was fair to the stockholders of
Loyola from a financial point of view (the "Opinion"). The Opinion was
updated as of May 16, 1995, the date as of which the Agreement was
executed, and as of the date of this Proxy Statement/Prospectus (the
"Updated Opinion" and together with the Opinion the "Opinions"). No
limitations were imposed by the Loyola Board upon Alex. Brown with respect
to the investigations made or procedures followed by it in rendering the
Opinions.
THE FULL TEXT OF THE UPDATED OPINION, WHICH SETS FORTH ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED
HERETO AS ANNEX III TO THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED
HEREIN BY REFERENCE. LOYOLA STOCKHOLDERS ARE URGED TO READ THE UPDATED
OPINION IN ITS ENTIRETY. THE FOLLOWING SUMMARY OF THE OPINION IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE UPDATED OPINION.
In rendering the Opinions, Alex. Brown (i) reviewed the Binding Letter
Agreement and subsequently the Agreement, certain publicly available
business and financial information concerning Loyola and Crestar, and
certain internal financial analyses and forecasts for Loyola and Crestar
prepared by their respective managements; (ii) held discussions with
members of senior management of Loyola and Crestar regarding the past and
current business operations, financial condition, and future prospects of
their organizations; (iii) reviewed the reported price and trading activity
for Loyola Common Stock and Crestar Common Stock and compared certain
financial and stock market information for each of Loyola and Crestar with
similar information for certain other financial institutions, the
securities of which are publicly traded; (iv) reviewed the financial terms
of certain recent business combinations in the financial institutions
industry which Alex. Brown deemed comparable in whole or in part; and (v)
performed such other studies and analyses as Alex. Brown considered
appropriate.
Alex. Brown relied without independent verification upon the accuracy
and completeness of all of the financial and other information reviewed by
and discussed with it for purposes of its Opinions. With respect to the
financial forecasts reviewed by Alex. Brown in rendering its Opinions,
Alex. Brown assumed that such financial forecasts were reasonably prepared
on bases reflecting the best currently available estimates and judgments of
the management of each of Loyola and Crestar as to the future financial
performance of Loyola and Crestar. Alex. Brown did not make an independent
evaluation or appraisal of the assets or liabilities of Loyola or Crestar
nor was it furnished with any such appraisal.
The summary set forth below does not purport to be a complete
description of the analyses performed by Alex. Brown in this regard. The
preparation of a fairness opinion involves various determinations as to the
most appropriate and relevant methods of financial analysis and the
application of these methods to the particular circumstances and,
therefore, such an opinion is not readily susceptible to summary
description. Accordingly, notwithstanding the separate factors discussed
below, Alex. Brown believes that its analyses must be considered as a whole
and that selecting portions of its analyses, and of the factors considered
by it, without considering all analyses and factors, could create an
incomplete view of the evaluation process underlying its opinion. No one
of the analyses performed by Alex. Brown was assigned a greater
significance than any other. In performing its analyses, Alex. Brown made
numerous assumptions with respect to industry performance, business and
economic conditions and other matters, many of which are beyond Loyola's or
Crestar's control. The analyses performed by Alex. Brown are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
Additionally, analyses relating to the values of businesses do not purport
to be appraisals or to reflect the prices at which businesses actually may
be sold.
Analysis of Selected Publicly Traded Companies. In preparing the
Opinions, Alex. Brown, using publicly available information, compared
selected financial information, including book value, tangible book value,
latest twelve months ("LTM") earnings, 1995 estimated earnings, 1996
estimated earnings, asset quality ratios and loan loss reserve levels, for
Loyola and two peer groups of savings bank organizations.
The first peer group comprised all savings banks in the United States
that possessed asset bases in excess of $500 million (the "National
Comparables Group"). The National Comparables Group was then segmented
into those savings banks headquartered in the Mid-Atlantic Region
(Delaware, Maryland, Pennsylvania and Virginia) (the "Regional Comparables
Group"). The Regional Comparables Group included Maryland Federal Bancorp
(MD); Parkvale Financial Corporation, PennFirst Bancorp, Inc., Sovereign
Bancorp and York Financial Corp. (PA); and Charter Federal Savings Bank,
Virginia Beach Federal Financial, Virginia First Federal and Washington
Federal Savings (VA). Since Loyola's stock price began to increase, and
such increase was believed to be due to takeover rumors during the early
part of April, the trading multiple comparisons are as of March 24, 1995,
one month prior to the date the Loyola Board meeting was held to approve
the Binding Letter Agreement. As of March 24, 1995, the relative multiples
implied by the market price of Loyola's Common Stock and the mean market
price of the common stock of the National Comparables Group and the
Regional Comparables Group, respectively, to such selected financial data
was: (i) to LTM earnings 12.6x for Loyola and 10.3x and 9.6x for the
National Comparables Group and Regional Comparables Group, respectively;
(ii) to 1995 Institutional Brokerage Estimation Service ("I/B/E/S")
estimated earnings per share, 12.2x for Loyola and 9.8x and 8.3x for the
National Comparables Group and the Regional Comparables Group,
respectively; (iii) to 1996 I/B/E/S estimated earnings per share, 11.0x for
Loyola and 9.2x and 7.5x for the National Comparables Group and Regional
Comparables Group, respectively; (iv) to stated book value, 107% for Loyola
and 105% and 113% for the National Comparables Group and the Regional
Comparables Group, respectively; (v) to tangible book value, 112% for
Loyola and 110% and 123% for the National Comparables Group and the
Regional Comparables Group, respectively; and (vi) to total assets, 7.4%
for Loyola and 8.6% and 7.5% for the National Comparables Group and
Regional Comparables Group, respectively.
Analysis of Comparable Acquisition Transactions. In preparing the
Opinions, Alex. Brown analyzed certain comparable merger and acquisition
transactions for savings banks based upon the acquisition price relative to
stated book value, stated tangible book value, LTM earnings, total assets
and the premiums to core deposits and market price. The market price
premium is measured against the market price of the common stock one month
prior to the acquisition announcement (or, in Loyola's case, on March 24,
1995). The analysis included a review and comparison of the mean multiples
represented by a sampling of recently effected or pending savings bank
acquisitions nationwide having a transaction value between $100 million and
$1 billion which were announced since January 1, 1993 (a total of 37
transactions), as segmented into: (i) transactions announced since January
1, 1995 (4) ("1995 Transactions"); (ii) transactions in which the selling
savings bank was headquartered in the Mid-Atlantic Region (4) (the
"Regional Transactions"); (iii) transactions in which the selling savings
bank achieved a return on average assets between 0.50% and 1.00% in the
year of its announced acquisition (11) (the "Profitability-Segmented
Transactions"); and (iv) transactions in which the selling savings bank
possessed nonperforming assets between 1.00% and 4.00% of its total assets
(20) (the "Asset-Quality Segmented Transactions").
The relative multiples implied by the Exchange Ratio ($32.00 implied
per share value to Loyola stockholders) and each of the comparable
acquisition transaction segmentations, respectively, are provided in the
following table:
<TABLE>
PURCHASE PRICE TO:
CORE
BOOK TANGIBLE BOOK LTM DEPOSITS MARKET
TRANSACTION GROUP VALUE VALUE ASSETS EPS PREMIUM PREMIUM
<S> <C> <C> <C> <C> <C> <C>
Consideration ($32.00 150.6% 158.9% 11.4% 17.8x 8.6% 41.4%
per share)
Comparable Acquisition
Transactions:
(a) Nationwide - Mean 163.4% 175.1% 13.5% 14.5x 8.1% 37.9%
High 218.6% 218.6% 20.4% 33.3x 14.1% 181.0%
Low 113.6% 132.8% 6.7% 8.1x 1.0% 1.8%
(b) Recent Transactions - Mean 174.1% 176.6% 15.4% NM 10.3% 34.3%
High 197.1% 197.1% 20.4% 33.3x 13.2% 57.6%
Low 139.4% 139.4% 8.0% 20.1x 8.1% 13.6%
(c) Regional Transactions - Mean 163.4% 176.6% 13.7% 15.7x 9.2% 35.1%
High 182.9% 191.1% 20.4% 33.3x 12.6% 52.9%
Low 151.5% 154.6% 8.0% 13.3x 7.3% 7.8%
(d) Profitability-Segmented - Mean 164.6% 179.2% 12.1% 15.7x 8.0% 34.3%
High 197.1% 207.4% 17.8% 28.6x 13.2% 158.0%
Low 113.6% 147.5% 7.3% 10.9x 4.4% 8.1%
(e) Asset-Quality Segmented - Mean 162.9% 174.9% 13.2% 16.8x 7.6% 33.2%
High 205.4% 212.5% 18.8% 32.8x 13.2% 178.5%
Low 113.6% 142.2% 6.7% 8.8x 1.0% 1.8%
</TABLE>
Discounted Cash Flow Analysis. Using discounted cash flow analysis,
Alex. Brown estimated the present value of the future dividend streams that
Loyola could produce over a two year period, under different assumptions as
to required equity levels, if Loyola performed in accordance with
management's forecasts and certain variants thereof. Alex. Brown also
estimated the terminal value for Loyola's common equity after the two year
period by applying book value (150% - 185%) and earnings (13.0 - 16.0
times) acquisition multiples currently being received by savings bank
institutions with similar profitability ratios as Loyola is projected to
have during its calendar year ended December 31, 1996. The range of
multiples used reflected a variety of scenarios regarding the growth and
profitability prospects of Loyola. The dividend streams and terminal
values were then discounted to present values using discount rates ranging
from 12.5% to 15.0%, which reflect different assumptions regarding the
required rates of returns of holders or prospective buyers of Loyola's
common equity.
Reference Range. Based in part on the several analyses discussed
above, Alex. Brown developed, for purposes of its Opinions, a reference
range for the value of Loyola common equity of $28.00 to $34.00 per share
of Loyola Common Stock. The values reflected in the foregoing reference
range were considered along with the other analyses performed by Alex.
Brown and were not intended to represent the price at which 100% of Loyola
Common Stock could actually be sold. The foregoing reference ranges were
based in part on the application of economic and financial models and are
not necessarily indicative of actual values; which may be significantly
more or less than such estimates. The reference ranges do not purport to
be appraisals.
Compensation of Financial Advisor. Pursuant to the terms of an
engagement letter dated September 30, 1994, Loyola has paid Alex. Brown a
fee of $300,000 for acting as financial advisors in connection with the
Merger, including rendering the Opinion. In addition, Loyola has agreed to
pay Alex. Brown a fee of 0.70% of the aggregate consideration received by
Loyola stockholders in the Merger less the $300,000 in fees already paid to
Alex. Brown. This fee is payable to Alex. Brown upon consummation of the
Merger, and is estimated to be approximately $1.7 million. Whether or not
the Merger is consummated, Loyola also has agreed to indemnify Alex. Brown
and certain related persons against certain liabilities relating to or
arising out of its engagement.
EFFECTIVE TIME OF THE MERGER
The Merger is expected to be consummated in late December, 1995 or
early January, 1996. The Merger will be effective on the date (the
"Effective Date") and the time (the "Effective Time") specified in the
Articles of Merger that are to be filed with the State Department of
Assessments and Taxation of Maryland and the SCC as soon as practicable
following satisfaction of all the conditions to the consummation of the
Merger set forth in the Agreement. Either Loyola or Crestar, acting
unilaterally, may terminate the Agreement if the Merger has not been
consummated by March 31, 1996.
Until the Effective Time of the Merger occurs, Loyola stockholders
will retain their rights as stockholders to vote on matters submitted to
them by the Loyola Board.
DETERMINATION OF EXCHANGE RATIO AND EXCHANGE FOR CRESTAR COMMON STOCK
Crestar valued Loyola Common Stock for purposes of the exchange at the
Exchange Ratio. The valuation of Loyola Common Stock was based upon the
potential value of Loyola Common Stock, the nature of Loyola's savings and
loan association businesses, and Loyola's deposit base, market share and
market franchise in and around Maryland and Washington, D.C. Each share of
Loyola Common Stock (other than shares held directly by Crestar, excluding
shares held in a fiduciary capacity or in satisfaction of a debt previously
contracted) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the number of shares of
Crestar Common Stock determined by the Exchange Ratio which is determined
by the Average Closing Price, subject to adjustment in certain
circumstances. The Exchange Ratio at the Effective Time of the Merger
shall be adjusted to reflect any consolidation, split-up, other
subdivisions or combinations of Crestar Common Stock, any dividend payable
in Crestar Common Stock, or any capital reorganization involving the
reclassification of Crestar Common Stock subsequent to the date of the
Agreement. Based on the $ closing price of Crestar Common Stock on
the NYSE on , 1995, the Exchange Ratio would have been
shares of Crestar Common Stock per share of Loyola Common Stock if
such price had been the Average Closing Price. Based on the
shares of Loyola Common Stock outstanding as of the Record Date, the
Exchange Ratio would have resulted in the issuance of an aggregate of
approximately shares of Crestar Common Stock in exchange for the
Loyola Common Stock. Such number of shares may increase or decrease
depending on the Average Closing Price. The aggregate number of shares of
Crestar Common Stock to be issued in connection with the Merger also will
vary to the extent that outstanding options to purchase 1,080,567 shares of
Loyola Common Stock (as of March 31, 1995) are exercised prior to the
Effective Time of the Merger. See " Effect on Loyola Employee Benefits
Plans" below.
Following the Effective Time of the Merger, former holders of shares
of Loyola Common Stock will be mailed a Letter of Transmittal which will
set forth the procedures that should be followed for exchange of Loyola
Common Stock for Crestar Common Stock.
Stockholders of Loyola who receive Crestar Common Stock will be
entitled to receive certificates representing the number of whole shares of
Crestar Common Stock for which such shares have been submitted for exchange
and cash in lieu of any fractional share interest on the basis of the
Exchange Ratio.
BUSINESS OF LOYOLA AND CRESTAR PENDING THE MERGER
Loyola has agreed that until the Effective Time of the Merger it will
and will cause each of its subsidiaries to conduct their respective
operations only in the ordinary course of business consistent with past
practices (subject to the terms of the Agreement described below) and will
use its best efforts to preserve intact their respective business
organizations, keep available the services of their officers and employees
and maintain satisfactory relationships with licensors, suppliers,
distributors, customers, clients and others having business relationships
with them. Loyola has also agreed that it will not, and will not permit any
of its subsidiaries to, take any action, engage in any transactions or
enter into any agreement which would adversely affect or delay in any
material respect the ability of Crestar or Loyola to obtain any necessary
approvals, consents or waivers of any Governmental Entity (as defined in
the Agreement) or third party required for the Merger or to perform its
covenants and agreements on a timely basis under the Agreement. In this
connection, Loyola has agreed that, without the prior written consent of
Crestar, it will not and will not permit any of its subsidiaries to:
(i) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other person, or make any loan or advance; (ii) adjust,
split, combine or reclassify any capital stock; make, declare or pay any
dividend on Loyola Common Stock other than the regular quarterly cash
dividend not exceeding $0.12 per share of Loyola Common Stock; or make any
other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock, or grant any stock appreciation rights, or convert any options into
stock appreciation rights, or grant any person any right to acquire any
shares of its capital stock, except for dividends paid by any of the
wholly-owned subsidiaries of Loyola to Loyola or any of its wholly-owned
subsidiaries; or issue any additional shares of capital stock except
pursuant to the exercise of stock options outstanding as of the date of the
Agreement which were granted under Loyola's 1986 Stock Option Plan, as
amended; (iii) sell, transfer, mortgage, encumber or otherwise dispose of
any of its material properties or assets to any person other than a direct
or indirect wholly-owned subsidiary of Loyola, or cancel, release or assign
any material indebtedness of any person or any claims held by any Person,
except pursuant to contracts or agreements in force at the date of the
Agreement; (iv) other than portfolio investments in the ordinary course of
business consistent with past practice, make any material investment either
by purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other person other
than a wholly-owned subsidiary of Loyola; (v) enter into or terminate any
material contract or agreement, or make any change in any of its material
leases or contracts, other than renewals of contracts and leases without
material adverse changes of terms; (vi) except as permitted under the
current year's budget or as otherwise provided in the Agreement, increase
in any manner the compensation or fringe benefits of its employees
(including employees, former employees, director and former directors) or
pay any pension or retirement allowance not required by any existing plan
or agreement to any such employees, or become a party to, amend, modify or
commit itself to any pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for the benefit of any
employee, or adopt, amend or modify any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit agreements,
trusts, plans, funds, employee stock ownership, consulting, severance or
fringe benefit plan, or other arrangements for the benefit or welfare of
any employee or voluntarily accelerate the vesting of any stock options or
other stock-based compensation; (vii) modify in any material respect the
manner in which it and its subsidiaries have heretofore conducted or
accounted for their business; (viii) except as contemplated by the
Agreement, amend its Articles of Incorporation or its By-Laws; (ix) agree
to, or make any commitment to, take any of the actions prohibited by the
provisions of the Agreement governing the conduct of the business of Loyola
pending the Merger; (x) except if as a result of death, disability or other
inability to serve, elect or appoint any new director or officer of Loyola
or any of its subsidiaries, provided that the appointment of an officer to
another office of Loyola or any of its subsidiaries shall not be deemed to
be the appointment of a new officer; or (xi) acquire an insurance policy or
enter into any new agreement, amendment or endorsement or make any changes
relating to insurance coverage, including coverage for its directors and
officers, which would result in an additional premium payment obligation of
$50,000 or more.
Loyola has further agreed that neither Loyola nor any of its
subsidiaries, nor any of their respective officers, directors and employees
shall, and Loyola shall direct and use its best efforts to cause its agents
and representatives not to, directly or indirectly, take any action to
solicit or initiate any inquiries or the making of any offer or proposal
with respect to a merger, consolidation, business combination, liquidation,
reorganization, sale or other disposition of any significant portion of
assets, sale of shares of capital stock, or similar transactions involving
Loyola or any subsidiary of Loyola (an "Acquisition Proposal") or, except
as may be legally required for the discharge by the Loyola Board of its
fiduciary duties, engage in any negotiation concerning, or provide any
confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal. Loyola will promptly notify
Crestar of any Acquisition Proposal or any inquiries with respect thereto,
and will give Crestar contemporaneous written notice upon engaging in
discussions or negotiations with, or providing any information regarding
Loyola to, any such person regarding an Acquisition Proposal.
Loyola has agreed that, prior to the consummation of the Merger, it
will conform its loan, accrual and reserve policies, and shall establish
and take such accruals, reserves and charges in order to implement such
policies in respect of excess facilities and equipment capacity, severance
and other benefit costs, litigation matters, write-off or write-down of
various assets and other appropriate accounting adjustments, and to
recognize for financial accounting purposes such expenses of the Merger and
restructuring charges related to or to be incurred in connection with the
Merger, including the expense for any tax liabilities with respect to the
anticipated recapture of the bad debt reserves established by Loyola or any
of its subsidiaries for tax purposes to the extent not otherwise recorded,
so that such policies are applied consistently on a mutually satisfactory
basis with those of Crestar; provided that: (i) Loyola will not be
obligated to take any such action unless and until Crestar specifies its
request in writing and acknowledges that all conditions to Crestar's
obligations to consummate the Merger set forth in the Agreement have been
satisfied or waived by Crestar; (ii) Loyola acknowledges that the
conditions to its obligation to consummate the Merger set forth in the
Agreement have been satisfied or waived by Loyola; (iii) Loyola shall not
be required to take any such action that impairs its regulatory capital
below regulatory guidelines, that is inconsistent with any formal or
informal undertaking by Loyola to any bank regulator that has been
disclosed in writing to Crestar prior to the date of the Agreement or is
inconsistent with any bank regulatory requirement applicable to Loyola; and
(iv) Loyola shall not be required to take any such action that is not
consistent with generally accepted accounting principles applicable to
depository institutions.
Crestar has agreed that until the Effective Time of the Merger it will
and will cause each of its subsidiaries to conduct their respective
operations only in the ordinary course of business consistent with past
practice and will use its best efforts to preserve intact their respective
business organizations, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors,
suppliers, distributors, customers, clients and others having business
relationships with them. Crestar has also agreed that it will not, and
will not permit any of its subsidiaries to, take any action, engage in any
transactions or enter into any agreement which would adversely affect or
delay in any material respect the ability of Crestar or Loyola to obtain
any necessary approvals, consents or waivers of any Governmental Entity
required for the transactions contemplated hereby or to perform its
covenants and agreements on a timely basis under the Agreement.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is conditioned upon the approval of the
holders of a majority of the outstanding Loyola Common Stock entitled to
vote at the Loyola Stockholder Meeting. The Merger must be approved by the
Federal Reserve Board, the OTS, the MBC, and the SCC, applications for
which have been filed and approvals for which are expected to be received.
The obligations of Loyola and Crestar to consummate the Merger are further
conditioned upon: (i) the accuracy of the representations and warranties of
Loyola and Crestar contained in the Agreement; (ii) the performance of all
covenants and agreements contained in the Agreement; (iii) the receipt of
an opinion of Piper & Marbury L.L.P., counsel to Loyola, and an opinion of
Hunton & Williams, counsel to Crestar, with respect to certain of the tax
consequences of the Merger described herein under " Certain Federal Income
Tax Consequences;" (iv) no preliminary or permanent injunction or other
order shall have been issued by any court or by any Governmental Entity
which prohibits the consummation of the Merger and no litigation or
proceeding shall be pending against Crestar or Loyola or any of their
subsidiaries brought by any government entity seeking to prevent
consummation of the Merger; (v) the approval for listing on the NYSE of the
shares of Crestar Common Stock at the Effective Time of the Merger, subject
to official notice of issuance; (vi) the receipt of opinions of counsel
with respect to certain legal matters; (vii) the registration statement
registering the shares of Crestar Common Stock to be issued in the Merger
shall have become effective and no stop order suspending the effectiveness
of such registration statement shall have been issued and no proceedings
for that purpose shall have been initiated or threatened by the SEC;
(viii) no statute, rule, regulation, executive order, decree or order of
any kind shall have been enacted, entered, promulgated or enforced by any
court or Governmental Entity which prohibits consummation of the Merger;
(ix) the receipt by Crestar of permits and other authorizations necessary
under all state securities or "Blue Sky" laws to consummate the Merger; and
(x) the receipt by Crestar of a letter from KPMG Peat Marwick LLP to the
effect that the Merger can be accounted for as a pooling-of-interests.
Crestar and Loyola may waive any condition to their obligations to
consummate the Merger except requisite approvals of Loyola stockholders and
regulatory authorities.
STOCK OPTION AGREEMENT
Crestar and Loyola have entered into a Stock Option Agreement, dated
as of April 27, 1995 (the "Option Agreement"), pursuant to which Loyola
issued to Crestar an option (the "Option") to purchase up to 1,613,442
shares of Loyola Common Stock at a purchase price of $25.00 per share.
Crestar may exercise the Option upon the occurrence of certain events
(each a "Purchase Event"). The Option Agreement provides that a Purchase
Event shall mean the occurrence of any of the following events after the
date of execution of the Option Agreement: (i) Loyola, without having
received Crestar's prior written consent, shall have entered into an
agreement with any person to: (x) merge, consolidate or enter into any
similar transaction with Loyola except as contemplated in the Agreement;
(y) purchase, lease or otherwise acquire all or substantially all of the
assets of Loyola; or (z) purchase or otherwise acquire (including by way of
merger, consolidation, share exchange or any similar transaction)
securities representing 15% or more of the voting power of Loyola; (ii) any
person (other than Crestar and its subsidiary banks in a fiduciary
capacity, or Loyola and Loyola F.S.B. in a fiduciary capacity) shall have
acquired beneficial ownership or the right to acquire beneficial ownership
of 15% or more of the outstanding shares of Loyola Common Stock; (iii) any
person shall have made a bona fide proposal to Loyola by public
announcement or written communication that is or becomes the subject of
public disclosure to acquire Loyola or Loyola F.S.B. by merger,
consolidation, purchase of all or substantially all of its assets or any
other similar transaction, and following such bona fide proposal the
stockholders of Loyola vote not to adopt the Merger; or (iv) Loyola shall
have willfully breached certain specified covenants contained in the
Agreement following a bona fide proposal to acquire by merger,
consolidation, purchase of all or substantially all of its assets or any
other similar transaction, which breach would entitle Crestar to terminate
the Agreement (without regard to the cure periods provided for therein) and
such breach shall not have been cured prior to the date on which Crestar
shall notify Loyola of its intent to exercise the Option.
The Option may be exercised in whole or in part, at one or more
closings, and may be exercised at any time if a Purchase Event shall have
occurred and be continuing and before the Option Agreement is terminated,
unless Crestar shall have breached in any material respect any material
covenant or representation contained in the Agreement and such breach has
not been cured. The Option Agreement provides that to the extent that it
shall have not been exercised, the Option shall terminate (i) on the
Effective Date of the Merger; (ii) upon the termination of the Agreement in
accordance with the provisions thereof (other than a termination resulting
from a willful breach by Loyola of certain specified covenants contained
therein or, following the occurrence of a Purchase Event, failure of
Loyola's stockholders to approve the Merger by the vote required under
applicable law); or (iii) 12 months after termination of the Agreement due
to a willful breach by Loyola of certain specified covenants contained
therein or, following the occurrence of a Purchase Event, failure of
Loyola's stockholders to approve the Merger by the vote required under
applicable law.
TERMINATION
The Agreement may be terminated, and the Merger abandoned at any time
prior to the Effective Date of the Merger, by: (i) the mutual consent of
Crestar and Loyola, if its respective board of directors so determines by a
vote of a majority of the members of its entire board; (ii) either Crestar
or Loyola, if its respective board of directors so determines by a vote of
a majority of the members of its entire board, in the event of the failure
of the stockholders of Loyola to approve the Agreement at the Special
Meeting; (iii) by Crestar or Loyola, if its respective board of directors
so determines by a vote of a majority of the members of its entire board,
in the event of a material breach by the other party of any representation,
warranty, covenant or agreement contained in the Agreement which is not
cured or not curable within 60 days after written notice of such breach is
given to the party committing such breach; (iv) either Crestar or Loyola by
written notice to the other party if prior to December 31, 1995 either (A)
any approval, consent or waiver of any Governmental Entity required to
permit consummation of the transactions contemplated by the Agreement shall
have been denied, or (B) any Governmental Entity of competent jurisdiction
shall have issued a final, unappealable order or ruling enjoining or
otherwise prohibiting consummation of the transactions contemplated by the
Agreement; (v) either Crestar or Loyola, if its respective board of
directors so determines by a vote of a majority of the members of its
entire board, if the Merger is not consummated by March 31, 1996, unless
the failure to so consummate by such time is due to a breach of any
representation, warranty, agreement or covenant by the party seeking to
terminate the Agreement; and (vi) Loyola, if the Loyola Board so determines
by a majority vote of the members of its entire board at any time during
the five-day period prior to the fifth day prior to the Closing Date, if
the Average Closing Price is less than $40.00; provided, however, that
Crestar shall have the option of increasing the consideration to be
received by holders of Loyola Common Stock by adjusting the Exchange Ratio
to a number equal to the quotient, the numerator of which is the product of
$40.00 times the Exchange Ratio then in effect and the denominator of which
is the Average Closing Price.
In the event of the termination of the Agreement pursuant to the
above, the Agreement, other than provisions relating to confidentiality of
information obtained by the parties and to the payment of expenses relating
to the Merger, shall become void and there shall be no liability on the
part of any party or its directors or officers, except that any such
termination will be without prejudice to the rights of any party arising
out of the willful breach of the other party of any covenant or willful
misrepresentation contained in the Agreement.
ACCOUNTING TREATMENT
Consummation of the Merger is conditioned upon the receipt by Crestar
of a letter from KPMG Peat Marwick LLP to the effect that the Merger can be
accounted for as a pooling-of-interests. See " Conditions to Consummation
of the Merger." Under this accounting treatment, as of the Effective Time
of the Merger, the assets and liabilities of Loyola would be added to those
of Crestar at their recorded book values and the shareholders' equity
accounts of Crestar and Loyola would be combined on Crestar's consolidated
balance sheet. On the pooling-of-interests accounting basis, income and
other financial statements of Crestar issued after consummation of the
Merger would be restated retroactively to reflect the consolidated combined
financial position and results of operations of Crestar and Loyola as if
the Merger had taken place prior to the periods covered by such financial
statements.
OPERATIONS AFTER THE MERGER
After the consummation of the Merger, Crestar will continue generally
to conduct the business presently conducted by Loyola, except that
following the Merger Crestar will be required to divest certain business
activities of Loyola not permitted to be engaged in by bank holding
companies. Crestar also intends to establish a Baltimore region with a
separate management team and a local advisory board of directors.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Loyola's management may be deemed to have interests
in the Merger in addition to their interests as stockholders of Loyola
generally. In each case, the Loyola Board was aware of their potential
interests, and considered them, among other matters, in approving the
Agreement and the transactions contemplated thereby.
Employment Agreements. Employment agreements are currently in effect
for 12 executive and other senior officers of Loyola and its subsidiaries
(collectively, the "Officers"), including Messrs. Mosmiller and Johnson who
are members of the Loyola Board. The agreements will continue to be
effective (except with respect to an amendment to the agreements dated as
of May 16, 1995) whether or not the Merger is consummated. If the Merger
is consummated, employer obligations under the employment agreements with
the Officers will become obligations of Crestar and its subsidiaries by
operation of law.
Loyola and Loyola F.S.B. have entered into employment agreements with
Joseph W. Mosmiller, Chairman of the Board and Chief Executive Officer, and
James C. Johnson, President and Chief Operating Officer. The original
terms of the agreements continue until April, 1998. However, upon each
anniversary date of the agreements, the Loyola Board may extend the term
for an additional one-year period. Each of these agreements provides for a
minimum annual salary of $393,000 and $299,000, respectively. The
agreements further provide that these individuals will serve as Chairman of
the Board and Chief Executive Officer, and as President and Chief Operating
Officer of Loyola and Loyola F.S.B., respectively, and that they will be
entitled to participate in discretionary bonuses, stock option plans,
incentive compensation plans, other customary fringe benefits, vacation and
sick leave and disability payments available to senior management
employees. Under the agreements, Messrs. Mosmiller and Johnson may
relinquish their respective positions and accept reduced responsibilities
during the remaining portion of the terms of the agreements. In such
event, they would be entitled to receive an annual salary in an amount at
least equal to 50% of the annual salary they were being paid at the time
they relinquished their respective positions.
The agreements with Messrs. Mosmiller and Johnson provide for salary
reviews by the Loyola Board at least annually. The agreements also provide
that salary increases may be awarded in the sole discretion of the Loyola
Board and that discretionary bonuses may be awarded in an equitable manner
with all other senior management employees. Each agreement is terminated
upon death and is terminable by Loyola or Loyola F.S.B. for "just cause,"
as defined in the agreements. If employment is terminated without "just
cause," the employee is entitled to a continuation of his salary for the
remaining term (including any renewal term) (the "Expiration Date") of the
agreement plus such salary for an additional one-year period, continued
payment of certain health, life, disability and other insurance benefit
costs through the Expiration Date, as well as supplemental retirement
benefits in an amount sufficient to provide the employee with the benefits
he would have received had he remained employed through the Expiration
Date. Messrs. Mosmiller and Johnson may terminate their agreements upon 60
days' prior written notice to the Loyola Board, in which case they are
entitled only to compensation, vested rights, and employee benefits up to
the date of such termination.
Loyola F.S.B. has also entered into employment agreements with Thomas
R. Marvel, James V. McAveney, Charles C. Schmitt and William A. Wycoff.
The terms of the agreements continue until April, 1998. However, upon each
anniversary date of the agreements, the Loyola Board may extend the term
for an additional one-year period. The agreements each provide for a
minimum annual salary of $166,200. The agreements provide for salary
review by the Loyola Board at least annually. The agreements also provide
that salary increases may be awarded in the sole discretion of the Loyola
Board and that discretionary bonuses may be awarded in an equitable manner
with all other senior management employees. The named individuals are also
entitled to participate in fringe benefits, vacation and sick leave and
disability payments available to senior management employees. Each
agreement is terminated upon death, and is terminable by Loyola F.S.B. for
"just cause," as defined in such agreements. If employment is terminated
without "just cause," the employee is entitled to a continuation of his
salary for the remaining term (including any renewal term) (the "Expiration
Date") of the agreement plus such salary for an additional one year period,
continued payment of certain health, life, disability and other insurance
benefit costs through the Expiration Date, as well as supplemental
retirement benefits in an amount sufficient to provide the employee with
the benefits he would have received had he remained employed through the
Expiration Date. The employee may terminate his agreement upon 60 days'
prior written notice to the Loyola Board, in which case he is entitled only
to compensation, vested rights and employee benefits up to the date of such
termination.
Each of the employment agreements discussed above contains a provision
stating that in the event of termination of employment without the
employee's prior written consent and for a reason other than "just cause,"
in connection with, or within one year after, any "change in control" of
Loyola or Loyola F.S.B., as defined in the agreements, the employee will be
paid within 10 days of such termination in one lump sum payment or, at the
employee's election, in monthly payments over the five-year period
following such termination, a sum equal to the difference between the
product of 2.99 times his "base amount" as defined in Section 280G(b)(3) of
the Code, which generally defines "base amount" as the average taxable
compensation he received during the five-year period immediately prior to
the year of the change in control and the sum of any other "parachute
payments" (as defined under the Code) he receives on account of the change
in control but excluding from the calculation of such base amount any
amount includible in the employee's gross income for his 1995 taxable year
which is attributable to (a) the employee's exercise of nonqualified stock
options, (b) any disqualifying disposition of stock acquired from the
exercise of any incentive stock options, and (c) cash received in exchange
for any stock option during such taxable year. The term "change in
control" generally refers to the ownership, holding or power to vote more
than 25% of Loyola's or Loyola F.S.B.'s voting stock, the control of the
election of a majority of Loyola's or Loyola F.S.B.'s directors, the
exercise of a controlling influence over the management or policies of
Loyola or Loyola F.S.B. by any person or by persons acting as a "group" (as
defined under the Securities Exchange Act of 1934, as amended, and the
rules promulgated thereunder), or during any period of two consecutive
years, individuals who are continuing directors cease to constitute at
least two-thirds of the Loyola Board or the Board of Directors of Loyola
F.S.B. (provided that any individual whose election or nomination for
election was approved by a vote of at least two-thirds of the continuing
directors then in office shall be considered a continuing director). The
agreements also provide for payment of the amounts described above to the
employee in the event of his voluntary termination of employment following
the occurrence of certain specified events (such as a material reduction in
compensation, duties or responsibilities) in connection with, or within
three years after, any change in control of Loyola or Loyola F.S.B.. The
aggregate payments which would be made to Messrs. Mosmiller, Johnson,
Marvel, McAveney, Schmitt and Wycoff, assuming the termination of
employment under the foregoing circumstances at the date of this Proxy
Statement/Prospectus, would be approximately $1.6 million, $1.2 million,
$607,000, $612,000, $610,000 and $606,000, respectively.
The following additional senior officers of subsidiaries of Loyola
have employment agreements with the subsidiary identified: Linda A.
Stadtler, Loyola F.S.B.; John A. Nicodemus, Bay State Appraisal
Corporation; David F. Noyes, Loyola F.S.B.; John F. Carroll, III, Mid-
Atlantic Financial Group, Inc.; Thomas M. King, Mid-Atlantic Builders,
Inc.; and George F. Adams, Loyola Financial and Development Corporation.
These agreements also provide for severance payments generally using the
formula for calculating the amount of the payment described in the
preceding paragraph.
Crestar will interview current senior management employees of Loyola
and its subsidiaries for available positions in a Baltimore region to be
established by Crestar with a separate management team and a local advisory
board of directors. Crestar will undertake to use its best efforts to
continue employment of all branch personnel of Loyola and its subsidiaries
who meet Crestar's employment qualification requirements, either at
existing offices of Loyola and its subsidiaries or at offices of Crestar or
its subsidiaries, in each case, within reasonable commuting distance. Non-
branch personnel of Loyola and its subsidiaries not offered employment will
be interviewed prior to the Effective Time of the Merger for open positions
within offices of Crestar or its subsidiaries. During the pendency of the
Merger, but in no instance later than two months prior to the Effective
Date, Crestar and its subsidiaries will invoke a hiring freeze in the
Baltimore-Washington Metropolitan Area (excluding employees of any
financial institution in such areas acquired by Crestar prior to the
Effective Time) with a view towards filling vacant positions with employees
of Loyola and its subsidiaries not previously offered employment by Crestar
or its subsidiaries. Notwithstanding the hiring freeze, Crestar reserves
the right to fill jobs which it characterizes as "immediately must fill"
with persons other than employees of Loyola or its subsidiaries. Employees
of Loyola as of the Effective Time who are not offered comparable
employment by Crestar or its subsidiaries (the acceptance of a position
with Crestar or one of its banking subsidiaries shall establish that such
position is comparable), other than those who are covered by employment
agreements or individual severance arrangements (who are terminated and
paid in accordance with such respective employment agreements or individual
severance arrangements), will be paid severance pay equal to one week's
base pay for each year of service with Loyola up to a maximum of 20 years
service and two weeks' base pay for each year of service with Loyola in
excess of 20 years service, with a minimum of four weeks' severance pay.
Employees of Loyola as of the Effective Time who are not offered comparable
employment by Crestar or its subsidiaries, will be offered outplacement
counseling.
Indemnification; Liability Insurance. After the Effective Time of the
Merger, Crestar agrees to indemnify and hold harmless each present and
former director and officer of Loyola or its subsidiaries (each an
"Indemnified Party") against any and all costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities incurred in connection with any and all claims, actions, suits,
proceedings or investigations, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters arising out of or in
connection with such party's position as, or actions taken as, a director
or officer of Loyola or a subsidiary, at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to
the fullest extent permitted by applicable law (and also advance expenses
incurred to the fullest extent permitted by Maryland law and Loyola's
Charter and Bylaws); provided, however, that Crestar's obligation to
provide such indemnification shall not apply to any material litigation,
proceeding or controversy required to be disclosed under the Agreement that
is not disclosed in the Agreement, nor to claims asserted or claimed more
than six years after the Effective Time. Crestar shall not have any
obligation to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that the indemnification of the Indemnified
Party in the manner contemplated hereby is prohibited by applicable law.
For a period of six years after the Effective Time, Crestar will honor the
duties and obligations contained in the indemnification agreements
identified in the Agreement which have been entered into between Loyola and
its directors, chief executive officer, president, executive vice
presidents and secretary.
Advisory Board of Directors for Baltimore Region. Crestar Bank MD
will offer all members of the Loyola Board a position on Crestar Bank MD's
Baltimore local advisory board for a term of at least one year commencing
at the Effective Time of the Merger. Members who agree to serve on the
Baltimore local advisory board will receive a retainer of $8,000 per year
and a fee of $3,000 per meeting attended (or a maximum of $20,000 per
annum) plus non-local travel expenses. The Baltimore local advisory board
will meet four times during the year. Crestar agreed to waive its age
limitation for advisory directors for the one-year period.
STOCK OPTIONS
At the Effective Time of the Merger, each outstanding option to
purchase Loyola Common Stock (the "Loyola Options"), other than the Option
held by Crestar, shall be converted into an Exchange Option to purchase
such number of shares of Crestar Common Stock at an exercise price
determined as follows: (i) the number of shares of Crestar Common Stock to
be subject to the Exchange Option shall be equal to the product of (A) the
number of shares of Loyola Common Stock subject to the Loyola Option
multiplied by (B) the Exchange Ratio, the product being rounded, if
necessary, up or down, to the nearest whole share; and (ii) the per share
exercise price under the Exchange Option shall be equal to (A) the per
share exercise price under the Loyola Option divided by (B) the Exchange
Ratio, with any fractional cent rounded to the nearest whole cent. The
Exchange Option shall otherwise have the same duration and other terms as
the Loyola Option. Adjustments to any Loyola Options which are "incentive
stock options" under Section 422 of the Code shall be effected in a manner
consistent with Section 424(a) of the Code.
EFFECT ON LOYOLA EMPLOYEE BENEFITS PLANS
As of the Effective Time, Crestar unconditionally agrees to, and
agrees to cause each of its subsidiaries, with respect to which such
subsidiary is an employer of a Contract Employee (as defined below) to
honor, without modification (except in accordance with the terms of such
contract, agreement or commitment), offset or counterclaim (except with the
consent of the Contract Employee), all contracts, agreements and
commitments of Loyola or any of its subsidiaries authorized by Loyola or
any of its subsidiaries prior to the date of the Agreement which apply to
any current or former employee or current or former director of Loyola or
any of its subsidiaries, all of which contracts, agreements and commitments
to or with employees are listed in the Agreement, which have been entered
into or authorized prior to the date of the Agreement (the "Contract
Employees"), supplemental retirement benefits and the Supplemental
Executive Retirement Plan. In accordance with the terms of such contracts,
agreements and commitments, Crestar has assumed, subject to the
consummation of the Merger, all of Loyola's and its subsidiaries'
obligations under such contracts, agreements and commitments. With respect
to each Contract Employee, Crestar has expressly agreed that in the event
of any dispute under such employee's contract or under the terms of the
Agreement, Crestar shall pay all reasonable fees and disbursements of such
employee's counsel in connection with all matters as to which such employee
is the prevailing party.
All employees of Loyola or its subsidiaries immediately prior to the
Effective Time of the Merger who are employed by Crestar or its
subsidiaries immediately following the Effective Time ("Transferred
Employees") will be covered by Crestar's employee benefit plans as to which
they are eligible based on their length of service with Loyola,
compensation, job classification, position and, where variations are
required by local circumstances, location, including, where applicable, any
incentive compensation plan. Notwithstanding the foregoing, Crestar may
determine to continue any of the Loyola benefit plans for Transferred
Employees in lieu of offering participation in Crestar's benefit plans
providing similar benefits (e.g., medical and hospitalization benefits), to
terminate any such Loyola benefit plans, or to merge any such Loyola
benefit plans with Crestar's benefit plans. Except as prohibited by law,
Transferred Employees' service with Loyola and its subsidiaries which is
recognized by the applicable Loyola benefit plan at the Effective Time
shall be recognized as service with Crestar for purposes of eligibility to
participate (including level of participation but not for purposes of
benefit accrual) and vesting, if applicable, under the corresponding
Crestar benefit plan, if any, subject to applicable break-in-service rules,
provided, however, that such service with Loyola and its subsidiaries shall
not be recognized for purposes of determining a Transferred Employee's
eligibility for retiree medical and life insurance benefits under Crestar's
benefit plans unless such Transferred Employee completes twelve months of
continuous service with Crestar or its subsidiaries immediately following
the Effective Time and provided further that retiree medical shall be
available only under Crestar's defined dollar retiree health plan.
Crestar has agreed that any preexisting condition, limitation or
exclusion in its health plans shall not apply to Transferred Employees or
their covered dependents who are covered under a medical or hospitalization
indemnity plan maintained by Loyola or its subsidiaries at the Effective
Time and who then change that coverage to Crestar's medical or
hospitalization indemnity health plan at the time such Transferred
Employees are first given the option to enroll in Crestar's health plans.
Crestar has agreed that immediately following the Effective Time, all
participants who then have accounts in the 401(k) profit sharing plan
maintained by Loyola (the "401(k) Plan") shall be fully vested in their
account balances. Crestar, at its election, may continue the 401(k) Plan
for the benefit of Transferred Employees (as such plan may be amended as of
the Effective Time to provide current contributions and eligibility
provisions identical to those under Crestar's Employees' Thrift and Profit
Sharing Plan (the "Thrift Plan")), may merge the 401(k) Plan into the
Thrift Plan or any other defined contribution plan maintained by Crestar,
may cease additional benefit accruals under and contributions to the 401(k)
Plan and continue to hold the assets of such Plan until they are
distributable in accordance with its terms or may terminate the 401(k) Plan
as permitted under applicable provisions of the Code. In the event of a
merger of the 401(k) Plan into the Thrift Plan or other defined
contribution plan maintained by Crestar or other transfers of a Transferred
Employee to the Thrift Plan or other defined contribution plan, the Thrift
Plan or other defined contribution plan will recognize for purposes of
eligibility to participate, early retirement, and vesting, all Transferred
Employees' service which is recognized under the 401(k) Plan, subject to
applicable break-in-service rules. Loyola and its subsidiaries have agreed
to cooperate with Crestar in implementing any decision under the Agreement
with respect to the 401(k) Plan.
The Retirement Plan for Employees of Crestar Financial Corporation and
Affiliated Corporations (the "Crestar Retirement Plan") will recognize for
purposes of eligibility to participate, vesting, and eligibility for early
retirement (including early retirement under the "rule of 85"), but not for
benefit accrual purposes, all Transferred Employees' service which is
recognized under the Pension Plan of Loyola Federal Savings Bank (the
"Loyola Pension Plan"), subject to applicable break-in-service rules.
Crestar, at its option, may continue the Loyola Pension Plan and pay out or
annuitize benefits, or may merge the Loyola Pension Plan into the Crestar
Retirement Plan. If the Loyola Pension Plan is terminated, or if accruals
are suspended or the Loyola Pension Plan is merged into the Crestar
Retirement Plan, or in the event of other transfers of a Transferred
Employee to the Crestar Retirement Plan, each Transferred Employee who
becomes a participant in the Crestar Retirement Plan shall begin to accrue
benefits under the Crestar Retirement Plan on and after the date of such
merger, suspension, termination or transfer in accordance with the terms of
the Crestar Retirement Plan.
Loyola has agreed to amend the vacation plan or policy applicable to
employees of Loyola and its subsidiaries, effective no later than January
1, 1996, to provide identical benefits and accrual of vacation in
accordance with Crestar's vacation policy. Effective no later than January
1, 1996, Loyola has agreed to amend the cafeteria plan covering employees
of Loyola and its subsidiaries to (i) eliminate the payment of cash or
other compensation or benefits to an employee who waives medical, dental or
vision benefits and (ii) eliminate any provision allowing the surrender or
cancellation of vacation in lieu of additional cash or other compensation
or benefits. Loyola has agreed not to adopt, or to amend the cafeteria
plan covering employees of Loyola or its subsidiaries to provide health
care flexible spending accounts.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Crestar and Loyola have received opinions of Hunton & Williams,
counsel to Crestar, and Piper & Marbury L.L.P., counsel to Loyola, to the
effect that for federal income tax purposes: (i) the Merger and the Bank
Merger each will constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Code; (ii) neither Loyola nor Crestar will recognize
any taxable gain or loss upon consummation of the Merger; (iii) none of
Loyola F.S.B., Crestar Bank MD or Crestar will recognize any taxable gain
or loss upon consummation of the Bank Merger (but Loyola F.S.B. or Crestar
Bank MD may be required to include in income certain amounts as a result of
the termination of any bad-debt-reserve maintained by Loyola F.S.B. for
federal income tax purposes and other possible required changes in tax
accounting methods); and (iv) the Merger will result in the tax
consequences summarized below for Loyola stockholders who receive Crestar
Common Stock in exchange for Loyola Common Stock pursuant to the Merger.
Such opinions have been filed as exhibits to the Registration Statement.
Receipt of substantially the same opinions as of the Effective Date is a
condition to consummation of the Merger. The opinions of Hunton & Williams
and Piper & Marbury L.L.P. are based on, and the opinions to be given as of
the Effective Date will be based on, certain customary assumptions and
representations regarding, among other things, the lack of previous
dealings between Loyola and Crestar, the existing and future ownership of
Loyola capital stock and Crestar capital stock and the future business
plans for Crestar.
A Loyola stockholder who receives solely Crestar Common Stock in
exchange for his shares of Loyola Common Stock will not recognize any gain
or loss on the exchange. If a stockholder receives Crestar Common Stock
and cash in lieu of a fractional share of Crestar Common Stock, the
stockholder will recognize taxable gain or loss solely with respect to such
cash as if the fractional share had been received and then redeemed for the
cash. A stockholder will have an aggregate tax basis in his shares of
Crestar Common Stock (including any fractional share interest) received in
the Merger equal to his tax basis in the shares of Loyola Common Stock
exchanged therefor. A stockholder's holding period for shares of Crestar
Common Stock (including any fractional share interest) received in the
Merger will include his holding period for the shares of Loyola Common
Stock exchanged therefor if they are held as a capital asset at the
Effective Time of the Merger.
THE PRECEDING DISCUSSION SUMMARIZES FOR GENERAL INFORMATION THE
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO LOYOLA
STOCKHOLDERS. IT DOES NOT DISCUSS ALL POTENTIALLY RELEVANT FEDERAL INCOME
TAX MATTERS OR CONSEQUENCES TO ANY FOREIGN OR OTHER STOCKHOLDERS SUBJECT TO
SPECIAL TAX TREATMENT, NOR DOES IT DISCUSS, AND NO OPINION HAS BEEN
REQUESTED REGARDING, ANY STATE OR LOCAL TAX CONSEQUENCES OF THE MERGER.
THE TAX CONSEQUENCES TO ANY PARTICULAR STOCKHOLDER MAY DEPEND ON THE
STOCKHOLDER'S INDIVIDUAL CIRCUMSTANCES. LOYOLA STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO FEDERAL, STATE, AND LOCAL TAX
CONSEQUENCES.
PRO FORMA CONDENSED FINANCIAL INFORMATION
The following Pro Forma Condensed Financial Information and explanatory
notes are presented to show the impact of the Merger on Crestar's and Loyola's
historical financial position and results of operations. The Merger is
reflected in the Pro Forma Condensed Financial Information under the pooling-of-
interests method of accounting.
The Pro Forma Condensed Statement of Financial Condition presented
assumes that the Merger was consummated on March 31, 1995 and the Pro
Forma Condensed Statements of Operations assume that the Merger was
consummated at the beginning of each period presented.
The pro forma earnings are not necessarily indicative of the
results of operations had the Merger occurred at the beginning of each
period presented, nor are they necessarily indicative of the results
of future operations.
<PAGE>
Pro Forma Condensed Statement of Financial Condition
March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
CRESTAR &
LOYOLA
ADJUSTMENTS PRO FORMA
(Dollars in thousands) CRESTAR LOYOLA INCR(DECR) COMBINED
<S> <C> <C> <C> <C>
Assets
Cash and due from banks $693,848 $19,959 $ $ 713,807
Securities held to maturity 875,669 287,256 1,162,925
Securities available for sale 1,413,765 36,642 1,450,407
Money market investments 654,993 34,423 689,416
Mortgage loans held for sale 220,470 34,236 254,706
Loans, net of unearned income 9,752,915 2,021,977 11,774,892
Less: Allowance for loan losses (222,702) (13,796) (10,913)(1) (247,411)
Loans-net 9,530,213 2,008,181 11,527,481
Premises and equipment, net 332,762 24,021 356,783
Intangible assets-net 180,041 9,025 189,066
Foreclosed properties-net 21,690 11,401 (878)(1) 32,213
Other assets 503,434 28,341 531,775
Total Assets $14,426,885 $2,493,485 ($11,791) $16,908,579
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing demand deposits $2,084,914 $29,253 $ $2,114,167
Interest bearing deposits 8,970,386 1,456,673 10,427,059
Total deposits 11,055,300 1,485,926 12,541,226
Short-term borrowings 1,540,525 439,131 1,979,656
Other liabilities 229,705 66,087 21,289 (1) 317,081
Long-term debt 385,767 330,062 715,829
Total Liabilities 13,211,297 2,321,206 21,289 15,553,792
Shareholders' Equity
Preferred stock, authorized 2,000,000
shares, none issued - - - -
Common stock, $5 par value, authorized
100,000,000 shares; outstanding
38,397,409 actual shares and
43,991,756 pro forma combined shares 191,987 - 27,972 (2) 219,959
Common stock, $.10 par value, authorized
50,000,000 shares; outstanding
8,107,750 shares - 811 (811)(2) -
Capital surplus 338,002 44,206 (27,161)(2) 355,047
Retained earnings 703,006 127,262 (33,080)(1) 797,188
Net unrealized loss on securities available
for sale (17,407) - - (17,407)
Total Shareholders' Equity 1,215,588 172,279 (33,080) 1,354,787
Total Liabilities and
Shareholders' Equity $14,426,885 $2,493,485 ($11,791) $16,908,579
</TABLE>
See notes to Pro Forma Condensed Financial Information.
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
CRESTAR &
(Dollars in thousands, except per share data) LOYOLA
PRO FORMA
CRESTAR LOYOLA COMBINED (4)
Interest Income
Interest and fees on loans $206,029 $39,272 $245,301
Interest and dividends on securities 37,883 5,410 43,293
Other interest income 10,351 1,015 11,366
Total interest income 254,263 45,697 299,960
Interest Expense
Interest on deposits 76,760 16,335 93,095
Interest on short-term borrowings 17,958 6,992 24,950
Interest on long-term debt 7,861 4,617 12,478
Total interest expense 102,579 27,944 130,523
Net interest income
Net interest income 151,684 17,753 169,437
Provision for loan losses 10,100 201 10,301
Net interest income after provision
for loan losses 141,584 17,552 159,136
Noninterest income
Service charges on deposit accounts 21,591 321 21,912
Trust and investment advisory income 13,538 - 13,538
Securities losses (2,410) - (2,410)
Other noninterest income 31,945 2,368 34,313
Total noninterest income 64,664 2,689 67,353
Noninterest expense
Personnel expense 76,316 6,501 82,817
Occupancy expense, net 10,960 1,257 12,217
Equipment expense 7,012 439 7,451
Other noninterest expense 43,544 5,232 48,776
Total noninterest expense 137,832 13,429 151,261
Net income
Income before income taxes 68,416 6,812 75,228
Income tax expense 23,330 2,744 26,074
Net income $45,086 $4,068 $49,154
Per common share data
Net income per share:
Primary $1.18 $0.47 $1.12
Fully diluted $1.18 $0.47 $1.11
Weighted average shares outstanding:
Primary 38,097,000 8,663,000 44,075,000
Fully diluted 38,178,000 8,704,000 44,184,000
See Notes to Pro Forma Condensed Financial Information
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1994
(UNAUDITED)
CRESTAR &
(Dollars in thousands, except per share data) LOYOLA
PRO FORMA
CRESTAR LOYOLA COMBINED (4)
Interest Income
Interest and fees on loans $154,964 $30,364 $185,328
Interest and dividends on securities 50,533 5,752 56,285
Other interest income 11,533 3,020 14,553
Total interest income 217,030 39,136 256,166
Interest Expense
Interest on deposits 61,501 13,546 75,047
Interest on short-term borrowings 10,613 3,477 14,090
Interest on long-term debt 4,250 5,380 9,630
Total interest expense 76,364 22,403 98,767
Net interest income
Net interest income 140,666 16,733 157,399
Provision for loan losses 10,032 180 10,212
Net interest income after provision
for loan losses 130,634 16,553 147,187
Noninterest income
Service charges on deposit accounts 20,779 221 21,000
Trust and investment advisory income 15,003 - 15,003
Securities losses (1,718) - (1,718)
Other noninterest income 29,391 2,647 32,038
Total noninterest income 63,455 2,868 66,323
Noninterest expense
Personnel expense 74,797 6,359 81,156
Occupancy expense, net 10,794 1,160 11,954
Equipment expense 5,928 433 6,361
Other noninterest expense 42,491 5,662 48,153
Total noninterest expense 134,010 13,614 147,624
Net income
Income before income taxes 60,079 5,807 65,886
Income tax expense 19,597 2,317 21,914
Net income $40,482 $3,490 $43,972
Per common share data
Net income per share:
Primary $1.07 $0.41 $1.00
Fully diluted $1.07 $0.40 $1.00
Weighted average shares outstanding:
Primary 37,835,000 8,597,000 43,766,000
Fully diluted 37,850,000 8,633,000 43,806,000
See Notes to Pro Forma Condensed Financial Information
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
CRESTAR &
(Dollars in thousands, except per share data) LOYOLA
PRO FORMA
CRESTAR LOYOLA COMBINED (4)
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $692,710 $133,072 $825,782
Interest and dividends on securities 183,997 22,277 206,274
Other interest income 49,327 6,062 55,389
Total interest income 926,034 161,411 1,087,445
Interest Expense
Interest on deposits 276,542 57,915 334,457
Interest on short-term borrowings 48,169 16,667 64,836
Interest on long-term debt 19,507 19,485 38,992
Total interest expense 344,218 94,067 438,285
Net interest income
Net interest income 581,816 67,344 649,160
Provision for loan losses 29,682 660 30,342
Net interest income after provision
for loan losses 552,134 66,684 618,818
Noninterest income
Service charges on deposit accounts 82,851 1,063 83,914
Trust and investment advisory income 55,609 - 55,609
Securities losses (10,776) - (10,776)
Other noninterest income 126,586 11,610 138,196
Total noninterest income 254,270 12,673 266,943
Noninterest expense
Personnel expense 303,580 26,364 329,944
Occupancy expense, net 42,231 4,901 47,132
Equipment expense 25,339 1,755 27,094
Other noninterest expense 180,558 21,272 201,830
Total noninterest expense 551,708 54,292 606,000
Net income
Income before income taxes 254,696 25,065 279,761
Income tax expense 85,617 10,026 95,643
Net income $169,079 $15,039 $184,118
Per common share data
Net income per share:
Primary $4.47 $1.74 $4.20
Fully diluted $4.47 $1.73 $4.20
Weighted average shares outstanding:
Primary 37,864,000 8,646,000 43,830,000
Fully diluted 37,867,000 8,660,000 43,842,000
</TABLE>
See Notes to Pro Forma Condensed Financial Information
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
CRESTAR &
(Dollars in thousands, except per share data) LOYOLA
PRO FORMA
CRESTAR LOYOLA COMBINED (4)
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $575,085 $116,637 $691,722
Interest and dividends on securities 208,827 14,937 223,764
Other interest income 48,717 9,016 57,733
Total interest income 832,629 140,590 973,219
Interest Expense
Interest on deposits 244,341 58,322 302,663
Interest on short-term borrowings 43,787 4,600 48,387
Interest on long-term debt 17,489 15,764 33,253
Total interest expense 305,617 78,686 384,303
Net interest income
Net interest income 527,012 61,904 588,916
Provision for loan losses 48,775 3,085 51,860
Net interest income after provision
for loan losses 478,237 58,819 537,056
Noninterest income
Service charges on deposit accounts 79,419 909 80,328
Trust and investment advisory income 57,440 - 57,440
Securities gains 2,237 - 2,237
Other noninterest income 109,169 10,614 119,783
Total noninterest income 248,265 11,523 259,788
Noninterest expense
Personnel expense 262,626 23,260 285,886
Occupancy expense, net 38,359 4,467 42,826
Equipment expense 24,122 1,684 25,806
Other noninterest expense 197,915 20,506 218,421
Total noninterest expense 523,022 49,917 572,939
Net income
Income before income taxes 203,480 20,425 223,905
Income tax expense 62,989 8,160 71,149
Net income 140,491 12,265 152,756
Preferred dividend requirement 2,221 - 2,221
Net income applicable to common shares $138,270 $12,265 $150,535
Per common share data
Net income per share:
Primary $3.68 $1.42 $3.46
Fully diluted $3.67 $1.42 $3.45
Weighted average shares outstanding:
Primary 37,587,000 8,620,000 43,534,000
Fully diluted 37,665,000 8,630,000 43,620,000
</TABLE>
See Notes to Pro Forma Condensed Financial Information
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1992
(UNAUDITED)
<TABLE>
<CAPTION>
CRESTAR &
(Dollars in thousands, except per share data) LOYOLA
PRO FORMA
CRESTAR LOYOLA COMBINED (4)
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $617,686 $131,100 $748,786
Interest and dividends on securities 179,902 7,974 187,876
Other interest income 66,089 14,169 80,258
Total interest income 863,677 153,243 1,016,920
Interest Expense
Interest on deposits 326,240 76,980 403,220
Interest on short-term borrowings 38,096 121 38,217
Interest on long-term debt 17,197 10,066 27,263
Total interest expense 381,533 87,167 468,700
Net interest income
Net interest income 482,144 66,076 548,220
Provision for loan losses 99,242 7,065 106,307
Net interest income after provision
for loan losses 382,902 59,011 441,913
Noninterest income
Service charges on deposit accounts 73,944 789 74,733
Trust and investment advisory income 51,007 - 51,007
Securities gains 3,563 2,900 6,463
Other noninterest income 89,877 11,785 101,662
Total noninterest income 218,391 15,474 233,865
Noninterest expense
Personnel expense 233,838 22,891 256,729
Occupancy expense, net 35,654 4,275 39,929
Equipment expense 24,011 1,655 25,666
Other noninterest expense 208,300 26,799 235,099
Total noninterest expense 501,803 55,620 557,423
Net income (3)
Income before income taxes 99,490 18,865 118,355
Income tax expense 19,689 7,460 27,149
Net income 79,801 11,405 91,206
Preferred dividend requirement 2,475 - 2,475
Net income applicable to common shares $77,326 $11,405 $88,731
Per common share data (3)
Net income per common share:
Primary $2.32 $1.30 $2.26
Fully diluted $2.32 $1.29 $2.25
Weighted average shares outstanding:
Primary 33,286,000 8,776,000 39,342,000
Fully diluted 33,369,000 8,811,000 39,449,000
</TABLE>
See Notes to Pro Forma Condensed Financial Information
NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION
(Unaudited)
(1) Certain material, non-recurring adjustments of approximately $26 million,
on an after-tax basis, will be recorded in conjunction with the Merger.
These adjustments include approximately $13 million for the tax liability
associated with the tax bad debt reserves of Loyola, approximately $5
million for the settlement of obligations under existing employment
contracts, severance pay for involuntary terminations, early retirement and
related employee benefits; approximately $2 million associated with branch
closings; and approximately $6 million of expenses related to effecting the
Merger.
Additional non-recurring adjustments include an increase in the allowance
for loan losses of approximately $11 million and an increase in the reserve
for foreclosed properties of approximately $1 million (resulting in an
after-tax charge of approximately $7 million). Such adjustments will be
taken to conform Loyola's methodology of evaluating the allowance for loan
losses and reserve for foreclosed properties, and manner of disposition of
certain assets, to Crestar's methodology and manner of disposition of
certain assets. The impact of each of the adjustments has been reflected in
the Proforma Condensed Statement of Financial Condition as of March 31,
1995. The loan loss provision and write-down of foreclosed properties
ultimately recorded will be based on the facts, circumstances and external
events operative at the time, and may be more or less than the amounts
reflected in the pro forma condensed financial information.
(2) Based on an Exchange Ratio of 0.690 for conversion of Loyola Common Stock
into Crestar Common Stock. The Exchange Ratio is based on the April 27,
1995 closing price of Crestar Common Stock of $45.50 per share. See
"Summary--The Exchange Ratio" and "The Merger--Determination of Exchange
Ratio and Exchange for Crestar Common Stock" for additional discussion
regarding calculation of the Exchange Ratio. At March 31, 1995, Crestar
and Loyola had 38,397,409 and 8,107,750 common shares outstanding,
respectively.
(3) Net income and primary and fully diluted net income per share for the year
ended December 31, 1992 does not include the cumulative effect of a change
in accounting principle resulting from the adoption by Loyola effective
January 1, 1992 of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). The cumulative effect of
adopting SFAS 109 on Loyola's net income, primary net income per share and
fully diluted net income per share was an increase of $2.8 million, $0.31
and $0.31, respectively, for the year ended December 31, 1992.
(4) No pro forma adjustments are necessary in the Pro Forma Condensed
Statements of Operations.
<PAGE>
CAPITALIZATION
The following table sets forth (i) the unaudited historical
capitalization of Crestar as of March 31, 1995, (ii) the unaudited
historical capitalization of Loyola as of March 31, 1995 and (iii) the
unaudited pro forma capitalization of Crestar and Loyola assuming the
merger had been consummated on March 31, 1995. For additional
information, reference is made to the historical consolidated financial
statements and notes thereto of Crestar, incorporated by reference
herein, the historical consolidated statements and notes thereto of
Loyola, also incorporated by reference herein, and the "Notes to
Capitalization" which follow.
<TABLE>
<CAPTION> CAPITALIZATION
MARCH 31, 1995
(UNAUDITED) CRESTAR &
LOYOLA
(Dollars in thousands) PRO FORMA
CRESTAR LOYOLA ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
Long-term debt and capital lease obligations:
Crestar:
8 3/4% Subordinated notes due 2004 149,625 149,625
8 1/4% Subordinated notes due 2002 125,000 125,000
8 5/8% Subordinated notes due 1998 49,968 49,968
7-8 1/4% Mortgage indebtedness maturing
through 2009 9,923 9,923
8 5/8-14 3/8% Capital lease obligations
maturing through 2006 1,303 1,303
4 3/8-8% Federal Home Loan Bank
obligations payable through 2008 18,813 18,813
6 1/4%-11 1/4% Collateralized mortgage
obligation bonds maturing through 2019 31,135 31,135
Loyola:
4 -7 1/4% Federal Home Loan Bank
obligations payable through 2014 330,062 330,062
Total long-term debt and capital lease
obligations 385,767 330,062 - 715,829
Shareholders' Equity:
Crestar:
Preferred stock, authorized 2,000,000
shares, none issued - -
Common stock, $5 par value, authorized
100,000,000 shares; outstanding
38,397,409 shares actual and
43,991,756 shares pro forma
combined 191,987 27,972 (1) 219,959
Capital surplus 338,002 17,045 (1) 355,047
Retained earnings 703,006 127,262 (1) 797,188
(33,080)(2)
Net unrealized loss on securities
available for sale (17,407) (17,407)
Loyola:
Common stock, $.10 par value, authorized
50,000,000 shares, outstanding
8,107,750 shares 811 (811)(1)
Paid-in capital 44,206 (44,206)(1)
Retained earnings 127,262 (127,262)(1)
Net unrealized gain (loss) on securities
available for sale - -
Total stockholders' equity 1,215,588 172,279 (33,080) 1,354,787
Total long-term debt, capital lease
obligations and shareholders' equity $1,601,355 $502,341 ($33,080) $2,070,616
</TABLE>
<PAGE>
NOTES TO CAPITALIZATION
(Unaudited)
(1) Based on an Exchange Ratio of 0.690 for conversion of Loyola
Common Stock into Crestar Common Stock. See "Summary--The Exchange
Ratio" and "The Merger--Determination of Exchange Ratio and
Exchange for Crestar Common Stock" for additional
discussion regarding calculation of the Exchange Ratio.
Loyola common shares outstanding are assumed to be converted
into 5,594,347 shares of Crestar Common Stock, having a par
value of $5 per share.
(2) Certain material, non-recurring adjustments of approximately
$26 million, on an after-tax basis, will be recorded in
conjunction with the Merger. These adjustments include
approximately $13 million for the tax liability associated
with the tax bad debt reserves of Loyola, approximately $5
million for the settlement of obligations under existing
employment contracts, severance pay for involuntary
terminations, early retirement and related employee
benefits; approximately $2 million associated with branch
closings; and approximately $6 million of expenses related
to effecting the Merger.
Additional non-recurring adjustments include an increase
in the allowance for loan losses of approximately $11
million and an increase in the reserve for foreclosed
properties of approximately $1 million (resulting in an
after-tax charge of approximately $7 million). Such
adjustments will be taken to conform Loyola's methodology
of evaluating the allowance for loan losses and reserve for
foreclosed properties, and manner of disposition of certain
assets, to Crestar's methodology and manner of disposition
of certain assets. The impact of each of the adjustments
described above has been reflected in the Pro Forma
Condensed Statement of Financial Condition as of March 31,
1995, and the Crestar and Loyola pro forma combined
capitalization as of March 31, 1995. The loan loss
provision and write-down of foreclosed properties ultimately
recorded will be based on the facts, circumstances and
external events operative at the time, and may be more or
less than the amounts detailed above.
PRO FORMA CONDENSED FINANCIAL
INFORMATION - CRESTAR, LOYOLA AND CHASE MD
The following Pro Forma Condensed Financial Information and
explanatory notes are presented to show the impact of the Merger
on Crestar's and Loyola's historical financial position,
including the impact of Crestar's pending purchase of selected
assets and liabilities of Chase MD. The Merger of Crestar and
Loyola is presented under the pooling-of-interests method of
accounting, and the purchase of selected assets and liabilities
of Chase MD is presented under the purchase method of accounting.
The Pro Forma Condensed Statement of Financial Condition -
Crestar, Loyola and Chase MD assumes that the Merger of Crestar
and Loyola, and the purchase of selected assets and liabilities
of Chase MD by Crestar, was consummated on March 31, 1995. The
historical statements of operations for Chase MD are not material
in comparison to the historical statements of operations for
Crestar, or in comparison to the pro forma statements of
operations for Crestar and Loyola combined.
<TABLE>
Pro Forma Condensed Statement of Financial Condition -
Crestar, Loyola and Chase MD
March 31, 1995
(Unaudited) Crestar,
Crestar & Loyola &
Loyola Purchase Chase MD
Adjustments pro forma of Chase MD pro forma
(Dollars in thousands) Crestar Loyola Incr(Decr) combined by Crestar (3) combined
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and due from banks $ 693,848 $19,959 $ $ 713,807 $ 10,900 $ 724,707
Securities held to maturity 875,669 287,256 1,162,925 1,162,925
Securities available for sale 1,413,765 36,642 1,450,407 1,450,407
Money market investments 654,993 34,423 689,416 141,719 831,135
Mortgage loans held for sale 220,470 34,236 254,706 254,706
Loans, net of unearned income 9,752,915 2,021,977 11,774,892 260,553 12,035,445
Less: Allowance for loan losses (222,702) (13,796) (10,913)(1) (247,411) (3,000) (250,411)
Loans - net 9,530,213 2,008,181 11,527,481 257,553 11,785,034
Premises and equipment, net 332,762 24,021 356,783 445 357,228
Intangible assets - net 180,041 9,025 189,066 38,145 227,211
Foreclosed properties - net 21,690 11,401 (878)(1) 32,213 32,213
Other assets 503,434 28,341 531,775 531,775
Total Assets $14,426,885 $2,493,485 ($11,791) $16,908,579 $448,762 $17,357,341
Liabilities and Shareholders'
Equity
Deposits:
Noninterest-bearing demand
deposits $ 2,084,914 $29,253 $ $ 2,114,167 $8,748 $ 2,122,915
Interest bearing deposits 8,970,386 1,456,673 10,427,059 413,004 10,840,063
Total deposits 11,055,300 1,485,926 12,541,226 421,752 12,962,978
Short-term borrowings 1,540,525 439,131 1,979,656 27,010 2,006,666
Other liabilities 229,705 66,087 21,289 (1) 317,081 317,081
Long-term debt 385,767 330,062 715,829 715,829
Total Liabilities 13,211,297 2,321,206 21,289 15,553,792 448,762 16,002,554
Shareholders' Equity
Preferred stock, authorized
2,000,000 shares, none issued -- -- -- -- -- --
Common stock, $5 par value,
authorized 100,000,000 shares;
outstanding 38,397,409 actual
shares and 43,991,756 pro forma
combined shares 191,987 -- 27,972 (2) 219,959 -- 219,959
Common stock, $.10 par value,
authorized 50,000,000 shares;
outstanding 8,107,750 shares -- 811 (811)(2) -- -- --
Capital surplus 338,002 44,206 (27,161)(2) 355,047 -- 355,047
Retained earnings 703,006 127,262 (33,080)(1) 797,188 -- 797,188
Net unrealized loss on securities
available for sale (17,407) -- -- (17,407) -- (17,407)
Total Shareholders' Equity 1,215,588 172,279 (33,080) 1,354,787 -- 1,354,787
Total Liabilities and
Shareholders' Equity $14,426,885 $2,493,485 ($11,791) $16,908,579 $448,762 $17,357,341
</TABLE>
See notes to Pro Forma Condensed Financial Information - Crestar, Loyola and
Chase MD.
NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION -
CRESTAR, LOYOLA AND CHASE MD
(Unaudited)
(1) Certain material, non-recurring adjustments of approximately
$26 million, on an after-tax basis, will be recorded in
conjunction with the Merger of Crestar with Loyola. These
adjustments include approximately $13 million for the tax
liability associated with the tax bad debt reserves of
Loyola, approximately $5 million for the settlement of
obligations under existing employment contracts, severance
pay for involuntary terminations, early retirement and
related employee benefits; approximately $2 million
associated with branch closings; and approximately $6
million of expenses related to effecting the Merger.
Additional non-recurring adjustments include an increase
in the allowance for loan losses of approximately $11
million and an increase in the reserve for foreclosed
properties of approximately $1 million (resulting in an
after-tax charge of approximately $7 million). Such
adjustments will be taken to conform Loyola's methodology of
evaluating the allowance for loan losses and reserve for
foreclosed properties, and manner of disposition of certain
assets, to Crestar's methodology and manner of disposition
of certain assets. The impact of each of the adjustments
has been reflected in the Pro Forma Condensed Statement of
Financial Condition - Crestar, Loyola and Chase MD as of
March 31, 1995. The loan loss provision and write-down of
foreclosed properties ultimately recorded will be based on
the facts, circumstances and external events operative at
the time, and may be more or less than the amounts reflected
in the pro forma condensed financial information.
(2) Based on an Exchange Ratio of 0.690 for conversion of Loyola
Common Stock into Crestar Common Stock. The Exchange Ratio
is based on the April 27, 1995 closing price of Crestar
Common Stock of $45.50 per share. See "Summary - The
Exchange Ratio" and "The Merger - Determination of Exchange
Ratio and Exchange for Crestar Common Stock" for additional
discussion regarding calculation of the Exchange Ratio. At
March 31, 1995, Crestar and Loyola had 38,397,409 and
8,107,750 common shares outstanding, respectively.
(3) Per the terms of the purchase agreement between Crestar MD
and Chase MD, Crestar MD will purchase selected assets and
assume selected liabilities of Chase MD in a transaction
expected to be completed in the fourth quarter of 1995. The
assumption of net liabilities by Crestar will result in
receipt of approximately $141.7 million from Chase MD
(excluding cash balances on hand at Chase MD branches of
approximately $10.9 million), that is reflected as an
increase to money market investments in the Pro Forma
Condensed Statement of Financial Condition - Crestar, Loyola
and Chase MD. The statement also reflects the estimated
purchase premium for the net liabilities to be assumed by
Crestar MD, recorded as an intangible asset, of $38.1
million.
<PAGE>
BUSINESS OF CRESTAR
Crestar is the holding company for Crestar Bank, Crestar Bank N.A. of
Washington, D.C. and Crestar Bank MD of Maryland (collectively, the "Bank
Subsidiaries"). At March 31, 1995, Crestar had approximately $14.4 billion
in total assets, $11.1 billion in total deposits and $1.2 billion in total
stockholders' equity.
In 1963, six Virginia banks combined to form United Virginia
Bankshares Incorporated ("UVB"), a bank holding company formed under the
Bank Holding Company Act of 1956 (the "BHCA"). UVB (parent company of
United Virginia Bank) extended its operations into the District of Columbia
by acquiring NS&T Bank, N.A. on December 27, 1985 and into Maryland by
acquiring Bank of Bethesda on April 1, 1986. On September 1, 1987, UVB
became Crestar Financial Corporation and its bank subsidiaries adopted
their present names.
Crestar serves customers through a network of 349 banking offices and
293 automated teller machines (as of March 31, 1995). The Bank
Subsidiaries offer a broad range of banking services, including various
types of deposit accounts and instruments, commercial and consumer loans,
trust and investment management services, bank credit cards and
international banking services. Crestar's subsidiary, Crestar Insurance
Agency, Inc., offers a variety of personal and business insurance products.
Securities brokerage and investment banking services, including mutual
funds and annuities, are offered by Crestar's subsidiary, Crestar
Securities Corporation. Mortgage loan origination, servicing and wholesale
lending are offered by Crestar Mortgage Corporation, and investment
advisory services are offered by Capitoline Investment Services
Incorporated, both of which are subsidiaries of Crestar Bank. These
various Crestar subsidiaries provide banking and non-banking services
throughout Virginia, Maryland and Washington, D.C., as well as certain non-
banking services to customers in other states.
The executive offices of Crestar are located in Richmond, Virginia at
Crestar Center, 919 East Main Street. Crestar's Operations Center is
located in Richmond. Regional headquarters are located in Norfolk and
Roanoke, Virginia and in Washington, D.C.
RECENT DEVELOPMENTS
Recent Acquisitions. On March 24, 1995, Crestar acquired TideMark
Bancorp, Inc., headquartered in Newport News, Virginia. Approximately $400
million in total assets, $170 million in loans, $240 million in total
deposits and three branches were initially added to Crestar's existing
branch network. Crestar issued 648 thousand shares of Crestar Common Stock
and made cash payments of approximately $13 million in the transaction.
On January 20, 1995, Crestar acquired Jefferson Savings & Loan
Association, F.A., headquartered in Warrenton, Virginia. Approximately
$300 million in total assets, $200 million in loans, $250 million in
deposits, and five branches were initially added to Crestar's existing
branch network. Crestar issued 471 thousand shares of Crestar Common Stock
and made cash payments of approximately $5 million in the transaction.
On January 20, 1995, Crestar acquired Independent Bank, headquartered
in Manassas, Virginia. Approximately $85 million in total assets, $50
million in loans, $70 million in total deposits and four banking offices
were initially added to Crestar's existing branch network. Crestar issued
198 thousand shares of Crestar Common Stock and made cash payments of
approximately $5 million in the transaction.
Pending Acquisitions. On June 23, 1995 Crestar and Crestar Bank MD entered
into an agreement with Chase MD to purchase all the deposits and customer
accounts, plus selected loans, of six branches of Chase MD. Crestar's
acquisition of selected assets and liabilities of Chase MD will bring to Crestar
approximately $450 million in deposits and approximately $260 million in loans.
The acquisition of selected assets and liabilities of Chase MD, which is subject
to the receipt of regulatory approvals, is expected to be completed in the
fourth quarter of 1995.
Crestar continually seeks acquisition opportunities with other financial
institutions in which it may pay cash or issue common stock or other equity or
debt securities. As of the date of this Proxy Statement/Prospectus, Crestar has
no present agreements or understandings to acquire or merge with any other
businesses other than as described in "-- Recent Developments."
BUSINESS OF LOYOLA
Loyola is a unitary savings and loan holding company for Loyola F.S.B.
At March 31, 1995, Loyola had approximately $2.5 billion in total assets,
$1.5 billion in total deposits, and $172.3 million in total stockholders'
equity. Loyola was incorporated under the laws of Maryland on May 8, 1989
and is a successor to a Delaware corporation incorporated on August 8,
1986. On December 12, 1986, the predecessor acquired all of the Common
Stock of Loyola F.S.B. following Loyola F.S.B.'s conversion from a
federally chartered mutual to a federally chartered stock savings and loan
association. Loyola F.S.B. converted from a federal savings and loan
to a federal savings bank in 1992. Loyola is subject primarily to
regulation by the Office of Thrift Supervision.
Loyola is a financial intermediary which accepts deposits from the
general public and invests such deposits, together with other borrowings,
primarily in real estate loans secured by liens on residential and other
real property and in consumer and other loans. Currently, the principal
asset of Loyola is the Common Stock of Loyola F.S.B. Loyola F.S.B. is a
federally chartered stock savings bank serving more than 160,000 customers
through a network of 34 banking centers in Maryland and one in Washington,
D.C. Loyola F.S.B. also operates 17 automated teller machines and has
three loan offices (with one located in each of south central Pennsylvania,
central Delaware and eastern South Carolina). Loyola F.S.B. commenced
operations in 1879 and is now the second largest thrift institution
headquartered in Maryland. Primarily through its other subsidiaries,
Loyola engages in additional mortgage banking and origination activities in
Virginia, Florida and Alabama, develops real estate and provides securities
brokerage, real estate appraisal and insurance brokerage services.
Loyola's executive offices are located at 1300 North Charles Street,
Baltimore, Maryland 21201-5705.
PRICE RANGE OF LOYOLA COMMON STOCK
AND DIVIDEND POLICY
Loyola Common Stock is traded on The Nasdaq National Market under the
symbol "LOYC." The following table sets forth the calendar periods
indicated, the high and low closing prices of the Loyola Common Stock as
reported on The Nasdaq National Market for the following calendar quarters:
1995 High Low
Second Quarter $32.25 23.125
(through June 23,
1995)
First Quarter 23.50 17.625
1994
Fourth Quarter $22.25 $15.875
Third Quarter 24.50 21.75
Second Quarter 22.875 18.75
First Quarter 19.50 15.375
1993
Fourth Quarter $19.50 $14.50
Third Quarter 16.50 13.25
Second Quarter 15.875 12.875
First Quarter 16.875 13.50
On August 3, 1995, the Record Date, the outstanding shares of Loyola
Common Stock were held by approximately record holders. The
closing price per share of Loyola Common Stock on August , 1995 on The
Nasdaq National Market was $ .
Loyola has agreed that it will not make, declare or pay any dividend
on Loyola Common Stock other than the regular quarterly cash dividend not
exceeding $0.12 per share of Loyola Common Stock; provided that for
dividends paid after September 30, 1995, the record date for each Loyola
dividend shall be the same as Crestar's record date for its dividend for
the same quarter in which the Loyola dividend is paid with the result that
with respect to their shares of Loyola Common Stock the stockholders of
Loyola will be entitled to receive either a Loyola or Crestar regular
dividend for each fiscal quarter prior to the Effective Time. The payment
and amounts of dividends in the future will be determined by the Loyola
Board, based upon the results of operations and financial condition of
Loyola, economic conditions at the time of declaration and OTS and other
regulatory restrictions.
Loyola is a legal entity separate and distinct from Loyola F.S.B., its
wholly-owned subsidiary. A large portion of Loyola's revenues results from
dividends paid to Loyola by Loyola F.S.B.. Loyola F.S.B. is subject to
various statutory restrictions on its ability to pay dividends to Loyola.
Under federal regulations, Loyola F.S.B. may not declare or pay a cash
dividend on any of its stock if the effect thereof would cause Loyola
F.S.B.'s capital to be reduced below the amount required for the
liquidation account or the capital requirements imposed by Financial
Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") and
the OTS. Since Loyola F.S.B. currently meets the fully phased-in capital
requirements under FIRREA, it may pay a cash dividend on its capital stock
up to the higher of (i) 100% of its net income to date during the calendar
year plus an amount not to exceed 50% of its surplus capital ratio at the
beginning of the calendar year or (ii) 75% of its net income over the most
recent four-quarter period. Based upon this calculation, the amount
available for payment of a dividend was $20.6 million on March 31, 1995.
See "Comparative Rights of Stockholders -- Dividends and Other
Distributions."
<PAGE>
LOYOLA SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of Loyola Common Stock as of June 1, 1995 by each of
Loyola's directors and by all directors and executive officers of Loyola as
a group.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
<TABLE>
<CAPTION>
DIRECT HELD IN THE PROFIT
OWNERSHIP PLUS AND DEFERRED
OF COMMON STOCK COMPENSATION PERCENT OF
NAME STOCK(2) OPTIONS(3) PLANS (4) TOTAL CLASS
<S> <C> <C> <C> <C> <C>
Directors:
Joseph W. Mosmiller 53,572(5) 171,300 58,064 282,936 3.5%
John T. Stinson 17,224 5,000 22,224 0.3
James C. Johnson 36,147(5) 144,375 51,312 231,834 2.8
William G. Scaggs 133,202 11,000 144,202 1.8
Harry K. Wells 37,536(5) 11,000 48,536 0.6
C. Gordon Haines 10,224 9,000 19,224 0.2
Morton J. Macks 216,000 - 216,000 2.7
H. Mebane Turner 11,608(6) 10,120 21,728 0.3
Executive Officers:
Thomas R. Marvel 32,556 89,576 35,889 158,021 2.0
James V. McAveney 24,600(5) 81,802 22,608 129,010 1.6
Charles C. Schmitt 5,200 90,800 20,362 116,362 1.4
William A. Wycoff 1,920 96,000 15,700 113,620 1.4
All Directors and Executive
Officers as a group
(12 persons) 579,789 719,973 203,935 1,503,697(7) 18.6%
</TABLE>
1/ For the purposes of this table, pursuant to rules promulgated under
the Exchange Act, an individual is considered to "beneficially own"
any shares of Loyola Common Stock over which he or she has or shares,
(a) voting power, which includes the power to vote or direct the
voting of the shares; or (b) investment power, which includes the
power to dispose or direct the disposition of the shares. A person
also is deemed to have beneficial ownership of any shares of Loyola
Common Stock which may be acquired within 60 days pursuant to the
exercise of stock options. Unless otherwise indicated, the
individuals listed in the table have sole voting power and sole
investment power with respect to the indicated shares. Shares of
Common Stock which may be acquired within 60 days of the Record Date
are deemed to be outstanding shares of Loyola Common Stock
beneficially owned by such person(s) but are not deemed to be
outstanding for the purposes of computing the percentage of Loyola
Common Stock owned by any other person or group.
2/ Except as otherwise noted, the named individuals effectively exercise
sole voting power and sole dispositive power over these shares.
3/ Includes shares which the named individuals have the right to acquire
pursuant to stock options which are exercisable within 60 days of June
1, 1995.
4/ Includes shares held in a defined contribution profit sharing plan
(the "Profit Plus Plan") and a nonqualified deferred compensation plan
(the "Deferred Compensation Plan") as of March 31, 1995 for the
benefit of the executive officers named in the summary compensation
table. Shares held in the Profit Plus Plan and the Deferred
Compensation Plan are voted by the individual employees based upon
their shares owned.
5/ Includes 12,400 shares, 11,748 shares, 6,000 shares and 18,768 shares
owned solely by the spouses of Messrs. Mosmiller, Johnson, McAveney
and Wells, respectively.
6/ Includes 2,802 shares owned by The University of Baltimore Educational
Foundation, as to which Mr. Turner exercised shared voting and
dispositive power.
7/ Includes executive officers of Loyola F.S.B. Includes 719,973 shares
with respect to which certain officers and directors have the right to
acquire beneficial ownership through the exercise of stock options,
which stock options are exercisable within 60 days of June 1, 1995.
Such shares are deemed to be outstanding for the purpose of computing
the percentage outstanding shares of Loyola's Common Stock
beneficially owned by directors and executive officers as a group.
To Loyola's knowledge, no persons or groups own in excess of 5% of the
outstanding Loyola Common Stock as of June 1, 1995.
<PAGE>
SUPERVISION AND REGULATION OF CRESTAR
Bank holding companies and banks operate in a highly regulated
environment and are regularly examined by federal and state regulators.
The following description briefly discusses certain provisions of federal
and state laws and certain regulations and the potential impact of such
provisions on Crestar and its Bank Subsidiaries. To the extent that the
following information describes statutory or regulatory provisions, it is
qualified in its entirety by reference to the particular statutory or
regulatory provisions.
BANK HOLDING COMPANIES
As a bank holding company registered under the BHCA, Crestar is
subject to regulation by the Federal Reserve Board. The Federal Reserve
Board has jurisdiction under the BHCA to approve any bank or nonbank
acquisition, merger or consolidation proposed by a bank holding company.
The BHCA generally limits the activities of a bank holding company and its
subsidiaries to that of banking, managing or controlling banks, or any
other activity which is so closely related to banking or to managing or
controlling banks as to be a proper incident thereto.
The BHCA currently prohibits the Federal Reserve Board from approving
an application from a bank holding company to acquire shares of a bank
located outside the state in which the operations of the holding company's
banking subsidiaries are principally conducted, unless such an acquisition
is specifically authorized by statute of the state in which the bank whose
shares are to be acquired is located. Under recently enacted federal
legislation, the restriction on interstate acquisitions will be abolished
effective September 29, 1995 and thereafter. Bank holding companies from
any state will then be able to acquire banks and bank holding companies
located in any other state. Effective June 1, 1997, the law will allow
interstate bank mergers, subject to earlier "opt-in" or "opt-out" action by
individual states. The law also allows interstate branch acquisitions and
de novo branching if permitted by the host state. Virginia and Maryland
have recently adopted early "opt-in" legislation that will allow interstate
bank mergers, effective July 1, 1995 and September 29, 1995, respectively.
These laws also permit interstate branch acquisitions and de novo branching
in Virginia and Maryland by out-of-state banks if reciprocal treatment is
accorded Virginia and Maryland banks (as the case may be) in the state of
the acquiror.
There are a number of obligations and restrictions imposed on bank
holding companies and their depository institution subsidiaries by federal
law and regulatory policy that are designed to reduce potential loss
exposure to the depositors of such depository institutions and to the FDIC
insurance fund in the event the depository institution becomes in danger of
default or in default. For example, under a policy of the Federal Reserve
Board with respect to bank holding company operations, a bank holding
company is required to serve as a source of financial strength to its
subsidiary depository institutions and to commit resources to support such
institutions in circumstances where it might not do so otherwise. In
addition, the "cross-guarantee" provisions of federal law require insured
depository institutions under common control to reimburse the FDIC for any
loss suffered or reasonably anticipated by either the Savings Association
Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF") as a result of
the default of a commonly controlled insured depository institution or for
any assistance provided by the FDIC to a commonly controlled insured
depository institution in danger of default. The FDIC may decline to
enforce the cross-guarantee provisions if it determines that a waiver is in
the best interest of the SAIF or the BIF or both. The FDIC's claim for
reimbursement is superior to claims of stockholders of the insured
depository institution or its holding company but is subordinate to claims
of depositors, secured creditors and holders of subordinated debt (other
than affiliates) of the commonly controlled insured depository institution.
The Federal Deposit Insurance Act ("FDIA") also provides that amounts
received from the liquidation or other resolution of any insured depository
institution by any receiver must be distributed (after payment of secured
claims) to pay the deposit liabilities of the institution prior to payment
of any other general or unsecured senior liability, subordinated liability,
general creditor or stockholder. This provision would give depositors a
preference over general and subordinated creditors and stockholders in the
event a receiver is appointed to distribute the assets of any of the Bank
Subsidiaries.
Crestar also is registered under the bank holding company laws of
Virginia. Accordingly, Crestar and its Bank Subsidiaries are subject to
further regulation and supervision by the State Corporation Commission of
Virginia.
CAPITAL REQUIREMENTS
The Federal Reserve Board, the Office of the Comptroller of the
Currency (the "OCC") and the FDIC have issued substantially similar
risk-based and leverage capital guidelines applicable to United States
banking organizations. In addition, those regulatory agencies may from time
to time require that a banking organization maintain capital above the
minimum levels because of its financial condition or actual or anticipated
growth. Under the risk-based capital requirements of these federal bank
regulatory agencies, Crestar and its Bank Subsidiaries are required to
maintain a minimum ratio of total capital to risk-weighted assets of at
least 8%. At least half of the total capital is required to be "Tier 1
capital", which consists principally of common and certain qualifying
preferred stockholders' equity, less certain intangibles and other
adjustments. The remainder "Tier 2 capital" consists of a limited amount
of subordinated and other qualifying debt (including certain hybrid capital
instruments) and a limited amount of the general loan loss allowance. The
Tier 1 and total capital to risk-weighted asset ratios of Crestar Financial
Corporation as of March 31, 1995 were 9.2% and 13.0% respectively,
exceeding the minimums required.
In addition, each of the federal regulatory agencies has established a
minimum leverage capital ratio (Tier 1 capital to average tangible assets).
These guidelines provide for a minimum ratio of 3% for banks and bank
holding companies that meet certain specified criteria, including that they
have the highest regulatory examination rating and are not contemplating
significant growth or expansion. All other institutions are expected to
maintain a leverage ratio of at least 100 to 200 basis points above the
minimum. The Tier 1 capital leverage ratio of Crestar as of March 31, 1995,
was 7.9% The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") requires each federal banking agency to revise its risk-based
capital standards to ensure that those standards take adequate account of
interest rate risk, concentration of credit risk and the risks of
nontraditional activities, as well as reflect the actual performance and
expected risk of loss on multi-family mortgages. Rules have been
promulgated with respect to concentration of credit risk and the risks of
non-traditional activities, and also as to the risk of loss on multi-family
mortgages. A proposed rule with respect to interest rate risk is still
under consideration. The proposal would allow institutions to use internal
risk models to measure interest rate risk (if the models are acceptable to
examiners) and would require additional capital of institutions identified
as having excess interest rate risk. Crestar does not expect any of these
rules, either individually or in the aggregate, to have a material impact
on its capital requirements.
LIMITS ON DIVIDENDS AND OTHER PAYMENTS
Crestar is a legal entity separate and distinct from its subsidiary
institutions. Most of the revenues of Crestar result from dividends paid
to Crestar by its Bank Subsidiaries. There are various limitations
applicable to the payment of dividends to Crestar as well as the payment of
dividends by Crestar to its respective stockholders. Under federal law
applicable to the Bank Subsidiaries, prior approval from the bank
regulatory agencies is required if cash dividends declared in any given
year exceed net income for that year plus retained earnings of the two
preceding years. Under these supervisory practices, at March 31, 1995, the
Bank Subsidiaries could have paid additional dividends to Crestar of
approximately $161.4 million, without obtaining prior regulatory approval.
The payment of dividends by the Bank Subsidiaries or Crestar may also be
limited by other factors, such as requirements to maintain capital above
regulatory guidelines. Bank regulatory agencies have authority to prohibit
any Bank Subsidiary or Crestar from engaging in an unsafe or unsound
practice in conducting their business. The payment of dividends, depending
upon the financial condition of the Bank Subsidiary in question, or
Crestar, could be deemed to constitute such an unsafe or unsound practice.
The Federal Reserve Board has stated that, as a matter of prudent banking,
a bank or bank holding company should not maintain its existing rate of
cash dividends on common stock unless (1) the organization's net income
available to common stockholders over the past year has been sufficient to
fund fully the dividends and (2) the prospective rate of earnings retention
appears consistent with the organization's capital needs, asset quality,
and overall financial condition.
Under the FDIA, insured depository institutions such as the Bank
Subsidiaries are prohibited from making capital distributions, including
the payment of dividends, if, after making such distribution, the
institution would become "undercapitalized" (as such term is used in the
statute). Based on the Bank Subsidiaries' current financial condition,
Crestar does not expect that this provision will have any impact on its
ability to obtain dividends from its Bank Subsidiaries.
In addition to limitations on dividends, the Bank Subsidiaries are
limited in the amount of loans and other extensions of credit that may be
extended to Crestar, and any such loans or extensions of credit are subject
to collateral security requirements. Generally, up to 10% of the Bank
Subsidiaries' regulatory capital, surplus, undivided profits, allowance for
loan losses and contingency reserves may be loaned to Crestar. As of March
31, 1995, approximately $140 million of credit was available to Crestar
under this limitation, although no extensions of credit were outstanding.
BANKS
The Bank Subsidiaries are supervised and regularly examined by the
Federal Reserve Board, the SCC, the MBC and the OCC, as the case may be.
The Bank Subsidiaries are also subject to various requirements and
restrictions under federal and state law such as limitations on the types
of services that they may offer, the nature of investments that they make,
and the amounts of loans that may be granted. Various consumer and
compliance laws and regulations also affect the operations of the Bank
Subsidiaries. In addition to the impact of regulation, the Bank
Subsidiaries are affected significantly by actions of the Federal Reserve
Board in attempting to control the money supply and the availability of
credit.
The Bank Subsidiaries also are subject to the requirements of the
Community Reinvestment Act (the "CRA"). The CRA imposes on financial
institutions an affirmative and ongoing obligation to meet the credit needs
of their local communities, including low- and moderate-income
neighborhoods, consistent with the safe and sound operation of those
institutions. Each financial institution's efforts in meeting community
credit needs currently are evaluated as part of the examination process
pursuant to twelve assessment factors. These factors also are considered
in evaluating mergers, acquisitions and applications to open branches. The
Bank Subsidiaries have attained either an "outstanding" or "satisfactory"
rating on their most recent CRA performance evaluations.
As a result of a 1993 Presidential initiative, each of the federal
banking agencies, recently approved a final rule establishing a new
framework for the implementation of CRA. The new rule, which will become
fully effective on July 1, 1997, will emphasize an institution's
performance in meeting community credit needs. Institutions will be
evaluated on the basis of a three pronged lending, investment and service
test, with lending being of primary importance. CRA ratings will continue
to be a matter of public record, and CRA performance will continue to be
evaluated in connection with mergers, acquisitions and branch applications.
Although the new rule is likely to have some impact on Crestar's business
practices, it is not anticipated that any changes will be material.
As institutions with deposits insured by the BIF, the Bank
Subsidiaries also are subject to insurance assessments imposed by the FDIC.
Currently, a risk-based assessment schedule, imposes assessments ranging
from 0.23% to 0.31% of an institution's average assessment base. The
actual assessment to be paid by each BIF member is based on the
institution's assessment risk classification, which is determined based on
whether the institution is considered "well capitalized," "adequately
capitalized" or "undercapitalized," as such terms have been defined in
applicable federal regulations, and whether such institution is considered
by its supervisory agency to be financially sound or to have supervisory
concerns. It is anticipated that the BIF assessment rate will be reduced
by the FDIC during the latter half of 1995 to an average of 4-5 basis
points as a result of BIF achieving its designated ratio of $1.25 of
reserves for every $100 of insured deposits. Crestar will not realize the
full benefit of this premium reduction, however, because, as of March 31,
1995, approximately 38% of the total deposits of the Bank Subsidiaries were
SAIF-insured and subject to the SAIF assessment rate, as a result of past
thrift acquisitions. The SAIF rate is projected to remain at its current
level for another seven years, until such time as SAIF is recapitalized.
Various legislative initiatives have been proposed to deal with the
impending rate disparity but the prospect of any legislation is uncertain.
Under existing law, Loyola deposits acquired by Crestar as part of the
proposed transaction will remain SAIF-insured subject to the SAIF
assessment rate.
OTHER SAFETY AND SOUNDNESS REGULATIONS
The federal banking agencies have broad powers under current federal
law to take prompt corrective action to resolve problems of insured
depository institutions. The extent of these powers depends upon whether
the institutions in question are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" or
"critically undercapitalized," as such terms are defined under uniform
regulations defining such capital levels issued by each of the federal
banking agencies.
In addition, FDIC regulations now require that management report on
its institution's responsibility for preparing financial statements, and
establishing and maintaining an internal control structure and procedures
for financial reporting and compliance with designated laws and regulations
concerning safety and soundness; and that independent auditors attest to
and report separately on assertions in management's reports concerning
compliance with such laws and regulations, using FDIC-approved audit
procedures.
The 1991 FDICIA law, as amended by the Riegle Community Development
Act of 1994, requires the Federal bank regulators to develop standards for
a wide variety of internal bank operating procedures and grants regulators
discretion to develop standards on asset quality, earnings and stock
valuation. Final rules on the subject have not yet been published but a
1993 proposed rule contained broad principle-based standards that leave the
method for meeting such standards largely in the province of management.
Based on its review of the proposed rule, Crestar does not believe that the
standards will have any significant impact on its operations.
DESCRIPTION OF CRESTAR CAPITAL STOCK
The capital stock of Crestar consists of 100,000,000 authorized shares
of Common Stock and 2,000,000 authorized shares of Preferred Stock. The
shares of Preferred Stock are issuable in series, with relative rights,
preferences and limitations of each series fixed by Crestar's Board of
Directors. The following summary does not purport to be complete and is
subject in all respects to applicable Virginia law, Crestar's Restated
Articles of Incorporation (the "Crestar Articles") and Bylaws, and the
Rights Agreement dated June 23, 1989 (described below) (the "Rights
Agreement").
COMMON STOCK
Crestar had 38,397,409 shares of Common Stock outstanding at March 31,
1995. Each share of Common Stock is entitled to one vote on all matters
submitted to a vote of stockholders. Holders of Common Stock are entitled
to receive dividends when and as declared by Crestar's Board of Directors
out of funds legally available therefor. Dividends may be paid on the
Common Stock only if all dividends on any outstanding Preferred Stock have
been paid or provided for.
The issued and outstanding shares of Common Stock are fully paid and
non-assessable. Holders of Common Stock have no preemptive or conversion
rights and are not subject to further calls or assessments by Crestar.
In the event of the voluntary or involuntary dissolution, liquidation
or winding up of Crestar, holders of Common Stock are entitled to receive,
pro rata, after satisfaction in full of the prior rights of creditors and
holders of Preferred Stock, if any, all the remaining assets of Crestar
available for distribution.
Directors are elected by a vote of the holders of Common Stock.
Holders of Common Stock are not entitled to cumulative voting rights.
Mellon Bank, N.A. acts as the transfer agent and registrar for the
Common Stock.
PREFERRED STOCK
Crestar's Board of Directors is authorized to designate with respect
to each new series of Preferred Stock the number of shares in each series,
the dividend rates and dates of payment, voluntary and involuntary
liquidation preferences, redemption prices, whether or not dividends shall
be cumulative and, if cumulative, the date or dates from which the same
shall be cumulative, the sinking fund provisions, if any, for redemption or
purchase of shares, the rights, if any, and the terms and conditions on
which shares can be converted into or exchanged for, or the rights to
purchase, shares of any other class or series, and the voting rights, if
any. Any Preferred Stock issued will rank prior to the Common Stock as to
dividends and as to distributions in the event of liquidation, dissolution
or winding up of Crestar. The ability of Crestar's Board of Directors to
issue Preferred Stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could, among other
things, adversely affect the voting powers of holders of Common Stock and,
under certain circumstances, may discourage an attempt by others to gain
control of Crestar.
Pursuant to the Crestar Articles, the Board of Directors has
designated a series of 100,000 shares of Participating Cumulative Preferred
Stock, Series C (the "Series C Preferred Stock"), none of the shares of
which are currently outstanding. The Series C Preferred Stock was created
in connection with Crestar's stockholder rights plan which is described
below.
RIGHTS
In 1989, pursuant to the Rights Agreement, Crestar distributed as a
dividend one Right for each outstanding share of Common Stock. Each Right
entitles the holder to buy one one-thousandth of a share of Junior
Preferred Stock at an exercise price of $115, subject to adjustment. The
Rights will become exercisable only if a person or group acquires or
announces a tender offer for 10% or more of the outstanding Common Stock.
When exercisable, Crestar may issue a share of Common Stock in exchange for
each Right other than those held by such person or group. If a person or
group acquires 30% or more of the outstanding Common Stock, each Right will
entitle the holder, other than the acquiring person, upon payment of the
exercise price, to acquire Series C Preferred Stock or, at the option of
Crestar, Common Stock, having a value equal to twice the Right's exercise
price. If Crestar is acquired in a merger or other business combination or
if 50% of its earnings power is sold, each Right will entitle the holder,
other than the acquiring person, to purchase securities of the surviving
company having a market value equal to twice the exercise price of the
Right. The Rights will expire on June 23, 1999, and may be redeemed by
Crestar at any time prior to the tenth day after an announcement that a 10%
position has been acquired, unless such time period has been extended by
the Board of Directors.
Until such time as a person or group acquires or announces a tender
offer for 10% or more of the Common Stock, (i) the Rights will be evidenced
by the Common Stock certificates and will be transferred with and only with
such Common Stock certificates, and (ii) the surrender for transfer of any
certificate for Common Stock will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
Rights may not be transferred, directly or indirectly (i) to any person or
group that has acquired, or obtained the right to acquire, beneficial
ownership of 10% or more of the Rights (an "Acquiring Person"), (ii) to any
person in connection with a transaction in which such person becomes an
Acquiring Person or (iii) to any affiliate or associate of any such person.
Any Right that is the subject of a purported transfer to any such person
will be null and void.
The Rights can be expected to have certain anti-takeover effects if an
acquisition transaction not approved by the Board of Directors is proposed
by a person or group. In such event, the Rights will cause substantial
dilution to any person or group that acquires more than 10% of the
outstanding shares of Common Stock of Crestar if certain events thereafter
occur without the Rights having been redeemed. For example, if thereafter
such acquiring person acquires 30% of Crestar's outstanding Common Stock,
or effects a business combination with Crestar, the Rights permits
stockholders to acquire securities having a value equal to twice the amount
of the purchase price specified in the Rights, but rights held by such
"acquiring person" are void to the extent permitted by law and may not be
exercised. Further, other stockholders may not transfer rights to such
"acquiring person" above his 10% ownership threshold. Because of these
provisions, it is unlikely that any person or group will propose an
acquisition transaction that is not approved by Crestar's Board of
Directors. Thus, the Rights could have the effect of discouraging
acquisition transactions not approved by Crestar's Board of Directors. The
Rights do not interfere with any merger or other business combination
approved by Crestar's Board of Directors and stockholders because the
rights are redeemable with the concurrence of a majority of the "Continuing
Directors," defined as directors in office when the Rights Agreement was
adopted or any person added thereafter to the Board with the approval of
the Continuing Directors.
VIRGINIA STOCK CORPORATION ACT
The VSCA contains provisions governing "Affiliated Transactions."
These provisions, with several exceptions discussed below, require approval
of material acquisition transactions between a Virginia corporation and any
holder of more than 10% of any class of its outstanding voting shares (an
"Interested Stockholder") by the holders of at least two-thirds of the
remaining voting shares. Affiliated Transactions subject to this approval
requirement include mergers, share exchanges, material dispositions of
corporate assets not in the ordinary course of business, any dissolution of
the corporation proposed by or on behalf of an Interested Stockholder, or
any reclassification, including reverse stock splits, recapitalization or
merger of the corporation with its subsidiaries which increases the
percentage of voting shares owned beneficially by an Interested Stockholder
by more than 5%.
For three years following the time that an Interested Stockholder
becomes an owner of 10% of the outstanding voting shares, a Virginia
corporation cannot engage in an Affiliated Transaction with such Interested
Stockholder without approval of two-thirds of the voting shares other than
those shares beneficially owned by the Interested Stockholder, and majority
approval of the "Disinterested Directors." A Disinterested Director means,
with respect to a particular Interested Stockholder, a member of Crestar's
Board of Directors who was (1) a member on the date on which an Interested
Stockholder became an Interested Stockholder and (2) recommended for
election by, or was elected to fill a vacancy and received the affirmative
vote of, a majority of the Disinterested Directors then on the Board. At
the expiration of the three year period, the statute requires approval of
Affiliated Transactions by two-thirds of the voting shares other than those
beneficially owned by the Interested Stockholder.
The principal exceptions to the special voting requirement apply to
transactions proposed after the three year period has expired and require
either that the transaction be approved by a majority of the corporation's
Disinterested Directors or that the transaction satisfy the fair-price
requirements of the statute. In general, the fair-price requirement
provides that in a two-step acquisition transaction, the Interested
Stockholder must pay the stockholders in the second step either the same
amount of cash or the same amount and type of consideration paid to acquire
the Virginia corporation's shares in the first step.
None of the foregoing limitations and special voting requirements
applies to a transaction with an Interested Stockholder whose acquisition
of shares making such person an Interested Stockholder was approved by a
majority of the Virginia corporation's Disinterested Directors.
These provisions were designed to deter certain takeovers of Virginia
corporations. In addition, the statute provides that, by affirmative vote
of a majority of the voting shares other than shares owned by any
Interested Stockholder, a corporation can adopt an amendment to its
articles of incorporation or bylaws providing that the Affiliated
Transactions provisions shall not apply to the corporation. Crestar has
not "opted out" of the Affiliated Transactions provisions.
Virginia law also provides that shares acquired in a transaction that
would cause the acquiring person's voting strength to meet or exceed any of
three thresholds (20%, 33 1/3% or 50%) have no voting rights unless granted
by a majority vote of shares not owned by the acquiring person or any
officer or employee-director of the Virginia corporation. This provision
empowers an acquiring person to require the Virginia corporation to hold a
special meeting of stockholders to consider the matter within 50 days of
its request.
COMPARATIVE RIGHTS OF STOCKHOLDERS
At the Effective Time of the Merger, stockholders of Loyola
automatically will become stockholders of Crestar, and their rights as
stockholders will be determined by the Crestar Articles and Crestar's
Bylaws. The following is a summary of the material differences in the
rights of stockholders of Crestar and Loyola. This summary does not
purport to be a complete discussion of, and is qualified in its entirety by
reference to, the governing law and the Articles of Incorporation or
Charter and Bylaws of each entity.
CAPITALIZATION
Loyola. The Loyola Charter authorizes the issuance of up to
50,000,000 shares of capital stock, par value $0.10 per share. All of such
shares are classified as Loyola Common Stock of which shares were
issued and outstanding as of the Record Date. The Loyola Charter permits
the Loyola Board to issue preferred stock from time to time and in one or
more series, to specify the number of shares of such series and to
determine the applicable preferences, conversion and other rights, voting
powers, restrictions, limitations as to distributions and dividends,
qualifications or terms or conditions of redemption of such shares within
the limits established by law from time to time.
Crestar. Crestar's authorized capital is set forth under "Description
of Crestar Capital Stock."
AMENDMENT OF ARTICLES OR BYLAWS
Loyola. The By-Laws of Loyola may be amended only by the affirmative
vote of the holders of not less than 80% of all of the votes entitled to
vote generally in the election of directors or by a vote of two-thirds of
the Loyola Board. The Loyola Charter may be amended only by the
affirmative vote of the holders of not less than a majority of all of the
votes entitled to be cast on the matter, except a vote by not less than 80%
of all votes entitled to be cast is required to amend the Loyola Charter
(a) to make certain changes relating to the Loyola Board, (b) to limit
stockholder proposals and nominations, (c) to modify provisions governing
business combinations or other transactions involving a change in control,
and (d) to make changes to provisions relating to limitations of liability
and indemnification. The Loyola Charter provisions relating to limitations
of liability and indemnification may only be amended prospectively.
Crestar. As permitted by the VSCA, the Crestar Articles provide that,
unless a greater vote is required by law, by the Crestar Articles or by a
resolution of the Board of Directors, the Crestar Articles may be amended
if the amendment is adopted by the Board of Directors and approved by a
vote of the holders of a majority of the votes entitled to be cast on the
amendment by each voting group entitled to vote thereon. The Article
providing for a classified Board of Directors and establishing criteria for
removing Directors requires the approving vote of a majority of
"Disinterested Directors" and the holders of at least two-thirds of the
votes entitled to be cast on the amendment.
Crestar's Bylaws generally provide that the Board of Directors may, by
a majority vote, amend its Bylaws.
REQUIRED STOCKHOLDER VOTE FOR CERTAIN ACTIONS
Loyola. Except as otherwise provided by the MGCL, the approval of
stockholders holding a majority of all votes entitled to be cast is required
for a merger, consolidation or sale of substantially all of the assets of
Loyola.
Crestar. The VSCA generally requires the approval of a majority of a
corporation's Board of Directors and the holders of more than two-thirds of
all the votes entitled to be cast thereon by each voting group entitled to
vote on any plan of merger or consolidation, plan of share exchange or sale
of substantially all of the assets of a corporation not in the ordinary
course of business. The VSCA also specifies additional voting requirements
for Affiliated Transactions and transactions that would cause an acquiring
person's voting power to meet or exceed specified thresholds, as discussed
under "Description of Crestar Capital Stock Virginia Stock Corporation
Act."
None of the additional voting requirements contained in the VSCA are
applicable to the Merger since it is not an "Affiliated Transaction."
DIRECTOR NOMINATIONS
Loyola. The Loyola Charter provides that any stockholder desiring to
make a nomination for the election of directors at a meeting of
stockholders must submit written notice to Loyola not less than 30 or more
than 60 days in advance of the meeting.
Crestar. The Bylaws of Crestar provide that any nomination for
director made by a stockholder must be made in writing to the Secretary of
Crestar not less than 15 days prior to the meeting of stockholders at which
directors are to be elected. If mailed, such notice shall be sent by
certified mail, return receipt requested, and shall be deemed to have been
given when received by the Secretary of Crestar. A stockholder's
nomination for director shall set forth (a) the name and business address
of the stockholder's nominee, (b) the fact that the nominee has consented
to his name being placed in nomination, (c) the name and address, as they
appear on Crestar's books, of the stockholder making the nomination,
(d) the class and number of shares of Crestar's stock beneficially owned by
the stockholder, and (e) any material interest of the stockholder in the
proposed nomination.
DIRECTORS AND CLASSES OF DIRECTORS; VACANCIES AND REMOVAL OF DIRECTORS
Loyola. The Loyola Charter and By-Laws provide that the number of
directors (exclusive of directors, if any, to be elected by the holders of
preferred stock) shall not be less than six nor more than 15 as shall be
provided from time to time in accordance with the By-laws. The power to
determine the number of directors within these numerical limitations is
vested in the Loyola Board. The Loyola Board currently consists of eight
members. Moreover, the Loyola Charter divides the Loyola Board into three
classes which shall be as nearly equal in number as possible. Each class
currently contains two or three directors. The members of each class serve
for three years with terms staggered so that only one class is elected each
year.
The Loyola Charter provides that vacancies on the Loyola Board and
newly created directorships shall be filled by a majority vote of the
stockholders or directors then in office and any director so chosen by the
remaining directors shall hold office until the next annual meeting of
stockholders, at which time the stockholders shall elect a director to hold
office for the balance of the term then remaining.
Subject to the rights of the holders of any class separately entitled
to elect directors, the Loyola Charter provides that any director may be
removed from office at any time, but only for cause and then only by the
affirmative vote of the holders of at least 80% of the combined voting
power of all classes of shares of capital stock entitled to vote in the
election for directors.
Crestar. The Crestar Articles provide that the number of Directors
shall be set forth in the Bylaws, but the number of directors set forth in
the Bylaws may not be increased by more than four during any 12-month
period except by the affirmative vote of more than two-thirds of the votes
entitled to be cast. The Bylaws provide for a Board of Directors
consisting of not less than five nor more than 26 members, with the number
to be fixed by the Board. The Board currently has fixed the number of
directors at 19. Crestar's Board of Directors is divided into three
classes, each as nearly equal in number as possible, with one class being
elected annually.
The Crestar Articles provide that any vacancy occurring on the Board
of Directors, including a vacancy resulting from an increase in the number
of Directors, may be filled by the affirmative vote of a majority of the
remaining directors, though less than a quorum of the Board of Directors.
If at the time any such vacancy is filled, any person, or any associate or
affiliate of such person (as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, or any successor rule
or regulation) is directly or indirectly the beneficial owner of 10% (or
more) of outstanding voting shares, the vacancy shall be filled by the
affirmative vote of a majority of the remaining directors in the class of
directors in which the vacancy has occurred. Directors so chosen shall
hold office for a term expiring at the next following annual meeting of
stockholders at which directors are elected. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
Subject to the rights of the holders of preferred stock then
outstanding, any director may be removed, with cause, only by the
affirmative vote of the holders of at least two-thirds of outstanding
voting shares.
ANTI-TAKEOVER PROVISIONS
Loyola. The Loyola Charter directs the Loyola Board in connection
with the exercise of its business judgment when evaluating a transaction
which may involve a change in control of Loyola, to give consideration to
all relevant factors, including the long-term economic effects on Loyola
and its stockholders; the social and economic effects on employees,
depositors and other constituents of Loyola; the historical and current
operating results or financial condition of Loyola; whether a more
favorable price could be obtained in the future; the reputation and
business practices of the other party; and estimate of values of future
sales of securities by Loyola; and any antitrust or other legal or
regulatory issues raised by the transaction. The Loyola Charter authorizes
the Loyola Board to employ a broad range of defensive measures to defeat an
offer they believe should be opposed.
The MGCL prohibits certain "business combinations" (including a
merger, consolidation, share exchange, or, in certain circumstances, an
asset transfer or issuance or reclassification of equity securities)
between a Maryland corporation and an "Interested Stockholder." Interested
Stockholders are all persons (a) who beneficially own 10% or more of the
voting power of the corporation's shares or (b) an affiliate or associate
of the corporation who, at any time within the two-year period prior to the
date in question, was an Interested Stockholder or an affiliate or an
associate thereof. Such business combinations are prohibited for five
years after the most recent date on which the Interested Stockholder became
an Interested Stockholder. Thereafter, any such business combination must
be recommended by the board of directors of such corporation and approved
by the affirmative vote of at least (a) 80% of the votes entitled to be
case by all holders of voting shares of the corporation, and (b) 66 2/3% of
the votes entitled to be cast by all holders of voting shares of the
corporation other than voting shares held by the Interested Stockholder or
an affiliate or associate of the Interested Stockholder, with whom the
business combination is to be effected, unless, among other things, the
corporation's stockholders receive a minimum price (as defined in the MGCL)
for their shares and the consideration is received in cash or in the same
form as previously paid by the Interested Stockholder for its shares.
These provisions of Maryland law do not apply, however, to business
combinations that are approved or exempted by the Board of Directors of the
corporation prior to the time that the Interested Stockholder becomes an
Interested Stockholder. Crestar and its affiliates and associates were
exempted from these provisions of Maryland law by the Loyola Board. A
Maryland corporation may adopt an amendment to its charter electing not to
be subject to the special voting requirements of the foregoing legislation.
Any such amendment would have to be approved by the affirmative vote of at
least 80% of the votes entitled to be cast by all holders of outstanding
shares of voting stock and 66 2/3% of the votes entitled to be cast by
holders of outstanding shares of voting stock who are not Interested
Stockholders. Loyola has not adopted such an amendment to the Loyola
Charter.
The MGCL provides the "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to
the extent approved by a vote of two-thirds of the votes entitled to be
cast on the matter, excluding shares of stock owned by the acquiror or by
officers or directors who are employees of the corporation. Control shares
are voting shares of stock which, if aggregated with all other shares of
stock previously acquired by such a person, would entitle the acquiror to
exercise voting power in electing directors within one of the following
ranges of voting power: (a) 20% or more but less than 33 1/3%; (b) 33 1/3%
or more but less than a majority; or (c) a majority of all voting power.
Control Shares do not include shares of stock an acquiring person is
entitled to vote as a result of having previously obtained stockholder
approval. A control share acquisition means, subject to certain
exceptions, the acquisition of, ownership of or the power to direct the
exercise of voting power with respect to, control shares.
A person who has made or proposed to make a "control share
acquisition," upon satisfaction of certain conditions (including an
undertaking to pay expenses), may compel the board of directors to call a
special meeting of stockholders to be held within 50 days of demand
therefore to consider the voting rights of the shares. If no request for a
meeting is made, the corporation may itself present the question at any
stockholders' meeting.
If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as permitted by the
statute, then subject to certain conditions and limitations, the
corporation may redeem any or all of the control shares (except those for
which voting rights have previously been approved) for fair value
determined, without regard to voting rights, as of the date of the last
control share acquisition or of any meeting of stockholders at which the
voting rights of such shares are considered and not approved. If voting
rights for "control shares" are approved at a stockholders' meeting and the
acquiror becomes entitled to vote a majority of the shares entitled to
vote, all other stockholders may exercise appraisal rights. The fair value
of the stock as determined for purposes of such appraisal rights may not be
less than the highest price per share paid in the control share
acquisition, and certain limitations and restrictions otherwise applicable
to the exercise of dissenters' rights do not apply in the context of a
"control share acquisition."
The control share acquisition statute does not apply to stock acquired
in a merger, consolidation or stock exchange if the corporation is a party
to the transaction, or to acquisitions previously approved or exempted by a
provision in the charter or by-laws of the corporation. The Loyola By-Laws
exempt the acquisition of Loyola Common Stock by Crestar or its affiliates
and associates or any other related transaction from the provisions of the
Maryland control share acquisition statute.
Crestar. For a description of certain provisions of VSCA which may be
deemed to have an anti-takeover effect, see "Description of Crestar Capital
Stock Virginia Stock Corporation Act."
PREEMPTIVE RIGHTS
Neither the stockholders of Crestar nor the stockholders of Loyola
have preemptive rights. Thus, if additional shares of Crestar Common
Stock, Crestar preferred stock or Loyola Common Stock or Loyola Preferred
Stock are issued, holders of such stock, to the extent they do not partici-
pate in such additional issuance of shares, would own proportionately
smaller interests in a larger amount of outstanding capital stock.
ASSESSMENT
All outstanding shares of Loyola Common Stock are fully paid and
nonassessable.
All shares of Crestar Common Stock presently issued are, and those to
be issued pursuant to the Agreement will be, fully paid and nonassessable.
CONVERSION; REDEMPTION; SINKING FUND
Neither Crestar Common Stock nor Loyola Common Stock is convertible,
redeemable or entitled to any sinking fund.
LIQUIDATION RIGHTS
Loyola. Maryland law generally provides that a corporation's board of
directors may propose dissolution for submission to stockholders and that
to be authorized, the dissolution must be approved by the holders of more
than two-thirds of all votes entitled to be cast on the proposal, unless
the charter of the corporation requires a greater or lesser vote. The
Loyola Charter, which would require the affirmative vote of the holders of
a majority of the total number of shares entitled to vote on the proposal,
modifies the statutory requirements for dissolution under the MGCL.
Crestar. The VSCA generally provides that a corporation's board of
directors may propose dissolution for submission to stockholders and that
to be authorized, the dissolution must be approved by the holders of more
than two-thirds of all votes entitled to be cast on the proposal, unless
the articles of incorporation of the corporation require a greater or
lesser vote. There are no provisions in the Crestar Articles which would
modify the statutory requirements for dissolution under the VSCA.
DIVIDENDS AND OTHER DISTRIBUTIONS
Loyola. Maryland law permits the payment of dividends unless the
corporation would not be able to pay its debts as they become due in the
usual course of business or the corporation's total assets would be less
than the sum of the corporation's total liabilities plus, unless the
charter permits otherwise (which the Loyola Charter does not), the amount
that would be needed, if the corporation were to be dissolved at the time
of such dividends, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights on dissolution are superior to those
receiving the dividends.
Crestar. The VSCA generally provides that a corporation may make
distributions to its stockholders unless, after giving effect to the
distribution, (i) the corporation would not be able to pay its debts as
they become due in the usual course of business or (ii) the corporation's
total assets would be less than the sum of its total liabilities plus
(unless the articles of incorporation permit otherwise, which the Crestar
Articles do not) the amount that would be needed, if the corporation were
to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of stockholders whose preferential
rights are superior to those receiving the distribution. These
requirements are applicable to Crestar as a Virginia corporation.
In addition to the limitations set forth in the VSCA, there are
various regulatory requirements which are applicable to distributions by
bank holding companies such as Crestar and by savings and loan holding
companies such as Loyola. For a description of the regulatory limitations
on distributions by Crestar, see "Supervision and Regulation Limits on
Dividends and Other Payments." For a description of the regulatory
limitations on capital distributions by Loyola, see "Price Range of Loyola
Common Stock and Dividend Policy."
SPECIAL MEETINGS OF STOCKHOLDERS
Loyola. A special meeting of the stockholders of Loyola may be called
by the Chairman of the Loyola Board or the President, by a majority of the
Loyola Board or by stockholders entitled to cast at least 25% of the votes
at such meeting. However, Maryland law provides that a special meeting
need not be called to consider any matter which is substantially the same
as a matter voted on at any special meeting of stockholders held during the
preceding 12 months unless the meeting is requested by stockholders
entitled to cast a majority of all the votes entitled to be cast at the
meeting.
Crestar. The Bylaws of Crestar provide that special meetings of the
stockholders for any purpose or purposes may be called at any time by the
Chairman of the Board of Directors, by the President, or by a majority of
the Board of Directors.
INDEMNIFICATION
Loyola. As permitted by the MGCL, provisions in the Loyola Charter
limit the personal liability of directors and officers for money damages to
the fullest extent permitted by Maryland law except that such Loyola
Charter provisions do not limit liability (a) for, and to the extent of,
actual receipt of an improper benefit in money, property or services or (b)
in respect of any adjudication based upon a finding of active and
deliberate dishonesty which was material or the cause of action
adjudicated. The Loyola Charter provisions do not affect potential
liability of directors and officers to third parties, such as creditors of
Loyola.
As permitted by the MGCL, the Loyola Charter obligates Loyola to
indemnify its directors and officers and to pay or reimburse expenses for
such individuals in advance of the final disposition of a proceeding to the
maximum extent permitted by Maryland law. Loyola's By-Laws contain
indemnification procedures which implement those of the Loyola Charter.
The MGCL permits a corporation to indemnify its directors and officers,
among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any
proceeding to which they may be made a party by reason of their service in
those or other capacities, unless it is established that (a) the act or
omission of the director or officer was material to the matter giving rise
to such proceeding and (i) was committed in bad faith or (ii) was the
result of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or
services, or (c) in the case of any criminal proceeding, the director or
officer had reasonably cause to believe that the action or omission was
unlawful.
Crestar. The Crestar Articles provide that to the full extent
permitted by the VSCA and any other applicable law, Crestar shall indemnify
a director or officer of Crestar who is or was a party to any proceeding by
reason of the fact that he is or was such a director or officer or is or
was serving at the request of the corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. The Board of Directors
is empowered, by majority vote of a quorum of disinterested directors, to
contract in advance to indemnify any director or officer.
STOCKHOLDER PROPOSALS
Loyola. The Loyola Charter provides that any stockholder desiring to
make a nomination for the election of directors or a proposal for new
business at a meeting of stockholders must submit written notice to the
corporation not less than 30 or more than 60 days in advance of the
meeting, delivered or mailed by first class United States mail, postage
prepaid, to the Secretary of Loyola. Such notice given by a stockholder to
the Secretary shall set forth in writing as to each matter: (i) a brief
description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (ii) the name and
address, as they appear in Loyola's books, of the stockholder proposing
such business, (iii) the class and number of shares of Loyola which are
beneficially owned by the stockholder and (iv) any material interest of the
stockholder in such business. No business shall be conducted at a meeting
of stockholders except in accordance with the procedures set forth in
Loyola's By-laws.
Crestar. The Bylaws of Crestar provide that at any meeting of
stockholders of Crestar, only that business that is properly brought before
the meeting may be presented to and acted upon by the stockholders. To be
properly brought before the meeting, business must be brought (a) by or at
the direction of the Board of Directors or (b) by a stockholder who has
given written notice of business he expects to bring before the meeting to
the Secretary of Crestar not less than 15 days prior to the meeting. If
mailed, such notice shall be sent by certified mail, return receipt
requested, and shall be deemed to have been given when received by the
Secretary of Crestar. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the
meeting (a) a brief description of the business to be brought before the
meeting and the reasons for conducting such business at the meeting, (b)
the name and address, as they appear on Crestar's books, of the stockholder
proposing such business, (c) the class and number of shares of Crestar's
stock beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. No business shall be conducted at a
meeting of stockholders except in accordance with the procedures set forth
in Crestar's Bylaws.
STOCKHOLDER INSPECTION RIGHTS; STOCKHOLDER LISTS
Loyola. Under Maryland law, any stockholder has the right to inspect
and copy the by-laws, minutes of the proceedings of stockholders, annual
statement of affairs, and voting trust agreements on file at the
corporation's principal office. Maryland law also provides that one or
more persons who together have been stockholders of record for at least six
months and who together hold at least 5% of the outstanding stock of any
class may inspect and copy the corporation's books of account, stock ledger
and stockholders' list and may require the corporation to produce a
verified statement of affairs.
Crestar. Under the VSCA, the stockholder of a Virginia corporation is
entitled to inspect and copy certain books and records, including the
articles of incorporation and bylaws of the corporation if he gives the
corporation written notice of his demand at least five business days before
the date on which he wishes to inspect and copy. The stockholder of a
Virginia corporation is entitled to inspect and copy certain other books
and records, including a list of stockholders, minutes of any meeting of
the board of directors and accounting records of the corporation, if (i)
the stockholder has been a stockholder of record for at least six months
immediately preceding his or her written demand or is the holder of at
least 5% of the corporation's outstanding shares, (ii) the stockholder's
demand is made in good faith and for a proper purpose, (iii) the
stockholder describes with reasonable particularity the purpose of the
request and the records desired to be inspected and (iv) the records are
directly connected with the stated purpose, and if he gives the corporation
written notice of his demand at least five business days before the date on
which he wishes to inspect and copy. The VSCA also provides that a
corporation shall make available for inspection by any stockholder during
usual business hours, at least 10 days before each meeting of stockholders,
a complete list of the stockholders entitled to vote at such meeting.
STOCKHOLDER RIGHTS PLAN
Loyola. Loyola has not implemented a stockholder rights plan.
Crestar. For a description of a stockholder rights plan which has
been adopted by Crestar, see "Description of Crestar Capital Stock Rights."
DISSENTERS' RIGHTS
Loyola. The provisions of Title 3 of the MGCL, which provide
stockholders of a Maryland corporation the right to demand and receive
payment of the fair value of their shares in the event of mergers,
consolidations and certain other corporate transactions, are applicable to
Loyola as a Maryland corporation. However, because Loyola Common Stock is
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.,
stockholders of Loyola generally do not have rights to demand and receive
payment of the fair value of their shares in the event of mergers,
consolidations and certain other corporate transactions to which Loyola is
a party.
Crestar. The provisions of Article 15 of the VSCA which provide
stockholders of a Virginia corporation the right to dissent from, and
obtain payment of the fair value of their shares in the event of, mergers,
consolidations and certain other corporate transactions are applicable to
Crestar as a Virginia corporation. However, because Crestar has more than
2,000 record stockholders, stockholders of Crestar generally do not have
rights to dissent from mergers, consolidations and certain other corporate
transactions to which Crestar is a party because Article 15 of the VSCA
provides that holders of shares of a Virginia corporation which has shares
listed on a national securities exchange or which has at least 2,000 record
stockholders are not entitled to dissenters' rights unless certain
requirements are met.
RESALE OF CRESTAR COMMON STOCK
Crestar Common Stock has been registered under the 1933 Act, thereby
allowing such shares to be traded freely and without restriction by those
holders of Loyola Common Stock who receive such shares following
consummation of the Merger and who are not deemed to be "affiliates" (as
defined under the 1933 Act, but generally including directors, certain
executive officers and 10% or more stockholders) of Loyola or Crestar.
Each holder of Loyola Common Stock who is deemed by Loyola to be an
affiliate of it has entered into an agreement with Crestar prior to the
Effective Date of the Merger providing, among other things, that (A) such
affiliate acknowledges and agrees to support and vote such shares of Loyola
Common Stock beneficially owned by them to ratify and confirm the Agreement
and the Merger, (B) such affiliate acknowledges and agrees beginning 30
days prior to the Effective Date, that he will not sell, pledge, transfer
or otherwise dispose of shares of Loyola Common Stock or Crestar capital
stock except in compliance with the applicable provisions of the 1933 Act
and rules and regulations thereunder and until such time as financial
results covering at least 30 days of combined operations of Crestar and
Loyola have been published within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies, and (C) the
certificates representing said shares may bear a legend referring to the
foregoing restrictions. This Proxy Statement/Prospectus does not cover any
resales of Crestar Common Stock received by affiliates of Loyola.
EXPERTS
The consolidated financial statements of Crestar Financial Corporation
and Subsidiaries incorporated in this Proxy Statement/Prospectus by
reference to Crestar's Annual Report on Form 10-K for the year ended
December 31, 1994 have been so incorporated in reliance upon the report of
KPMG Peat Marwick LLP, independent auditors, incorporated herein by
reference, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP refers to a change in
accounting for certain investments in debt and equity securities.
The consolidated financial statements of Loyola Capital Corporation
and Subsidiaries incorporated in this Proxy Statement/Prospectus by
reference to Loyola's Annual Report on Form 10-K for the year ended
December 31, 1994 have been so incorporated in reliance upon the report of
KPMG Peat Marwick LLP, independent auditors, incorporated herein by
reference, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP refers to a change in
accounting for income taxes.
LEGAL OPINION
The legality of the Crestar Common Stock to be issued in the Merger
will be passed on for Crestar by Hunton & Williams, Richmond, Virginia.
Gordon F. Rainey, Jr., a partner in Hunton & Williams, is a director of
Crestar.
A condition to consummation of the Merger is the delivery by each of
Piper & Marbury L.L.P., counsel to Loyola, and Hunton & Williams, counsel to
Crestar, of an opinion concerning certain federal income tax consequences
of the Merger. See "The Merger -- Certain Federal Income Tax
Consequences."
Certain legal matters will be passed on for Loyola by Piper & Marbury
L.L.P., Baltimore, Maryland.
OTHER MATTERS
As of the date of this Prospectus/Proxy Statement, the Loyola Board
does not know of any other matters to be presented for action at the Loyola
Stockholder Meeting other than procedural matters incident to the conduct
of the meeting. In addition, stockholders may make proposals for
consideration at the Loyola Stockholder Meeting in accordance with the
procedures specified in Loyola's Bylaws. If such stockholder proposals are
made or any other matters not now known are properly brought before the
Loyola Stockholder Meeting, the persons named in the accompanying proxy
will vote such proxy in accordance with the determination of a majority of
the Loyola Board.
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
CRESTAR FINANCIAL CORPORATION
("CRESTAR")
AND
LOYOLA CAPITAL CORPORATION
("LOYOLA")
MAY 16, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER
1.1. Structure of the Merger
1.2. Conversion of Stock; Exchange Ratio
1.3. Exchange Procedures
1.4. Stock Options
1.5. Articles of Incorporation of the Successor Corporation
1.6. By-Laws of the Successor Corporation
1.7. Directors and Officers of the Successor Corporation.
1.8. Closing
ARTICLE 2 REPRESENTATIONS AND WARRANTIES
2.1. Organization and Capitalization of Crestar
2.2. Organization and Capitalization of Loyola
2.3. Rights, etc
2.4. Capital Stock
2.5. Authority
2.6. Subsidiaries
2.7. Authorization and Validity of Agreement
2.8. No Violations
2.9. Securities Exchange Act Reports
2.10.Absence of Certain Changes or Events
2.11.Taxes
2.12.Absence of Claims
2.13.Absence of Regulatory Actions
2.14.Labor Matters
2.15.Employee Benefit Plans
2.16.Title to Assets
2.17.Knowledge as to Conditions
2.18.Compliance With Laws
2.19.Crestar Common Stock
2.20.Fees
2.21.Registration Statement; Proxy Statement
2.22.Environmental Matters
2.23.Material Contracts
2.24.Insurance
2.25.Loans; Allowance for Credit Losses
2.26.Business Combination Statute, etc.
2.27.No Dissenters' Rights
2.28.Loan Servicing Rights
ARTICLE 3 CONDITIONS TO EFFECTIVENESS
3.1. Stock Option Agreement
3.2. Affiliate Agreements
ARTICLE 4 COVENANTS PRIOR TO CLOSING
4.1. Access to Information; Notice of Changes; Confidentiality
4.2. Conduct of the Business of Loyola Pending the Closing Date
4.3. Conduct of the Business of Crestar Pending the Closing Date
4.4. No Solicitation of Other Offers
4.5. Certain Filings, Consents and Arrangements
4.6. Best Efforts
4.7. Publicity
4.8. Proxy; Registration Statement
4.9. Stockholders' Meeting
4.10.Crestar
4.11.Additional Agreements
4.12.Listing
4.13.Merger
4.14.Branch Closing Law
ARTICLE 5 CONDITIONS PRECEDENT TO MERGER
5.1. Conditions Precedent to Obligations of All Parties
5.2. Conditions Precedent to Obligations of Crestar
5.3. Conditions Precedent to Obligations of Loyola
ARTICLE 6 COVENANTS
6.1. Tax-Free Reorganization Treatment
6.2. Employee Matters
6.3. Employee Benefits
6.4. Indemnification; Directors' and Officers' Insurance
6.5. Crestar Baltimore, Maryland Local Advisory Board of Directors
ARTICLE 7 TERMINATION
7.1. Termination
7.2. Effect of Termination
ARTICLE 8 MISCELLANEOUS
8.1. Certain Definitions; Interpretation
8.2. Fees and Expenses
8.3. Survival
8.4. Notices
8.5. Entire Agreement
8.6. Binding Effect; Benefit; Assignment
8.7. Waiver
8.8. Further Actions
8.9. Counterparts
8.10.Applicable Law
8.11.Severability
<PAGE>
INDEX TO DEFINITIONS
Term Location of Definition
Acquisition Proposal 4.4
Affiliates 3.2(a)
Agreement Preamble
Average Closing Price 1.2(b)
Bank Regulators 2.13
Benefit Plans 2.15
Branch Property 2.22(a)
Change of Control 8.1
Claims 6.4(a)
Closing Date 1.8
Code 1.4(b)
Contract Employees 6.3(a)
Control 8.1
Crestar Preamble
Crestar Bank MD 5.1(f)
Crestar Retirement Plan 6.3(e)
Crestar Common Stock 1.2(a)
Effective Date 1.8
Effective Time 1.8
Environmental Law 2.22(a)
ERISA 2.15
Exchange Option 1.4(a)
Exchange Ratio 1.2(b)
Federal Reserve Board 4.14
401(k) Plan 6.3(d)
GAAP 2.9(a)
Governmental Entity 2.22(a)
Hazardous Substance 2.22(a)
Indemnified Parties 6.3(a)
IRS 2.15
Loan Servicing File 8.1
Loan Servicing Rights 8.1
Loyola Preamble
Loyola Common Stock 1.2(a)
Loyola FSB 5.1(h)
Loyola Meeting 4.9
Loyola Pension Plan 6.3(e)
Material 8.1
Material Adverse Effect 8.1
Merger 1.1
MGCL 1.1
OREO 2.25(a)
Outstanding Option 1.4(a)
Pension Plan 2.15
Person 8.1
Proxy Statement 2.21
Proxy Statement/Prospectus 2.21
Registration Statement 2.21
Reports 2.9
Rights 2.3
SEC 2.9
Securities Exchange Act 2.9
Securities Act 2.21
Serviced Mortgage Loan 8.1
Significant Subsidiary 2.4
Subsidiary 8.1
Successor Corporation 1.1
Thrift Plan 6.3(d)
To the knowledge of Crestar 8.1
To the knowledge of Loyola 8.1
Transferred Employees 6.3(b)
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made as of the 16th
day of May, 1995, by and between CRESTAR FINANCIAL CORPORATION, a Virginia
corporation ("Crestar"), and LOYOLA CAPITAL CORPORATION, a Maryland
corporation ("Loyola").
WHEREAS, the respective Boards of Directors of Crestar and Loyola have
approved the acquisition of Loyola by Crestar, subject to the terms and
conditions of this Agreement;
WHEREAS, to complete such acquisition, the respective Boards of
Directors of Crestar and Loyola have approved the merger of Loyola into
Crestar pursuant to and subject to the terms and conditions of this
Agreement.
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements herein
contained, the parties, intending to be legally bound hereby, agree as
follows:
ARTICLE 1
THE MERGER
1.1. Structure of the Merger.
Subject to the terms and conditions of this Agreement and the Plan of
Merger attached hereto as Schedule 1.1, at the Effective Time (as defined in
Section 1.8), Loyola will merge (the "Merger") with and into Crestar, with
Crestar being the successor corporation (the "Successor Corporation"). At
the Effective Time, the separate corporate existence of Loyola shall cease,
and Crestar shall continue as the Successor Corporation. From and after the
Effective Time, the Merger shall have the effects set forth in Section 3-114
of the Maryland General Corporation Law ("MGCL") and in Section 13.1-721 of
the Virginia Stock Corporation Act.
1.2. Conversion of Stock; Exchange Ratio.
(a) Conversion of Stock. At the Effective Time, each share of
common stock of Loyola, par value $0.10 per share (the "Loyola Common Stock")
then issued and outstanding (other than shares held directly by Crestar,
excluding shares held in a fiduciary capacity or in satisfaction of a debt
previously contracted) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into and represent the right
to receive the number of shares of stock of Crestar determined in accordance
with subparagraph (b). As of the Effective Time, each share of Loyola Common
Stock held directly by Crestar, excluding shares held in a fiduciary capacity
or in satisfaction of a debt previously contracted, shall be canceled,
retired and cease to exist, and no exchange or payment shall be made with
respect thereto. Each issued and outstanding share of common stock of
Crestar, par value $5.00 per share ("Crestar Common Stock") shall continue to
be an issued and outstanding share of common stock of the Successor
Corporation.
(b) Exchange Ratio. Each share of Loyola Common Stock (other than
shares held directly by Crestar, excluding shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted) shall be
converted into a fraction of a share of Crestar Common Stock, determined in
accordance with the Exchange Ratio. The "Exchange Ratio" shall be calculated
as follows:
(i) if the Average Closing Price (as defined below) is between
$43.478 and $46.375, the Exchange Ratio shall be 0.690 (the
quotient of (A) $32.00 divided by (B) $46.375);
(ii) if the Average Closing Price is greater than $46.375, the
Exchange Ratio shall be the quotient of (A) $32.00 divided by (B)
the Average Closing Price, rounded to the nearest one-one
thousandth of a share, provided that the Exchange Ratio shall not
be less than 0.640; and
(iii) if the Average Closing Price is less than $43.478, the
Exchange Ratio shall be the quotient of (A) $30.00 divided by (B)
the Average Closing Price, rounded to the nearest one-one
thousandth of a share, provided that the Exchange Ratio shall not
be greater than 0.750, subject to adjustment as provided in Section
7.1(f).
As used herein, "Average Closing Price" shall mean the average closing
price of Crestar Common Stock as reported on the New York Stock Exchange for
each of the 10 trading days ending on the tenth day prior to the Closing Date
(as defined in Section 1.8).
The Exchange Ratio at the Effective Time of the Merger shall be
adjusted to reflect any consolidation, split-up, other subdivisions or
combinations of Crestar Common Stock, any dividend payable in Crestar Common
Stock, or any capital reorganization involving the reclassification of
Crestar Common Stock subsequent to the date of this Agreement. The Exchange
Ratio may be adjusted as provided in Section 7.1(f).
(c) Fractional Shares. No fractional shares of Crestar Common Stock
will be issued pursuant hereto, and Crestar shall pay cash in lieu of any
fractional shares of Crestar Common Stock which otherwise would be issuable.
Any such cash payments shall be made on the basis of the Average Closing
Price.
1.3. Exchange Procedures.
(a) After the Effective Time of the Merger, each holder of a
certificate for theretofore outstanding shares of Loyola Common Stock, upon
surrender of such certificate and a letter of transmittal to Crestar Bank
(which shall act as exchange agent), shall be entitled to receive in exchange
therefor a certificate or certificates representing the number of full shares
of Crestar Common Stock for which shares of Loyola Common Stock theretofore
represented by the certificate or certificates so surrendered shall have been
exchanged as provided in this Article I. Until so surrendered, each
outstanding certificate which, prior to the Effective Time of the Merger,
represented Loyola Common Stock will be deemed to evidence the right to
receive the number of full shares of Crestar Common Stock into which the
shares of Loyola Common Stock represented thereby may be converted in
accordance with the Exchange Ratio; and, after the Effective Time of the
Merger will be deemed for all corporate purposes of Crestar to evidence
ownership of the number of full shares of Crestar Common Stock into which the
shares of Loyola Common Stock represented thereby were converted.
(b) Until such outstanding certificates formerly representing Loyola
Common Stock are surrendered, no dividend payable to holders of record of
Crestar Common Stock for any period as of any date subsequent to the
Effective Time of the Merger shall be paid to the holder of such outstanding
certificates in respect thereof. After the Effective Time of the Merger,
there shall be no further registry of transfer on the records of Loyola or
shares of Loyola Common Stock. If a certificate representing such shares is
presented to Crestar, it shall be canceled and exchanged for a certificate
representing shares of Crestar Common Stock as herein provided. Upon
surrender of certificates of Loyola Common Stock in exchange for Crestar
Common Stock, there shall be paid to the record holder of the certificates of
Crestar Common Stock issued in exchange therefor (i) the amount of dividends
theretofore paid with respect to such full shares of Crestar Common Stock as
of any date subsequent to the Effective Time of the Merger which have not yet
been paid to a public official pursuant to abandoned property laws and (ii)
at the appropriate payment date the amount of dividends with a record date
after the Effective Time of the Merger but prior to surrender and a payment
date subsequent to surrender. No interest shall be payable with respect to
such dividends upon surrender of outstanding certificates.
(c) At the Effective Time of the Merger, each share of Loyola Common
Stock held directly by Crestar (excluding shares held in a fiduciary capacity
or in satisfaction of a debt previously contracted) shall be canceled,
retired and cease to exist.
1.4. Stock Options.
(a) At the Effective Time, options granted by Loyola under Loyola's
1986 Stock Option Plan, as amended, to purchase shares of Loyola Common
Stock, which are outstanding and unexercised immediately prior thereto (each,
an "Outstanding Option"), shall be converted as to each whole share subject
to such Outstanding Option into an option (each, an "Exchange Option") to
purchase such number of shares of Crestar Common Stock at such exercise price
as is determined as provided below:
(i) the number of shares of Crestar Common Stock to be subject
to the Exchange Option shall be equal to the product of (A) the
number of shares of Loyola Common Stock subject to the Outstanding
Option multiplied by (B) the Exchange Ratio (as may be adjusted
pursuant to Section 1.2(b)), the product being rounded, if
necessary, up or down, to the nearest whole share;
(ii) the per share exercise price under the Exchange Option
shall be equal to (A) the per share exercise price under the
Outstanding Option divided by (B) the Exchange Ratio (as may be
adjusted pursuant to Section 1.2(b)), with any fractional cent
rounded to the next whole cent; and
(iii) the Exchange Option shall otherwise have the same duration
and other terms as the Outstanding Option.
(b) The adjustments provided herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")) shall be effected in
a manner consistent with Section 424(a) of the Code.
(c) No options for Loyola capital stock have been granted since May
1, 1995 except under the Stock Option Agreement contemplated by Section 3.1.
1.5. Articles of Incorporation of the Successor Corporation.
The Articles of Incorporation of Crestar, as in effect immediately prior
to the Effective Time, shall be the Articles of Incorporation of the
Successor Corporation until thereafter amended as provided by law.
1.6. By-Laws of the Successor Corporation.
The By-Laws of Crestar, as in effect immediately prior to the Effective
Time, shall be the By-Laws of the Successor Corporation until thereafter
amended as provided by law.
1.7. Directors and Officers of the Successor Corporation.
The directors and officers of Crestar, as in office immediately prior to
the Effective Time, shall be the directors and officers of the Successor
Corporation.
1.8. Closing.
On such date as Crestar shall designate which shall be a date promptly
following the expiration of all applicable waiting periods in connection with
approvals of Bank Regulators (as defined in Section 2.13) occurs (but not
earlier than December 28, 1995) and all conditions to the consummation of
this Agreement are satisfied or waived, or on such earlier or later date as
may be agreed by the parties (the "Closing Date"), articles of merger shall
be executed in accordance with all appropriate legal requirements and shall
be filed as required by law, and the Merger provided for herein shall become
effective upon such filing or on such date as may be specified in such
articles of merger by agreement of the parties hereto. The date of such
filing or such later effective date is herein called the "Effective Date."
The "Effective Time" of the Merger shall be such time on the Effective Date
as may be agreed by the parties.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Crestar represents and warrants to Loyola, and Loyola represents and
warrants to Crestar, to the extent applicable as indicated below, that:
2.1. Organization and Capitalization of Crestar
In the case of Crestar, it is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Virginia,
it is a bank holding company registered under the Bank Holding Company Act of
1956, as amended; and it's authorized capital stock as of the date hereof
consists of 100,000,000 authorized shares of common stock, par value $5.00
per share, of which 38,397,409 shares were issued and outstanding as of March
31, 1995, and 2,000,000 authorized shares of preferred stock, no par value
per share, of which no shares are issued and outstanding as of the date
hereof.
2.2. Organization and Capitalization of Loyola
In the case of Loyola, it is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and it
is a savings and loan holding company registered under the Savings and Loan
Holding Company Act, as amended; and its authorized capital stock as of the
date hereof consists of 35,000,000 authorized shares of Loyola Common Stock,
of which 8,107,750 shares were issued and outstanding as of March 31, 1995,
and 15,000,000 authorized shares of preferred stock, par value $0.10 per
share, of which no shares are issued and outstanding as of the date hereof.
2.3. Rights, etc.
In the case of Loyola, except as set forth on Schedule 2.3 or as
contemplated by Section 3.1, there are not any shares of its capital stock
reserved for issuance, or any outstanding or authorized options, warrants,
rights, subscriptions, claims of any character, agreements, obligations,
convertible or exchangeable securities, or other commitments, contingent or
otherwise, relating to its capital stock, pursuant to which it is or may
become obligated to issue shares of capital stock or any securities
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of its capital stock (collectively, "Rights").
2.4. Capital Stock.
In the case of Crestar and Loyola, respectively, all outstanding shares
of capital stock of it and its Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X, provided that any Subsidiary (as defined in Section
8.1) that is a bank, savings bank or trust company shall be deemed a
Significant Subsidiary) are duly authorized, validly issued and outstanding,
fully paid and (subject to 12 U.S.C. (section) 55 in the case of a
national bank) nonassessable, and subject to no preemptive rights.
2.5. Authority.
In the case of Crestar and Loyola, respectively, each of it and its
Significant Subsidiaries has the power and authority, and is duly qualified
in all jurisdictions where such qualification is required, to carry on its
business as it is now being conducted and to own all its Material (as defined
in Section 8.1) properties and assets (except for such qualifications the
absence of which, individually or in the aggregate, would not have a Material
Adverse Effect (as defined in Section 8.1)), and it has all federal, state,
local, and foreign Governmental Entity (as defined in Section 2.22(a))
authorizations necessary for it to own or lease its properties and assets and
to carry on its business as it is now being conducted, except for such powers
and authorizations the absence of which, either individually or in the
aggregate, would not have a Material Adverse Effect.
2.6. Subsidiaries.
In the case of Loyola, a list of its Subsidiaries is contained on
Schedule 2.6. In the case of Loyola, all of the issued and outstanding
shares of capital stock of each of its Subsidiaries are owned by it free and
clear of all liens, claims, encumbrances and restrictions on transfer and
there are no Rights with respect to such capital stock, except as set forth
on Schedule 2.6.
2.7. Authorization and Validity of Agreement.
In the case of Crestar and Loyola, respectively, it has full power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. In the
case of Crestar, and subject, in the case of Loyola, to the receipt of the
required stockholder approval for Loyola referred to in Section 5.1(a), this
Agreement has been authorized by all necessary corporate action of it. In
the case of Crestar and Loyola, respectively, this Agreement is a valid and
binding agreement of it enforceable against it in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles. In the
case of Crestar and Loyola, respectively, neither the execution and delivery
of this Agreement nor the carrying out of the transactions contemplated
hereunder will result in any violation, termination or modification of, or be
in conflict with, any terms of any contract or other instrument to which
Crestar or Loyola is a party, or of any judgment, decree or order applicable
to Crestar or Loyola, or result in the creation of any lien, charge or
encumbrance upon any of its properties or assets.
2.8 No Violations.
In the case of Crestar and Loyola, respectively, the execution, delivery
and performance of this Agreement by it does not, and the consummation of the
transactions contemplated hereby by it will not, constitute (i) a breach or
violation of, or a default under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or Material
agreement, indenture or instrument of it or its Subsidiaries or to which it
or its Subsidiaries (or any of their respective properties) is subject, which
breach, violation or default would have a Material Adverse Effect (all of
such breaches, violations, or defaults being identified on Schedule 2.8) or
enable any person to enjoin the Merger or (ii) a breach or violation of, or
a default under, the charter or by-laws of it or any of its Subsidiaries; and
the consummation of the transactions contemplated hereby will not require any
approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or
waiver of any other party to any such agreement, indenture or instrument,
other than (i) the required approvals, consents and waivers of governmental
authorities referred to in Section 5.1(c), (ii) the approval of the
stockholders of Loyola referred to in Section 5.1(a), (iii) such approvals,
consents or waivers as are required under the federal and state securities or
"Blue Sky" laws in connection with the transactions contemplated by this
Agreement, and (iv) any other approvals, consents or waivers the absence of
which, individually or in the aggregate, would not result in a Material
Adverse Effect or enable any person to enjoin the Merger.
2.9. Securities Exchange Act Reports.
In the case of Crestar and Loyola, respectively, it has filed with the
Securities and Exchange Commission ("SEC") all required forms, reports and
documents required under the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"). In the case of Crestar and Loyola, respectively,
as of their respective dates, neither its Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, nor any other document filed subsequent
to December 31, 1994 under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act, each in the form (including exhibits) filed with the
SEC (collectively, its "Reports") contained, as of the date thereof, any
untrue statement of a Material fact or omitted to state a Material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. In the case of Crestar and Loyola, respectively, each of the
balance sheets or statements of condition contained or incorporated by
reference in its Reports (including any related notes and schedules) fairly
present the financial position of the entity or entities to which it relates
as of its date and each of the statements of operations and retained earnings
and of cash flows and changes in financial position or equivalent statements
contained or incorporated by reference in its Reports (including any related
notes and schedules) fairly present the results of operations, retained
earnings and cash flows of the entity or entities to which it relates for the
periods set forth therein (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments that are not Material in
amount or effect), in each case in accordance with generally accepted
accounting principles applicable to depository institutions ("GAAP")
consistently applied during the periods involved, except as may be noted in
the Reports. In the case of Crestar and Loyola, respectively, as of the date
of such Reports, there existed no Material liabilities of Crestar or Loyola,
respectively, contingent or otherwise, that are required to be disclosed
under GAAP or would be required to be disclosed in the financial statements
contained in the Annual Report on Form 10-K for the year ended December 31,
1994 but are not so disclosed in such Reports.
2.10. Absence of Certain Changes or Events.
In the case of Crestar and Loyola, respectively, since December 31,
1994, except as disclosed in its Reports, it has not incurred any Material
liability except in the ordinary course of its business consistent with past
practice, and since December 31, 1994 there has not been any change in the
financial condition or results of operations of it or any of its Subsidiaries
which, individually or in the aggregate, has had a Material Adverse Effect
(other than as a result of changes in banking laws or regulations of general
applicability or interpretations thereof).
2.11. Taxes.
In the case of Crestar and Loyola, respectively, except as otherwise
would not have a Material Adverse Effect, all federal, state, local and
foreign tax returns required to be filed on or before the Effective Date by
or on behalf of it or any of its Subsidiaries have been timely filed or
requests for extensions have been timely filed and any such extensions have
been granted and not expired. In the case of Crestar and Loyola,
respectively, except as otherwise would not have a Material Adverse Effect,
all taxes imposed on it or any of its Subsidiaries (or for which it or any of
its Subsidiaries is liable) for any period (or portion of a period) ending on
or before the Effective Date have been paid in full or adequate provision has
been made for any such taxes on its balance sheet (in accordance with GAAP).
Except as disclosed on Schedule 2.11A, in the case of Crestar, and on
Schedule 2.11B, in the case of Loyola, respectively, as of the date of this
Agreement, there are no assessments or notices of deficiency or proposed
assessments with respect to any taxes of it or any of its Subsidiaries (or
for which it or any of its Subsidiaries is liable) that, if resolved in a
manner adverse to it, would have a Material Adverse Effect. In the case of
Crestar and Loyola, respectively, except as otherwise would not have a
Material Adverse Effect, neither it nor any of its Subsidiaries has executed
an extension or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect. In the case of
Loyola, except as disclosed on Schedule 2.11B, (i) neither Loyola nor any
Subsidiary of Loyola has filed (or been included in) a consolidated,
combined, or unitary income tax return with a corporation other than Loyola
and its Subsidiaries, (ii) each of Loyola and its Subsidiaries is in Material
compliance with, and its records contain all information and documents
necessary to comply in all Material respects with, all applicable tax
information reporting and withholding requirements, and such records identify
with specificity all accounts subject to backup withholding under Section
3406 of the Code, (iii) for periods ending after the date of the most recent
balance sheet contained in the latest Report of Loyola, the books and records
of Loyola and its Subsidiaries fully and properly reflect their liabilities
for all accrued taxes in accordance with GAAP, (iv) neither Loyola nor any of
its Subsidiaries has made or entered into, or holds any assets subject to, a
consent filed pursuant to Section 341(f) of the Code and the regulations
thereunder or a "safe harbor lease" subject to former Section 168(f)(8) of
the Code and the regulations thereunder, (v) no Material amount is required
to be included in the income of Loyola or any of its Subsidiaries pursuant to
Section 481 of the Code and the regulations thereunder by reason of any event
that occurred prior to the Effective Time, and (vi) Schedule 2.11B describes
all Material tax elections, consents, and agreements affecting Loyola or any
of its Subsidiaries. For purposes of this Section 2.11, "tax" and "taxes"
include any interest, penalty, and addition to tax payable with respect to
any tax.
2.12. Absence of Claims.
Except as disclosed on Schedule 2.12A, in the case of Crestar, and on
Schedule 2.12B, in the case of Loyola, respectively, no Material litigation,
proceeding or controversy before any court or Governmental Entity is pending,
and there is no pending claim, action or proceeding against it or any of its
Subsidiaries, which is reasonably likely, individually or in the aggregate to
have a Material Adverse Effect or to Materially hinder or delay consummation
of the transactions contemplated hereby.
2.13. Absence of Regulatory Actions.
In the case of Crestar and Loyola, respectively, neither it nor any of
its Subsidiaries is a party to any cease and desist order, written agreement
or memorandum of understanding with, or a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of, federal or state governmental
authorities charged with the supervision or regulation of banks or bank
holding companies or savings and loans or savings and loan holding companies
or engaged in the insurance of bank deposits ("Bank Regulators"), nor has it
been advised by any Bank Regulator that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting)
any such order, directive, written agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter, board resolutions or
similar undertaking.
2.14. Labor Matters.
In the case of Crestar and Loyola, respectively, neither it nor any of
its Subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is it or any of its Subsidiaries the subject of any
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice or seeking to compel it or such Subsidiary to bargain with any
labor organization as to wages and conditions of employment, nor to the
knowledge of Loyola and Crestar (as defined in Section 8.1), respectively, is
there any strike or other labor dispute involving it or any of its
Subsidiaries pending or threatened.
2.15. Employee Benefit Plans.
Except as disclosed on Schedule 2.15, to the knowledge of Loyola, all
"employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) that cover any
of its or its Subsidiaries' employees, comply and have been administered in
all Material respects with all applicable requirements of ERISA, the Code and
other applicable laws; to the knowledge of Loyola, neither it nor any of its
Subsidiaries has engaged in a "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) with respect to any such employee
benefit plan which is likely to result in any Material penalties or taxes
under Section 502(i) of ERISA or Section 4975 of the Code; no Material
liability to the Pension Benefit Guaranty Corporation has been or is expected
by it or them to be incurred with respect to any such employee benefit plan
which is subject to Title IV of ERISA ("Pension Plan"), or with respect to
any "single-employer plan" (as defined in Section 4001(a)(15) of ERISA)
currently or formerly maintained by it, them or any entity which is
considered one employer with it under Section 4001 of ERISA or Section 414 of
the Code; no Pension Plan had an "accumulated funding deficiency" (as defined
in Section 302 of ERISA (whether or not waived) as of the last day of the end
of the most recent plan year ending prior to the date hereof; the fair market
value of the assets of each Pension Plan exceeds the present value of the
"benefit liabilities" (as defined in Section 4001(a)(16) of ERISA) under such
Pension Plan as of the end of the most recent plan year with respect to such
Pension Plan ending prior to the date hereof, calculated on the basis of the
actuarial assumptions used in the most recent actuarial valuation for such
Pension Plan as of the date hereof; no notice of a "reportable event" (as
defined in Section 4043 of ERISA) for which the 30-day reporting requirement
has not been waived has been required to be filed for any Pension Plan within
the 12-month period ending on the date hereof; neither it nor any of its
Subsidiaries has provided, or is required to provide, security to any Pension
Plan pursuant to Section 401(a)(29) of the Code; neither it nor any of its
Subsidiaries have not contributed to any "multiemployer plan," as defined in
Section 3(37) of ERISA on or after September 26, 1980. Schedule 2.15
identifies each "employee welfare benefit plan" (as defined in Section 3(1)
of ERISA) maintained by Loyola and its Subsidiaries which is funded; the
funding under each such plan does not exceed the limitations under Section
419A(b) or 419A(c) of the Code and neither Loyola nor any of its Subsidiaries
is subject to taxation on the income of any such plan. Schedule 2.15
identifies the method of funding (including any individual accounting) for
all post-retirement medical or life insurance benefits for the employees of
Loyola and its Subsidiaries and discloses the funded status of such plans.
In the case of Loyola, with respect to each benefit plan, program,
arrangement or policy for employees that is maintained or contributed to by
Loyola or any of its Subsidiaries, including, but not limited to, "employee
benefit plans" (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (collectively, the "Benefit
Plans"), it has made available to Crestar a true and correct copy of (i) the
most recent annual report on Form 5500 filed with the Internal Revenue
Service (the "IRS"), (ii) such Benefit Plan, (iii) each trust agreement and
insurance contract relating to such Benefit Plan, (iv) the most recent
summary plan description for such Benefit Plan, (v) the most recent actuarial
report or valuation if such Benefit Plan is subject to Title IV of ERISA,
(vi) the most recent determination letter issued by the IRS if such Benefit
Plan is intended to be qualified under Section 401(a) of the Code, (vii) any
open requests for rulings or determination letters that pertain to any
Benefit Plan, and (viii) all outstanding employment agreements, as amended
through the date hereof with employees, former employees, directors, former
directors and independent contractors of Loyola and each of its Subsidiaries.
Other than has been identified on Schedule 2.15, full payment has been made
(or proper accruals have been established to the extent required by GAAP) for
all contributions which are required or for which benefits have accrued prior
to Closing under the terms of each Benefit Plan, employment agreement,
benefit commitment and for all liabilities which have accrued prior to the
Effective Time under each Benefit Plan, employment agreement, benefit
commitment or collective bargaining agreement, including any such Benefit
Plan, employment agreement, benefit commitment or collective bargaining
agreement to be assumed by Crestar pursuant to Section 6.3(a). There are no
trades or businesses, and there never have been any trades or businesses,
which are or were treated as a single employer under ERISA and the Code with
respect to Loyola other than its Subsidiaries.
2.16. Title to Assets.
In the case of Crestar and Loyola, respectively, each of it and each of
its Subsidiaries has good and marketable title to its properties and assets
(other than property as to which it is lessee) except for such defects in
title which would not, individually or in the aggregate, have a Material
Adverse Effect.
2.17. Knowledge as to Conditions.
To the knowledge of Crestar and Loyola, respectively, there is no reason
why the approvals, consents and waivers of the Governmental Entities referred
to in Section 5.1(c) should not be obtained without the imposition of any
condition of the type referred to in the provisos thereto.
2.18. Compliance With Laws.
In the case of Crestar and Loyola, respectively, it and each of its
Subsidiaries has all permits, licenses, certificates of authority, orders and
approvals of, and has made all filings, applications and registrations with,
federal, state, local and foreign governmental or regulatory bodies that are
required in order to permit it to carry on its business as it is presently
conducted and the absence of which could, individually or in the aggregate,
have a Material Adverse Effect.
2.19. Crestar Common Stock.
In the case of Crestar, the shares of Crestar Common Stock to be issued
pursuant to this Agreement, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and non-
assessable and subject to no preemptive rights.
2.20. Fees.
In the case of Crestar and Loyola, respectively, other than financial
advisory services performed for Loyola by Alex. Brown & Sons Incorporated (on
terms disclosed to Crestar) and financial advisory services performed for
Crestar by Morgan Stanley & Co., Incorporated, neither it nor any of its
Subsidiaries, nor any of their respective officers, directors, employees or
agents has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder has acted directly or indirectly for it or any of its
Subsidiaries, in connection with this Agreement or the transactions
contemplated hereby.
2.21. Registration Statement; Proxy Statement.
In the case of Crestar and Loyola, respectively, the information to be
supplied by it for inclusion in (i) the Registration Statement on Form S-4
and/or such other form(s) as may be appropriate to be filed under the
Securities Act of 1933, as amended (the "Securities Act") with the SEC by
Crestar for the purpose of, among other things, registering Crestar Common
Stock to be issued to the stockholders of Loyola in the Merger (the
"Registration Statement") will not, at the time such Registration Statement
becomes effective, contain any untrue statement of a Material fact or omit to
state any Material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or (ii) the proxy statement to
be filed with the SEC by Loyola under the Securities Exchange Act and
distributed in connection with Loyola's meeting of its stockholders to vote
upon this Agreement (as amended or supplemented from time to time, the "Proxy
Statement", and together with the prospectus included in the Registration
Statement, as amended or supplemented from time to time, the "Proxy
Statement/Prospectus") will not, at the time the Proxy Statement/Prospectus
is mailed and at the time of the Loyola Meeting (as defined in Section 4.9),
contain any untrue statement of a Material fact or omit to state any Material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading.
2.22. Environmental Matters.
(a) For purposes of this Section 2.22, the following terms shall
have the indicated meaning:
"Branch Property" means all real property presently owned or
operated by Loyola and each of its Subsidiaries on which branches or
facilities are located.
"Environmental Law" means (i) any applicable federal, state or local
statute, law, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, directive,
requirement or agreement with any court, governmental authority or other
regulatory or administrative agency or commission, domestic or foreign
("Governmental Entity") now existing, relating to the use, storage,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances, each as amended, or
(ii) any common law that may impose liability or obligations for injuries or
damages due to the presence of or exposure to any Hazardous Substance.
"Hazardous Substance" means any substance, whether liquid, solid or
gas, listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, under any applicable Environmental Law, whether by
type or by quantity. Hazardous Substance includes, without limitation, (i)
any "hazardous substance" as defined in the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, and (ii) any "hazardous
waste" as defined in the Resource Conservation and Recovery Act, as amended.
(b) To the knowledge of Loyola, except as disclosed on Schedule 2.22
or as would not individually or in the aggregate have a Material Adverse
Effect on Loyola;
(i) each of Loyola and its Subsidiaries is and has been in
substantial compliance with all applicable Environmental Law;
(ii) neither Loyola nor any of its Subsidiaries has received any
written notices, demand letters or written requests for information
from any Governmental Entity or any third party indicating that
Loyola or any Subsidiary may be in violation of, or liable under,
any Environmental Law;
(iii) there are no civil, criminal or administrative actions,
suits, demands, claims, hearings, investigation or proceedings
pending or threatened against Loyola or any Subsidiary alleging
that they may be in violation of, or liable under, any
Environmental Law;
(iv) no reports have been filed, or are required to be filed
with any Governmental Entity, by Loyola or any of its Subsidiaries
concerning the release of any Hazardous Substance or the violation
or any Environmental Law on or at the Branch Property; and
(v) there are no underground storage tanks on, in or under any
of the Branch Property and no underground storage tanks have been
closed or removed from any Branch Property while such Branch
Property was owned or operated by Loyola or any of its
Subsidiaries.
(c) There are no permits or licenses required under any
Environmental Law in respect of the Branch Property presently operated by
Loyola or any of its Subsidiaries that the absence of which could,
individually or in the aggregate, have a Material Adverse Effect.
(d) Schedule 2.22 contains copies of all documentation representing
Loyola's environmental policies and procedures (including environmental
policies and procedures applicable to land loans, land acquisition and
development loans, commercial construction loans and commercial permanent
mortgage loans). Land loans and land acquisition and development loans made
to real estate joint ventures of Loyola and its Subsidiaries are among the
land loans and land acquisition and development loans covered by such
policies and procedures. Loyola has operated and conducted its business and
operations (including specifically the making of land loans, land acquisition
and development loans, commercial construction loans and commercial permanent
mortgage loans) in substantial compliance with all such policies and
procedures since their adoption on March 16, 1993 except where the failure to
so operate or conduct such business would not, individually or in the
aggregate, have a Material Adverse Effect.
2.23. Material Contracts.
In the case of Crestar and Loyola, respectively, neither it nor any of
its Subsidiaries is in default under any Material contract, which default is
reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect on it, and there has not occurred any event that with
the lapse of time or the giving of notice or both would constitute such a
default. In the case of Crestar and Loyola, respectively, neither it nor any
of its Subsidiaries is a party to or is bound by any agreement or subject to
or bound by any judgment, decree, order, writ or injunction that places any
Material restriction on the ability of it or any of its Subsidiaries to
engage in their respective businesses in accordance with present practices.
2.24. Insurance.
In the case of Crestar and Loyola, respectively, the assets, properties
and operations of it and its Subsidiaries are insured under various policies
of general liability and other forms of insurance, including surety and
bonding arrangements. Such policies are in amounts and types of coverage
which are reasonable in relation to the business and assets of each of them
and all premiums due have been paid in full. All such forms of insurance are
in full force and effect in accordance with their terms, no notice of
cancellation has been received, and there is no existing default or event
which, with the giving of notice or lapse of time or both, would constitute
a default thereunder, in each such case, except which would not have a
Material Adverse Effect. To the knowledge of Crestar and Loyola,
respectively, there has been no failure to give any notice or to present any
Material claim under any insurance arrangement in due and timely fashion.
2.25. Loans; Allowance for Credit Losses.
(a) Each loan outstanding on the books of Loyola is reflected
correctly in all Material respects by the loan documentation, was made in the
ordinary course of business, was to the knowledge of Loyola not uncollectible
at the time it was made, and in all Material respects was made in accordance
with Loyola's standard loan policies. The records of Loyola regarding all
loans outstanding on its books are accurate in all Material respects. Except
as identified on Schedule 2.25, no loan in excess of $1,000,000 has been
classified as of the date hereof by Loyola or regulatory examiners as "Other
Loans Specially Mentioned," "Substandard," "Doubtful" or "Loss." Except as
identified on Schedule 2.25, each loan reflected as an asset on Loyola's
balance sheets is, to the knowledge of Loyola, the legal, valid and binding
obligation of the obligor and any guarantor, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditor's rights and to general equity principles,
and no defense, offset or counterclaim has been asserted with respect to any
such loan which if successful could have a Material Adverse Effect. The
allowance for credit losses included in the consolidated financial statements
of Loyola included in Loyola's December 31, 1994 Form 10-K was determined in
accordance with GAAP to be adequate to provide for losses relating to or
inherent in the loan and lease portfolios of, and other extensions of credit
(including letters of credit and commitments to make loans or extend credit)
by, Loyola and its Subsidiaries. Loyola has disclosed to Crestar in writing
prior to the date hereof the aggregate amounts as of a recent date of all
loans, losses, advances, credit enhancements, other extensions of credit,
commitments and interest-bearing assets of Loyola and its Subsidiaries that
have been classified by any bank examiner (whether regulatory or internal) as
"Other Loans Specially Mentioned," "Special Mention," "Substandard,"
"Doubtful," "Loss," "Classified," "Criticized," "Credit Risk Assets,"
"Concerned Loans" or words of similar import, and Loyola shall promptly on a
periodic basis inform Crestar of any such classification arrived at any time
after the date hereof. The real property classified by Loyola and each of
its Subsidiaries as other real estate owned ("OREO") included in non-
performing assets is carried net of reserves at the lower of cost or market
value based on independent appraisals.
(b) The allowance for credit losses included in the consolidated
financial statements of Crestar included in Crestar's December 31, 1994 Form
10-K was determined in accordance with GAAP to be adequate to provide for
losses relating to or inherent in the loan and lease portfolios of, and other
extensions of credit (including letters of credit and commitments to make
loans or extend credit) by, Crestar and its Subsidiaries. The OREO included
in nonperforming assets is carried net of reserves at the lower of cost or
market value based on independent appraisals.
2.26. Business Combination Statute, etc.
Loyola has taken all action necessary to exempt transactions with
Crestar and its affiliates from the operation of the Maryland "business
combination" statute at Sections 3-601 et seq. of the MGCL and the Maryland
"control share" statute at Sections 3-701 et seq. of the MGCL.
2.27. No. Dissenters' Rights.
Stockholders of Loyola who vote against the Merger will not have
dissenters' rights to receive cash for their shares under Sections 3-201 et
seq. of the MGCL.
2.28. Loan Servicing Rights.
The Loan Servicing Rights (as defined in Section 8.1) relating to the
Serviced Mortgaged Loans (as defined in Section 8.1) described on Schedule
2.28 are valid and binding rights and obligations of Loyola or its
Subsidiaries, as the case may be and, to the knowledge of Loyola, all of the
other parties thereto, are in full force and effect and are enforceable in
accordance with their terms, except as may be limited by matters relating to
bankruptcy and insolvency. Except as set forth on Schedule 2.28, to the
knowledge of Loyola, there is no default or claim of default by any party
under, or any third party having an interest in, any such servicing
agreement, and there is no pending or, to the knowledge of Loyola, threatened
cancellation of any servicing agreement relating to any Serviced Mortgage
Loan referred to on Schedule 2.28.
ARTICLE 3
CONDITIONS TO EFFECTIVENESS
This Agreement shall be effective upon execution by each of the parties
hereto and satisfaction of the following conditions:
3.1. Stock Option Agreement.
Crestar and Loyola shall each have executed and delivered the Stock
Option Agreement in the form of Schedule 3.1.
3.2. Affiliate Agreements.
(a) Loyola has identified to Crestar on Schedule 3.2 hereof all
persons who were, as of the date hereof, directors or executive officers of
Loyola or any Subsidiary representing 25% or more of the consolidated assets
of Loyola (the "Affiliates").
(b) Loyola has delivered a written letter agreement of Affiliates
in form and substance satisfactory to each of Loyola and Crestar from each
person who is identified as a possible Affiliate pursuant to clause (a)
above. The written letter agreements provide that each signatory thereto
acknowledges and agrees to support and vote the shares of Loyola Common Stock
beneficially owned by them to ratify and confirm this Agreement and the
Merger. Such letter agreements also provide that each signatory thereto
acknowledges and agrees, beginning 30 days prior to the Effective Date, that
he will not sell, pledge, transfer or otherwise dispose of shares of Loyola
Common Stock or Crestar capital stock except in compliance with applicable
provisions of the Securities Act and the rules and regulations thereunder and
until such time as financial results covering at least 30 days of combined
operations of Crestar and Loyola have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies. If
the Merger will qualify for pooling-of-interests accounting treatment, shares
of Crestar Common Stock issued to Affiliates in exchange for shares of Loyola
Common Stock shall not be transferable until such time as financial results
covering at least 30 days of combined operations of Crestar and Loyola have
been published within the meaning of Section 201.01 of the SEC's Codification
of Financial Reporting Policies, regardless of whether each such Affiliate
has provided the written letter agreement referred to in this Section 3.2(b)
(and Crestar shall be entitled to place restrictive legends upon certificates
for shares of Crestar Common Stock issued to Affiliates pursuant to this
Agreement to enforce the provisions of this Section 3.2(b)).
ARTICLE 4
COVENANTS PRIOR TO CLOSING
4.1. Access to Information; Notice of Changes; Confidentiality.
(a) During the period commencing on the date hereof and ending on
the Closing Date, each of the parties shall (and shall cause each of its
Subsidiaries to) upon reasonable notice, afford the other parties, and their
respective counsel, accountants, officers and employees and other authorized
representatives, reasonable access during normal business hours to the
properties, books, personnel, records, tax returns, work papers of
independent auditors of such party and its Subsidiaries in order that they
may have the opportunity to make such investigations as they shall desire of
the affairs of such party and its Subsidiaries; such investigation shall not,
however, affect or be deemed to modify the representations and warranties
made by such party in this Agreement.
(b) During the period commencing on the date hereof and ending on
the Closing Date, each party shall promptly notify the other parties hereto
in writing of any and all occurrences which, if they had occurred prior to
execution of this Agreement, would have caused the representations and
warranties of such party contained in Article 2 and the Schedules delivered
in conjunction therewith to be incorrect in any Material respect.
(c) Crestar acknowledges that information received by it concerning
Loyola and its Subsidiaries and their operations is subject to the
Confidentiality Agreement dated February 22, 1995 between Crestar and Loyola.
Without limiting the foregoing, each party will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
4.1 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Subject to the requirements of law, each
party will keep confidential, and will cause its representatives to keep
confidential, all information and documents obtained pursuant to this Section
4.1 unless such information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such party to be
bound by a confidentiality obligation, (iii) is disclosed with the prior
written approval of the party to which such information pertains, or (iv) is
or becomes readily ascertainable from published information or trade sources.
In the event that this Agreement is terminated or the transactions
contemplated by this Agreement shall otherwise fail to be consummated, each
party shall promptly cause all copies of documents or extracts thereof
containing information and data as to another party hereto to be returned to
the party which furnished the same.
4.2. Conduct of the Business of Loyola Pending the Closing Date.
Loyola agrees that, except as expressly permitted by this Agreement or
otherwise consented to or approved in writing by Crestar, during the period
from the date hereof to the Effective Time:
(a) Loyola will and will cause each of its Subsidiaries to conduct
their respective operations only in the ordinary course of business
consistent with past practice (subject, in any event, to the provisions of
paragraph (c) below) and will use its best efforts to preserve intact their
respective business organizations, keep available the services of their
officers and employees and maintain satisfactory relationships with
licensors, suppliers, distributors, customers, clients and others having
business relationships with them.
(b) Loyola shall not, and shall not permit any of its Subsidiaries
to, take any action, engage in any transactions or enter into any agreement
which would adversely affect or delay in any Material respect the ability of
Crestar or Loyola to obtain any necessary approvals, consents or waivers of
any Governmental Entity or third party required for the transactions
contemplated hereby or to perform its covenants and agreements on a timely
basis under this Agreement.
(c) Loyola will not and will not permit any of its Subsidiaries to:
(i) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money,
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other Person, or make any
loan or advance;
(ii) adjust, split, combine or reclassify any capital stock;
make, declare or pay any dividend on Loyola Common Stock other than
the regular quarterly cash dividend not exceeding $0.12 per share
of Loyola Common Stock; provided that for dividends paid after
September 30, 1995, the record date for each Loyola dividend shall
be the same as Crestar's record date for its dividend for the same
quarter in which the Loyola dividend is paid with the result that
with respect to their shares of Loyola Common Stock the
stockholders of Loyola will be entitled to receive either a Loyola
or Crestar regular dividend for each fiscal quarter prior to the
Effective Time; or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or grant any
stock appreciation rights, or convert any options into stock
appreciation rights, or grant any Person any right to acquire any
shares of its capital stock, except for dividends paid by any of
the wholly-owned Subsidiaries of Loyola to Loyola or any of its
wholly-owned Subsidiaries; or issue any additional shares of
capital stock except pursuant to the exercise of stock options
outstanding as of the date hereof which were granted under Loyola's
1986 Stock Option Plan, as amended;
(iii) sell, transfer, mortgage, encumber or otherwise dispose of
any of its Material properties or assets to any Person other than
a direct or indirect wholly-owned Subsidiary of Loyola, or cancel,
release or assign any Material indebtedness of any Person or any
claims held by any Person, except pursuant to contracts or
agreements in force at the date of this Agreement;
(iv) other than portfolio investments in the ordinary course of
business consistent with past practice, make any Material
investment either by purchase of stock or securities, contributions
to capital, property transfers, or purchase of any property or
assets of any other Person other than a wholly-owned Subsidiary of
Loyola;
(v) enter into or terminate any Material contract or agreement,
or make any change in any of its Material leases or contracts,
other than renewals of contracts and leases without Material
adverse changes of terms;
(vi) except as permitted under the current year's budget,
increase in any manner the compensation or fringe benefits of its
"employees" (which term for purposes of this paragraph (vi)
includes employees, former employees, directors and former
directors) or pay any pension or retirement allowance not required
by any existing plan or agreement to any such employees, or become
a party to, amend, modify or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or
employment agreement with or for the benefit of any employee
(except it may continue supplemental retirement benefits to former
employees listed on Schedule 4.2), or (except as required by law,
by Bank Regulators or by Section 6.3) adopt, amend or modify any
bonus (except that it may compute 1995 benefits under its incentive
bonus program without regard to expenses incurred in connection
with the transactions contemplated under this Agreement or to
actions taken at the request of Crestar under Section 4.13 and that
it may pay its 1995 incentive bonus if the Merger occurs in 1995
and the other conditions to payment are met), profit sharing,
compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other employee
benefit agreements, trusts, plans, funds, employee stock ownership,
consulting, severance or fringe benefit plan, formal, informal,
written or oral, or other arrangements for the benefit or welfare
of any employee or voluntarily accelerate the vesting of any stock
options or other stock-based compensation, provided that extensions
of employment agreements in existence on the date hereof and listed
on Schedule 6.3 pursuant to the terms thereof shall be deemed to be
made in the ordinary course of business consistent with past
practice except that it may take any such action as provided in
Section 6.3;
(vii) modify in any Material respect the manner in which it and
its Subsidiaries have heretofore conducted or accounted for their
business;
(viii) except as contemplated by this Agreement, amend its
Articles of Incorporation or its By-Laws;
(ix) agree to, or make any commitment to, take any of the
actions prohibited by this Section 4.2;
(x) except if as a result of death, disability or other
inability to serve, elect or appoint any new director or officer of
Loyola or any of its Subsidiaries, provided that the appointment of
an officer to another office of Loyola or any of its Subsidiaries
shall not be deemed to be the appointment of a new officer; or
(xi) acquire an insurance policy or enter into any new
agreement, amendment or endorsement or make any changes relating to
insurance coverage, including coverage for its directors and
officers, which would result in an additional premium payment
obligation of $50,000 or more.
4.3. Conduct of the Business of Crestar Pending the Closing Date.
Crestar agrees that, except as expressly permitted by this Agreement or
otherwise consented to or approved in writing by Loyola, during the period
from the date hereof to the Effective Time:
(a) Crestar will and will cause each of its Subsidiaries to conduct
their respective operations only in the ordinary course of business
consistent with past practice and will use its best efforts to preserve
intact their respective business organizations, keep available the services
of their officers and employees and maintain satisfactory relationships with
licensors, suppliers, distributors, customers, clients and others having
business relationships with them.
(b) Crestar shall not, and shall not permit any of its Subsidiaries
to, take any action, engage in any transactions or enter into any agreement
which would adversely affect or delay in any Material respect the ability of
Crestar or Loyola to obtain any necessary approvals, consents or waivers of
any Governmental Entity required for the transactions contemplated hereby or
to perform its covenants and agreements on a timely basis under this
Agreement.
4.4. No Solicitaion of Other Offers.
Loyola agrees that neither it nor any of its Subsidiaries nor any of
their respective officers, directors and employees shall, and Loyola shall
direct and use its best efforts to cause its agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
take any action to solicit or initiate any inquiries or the making of any
offer or proposal (including without limitation any proposal to stockholders
of Loyola) with respect to a merger, consolidation, business combination,
liquidation, reorganization, sale or other disposition of any significant
portion of assets, sale of shares of capital stock, or similar transactions
involving Loyola or any Subsidiary of Loyola (any such inquiry, offer or
proposal, an "Acquisition Proposal"), or, except as may be legally required
for the discharge by the board of directors of its fiduciary duties, engage
in any negotiations concerning, or provide any confidential information or
data to, or have any discussions with, any person relating to an Acquisition
Proposal. As of the time hereof, Loyola is not engaged in any negotiations
or discussions relating to an Acquisition Proposal. Loyola shall promptly
notify Crestar orally and in writing of any Acquisition Proposal or any
inquiries with respect thereto, such written notification to include the
identity of the Person making such inquiry or Acquisition Proposal and such
other information with respect thereto as is reasonably necessary to apprise
Crestar of the Material terms of such Acquisition Proposal. Loyola shall
give Crestar contemporaneous written notice upon engaging in discussions or
negotiations with, or providing any information regarding Loyola to, any such
person regarding an Acquisition Proposal.
4.5. Certain Filings, Consents and Arrangements.
Crestar and Loyola shall (a) as soon as practicable make any filings and
applications required to be filed in order to obtain all approvals, consents
and waivers of Governmental Entities necessary or appropriate for the
consummation of the transactions contemplated hereby (including without
limitation all applications for required approvals as set forth in Section
5.1(c)), (b) cooperate with one another (i) in promptly determining what
filings are required to be made and what approvals, consents or waivers are
required to be obtained under any relevant federal, state or foreign law or
regulation, and (ii) in promptly making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such approvals, consents or waivers, and (c) deliver to the other copies of
the publicly available portions of all such filings and applications promptly
after they are filed.
4.6. Best Efforts.
Crestar and Loyola each will (i) use its best efforts to take all action
necessary to render accurate as of the Closing Date the representations and
warranties of it contained herein, and (ii) use its best efforts to perform
or cause to be satisfied each covenant or condition to be performed or
satisfied by it as contemplated by this Agreement.
4.7. Publicity.
The initial press release announcing this Agreement shall be a joint
press release and thereafter Loyola and Crestar shall consult with each other
in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and in making any filings
with any Governmental Entity or with any national securities exchange with
respect thereto.
4.8. Proxy; Registration Statement.
As soon as practicable after the date hereof, Crestar and Loyola shall
cooperate with each other to prepare the Proxy Statement, file it with the
SEC, respond to comments of the Staff of the SEC, clear the Proxy Statement
with the Staff of the SEC and thereafter and after the effectiveness of the
Registration Statement mail the Proxy Statement to all holders of record (as
of the applicable record date) of shares of Loyola Common Stock. Crestar
shall promptly prepare the Registration Statement and file it with the SEC
and shall use all reasonable efforts to have the Registration Statement
declared effective by the SEC as promptly as practicable and to maintain the
effectiveness of such Registration Statement. Crestar shall also take any
action required to be taken under state securities or "Blue Sky" laws in
connection with the issuance of Crestar Common Stock pursuant to the Merger
and Loyola shall furnish Crestar all information concerning Loyola and the
holders of its capital stock and shall take any action as Crestar may
reasonably request in connection with any such action.
4.9. Stockholders' Meeting.
Loyola shall take all action necessary, in accordance with applicable
law and its Charter and By-Laws, to convene a meeting of the holders of
Loyola Common Stock (the "Loyola Meeting") as promptly as practicable for the
purpose of considering and taking action required by this Agreement. Except
to the extent legally required for the discharge by the board of directors of
its fiduciary duties, the board of directors of Loyola shall recommend that
the holders of Loyola Common Stock vote in favor of and approve the Merger at
the Loyola Meeting.
4.10. Crestar.
Crestar shall take all steps necessary such that Crestar shall exist at
the Closing Date as a Virginia corporation, into which Loyola may merge under
applicable law; and prior to the Closing Date take all corporate action to
approve of and authorize the consummation of the Merger and the other
transactions contemplated by this Agreement.
4.11. Additional Agreements.
Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use all reasonable efforts to take promptly, or cause to be
taken promptly, all actions and to do promptly, or cause to be done promptly,
all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement as promptly as practicable, including using efforts to obtain
all necessary actions or non-actions, extensions, waivers, consents and
approvals from all applicable Governmental Entities and third parties,
effecting all necessary registrations, applications and filings (including,
without limitation, filings under any applicable state securities or "Blue
Sky" laws) and obtaining any required contractual consents and regulatory
approvals.
4.12. Listing.
Crestar shall use its best efforts to list on the New York Stock
Exchange upon official notice of issuance Crestar Common Stock to be issued
in the Merger.
4.13. Merger.
(a) Loyola shall, and shall cause its officers, directors and
employees to, cooperate with and assist Crestar in the formulation of a plan
or plans of integration for the Merger of Loyola into Crestar. Customer
notification and direct contact by Crestar with customers of Loyola will
commence 30 days prior to the Closing Date.
(b) Notwithstanding that to the knowledge of Loyola it has
established all reserves and taken all provisions for possible loan losses
required by GAAP and applicable laws, rules and regulations, Loyola
recognizes that Crestar has adopted different loan, accrual and reserve
policies (including loan classifications and levels of reserves for possible
loan losses). To formulate the plan or plans of integration for the Merger,
Loyola and Crestar shall consult and cooperate with each other with respect
to (i) conforming, as specified in a written notice from Crestar to Loyola,
based upon such consultation, Loyola's loan, accrual and reserve policies to
those policies of Crestar to the extent appropriate, (ii) new extensions of
credit or Material revisions to existing terms of credits by Loyola in each
case where the aggregate exposure exceeds $1 million, and (iii) conforming,
as specified in a written notice from Crestar to Loyola, based upon such
consultation, the composition of the investment portfolio and overall
asset/liability management position of Loyola to the extent appropriate and
reasonable.
(c) To formulate the plan or plans of integration for the Merger,
Loyola and Crestar shall consult and cooperate with each other with respect
to determining, as specified in a written notice from Crestar to Loyola,
based upon such consultation, appropriate accruals, reserves and charges to
establish and take in respect of excess facilities and equipment capacity,
severance and other benefit costs, litigation matters, write-off or write-
down of various assets and other appropriate accounting adjustments taking
into account Crestar's plan or plans of integration and the Merger.
(d) Loyola and Crestar shall consult and cooperate with each other
with respect to determining, as specified in a written notice from Crestar to
Loyola, based upon such consultation, the amount and the timing for
recognizing for financial accounting purposes the expense of the Merger and
the restructuring charges related to or to be incurred in connection with the
Merger.
(e) At the request of Crestar, Loyola shall, prior to the Effective
Time, use its best efforts to establish and take such reserves and accruals
as Crestar shall request to conform, on a mutually satisfactory basis,
Loyola's loan, accrual and reserve policies to Crestar's policies, shall
establish and take such accruals, reserves and charges in order to implement
such policies in respect of excess facilities and equipment capacity,
severance and other benefit costs, litigation matters, write-off or write-
down of various assets and other appropriate accounting adjustments, and to
recognize for financial accounting purposes such expenses of the Merger and
restructuring charges related to or to be incurred in connection with the
Merger, including the expense for any tax liabilities with respect to the
anticipated recapture of the bad debt reserves established by Loyola or any
of its Subsidiaries for federal income tax purposes (and state income tax
purposes, if applicable) to the extent not otherwise recorded; provided,
however, that (i) Loyola shall not be obligated to take any such action
pursuant to this paragraph (e) unless and until Crestar specifies its request
in a writing delivered by Crestar to Loyola, and acknowledges that all
conditions to its obligations to consummate the Merger set forth in Sections
5.1 and 5.2 have been satisfied or waived (if waivable) by Crestar, (ii)
Loyola acknowledges that the conditions to its obligation to consummate the
Merger set forth in Sections 5.1 and 5.3 have been satisfied or waived (if
waivable) by Loyola, (iii) Loyola shall not be required to take any such
action that impairs its regulatory capital below regulatory guidelines, that
is inconsistent with any formal or informal undertaking by Loyola to any Bank
Regulator that has been disclosed in writing to Crestar prior to the date
hereof or is inconsistent with any bank regulatory requirement applicable to
Loyola, and (iv) Loyola shall not be required to take any such action that is
not consistent with GAAP. Loyola's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached in
any respect for any purpose as a consequence of any action undertaken on
account of this Section 4.13.
(f) Loyola shall give notice of an intent to terminate the data
processing agreement of Loyola on the date hereof, and Loyola and Crestar
shall consult and cooperate with each other with respect to termination of
the data processing agreement of Loyola, the renewals of Material contracts
and leases of Loyola and employee benefit matters.
4.14. Branch Closing Law.
Crestar expects to close and relocate the business of certain Loyola
branches in connection with the Merger. If any of these closings/relocations
do not constitute "relocations" as that term is defined in the Joint Policy
Statement of September 2, 1993 Concerning Branch Closings issued by the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), the
Office of the Comptroller of the Currency and the Federal Deposit Insurance
Corporation, and instead are considered branch closings for purposes of
Section 42 of the Federal Deposit Insurance Act and after receipt of all
required approvals of the Merger from Bank Regulators, Loyola will take all
necessary action under Section 42 and the regulations promulgated thereunder
by notifying customers and otherwise complying with the branch closing law
and regulations.
ARTICLE 5
CONDITIONS PRECEDENT TO MERGER
5.1. Conditions Precedent to Obligations of All Parties.
The respective obligations of Crestar and Loyola to effect the Merger
are subject to the satisfaction or waiver (subject to applicable law) at or
prior to the Effective Time of each of the following conditions:
(a) Loyola Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved by the requisite
vote of the stockholders of Loyola in accordance with applicable law.
(b) Crestar Existence. Crestar shall validly exist as a Virginia
corporation in good standing under the laws of the Commonwealth of Virginia.
(c) Regulatory Approval. Crestar shall have procured the required
approval, consent, waiver or other administrative action with respect to this
Agreement and the transactions contemplated hereby (i) by the Office of
Thrift Supervision under the Savings and Loan Holding Company Act, (ii) by
the State Corporation Commission of Virginia, and (iii) by the Federal
Reserve Board and under the Bank Holding Company Act of 1956, and all
applicable statutory waiting periods shall have expired; and the parties
shall have procured all other regulatory approvals, consents, waiver or
administrative actions of Governmental Entities or other Person that are
necessary or appropriate to the consummation of the transactions contemplated
by this Agreement; provided, however, that no approval, consent, waiver or
administrative action referred to in this Section 5.1(c) shall be deemed to
have been received if it shall include any condition or requirement that
would (i) result in a Material Adverse Effect on Crestar or Loyola or (ii) so
Materially and adversely affect the economic or business benefits of the
Merger that Crestar, in the sole judgment of Crestar, would not have entered
into this Agreement had such conditions or requirements been known at the
date hereof;
(d) Other Legal Requirements. All other requirements prescribed by
law which are necessary to the consummation of the transactions contemplated
by this Agreement shall have been satisfied.
(e) Injunction; Legal Proceedings. No preliminary or permanent
injunction or other order shall have been issued by any court or by any
Governmental Entity which prohibits the consummation of the Merger and the
transactions contemplated by this Agreement and which is in effect at the
Effective Time; and no litigation or proceeding shall be pending against
Crestar or Loyola or any of their Subsidiaries brought by any Governmental
Entity seeking to prevent consummation of the transactions contemplated
hereby.
(f) Statutes. No statute, rule, regulation, executive order, decree
or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or Governmental Entity which prohibits the consummation
of the Merger.
(g) Registration Statement. The Registration Statement shall have
become effective and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(h) Tax Opinion. Crestar and Loyola each shall have received the
opinion of Piper & Marbury L.L.P., counsel to Loyola, and the opinion of
Hunton & Williams, counsel to Crestar, each dated as of the Effective Date,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code and
that, accordingly, for federal income tax purposes: (i) no gain or loss will
be recognized by Crestar or Loyola as a result of the Merger; (ii) no gain or
loss will be recognized by the stockholders of Loyola on the exchange of
their shares of Loyola Common Stock for shares of Crestar Common Stock
(including any fractional share interest) pursuant to the Merger; (iii) the
tax basis of the shares of Crestar Common Stock (including any fractional
share interest) received in the Merger will be the same as the tax basis of
the shares of Loyola Common Stock surrendered in exchange therefor ; (iv) the
holding period of the shares of Crestar Common Stock (including any
fractional share interest) received in the Merger will include the period
during which the shares of Loyola Common Stock surrendered in exchange
therefor were held, provided such shares of Loyola Common Stock were held as
capital assets at the Effective Time; and (v) the receipt of cash in lieu of
a fractional share of Crestar Common Stock will be treated as full payment in
exchange for such fractional share pursuant to Section 302(a) of the Code, as
if such fractional share had been issued and then redeemed for the cash. In
addition, if requested by Crestar, such opinions shall further opine
substantially to the effect that, if Loyola Federal Savings Bank ("Loyola
FSB") is to be merged into Crestar Bank MD or its successor after the Merger,
such subsequent merger will be treated as a reorganization within the meaning
of Section 368(a)(1)(A) of the Code and that, accordingly, for federal income
tax purposes no gain or loss will be recognized by Crestar, Crestar Bank MD,
or Loyola FSB as a result of such subsequent merger (but amounts may be
required to be included in income as a result of the termination of any bad-
debt reserve maintained by Loyola FSB for federal income tax purposes and
other possible required changes in tax accounting methods). In rendering
their opinions, such counsel may rely upon representations contained in
certificates of officers of Crestar, Loyola and others. Crestar and Loyola
shall cooperate with each other and with such counsel, and shall provide such
certificates as may be reasonably requested by such counsel, to obtain such
opinions.
5.2 Conditions Precedent to Obligations of Crestar.
The obligations of Crestar to effect the Merger are also subject to the
satisfaction or waiver, at or prior to the Effective Time, of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All representations
and warranties of Loyola contained herein shall be true and correct in all
Material respects as of the date hereof and at and as of the Closing Date,
with the same force and effect as though made on and as of the Closing Date.
(b) Loyola's Performance. Loyola shall have performed in all
Material respects all obligations and agreements, and complied in all
Material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by it prior to the Closing Date,
as set forth in Article 4 and elsewhere herein.
(c) Officers' Certificate. Crestar shall have received a
certificate signed by the Chief Executive Officer and the Chief Financial
Officer of Loyola, dated the Closing Date, certifying as to the matters set
forth in subparagraphs 5.2(a) and (b).
(d) Opinion of Counsel. Crestar shall have received an opinion in
form and substance satisfactory to Crestar dated the Closing Date, of Piper
& Marbury L.L.P. covering the matters set forth in Sections 2.2, 2.5, 2.7 and
2.8, subject to reasonable and customary exceptions and qualifications.
(e) State Securities or "Blue Sky" Laws. Crestar shall have
received permits and other authorizations necessary under all state
securities or "Blue Sky" laws to consummate the transactions contemplated
hereby.
(f) Accounting Treatment. Crestar shall have received a letter in
form and substance satisfactory to Crestar dated the Effective Date from KPMG
Peat Marwick LLP to the effect that the Merger can be accounted for as a
pooling-of-interests.
5.3. Conditions Precedent to Obligations of Loyola.
The obligations of Loyola to effect the Merger are also subject to the
satisfaction or waiver, at or prior to the Effective Time, of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All representations
and warranties of Crestar contained herein shall be true and correct in all
Material respects as of the date hereof and at and as of the Closing Date,
with the same force and effect as though made on and as of the Closing Date.
(b) Crestar's Performance. Crestar shall have performed in all
Material respects all obligations and agreements, and complied in all
Material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by it prior to the Closing Date,
as set forth in Article 4 and elsewhere herein.
(c) Officer's Certificate. Loyola shall have received a certificate
signed by the Chief Executive Officer and the Chief Financial Officer of
Crestar, dated the Closing Date, certifying as to the matters set forth in
subparagraphs 5.3(a) and (b).
(d) Opinion of Counsel. Loyola shall have received an opinion in
form and substance satisfactory to Loyola, dated the Closing Date, of Hunton
& Williams covering the matters set forth in Section 2.1, 2.5, 2.7 and 2.8,
subject to reasonable and customary exceptions and qualifications.
(e) Stock Listing. Crestar Common Stock to be issued in the Merger
has been approved for listing on the New York Stock Exchange, subject to
official notice of issuance.
ARTICLE 6
COVENANTS
6.1. Tax-Free Reorganization Treatment.
Neither Crestar nor Loyola shall take or cause to be taken any action,
whether before or after the Effective Time, which would disqualify the Merger
as a "reorganization" within the meaning of Section 368(a)(1)(A) of the Code.
6.2. Employee Matters.
(a) Crestar intends to establish a Baltimore region with a separate
management team and an advisory board of directors.
(b) Crestar will interview current senior management employees of
Loyola and its Subsidiaries for available positions in the Baltimore region.
Crestar will undertake to use its best efforts to continue employment of all
branch personnel of Loyola and its Subsidiaries who meet Crestar's employment
qualification requirements, either at existing offices of Loyola and its
Subsidiaries or at offices of Crestar or its Subsidiaries, in each case,
within reasonable commuting distance. Non-branch personnel of Loyola and its
Subsidiaries not offered employment will be interviewed prior to the
Effective Time of the Merger for open positions within offices of Crestar or
its Subsidiaries. During the pendency of the Merger, but in no instance
later than two months prior to the Effective Date, Crestar and its
Subsidiaries will invoke a hiring freeze in the Baltimore-Washington
Metropolitan Area (excluding employees of any financial institution in such
areas acquired by Crestar prior to the Effective Time) with a view towards
filling vacant positions with employees of Loyola and its Subsidiaries not
previously offered employment by Crestar or its Subsidiaries.
Notwithstanding the hiring freeze, Crestar reserves the right to fill jobs
which it characterizes as "immediately must fill" with persons other than
employees of Loyola or its Subsidiaries.
(c) Employees of Loyola as of the Effective Time who are not offered
comparable employment by Crestar or its Subsidiaries (the acceptance of a
position with Crestar or one of its banking Subsidiaries shall establish that
such position is comparable), other than those who are covered by employment
agreements or individual severance arrangements (who are terminated and paid
in accordance with such respective employment agreements or individual
severance arrangements), will be paid severance pay equal to one week's base
pay for each year of service with Loyola up to a maximum of 20 years service
and two weeks' base pay for each year of service with Loyola in excess of 20
years service. Employees of Loyola as of the Effective Time who are not
offered comparable employment by Crestar or its Subsidiaries, will be offered
outplacement counseling.
6.3. Employee Benefits.
(a) As of the Effective Time, Crestar hereby unconditionally agrees
to, and agrees to cause each of its Subsidiaries with respect to which such
Subsidiary is an employer of a Contract Employee (as defined below) to,
honor, without modification (except in accordance with the terms of such
contract, agreement or commitment), offset or counterclaim (except with the
consent of the Contract Employee), all contracts, agreements and commitments
of Loyola or any of its Subsidiaries authorized by Loyola or any of its
Subsidiaries prior to the date of this Agreement which apply to any current
or former employee or current or former director of Loyola or any of its
Subsidiaries, all of which contracts, agreements and commitments to or with
employees are listed on Schedule 6.3, which have been entered into or
authorized prior to the date hereof (the "Contract Employees"), supplemental
retirement benefits listed on Schedule 6.3(c), and the Supplemental Executive
Retirement Plan. In accordance with the terms of such contracts, agreements
and commitments, Crestar hereby assumes, subject to the consummation of the
Merger, all of Loyola's and its Subsidiaries' obligations under such
contracts, agreements and commitments. With respect to each Contract
Employee, Crestar expressly agrees that in the event of any dispute under
such employee's contract or under the terms of this Section 6.3, Crestar
shall pay all reasonable fees and disbursements of such employee's counsel in
connection with all matters as to which such employee is the prevailing
party.
(b) All employees of Loyola or its Subsidiaries immediately prior
to the Effective Time of the Merger who are employed by Crestar or its
Subsidiaries immediately following the Effective Time ("Transferred
Employees") will be covered by Crestar's employee benefit plans as to which
they are eligible based on their length of service with Loyola, compensation,
job classification, position and, where variations are required by local
circumstances, location, including, where applicable, any incentive
compensation plan. Notwithstanding the foregoing, Crestar may determine to
continue any of the Benefit Plans for Transferred Employees in lieu of
offering participation in Crestar's benefit plans providing similar benefits
(e.g., medical and hospitalization benefits), to terminate any such Benefit
Plans, or to merge any such Benefit Plans with Crestar's benefit plans.
Except as prohibited by law, Transferred Employees' service with Loyola and
its Subsidiaries which is recognized by the applicable Benefit Plan at the
Effective Time shall be recognized as service with Crestar for purposes of
eligibility to participate (including level of participation but not for
purposes of benefit accrual) and vesting, if applicable, under the
corresponding Crestar benefit plan, if any, subject to applicable break-in-
service rules, provided, however, that such service with Loyola and its
Subsidiaries shall not be recognized for purposes of determining a
Transferred Employee's eligibility for retiree medical and life insurance
benefits under Crestar's benefit plans unless such Transferred Employee
completes twelve months of continuous service with Crestar or its
Subsidiaries immediately following the Effective Time and provided further
that retiree medical shall be available only under Crestar's defined dollar
retiree health plan.
(c) Crestar agrees that any preexisting condition, limitation or
exclusion in its health plans shall not apply to Transferred Employees or
their covered dependents who are covered under a medical or hospitalization
indemnity plan maintained by Loyola or its Subsidiaries at the Effective Time
and who then change that coverage to Crestar's medical or hospitalization
indemnity health plan at the time such Transferred Employees are first given
the option to enroll in Crestar's health plans.
(d) Crestar agrees that immediately following the Effective Time,
all participants who then have accounts in the 401(k) profit sharing plan
maintained by Loyola (the "401(k) Plan") shall be fully vested in their
account balances. Crestar, at its election, may continue the 401(k) Plan for
the benefit of Transferred Employees (as such plan may be amended as of the
Effective Time to provide current contributions and eligibility provisions
identical to those under Crestar's Employees' Thrift and Profit Sharing Plan
(the "Thrift Plan")), may merge the 401(k) Plan into the Thrift Plan or any
other defined contribution plan maintained by Crestar, may cease additional
benefit accruals under and contributions to the 401(k) Plan and continue to
hold the assets of such Plan until they are distributable in accordance with
its terms or may terminate the 401(k) Plan as permitted under applicable
provisions of the Code. In the event of a merger of the 401(k) Plan into the
Thrift Plan or other defined contribution plan maintained by Crestar or other
transfers of a Transferred Employee to the Thrift Plan or other defined
contribution plan, the Thrift Plan or other defined contribution plan will
recognize for purposes of eligibility to participate, early retirement, and
vesting, all Transferred Employees' service which is recognized under the
401(k) Plan, subject to applicable break-in-service rules. Loyola and its
Subsidiaries agree to cooperate with Crestar in implementing any decision
under this subsection (d) with respect to the 401(k) Plan.
(e) The Retirement Plan for Employees of Crestar Financial
Corporation and Affiliated Corporations (the "Crestar Retirement Plan") will
recognize for purposes of eligibility to participate, vesting, and
eligibility for early retirement (including early retirement under the "rule
of 85"), but not for benefit accrual purposes, all Transferred Employees'
service which is recognized under the Pension Plan of Loyola Federal Savings
Bank (the "Loyola Pension Plan"), subject to applicable break-in-service
rules. Crestar, at its option, may continue the Loyola Pension Plan and pay
out or annuitize benefits, or may merge the Loyola Pension Plan into the
Crestar Retirement Plan. If the Loyola Pension Plan is terminated, or if
accruals are suspended or the Loyola Pension Plan is merged into the Crestar
Retirement Plan, or in the event of other transfers of a Transferred Employee
to the Crestar Retirement Plan, each Transferred Employee who becomes a
participant in the Crestar Retirement Plan shall begin to accrue benefits
under the Crestar Retirement Plan on and after the date of such merger,
suspension, termination or transfer in accordance with the terms of the
Crestar Retirement Plan.
(f) Loyola shall amend the vacation plan or policy applicable to
employees of Loyola and its Subsidiaries, effective no later than January 1,
1996, to provide identical benefits and accrual of vacation in accordance
with Crestar's vacation policy. Effective no later than January 1, 1996,
Loyola shall amend the cafeteria plan covering employees of Loyola and its
Subsidiaries to (i) eliminate the payment of cash or other compensation or
benefits to an employee who waives medical, dental or vision benefits and
(ii) eliminate any provision allowing the surrender or cancellation of
vacation in lieu of additional cash or other compensation or benefits.
Loyola shall not adopt, or amend the cafeteria plan covering employees of
Loyola or its Subsidiaries to provide, health care flexible spending
accounts.
6.4. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, Crestar agrees to indemnify
and hold harmless each present and former director and officer of Loyola or
its Subsidiaries (the "Indemnified Parties"), against any and all costs or
expenses (including reasonable attorneys' fees), judgments, fines, penalties,
settlements, losses, claims, damages or liabilities incurred in connection
with any and all claims, actions, suits, proceedings or investigations,
whether civil, criminal, administrative or investigative, arising out of or
pertaining to matters arising out of or in connection with such party's
position as, or actions taken as, a director or officer of Loyola or a
Subsidiary (collectively, "Claims"), at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to the
fullest extent permitted by applicable law (and also advance expenses
incurred to the fullest extent permitted by Maryland law and Loyola's Charter
and By-Laws); provided, however, that Crestar's obligation to provide such
indemnification shall not apply to any Material litigation, proceeding or
controversy required to be disclosed on Schedule 2.12B that is not disclosed
on Schedule 2.12B, nor to Claims asserted or claimed more than six years
after the Effective Time. Crestar shall not have any obligation hereunder to
any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law.
(b) Any Indemnified Party wishing to claim indemnification under
Section 6.4(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall within 30 days thereof notify Crestar thereof, but the
failure to so notify shall not relieve Crestar of any liability it may have
to such Indemnified Party if such failure does not Materially prejudice
Crestar. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time): (i)
Crestar shall have the right to assume the defense thereof and Crestar shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if Crestar elects
not to assume such defense, or counsel for the Indemnified Parties advises
that there are issues which raise conflicts of interest between Crestar and
the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Crestar shall pay the reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor
are received; (ii) the Indemnified Parties will cooperate in the defense of
any such matter; and (iii) Crestar shall not be liable for any settlement
effected without its prior written consent which shall not be unreasonably
withheld.
(c) Subject to Section 6.4(a), for a period of six years after the
Effective Time, Crestar shall honor the duties and obligations contained in
the Indemnification Agreements identified on Schedule 6.4 hereof which have
been entered into between Loyola and its directors, Chief Executive Officer,
President, Executive Vice Presidents and Secretary.
6.5. Crestar Baltimore, Maryland Local Advisory Board of Directors.
Crestar will offer all members of the board of directors of Loyola a
position on Crestar's Baltimore, Maryland local advisory board of directors
for a term of at least one year commencing at the Effective Time of the
Merger. There will be four meetings during the year. Such persons who agree
to serve on the local advisory board will receive a retainer of $8,000 per
year and a fee of $3,000 per meeting attended plus non-local travel expenses
(or a maximum of $20,000 per annum). Crestar agrees to waive the age
limitation for the one-year period.
ARTICLE 7
TERMINATION
7.1. Termination.
This Agreement may be terminated, and the Merger abandoned, prior to the
Effective Date, either before or after its approval by the stockholders of
Loyola:
(a) by the mutual consent of Crestar and Loyola, if the board of
directors of each so determines by vote of a majority of the members of its
entire board;
(b) by Crestar or Loyola, if its board of directors so determines
by vote of a majority of the members of its entire board, in the event of the
failure of the stockholders of Loyola to approve this Agreement at the Loyola
Meeting called to consider such approval;
(c) by Crestar or Loyola, if its board of directors so determines
by vote of a majority of the members of its entire board, in the event of a
Material breach by the other party hereto of any representation, warranty,
covenant or agreement contained herein which is not cured or not curable
within 60 days after written notice of such breach is given to the party
committing such breach by the other party;
(d) by Crestar or Loyola by written notice to the other party if
prior to December 31, 1995 either (i) any approval, consent or waiver of any
Governmental Entity required to permit consummation of the transactions
contemplated hereby shall have been denied or (ii) any Governmental Entity of
competent jurisdiction shall have issued a final, unappealable order or
ruling enjoining or otherwise prohibiting consummation of the transactions
contemplated by this Agreement;
(e) by Crestar or Loyola, if its board of directors so determines
by vote of a majority of the members of its entire board, in the event that
the Merger is not consummated by March 31, 1996, unless the failure to so
consummate by such time is due to the breach of any representation, warranty,
agreement or covenant contained in this Agreement by the party seeking to
terminate; or
(f) by Loyola if its board of directors so determines by a majority
vote of the members of its entire board at any time during the five-day
period prior to the fifth day prior to the Closing Date, if the Average
Closing Price is less than $40.00, provided, however, that Crestar shall have
the option of increasing the consideration to be received by holders of
Loyola Common Stock hereunder by adjusting the Exchange Ratio to a number
equal to a quotient, the numerator of which is the product of $40.00 times
the Exchange Ratio then in effect and the denominator of which is the Average
Closing Price. In such case, Crestar shall give prompt written notice to
Loyola of such election and of the revised Exchange Ratio, and in such event
no termination shall be deemed to have occurred pursuant to this Section
7.1(f), and this Agreement shall remain in full force and effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified) and any references herein to "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted pursuant to this Section
7.1(f).
7.2. Effect of Termination.
In the event of the termination of this Agreement by either Crestar or
Loyola, as provided above, except as otherwise provided in Section 8.3, this
Agreement shall thereafter become void and there shall be no liability on the
part of any party hereto or their respective officers or directors, except
that any such termination shall be without prejudice to the rights of any
party hereto arising out of the willful breach of any other party of any
covenant or willful misrepresentation contained in this Agreement.
ARTICLE 8
MISCELLANEOUS
8.1. Certain Definitions; Interpretation.
As used in this Agreement, the following terms shall have the meanings
indicated:
"Change of Control" means any of the following events:
(i) the acquisition by any Person (including a group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act),
other than Crestar or any Subsidiary of Crestar, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act) of 40% or more of the combined voting power of Crestar's
then outstanding voting securities;
(ii) the first purchase of shares of outstanding voting securities
of Crestar under a tender offer or exchange offer, other than an offer
by Crestar or any Subsidiary of Crestar;
(iii) individuals who as of the date hereof constitute the
Board of Directors of Crestar cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for the
election by the stockholders of Crestar of each new director was
approved by a vote of at least two-thirds of the directors then still in
office who were directors as of the date hereof; or
(iv) approval by the stockholders of Crestar of any plan for the
liquidation or dissolution of Crestar or for a consolidation or merger
of Crestar (A) in which Crestar would not be the continuing or surviving
corporation, and pursuant to which shares of the outstanding voting
securities of Crestar would be converted into cash, securities or other
property, other than a merger of Crestar in which the stockholders of
Crestar immediately prior to the merger have the same proportionate
ownership of the surviving corporation immediately after the merger, or
(B) in which Crestar is the surviving corporation but the stockholders
prior to the merger or consolidation will not own 60% or more of the
outstanding voting stock of the surviving corporation immediately after
such merger or consolidation.
"Control" shall have the meaning ascribed thereto in the Bank Holding
Company Act of 1956, as amended.
"Loan Servicing File" means the documents, files and other items which
pertain to a particular Serviced Mortgage Loan (as defined below) including,
but not limited to, the electronic data files, books, records, notes and all
additional documents generated as a result of or utilized in originating and
or servicing each Serviced Mortgage Loan.
"Loan Servicing Rights" means, with respect to each Serviced Mortgage
Loan, any and all of the following: (i) all rights to service the Serviced
Mortgage Loans; (ii) any payments or monies payable for servicing the
Serviced Mortgage Loans; (iii) any late fees, assumption fees, penalties or
similar payments due and payable with respect to the Serviced Mortgage Loans;
(iv) all agreements or documents creating, defining or evidencing any such
servicing rights to the extent they are related to such servicing rights and
all rights of Loyola or any Subsidiary of Loyola thereunder; (v) escrow
payments or other similar payments with respect to the Serviced Mortgage
Loans and any amounts actually collected with respect thereto; (vi) all
accounts and other rights to payment related to any of the property described
in this paragraph; and (vii) possession and use of any and all Loan Servicing
Files pertaining to the Serviced Mortgage Loans or pertaining to the past,
present or prospective servicing of the Serviced Mortgage Loans.
"Material" means material to Crestar or Loyola (as the case may be) and
its respective Subsidiaries, taken as a whole.
"Material Adverse Effect," with respect to a Person, means any
condition, event, change or occurrence that individually, or in the aggregate
with any other condition, event, change or occurrence, is reasonably likely
to have a material adverse effect upon (i) the financial condition, business
or results of operations of such Person and its Subsidiaries, taken as a
whole, or (ii) the ability of such Person to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement; provided,
that reduction in Loyola's net income attributable to movements in interest
rates shall not by itself constitute a Material Adverse Effect as to Loyola
so long as Loyola manages its portfolio gap position in a manner consistent
with past practices.
"Person" includes an individual, corporation, partnership, association,
trust or unincorporated organization.
"Serviced Mortgage Loan" means an individual Serviced Mortgage Loan, the
Loan Servicing Rights associated therewith being an asset of Loyola or a
Subsidiary of Loyola. Each Serviced Mortgage Loan includes without
limitation the Serviced Mortgage Loan file, the monthly payments, principal
prepayments, liquidation proceeds, condemnation proceeds, insurance proceeds,
OREO disposition proceeds, and all other benefits, rights, proceeds and
obligations arising from or in connection with such Serviced Mortgage Loans
after the Effective Time.
"Subsidiary," with respect to a Person, means any other Person
controlled by such Person.
"To the knowledge of Loyola" or "to the knowledge of Crestar" means to
the knowledge of each person with the title of Executive Vice President or
higher of Crestar or Loyola, respectively, after inquiry of subordinate
officers as reasonable in the circumstances.
When a reference is made in this Agreement to Articles, Sections, or
Schedules, such reference shall be to a Section or Article of, or Schedule
to, this Agreement unless otherwise indicated. The table of contents, tie
sheet and headings contained in this Agreement are for ease of reference only
and shall not affect the meaning or interpretation of this Agreement.
Whenever the words "include," "includes," or "including" are used in this
Agreement, they shall be deemed followed by the words "without limitation."
Any singular term in this Agreement shall be deemed to include the plural,
and any plural term the singular.
8.2. Fees and Expenses.
All costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall, if incurred
by Crestar, be paid by Crestar and shall, if incurred by Loyola, be paid by
Loyola.
8.3. Survival.
Only those agreements and covenants of the parties that are applicable
in whole or in part after the Effective Time shall survive the Effective
Time. All other representations, warranties, agreements and covenants shall
be deemed to be conditions of this Agreement and shall not survive the
Effective Time. If this Agreement shall be terminated, the agreements of the
parties in Sections 4.1(c) and 8.2 shall survive such termination.
8.4. Notices.
All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing
and shall be deemed to have been duly given if delivered in person or mailed,
certified or registered mail with postage prepaid, or sent by telex, telegram
or telecopier, as follows:
(a) if to Loyola, to it at:
Loyola Capital Corporation
1300 North Charles Street
Baltimore, Maryland 21201
Attention: Joseph W. Mosmiller, Chairman of the Board and Chief
Executive Officer
Telecopier: (410) 332-7067
with a copy to:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201
Attention: James J. Winn, Jr., Esquire
Telecopier: (410) 576-5051
(b) if to Crestar, to it at:
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23219
Attention: John C. Clark, III, Senior Vice President and
General Counsel
Telecopier: (804) 782-7244
with a copy to:
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Attention: Lathan M. Ewers, Jr.
Telecopier: (804) 788-8218
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date
of delivery unless if mailed in which case on the third business day after
the mailing thereof except for a notice of a change of address, which shall
be effective only upon receipt thereof.
8.5. Entire Agreement.
This Agreement and the Schedules and other documents referred to herein
or delivered pursuant hereto collectively contain the entire understanding of
the parties hereto with respect to the subject matter contained herein and
supersede all prior and contemporaneous agreements and understandings, oral
and written, with respect thereto.
8.6. Binding Effect; Benefit; Assignment.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors, heirs and permitted assigns,
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties. Nothing in this Agreement, expressed
or implied, is intended to confer on any Person, other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
8.7 Waiver.
Prior to the Effective Time, any provision of this Agreement may be
(i) waived by the party benefited by the provision or by both parties by a
writing executed by an executive officer, or (ii) amended or modified at any
time (including the structure of the transaction) by an agreement in writing
between the parties hereto approved by their respective boards of directors,
except that, after the vote by the stockholders of Loyola, no such amendment
or modification may be made which reduces or changes the form and amount of
consideration payable pursuant to this Agreement without further stockholder
approval.
8.8. Further Actions.
Each of the parties hereto agrees that, subject to its legal
obligations, it will use its best efforts to fulfill all conditions precedent
specified herein, to the extent that such conditions are within its control,
and to do all things reasonably necessary to consummate the transactions
contemplated hereby.
8.9. Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, and all of which together shall he deemed
to be one and the same instrument.
8.10. Applicable Law.
This Agreement and the legal relations between the parties hereto shall
be governed by and construed in accordance with the laws of the Commonwealth
of Virginia, without regard to the conflict of laws rules thereof, or to the
extent applicable, the federal laws of the United States of America.
8.11. Severability.
If any term, provision, covenant or restriction contained in this
Agreement is held by a court of competent jurisdiction or other authority to
be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions contained in
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
IN WITNESS WHEREOF, each of Crestar and Loyola have executed this
Agreement as of the date first above written.
CRESTAR FINANCIAL CORPORATION
By: /s/ Richard G. Tilghman
Name: Richard G. Tilghman
Title: Chairman of the Board and Chief
Executive Officer
LOYOLA CAPITAL CORPORATION
By: /s/ Joseph W. Mosmiller
Name: Joseph W. Mosmiller
Title: Chairman of the Board and Chief
Executive Officer
[SCHEDULES OMITTED]
<PAGE>
PLAN OF MERGER
OF
LOYOLA CAPITAL CORPORATION
INTO
CRESTAR FINANCIAL CORPORATION
Section 1. Merger. Loyola Capital Corporation, a Maryland
corporation ("Loyola") shall, upon the later of the time that Articles of
Merger are made effective by the Maryland State Department of Assessments
and Taxation and the State Corporation Commission of Virginia (the
"Effective Time"), be merged (the "Merger") into Crestar Financial
Corporation, a Virginia corporation ("Crestar"), which shall be the
"Successor Corporation."
Section 2. Conversion of Stock; Exchange Ratio. At the Effective
Time:
(a) Conversion of Stock. Each share of Crestar Common Stock
issued and outstanding immediately prior to the Effective Time shall
continue unchanged as an outstanding share of Common Stock of the
Successor Corporation.
Each share of Loyola Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held
directly by Crestar, excluding shares held in a fiduciary capacity or
in satisfaction of a debt previously contracted) shall, by virtue of
the Merger and without any action on the part of the holder thereof,
be converted into and represent the right to receive the number of
shares of Crestar Common Stock determined in accordance with
subparagraph (b). As of the Effective Time, each share of Loyola
Common Stock held directly by Crestar (excluding shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted)
shall be canceled, retired and cease to exist, and no exchange or
payment shall be made with respect thereto.
(b) Exchange Ratio. Each share of Loyola Common Stock
(other than shares held directly by Crestar, excluding shares
held in a fiduciary capacity or in satisfaction of a debt
previously contracted) shall be converted into a fraction of a
share of Crestar Common Stock, determined in accordance with the
Exchange Ratio. The "Exchange Ratio" shall be calculated as
follows:
(i) if the Average Closing Price (as defined below) is
between $43.478 and $46.375, the Exchange Ratio shall be 0.690
(the quotient of (A) $32.00 divided by (B) $46.375);
(ii) if the Average Closing Price is greater than $46.375,
the Exchange Ratio shall be the quotient of (A) $32.00 divided by
(B) the Average Closing Price, rounded to the nearest one-one
thousandth of a share, provided that the Exchange Ratio shall not
be less than 0.640; and
(iii) if the Average Closing Price is less than $43.478,
the Exchange Ratio shall be the quotient of (A) $30.00 divided by
(B) the Average Closing Price rounded to the nearest one-one
thousandth of a share, provided that the Exchange Ratio shall not
be greater than 0.750, subject to adjustment as provided in
Section 3.
As used herein, "Average Closing Price" shall mean the average closing
price of Crestar Common Stock as reported on the New York Stock Exchange
for each of the 10 trading days ending on the tenth day prior to the
Closing Date (as defined in the Agreement).
The Exchange Ratio at the Effective Time of the Merger shall be
adjusted to reflect any consolidation, split-up, other subdivisions or
combinations of Crestar Common Stock, any dividend payable in Crestar
Common Stock, or any capital reorganization involving the reclassification
of Crestar Common Stock.
Section 3. Possible Adjustment of Exchange Ratio. The Agreement (as
defined in Section 6 of this Plan of Merger) may be terminated by Loyola if
its Board of Directors so determines by a majority vote of the members of
its entire Board at any time during the five-day period prior to the fifth
day prior to the Closing Date, if the Average Closing Price is less than
$40.00; provided, however, that Crestar shall have the option of increasing
the consideration to be received by holders of Loyola Common Stock by
adjusting the Exchange Ratio to a number equal to a quotient, the numerator
of which is the product of $40.00 times the Exchange Ratio then in effect
and the denominator of which is the Average Closing Price. In such case,
Crestar shall give prompt notice to Loyola of such election and of the
revised Exchange Ratio, and in such event no termination shall be deemed to
have occurred pursuant to the Agreement and the Agreement and this Plan of
Merger shall remain in full force and effect in accordance with their
respective terms (except as the Exchange Ratio shall have been so modified)
and any references in the Agreement and this Plan of Merger to "Exchange
Ratio" shall thereafter be deemed to refer to the Exchange Ratio as
adjusted pursuant to this Section 3.
Section 4. Conversion of Options.
(a) At the Effective Time, options granted by Loyola under
Loyola's 1986 Stock Option Plan, as amended, to purchase shares of
Loyola Common Stock, which are outstanding and unexercised immediately
prior thereto (each, an "Outstanding Option"), shall be converted as
to each whole share subject to such Outstanding Option into an option
(each, an "Exchange Option") to purchase such number of shares of
Crestar Common Stock at such exercise price as is determined as
provided below:
(i) the number of shares of Crestar Common Stock to be
subject to the Exchange Option shall be equal to the product of
(A) the number of shares of Loyola Common Stock subject to the
Outstanding Option multiplied by (B) the Exchange Ratio (as it
may be adjusted pursuant to Sections 2 and 3), the product being
rounded, if necessary, up or down, to the nearest whole share;
(ii) the per share exercise price under the Exchange
Option shall be equal to (A) the per share exercise price under
the Outstanding Option divided by (B) the Exchange Ratio (as it
may be adjusted pursuant to Sections 2 and 3), with any
fractional cent rounded up to the next whole cent; and
(iii) the Exchange Option shall otherwise have the same
duration and other terms as the Outstanding Option.
(b) The adjustments with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")) shall be effected in a
manner consistent with Section 424(a) of the Code.
Section 5. Articles of Incorporation, By-laws and Directors of the
Successor Corporation. At the Effective Time of the Merger, there shall be
no change caused by the Merger in the Articles of Incorporation (except any
change caused by the filing of Articles of Merger relating to the Merger),
By-laws, or Board of Directors of the Successor Corporation.
Section 6. Conditions to Merger. Consummation of the Merger is
subject to the following conditions:
(i) Approval of the Agreement and the Transactions
contemplated thereby by the requisite vote of the holders of the
requisite majority of the outstanding shares of Loyola Common Stock
entitled to vote;
(ii) Approval of the Merger by the Board of Governors of the
Federal Reserve System, the Office of Thrift Supervision, and the
State Corporation Commission of Virginia; and
(iii) The satisfaction of the conditions or the waiver of such
conditions by the party for whose benefit they were imposed, as
contained in the Agreement and Plan of Merger (the "Agreement") dated
as of May 16, 1995 between Crestar and Loyola.
Section 7. Effect of the Merger. The Merger shall have the effects
provided by Section 13.1-721 of Virginia Stock Corporation Act and Section
3-114 of the Maryland General Corporation Law.
Section 8. Amendment. Pursuant to Section 13.1-718(I) of the
Virginia Stock Corporation Act, the Board of Directors of Crestar (with
Loyola's consent) reserves the right to amend this Plan of Merger at any
time prior to issuance of the Certificate of Merger by the State
Corporation Commission of Virginia; provided, however, that any such
amendment made subsequent to the submission of this Plan of Merger to the
stockholders of Loyola may not: (i) alter or change the amount or kind of
shares, securities, cash, property or rights to be received in exchange for
or in conversion of all or any of the shares of Loyola Common Stock; (ii)
alter or change any of the terms and conditions of this Plan of Merger if
such alteration or change would adversely affect the shares of Loyola
Common Stock; or (iii) alter or change any term of Loyola's Charter (except
as provided herein).
<PAGE>
ANNEX II
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Option Agreement") dated as of April 27,
1995, between LOYOLA CAPITAL CORPORATION ("Loyola"), a Maryland
corporation, and CRESTAR FINANCIAL CORPORATION ("Crestar"), a Virginia
corporation, recites and provides:
A. The Boards of Directors of Loyola and Crestar have approved a
binding letter of agreement dated April 27, 1995 (the "Letter Agreement")
(to be merged into a definitive agreement (the "Merger Agreement"))
providing for the merger (the "Merger") of Loyola with and into Crestar.
B. As a condition to and as consideration for Crestar's entry into
the Letter Agreement and the Merger Agreement and to induce such entry,
Loyola has agreed to grant to Crestar the option set forth herein to
purchase authorized but unissued shares of Loyola Common Stock.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
Capitalized terms defined in the Letter Agreement or the Merger
Agreement and used herein shall have the same meanings as in the Letter
Agreement or the Merger Agreement, as the case may be.
2. Grant of Option.
Subject to the terms and conditions set forth herein, Loyola
hereby grants to Crestar an option (the "Option") to purchase up to
1,613,442 shares of Loyola Common Stock at an exercise price of $25.00 per
share payable in cash as provided in Section 4; provided, however, that in
the event Loyola issues or agrees to issue any shares of Loyola Common
Stock (other than as permitted under the Letter Agreement and the Merger
Agreement) at a price less than $25.00 per share (as adjusted pursuant to
Section 6), the exercise price shall be such lesser price.
3. Exercise of Option.
(a) Unless Crestar shall have breached in any material respect
any material covenant or representation contained in the Letter Agreement
or the Merger Agreement and such breach has not been cured, Crestar may
exercise the Option, in whole or part, at any time or from time to time if
a Purchase Event (as defined below) shall have occurred and be continuing;
provided that to the extent the Option shall not have been exercised, it
shall terminate and be of no further force and effect (i) on the Effective
Date of the Merger, or (ii) upon termination of the Letter Agreement or the
Merger Agreement in accordance with the provisions thereof (other than a
termination resulting from a willful breach by Loyola of any Specified
Covenant or, following the occurrence of a Purchase Event, failure of
Loyola's stockholders to approve the Merger Agreement by the vote required
under applicable law or under Loyola's Charter), or (iii) 12 months after
termination of the Letter Agreement or the Merger Agreement due to a
willful breach by Loyola of any Specified Covenant or, following the
occurrence of a Purchase Event, failure of Loyola's stockholders to approve
the Merger Agreement by the vote required under applicable law or under
Loyola's Charter. Any exercise of the Option shall be subject to
compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Loyola or Loyola Federal Savings Bank (the "Savings
Bank"), without having received Crestar's prior written consent, shall have
entered into an agreement with any person (x) to merge or consolidate, or
enter into any similar transaction, except as contemplated in the Letter
Agreement or the Merger Agreement, (y) to purchase, lease or otherwise
acquire all or substantially all of the assets of Loyola or the Savings
Bank, or (z) to purchase or otherwise acquire (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 10% or more of the voting power of Loyola or the Savings Bank;
(ii) any person (other than Loyola or the Savings Bank in a
fiduciary capacity, or Crestar, Crestar Bank, Crestar Bank N.A. or Crestar
Bank MD in a fiduciary capacity) shall have acquired beneficial ownership
or the right to acquire beneficial ownership of 15% or more of the
outstanding shares of Loyola Common Stock after the date hereof (the term
"beneficial ownership" for purposes of this Option Agreement having the
meaning assigned thereto in Section 13(d) of the Securities Exchange Act of
1934 (the "Exchange Act") and the regulations promulgated thereunder);
(iii) any person shall have made a bona fide proposal to
Loyola by public announcement or written communication that is or becomes
the subject of public disclosure to acquire Loyola or Savings Bank by
merger, consolidation, purchase of all or substantially all of its assets
or any other similar transaction, and following such bona fide proposal the
stockholders of Loyola vote not to adopt the Merger Agreement; or
(iv) Loyola shall have willfully breached any Specified
Covenant following a bona fide proposal to Loyola or the Savings Bank to
acquire Loyola or the Savings Bank by merger, consolidation, purchase of
all or substantially all of its assets or any other similar transaction,
which breach would entitle Crestar to terminate the Letter Agreement or the
Merger Agreement (without regard to the cure periods provided for therein)
and such breach shall not have been cured prior to the Notice Date (as
defined below).
If more than one of the transactions giving rise to a
Purchase Event under this Section 3(b) is undertaken or effected, then all
such transactions shall give rise only to one Purchase Event, which
Purchase Event shall be deemed continuing for all purposes hereunder until
all such transactions are abandoned. As used in this Option Agreement,
"person" shall have the meanings specified in Sections 3(a)(9) and 13(d)(3)
of the Exchange Act.
(c) In the event Crestar wishes to exercise the Option, it shall
send to Loyola a written notice (the date of which being herein referred to
as the "Notice Date") specifying (i) the total number of shares it will
purchase pursuant to such exercise, and (ii) a place and date not earlier
than three business days nor later than 60 business days after the Notice
Date for the closing of such purchase ("Closing Date"); provided that if
prior notification to or approval of any federal or state regulatory agency
is required in connection with such purchase, Crestar shall promptly file
the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which any required
notification period has expired or been terminated or such approval has
been obtained and any requisite waiting period shall have passed.
(d) As used herein, "Specified Covenant" means any covenant
contained in Section 6 of the Letter Agreement and Sections 1.8, 4.1, 4.2,
4.4, 4.5, 4.6, 4.8, 4.9, 4.11, or 4.13 of the draft Merger Agreement, the
table of contents of which is attached hereto, and, after its execution,
comparable provisions in the Merger Agreement.
4. Payment and Delivery of Certificates.
(a) At the closing referred to in Section 3, Crestar shall pay
to Loyola the aggregate purchase price for the shares of Loyola Common
Stock purchased pursuant to the exercise of the Option in immediately
available funds by a wire transfer to a bank account designated by Loyola.
(b) At such closing, simultaneously with the delivery of funds
as provided in subsection (a), Loyola shall deliver to Crestar a
certificate or certificates representing the number of shares of Loyola
Common Stock purchased by Crestar, and Crestar shall deliver to Loyola a
letter agreeing that Crestar will not offer to sell or otherwise dispose of
such shares in violation of applicable law or the provisions of this Option
Agreement.
(c) Certificates for Loyola Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend which shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of a Stock Option Agreement between the
registered holder hereof and Loyola Capital Corporation and to resale
restrictions arising under the Securities Act of 1933, as amended, a copy
of which agreement is on file at the principal office of Loyola Capital
Corporation. A copy of such agreement will be provided to the holder hereof
without charge upon receipt by Loyola Capital Corporation of a written
request."
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without such legend if
Crestar shall have delivered to Loyola a copy of a letter from the staff of
the Commission, or an opinion of counsel, in form and substance
satisfactory to Loyola, to the effect that such legend is not required for
purposes of the Securities Act.
5. Representations.
Loyola represents, warrants and covenants to Crestar as follows:
(a) Loyola shall at all times maintain sufficient authorized but
unissued shares of Loyola Common Stock so that the Option may be exercised
without authorization of additional shares of Loyola Common Stock.
(b) The shares to be issued upon due exercise, in whole or in
part, of the Option, when paid for as provided herein, will be duly
authorized, validly issued, fully paid and nonassessable.
6. Adjustment Upon Changes in Capitalization.
In the event of any change in Loyola Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
exchanges of shares or the like, the type and number of shares subject to
the Option, and the purchase price per share, as the case may be, shall be
adjusted appropriately. In the event that any additional shares of Loyola
Common Stock are issued or otherwise become outstanding after the date of
this Option Agreement (other than pursuant to this Option Agreement), the
number of shares of Loyola Common Stock subject to the Option shall be
adjusted so that, after such issuance, it equals 19.9% of the number of
shares of Loyola Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 6 shall be deemed to authorize Loyola to breach
any provision of the Letter Agreement or the Merger Agreement.
7. Registration Rights.
If requested by Crestar, Loyola shall as expeditiously as
possible file a registration statement on a form of general use under the
Securities Act if necessary in order to permit the sale or other
disposition of the shares of Loyola Common Stock that have been acquired
upon exercise of the Option in accordance with the intended method of sale
or other disposition requested by Crestar. Crestar shall provide all
information reasonably requested by Loyola for inclusion in any
registration statement to be filed hereunder. Loyola will use its best
efforts to cause such registration statement first to become effective and
then to remain effective for such period not in excess of 270 days from the
day such registration statement first becomes effective as may be
reasonably necessary to effect such sales or other dispositions. The first
registration effected under this Section 7 shall be at Loyola's expense
except for underwriting commissions and the fees and disbursements of
Crestar's counsel attributable to the registration of such Loyola Common
Stock. A second registration may be requested hereunder at Crestar's
expense. In no event shall Loyola be required to effect more than two
registrations hereunder. The filing of any registration statement hereunder
may be delayed for such period of time as may reasonably be required to
facilitate any public distribution by Loyola of Loyola Common Stock. If
requested by Crestar, in connection with any such registration, Loyola will
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Upon receiving any request from
Crestar or assignee thereof under this Section 7, Loyola agrees to send a
copy thereof to Crestar and to any assignee thereof known to Loyola, in
each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies.
8. Severability.
If any term, provision, covenant or restriction contained in this
Option Agreement is held by a court or a federal or state regulatory agency
of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained
in this Option Agreement shall remain in full force and effect, and shall
in no way be affected, impaired or invalidated. If for any reason such
court or regulatory agency determines that the Option will not permit the
holder to acquire the full number of shares of Loyola Common Stock provided
in Section 2 (as adjusted pursuant to Section 6), it is the express
intention of Loyola to allow the holder to acquire such lesser number of
shares as may be permissible, without any amendment or modification hereof.
9. Miscellaneous.
(a) Expenses. Except as otherwise provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Entire Agreement. Except as otherwise expressly provided
herein, this Option Agreement contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. The terms and conditions of this Option Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Nothing in this Option Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Option
Agreement, except as expressly provided herein.
(c) Assignment. Neither of the parties hereto may assign any of
its rights or obligations under this Option Agreement or the Option created
hereunder to any other person, without the express written consent of the
other party, except that in the event a Purchase Event shall have occurred
and be continuing Crestar may assign in whole or in part its rights and
obligations hereunder; provided, however, that to the extent required by
applicable regulatory authorities, Crestar may not assign its rights under
the Option except in (i) a widely dispersed public distribution, (ii) a
private placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of Loyola, (iii) an assignment to a
single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Crestar's behalf, or
(iv) any other manner approved by applicable regulatory authorities.
(d) Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if
delivered in the manner and to the addresses provided for in or pursuant to
Section 8.4 of the draft Merger Agreement and, after its execution, the
Merger Agreement.
(e) Counterparts. This Option Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute
but one agreement.
(f) Specific Performance. The parties agree that damages would
be an inadequate remedy for a breach of the provisions of this Option
Agreement by either party hereto and that this Option Agreement may be
enforced by either party hereto through injunctive or other equitable
relief.
(g) Governing Law. This Option Agreement shall be governed by
and construed in accordance with the laws of Virginia applicable to
agreements made and entirely to be performed within such state and such
federal laws as may be applicable.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Option Agreement as of the day and year first written above.
LOYOLA CAPITAL CORPORATION
By: /s/ Joseph W. Mosmiller
Joseph W. Mosmiller
Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORPORATION
By: /s/ Richard G. Tilghman
Richard G. Tilghman
Chairman of the Board and
Chief Executive Officer
<PAGE>
ANNEX III
Alex. Brown & Sons Incorporated Reply to: P. O. Box 515
Established 1800 Baltimore, MD 21203
America's Oldest Investment Banking Firm
Members: New York Stock Exchange, Inc. and
Other Leading Exchanges
June 16, 1995
The Board of Directors of
Loyola Capital Corporation
1300 North Charles Street
Baltimore, Maryland 21201
Dear Sirs:
You have requested our opinion as to the fairness from a financial
point of view to the holders of the outstanding shares of Common Stock,
$0.10 par value per share (the "Shares") of Loyola Capital Corporation (the
"Company") of the consideration to be received by the Company's
shareholders pursuant to the Agreement and Plan of Merger By and Between
Crestar Financial Corporation ("Crestar") and the Company dated May 16,
1995 (the "Agreement"). Pursuant to the Agreement, each of the Shares will
receive:
(a) 0.690 shares of Crestar Common Stock, par value $5.00 per share
("Crestar Common Stock"), if the Average Crestar Closing Price
(as defined in the Agreement) is between $43.478 and $46.375;
(b) the number of shares of Crestar Common Stock equal to $32.00
divided by the Average Crestar Closing Price (with a minimum of
0.640 shares of Crestar Common Stock), if the Average Crestar
Closing Price is greater than $46.375; or
(c) the number of shares of Crestar Common Stock equal to $30.00
divided by the Average Crestar Closing Price (with a maximum of
0.750 shares of Crestar Common Stock), if the Average Crestar
Closing Price is less than $43.478 (collectively, the "Merger
Consideration").
Alex. Brown & Sons Incorporated, as a customary part of its investment
banking business, is engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and
other purposes. We have acted as financial advisor to the Board of
Directors of the Company in connection with the transactions described
above and will receive a fee for our services, a significant portion of
which is contingent upon the consummation of the transaction contemplated
by the Agreement. Alex. Brown & Sons Incorporated regularly publishes
research reports regarding the financial services industry and the
businesses and securities of publicly owned companies in that industry.
In connection with this opinion, we have reviewed certain publicly
available financial information concerning the Company and Crestar and
certain internal financial analyses and other information furnished to us
by the Company and Crestar. We have also held discussions with members of
the senior management of the Company and Crestar regarding the business and
prospects of the Company and Crestar, respectively. In addition, we have
(i) reviewed the reported price and trading activity for the Shares and
Crestar Common Stock, (ii) compared certain financial and stock market
information for the Company and Crestar, respectively, with similar
information for certain comparable companies whose securities are publicly
traded (iii) reviewed the Agreement and compared the financial terms of the
Agreement with those of certain recent business combinations of other
savings banks and commercial banks which we deemed comparable in whole or
in part and (iv) performed such other studies and analyses and considered
such other factors as we deemed appropriate.
We have not independently verified the information described above and
for purposes of this opinion have assumed the accuracy, completeness and
fairness thereof. With respect to information relating to the prospects of
the Company and Crestar, we have assumed that such information reflects the
best currently available estimates and judgments of the managements of the
Company and Crestar, respectively, as to the likely future financial
performance of the Company and Crestar. In addition, we have not made an
independent evaluation or appraisal of the assets or liabilities of the
Company or Crestar, nor have we been furnished with any such evaluation or
appraisal. Our opinion is based on market, economic and other conditions
as they exist and can be evaluated as of the date of this letter.
Based upon and subject to the foregoing, it is our opinion that, as of
the date of this letter, the Merger Consideration is fair, from a financial
point of view, to the holders of Shares.
Very truly yours,
ALEX. BROWN & SONS INCORPORATED
By: /s/ Donald W. Delson
Donald W. Delson
Managing Director
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Crestar Articles implement the provisions of the VSCA, which
provide for the indemnification of Crestar's directors and officers in a
variety of circumstances, which may include indemnification for liabilities
under the Securities Act of 1933. Under sections 13.1-697 and 13.1-702 of
the VSCA, a Virginia corporation generally is authorized to indemnify its
directors and officers in civil or criminal actions if they acted in good
faith and believed their conduct to be in the best interests of the
corporation and, in the case of criminal actions, had no reasonable cause
to believe that the conduct was unlawful. The Crestar Articles require
indemnification of directors and officers with respect to certain liabili-
ties, expenses and other amounts imposed upon them by reason of having been
a director or officer, except in the case of willful misconduct or a
knowing violation of criminal law. Crestar also carries insurance on
behalf of directors, officers, employees or agents that may cover
liabilities under the Securities Act of 1933. In addition, the VSCA and
the Crestar Articles eliminate the liability of a director or officer of
Crestar in a stockholder or derivative proceeding. This elimination of
liability will not apply in the event of willful misconduct or a knowing
violation of the criminal law or any federal or state securities law.
Sections 13.1-692.1 and 13.1-696 to -704 of the VSCA are hereby
incorporated herein by reference.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
2(a) Agreement and Plan of Merger, dated as of May 16,
1995, by and between Crestar and Loyola (attached
to the Proxy Statement/Prospectus as Annex I)
2(b) Stock Option Agreement dated as of April 27,
1995, by and between Crestar and Loyola (attached
to the Proxy Statement/Prospectus as Annex II)
5 Opinion of Hunton & Williams with respect to
legality
8(a) Opinion of Hunton & Williams with respect to tax
consequences of the Merger
8(b) Opinion of Piper & Marbury L.L.P. with respect to
tax consequences of the Merger
24(a) Consent of KPMG Peat Marwick LLP (Crestar
Financial Corporation)
24(b) Consent of KPMG Peat Marwick LLP (Loyola Capital
Corporation)
24(c) Consent of Alex. Brown & Sons Incorporated
24(d) Consent of Hunton & Williams (included in Exhibit
5 and Exhibit 8(a))
24(e) Consent of Piper & Marbury L.L.P. (included in
Exhibit 8(b))
25 Power of Attorney (included in the Registration Statement)
28 Form of Proxy
(b) Financial Statement Schedules -- None
(c) Report, Opinion or Appraisal -- (attached to the
Proxy Statement/Prospectus as Annex III)
Item 22. Undertakings
(a) The undersigned Registrant hereby undertakes as fol-
lows:
1. To file, during any period in which offers or
sales are being made, a post-effective amendment
to this registration statement.
(i) To include any prospectus required by sec-
tion 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the in-
formation set forth in the registration
statement.
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) do not apply if the reg-
istration statement is on Form S-3 or Form
S-8, and the information required to be
included in a post-effective amendment by
those paragraphs is contained in periodic
reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securi-
ties Exchange Act of 1934 that are incorpo-
rated by reference in the registration sta-
tement.
2. That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securi-
ties at that time shall be deemed to be the initial
bona fide offering thereof.
3. To remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination
of the offering.
4. That prior to any public reoffering of the securi-
ties registered hereunder through the use of a
prospectus which is a part of this registration
statement, by any person or party who is deemed to
be an underwriter within the meaning of Rule
145(c), the Registrant undertakes that such
reoffering prospectus will contain the information
called for by the applicable registration form
with respect to reofferings by persons who may be
deemed underwriters, in addition to the
information called for by the other items of the
applicable form.
5. That every prospectus (i) that is filed pursuant
to the paragraph immediately preceding, or (ii)
that purports to meet the requirements of Section
10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities
subject to Rule 415, will be filed as part of an
amendment to the registration statement and will
not be used until such amendment is effective, and
that, for the purposes of determining any
liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to
be a new registration statement relating to the
securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.
6. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provi-
sions, or otherwise, the Registrant has been ad-
vised that in the opinion of the Securities and
Exchange Commission such indemnification is
against public policy as expressed in the
Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other
than the payment by the Registrant of expenses
incurred or paid by a director, officer or
controlling person of the Registrant in the suc-
cessful defense of any action, suit or proceeding)
is asserted by such director, officer or control-
ling person in connection with the securities
being registered, the Registrant will, unless in
the opinion of its counsel the matter has been
settled by controlling precedent, submit to a
court of appropriate jurisdiction the question
whether such indemnification by it is against
public policy as expressed in the Securities Act
of 1933 and will be governed by the final
adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond
to requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one
business day of receipt of such request, and to send the incorporated
documents by first-class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.
(c) The undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was not
the subject of and included in the registration statement when it became
effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Richmond, Commonwealth of
Virginia, on June 27, 1995.
CRESTAR FINANCIAL CORPORATION
(Registrant)
By: /s/ Richard G. Tilghman
Richard G. Tilghman
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on June 27, 1995. Each of the directors and/or officers of
Crestar Financial Corporation whose signature appears below hereby appoints
John C. Clark, III, Lathan M. Ewers, Jr. and David M. Carter, and each of them
severally, as his attorney-in-fact to sign in his name and behalf, in any and
all capacities stated below and to file with the Commission, any and all
amendments, including post-effective amendments to this registration statement,
making such changes in the registration statement as appropriate, and generally
to do all such things in their behalf in their capacities as officers and
directors to enable Crestar Financial Corporation to comply with the provisions
of the Securities Act of 1933, and all requirements of the Securities and
Exchange Commission.
SIGNATURE TITLE
/s/ Richard G. Tilghman Chairman of the Board and Chief
RICHARD G. TILGHMAN Executive Officer and Director
(Principal Executive Officer)
/s/ James M. Wells, III President and Director
JAMES M. WELLS, III
/s/ James D. Barr Executive Vice President, Controller
JAMES D. BARR and Treasurer
(Principal Financial Officer
and Principal Accounting Officer)
Director
RICHARD M. BAGLEY
/s/ J. Carter Fox Director
J. CARTER FOX
Director
BONNIE GUITON HILL
/s/ Gene A. James Director
GENE A. JAMES
Director
H. GORDON LEGGETT, JR.
/s/ Charles R. Longsworth Director
CHARLES R. LONGSWORTH
/s/ Patrick J. Maher Director
PATRICK J. MAHER
/s/ Frank E. McCarthy Director
FRANK E. MCCARTHY
Director
G.GILMER MINOR, III
/s/ Gordon F. Rainey, Jr. Director
GORDON F. RAINEY, JR.
/s/ Frank S. Royal, M.D. Director
FRANK S. ROYAL, M.D.
EUGENE P. TRANI Director
L. DUDLEY WALKER Director
KAREN HASTIE WILLIAMS Director
<PAGE>
EXHIBIT INDEX
Exhibit Description
2(a) Agreement and Plan of Merger, dated as of May 16, 1995,
by and between Crestar and Loyola (attached to the Proxy
Statement/Prospectus as Annex I)
2(b) Stock Option Agreement dated as of April 27, 1995, by and
between Crestar and Loyola (attached to the Proxy
Statement/Prospectus as Annex II)
5 Opinion of Hunton & Williams with respect to legality
8(a) Opinion of Hunton & Williams with respect to tax
consequences of the Merger
8(b) Opinion of Piper & Marbury L.L.P. with respect to tax
consequences of the Merger
24(a) Consent of KPMG Peat Marwick LLP (Crestar Financial
Corporation)
24(b) Consent of KPMG Peat Marwick LLP (Loyola Capital
Corporation)
24(c) Consent of Alex. Brown & Sons Incorporated
24(d) Consent of Hunton & Williams (included in Exhibit 5 and
Exhibit 8(a))
24(e) Consent of Piper & Marbury L.L.P. (included in Exhibit
8(b))
25 Power of Attorney (included in the Registration Statement)
28 Form of Proxy
Exhibit 5
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
FILE NO.: 33411.1139
DIRECT DIAL: (804) 788-7216
June 28, 1995
Board of Directors
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23219
REGISTRATION STATEMENT ON FORM S-4
LOYOLA CAPITAL CORPORATION
Ladies and Gentlemen:
We are acting as counsel for Crestar Financial Corporation (the
"Company") in connection with the registration under the Securities Act of
1933 of 7,000,000 shares of its common stock (the "Common Stock"). The
transaction in which the Common Stock will be issued is described in the
Company's Registration Statement on Form S-4 of the Company (the
"Registration Statement") filed with the Securities and Exchange Commission
(the "Commission") on June 28, 1995 and relating to the Company's merger
with Loyola Capital Corporation. In connection with the filing of the
Registration Statement you have requested our opinion concerning certain
corporate matters.
We are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Virginia.
2. The Common Stock has been duly authorized and, when the shares
have been issued as described in the Registration Statement, will be
legally issued, fully paid and nonassessable.
We consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the references to us in the
Proxy Statement/Prospectus included therein. In giving this consent, we do
not admit that we are within the category of persons whose consent is
required by section 7 of the Securities Act of 1933 or the rules and
regulations promulgated thereunder by the Securities and Exchange
Commission.
Very truly yours,
/s/ Hunton & Williams
Exhibit 8(a)
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
June 27, 1995
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23219
Loyola Capital Corporation
1300 North Charles Street
Baltimore, Maryland 21201
MERGER OF LOYOLA CAPITAL CORPORATION
INTO CRESTAR FINANCIAL CORPORATION
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Gentlemen:
We have acted as counsel to Crestar Financial Corporation
("Crestar") in connection with the proposed merger of Loyola Capital
Corporation ("Loyola") into Crestar (the "Holding Company Merger"). After
the Holding Company Merger, Crestar may cause Loyola Federal Savings Bank
("Loyola F.S.B."), currently a wholly-owned subsidiary of Loyola, to merge
into Crestar Bank MD, a wholly-owned subsidiary of Crestar, or its succes-
sor (if any), which also will be a wholly-owned subsidiary of Crestar (the
"Bank Merger"). As used herein, "Crestar Bank MD" refers to the existing
Crestar Bank MD or such successor, as appropriate.
In the Holding Company Merger, each outstanding share of Loyola
common stock (other than shares held by Crestar, excluding shares held in a
fiduciary capacity) is to be converted into a fraction of a share of
Crestar common stock based on the average closing price of Crestar common
stock for the ten trading days ending on the tenth day before the effective
date of the Holding Company Merger (the "Effective Date"). However, a
share of Loyola common stock will not be converted into less than 0.64 or
more than 0.75 of a share of Crestar common stock, except that Crestar may
increase the exchange ratio to more than 0.75 of a share if such average
closing price is less than $40 per share and Loyola otherwise would
exercise its right to abandon the Holding Company Merger. Any Loyola
shareholder who becomes entitled to a fractional share of Crestar common
stock as a result of the Holding Company Merger, after aggregating all the
shareholder's shares of Loyola common stock, will receive cash from Crestar
in lieu of the fractional share. Loyola shareholders are not entitled to
exercise dissenter's rights with respect to the Holding Company Merger
under Maryland law.
You have requested our opinion concerning certain federal income
tax consequences of the Holding Company Merger and the Bank Merger. In
giving this opinion, we have reviewed the Agreement and Plan of Merger
dated as of May 16, 1995 between Crestar and Loyola; the Plan of Merger
relating to the Holding Company Merger; the form S-4 Registration Statement
under the Securities Act of 1933 relating to the Holding Company Merger
(the "S-4"); and such other documents as we have considered necessary. In
addition, we have assumed the following:
1. The fair market value of the Crestar common stock (including
any fractional share interest) received by a Loyola shareholder in exchange
for Crestar common stock will be approximately equal to the fair market
value of the Loyola common stock surrendered in the exchange.
2. None of the compensation received by any shareholder-
employee of Loyola will be separate consideration for, or allocable to, any
shares of Loyola common stock; none of the shares of Crestar common stock
received by any shareholder-employee in the Holding Company Merger will be
separate consideration for, or allocable to, any employment agreement; and
the compensation paid to any shareholder-employee will be for services
actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services.
3. The payment of cash in lieu of fractional shares of Crestar
common stock is solely for the purpose of avoiding the expense and inconve-
nience to Crestar of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash consideration that
will be paid in the Holding Company Merger to Loyola shareholders in lieu
of fractional shares of Crestar common stock will not exceed one percent of
the total consideration issued in the Holding Company Merger to the Loyola
shareholders in exchange for their Loyola common stock.
4. No share of Loyola common stock has been or will be redeemed
in anticipation of the Holding Company Merger, and Loyola has not made and
will not make any extraordinary distribution with respect to its stock in
anticipation of the Holding Company Merger.
5. Crestar has no plan or intention to reacquire any of its
stock issued in the Holding Company Merger or to make any extraordinary
distribution with respect to such stock.
6. There is no plan or intention by shareholders of Loyola to
sell, exchange, or otherwise dispose of a number of shares of Crestar
common stock received in the Holding Company Merger that would reduce the
Loyola shareholders' ownership of Crestar common stock to a number of
shares having a fair market value, as of the Effective Date, of less than
50 percent of the fair market value of all the formerly outstanding Loyola
common stock as of the Effective Date. For this purpose, shares of Loyola
common stock exchanged for cash in lieu of fractional shares of Crestar
common stock are treated as outstanding Loyola common stock on the Effec-
tive Date. Moreover, shares of Loyola common stock and shares of Crestar
common stock held by Loyola shareholders and otherwise sold, redeemed, or
disposed of before or after the Holding Company Merger are considered in
making the above determination.
7. Following the Holding Company Merger, Crestar will continue
the historic business of Loyola or use a significant portion of Loyola's
historic business assets in a business.
8. The liabilities of Loyola that will be assumed by Crestar
and the liabilities, if any, to which the transferred assets of Loyola are
subject were incurred by Loyola in the ordinary course of business.
9. There is no intercorporate indebtedness existing between
Loyola and Crestar that was issued or acquired or will be settled at a
discount.
10. Neither Crestar nor any subsidiary of Crestar (a) has
transferred or will transfer cash or other property to Loyola or any
subsidiary of Loyola for less than fair market value consideration in
anticipation of the Holding Company Merger or the Bank Merger or (b) has
made or will make any loan to Loyola or any subsidiary of Loyola in
anticipation of the Holding Company Merger or the Bank Merger.
11. On the Effective Date, the fair market value of the assets
of Loyola transferred to Crestar will exceed the sum of Loyola's liabili-
ties assumed by Crestar plus the amount of liabilities, if any, to which
the transferred assets are subject.
12. Crestar has no plan or intention to sell or otherwise
dispose of any of the assets of Loyola acquired in the Holding Company
Merger, except in the Bank Merger.
13. Crestar, Crestar Bank MD, Loyola, Loyola F.S.B., and the
shareholders of Loyola will pay their respective expenses, if any, incurred
in connection with the Holding Company Merger and the Bank Merger.
14. For each of Crestar, Crestar Bank MD, Loyola, and Loyola
F.S.B., not more than 25 percent of the fair market value of its adjusted
total assets consists of stock and securities of any one issuer, and not
more than 50 percent of the fair market value of its total assets, exclud-
ing cash, cash items (including accounts receivable and cash equivalents),
and United States government securities, consists of stock and securities
of five or fewer issuers. For purposes of the preceding sentence, (a) a
corporation's total assets exclude stock and securities issued by any
subsidiary at least 50 percent of the voting power or 50 percent of the
total fair market value of the stock of which is owned by the corporation,
but the corporation is treated as owning directly a ratable share (based on
the percentage of the fair market value of the subsidiary's stock owned by
the corporation) of the assets owned by any such subsidiary, and (b) all
corporations that are members of the same "controlled group" within the
meaning of section 1563(a) of the Internal Revenue Code (the "Code") are
treated as a single issuer.
15. At all times during the five-year period ending on the
effective date of the Holding Company Merger, the fair market value of all
of Loyola's United States real property interests was and will have been
less than 50 percent of the total fair market value of (a) its United
States real property interests, (b) its interests in real property located
outside the United States, and (c) its other assets used or held for use in
a trade or business. For purposes of the preceding sentence, (x) United
States real property interests include all interests (other than an
interest solely as a creditor) in real property and associated personal
property (such as movable walls and furnishings) located in the United
States or the Virgin Islands and interests in any corporation (other than a
controlled corporation) owning any United States real property interest,
(y) Loyola is treated as owning its proportionate share (based on the
relative fair market value of its ownership interest to all ownership
interests) of the assets owned by any controlled corporation or any
partnership, trust, or estate in which Loyola is a partner or beneficiary,
and (z) any such entity in turn is treated as owning its proportionate
share of the assets owned by any controlled corporation or any partnership,
trust, or estate in which the entity is a partner or beneficiary. As used
in this paragraph, "controlled corporation" means any corporation at least
50 percent of the fair market value of the stock of which is owned by
Loyola, in the case of a first-tier subsidiary of Loyola, or by a con-
trolled corporation, in the case of a lower-tier subsidiary.
16. Any shares of Crestar common stock received in exchange for
shares of Loyola common stock that (a) were acquired in connection with the
performance of services, including stock acquired through the exercise of
an option or warrant acquired in connection with the performance of
services, and (b) are subject to a substantial risk of forfeiture within
the meaning of section 83(a) of the Code will be subject to substantially
the same risk of forfeiture after the Holding Company Merger.
17. No outstanding Loyola common stock acquired in connection
with the performance of services was or will have been acquired within six
months before the effective date of the Holding Company Merger by any
person subject to section 16(b) of the Securities Exchange Act of 1934
other than pursuant to an option granted more than six months before the
effective date of the Holding Company Merger.
18. Neither Loyola nor Loyola F.S.B. has filed, and neither
holds any asset subject to, a consent pursuant to section 341(f) of the
Code and regulations thereunder.
19. Neither Loyola nor Loyola F.S.B. is a party to, and neither
holds any asset subject to, a "safe harbor lease" under former section
168(f)(8) of the Code and regulations thereunder.
20. No share of Loyola F.S.B. stock has been or will be redeemed
in anticipation of the Bank Merger, and Loyola F.S.B. has not made and will
not make any extraordinary distribution with respect to its stock in
anticipation of the Bank Merger.
21. Crestar Bank MD has no plan or intention to reacquire any of
its outstanding stock or to make any extraordinary distribution with
respect to such stock.
22. If the Bank Merger is effected, Crestar Bank MD will
continue the historic business of Loyola F.S.B. or use a significant
portion of Loyola F.S.B.'s historic business assets in a business.
23. If the Bank Merger is effected, the liabilities of Loyola
F.S.B. that will be assumed by Crestar Bank MD and the liabilities, if any,
to which the transferred assets of Loyola F.S.B. are subject will have been
incurred by Loyola F.S.B. in the ordinary course of business.
24. There is no intercorporate indebtedness existing between
Loyola F.S.B. and Crestar Bank MD that was issued or acquired or will be
settled at a discount.
25. If the Bank Merger is effected, on the effective date
thereof, the adjusted federal income tax basis and the fair market value of
the assets of Loyola F.S.B. transferred to Crestar Bank MD each will exceed
the sum of Loyola F.S.B.'s liabilities assumed by Crestar Bank MD plus the
amount of liabilities, if any, to which the transferred assets are subject.
26. Crestar Bank MD has no plan or intention to sell or other-
wise dispose of any of the assets of Loyola F.S.B. to be acquired in the
Bank Merger, except for dispositions made in the ordinary course of
business.
27. Crestar has no plan or intention to dispose of any Crestar
Bank MD stock.
On the basis of the foregoing, and assuming that (a) with respect to
any nonresident alien or foreign entity that is a shareholder of Loyola, Loyola
will comply with all applicable statement and notification requirements (if any)
of Treasury Regulation (Section) 1.897-2(g) & (h), (b) the Holding Company
Merger will be consummated in accordance with the Plan of Merger, and (c) the
Bank Merger, if any, will be consum- mated in accordance with a plan of merger
we have approved as to form and substance, we are of the opinion that (under
current law) for federal income tax purposes:
1. The Holding Company Merger will be a reorganization within
the meaning of section 368(a)(1)(A) of the Code.
2. Loyola will not recognize gain or loss (a) on the transfer
of its assets to Crestar in exchange for Crestar common stock and the
assumption of Loyola's liabilities or (b) on the constructive distribution
of Crestar common stock to Loyola shareholders.
3. Crestar will not recognize gain or loss on the acquisition
of Loyola's assets in exchange for Crestar common stock and the assumption
of Loyola's liabilities.
4. A Loyola shareholder will not recognize gain or loss on the
exchange of his shares of Loyola common stock for shares of Crestar common
stock (including any fractional share interest) in the Holding Company
Merger.
5. The aggregate basis of shares of Crestar common stock
(including any fractional share interest) received by a Loyola shareholder
in the Holding Company Merger will be the same as the aggregate basis of
the shares of Loyola common stock exchanged therefor.
6. The holding period for shares of Crestar common stock
(including any fractional share interest) received by a Loyola shareholder
in the Holding Company Merger will include the holding period for the
shares of Loyola common stock exchanged therefor, if such shares of Loyola
common stock are held as a capital asset on the effective date of the
Holding Company Merger.
7. Cash received by a Loyola shareholder in lieu of
a fractional share of Crestar common stock will be treated as having been
received as full payment in exchange for such fractional share pursuant to
section 302(a) of the Code.
8. The Bank Merger, if any, will be a reorganiza-
tion within the meaning of section 368(a)(1)(A) and section 368(a)(1)(D) of
the Code.
9. Loyola F.S.B. will not recognize gain or loss (a) on the
transfer of its assets to Crestar Bank MD in exchange for the assumption of
liabilities and in constructive exchange for Crestar Bank MD stock or (b)
on the constructive distribution of Crestar Bank MD stock to Crestar. (We
note, however, that Loyola F.S.B. or Crestar Bank MD may be required to
include in income certain amounts as a result of (i) the termination of any
bad-debt reserve maintained by Loyola F.S.B. for federal income tax
purposes and (ii) other possible required changes in accounting methods.)
10. Crestar Bank MD will not recognize gain or loss
on the acquisition of Loyola F.S.B.'s assets in exchange for the assumption
of Loyola F.S.B.'s liabilities and in constructive exchange for Crestar
Bank MD stock. (We note, however, that Loyola F.S.B. or Crestar Bank MD
may be required to include in income certain amounts as a result of (i) the
termination of any bad-debt reserve maintained by Loyola F.S.B. for federal
income tax purposes and (ii) other possible required changes in accounting
methods.)
11. Crestar will not recognize gain or loss on the constructive
exchange of shares of Loyola F.S.B. stock for shares of Crestar Bank MD
stock in the Bank Merger.
12. The basis of the shares of Crestar Bank MD stock held by
Crestar will be increased by the basis of the shares of Loyola F.S.B. stock
outstanding at the time of the Bank Merger.
We are also of the opinion that the material federal income tax
consequences of the Holding Company Merger are fairly summarized in the S-4
under the headings "Summary--Certain Federal Income Tax Consequences of the
Merger" and "The Merger--Certain Federal Income Tax Consequences." We
consent to the use of this opinion as an exhibit to the S-4 and to the
reference to this firm under such headings. In giving this consent, we do
not admit that we are within the category of persons whose consent is
required by section 7 of the Securities Act of 1933 or the rules and
regulations promulgated thereunder by the Securities and Exchange Commis-
sion.
Very truly yours,
/s/ Hunton & Williams
Exhibit 8b
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
Baltimore, Maryland 21201-3018
410-539-2530
FAX: 410-539-0489
WASHINGTON
NEW YORK
PHILADELPHIA
EASTON
LONDON
June 26, 1995
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23219
Loyola Capital Corporation
1300 North Charles Street
Baltimore, Maryland 21201
Merger of Loyola Capital Corporation
Into Crestar Financial Corporation
Certain Federal Income Tax Consequences
Gentlemen:
We have acted as counsel to Loyola Capital Corporation ("Loyola") in connection
with the proposed merger of Loyola into Crestar Financial Corporation
("Crestar") (the "Holding Company Merger"). After the Holding Company Merger,
Crestar may cause Loyola Federal Savings Bank ("Loyola F.S.B."), currently a
wholly-owned subsidiary of Loyola, to merge into Crestar Bank MD, a wholly-owned
subsidiary of Crestar, or its successor (if any), which also will be a
wholly-owned subsidiary of Crestar (the "Bank Merger"). As used herein, Crestar
Bank MD refers to the existing Crestar Bank MD or such successor, as
appropriate.
In the Holding Company Merger, each outstanding share of Loyola common stock
(other than shares held by Crestar, excluding shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted) is to be converted
into a fraction of a share of Crestar common stock based on the average closing
price of Crestar common stock for the ten trading days ending on the tenth day
before the effective date of the Holding Company Merger (the "Effective Date").
However, a share of Loyola common stock will not be converted into less than
0.64 or more than 0.75 of a share of Crestar common stock, except that Crestar
may increase the exchange ratio to more than 0.75 of a share if such average
closing price is less than $40 per share and Loyola otherwise would exercise its
right to abandon the Holding Company Merger.
Any Loyola shareholder who becomes entitled to a fractional share of Crestar
common stock as a result of the Holding Company Merger, after aggregating all
the shareholder's shares of Loyola common stock, will receive cash from Crestar
in lieu of the fractional share. Loyola shareholders are not entitled to
exercise dissenter's rights with respect to the Holding Company Merger under
Maryland law.
You have requested our opinion concerning certain federal income tax
consequences of the Holding Company Merger and the Bank Merger. In giving this
opinion, we have reviewed the Agreement and Plan of Merger dated as of May 16,
1995 between Crestar and Loyola; the Plan of Merger relating to the Holding
Company Merger; the form S-4 Registration Statement under the Securities Act of
1933 relating to the Holding Company Merger (the "S-4"); and such other
documents as we have considered necessary.
In addition, we have assumed the following:
1. The fair market value of the Crestar common stock (including any fractional
share interest) received by a Loyola shareholder in exchange for Crestar common
stock will be approximately equal to the fair market value of the Loyola common
stock surrendered in the exchange.
2. None of the compensation received by any shareholder-employee of Loyola will
be separate consideration for, or allocable to, any shares of Loyola common
stock; none of the shares of Crestar common stock received by any
shareholder-employee in the Holding Company Merger will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any shareholder-employee will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm s length for similar services.
3. The payment of cash in lieu of fractional shares of Crestar common stock is
solely for the purpose of avoiding the expense and inconvenience to Crestar of
issuing fractional shares and does not represent separately bargained-for
consideration. The total cash consideration that will be paid in the Holding
Company Merger to Loyola shareholders in lieu of fractional shares of Crestar
common stock will not exceed one percent of the total consideration issued in
the Holding Company Merger to the Loyola shareholders in exchange for their
Loyola common stock.
4. No share of Loyola common stock has been or will be redeemed in anticipation
of the Holding Company Merger, and Loyola has not made and will not make any
extraordinary distribution with respect to its stock in anticipation of the
Holding Company Merger.
5. Crestar has no plan or intention to reacquire any of its stock issued in the
Holding Company Merger or to make any extraordinary distribution with respect to
such stock.
6. There is no plan or intention by shareholders of Loyola to sell, exchange, or
otherwise dispose of a number of shares of Crestar common stock received in the
Holding Company Merger that would reduce the Loyola shareholder s ownership of
Crestar common stock to a number of shares having a fair market value, as of the
Effective Date, of less than 50 percent of the fair market value of all the
formerly outstanding Loyola common stock as of the Effective Date. For this
purpose, shares of Loyola common stock exchanged for cash in lieu of fractional
shares of Crestar common stock are treated as outstanding Loyola common stock on
the Effective Date. Moreover, shares of Loyola common stock and shares of
Crestar common stock held by Loyola shareholders and otherwise sold, redeemed,
or disposed of before or after the Holding Company Merger are considered in
making the above determination.
7. Following the Holding Company Merger, Crestar will continue the historic
business of Loyola or use a significant portion of Loyola s historic business
assets in a business.
8. The liabilities of Loyola that will be assumed by Crestar and the
liabilities, if any, to which the transferred assets of Loyola are subject were
incurred by Loyola in the ordinary course of business.
9. There is no intercorporate indebtedness existing between Loyola and Crestar
that was issued or acquired or will be settled at a discount.
10. Neither Crestar nor any subsidiary of Crestar (a) has transferred or will
transfer cash or other property to Loyola or any subsidiary of Loyola for less
than fair market value consideration in anticipation of the Holding Company
Merger or the Bank Merger or (b) has made or will make any loan to Loyola or any
subsidiary of Loyola in anticipation of the Holding Company Merger or the Bank
Merger.
11. On the Effective Date, the fair market value of the assets of Loyola
transferred to Crestar will exceed the sum of Loyola s liabilities assumed by
Crestar plus the amount of liabilities, if any, to which the transferred assets
are subject.
12. Crestar has no plan or intention to sell or otherwise dispose of any of the
assets of Loyola acquired in the Holding Company Merger, except in the Bank
Merger.
13. Crestar, Crestar Bank MD, Loyola, Loyola F.S.B., and the shareholders of
Loyola will pay their respective expenses, if any, incurred in connection with
the Holding Company Merger and the bank Merger.
14. For each of Crestar, Crestar Bank MD, Loyola, and Loyola F.S.B., not more
than 25 percent of the fair market value of its total assets consists of stock
and securities of any one issuer, and not more than 50 percent of the fair
market value of its total assets, excluding cash, cash items (including accounts
receivable and cash equivalents), and United States government securities,
consists of stock and securities of five or fewer issuers. For purposes of the
preceding sentence, (a) a corporation s total assets exclude stock and
securities issued by any subsidiary at least 50 percent of the voting power or
50 percent of the total fair market value of the stock of which is owned by the
corporation, but the corporation is treated as owning directly a ratable share
(based on the percentage of the fair market value of the subsidiary s stock
owned by the corporation) of the assets owned by any such subsidiary, and (b)
all corporations that are members of the same controlled group within the
meaning of section 1563(a) of the Internal Revenue Code (the "Code") are treated
as a single issuer.
15. At all times during the five-year period ending on the effective date of the
Holding Company Merger, the fair market value of all of Loyola s United States
real property interests was and will have been less than 50 percent of the total
fair market value of (a) its United States real property interests, (b) its
interests in real property located outside the United States, and (c) its other
assets used or held for use in a trade or business. For purposes of the
preceding sentence, (x) United States real property interests include all
interests (other than an interest solely as a creditor) in real property and
associated personal property (such as movable walls and furnishings) located in
the United States or the Virgin Islands and interests in any corporation
(other than a controlled corporation) owning any United States real property
interest, (y) Loyola is treated as owning its proportionate share (based on the
relative fair market value of its ownership interest to all ownership interests)
of the assets owned by any controlled corporation or any partnership, trust, or
estate in which Loyola is a partner or beneficiary, and (z) any such entity in
turn is treated as owning its proportionate share of the assets owned by any
controlled corporation or any partnership, trust, or estate in which the entity
is a partner or beneficiary. As used in this paragraph, controlled corporation
means any corporation or at least 50 percent of the fair market value of the
stock of which is owned by Loyola, in the case of a first-tier subsidiary of
Loyola, or by a controlled corporation, in the case of a lower-tier subsidiary.
16. Any shares of Crestar common stock received in exchange for shares of Loyola
common stock that (a) were acquired in connection with the performance of
services, including stock acquired through the exercise of an option or warrant
acquired in connection with the performance of services, and (b) are subject to
a substantial risk of forfeiture within the meaning of section 83(a) of the Code
will be subject to substantially the same risk of forfeiture after the Holding
Company Merger.
17. No outstanding Loyola common stock acquired in connection with the
performance of services was or will have been acquired within six months before
the effective date of the Holding Company Merger by any person subject to
section 16(b) of the Securities Exchange Act of 1934 other than pursuant to an
option granted more than six months before the effective date of the Holding
Company Merger.
18. Neither Loyola nor Loyola F.S.B. has filed, and neither holds any asset
subject to, a consent pursuant to section 341(f) of the Code and regulations
thereunder.
19. Neither Loyola nor Loyola F.S.B. is a party to, and neither holds any asset
subject to, a safe harbor lease under former section 168(f)(8) of the Code and
regulations thereunder.
20. No share of Loyola F.S.B. stock has been or will be redeemed in anticipation
of the Bank Merger, and Loyola F.S.B. has not made and will not make any
extraordinary distribution with respect to its stock in anticipation of the Bank
Merger.
21. Crestar Bank MD has no plan or intention to reacquire any of its outstanding
stock or to make any extraordinary distribution with respect to such stock.
22. If the Bank Merger is effected, Crestar Bank MD will continue the historic
business of Loyola F.S.B. or use a significant portion of Loyola F.S.B. s
historic business assets in a business.
23. If the Bank Merger is effected, the liabilities of Loyola F.S.B. that will
be assumed by Crestar Bank MD and the liabilities, if any, to which the
transferred assets of Loyola F.S.B. are subject will have been incurred by
Loyola F.S.B. in the ordinary course of business.
24. There is no intercorporate indebtedness existing between Loyola F.S.B. and
Crestar Bank MD that was issued or acquired or will be settled at a discount.
25. If the Bank Merger is effected, on the effective date thereof, the adjusted
federal income tax basis and the fair market value of the assets of Loyola
F.S.B. transferred to Crestar Bank MD each will exceed the sum of Loyola F.S.B.
s liabilities assumed by Crestar Bank MD plus the amount of liabilities, if any,
to which the transferred assets are subject.
26. Crestar Bank MD has no plan or intention to sell or otherwise dispose of any
of the assets of Loyola F.S.B. to be acquired in the Bank Merger, except for
dispositions made in the ordinary course of business.
27. Crestar has no plan or intention to dispose of any Crestar Bank MD stock.
On the basis of the foregoing, and assuming that (a) with respect to any
nonresident alien or foreign entity that is a shareholder of Loyola, Loyola will
comply with all applicable statement and notification requirements (if any) of
Treasury Regulation [fcsec] 1.897-2(g) & (h), (b) the Holding Company Merger
will be consummated in accordance with the Plan of Merger, and (c) the Bank
Merger, if any, will be consummated in accordance with a plan of merger we have
approved as to form and substance, we are of the opinion that (under current
law) for federal income tax purposes:
1. The Holding Company Merger will be a reorganization within the meaning of
section 368 (a)(1)(A) of the Code.
2. Loyola will not recognize gain or loss (a) on the transfer of its assets to
Crestar in exchange for Crestar common stock and the assumption of Loyola s
liabilities or (b) on the constructive distribution of Crestar common stock to
Loyola shareholders.
3. Crestar will not recognize gain or loss on the acquisition of Loyola s assets
in exchange for Crestar common stock and the assumption of Loyola s liabilities.
4. A Loyola shareholder will not recognize gain or loss on the exchange of his
shares of Loyola common stock for shares of Crestar common stock (including any
fractional share interest) in the Holding Company Merger.
5. The aggregate basis of shares of Crestar common stock (including any
fractional share interest) received by a Loyola shareholder in the Holding
Company Merger will be the same as the aggregate basis of the shares of Loyola
common stock exchanged therefor.
6. The holding period for shares of Crestar common stock (including any
fractional share interest) received by a Loyola shareholder in the Holding
Company Merger will include the holding period for the shares of Loyola common
stock exchanged therefor, if such shares of Loyola common stock are hold as a
capital asset on the effective date of the Holding Company Merger.
7. Cash received by a Loyola shareholder in lieu of a fractional share of
Crestar common stock will be treated as having been received as full payment in
exchange for such fractional share pursuant to section 302(a) of the Code.
8. The Bank Merger, if any, will be a reorganization within the meaning of
section 368(a)(1)(A) and section 368(a)(1)(D) of the Code.
9. Loyola F.S.B. will not recognize gain or loss (a) on the transfer of its
assets to Crestar Bank MD in exchange for the assumption of liabilities and in
constructive exchange for Crestar Bank MD stock or (b) on the constructive
distribution of Crestar Bank MD stock to Crestar. (We note, however, that Loyola
F.S.B. or Crestar Bank MD may be required to include in income certain amounts
as a result of (i) the termination of any bad-debt reserve maintained by Loyola
F.S.B. for federal income tax purposes and (ii) other possible required changes
in accounting methods.)
10. Crestar Bank MD will not recognize gain or loss on the acquisition of Loyola
F.S.B. s assets in exchange for the assumption of Loyola F.S.B. s liabilities
and in constructive exchange for Crestar Bank MD stock. (We note, however, that
Loyola F.S.B. or Crestar Bank MD may be required to include in income certain
amounts as a result of (i) the termination of any bad-debt reserve maintained by
Loyola F.S.B. for federal income tax purposes and (ii) other possible required
changes in accounting methods.)
11. Crestar will not recognize gain or loss on the constructive exchange of
shares of Loyola F.S.B. stock for shares of Crestar Bank MD stock in the Bank
Merger.
12. The basis of the shares of Crestar Bank MD stock held by Crestar will be
increased by the basis of the shares of Loyola F.S.B. stock outstanding at the
time of the Bank Merger. We are also of the opinion that the material federal
income tax consequences of the Holding Company Merger are fairly summarized in
the S-4 under the headings Summary -- Certain Federal Income Tax Consequences of
the Merger and The Merger -- Certain Federal Income Tax Consequences. We
consent to the use of this opinion as an exhibit to the S-4 and to the reference
to this firm under such headings. In giving this consent, we do not admit that
we are within the category of persons whose consent is required by section 7 of
the Securities Act of 1933 or the rules and regulations promulgated thereunder
by the Securities and Exchange Commission.
Very truly yours,
/s/ Piper & Marbury L.L.P.
Exhibit 24(a)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Crestar Financial Corporation:
We consent to the use of our report included in Crestar
Financial Corporation's Annual Report on Form 10-K for the year ended
December 31, 1994 incorporated herein by reference and to the reference to
our firm under the heading "Experts" in the Proxy Statement/Prospectus.
Our report refers to a change in accounting for certain investments in debt
and equity securities.
/s/ KPMG Peat Marwick LLP
Richmond, Virginia
June 27, 1995
Exhibit 24(b)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Loyola Capital Corporation:
We consent to the use of our report included in Loyola Capital
Corporation's Annual Report on Form 10-K for the year ended December 31,
1994 incorporated herein by reference and to the reference to our firm
under the heading "Experts" in the Proxy Statement/Prospectus. Our report
refers to a change in accounting for income taxes.
/s/ KPMG Peat Marwick LLP
Baltimore, Maryland
June 27, 1995
Exhibit 24(c)
CONSENT OF ALEX. BROWN & SONS INCORPORATED
We hereby consent to the inclusion of our opinion dated June 16,
1995 as an Annex to the Proxy Statement/Prospectus filed as part of the
Registration Statement on Form S-4 of Crestar Financial Corporation, and to the
references to our firm as Financial Adviser to Loyola Capital Corporation and to
our opinion contained in said Proxy Statement/Prospectus. In giving such
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission.
ALEX. BROWN & SONS INCORPORATED
By: /s/ ROGER G. POWELL
Name: Roger G. Powell
Title: Vice President
June 27, 1995
LOYOLA CAPITAL CORPORATION
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints the Board of Directors of
Loyola Capital Corporation ("Loyola"), with full power of substitution, to
act as proxies for the undersigned and to vote all shares of common stock
of Loyola which the undersigned is entitled to vote at the Special Meeting
of Stockholders to be held on September 19, 1995, at 2:00 p.m., local time,
at The University of Baltimore, Langsdale Auditorium, 1420 Maryland Avenue
at Oliver Street, Baltimore, Maryland, and at any and all adjournments
thereof.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
This proxy, when properly executed, will be voted as directed
on the reverse side. If no direction is made, this proxy will be voted FOR
each of the proposals listed. If any other business is properly presented
at the Special Meeting, this proxy will be voted by the proxies in their
discretion.
(Continued, and to be marked, signed and dated, on the reverse side)
(Proxy Card, reverse side)
1. The approval and adoption of the Agreement and Plan of Merger
and related Plan of Merger dated as of May 16, 1995 (the
"Merger Agreement"), by and between Loyola and Crestar
Financial Corporation ("Crestar"), providing for the merger of
Loyola with and into Crestar (the "Merger") as more fully
described in the accompanying Proxy Statement/Prospectus
pursuant to which each share of common stock of Loyola
outstanding as of the effective date of the Merger will be
converted into and become a right to receive the number of
shares of common stock of Crestar (and associated stock rights)
as determined in the manner specified in the accompanying Proxy
Statement/Prospectus and the Merger Agreement.
FOR AGAINST ABSTAIN
( ) ( ) ( )
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting or any
adjournments or postponements thereof.
The undersigned acknowledges receipt prior to the execution of this proxy
of a Notice of Special Meeting of Stockholders and of a Proxy
Statement/Prospectus dated , 1995.
Please sign exactly as your
name appears on this card.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give your full title, if
shares are held jointly, each
holder may sign, but only one
signature is required.
Dated _______________, 1995
___________________________
Signature
___________________________
