As filed with the Securities and Exchange Commission on March 19, 1996
Registration No. 33-64195
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to
Form S-3 1/
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Crestar Financial Corporation
(Exact name of registrant as specified in its charter)
Virginia 54-0722175
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
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.
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
(804) 788-8269
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ___________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. _____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
1/ In addition, pursuant to Rule 429, this Registration Statement on Form S-3
constitutes Post-Effective Amendment No. 1 to Registration Statement No.
33-50387 on Form S-3 (filed by Registrant on September 24, 1993).
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of each class Amount to maximum maximum
of securities to be be offering aggregate
registered (1) registered price per offering Amount of
(2)(3) unit (3)(4) price (4)(5) registration fee
<S> <C> <C> <C> <C>
Debt Securities, --- --- $174,000,000(8) $60,000
Preferred Stock,
Depositary Shares,(6)
Common Stock and
Preferred Share Purchase
Rights(7) . . . . . . .
Common and Preferred --- --- --- ---
Stock(9) . . . . . . . .
</TABLE>
(1) This Registration Statement also covers such indeterminate amount of
securities as may be issued in exchange for, or upon conversion of, as the
case may be, the securities registered hereunder. In addition, any other
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(2) If any Debt Securities are issued at an original issue discount, then such
greater principal amount as shall result in an aggregate initial offering
price of $174,000,000. In no event will the aggregate initial offering
price of Debt Securities, Preferred Stock, Depositary Shares, Preferred
Share Purchase Rights and Common Stock issued under this Registration
Statement and not previously registered under the Securities Act of 1933, as
amended (the "Securities Act"), exceed $174,000,000.
(3) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3 under the Securities Act.
(4) The proposed maximum offering price per unit will be determined from time to
time by the Registrant in connection with, and at the time of, the issuance
by the Registrant of the securities registered hereunder.
(5) Estimated solely for the purposes of computing the registration fee pursuant
to Rule 457(o) of the Rules and Regulations of the Securities and Exchange
Commission (the "Commission") under the Securities Act.
(6) Such indeterminate number of Depositary Shares to be evidenced by Depositary
Receipts issued pursuant to a Deposit Agreement. In the event the
Registrant elects to offer to the public fractional interests in shares of
the Preferred Stock registered hereunder, Depositary Receipts will be
distributed to those persons purchasing such fractional interests and such
shares will be issued to the Depositary Bank under the Deposit Agreement.
(7) The Rights to purchase Participating Cumulative Preferred Stock, Series C,
will be attached to and trade with shares of the Common Stock.
(8) No separate consideration will be received for any securities registered
hereunder that are issued in exchange for, or upon conversion of, other
securities registered hereunder.
(9) The maximum amount of Common and Preferred Stock to be registered with
respect to a series of Debt Securities is equal to the aggregate principal
amount of the Debt Securities of such series divided by the Market Value (as
defined in the applicable Indenture) of the Common and Preferred Stock on
the date of issuance. No additional consideration will be paid for the
Common and Preferred Stock registered hereunder.
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 the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act, or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
PROSPECTUS
$174,000,000
Crestar Financial Corporation
Debt Securities
Preferred Stock
Common Stock
Crestar Financial Corporation ("Crestar" or the "Company") intends to issue
from time to time in one or more series up to $174,000,000 of its (i) unsecured
subordinated debt securities (the "Debt Securities"), (ii) shares of preferred
stock (the "Preferred Stock"), which may be issued in the form of depositary
shares evidenced by depositary receipts (the "Depositary Shares"), or (iii)
shares of common stock (the "Common Stock"), on terms to be determined at the
time of sale (the Debt Securities, Preferred Stock, Depositary Shares and Common
Stock, collectively, the "Securities"). The Securities offered hereby
(collectively, the "Offered Securities") may be offered separately or as units
with other Offered Securities, in separate series in amounts, at prices and on
terms to be determined at the time of sale and to be set forth in a supplement
to this Prospectus (a "Prospectus Supplement").
The Debt Securities will be subordinate to all existing and future Senior
Indebtedness, as defined in the Indenture (as defined herein). The holders of
Debt Securities of any series may be obligated at maturity to exchange such Debt
Securities for Common or Preferred Stock of the Company. Unless otherwise
indicated in the applicable Prospectus Supplement, the maturity of the Debt
Securities will be subject to acceleration only in the event of certain events
of bankruptcy or reorganization of the Company. See "Description of Debt
Securities."
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable, (i) in the case of
Debt Securities, the specific designation, aggregate principal amount, currency,
denomination, maturity, priority, interest rate (which may be variable or
fixed), time of payment of interest, terms for optional redemption or repayment
or for sinking fund payments, terms for conversion into or exchange for Common
or Preferred Stock or other Offered Securities, and the initial public offering
price; (ii) in the case of Preferred Stock, the specific title and stated value,
number of shares or fractional interests therein, and the dividend, liquidation,
redemption, conversion, voting and other rights, the initial public offering
price, and whether interests in the Preferred Stock will be represented by
Depositary Shares; (iii) in the case of Common Stock, the initial offering
price; and (iv) in the case of all Offered Securities, whether such Offered
Security will be offered separately or as a unit with other Offered Securities,
will be set forth in a Prospectus Supplement. The Prospectus Supplement will
also contain information, where applicable, about certain United States federal
income tax considerations relating to, and any listing on a securities exchange
of, the Offered Securities covered by the Prospectus Supplement.
The Offered Securities may be sold for public offering to underwriters or
dealers, which may be a group of underwriters represented by one or more
managing underwriters, or through such firms or other firms acting alone or
through dealers. The Offered Securities may also be sold through agents to
investors. See "Plan of Distribution." The names of any agents, dealers or
managing underwriters, and of any underwriters, involved in the sale of the
Offered Securities in respect of which this Prospectus is being delivered and
the applicable agent's commission, dealer's purchase price or underwriter's
discount will be set forth in the Prospectus Supplement. The net proceeds to
the Company from such sale will also be set forth in the Prospectus Supplement.
Any underwriters, dealers or agents participating in the offering of Offered
Securities may be deemed "underwriters" within the meaning of the Securities Act
of 1933, as amended (the "Securities Act").
This Prospectus may not be used to consummate the sale of the Securities
unless accompanied by a Prospectus Supplement.
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
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1995.
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company or any underwriter,
agent or dealer. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication that there
has been no change in the affairs of the Company since the date hereof.
This Prospectus does not constitute an offer or solicitation by anyone in
any jurisdiction in which such offer or solicitation is not authorized or
in which the person making such offer or solicitation is not qualified to
do so or to anyone to whom it is unlawful to make such offer or
solicitation.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade
Center, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy
statements and other information concerning the Company may also be
inspected at the offices of the New York Stock Exchange, Inc. at 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission in Washington, D.C. a
Registration Statement on Form S-3 (together with all amendments and
exhibits thereto, the "Registration Statement") under the Securities Act
with respect to the Securities to which this Prospectus relates. As
permitted by the rules and regulations of the Commission, this Prospectus
does not contain all the information set forth in the Registration
Statement, including the exhibits thereto, which may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
Section 13 of the Exchange Act are hereby incorporated by reference in this
Prospectus: (i) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, including Crestar's Form 10-K/A Amendment No. 1 to Form
10-K for the year ended December 31, 1994, and Crestar's Form 10- K/A Amendment
No. 2 to Form 10-K for the year ended December 31, 1994 annual reports for the
Crestar Employees' Thrift and Profit Sharing Plan and the Crestar Merger Plan
for Transferred Employees, respectively; (ii) the Company's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1995, June 30, 1995 and September 30,
1995; (iii) the section entitled "Pro Forma Condensed Financial Information"
contained in the Company's Registration Statement on Form S-4 No. 33-60637 and
the Proxy Statement/Prospectus dated September 14, 1995 included therein; (iv)
the description of Crestar Common Stock in Crestar's registration statement
filed under the Exchange Act with respect to Crestar Common Stock on July 1,
1993; and (v) the description of the Rights in Crestar's registration statement
on Form 8-A filed under the Exchange Act with respect to the Rights on June 26,
1989.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which is deemed to be incorporated
by reference herein modifies or supersedes such earlier statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus or the Prospectus
Supplement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(other than exhibits to such documents). Written or telephone requests should
be directed to Crestar Financial Corporation, 919 East Main Street, P.O. Box
26665, Richmond, Virginia 23261-6665, Attention: Eugene S. Putnam, Jr., Senior
Vice President, (804) 782-5619.
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 September 30, 1995, Crestar had approximately $14.762
billion in total assets, $10.871 billion in total deposits and $1.258 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 332 banking offices and 296
automated teller machines (as of September 30, 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.
On December 31, 1995, Crestar completed its acquisition of Loyola Capital
Corporation, the holding company for Loyola F.S.B., a federally chartered stock
savings bank headquartered in Baltimore, Maryland. Loyola F.S.B. was renamed
Crestar Bank FSB.
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.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be used for general
corporate purposes, including Crestar's working capital needs, the funding of
investments in, or extensions of credit to, Crestar's banking and nonbanking
subsidiaries, possible acquisitions of other financial institutions or their
assets, possible acquisitions of failed financial institutions offered for sale
by regulatory authorities, possible acquisitions of, or investments in, other
businesses of a type eligible for bank holding companies and possible reduction
of outstanding indebtedness or repurchase of outstanding equity securities of
Crestar. Pending such use, Crestar may temporarily invest the net proceeds in
investment grade securities. Based upon its historical and anticipated future
growth, including future acquisitions, and the financial needs of its
subsidiaries, Crestar may engage in additional financings of a character and in
amounts to be determined as the need arises.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges and
the ratios of earnings to combined fixed charges and preferred stock dividend
requirements for each of the periods indicated:
Nine Months
Ended Year Ended
September 30, December 31,
1995 1994 1994 1993 1992 1991 1990
Earnings to fixed charges:
Excluding interest on deposits 3.7 4.7 4.5 4.0 2.6 1.3 1.4
Including interest on deposits 1.7 1.7 1.7 1.7 1.3 1.1 1.1
Earnings to combined fixed charges
and preferred stock dividend
requirements:
Excluding interest on deposits 3.7 4.7 4.5 3.9 2.5 1.3 1.3
Including interest on deposits 1.7 1.7 1.7 1.6 1.2 1.1 1.1
For purposes of computing the preceding ratios, earnings represent pre-tax
income from continuing operations plus fixed charges. Fixed charges represent
interest expense (exclusive of interest on deposits in one case and inclusive of
such interest in the other), capitalized interest, amortization of debt issuance
costs, and one-third (the amount deemed to represent an appropriate interest
factor) of rent expense (net of income from subleases) under lease commitments.
Preferred stock dividend requirements represent pre-tax earnings that would be
required to cover preferred stock dividends on outstanding preferred stock.
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 Board of Governors of the Federal Reserve System (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 Federal Deposit Insurance
Corporation (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 September 30, 1995 were 9.2% and 12.9% 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 September 30, 1995, was 7.6% 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
require institutions to use a regulator risk model to measure interest rate risk
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 September 30, 1995, the Bank Subsidiaries could have paid
additional dividends to Crestar of approximately $223.0 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 September 30, 1995,
approximately $147 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 State Corporation Commission, the Maryland Bank Commissioner
and the Office of the Comptroller of the Currency, as the case may be. Crestar
Bank FSB, a federally chartered thrift, is supervised and examined by the Office
of Thrift Supervision. The Bank Subsidiaries and Crestar Bank FSB are 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 and Crestar Bank FSB. In addition to the effect of
regulation, the Bank Subsidiaries and Crestar Bank FSB 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 and Crestar Bank FSB 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 and Crestar Bank FSB
have attained either an "outstanding" or "satisfactory" rating on their most
recent CRA performance evaluations.
In April, 1995, each of the federal banking agencies and the OTS 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 effect on Crestar's business practices, it is not
anticipated that any changes will be material.
As institutions with deposits insured by BIF and SAIF, the Bank
Subsidiaries and Crestar Bank FSB are subject to insurance assessments imposed
by the FDIC based on a risk-based assessment. The actual assessment paid 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.
The Bank Subsidiaries currently pay at a rate of 0.04% on their BIF deposits and
at a rate of 0.23% on their SAIF deposits. Crestar Bank FSB pays at a rate of
0.23% as all of its deposits are SAIF insured.
There is currently pending in Congress a proposal to recapitalize SAIF by
imposing a one-time assessment on SAIF deposits. The assessment is expected to
be approximately 80 basis points and would be based on the amount of SAIF
deposit balances. Banks with SAIF deposits ("Oakar institutions"), such as the
Bank Subsidiaries, may be entitled to a proposed 20% reduction in the
assessment. Under the current language of the proposal, Crestar Bank FSB would
pay the full assessment. An 80 basis point assessment would, after the 20%
Oakar reduction for the Bank Subsidiaries' SAIF deposits, negatively affect
Crestar's after-tax earnings by approximately $25 million. Conversely, future
earnings of Crestar should be augmented by a lower SAIF assessment rate. Absent
a one-time SAIF assessment, the Bank Subsidiaries and Crestar Bank FSB will
continue to pay a higher premium rate on their SAIF-insured deposits. Crestar
Bank FSB's deposits are SAIF-insured and are subject to the SAIF-assessment
rate, regardless of whether or when Crestar Bank FSB at some later date is
merged into a Bank Subsidiary, unless there is a merger of BIF and SAIF.
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 annually
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. Such
reports are available for public inspection.
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. Recently,
the federal bank regulatory agencies issued safety and soundness standards for
insured depository institutions relating to internal controls, information and
internal audit systems, loan documentation, credit underwriting, interest rate
exposure and asset growth, as well as for compensation, fees, and benefits.
Proposed standards for asset quality and earnings have been published for
comment and will probably be added to the guidelines at a later time. The
guidelines set forth broad, principle-based standards but leave the methods for
achieving those objectives to each institution. For institutions that fail to
meet the guidelines, the agencies may establish deadlines for submission and
review of safety and soundness guidelines. Crestar believes that it is in
compliance with the new and proposed guidelines in all material respects.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, dated as of
September 1, 1993 (the "Indenture"), between the Company and Chemical Bank, as
Trustee (the "Trustee"). A copy of the Indenture is an exhibit to the
Registration Statement of which this Prospectus forms a part. The following
summaries of certain provisions of the Indenture do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definitions therein of certain terms.
Whenever particular Sections, Articles or defined terms of the Indenture are
referred to, it is intended that such Sections, Articles or defined terms shall
be incorporated herein by reference. The following sets forth certain general
terms and provisions of the Debt Securities offered hereby. Further terms of
the Offered Securities will be set forth in the applicable Prospectus
Supplement.
General
The Debt Securities to be offered by this Prospectus are limited to
$174,000,000 in aggregate principal amount of unsecured subordinated debt
obligations of the Company. However, the Indenture does not limit the aggregate
principal amount of Debt Securities which may be issued thereunder and provides
that Debt Securities may be issued thereunder from time to time in one or more
series. (Section 301) $150,000,000 principal amount of 8-3/4% Subordinated
Notes due November 15, 2004 are currently issued and outstanding under the
Indenture, and the Company has $175,000,000 aggregate principal amount of
subordinated debt securities outstanding under an Indenture, dated as of
February 1, 1985 (the "Prior Indenture"), as supplemented by a First
Supplemental Indenture dated as of March 1, 1986, a Second Supplemental
Indenture dated as of September 1, 1986, and a Third Supplemental Indenture
dated as of July 1, 1992, between the Company and the Trustee. Neither the
Indenture nor the Debt Securities will limit or otherwise restrict the amount of
other indebtedness which may be incurred or the other Debt Securities which may
be issued by the Company or any of its Subsidiaries. The Debt Securities will
not be deposits or other obligations of a bank and will not be insured by the
FDIC.
Because the Company is a holding company, its rights and the rights of its
creditors, including any Holder of the Securities offered hereby, to participate
in any distribution of the assets of any subsidiary of the Company upon the
latter's liquidation or recapitalization will be subject to the prior claims of
such subsidiary's creditors (including, in the case of a Bank Subsidiary, its
depositors), except to the extent that the Company may itself be a creditor with
recognized claims against such subsidiary. Claims on subsidiaries of the
Company by creditors other than the Company include claims with respect to
long-term debt and substantial obligations with respect to deposit liabilities,
federal funds purchased, securities sold under repurchase agreements and other
short-term borrowings.
Unless otherwise indicated in the applicable Prospectus Supplement, the
maturity of the Debt Securities will be subject to acceleration only in the
event of certain events of bankruptcy or reorganization of the Company. See "-
Events of Default and Rights of Acceleration."
The holders of Debt Securities of a specified series that are convertible
into Common Stock ("Convertible Debt Securities") will be entitled at certain
times specified in the Prospectus Supplement relating to such Convertible Debt
Securities, subject to prior redemption, repayment or repurchase, to convert any
Convertible Debt Securities of such series into Common Stock, at the conversion
price set forth in such Prospectus Supplement, subject to adjustment and to such
other terms as are set forth in such Prospectus Supplement.
The holders of Debt Securities of any series may be obligated at maturity,
or at any earlier time as set forth in the Prospectus Supplement relating to
such series, to exchange them for Common or Preferred Stock of the Company. The
terms of any such exchange and the Common or Preferred Stock issuable upon such
exchange will be described in the Prospectus Supplement relating to such series
of Debt Securities. (Article Thirteen) Whenever Debt Securities are
exchangeable for Common or Preferred Stock, the Company will be obligated to
deliver Common or Preferred Stock with a market value equal to the principal
amount of such Debt Securities. In addition, the Company will unconditionally
undertake, at the expense of the Company, to sell the Common or Preferred Stock
in a sale (the "Secondary Offering") on behalf of any holders who elect to
receive cash for the Common or Preferred Stock. The Common Stock is described
below under "Description of Common Stock." A general description of the
Preferred Stock of the Company is set forth below under "Description of
Preferred Stock."
The staff of the Commission has advised the Company that Rule 13e-4 of the
Commission's rules and regulations relating to tender offers by issuers, as
currently in effect and interpreted, would be applicable to the exchange of Debt
Securities of any series for Common or Preferred Stock and to any Secondary
Offering. If, at the time of the exchange of Debt Securities of any series for
Common or Preferred Stock and the Secondary Offering, Rule 13e-4 (or any
successor rule or rules) applies to such transactions, the Company will comply
with such rule (or any successor rule or rules) and will afford holders of such
Debt Securities all rights and will make all filings required by such rule (or
successor rule or rules). If fewer than all of the Debt Securities of a series
may be exchanged for Common or Preferred Stock pursuant to the terms of such
Debt Securities, the particular Debt Securities to be exchanged shall be
selected by the Trustee utilizing a method the Trustee deems fair and equitable,
provided that such method shall comply with the requirements of applicable law,
including federal securities law.
Reference is made to the applicable Prospectus Supplement for the specific
terms of the series of Debt Securities offered thereby including (1) the title
of the Debt Security; (2) the aggregate principal amount and denominations; (3)
the maturity or maturities; (4) the price to be received by the Company from the
sale of such Debt Securities; (5) the interest rate or rates (or the method of
calculation thereof) to be established for the Debt Securities, which rate or
rates may vary from time to time; (6) the date or dates on which principal of
the Debt Securities is payable; (7) the date or dates from which interest on the
Debt Securities shall accrue and the payment and record date or dates for
payments of interest or the methods by which any such dates will be determined;
(8) the place or places where principal of (premium, if any) and interest, if
any, on the Debt Securities is payable; (9) the terms of any sinking fund and
analogous provisions with respect to the Debt Securities; (10) the respective
redemption and repayment rights, if any, of the Company and of the holders of
the Debt Securities and the related redemption and repayment prices and any
limitations on such redemption or repayment rights; (11) any provisions relating
to the conversion or exchange of the Debt Securities; (12) any addition to or
change in the affirmative or negative covenants, if any, to be imposed upon the
Company relating to any of the Debt Securities; (13) any trustee or fiscal or
authenticating or payment agent, issuing and paying agent, transfer agent or
registrar or any other person or entity to act in connection with such Debt
Securities for or on behalf of the holders thereof or the Company or an
affiliate; (14) whether such Debt Securities are to be issuable initially in
temporary global form and whether any such Debt Securities are to be issuable in
permanent global form and, if so, whether beneficial owners of interests in any
such permanent global security may exchange such interests for Debt Securities
of like tenor of any authorized form and denomination and the circumstances
under which any such exchanges may occur; (15) the listing of the Debt
Securities on any securities exchange or inclusion in any other market or
quotation or trading system; and (16) any other specific terms, conditions and
provisions of the Debt Securities.
Unless otherwise provided in the Prospectus Supplement, principal of and
any premium and interest on the Debt Securities shall be payable, and the
transfer of the Debt Securities will be registrable, at the office of the
Trustee, except that, at the option of the Company, interest may be paid by
mailing a check to the address of the person entitled thereto as it appears on
the register for the Debt Securities. (Sections 305 and 1002)
Unless otherwise indicated in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form without coupons and in
denominations of $1,000 or any integral multiple thereof. (Section 302) No
service charge will be made for any registration of transfer or exchange of the
Debt Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(Sections 302 and 305)
Debt Securities may be issued as Original Issue Discount Securities (as
defined in the Indenture) to be sold at a substantial discount below their
principal amount. Special federal income tax and other considerations
applicable thereto will be described in the Prospectus Supplement relating
thereto.
Global Securities
The Debt Securities of a series may be issued in the form of one or more
fully registered securities in global form (each, a "Global Security") that will
be deposited with, or on behalf of, a depositary (the "Depositary") identified
in the Prospectus Supplement relating to such series and will be registered in
the name of the Depositary or its nominee. In such case, one or more Global
Securities will be issued in a denomination or aggregate denominations equal to
the aggregate principal amount of outstanding Debt Securities of the series
represented by such Global Security or Securities. Unless and until any such
Global Security is exchanged in whole or in part for Debt Securities in
definitive certificated form, such Global Security may not be transferred except
as a whole by the Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor and except as
described in the applicable Prospectus Supplement. (Section 303)
The specific terms of the depositary arrangement with respect to a series
of Debt Securities to be represented by a Global Security will be described in
the Prospectus Supplement relating to such series. The Company anticipates that
the following provisions will apply to all depositary arrangements.
Upon the issuance of any Global Security, and the deposit of such Global
Security with or on behalf of the Depositary for such Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of institutions ("participants") that have accounts
with such Depositary or its nominee. The accounts to be credited will be
designated by the underwriters or agents engaging in the distribution or
placement of such Debt Securities or by the Company, if such Debt Securities are
offered and sold directly by the Company. Ownership of beneficial interests in
such Global Security will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests by
participants in such Global Security will be shown by book-keeping entries on,
and the transfer of that ownership interest will be effected only through
book-keeping entries to, records maintained by the Depositary or its nominee for
such Global Security. Ownership of beneficial interests in such Global Security
by persons that hold through participants will be shown by book-keeping entries
on, and the transfer of that ownership interest among or through such
participants will be effected only through book-keeping entries to, records
maintained by such participants. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive certificated form rather than book-entry form. Such laws may impair
the ability to own, transfer or pledge beneficial interests in any Global
Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as set forth below or otherwise specified in the applicable
Prospectus Supplement, owners of beneficial interests in a Global Security will
not be entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in definitive certificated
form and will not be considered the holders thereof for any purposes under the
Indenture. Accordingly, each person owning a beneficial interest in such Global
Security must rely on the procedures of the Depositary and, if such person is
not a participant, on the procedures of the participant through which such
person directly or indirectly owns its interest, to exercise any rights of a
holder under the Indenture. The Indenture provides that the Depositary may
grant proxies and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action which
a holder is entitled to give or take under the Indenture. (Section 104) The
Company understands that under existing industry practices, if the Company
requests any action of holders or any owner of a beneficial interest in such
Global Security desires to give any notice or take any action that a holder is
entitled to give or take under the Indenture, the Depositary for such Global
Security would authorize the participants holding the relevant beneficial
interest to give such notice or take such action, and such participants would
authorize beneficial owners owning through such participants to give such notice
or take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Principal and any premium and interest payments on Debt Securities
represented by a Global Security registered in the name of a Depositary or its
nominee will be made to such Depositary or its nominee, as the case may be, as
the registered owner of such Global Security. None of the Company, the Trustee
or any paying agent for such Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in any Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. (Section 308)
The Company expects that the Depositary for any series of Debt Securities
represented by a Global Security, upon receipt of any payment of principal,
premium or interest, will credit immediately participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security or Securities held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in "street name," and will be the responsibility of such participants.
If the Depositary for any series of Debt Securities represented by a Global
Security is at any time unwilling or unable to continue as Depositary and a
successor Depositary is not appointed by the Company within 90 days, the Company
will issue such Debt Securities in definitive certificated form in exchange for
such Global Security. In addition, the Company may at any time and in its sole
discretion determine not to have the Debt Securities of a series represented by
one or more Global Securities and, in such event, will issue Debt Securities of
such series in definitive certificated form in exchange for the Global Security
representing such series of Debt Securities. (Section 305)
Further, an owner of a beneficial interest in a Global Security
representing Debt Securities of a series may, on terms acceptable to the Company
and the Depositary for such Global Security, receive Debt Securities of such
series in definitive certificated form, if the Company so specifies with respect
to the Debt Securities of such series. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to have Debt
Securities of the series represented by such Global Security equal in principal
amount to such beneficial interest registered in its name and will be entitled
to physical delivery of such Debt Securities in definitive certificated form.
Debt Securities of such series so issued in definitive certificated form will,
except as set forth in the applicable Prospectus Supplement, be issued in
denominations of $1,000 and integral multiples thereof and will be issued in
registered form. (Section 305)
Subordination of Debt Securities
The obligations of the Company to make any payment on account of the
principal of and premium, if any, and interest on the Debt Securities will be
subordinate and junior in right of payment, to the extent set forth in the
Indenture, to all Senior Indebtedness (as defined in the Indenture) of the
Company. (Article 15) In the event that the Company shall default in the
payment of any principal of or any premium or interest on any Senior
Indebtedness when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration of acceleration or otherwise, then,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no direct or indirect payment (in cash, property, securities by
set-off or otherwise) will be made or agreed to be made for principal of or any
premium or interest on the Debt Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Debt Securities.
(Section 1501) Senior Indebtedness is defined in the Indenture generally as any
debt for borrowed money other than that which is expressly made pari passu or
subordinate to the Debt Securities, together with certain obligations of general
creditors.
The Indenture does not limit or prohibit the incurrence of Senior
Indebtedness. As of September 30, 1995, the Company had approximately $166
million of outstanding indebtedness within the definition of Senior Indebtedness
and $325 million of indebtedness subordinated to Senior Indebtedness.
In the event of (1) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company, its creditors or its property; (2) any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings; (3)
any assignment by the Company for the benefit of creditors; or (4) any other
marshalling of the assets of the Company, all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such proceedings) shall
first be paid in full before any payment or distribution, whether in cash,
securities or other property, is made to any holder of any of the Debt
Securities on account thereof. In such event, any payment or distribution on
account of the principal of or any premium or interest on the Debt Securities,
whether in cash, securities or other property (other than securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in the subordination provisions with respect to the Debt Securities, to
the payment of all Senior Indebtedness at the time outstanding, and to any
securities issued in respect thereof under any such plan of reorganization or
readjustment), which would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Debt Securities, shall be paid or
delivered directly to the holders of Senior Indebtedness in accordance with the
priorities then existing among such holders until all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) has been paid in full. In the event of any such proceeding, after
payment in full of all sums owing with respect to Senior Indebtedness, the
Holder or Holders of Debt Securities, together with the holders of any
obligations of the Company ranking on a parity with the Debt Securities, shall
be entitled to be paid from the remaining assets of the Company the amounts at
the time due and owing on account of unpaid principal of (and premium, if any)
and interest on the Debt Securities and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, shall be
made on account of any capital stock or obligations of the Company ranking
junior to the Debt Securities and such other obligations. If any payment or
distribution on account of the principal of or any premium or interest on the
Debt Securities of any character, whether in cash, securities or other property
(other than securities of the Company or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in the subordination provisions with respect to the
Debt Securities, to the payment of all Senior Indebtedness at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), or any security shall be received by the
Trustee or any Holder of any Debt Securities in contravention of any of the
terms of the Indenture and before all the Senior Indebtedness shall have been
paid in full, such payment or distribution or security will be received in trust
for the benefit of, and will be paid over or delivered and transferred to, the
holders of the Senior Indebtedness at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment
of all Senior Indebtedness remaining unpaid to the extent necessary to pay all
such Senior Indebtedness in full. (Section 1501)
By reason of such subordination, in the event of the insolvency of the
Company, holders of Senior Indebtedness may receive more, ratably, and any
Holder or Holders of the Debt Securities having a claim pursuant to such Debt
Securities may receive less, ratably, than the other creditors of the Company.
Such subordination will not prevent the occurrence of an Event of Default in
respect of the Debt Securities. See "- Events of Default and Rights of
Acceleration" for limitations on the right of acceleration.
No Restriction on Sale or Issuance of Stock of Crestar Bank
The Indenture contains no covenant that the Company will not sell, transfer
or otherwise dispose of any shares of, or securities convertible into, or
options, warrants, or rights to subscribe for or purchase shares of, voting
stock of any of its subsidiaries, including Bank Subsidiaries, nor does it
prohibit any subsidiary from issuing any shares of, securities convertible into,
or options, warrants or rights to subscribe for or purchase shares of, voting
stock of such subsidiary.
However, the Prior Indenture prohibits the issuance, sale, assignment,
transfer or other disposition of shares of, or securities convertible into, or
options, warrants or rights to subscribe for, or purchase shares of, Voting
Stock (as defined below) of the Bank (as defined below) if, after giving effect
to any such transaction and to the issuance of the maximum number of shares of
Voting Stock of the Bank issuable upon the exercise of all such convertible
securities, options, warrants or rights, the Company would own, directly or
indirectly, 80% or less of the shares of the Bank, except that the covenant does
not prohibit such sales, assignments, transfers or dispositions (1) made in
compliance with an order of a court or regulatory authority of competent
jurisdiction or made as a condition imposed by such court or authority to the
acquisition by the Company, directly or indirectly, of any other corporation or
entity or (2) when the proceeds are within 270 days, or such longer period of
time as may be necessary to obtain regulatory approval in connection therewith,
to be invested pursuant to an understanding or agreement in principle reached at
the time of such sale, assignment, transfer or disposition in a Controlled
Subsidiary (as defined below) (including any person which upon such investment
becomes a Controlled Subsidiary) engaged in a banking business or any other
business then legally permissible for bank holding companies. The Prior
Indenture also prohibits (1) the merger or consolidation of the Bank with or
into any other corporation unless the surviving corporation is, or upon
consummation of the merger or consolidation will become, a Controlled Subsidiary
and (2) the lease, sale or transfer of all or substantially all of the
properties and assets of the Bank to any corporation or other person, except to
a Controlled Subsidiary or a person that, upon such lease, sale or transfer,
will become a Controlled Subsidiary. The term "Bank" is defined in the Prior
Indenture to mean Crestar Bank of Virginia and (i) any successor or successors
to all or substantially all the business of Crestar Bank of Virginia as
presently constituted and (ii) any surviving corporation or transferee
corporation described in the foregoing covenant. The term "Controlled
Subsidiary" is defined in the Prior Indenture to mean a Subsidiary more than 80%
of the outstanding shares of Voting Stock of which is owned by the Company
and/or other Controlled Subsidiaries. The term "Voting Stock" is defined to
mean stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
Consolidation, Merger and Sale of Assets
The Company, without the consent of the Holder or Holders of any of the
outstanding Debt Securities, may consolidate or merge with or into, or convey,
transfer or lease its properties and assets substantially as an entirety, to any
corporation organized under the laws of any domestic jurisdiction, provided that
the successor corporation assumes the Company's obligations on the Debt
Securities and under the Indenture and that after giving effect to the
transaction no Event of Default, and no event which, after notice or lapse of
time would become an Event of Default, has occurred and is continuing, and that
certain other conditions are met. (Section 801)
Events of Default and Rights of Acceleration
Events of Default. The Indenture defines an Event of Default with respect
to any series of Debt Securities as being certain events involving the
bankruptcy or reorganization of the Company and such other events as may be
established for the Debt Securities of a particular series. (Section 501) No
Event of Default with respect to a particular series of Debt Securities issued
under the Indenture necessarily constitutes an Event of Default with respect to
any other series of Debt Securities issued thereunder. If an Event of Default
with respect to Debt Securities of any series at the time outstanding occurs and
is continuing, either the Trustee or the Holder or Holders of at least 25% in
aggregate principal amount of the outstanding Debt Securities of that series may
declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of all the Debt Securities of that
series to be due and payable immediately. At any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on acceleration has been obtained, the Holder
or Holders of a majority in aggregate principal amount of outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration. (Section 502)
Limited Rights of Acceleration. The Indenture does not provide for any
right of acceleration of the payment of principal of the Debt Securities upon a
default in the payment of principal or any premium or interest or in the
performance of any covenant or agreement in the Debt Securities or Indenture.
In the event of a default in the payment of principal or any premium or interest
or the performance of any covenant or agreement in the Indenture, the Trustee
may, subject to certain limitations and conditions, seek to enforce payment of
such principal, premium, if any, or interest (including the delivery of any
Common or Preferred Stock in exchange for Debt Securities), or the performance
of such covenant or agreement. (Section 503)
The Indenture provides that, subject to the duty of the Trustee in the case
of an Event of Default to act with the required standard of care, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holder
or Holders shall have offered to the Trustee reasonable indemnity. (Sections
601 and 603) Subject to such provisions for the indemnification of the Trustee,
the Holder or Holders of a majority in aggregate principal amount of the
outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee with
respect to the Debt Securities of that series. (Section 512)
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 1007)
Modification and Waiver
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holder or Holders of a majority in
principal amount of the Debt Securities of all affected series; provided,
however, that no such modification or amendment may, without the consent of the
Holder or Holders of all of the outstanding Debt Securities affected thereby,
(i) change the stated maturity date of the principal of, or any installment of
principal of (or premium, if any) or any interest on, any Debt Security; (ii)
reduce the principal amount of (or premium, if any), or interest on, any Debt
Security, change the method of calculation thereon or reduce the amount payable
on redemption thereof; (iii) reduce the amount of principal of a Debt Security
payable upon acceleration of the maturity thereof; (iv) change the place or
currency of payment of principal of (or premium, if any), or interest on, any
Debt Security; (v) impair the rights of any Holder of any Debt Securities to
conversion rights; (vi) impair the right to institute suit for the enforcement
of any payment on or with respect to any Debt Security; or (vii) reduce the
percentage in principal amount of the Debt Security, the consent of whose Holder
or Holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults. (Sections 901 and 902)
The Holder or Holders of a majority in principal amount of the Debt
Securities of all affected series may, on behalf of the Holder or Holders of
such Debt Securities, waive compliance by the Company with certain restrictive
provisions of the Indenture. The Holder or Holders of a majority in principal
amount of the Debt Securities of all affected series also may, on behalf of the
Holder or Holders of all such Debt Securities, waive any past default under the
Indenture with respect to such Debt Securities, except a default in the payment
of the principal (or premium, if any), or interest on, any Debt Security or in
respect of a provision which under the Indenture cannot be modified or amended
without the consent of the Holder or Holders of all of the outstanding Debt
Securities affected thereby. (Section 513)
Regarding the Trustee
Chemical Bank is the Trustee under the Indenture. Notice to Chemical Bank
should be directed to its Corporate Trust Office, 55 Water Street, New York, New
York 10041, Attention: Corporate Trustee Administration Department. Chemical
Bank serves as trustee with respect to $50,000,000 aggregate principal amount of
the Company's 8 5/8% Subordinated Notes due 1998, $125,000,000 aggregate
principal amount of the Company's 8 1/4% Subordinated Notes due 2002 and
$150,000,000 aggregate principal amount of the Company's 8 3/4% Subordinated
Notes due 2004. The Company and certain of the Company's subsidiaries maintain
deposit accounts and banking relations with the Trustee.
DESCRIPTION OF PREFERRED STOCK
General
The following summary does not purport to be complete and is subject in all
respects to applicable Virginia law, the Company's Restated Articles of
Incorporation and Bylaws.
The Company is authorized by its Restated Articles of Incorporation to
issue 2,000,000 shares of Preferred Stock. Preferred Stock of the Company may
be issued in series which may vary as to title and stated value, number of
shares or fractional interests therein, and the dividend, liquidation,
redemption, conversion, voting and other rights, the initial public offering
price and whether interests in the Preferred Stock will be represented by
Depositary Shares. The Board of Directors may fix such terms of any new series
of Preferred Stock from time to time. The ability of the 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 the
Company. The Company may amend from time to time its Restated Articles of
Incorporation to increase the number of authorized shares of preferred stock.
Any such amendment would require the approval of the holders of a majority of
the outstanding shares of Common Stock, and the approval of the holders of a
majority of the outstanding shares of all series of preferred stock voting
together as a single class without regard to series. As of the date of this
Prospectus, the Company has no series of preferred stock outstanding.
Pursuant to Crestar's Restated Articles of Incorporation, the Board of
Directors has designated a series of 100,000 shares of Participating Cumulative
Preferred Stock, Series C (the "Series C Preferred Stock"), no shares of which
have been issued. The Series C Preferred Stock was created in connection with
Crestar's shareholder rights plan. See "Description of Common Stock."
The Prospectus Supplement relating to each series of the Preferred
Stock will describe the following terms thereof:
(a) title and stated value of such series;
(b) the number of shares in such series;
(c) the dividend payment dates and the dividend rate or method
of determination or calculation of such terms applicable to the
series;
(d) applicable redemption provisions, if any;
(e) sinking fund or purchase fund provisions, if any;
(f) the fixed liquidation price and fixed liquidation premium,
if any, applicable to the series;
(g) the rate or basis of exchange or conversion into other
securities or method of determination thereof applicable to the
series, if any;
(h) the conversion rights, if any;
(i) applicable voting rights; and
(j) any other terms applicable thereto.
Redemption
A series of the Preferred Stock may be redeemable, in whole or in part, at
the option of the Company, and may be subject to mandatory redemption pursuant
to a sinking fund, in each case upon terms, at the times and at the redemption
prices set forth in the Prospectus Supplement relating to such series.
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption shall specify the number of shares of such
series of Preferred Stock which shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to any accrued and unpaid dividends
thereon to the date of redemption. The redemption price may be payable in cash,
capital stock or in cash received from the net proceeds of the issuance of
capital stock of the Company, as specified in the Prospectus Supplement relating
to such series of Preferred Stock. If the redemption price is payable only from
the net proceeds of the issuance of capital stock of the Company, the terms of
such series may provide that, if no such capital stock shall have been issued or
to the extent the net proceeds from any issuances are insufficient to pay in
full the aggregate redemption price then due, the applicable shares of such
series of Preferred Stock shall automatically and mandatorily be converted into
shares of the applicable capital stock of the Company pursuant to conversion
provisions specified in the Prospectus Supplement relating to such series of
Preferred Stock.
If fewer than all the outstanding shares of any series of the Preferred
Stock are to be redeemed, whether by mandatory or optional redemption, the
selection of the shares to be redeemed shall be determined by lot or pro rata as
may be determined by the Board of Directors or a duly authorized committee
thereof, or by any other method which may be determined by the Board of
Directors or such committee to be equitable. From and after the date of
redemption (unless default shall be made by the Company in providing for the
payment of the redemption price), dividends shall cease to accrue on the shares
of Preferred Stock called for redemption and all rights of the holders thereof
(except the right to receive the redemption price) shall cease.
Conversion Rights
The Prospectus Supplement for any series of Preferred Stock will state the
terms, if any, on which shares of that series are convertible into shares of
Common Stock or another series of preferred stock of the Company. As described
under "Redemption" above, under certain circumstances, the Preferred Stock may
be mandatorily converted into Common Stock or another series of preferred stock
of the Company. The Preferred Stock will have no preemptive rights.
Dividend Rights
The holders of the Preferred Stock of each series shall be entitled to
receive, if and when declared payable by the Board of Directors, out of assets
available therefor, dividends at, but not exceeding, the dividend rate for such
series (which may be fixed or variable), payable at such intervals and on such
dates as are provided in the resolution of the Board of Directors creating such
series. If such intervals and dividend payment dates shall vary from time to
time for such series, such resolution shall set forth the method by which such
intervals and such dates shall be determined. Such dividends on Preferred Stock
shall be paid before any dividends, other than a dividend payable in Common
Stock of the Company, may be paid upon or set apart for any shares of capital
stock ranking junior to the Preferred Stock in respect of dividends or
liquidation rights (referred to in this Prospectus as "stock ranking junior to
the Preferred Stock").
Voting Rights
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock, or except as expressly required by the
laws of the Commonwealth of Virginia or other applicable law, the holders of the
Preferred Stock will not be entitled to vote. Except as indicated in the
Prospectus Supplement relating to a particular series of Preferred Stock, each
such share will be entitled to one vote on matters on which holders of such
series of the Preferred Stock are entitled to vote. However, as more fully
described below under "- Depositary Shares," if the Company elects to issue
Depositary Shares representing a fraction of a share of a series of Preferred
Stock, each such Depositary Share will, in effect, be entitled to such fraction
of a vote, rather than a full vote. Since each full share of any series of
Preferred Stock shall be entitled to one vote, the voting power of such series,
on matters on which holders of such series and holders of other series of
preferred stock are entitled to vote as a single class, shall depend on the
number of shares in such series, not the aggregate liquidation preference or
initial offering price of the shares of such series of Preferred Stock.
In addition to the foregoing voting rights, under the Virginia Stock
Corporation Act as now in effect, the holders of Preferred Stock will have the
voting rights set forth under "- General" above with respect to amendments to
the Company's Restated Articles of Incorporation which would increase the number
of authorized shares of preferred stock of the Company.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of the Company,
the holders of the Preferred Stock shall be entitled to receive, for each share
thereof, the fixed liquidation or stated value for the respective series
together in all cases with all dividends accrued or in arrears thereon, before
any distribution of the assets shall be made to the holders of any stock ranking
junior to the Preferred Stock. If the assets distributable among the holders of
the Preferred Stock should be insufficient to permit the payment of the full
preferential amounts fixed for all series, then the distribution shall be made
among the holders of each series ratably in proportion to the full preferential
amounts to which they are respectively entitled.
Depositary Shares
General. The Company may, at its option, elect to offer fractional shares
of Preferred Stock, rather than full shares of Preferred Stock. In the event
such option is exercised, the Company will issue to the public receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock) of
a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a bank or trust company selected by the Company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary Bank"). Subject to the terms
of the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. If Depositary
Shares are issued, copies of the forms of Deposit Agreement and Depositary
Receipt will be incorporated by reference to the Registration Statement of which
this Prospectus is a part, and the following summary is qualified in its
entirety by reference to such documents.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary Bank may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.
Surrender of Depositary Shares and Withdrawal of Preferred Stock. Upon
surrender of Depositary Receipts to the Depositary Bank, the owner of the
Depositary Shares evidenced thereby is entitled to receive the number of whole
shares of Preferred Stock represented by such Depositary Shares. If the
Depositary Receipts delivered evidence a number of Depositary Shares in excess
of the number of Depositary Shares representing the number of whole shares of
Preferred Stock to be withdrawn, the Depositary Bank will deliver to such holder
at the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares. Owners of Depositary Shares will be entitled to receive only
whole shares of Preferred Stock. In no event will fractional shares of
Preferred Stock (or cash in lieu thereof) be distributed by the Depositary Bank.
Consequently, a holder of a Depositary Receipt representing a fractional share
of Preferred Stock would be able to liquidate his position only by sale to a
third party (in a public trading market transaction or otherwise) unless the
Depositary Shares are redeemed by the Company or converted by the holder (if
convertible by their terms into another security of the Company).
Dividends and Other Distributions. The Depositary Bank will distribute all
cash dividends or other cash distributions received in respect of the Preferred
Stock to the record holders of Depositary Shares relating to such Preferred
Stock in proportion to the number of such Depositary Shares owned by such
holders.
In the event of a distribution other than in cash, the Depositary Bank will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary Bank determines that it is not feasible
to make such distribution, in which case the Depositary Bank may, with the
approval of the Company, sell such property and distribute the net proceeds from
such sale to such holders.
Redemption of Depositary Shares. If a series of Preferred Stock
represented by Depositary Shares is subject to redemption, the Depositary Shares
will be redeemed from the proceeds received by the Depositary Bank resulting
from the redemption, in whole or in part, of such series of Preferred Stock held
by the Depositary Bank. The redemption price per Depositary Share will be equal
to the applicable fraction of the redemption price per share payable with
respect to such series of the Preferred Stock. Whenever the Company redeems
shares of Preferred Stock held by the Depositary Bank, the Depositary Bank will
redeem as of the same redemption date the number of Depositary Shares
representing the shares of Preferred Stock so redeemed. If fewer than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected by lot or pro rata as may be determined by the Depositary Bank.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of the Preferred Stock are entitled to vote, the Depositary Bank
will mail the information contained in such notice of meeting to the record
holders of the Depositary Shares relating to such Preferred Stock. Each record
holder of such Depositary Shares on the record date (which will be the same date
as the record date for the Preferred Stock) will be entitled to instruct the
Depositary Bank as to the exercise of the voting rights pertaining to the amount
of the Preferred Stock represented by such holder's Depositary Shares. The
Depositary Bank will endeavor, insofar as practicable, to vote the amount of the
Preferred Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all action which may be deemed
necessary by the Depositary Bank in order to enable the Depositary Bank to do
so. The Depositary Bank may abstain from voting shares of the Preferred Stock
to the extent it does not receive specific instructions from the holders of
Depositary Shares representing such Preferred Stock.
Amendment and Termination of the Depositary Agreement. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between the Company
and the Depositary Bank. However, any amendment that materially and adversely
alters the rights of the holders of Depositary Shares will not be effective
unless such amendment has been approved by the holders of at least a majority of
the Depositary Shares then outstanding. The Deposit Agreement may be terminated
by the Company or the Depositary only if (i) all outstanding Depositary Shares
have been redeemed or (ii) there has been a final distribution in respect of the
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of
Depositary Receipts.
Charges of Depositary Bank. The Company will pay all transfer and other
taxes and governmental charges arising solely from the existence of the
depositary arrangements. The Company will pay charges of the Depositary Bank in
connection with the initial deposit of the Preferred Stock and any redemption of
the Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges, including a fee for
the withdrawal of shares of Preferred Stock upon surrender of Depositary
Receipts, as are expressly provided in the Deposit Agreement to be for their
accounts.
Miscellaneous. The Depositary Bank will forward to holders of Depository
Receipts all reports and communications from the Company that are delivered to
the Depositary Bank and that the Company is required to furnish to the holders
of the Preferred Stock.
Neither the Depositary Bank nor the Company will be liable if it is
prevented or delayed by law or any circumstance beyond its control in performing
its obligations under the Deposit Agreement. The obligations of the Company and
the Depositary Bank under the Deposit Agreement will be limited to performance
in good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares or
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Receipts
or other persons believed to be competent and on documents believed to be
genuine.
Resignation and Removal of Depositary Bank. The Depositary Bank may resign
at any time by delivering to the Company notice of its election to do so, and
the Company may at any time remove the Depositary Bank, any such resignation or
removal to take effect upon the appointment of a successor Depositary Bank and
its acceptance of such appointment. Such successor Depositary Bank must be
appointed within 60 days after delivery of the notice of resignation or removal
and must be a bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000.
Miscellaneous
The Preferred Stock when issued and full consideration is received for such
Preferred Stock will be fully paid and nonassessable.
DESCRIPTION OF COMMON STOCK
General
The following summary does not purport to be complete and is subject in all
respects to applicable Virginia law, the Company's Restated Articles of
Incorporation and Bylaws, and the Rights Agreement dated June 23, 1989.
The Company is authorized by its Restated Articles of Incorporation to
issue 100,000,000 shares of Common Stock. The Company had 37,709,106 shares of
Common Stock outstanding at September 30, 1995. Each share of Common Stock is
entitled to one vote on all matters submitted to a vote of shareholders.
Holders of Common Stock are entitled to receive dividends when and as declared
by the Board of Directors of the Company 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
nonassessable. Holders of Common Stock have no preemptive or conversion rights
and are not subject to further calls or assessments by the Company.
In the event of the voluntary or involuntary dissolution, liquidation or
winding up of the Company, 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 the Company 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.
Rights
In 1989, pursuant to the Company's shareholder rights plan, the Company
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 the Company, 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 the Company 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 may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that acquires more than 10% of the
outstanding shares of Common Stock of the Company if certain events thereafter
occur without the Rights having been redeemed. However, the Rights should not
interfere with any merger or other business combination approved by the Board of
Directors and the shareholders because the Rights are redeemable under certain
circumstances.
Virginia Stock Corporation Act
The Virginia Stock Corporation Act 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 Shareholder") 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
Shareholder, 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
Shareholder by more than 5%.
For three years following the time that an Interested Shareholder becomes
an owner of 10% of the outstanding voting shares, a Virginia corporation cannot
engage in an Affiliated Transaction with such Interested Shareholder without
approval of two-thirds of the voting shares other than those shares beneficially
owned by the Interested Shareholder, and majority approval of the "Disinterested
Directors." A Disinterested Director means, with respect to a particular
Interested Shareholder, a member of the Company's Board of Directors who was (1)
a member on the date on which an Interested Shareholder became an Interested
Shareholder 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 Shareholder.
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 Shareholder must pay
the shareholders 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 Shareholder whose acquisition of shares
making such person an Interested Shareholder 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
Shareholder, 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. The Company 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 shareholders to consider the matter within 50 days of its request.
PLAN OF DISTRIBUTION
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable, (i) in the case of
Debt Securities, the specific designation, aggregate principal amount, currency,
denomination, maturity, priority, interest rate (which may be variable or
fixed), time of payment of interest, terms for optional redemption or repayment
or for sinking fund payments, terms for conversion into or exchange for Common
or Preferred Stock or other Offered Securities, and the initial public offering
price; (ii) in the case of Preferred Stock, the specific title and stated value,
number of shares or fractional interests therein, and the dividend, liquidation,
redemption, conversion, voting and other rights, the initial public offering
price, and whether interests in the Preferred Stock will be represented by
Depositary Shares; (iii) in the case of Common Stock, the initial offering
price; and (iv) in the case of all Offered Securities, whether such Offered
Security will be offered separately or as a unit with other Offered Securities,
will be set forth in a Prospectus Supplement. The Prospectus Supplement will
also contain information, where applicable, about certain United States federal
income tax considerations relating to, and any listing on a securities exchange
of, the Offered Securities covered by the Prospectus Supplement.
The Offered Securities may be sold for public offering to underwriters or
dealers, which may be a group of underwriters represented by one or more
managing underwriters, or through such firms or other firms acting alone or
through dealers. The Offered Securities may also be sold through agents to
investors. The names of any agents, dealers or managing underwriters, and of
any underwriters, involved in the sale of the Offered Securities in respect of
which this Prospectus is being delivered and the applicable agent's commission,
dealer's purchase price or underwriter's discount will be set forth in the
Prospectus Supplement. The net proceeds to the Company from such sale will also
be set forth in the Prospectus Supplement. Any underwriters, dealers or agents
participating in the offering of Offered Securities may be deemed "underwriters"
within the meaning of the Securities Act.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities and any discounts,
concessions or commissions allowed by underwriters to participating dealers will
be set forth in the Prospectus Supplement. Underwriters, dealers and agents
participating in the distribution of the Offered Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Offered Securities may be deemed to be
underwriting discounts and commissions under the Securities Act.
If an underwriter or underwriters are utilized in the sale of the Offered
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached.
The underwriter or underwriters with respect to an underwritten offering of
Offered Securities will be set forth in the Prospectus Supplement relating to
such offering and, if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover of such Prospectus
Supplement. If any underwriter or underwriters are utilized in the sale of the
Offered Securities, the underwriting agreement will provide that the obligations
of the underwriters are subject to certain conditions precedent and that the
underwriters with respect to a sale of Offered Securities will be obligated to
purchase all such Offered Securities if any are purchased. In connection with
the sale of Offered Securities, underwriters may be deemed to have received
compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent. Under such
underwriting agreements, underwriters, dealers and agents who participate in the
distribution of the Offered Securities, may be entitled to indemnification by
the Company against certain civil liabilities, including liabilities under the
Securities Act or contribution with respect to payments which the underwriters,
dealers or agents may be required to make in respect thereof.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with, and perform services for, the Company and its
Subsidiaries and the Trustee in the ordinary course of business.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Hunton & Williams, Richmond, Virginia, counsel for the Company.
Gordon F. Rainey, Jr., a member of Crestar's Board of Directors, is a partner of
Hunton & Williams.
EXPERTS
The consolidated financial statements of the Company incorporated in this
Prospectus by reference to the Company'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 covering the December 31, 1994 consolidated
financial statements refers to a change in accounting for certain investments in
debt and equity securities. To the extent that KPMG Peat Marwick LLP audit and
report on future consolidated financial statements of the Company and consent to
the use of their reports thereon, such future consolidated financial statements
also will be incorporated by reference in the Registration Statement in reliance
upon their reports and said authority.
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Estimated expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are as
follows:
Securities and Exchange Commission registration fee . . .$ 60,000
Blue Sky fees and expenses. . . . . . . . . . . . . . . . 20,000
Legal fees. . . . . . . . . . . . . . . . . . . . . . . . 100,000
Accounting fees . . . . . . . . . . . . . . . . . . . . . 30,000
Rating agency fees. . . . . . . . . . . . . . . . . . . . 165,000
Trustee fees. . . . . . . . . . . . . . . . . . . . . . . 30,000
Printing, engraving and postage expenses. . . . . . . . . 25,000
Miscellaneous expenses . . . . . . . . . . . . . . . . . 10,000
Total. . . . . . . . . . . . . . . . . . . . . . . .$440,000
Item 15. Indemnification of Directors and Officers
The Company's Restated Articles of Incorporation implement the provisions
of the Virginia Stock Corporation Act, which provide for the indemnification of
the Company's directors and officers in a variety of circumstances, which may
include indemnification for liabilities under the Securities Act. Under
sections 13.1-697 and 13.1-702 of the Virginia Stock Corporation Act, 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
Company's Restated Articles of Incorporation require indemnification of
directors and officers with respect to certain liabilities, 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. The
Company also carries insurance on behalf of directors, officers, employees or
agents that may cover liabilities under the Securities Act. In addition, the
Virginia Stock Corporation Act and the Company's Restated Articles of
Incorporation eliminate the liability of a director or officer of the Company in
a shareholder 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 Virginia Stock Corporation Act are hereby incorporated herein by
reference.
Item 16. Exhibits
1 -Proposed Form of Underwriting Agreement to be entered into between
the Company and the Underwriters*
3.1 -Restated Articles of Incorporation (incorporated herein by reference
to Exhibit 3(a) of the Company's Annual Report on Form 10-K for
the year ended December 31, 1990)
3.2 -Amendment to Restated Articles of Incorporation dated May 13, 1993
(incorporated herein by reference to Exhibit 3.2 of the Company's
Registration Statement on Form S-3 No. 33-50387
3.3 -Bylaws (incorporated herein by reference to Exhibit 3(b) of the
Company's Annual Report on Form 10-K for the year ended December
31, 1992)
4.1 -Indenture between the Company and Chemical Bank (incorporated herein
by reference to Exhibit 4.1 of the Company's Registration
Statement on Form S-3 No. 33-50387)
4.2 -Rights Agreement dated June 23, 1989 between the Company and Mellon
Bank, N.A., as Rights Agent (incorporated herein by reference to
Exhibit 4.1 of the Company's Current Report on Form 8-K dated
June 23, 1989)
4.3 -Proposed Form of Deposit Agreement to be entered into by the Company*
4.4 -Proposed Form of Deposit Receipt*
5 -Opinion of Hunton & Williams
12 -Statement re computation of Ratios
23.1 -Consent of KPMG Peat Marwick
23.2 -Consent of Hunton & Williams (included in Exhibit 5)
24 -Powers of Attorney of Directors and Officers of the Company (included
on signature pages)
______________
*To be filed subsequent to the effectiveness of this Registration Statement
and incorporated by reference pursuant to a Report on Form 8-K.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
Rule 415 Offering:
(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 Section 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 information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
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 registration statement is on Form S-3, 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 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration
statement.
(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 securities 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) The registrant is not a foreign private issuer.
Filings Incorporated Subsequent Exchange Act Documents by Reference: The
undersigned Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement 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.
Include the Following in a Registration Statement Permitted by Rule 430A
Under the Securities Act of 1933: Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described under
Item 15 above, or otherwise, the registrant has been advised that in the opinion
of the 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 successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling 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 and will be governed by the final adjudication of such issue.
Qualification of Trust Indentures Under the Trust Indenture Act of 1939 For
Delayed Offerings: The undersigned Registrant hereby undertakes to file an
application for the purpose of determining the eligibility of a trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act of 1939 in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Trust Indenture Act of 1939.
<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 March 19, 1996.
CRESTAR FINANCIAL CORPORATION
(Registrant)
By: /s/ JOHN C. CLARK, III
-------------------------
John C. Clark, III
Corporate Senior Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities indicated on March 19, 1996.
Signature Title
/s/ RICHARD G. TILGHMAN * Chairman of the Board and Chief
- ------------------------- Executive Officer and Director
Richard G. Tilghman (Principal Executive Officer)
/s/ JAMES M. WELLS, III * President and Director
- -------------------------
James M. Wells, III
/s/ RICHARD F. KATCHUK * Corporate Executive Vice President
- ------------------------- and Chief Financial Officer
Richard F. Katchuk (Principal Financial Officer)
/s/ JAMES D. BARR * Group Executive Vice President,
- ------------------------- Controller and Treasurer
James D. Barr (Principal Accounting Officer)
Director
- -------------------------
Richard M. Bagley
Director
- -------------------------
J. Carter Fox
Director
- -------------------------
Bonnie Guiton Hill
/s/ GENE A. JAMES * Director
- -------------------------
Gene A. James
/s/ H. GORDON LEGGETT, JR. * Director
- -------------------------
H. Gordon Leggett, Jr.
Director
- -------------------------
Charles R. Longsworth
/s/ PATRICK J. MAHER * Director
- -------------------------
Patrick J. Maher
/s/ FRANK E. MCCARTHY * Director
- -------------------------
Frank E. McCarthy
Director
- -------------------------
Paul D. Miller
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.
/s/ EUGENE P. TRANI* Director
- -------------------------
Eugene P. Trani
Director
- -------------------------
L. Dudley Walker
/s/ KAREN HASTIE WILLIAMS* Director
- -------------------------
Karen Hastie Williams
* By /s/ JOHN C. CLARK, III
- ----------------------------
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
<S> <C>
1 -Proposed Form of Underwriting Agreement to be entered into between
the Company and the Underwriters*
3.1 -Restated Articles of Incorporation (incorporated herein by reference
to Exhibit 3(a) of the Company's Annual Report on Form 10-K for the
year ended December 31, 1990)
3.2 -Amendment to Restated Articles of Incorporation dated May 13, 1993
(incorporated herein by reference to Exhibit 3.2 of the Company's
Registration Statement on Form S-3 No. 33-50387
3.3 -Bylaws (incorporated herein by reference to Exhibit 3(b) of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992)
4.1 -Indenture between the Company and Chemical Bank (incorporated
herein by reference to Exhibit 4.1 of the Company's
Registration Statement on Form S-3 No. 33-50387)
4.2 -Rights Agreement dated June 23, 1989 between the
Company and Mellon Bank, N.A., as Rights Agent (incorporated
herein by reference to Exhibit 4.1 of the Company's
Current Report on Form 8-K dated June 23, 1989)
4.3 -Proposed Form of Deposit Agreement to be entered into
by the Company*
4.4 -Proposed Form of Deposit Receipt*
5 -Opinion of Hunton & Williams
12 -Statement re computation of Ratios
23.1 -Consent of KPMG Peat Marwick
23.2 -Consent of Hunton & Williams (included in Exhibit 5)
24 -Powers of Attorney of Directors and Officers of the Company
(included on signature pages)
</TABLE>
______________
*To be filed subsequent to the effectiveness of this Registration Statement
and incorporated by reference pursuant to a Report on Form 8-K.
