<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) of the Securities Exchange Act of 1934
GREAT GUARANTY BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)
LOUISIANA 72-0493576
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
175 NEW ROADS STREET, NEW ROADS, LOUISIANA 70760
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (504) 638-5641
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
- ------------------------------------ --------------------------------
N/A N/A
- ------------------------------------ --------------------------------
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK $7.50 PAR VALUE
- --------------------------------------------------------------------------------
(Title of class)
- --------------------------------------------------------------------------------
(Title of class)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I
ITEM 1 DESCRIPTION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . . . . . . 10
ITEM 3 DESCRIPTION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 5 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ITEM 6 EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ITEM 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . 16
ITEM 8 DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART II
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS . . . . . . . . . . . . . . . 17
ITEM 2 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 3 CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS . . . . . . . . . . . . . . . . . 19
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES . . . . . . . . . . . . . . . . . . . 19
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . 19
PART F/S FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
PART III EXHIBITS
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
<PAGE> 3
PART I
DESCRIPTION OF BUSINESS
GENERAL
Great Guaranty Bancshares, Inc. ("Bancshares"), a Louisiana
corporation and a registered bank holding company under the Federal Bank
Holding Company Act of 1956 (the "HC Act"), was incorporated in 1981 to acquire
the outstanding stock of Guaranty Bank and Trust Company ("Guaranty Bank" or
"Bank"). Guaranty Bank is a wholly owned subsidiary of Bancshares, and
Bancshares has no other subsidiaries. While Bancshares and Guaranty Bank are
distinct entities regulated by different regulatory bodies, the income of
Bancshares is almost entirely derived from dividends paid by Guaranty Bank.
Therefore, the value of Bancshares and its securities are dependant upon the
value of Guaranty Bank. At December 31, 1996, Bancshares had total
consolidated assets of approximately $42 million, and shareholders' equity of
approximately $571 thousand while Guaranty Bank had assets of approximately
$41.8 million and shareholders' equity of approximately $3.5 million.
Bancshares' executive offices are located at 175 New Roads Street, New Roads,
Louisiana, 70760 and its telephone number is (504) 638-8621.
Guaranty Bank was organized as a Louisiana state bank in 1957.
Guaranty Bank provides full service consumer and commercial banking services
principally in Pointe Coupee Parish in the State of Louisiana through its main
banking office at 175 New Roads Street, New Roads, Louisiana and at two (2)
full service branches located in Livonia and Jarreau, Louisiana. Deposits of
Guaranty Bank are insured by the Federal Deposit Insurance Corporation ("FDIC")
up to the applicable legal limits. Guaranty Bank offers an array of deposit
services, including demand accounts, NOW accounts, certificates of deposit, and
money market accounts, and provides safe deposit boxes, night depository,
individual retirement accounts and electronic and drive-in banking services.
Guaranty Bank's lending activities consist principally of real estate,
consumer, commercial and agricultural loans, with no material concentration of
loans to borrowers in any line of business. At December 31, 1996, Guaranty
Bank had outstanding approximately $17.1 million in loans, of which 19.9% were
in commercial loans to borrowers engaged in various lines of business, 16.0%
were in consumer loans, 56.1% were in primarily residential real estate loans,
and 8.0% were in agricultural loans. Guaranty Bank's deposits represent a
cross-section of the area's economy, and there is no material concentration of
deposits from any single customer or group of customers. At December 31, 1996,
Guaranty Bank had total deposits of approximately $36.2 million.
PROPERTY
The executive offices of Bancshares and Guaranty Bank are located at
175 New Roads Street, New Roads, Louisiana 70760 and are owned by Guaranty
Bank. Guaranty Bank also owns the buildings and land at Highway 78 in Livonia,
Louisiana and Highway 413 in Jarreau, Louisiana, where the Bank's branches are
located, and on Highway 1 in Morganza, Louisiana, which the Bank uses for
record storage. No premises occupied by the Bank are leased, and none of the
properties owned by the Bank is subject to a mortgage.
EMPLOYEES
At December 31, 1996, Bancshares had no full-time employees. As of
that date, Guaranty Bank had 24 full-time employees, including 5 executive
officers, and no part-time employees. None of Guaranty Bank's employees are
subject to a collective bargaining agreement, and management considers its
relationship with its employees to be good.
<PAGE> 4
COMPETITION
The Bank's general market area consists principally of Pointe Coupee
Parish in the State of Louisiana. The market area has a population of
approximately 23,000 and contains numerous banks and other financial
institutions. Guaranty Bank experiences substantial competition in attracting
and retaining deposits and making loans.
The primary competitive factors for deposits are interest rates, the
quality and range of financial services offered, convenience of office
locations and office hours. Competition for loan customers is generally a
function of interest rates, loan origination fees and other charges,
restrictive covenants and compensating balances and other services offered.
The Bank competes with numerous other commercial banks, savings associations
and credit unions for customer deposits, as well as with a broad range of
financial institutions in consumer and commercial lending activities. In
addition to banks and savings associations, other businesses in the financial
services industry compete with the Bank for retail and commercial deposit funds
and for retail and commercial loan business. Competition for loans and
deposits is intense among the financial institutions in the area and has
increased due to recent acquisitions of community banks by regional holding
companies with greater resources than those of Bancshares. The size of these
institutions allows certain economics of scale not available to Bancshares or
the Bank.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "Interstate Banking Act") authorized the acquisition of banks in any
state by bank holding companies, subject to compliance with federal and state
antitrust laws, the Community Reinvestment Act (the "CRA") and specific deposit
concentration limits. The Interstate Banking Act removes most state barriers
to interstate acquisitions of banks and ultimately will permit multistate
banking operations to merge into a single bank. Enactment of the Interstate
Banking Act has resulted in increased competition from out-of-state financial
institutions and their holding companies. See "Supervision and Regulation."
LENDING ACTIVITIES
The Bank's lending activities consist principally of commercial,
consumer, real estate and agricultural loans. As of December 31, 1996 these
categories accounted for approximately 19.9%, 16.0%, 56.1% and 8.0%,
respectively, of the Bank's total loan portfolio. The Bank's major source of
income is interest and fees charged on loans.
Interest income on loans is recognized based on principal amounts
outstanding, at applicable interest rates. Accrual of interest on impaired
loans is discontinued when reasonable doubt exists as to the full, timely
collection of interest or principal or when payment of principal or interest is
contractually past due 90 days, unless the loan is well secured and in the
process of collection. When a loan is placed on nonaccrual status, all
interest previously accrued, but not collected, is reversed against current
period interest income. Income on such loans is then recognized only to the
extent that cash is received and when the future collection of principal is
probable. Interest accruals are resumed on such loans only when they are
brought current with respect to principal and interest and when, in the opinion
of management, the loans are estimated to be fully collectible as to both
principal and interest.
The Bank's policy is to make no loans to single borrowers in excess of
an aggregate amount of up to twenty-five percent (25%) of the Bank's unimpaired
capital and unimpaired surplus. The Bank, on occasion, sells participations in
loans when necessary to stay within lending limits or to otherwise limit the
Bank's exposure. The Bank's attempts to reduce the risk of undue
concentrations of loans to multiple borrowers engaged in similar activities
that would cause them to be similarly impacted by economic or
- 2 -
<PAGE> 5
other conditions. At December 31, 1996, no such concentration exceeded 10% of
the Bank's loan portfolio.
Types of Loans
The following table sets forth Guaranty Bank's loan distribution as of
the indicated dates (in thousands of dollars):
<TABLE>
<CAPTION>
December 31,
---------------------------
1996 1995
---------------------------
<S> <C> <C>
Commercial, financial and agricultural $ 4,776 $ 5,058
Real estate 9,572 7,568
Installment 2,731 2,367
--------- ----------
Total $ 17,079 $ 14,993
======== =========
</TABLE>
Maturities
The following table shows the maturity or repricing frequency of loans
outstanding as of December 31, 1996 (in thousands of dollars).
<TABLE>
<S> <C>
Maturity of fixed rate Loans:
Within one year $ 2,286
After one but within five years 5,527
After five years 5,708
---------
Total fixed rate loans 13,521
Variable rate loans repricing at least quarterly 3,532
Nonaccrual loans 26
---------
Total loans $ 17,079
=========
</TABLE>
An allowance for loan losses is maintained at a level considered
adequate to absorb any losses which may exist in the loan portfolio. The
allowance is increased by provisions charged to operations and by recoveries on
loans previously charged off, and is reduced by charge-offs. Guaranty Bank
makes regular credit reviews of the loan portfolio and considers past loss
experience, current economic conditions, review of specific problem loans, and
other factors in determining the adequacy of the allowance balance.
Nonperforming Loans
The following table summarizes nonperforming loans as of the indicated
dates (in thousands of dollars):
<TABLE>
<CAPTION>
December 31,
---------------------------
1996 1995
---------------------------
<S> <C> <C>
Nonaccrual loans $ 26 $ 9
Accruing loans past due 90 days or more 0 0
Restructured loans not included above 0 0
</TABLE>
- 3 -
<PAGE> 6
Loan Loss Experience
The following table summarizes Guaranty Bank's loan loss experience
for each of the last two (2) years (in thousands of dollars):
<TABLE>
<CAPTION>
December 31,
---------------------------
1996 1995
---------------------------
<S> <C> <C>
Balance at beginning of period $ 262 $ 280
Charge-offs:
Commercial, financial and agricultural 0 12
Installment 0 3
------- -------
Total Charge-offs 0 15
------- -------
Recoveries:
Commercial, financial and agricultural 0 12
Installment 8 8
------- -------
Total Recoveries 8 20
------- -------
Net charge-offs 8 5
Provision charged (credited) to operations (15) (23)
-------- -------
Balance at end of period 255 262
======= =======
Ratio of net charge-offs to average loans outstanding 0% 0%
</TABLE>
DEPOSITS
The following tale summarizes Guaranty Bank's outstanding deposits as
of the indicated dates (in thousands of dollars):
<TABLE>
<CAPTION>
December 31,
---------------------------
1996 1995
---------------------------
<S> <C> <C>
Noninterest-bearing demand deposits $ 6,305 $ 7,565
Interest-bearing demand deposits 5,053 3,298
Savings deposits 9,168 9,066
Time deposits 15,708 15,060
-------- --------
Total $ 36,234 $ 34,989
======== ========
</TABLE>
Maturities of time deposits of $100,000 or more outstanding as of
December 31, 1996 are summarized as follows (in thousands of dollars):
<TABLE>
<CAPTION>
Time Certificates of Deposit
----------------------------
<S> <C>
3 months or less $ 401
Over 3 through 12 months 667
Over 12 months 100
-----------
Total $ 1,168
===========
</TABLE>
- 4 -
<PAGE> 7
INVESTMENT SECURITIES
The investment policy of Guaranty Bank is an integral part of its
overall asset/liability management. The objective of the Bank's investment
policy is a portfolio which will provide liquidity necessary to facilitate
making loans and to cover deposit fluctuations while at the same time achieving
a satisfactory investment return on the funds invested. With the
implementation of Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities, the Bank is
required to classify its portfolio into three categories: "Held to Maturity",
"Trading Securities", and "Available for Sale".
"Held to Maturity" includes debt securities that the Bank has positive
intent and ability to hold to maturity; these securities are reported as
amortized cost. "Trading Securities" include debt and equity securities that
are purchased and held solely for the purpose of selling them in the short-term
future for trading profits; these securities are reported at fair market value
with unrealized gains and losses included in earnings. "Available for Sale"
securities include those acquired with the intention of disposal prior to
maturity, although these securities may be held to maturity; these securities
are reported at fair market value with unrealized gains and losses excluded
from the earnings and reported as a separate component of shareholders' equity.
As of December 31, 1996, the Bank's entire investment portfolio was classified
as "Available for Sale."
The following table sets forth the carrying amounts of investment
securities at the dates indicated (in thousands dollars):
<TABLE>
<CAPTION>
December 31,
---------------------------
1996 1995
---------------------------
<S> <C> <C>
U.S. Treasury securities and obligations of other
U.S. Government agencies and corporations $ 10,012 $ 9,903
Obligations of state and political subdivisions 0 20
Mortgage-backed bonds and collateralized
mortgage obligations 9,660 10,602
-------- ---------
Total $ 19,762 $ 20,525
======== =========
</TABLE>
SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under both
federal and state law. Set forth below is a summary of certain laws which
relate to the regulation of Bancshares and Guaranty Bank. The description does
not purport to be complete and is qualified in its entirety by reference to the
applicable laws and regulations.
Bancshares. Bancshares is subject to regulation under the Louisiana
Banking Law ("LBL") and the BHC Act. Bancshares is required to file with the
Federal Reserve Board quarterly and annual reports and such additional
information as the Federal Reserve Board may require pursuant to the BHC Act.
The Federal Reserve Board may conduct examinations of Bancshares and its
subsidiaries. The Commissioner imposes similar reporting and examination
requirements upon Bancshares under the LBL.
The Federal Reserve Board may require that a bank holding company
terminate an activity or terminate control of or liquidate or divest certain
subsidiaries or affiliates when the Federal Reserve Board believes the activity
or the control of the subsidiary or affiliate constitutes a significant risk to
the
- 5 -
<PAGE> 8
financial safety, soundness or stability of any of its banking subsidiaries.
The Federal Reserve Board also has the authority to regulate provisions of
certain bank holding company debt, including authority to impose interest
ceilings and reserve requirements on such debt. Under certain circumstances, a
bank holding company must file written notice and obtain approval from the
Federal Reserve Board prior to purchasing or redeeming its equity securities.
In addition, Bancshares is subject to a specific, Written Agreement with the
Federal Reserve Board dated November 18, 1985 pursuant to which Bancshares must
obtain consent of the Federal Reserve Board for (i) declaration or payment of
dividends, (ii) acceptance from Bank of any dividend or other form of payment
representing a reduction of capital from Bank, or (iii) any increase in
indebtedness. The written agreement with the Federal Reserve Board also
requires Bancshares to provide, within 30 days following the end of each
calendar quarter, (a) Bancshares' balance sheet for the quarter, (b)
Bancshares' income statement for the period ending that quarter, (c) the Bank's
Report of Condition as of the end of the quarter, and (d) the Bank's Report of
Income for the period ending that quarter.
Under the BHC Act and regulations adopted by the Federal Reserve
Board, a bank holding company and its non- banking subsidiaries are prohibited
from requiring certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services. Further,
Bancshares is required by the Federal Reserve Board to maintain certain levels
of capital.
Bancshares is required to obtain the prior approval of the Federal
Reserve Board for the acquisition of more than five percent of the outstanding
shares of any class of voting securities or substantially all of the assets of
any bank or bank holding company. Prior approval of the Federal Reserve Board
is also required for the merger or consolidation of Bancshares and another bank
holding company.
Bancshares is prohibited by the BHC Act, except in certain statutorily
prescribed instances, from acquiring direct or indirect ownership or control of
more than five percent of the outstanding voting shares of any company that is
not a bank or bank holding company and from engaging directly or indirectly in
activities other than those of banking, managing or controlling banks or
furnishing services to its subsidiaries. However, Bancshares may, subject to
the prior approval of the Federal Reserve Board, engage in any, or acquire
shares of companies engaged in, activities that are deemed by the Federal
Reserve Board to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In making any such determination,
the Federal Reserve Board is required to consider whether the performance of
such activities by Bancshares or an affiliate can reasonably be expected to
produce benefits to the public, such as greater convenience, increased
competition or gains in efficiency, that outweigh possible adverse effects,
such as undue concentration of resources, decreased or unfair competition,
conflicts of interest or unsound banking practices.
Under Federal Reserve Board regulations, a bank holding company is
required to serve as a source of financial and managerial strength to its
subsidiary banks and may not conduct its operations in an unsafe or unsound
manner. In addition, it is the Federal Reserve Board's policy that, in serving
as a source of strength to its subsidiary banks, a bank holding company should
stand ready to use available resources to provide adequate capital funds to its
subsidiary banks during periods of financial stress or adversity and should
maintain the financial flexibility and capital-raising capacity to obtain
additional resources for assisting its subsidiary banks. A bank holding
company's failure to meet its obligations to serve as a source of strength to
its subsidiary banks will generally be considered by the Federal Reserve Board
to be an unsafe and unsound banking practice or a violation of the Federal
Reserve Board's regulations or both. This doctrine has become known as the
"source of strength doctrine". Although the Unites States Court of Appeals for
the Fifth Circuit found the Federal Reserve Board's source of
- 6 -
<PAGE> 9
strength doctrine invalid in 1990, stating that the Federal Reserve Board had
no authority to assert the doctrine under the BHC Act, the decision was
reversed by the United States Supreme Court on procedural grounds. The
validity of the source of strength doctrine is likely to continue to be the
subject of litigation until definitely resolved by the courts or by Congress.
Guaranty Bank. Guaranty Bank is subject to primary supervision,
examination and regulation by the Commissioner and the FDIC. If, as a result
of an examination of a bank, the FDIC should determine that the financial
condition, capital resources, asset quality, earnings prospects, management,
liquidity or other aspects of the bank's operations are unsatisfactory or that
the bank or its management is violating or has violated any law or regulation,
various remedies are available to the FDIC. Such remedies include the power to
enjoin "unsafe or unsound practices," to require affirmative action to correct
any conditions resulting from any violation or practice, to issue an
administrative order that can be judicially enforced, to direct an increase in
capital, to restrict the growth of the bank, to assess civil monetary
penalties, to remove officers and directors, and to terminate a bank's deposit
insurance.
Various requirements and restrictions under the laws of the United
States and the State of Louisiana affect operations of the Bank. Federal and
Louisiana statutes and regulations relate to many aspects of the Bank's
operations, including reserves against deposits, interest rates payable on
deposits, loans or investments, mergers and acquisitions, borrowings,
dividends, locations of branch offices, capital requirements and disclosure
obligations to depositors and borrowers. Further, the Bank is required to
maintain certain levels of capital. The deposits of the Bank are insured by
the FDIC in the manner and to the extent provided by law.
Capital Levels. The FDIC and Federal Reserve Board have established
guidelines with respect to the maintenance of appropriate levels of capital by
banks or bank holding companies under their jurisdiction. Compliance with the
standards set forth in such guidelines and other provisions of federal law
could limit the amount of dividends which the Bank or Bancshares may pay. The
following table sets forth the capital amounts and ratios required by
regulation and Guaranty Bank's actual capital ratios and amounts:
- 7 -
<PAGE> 10
<TABLE>
<CAPTION>
To Be Well
Capitalized
Under Prompt
For Capital Corrective Action
Actual Adequacy Purposes Provisions
------ ----------------- ----------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1996
Total Capital (to Risk Weighted Assets):
Guaranty Bank . . . . . . . . . . . . . . $3,701 19.2% $1,543 8.0% $1,928 10.0%
Tier I Capital (to Risk Weighted Assets):
Guaranty Bank . . . . . . . . . . . . . . $3,460 17.9% $ 771 4.0% $1,157 6.0%
Tier I Capital (to Average Assets)
Guaranty Bank . . . . . . . . . . . . . . $3,460 8.4% $1,655 4.0% $2,068 5.0%
AS OF DECEMBER 31, 1995
Total Capital (to Risk Weighted Assets):
Guaranty Bank . . . . . . . . . . . . . . $4,096 23.8% $1,421 8.0% $1,777 10.0%
Tier I Capital (to Risk Weighted Assets):
Guaranty Bank . . . . . . . . . . . . . . $3,835 22.3% $ 711 4.0% $1,066 6.0%
Tier I Capital (to Average Assets)
Guaranty Bank . . . . . . . . . . . . . . $3,835 9.4% $1,622 4.0% $2,028 5.0%
</TABLE>
Restrictions on Transfers of Funds to Bancshares by the Bank.
Substantially all of Bancshares' revenues, on an unconsolidated basis,
including funds available for the payment of dividends and other operating
expenses, are the result of dividends paid by the Bank. Bancshares is a legal
entity separate and distinct from the Bank. Bancshares' ability to pay cash
dividends is limited by Louisiana law. There also are statutory and regulatory
limitations on the amount of dividends which may be paid to Bancshares by the
Bank. Louisiana law restricts the amount available for cash dividends by state
banks without approval by the Commissioner. In addition, as discussed above,
under Bancshares' Written Agreement with Federal Reserve Board, Bancshares must
obtain consent of the Federal Reserve Board to accept any dividend from Bank.
The FDIC and Federal Reserve Board also have authority to prohibit the Bank
from engaging in what, in their respective opinion, constitutes an unsafe or
unsound practice in conducting the Bank's business. It is possible, depending
upon the financial condition of the Bank and other factors, that the FDIC or
Federal Reserve Board could assert that the payment of dividends or other
payments might, under some circumstances, be an unsafe or unsound practice.
The Bank is subject to certain restrictions imposed by federal law on any
extensions of credit to, or the issuance of a guarantee or letter of credit on
behalf of, Bancshares or other affiliates, the purchase of or investments in
stock or other securities thereof, the taking of such securities as collateral
for loans and the purchase of assets of Bancshares or other affiliates. Such
restrictions prevent Bancshares and such other affiliates from borrowing from
the Bank unless the loans are secured by marketable obligations of designated
amounts. Further, such secured loans and investments by the Bank to or in
Bancshares or to or in any other affiliate is limited to 10 percent of the
Bank's capital and surplus (as defined by federal regulations) and such secured
loans and investments are limited, in the aggregate, to 20 percent of the
- 8 -
<PAGE> 11
Bank's capital and surplus (as defined by federal regulations). Additional
restrictions on transactions with affiliates may be imposed on the Bank under
other provisions of federal law.
Prompt Corrective Action and Other Enforcement Mechanisms. Federal law
requires such federal banking agency to take prompt corrective action to
resolve the problems of insured depository institutions, including but not
limited to those that fall below one or more prescribed minimum capital ratios.
The law requires each federal banking agency to promulgate regulations defining
the following five categories in which an insured depository institution will
be placed, based on the level of its capital ratios: well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized and
critically undercapitalized. At December 31, 1996 and 1995, the Bank was
categorized as "well capitalized."
In addition to measures taken under the prompt corrective action
provisions, commercial banking organizations may be subject to potential
enforcement actions by federal regulators for unsafe or unsound practices in
conducting their businesses or for violations of any law, rule, regulation or
any condition imposed in writing by the agency or any written agreement with
the agency. Enforcement actions may include the imposition of a conservator or
receiver, the issuance of a cease and desist order that can be judicially
enforced, the termination of insurance of deposits (in the case of a depository
institution), the imposition of civil money penalties, the issuance of
directives to increase capital, the issuance of formal and informal agreements,
the issuance of removal and prohibition orders against institution-affiliated
parties and the enforcement of such actions through injunctions or restraining
orders based upon a judicial determination that the agency would be harmed if
such equitable relief was not granted.
Safety and Soundness Standards. In July 1995, the federal banking agencies
adopted final guidelines establishing standards for safety and soundness, as
required by the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"). The guidelines set forth operational and managerial standards
relating to internal controls, information systems and internal audit systems,
loan documentation, credit underwriting, interest rate exposure, asset growth
and compensation, fees and benefits. Guidelines for asset quality and earnings
standards will be adopted in the future. The guidelines establish the safety
and soundness standards that the agencies will use to identify and address
problems at insured depository institutions before capital becomes impaired.
If an institution fails to comply with a safety and soundness standard, the
appropriate federal banking agency may require the institution to submit a
compliance plan. Failure to submit a compliance plan or to implement an
accepted plan may result in enforcement action.
Interstate Banking and Branching. Under the Interstate Banking Act, a bank
holding company that is adequately capitalized and managed may obtain approval
under the BHC ACT to acquire an existing bank located in another state without
regard to state law. A bank holding company would not be permitted to make
such an acquisition if, upon consummation, it would control (a) more than 10%
of the total amount of deposits of insured depository institutions in the
United States or (b) 30% or more of the deposits in the state in which the bank
is located. A state may limit the percentage of total deposits that may be
held in that state by any one bank or bank holding company if application of
such limitation does not discriminate against out-of-state banks. An
out-of-state state bank holding company may not acquire a state bank in
existence for less than a minimum length of time that may be prescribed by
state law except that a state may not impose more than a five-year existence
requirement.
The Interstate Banking Act also permits, beginning June 1, 1997, mergers of
insured banks located in different states and conversion of the branches of the
acquired bank into branches of the resulting bank. Each state may permit such
combinations earlier than June 1, 1997, and may adopt legislation to prohibit
interstate mergers after that date in that state or in other states by that
state's banks. The same concentration limits discussed in the preceding
paragraph apply. Louisiana has not adopted legislation
- 9 -
<PAGE> 12
to "opt out" of interstate mergers. The Interstate Banking Act also permits a
national or state bank to establish branches in a state other than its home
state if permitted by the laws of that state, subject to the same requirements
and conditions as for a merger transaction.
The Interstate Banking Act will likely increase competition from
out-of-state banks in the markets in which Bancshares operates, although it is
difficult to asses the impact that such increased competition may have on
Bancshares' operations.
Community Reinvestment Act. Under the CRA, a bank's applicable regulatory
authority (which is the FDIC for the Bank) is required to assess the record of
each financial institution which it regulates to determine if the institution
meets the credit needs of its entire community, including low-and
moderate-income neighborhoods served by the institution, and to take that
record into account in its evaluation of any application made by such
institution for, among other things, approval of the acquisition or
establishment of a branch or other deposit facility, an office relocation, a
merger or the acquisition of shares of capital stock of another financial
institution. The regulatory authority prepares a written evaluation of an
institution's record of meeting the credit needs of this entire community and
assigns a rating. The Bank has undertaken significant actions to comply with
the CRA. The Bank received a "satisfactory" rating in its most recent review
by regulators with respect to its compliance with the CRA.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis of the financial condition and
results of operations of Bancshares should be read in conjunction with the
consolidated financial statements, accompanying footnotes, and other
supplemental financial information appearing elsewhere in this Registration
Statement.
1996 COMPARED WITH 1995
BALANCE SHEET
Total assets increased to $42.0 million at December 31, 1996, an
increase of 2.9% from $40.8 million at December 31, 1995. Total loans
increased $2.1 million, or 14.0%, to $17.1 million compared to $15.0 million at
December 31, 1995, while securities declined $.8 million to $19.8 million at
December 31, 1996, primarily in order to fund a portion of the increased loan
volume.
Total deposits increased by $1.2 million to $36.2 million at December
31, 1996, a 3.4% increase from $35.0 million at December 31, 1995.
Non-interest bearing deposits declined at a 16.7% rate, compared to a 9.1%
growth in interest bearing deposits. During 1996, shareholders' equity in
Bancshares increased to $571 thousand from $444 thousand at December 31, 1995;
during the same periods, shareholders' equity in Guaranty Bank declined from
$3.92 million at year-end 1995 to $3.46 million at December 31, 1996, due
primarily to the payment by Guaranty Bank to Bancshares of an extraordinary
dividend of $700 thousand with which Bancshares reduced its outstanding bank
debt.
INCOME
The income of Bancshares is attributable almost entirely to dividends
on earnings of Guaranty Bank. Consolidated net income of Bancshares is
determined by deduction of interest and expenses incurred by Bancshares from
the net income earned by Guaranty Bank. Income before income taxes of
- 10 -
<PAGE> 13
Guaranty Bank for the year ended December 31, 1996 increased to $719.5
thousand from $719.9 thousand during 1995. Bancshares consolidated net income
decreased to $217 thousand for the year ended December 31, 1996 from $495
thousand during 1995. The decline in Bancshares' consolidated net income in
1996 from 1995 was primarily attributable to the tax effect of recording $331
thousand in operating loss carryforwards in 1995 that had not been recorded
prior thereto because of uncertainties incident to pending litigation. See
"Legal Proceedings." Those uncertainties were eliminated in 1995 with the
payment by Bancshares, subject to appeal, of the judgment amount awarded by the
trial court in that litigation. Bancshares consolidated net income per share
was $1.51 in 1996 compared to $3.45 in 1995. No income tax was due by Guaranty
Bank or Bancshares on 1995 or 1996 income as a result of recognition of loss
carry forwards from prior years' operations.
Interest income increased $52 thousand Or 1.7% to $3.0 million for
1996, principally as a result of an increase in loans. Noninterest income
totaled $396 thousand for the year ended December 31, 1996, up 7.3% from $369
thousand for the year ended December 31, 1995, due primarily to increased
service charges and fees.
EXPENSES
Interest expense increased from $1.2 million during 1995 to $1.4
million for the year ended December 31, 1996, due primarily to an increase in
interest bearing deposits and an increase in notes payable for borrowings by
Bancshares for payment, subject to appeal, of the trial court's judgment award
in pending litigation with The 400 Group. See "Legal Proceedings." Noninterest
expense for the year ended December 31, 1996 totaled $1.8 million, a decrease
of $221 thousand, or 11.1%, from the $2.0 million for the year ended December
31, 1995, due primarily to a decrease in legal fees and expenses relating to
pending litigation.
PROVISIONS FOR POSSIBLE LOAN LOSSES
As a result of management's assessment of the adequacy of the
allowance for possible loan losses, the Bank recorded no loan loss provisions
in 1995 or 1996. The year-end 1996 allowance for possible loan losses was $255
thousand, 1.5% of total loans, compared to $262 thousand, or 1.7% of total
loans, at December 31, 1995.
EARNING ASSET/INTEREST BEARING LIABILITIES YIELDS AND RATES
Bancshares has no earning assets independent of Guaranty Bank, and its
only interest bearing liabilities are promissory notes in the total principal
amount of $3.1 million at December 31, 1996, as compared to $3.8 million at
December 31, 1995, which bear interest at a floating rate based on the Chase
Manhattan Bank prime rate and averaged 9.42% in 1996 and 9.73% in 1995. The
average balances and yields for interest-bearing assets and interest-bearing
liabilities of Guaranty Bank for 1996 and 1995 on a tax-equivalent basis are as
follows (in thousands of dollars):
- 11 -
<PAGE> 14
<TABLE>
<CAPTION>
Year Ended December 31, 1996 Year Ended December 31, 1995
---------------------------- ----------------------------
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Real estate loans $ 10,643 $ 983 9.23% $ 9,078 $ 890 9.80%
Installment loans 2,328 251 10.79 2,078 236 11.32
Commercial and Industrial loans 2,795 271 9.70 2,422 239 9.87
U.S. Treasury and government agency
securities 16,767 1104 6.59 20,392 1,304 6.39
Municipal securities 0 0 0 0 0 0
Other securities (AID & TCO) 3,155 233 7.39 2,142 194 9.06
Federal funds sold and securities sold
under agreements to repurchase 1,939 105 5.42 887 54 6.09
Total earning assets $ 37,622 $ 2,947 7.83 $37,008 $2,917 7.88
======= =======
INTEREST-BEARING LIABILITIES:
Interest-bearing transaction accounts $ 3,667 $ 68 1.85 $ 3,207 $ 57 1.78
Money market deposits 2,043 41 2.01 2,210 44 1.99
Savings deposits 7,122 163 2.30 7,063 162 2.30
Time deposits 15,416 687 4.46 15,559 657 4.22
Federal funds purchased and securities
purchased under agreements to resell 0 0 0 0 0 0
FHLBB Borrowings 1,368 100 7.37 1,211 87 7.23
Total interest-bearing liabilities $ 29,616 $ 1,059 3.58 $ 29,250 $1,007 3.44
======== ------- ---- ======== ------ ====
Net interest income, tax equivalent(1) $ 1,888 $1,910
======= ======
Net interest margin, tax equivalent(1) 4.25% 4.44%
===== =====
</TABLE>
- ------------------------------
(1) Does not include interest bearing notes payable by Bancshares
- 12 -
<PAGE> 15
The changes in components of net interest income caused by changes in
average earning asset and liability volumes and changes in rates for 1996 and
1995 are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1996 Compared to 1995 1995 Compared to 1994
--------------------- ---------------------
Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- ---
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Real estate loans $ 153 $(52) $ 101 $133 $(15) $ 118
Installment loans 27 (16) 16 (94) 60 (34)
Commercial and Industrial loans 37 (4) 33 (49) 60 11
U.S. Treasury and government agency
securities (232) 39 (193) 72 153 225
Municipal securities 0 0 0 (5) (5) (10)
Other securities 92 (36) 56 73 91 104
Federal funds sold and securities sold
under agreements to repurchase 64 (6) 58 (62) 58 (4)
Total earning assets 48 (18) 30 (30) 404 374
INTEREST-BEARING LIABILITIES:
Interest-bearing transaction accounts 8 2 10 (12) (12) (24)
Money market deposits (3) 0 (3) (19) (7) (26)
Savings deposits 1 0 1 3 (12) (9)
Time deposits (6) 36 30 (39) 191 152
Federal funds purchased and securities
purchased under agreements to resell 0 0 0 0 0 0
FHLB Borrowings 11 2 13 82 0 82
Total interest-bearing liabilities 13 39 52 (40) 213 173
Net interest income, tax equivalent 35 (57) (22) 10 191 201
</TABLE>
The increase (decrease) due to changes in average balances reflected
in the above table was calculated by applying the preceding year's rate to the
current year's change in the average balance. The increase (decrease) due to
changes in average rates was calculated by applying the current year's change
in the average rates to the current year's average balance. Using this method
of calculating increases (decreases), an increase or decrease due to both
changes in average balances and rates is reflected in the changes attributable
to average rate changes.
RETURN ON EQUITY AND ASSETS
The return on equity and assets by Bancshares and Guaranty Bank for
the years ending December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
Guaranty Guaranty
Bank Bancshares Bank Bancshares
---- ---------- ---- ----------
<S> <C> <C> <C> <C>
Return on average assets 1.2% .5% 2.1% 1.2%
Return on average equity 12.8% 42.7% 24.0% 960.3%
Dividend payout ratio 209.0% --- 40.8% ---
Average equity to average assets 9.2% 1.2% 8.9% ---
</TABLE>
- --------------------
(1) Includes $700,000 extraordinary dividend paid in January 1996 to Bancshares
by Guaranty Bank to reduce Bancshares' outstanding debt.
- 13 -
<PAGE> 16
DESCRIPTION OF PROPERTY
The Bank's principal office is located at 175 New Roads Street, New
Roads, Louisiana 70760. The facility has 10,100 square feet in two buildings
with drive-up windows and a night depository. The Bank owns this property free
of any and all liens and encumbrances. The Bank also operates two (2)
full-service branches located in Livonia, Louisiana and Jarreau, Louisiana.
The Livonia branch is a 3,500 square foot facility opened in 1980 and the
Jarreau branch is a 1,400 square foot facility opened in 1981. The Bank owns
these properties free of any and all liens and encumbrances. The Bank also
owns a 2,780 square foot facility in Morganza, Louisiana which is presently
used by the Bank for record storage.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 31, 1997, the following persons were known by Bancshares
to be the beneficial owners of more than five (5%) percent of the outstanding
shares of voting securities of Bancshares, including 143,374 shares of Common
Stock and 21,559 shares of Series A Preferred Stock, all of which vote equally
as a single class. See "Description of Securities":
<TABLE>
<CAPTION>
Name of Beneficial Owner Shares Beneficially Owned Percent of Class
------------------------ ------------------------- ----------------
<S> <C> <C>
H.T. Olinde, Jr.(1) 12,488 7.57%
James E. Kissner(2) 8,450 5.13%
</TABLE>
(1) Includes shares voted by Mr. Olinde but owned by Brown Brokerage Co.
(369 shares) and B. Olinde & Sons (3,036 shares).
(2) Includes shares owned by Joyce G. Kissner, spouse of Mr. Kissner.
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates the beneficial ownership as of March 31,
1997, of Bancshares voting securities, including 143,374 shares of Common Stock
and 21,559 shares of Series A Preferred Stock, all of which vote equally as a
single class (see "Description of Securities"), by (i) each director of
Bancshares, (ii) the chief executive officer of Guaranty Bank, and (iii) all
directors and executive officers of Bancshares and Guaranty Bank as a group:
<TABLE>
<CAPTION>
Name and Position Shares Beneficially Owned Percent of Class
----------------- ------------------------- ----------------
<S> <C> <C>
Joseph L. Dabadie, Jr., Director 1,158 *
Craig A. Major, Director 436 *
H.T. Olinde, Jr., Director 12,488 7.57%
J. Lane Orillion, Director 150 *
F. Gregory Roy, Director 348 *
Daniel R. Domingue, Jr., Chief Executive 312 *
Officer of Guaranty Bank
Directors and Executive Officers 15,358 9.31%
as a group (10 persons)
</TABLE>
- ---------------------
*less than 1.0%
- 14 -
<PAGE> 17
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS
The directors of Bancshares are as follows:
Joseph L. Dabadie, Jr., age 70, has been a director since 1993. Mr.
Dabadie retired from the U.S. Army in 1988 with the rank of Brigadier General,
and since his retirement has worked as a safety director for Reliable
Production, Inc.
Craig A. Major, age 49, has been a director since 1993. Mr. Major has
been a cattle rancher for over twenty- five years and is the owner and operator
of Bar "M" Ranch and has also been the owner and operator of Major's Truck
Stop since 1991.
H.T. Olinde, Jr., age 69, was a founder of Guaranty Bank in 1957 and
serves as Chairman of the Board. Mr. Olinde served as a director from 1957
until his resignation in 1984 and was re-elected director in 1993. Mr. Olinde
is a shareholder and executive officer of B. Olinde & Sons, Inc., which owns
and operates retail furniture stores, a wholesale beer distributorship, and
various property interests.
J. Layne Orillion, age 49, has been a director since 1993. Mr.
Orillion is President and owner of Lo-Vac, Inc., which he founded in 1982.
F. Gregory Roy, age 45, has been a director since 1993. Mr. Roy is a
50% owner of P & G Farms, Inc. and has been in farming since 1978.
Each director has been elected without specific term to serve until
his successor is duly qualified and elected.
The foregoing directors of Bancshares are also directors of Guaranty
Bank. Additional directors of Guaranty Bank are Daniel R. Domingue, Jr. and
Larry J. Roberts; see discussion of "Executive Officers" below.
EXECUTIVE OFFICERS
The executive officers of Guaranty Bank are as follows:
Beverly B. David, age 53 is a Vice-President and head of bank
operations and has served in that capacity since 1989. Mrs. David also serves
as the bank's Cashier and Security Officer.
Daniel R. Domingue, Jr., age 52, has served as the Bank's President
and Chief Executive Officer and as a director of Guaranty Bank since 1994.
Prior to joining Guaranty Bank, Mr. Domingue served for five years as
President/CEO of Bank of Lafayette. Mr. Domingue has been in banking for over
twenty-three years.
R. Keith Miller, age 46, is Executive Vice President and is the Bank's
Senior Lending Officer. Mr. Miller has been an executive officer since joining
Guaranty Bank in 1982 and has been in banking for twenty-five years.
- 15 -
<PAGE> 18
J. Wade O'Neal, age 40, has been employed by Guaranty Bank for
seventeen years and has, since 1989, served as Vice-President and head of Loan
Administration. Mr. O'Neal also serves as the Bank's Compliance Officer.
Larry J. Roberts, age 57, serves as Senior Vice-President and Chief
Financial Officer and has been employed by Guaranty Bank for twenty-five years.
Mr. Roberts also serves as Secretary to the Board of Guaranty Bank and as
Treasurer of Bancshares.
EXECUTIVE COMPENSATION
Daniel R. Domingue, Jr. serves as the authorized representative of Bancshares
and as President and Chief Executive Officer of Guaranty Bank, for which he
received aggregate cash compensation during the three years ended December 31,
1996 as set forth in the cash compensation table below. No executive officer or
employee of Bancshares or Guaranty Bank earned aggregate compensation during
any of the three years ended December 31, 1996 exceeding $100,000.
<TABLE>
<CAPTION>
Name of Individual and Position Year Salary Bonus Other
------------------------------- ---- ------ ----- -----
<S> <C> <C> <C> <C>
Daniel R. Domingue, Jr., Guaranty 1994(1) $50,000 $ 8,000 $4000
Bank President and CEO 1995 75,000 7,500 7125(2)
1996 75,000 15,000 8250(2)
</TABLE>
- -----------------
(1) Partial year, commencing May 1, 1994
(2) Includes living allowance at $500 per month and Bank's 401(k)
matching contribution
401 (k) Plan. Under Guaranty Bank's 401(k) Plan, officers and
employees of the Bank may make contributions to the Plan with pre-tax salary
reductions. The Bank matches contributions up to three (3%) percent of the
contributing employee's gross salary.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Various directors and executive officers of Guaranty Bank and
Bancshares, and their respective family members and affiliated firms were
customers of and had transactions with the Bank during 1995 and 1996 in the
ordinary course of business. Similar transactions may be expected to take
place in the ordinary course of business in the future. All outstanding loans
and commitments included in such transactions were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and did not, in the opinion
of management, involve more than normal risks of collectibility or present
other unfavorable features.
Since the beginning of 1995, no transaction between Guaranty Bank or
Bancshares and any executive officer, director or holder of more than 5% of the
capital stock of Bankshares has involved an amount in excess of $60,000 except
as indicated below, for which transactions the following information is
provided: (i) name of the person; (ii) relationship to Bancshares/Guaranty
Bank; (iii) nature of the transaction and (iv) the amount involved in the
transaction.
(i) Craig A. Major; (ii) director of Bancshares; (ii) personal loans
to or endorsed by Mr. Major; (iv) at March 31, 1997, $92,437 outstanding.
(i) J. Layne Orillion; (ii) director of Bancshares; (iii) loans and
line of credit commitments to Mr. Orillion and affiliated entities; (iv) at
March 31, 1997, $50,156 outstanding with $500,000 in available credit
commitments.
(i) F. Gregory Roy; (ii) director of Bancshares; (iii) loans and line
of credit commitments to Mr. Roy and affiliated entities; (iv) at March 31,
1997, $475,664 outstanding with $127,000 in available credit commitments.
(i) James E. Kissner; (ii) holder of more than 5% of the capital stock
of Bancshares; (iii) loan by Mr. Kissner to Bancshares at the prime rate of New
York banks, but not less than 8.75% per annum, secured by a subordinate
secruity interest in the common stock of Guaranty Bank; (iv) $200,000
outstanding at March 31, 1997.
(k) H.T. Olinde, Jr., (ii) director of Bancshares; (iii) purchase by
Mr. Olinde on December 29, 1995 of approximately 10 acres of real estate from
Guaranty Bank; (iv) purchase price of $210,000, cash.
DESCRIPTION OF SECURITIES
GENERAL
The authorized capital stock of Bancshares consists of 500,000 shares
of $7.50 par value Common Stock, 500,000 shares of no par value, nonvoting
Series A Preferred Stock, and 2,000,000 shares of no par value, voting Series B
Preferred Stock. At March 31, 1997 there were outstanding 143,374 shares of
Common Stock, 24,462 shares of Series A Preferred Stock and 21,559 of Series B
Preferred Stock. All of the outstanding shares of Bancshares capital stock are
fully paid and nonassessable.
- 16 -
<PAGE> 19
COMMON STOCK
The holders of Bancshares Common Stock are entitled to one vote for
each share held of record and are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available for payment
of dividends. In the event of liquidation, dissolution or winding-up of the
company, the holders of Common Stock are entitled to share ratably in all
assets remaining for distribution after payment of liabilities and after
provision for the liquidation preference of any class of stock that has
liquidation preference over the Common Stock. Holders of Common Stock have
preemptive rights.
PREFERRED STOCK
Bancshares has outstanding two series of preferred stock - Series A
nonvoting Preferred Stock and Series B voting Preferred Stock. The holders of
Bancshares Series A Preferred Stock have no voting rights but are entitled to
receive dividends identically with the Common Stock, on a share for share basis
and at the same rate, when, as and if such dividends are declared by the Board
of Directors. The holders of Bancshares Series B Preferred Stock have rights
and preferences identical to those of the Series A Preferred Stock, and, in
addition, holders of Series B Preferred Stock are entitled to one vote for each
share held of record on all matters to be voted on by the shareholders. Upon
liquidation, dissolution or winding-up of the corporation, the holders of the
shares of Series A and Series B Preferred Stock shall be entitled to receive
and to be paid out of the assets of the corporation available for distribution
to its shareholders, before any payment or distribution shall be made on the
Common Stock, the amount of $1.00 per share. To the extent funds are available
after payment of the $1.00 per share liquidation preference to the Series A and
Series B Preferred Stock, the holders of Common Stock shall be entitled to
receive the amount of $1.00 per share, and thereafter, the remainder of the
assets and funds of the corporation available for distribution to the
shareholders shall be distributed ratably among all holders of Series A and
Series B Preferred Stock and the holders of Common Stock on a share for share
basis. In the event that funds are insufficient to permit payment in full of
the $1.00 preferential amount due the Series A and Series B Preferred Stock,
then the assets shall be distributed among holders of the Series A and Series B
Preferred Stock ratably, in proportion to the full amounts to which they are
respectively entitled. All outstanding shares of Series A and Series B
Preferred Stock are subject to redemption by Bancshares at any time through the
period ending December 31, 1998, for an amount per share equal to the original
issue price plus interest on said amount at the "prime" rate of interest, as
such rate may from time to time exist, as published in the Wall Street Journal,
plus one (1%) percent, from the date of original issue of said shares, August
22, 1994, through the date of redemption.
PART II
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
There is no public trading market for the Bancshares Common Stock or
Preferred Stock. Neither the Common Stock nor the Preferred Stock of
Bancshares has ever traded, and does not trade, on or through any exchange,
established quotation or listing system or market-maker. To the knowledge of
Bancshares management, there have been no sales or exchanges of the Bancshares
Common Stock or Preferred Stock within the past two years, nor have there been
any cash dividends declared or paid on
- 17 -
<PAGE> 20
the Bancshares Common Stock or Preferred Stock within the past two years. At
March 31, 1997, the total 143,374 shares of Bancshares Common Stock were held
of record by 518 shareholders; the 24,462 shares of nonvoting Series A
Preferred Stock are held of record by two shareholders; and the 21,559 shares
of Series B, voting Preferred Stock were held of record by seven shareholders.
LEGAL PROCEEDINGS
Guaranty Bank is, from time to time, a party to routine litigation
arising from regular business activities incident to furnishing financial
services. In addition, Bancshares and/or Guaranty Bank are parties to the
following legal proceedings:
(1) H.T. Olinde, Jr., et al. v. The 400 Group, et al., 18th
Judicial District Court, Suit Number 27,859, Division "Ad Hoc". Bancshares and
Guaranty Bank are substitute plaintiffs in this action, originally filed in
May, 1993 by the shareholders of Bancshares as a derivative action against
former directors and certain others ("The 400 Group"), seeking declaration of
the amount due under promissory notes evidencing advances by The 400 Group to
or for the benefit of Bancshares in 1987-88. The total amount advanced by The
400 Group was $1 million, including $400,000 for purchase of a promissory note
made by Bancshares, on which note the principal and interest due at the time of
purchase by The 400 Group was $1.7 million. After trial on the merits in
August, 1994, the trial court awarded judgment for approximately $3.6 million
against Bancshares, including the full face amount, approximately $2.4 million,
on the promissory note purchased by The 400 Group for $400,000. The judgment
amount was paid by Bancshares, subject to appeal. On appeal, the Louisiana
First Circuit Court of Appeal modified the judgment and reduced the trial
court's judgment to return of the original advances, plus reasonable interest,
a total of approximately $1.8 million. If the ruling by the First Circuit
becomes the final judgment in this case, Bancshares will be entitled to
reimbursement by The 400 Group of the overpayment, plus interest thereon, a
total of approximately $2.1 million. The 400 Group has requested review of the
First Circuit's ruling by the Louisiana Supreme Court. No decision has been
announced by the Supreme Court regarding whether the matter will be accepted
for review by the Supreme Court.
(2) Team Bank and Trust Company (now known as Guaranty Bank &
Trust Company) v. Thomas R. Bryan, et al., 18th Judicial District Court, Suit
Number 28,255, Div. "D". This claim was filed by Guaranty Bank in September,
1993 against certain of its former directors for breach of fiduciary duty
incident to causing payment by Guaranty Bank of a total of approximately
$127,000 in charges by third parties for services which Guaranty Bank asserts
were for the benefit of the defendants. The defendants assert that the charges
were for services that benefitted Bancshares and deny that any reimbursement is
due Guaranty Bank.
(3) Thomas R. Bryan v. Guaranty Bank & Trust Company, 18th
Judicial District Court, Suit Number 28,873, Div. "A". In August, 1993 the
Bank's chief executive officer, Thomas R. Bryan, who was also the president of
The 400 Group (described above), was dismissed for his actions on behalf of The
400 Group and adverse to Guaranty Bank and Bancshares. In May, 1994, Mr. Bryan
filed suit for alleged breach of his employment agreement with Guaranty Bank.
Guaranty Bank contends that there was ample cause for termination of the
employment agreement in accordance with its terms, that there are other
meritorious defenses to Mr. Bryan's claims, and that the suit is frivolous. No
answer to the plaintiff's petition has been required of or filed by Guaranty
Bank, and this proceeding is currently dormant.
- 18 -
<PAGE> 21
(4) Raymond Long, et al. v. Great Guaranty Bancshares, Inc., et
al., 18th Judicial District Court, Suit Number 23,413, Div. "C". In 1988, a
former director, Raymond Long, sued Guaranty Bank, Bancshares and the Bank's
chief executive officer at that time, Thomas R. Bryan, for $1.5 million
alleging, among other things, that Guaranty Bank wrongfully dishonored checks.
This action has been dormant for several years, and by agreement of the parties
will remain dormant pending final decision in the litigation with The 400 Group
described above.
CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
There has been no change in nor disagreement with the independent
accountants of Bancshares or Guaranty Bank during the two most recent fiscal
years.
RECENT SALES OF UNREGISTERED SECURITIES
In July, 1994, the directors of Bancshares loaned to Bancshares the
sum of $219,200 pursuant to convertible debentures of a form approved by the
Bancshares Board of Directors and by the Federal Reserve Board for funding of
expenses of Bancshares' ongoing litigation with its prior directors and others.
See "Legal Proceedings". The debentures stipulated interest on the principal
amount at the "prime" rate as it may from time to time exist, as published in
the Wall Street Journal, plus one (1%) percent per annum. On August 22, 1994,
by agreement of Bancshares and the holders of the debentures, the debentures
were converted into 42,896 shares of the previously authorized Series B
Preferred Stock at the conversion price of $5.11 per share, based on
information then available regarding value of Bancshares and subject to the
right of Bancshares to redeem shares of the Preferred Stock if necessary to
avoid dilution of the holders of Common Stock upon completion of pending
litigation. In furtherance of that redemption right, the holders of the
Preferred Stock granted to Bancshares the right to redeem the Preferred Shares
for the original issue price plus an amount equal to interest on the issue
price at the prime rate, plus one (1%) percent per annum, from the issue date
through the date of redemption. On December 29, 1995 Bancshares issued to
Raymond R. Long, 3,125 shares of Series B Preferred Stock in payment of
indebtedness by Bancshares to Mr. Long, subject to the right of Bancshares to
redeem said shares on terms and conditions identical to those described above.
On December 28, 1995 a total of 24,462 shares of the Series B voting Preferred
Stock were converted to shares of Series A, nonvoting Preferred Stock on a
share for share basis, on agreement of Bancshares with the holders of said
shares. The shares of Series A and Series B Preferred Stock referred to above
were issued on exemption from registration pursuant to the intrastate offering
exemption, Section 3(a)(11) of the Securities Act of 1933. The Company did not
use any underwriters in connection with the offering, and no securities sales
commissions were paid.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 83 of the Louisiana Business Corporation Law ("LBCL") provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another business, foreign or nonprofit corporation, partnership, joint venture,
or other
- 19 -
<PAGE> 22
enterprise. The indemnity may include expenses, including attorney fees,
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Section 83 further provides that a Louisiana corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions except that no indemnification is
permitted without judicial approval if the director or officer shall have been
adjudged to be liable for willful or intentional misconduct in the performance
of his duty to the corporation. Where an officer or director is successful on
the merits or otherwise in any defense of any action referred to above or any
claim therein, the corporation must indemnify him against such expenses that
such officer or director actually incurred. Section 83 permits a corporation
to pay expenses incurred by the officer or director in defending an action,
suit or proceeding in advance of the final disposition thereof if approved by
the board of directors.
Article 9 of the Bancshares Articles of Incorporation provides that
Bancshares shall indemnify any person threatened with or who is made a party to
any legal proceeding by reason of the fact that he is serving or has served as
a director, officer or employee of Bancshares. Such indemnification shall
include expenses actually and reasonably incurred by such person in connection
with the defense or settlement of such proceeding if (i) he is successful on
the merits or otherwise or (ii) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation.
- 20 -
<PAGE> 23
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
-21-
<PAGE> 24
C O N T E N T S
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT 23
CONSOLIDATED STATEMENTS OF CONDITION
December 31, 1996 and 1995 24 - 25
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 1996, 1995 and 1994 26 - 27
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Years ended December
31, 1996 and 1995 and 19946 - 28 - 29
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1996, 1995 and 1994 30 - 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 32 - 52
</TABLE>
-22-
<PAGE> 25
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Great Guaranty Bancshares, Inc.
New Roads, Louisiana
We have audited the accompanying consolidated statements of condition of Great
Guaranty Bancshares, Inc. and Subsidiary as of December 31, 1996 and 1995, and
the related consolidated statements of income, changes in shareholders' equity
and cash flows for each of the years during the three year period ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Great Guaranty
Bancshares, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the years during
the three year period ended December 31, 1996 in conformity with generally
accepted accounting principles.
POSTLETHWAITE & NETTERVILLE
Baton Rouge, Louisiana
April 4, 1997
-23-
<PAGE> 26
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF CONDITION
DECEMBER 31, 1996 AND 1995
A S S E T S
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash and due from banks $ 2,406,805 $ 1,725,550
Interest-bearing deposits with banks 1,288,571 --
Federal funds sold -- 1,825,000
Investment securities - available for sale 19,761,011 20,525,539
Restricted investments in equity securities 202,100 190,600
Loans, net of allowance for loan losses of
$254,819 and $261,601, respectively 16,823,712 14,731,246
Properties and equipment, net 664,854 704,848
Accrued interest receivable 355,583 371,516
Other assets 547,695 764,055
----------- -----------
TOTAL ASSETS $42,050,331 $40,838,354
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-24-
<PAGE> 27
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES
Demand deposits $ 6,304,731 $ 7,565,089
NOW deposits 5,053,484 3,297,949
Savings deposits 9,168,044 9,066,175
Time deposits, $100,000 and over 1,168,073 739,137
Other time deposits 14,539,820 14,320,907
------------ ------------
Total deposits 36,234,152 34,989,257
Notes payable 4,376,531 5,187,718
Accrued expenses and other liabilities 168,587 216,563
Federal funds purchased 700,000 --
------------ ------------
Total liabilities 41,479,270 40,393,538
------------ ------------
COMMITMENTS AND CONTINGENT LIABILITIES -- --
SHAREHOLDERS' EQUITY
Preferred stock - Series A, no par; 500,000 shares
authorized; 24,462 shares issued and outstanding 126,037 126,037
Preferred stock - Series B, no par; 2,000,000 shares
authorized; 21,559 shares issued and outstanding 111,080 111,080
Common stock - $7.50 par value, 500,000 shares
authorized; 143,374 shares issued and outstanding 1,075,305 1,075,305
Capital surplus 2,411,471 2,411,471
Retained deficit (3,151,760) (3,368,831)
Unrealized gain (loss) on securities available for sale,
net of tax of $552 and $46,237, respectively (1,072) 89,754
------------ ------------
Total shareholders' equity 571,061 444,816
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 42,050,331 $ 40,838,354
============ ============
</TABLE>
-25-
<PAGE> 28
Page 1 of 2
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 1,671,939 $ 1,485,824 $ 1,193,181
Interest on investment securities 1,210,354 1,456,679 1,203,397
Interest on federal funds sold 105,250 53,622 94,746
Interest on deposits with banks 61,860 1,044 65,786
----------- ----------- -----------
Total interest income 3,049,403 2,997,169 2,557,110
----------- ----------- -----------
INTEREST EXPENSE
Interest on notes payable 396,691 311,423 65,069
Interest on deposits 959,466 919,507 838,009
----------- ----------- -----------
Total interest expense 1,356,157 1,230,930 903,078
----------- ----------- -----------
NET INTEREST INCOME 1,693,246 1,766,239 1,654,032
PROVISION (CREDIT) FOR LOAN LOSSES (15,000) (23,106) (35,000)
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,708,246 1,789,345 1,689,032
----------- ----------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 342,481 342,179 225,401
Other service charges and fees 27,738 16,078 29,663
Net investment securities gains (losses) -- -- (6,497)
Other income 25,617 11,149 19,867
----------- ----------- -----------
395,836 369,406 268,434
----------- ----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits 887,540 885,009 902,879
Occupancy expense 227,632 200,996 235,877
Data processing 170,990 154,139 89,640
Legal fees 107,884 319,105 322,860
Other expense 379,773 435,313 542,297
----------- ----------- -----------
1,773,819 1,994,562 2,093,553
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 330,263 164,189 (136,087)
INCOME TAX EXPENSE (BENEFIT) 113,192 (331,126) --
----------- ----------- -----------
NET INCOME (LOSS) $ 217,071 $ 495,315 ($ 136,087)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-26-
<PAGE> 29
Page 2 of 2
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
PER COMMON SHARE DATA:
Net income (loss) $ 1.51 $ 3.45 $ (.95)
======= ======= =======
Average shares outstanding 143,374 143,374 143,374
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 30
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Preferred Stock
----------------------------------------------
Series A Series B
--------------------- ----------------------
# of # of
Shares Amount Shares Amount
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 -- $ -- -- $ --
Net (loss) -- -- -- --
Preferred stock issued -- -- 42,896 219,200
Change in unrealized gain (loss) on
securities available for sale -- -- -- --
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1994 -- -- 42,896 219,200
Net income -- -- -- --
Preferred stock issued -- -- 3,125 17,917
Exchange of Class B stock (voting)
for Class A stock (non-voting) 24,462 126,037 (24,462) (126,037)
Change in unrealized gain (loss) on
securities available for sale -- -- -- --
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1995 24,462 126,037 21,559 111,080
Net income -- -- -- --
Change in unrealized gain (loss) on
securities available for sale -- -- -- --
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1996 24,462 $ 126,037 21,559 $ 111,080
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
-28-
<PAGE> 31
<TABLE>
<CAPTION>
Unrealized
Gain (Loss) on
Common Stock Securities Total
# of Capital Retained Available Shareholders'
Shares Amount Surplus Deficit for Sale Equity
- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
143,374 $ 1,075,305 $ 2,411,471 $(3,728,059) $ -- $ (241,283)
-- -- -- (136,087) -- (136,087)
-- -- -- -- -- 219,200
-- -- -- -- (40,071) (40,071)
- ----------- ----------- ----------- ----------- ----------- -----------
143,374 1,075,305 2,411,471 (3,864,146) (40,071) (198,241)
-- -- -- 495,315 -- 495,315
-- -- -- -- -- 17,917
-- -- -- -- -- --
-- -- -- -- 129,825 129,825
- ----------- ----------- ----------- ----------- ----------- -----------
143,374 1,075,305 2,411,471 (3,368,831) 89,754 444,816
-- -- -- 217,071 -- 217,071
-- -- -- -- (90,826) (90,826)
- ----------- ----------- ----------- ----------- ----------- -----------
143,374 $ 1,075,305 $ 2,411,471 $(3,151,760) $ (1,072) $ 571,061
=========== =========== =========== =========== =========== ===========
</TABLE>
-29-
<PAGE> 32
Page 1 of 2
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 217,071 $ 495,315 $ (136,087)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 119,589 114,029 111,082
Provision for loan losses (15,000) (23,106) (35,000)
Deferred tax expense (benefit) 113,192 (331,126) --
Net amortization on investment premium\discounts (4,708) 36,180 74,998
Write down of other real estate -- 46,128 60,500
Stock dividends received (11,500) (11,400) (3,200)
Net gain on sale of other real estate (24,204) (9,308) --
Net investment securities losses -- -- 6,497
(Increase) decrease in accrued income
and other assets (5,187) 107,522 105,885
Increase (decrease) in accrued expenses
and other liabilities (56,150) (1,495,570) (133,073)
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 333,103 (1,071,336) 51,602
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales/maturities of investment securities
Held to maturity -- 5,200,201 8,606,001
Available for sale 9,044,870 -- 455,155
Purchase of investment securities
Held to maturity -- (3,423,951) (10,177,647)
Available for sale (8,413,250) -- (997,066)
Net change in:
Interest bearing deposits with banks (1,288,571) 392,000 2,438,183
Federal funds sold 1,825,000 (1,125,000) 3,425,005
Loans (2,077,466) (2,854,106) (375,427)
Purchase of equipment and building improvements (79,595) (151,058) (31,056)
Proceeds from sale of other real estate 195,281 374,000 33,475
------------ ------------ ------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (793,731) (1,587,914) 3,376,623
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
-30-
<PAGE> 33
Page 2 of 2
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in non-interest-bearing
demand, savings and NOW deposit accounts $ 597,048 $ (698,095) $(1,655,039)
Net increase (decrease) in time deposits 647,849 (451,547) (2,090,527)
Payments on bank notes payable (700,524) (2,076,117) --
Proceeds of issuance of note payable -- 3,800,524 --
Net advances (repayments) on FHLB line of credit (102,490) 1,156,198 222,176
Federal funds purchased 700,000 -- --
Proceeds of issuance of preferred stock -- 17,917 219,200
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,141,883 1,748,880 (3,304,190)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS 681,255 (910,370) 124,035
CASH AND DUE FROM BANKS AT
BEGINNING OF YEAR 1,725,550 2,635,920 2,511,885
----------- ----------- -----------
CASH AND DUE FROM BANKS AT
END OF YEAR $ 2,406,805 $ 1,725,550 $ 2,635,920
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 1,361,830 $ 1,506,382 $ 868,546
=========== =========== ===========
Income taxes $ -- $ -- $ --
=========== =========== ===========
Non-cash investing and financing activities:
Stock dividends - FHLB $ 11,500 $ 11,400 $ 3,200
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-31-
<PAGE> 34
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Great Guaranty Bancshares, Inc.
(the Company) and Subsidiary conform to generally accepted accounting
principles and the prevailing practices within the banking industry. A
summary of significant accounting policies is as follows:
Basis of Presentation
The consolidated financial statements include the accounts of
Bancshares and its wholly-owned subsidiary, Guaranty Bank & Trust
Company (the Bank). The Bank operates and extends credit primarily in
and around Pointe Coupee Parish, Louisiana. All significant
intercompany accounts and transactions have been eliminated. Assets
held in an agency or fiduciary capacity are not assets of the Bank
and, accordingly, are not included in the accompanying consolidated
financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Investment in Debt Securities
The Bank's investments in debt securities are classified into two
categories and accounted for as follows:
o Securities to be Held to Maturity. Consists of bonds, notes, and
debentures for which the Bank has the positive intent and
ability to hold to maturity. These securities are reported at
cost, adjusted for amortization of premiums and accretion of
discounts which are recognized in interest income using the
interest method over the period to maturity.
o Securities Available for Sale. Consists of bonds, notes and
debentures that are available to meet the Bank's operating
needs. These securities are reported at fair value as determined
by quoted market prices.
Declines in the fair value of individual held to maturity and
available for sale securities below their cost that are other than
temporary have resulted in write-downs of the individual securities
to their fair value. The related write-downs have been included in
earnings as realized losses.
Unrealized holding gains and losses, net of tax, on securities
available for sale are reported as a net amount in a separate
component of shareholders' equity until realized.
Realized gains and losses on the sale of securities are determined
using the specific-identification method.
-32-
<PAGE> 35
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Loans Receivable
Loans receivable that management has the intent and ability to hold
for the foreseeable future or until maturity or pay-off are reported
at their outstanding principal adjusted for any charge-offs, the
allowance for loan losses, and any deferred fees or costs on
originated loans and unamortized premiums or discounts on purchased
loans.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as
they become due. When interest accrual is discontinued, all unpaid
accrued interest is reversed. Interest income is subsequently
recognized only to the extent cash payments are received.
The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is based on the Bank's
past loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to repay,
the estimated value of any underlying collateral, and current
economic conditions.
Foreclosed Real Estate
Real estate properties acquired through, or in lieu of, loan
foreclosure are to be sold and are initially recorded at fair value
at the date of foreclosure establishing a new cost basis. After
foreclosure, valuations are periodically performed by management and
the real estate is carried at the lower of carrying amount or fair
value less cost to sell. Revenue and expenses from operations and
changes in the valuation allowance are included in loss on foreclosed
real estate.
Bank premises and equipment
Bank premises and equipment are stated at cost less accumulated
depreciation which is computed using either straight-line or
accelerated methods over the estimated useful lives of the assets,
which range from three to 30 years.
Income Taxes
Provisions for income taxes are based on taxes payable or refundable
for the current year (after exclusion of non-taxable income such as
interest on state and municipal securities) and deferred taxes on
temporary differences between the amount of taxable income and pretax
financial income and between the tax bases of assets and liabilities
and their reported amounts in the financial statements. Deferred tax
assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which
the deferred tax assets and liabilities are expected to be realized
or settled as prescribed in FASB Statement No. 109, Accounting for
Income Taxes. As changes in tax laws or rates are enacted, deferred
tax assets and liabilities are adjusted through the provision for
income taxes.
-33-
<PAGE> 36
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings per share
Earnings per share are calculated on the basis of the weighted
average number of shares outstanding.
Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents are
defined as those amounts included in the balance sheet caption "Cash
and due from banks."
Off-Balance Sheet Financial Instruments
In the ordinary course of business, the Bank has entered into
off-balance sheet financial instruments consisting primarily of
commitments to extend credit. Such financial instruments are recorded
in the financial statements when they are funded.
Fair Values of Financial Instruments
Statement of Financial Accounting Standards (SFAS) 107, Disclosures
about Fair Value of Financial Instruments, requires disclosure of
fair value information about financial instruments, whether or not
recognized in the balance sheet. In cases where quoted market prices
are not available, fair values are based on estimates using present
value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. In that regard, the
derived fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in
immediate settlement of the instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented
do not represent the underlying value of Bancshares.
The following methods and assumptions were used by Bancshares in
estimating its fair value disclosures for financial instruments:
Cash and Cash Equivalents - The carrying amounts reported in the
balance sheets for cash and cash equivalents approximate those
assets' fair values.
Interest-bearing deposits in other banks - Fair values for
interest-bearing deposits in other banks are estimated using a
discounted cash flow analysis that applies interest rates
currently being offered on certificates to a schedule of
aggregated contractual maturities on such time deposits.
Investment Securities - Fair values for investment securities
are based on quoted market prices, where applicable. If quoted
market prices are not available, fair values are based on quoted
market prices of comparable instruments.
-34-
<PAGE> 37
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Values of Financial Instruments (continued)
Loans Receivable - For variable-rate loans that reprice
frequently and have no significant change in credit risk, fair
values are based on carrying values. Fair values for certain
mortgage loans (e.g., one-to-four family residential), credit
card loans, and other consumer loans are based on quoted market
prices of similar loans sold in conjunction with securitization
transactions, adjusted for differences in loan characteristics.
Fair values for commercial real estate and commercial loans are
estimated using discounted cash flow analyses, using interest
rates currently being offered for loans with similar terms to
borrowers of similar credit quality. Fair values for impaired
loans are estimated using discounted cash flow analyses or
underlying collateral values, where applicable.
Deposit liabilities - The fair values disclosed for demand
deposits are, by definition, equal to the amount payable on
demand at the reporting date (that is, their carrying amounts).
The carrying amounts of variable-rate, fixed-term money market
accounts and certificates of deposit approximate their fair
values at the reporting date. Fair values for fixed-rate
certificates of deposit are estimated using a discounted cash
flow calculation that applies interest rates currently being
offered on certificates to a schedule of aggregated expected
monthly maturities on time deposits.
Short-term borrowings - The carrying amounts of federal funds
purchased, borrowings under repurchase agreements, and other
short-term borrowings maturing within 90 days approximate their
fair values. Fair values of other short-term borrowings are
estimated using discounted cash flow analyses based on the
Bank's current incremental borrowing rates for similar types of
borrowing arrangements.
Long-term debt - The fair values of the Company's long-term debt
are estimated using discounted cash flow analyses based on the
Company's current incremental borrowing rates for similar types
of borrowing arrangements.
Accrued interest - The carrying amount of accrued interest
payable approximates fair value.
Off-Balance Sheet Instruments - Fair values for off-balance
sheet lending commitments are based on fees currently charged to
enter into similar agreements, taking into account the remaining
terms of the agreements and the counterparties' credit standing.
Reclassification
Certain amounts in the 1995 and 1994 financial statements have been
reclassified to conform with the current year presentation.
-35-
<PAGE> 38
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INVESTMENT SECURITIES
<TABLE>
<CAPTION>
December 31, 1996
-----------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available for Sale
U.S. Treasury & U. S. Agency $ 8,200,023 $ 31,059 $ -- $ 8,231,082
Mortgage backed securities 9,660,253 15,765 (48,448) 9,627,570
Agency for International
Development bonds 1,902,359 -- -- 1,902,359
------------ ------------ ------------ ------------
$ 19,762,635 $ 46,824 $ (48,448) $ 19,761,011
============ ============ ============ ============
Restricted Investments in
Equity Securities
Stock in Federal Home
Loan Bank, at cost $ 202,100 $ -- $ -- $ 202,100
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
-----------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available for Sale
U.S. Treasury & U. S. Agency $ 7,914,918 $ 61,290 $ (7,807) $ 7,968,401
Mortgage backed securities 10,519,865 136,812 (54,407) 10,602,270
Municipal securities 20,000 104 -- 20,104
Agency for International
Development bonds 1,934,764 -- -- 1,934,764
------------ ------------ ------------ ------------
$ 20,389,547 $ 198,206 $ (62,214) $ 20,525,539
============ ============ ============ ============
Restricted Investments in
Equity Securities
Stock in Federal Home
Loan Bank, at cost $ 190,600 $ -- $ -- $ 190,600
============ ============ ============ ============
</TABLE>
-36-
<PAGE> 39
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INVESTMENT SECURITIES (continued)
During 1995, the Bank reassessed the classifications of investment
securities and transferred securities from held to maturity to available
for sale having amortized costs of $13,912,703 and fair value of
$13,982,936. Gross unrealized gains were $130,833 and unrealized losses
were $60,600 at the date of transfer.
Investments in restricted equity securities consist of stock of the
Federal Home Loan Bank. These investments' fair values are based on the
recoverability of their par value. The Bank is required to maintain an
investment balance in FHLB equal to 5% of its outstanding advances with
the Federal Home Loan Bank (see Note 6). These investments are pledged as
collateral against borrowings from the FHLB.
The amortized cost and estimated market value of debt securities at
December 31, 1996, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
Securities Available for Sale
------------------------------
Amortized Fair
Cost Value
----------- -----------
<S> <C> <C>
Due in one year or less $ 6,043,926 $ 6,061,576
Due from one year to five years 6,089,455 6,114,056
Due from five years to ten years 3,436,552 3,418,234
Due after ten years 4,192,702 4,167,145
----------- -----------
$19,762,635 $19,761,011
=========== ===========
</TABLE>
For purposes of the maturity table, mortgage-backed securities, which are
not due at a single maturity date, have been allocated over maturity
groupings based on the weighted-average contractual maturities of
underlying collateral. The mortgage-backed securities may mature earlier
than their weighted-average contractual maturities because of principal
prepayments.
Investment securities with an approximate cost of $1,000,000 and
$2,440,000 and an approximate fair value of $1,000,000 and $2,428,000 at
December 31, 1996 and 1995, respectively, were pledged to secure public
deposits and for other purposes as required or permitted by law.
Proceeds from sales of securities available for sale were $1,308,040
resulting in gross realized gains of $1,817 and gross realized losses of
$8,314 for 1994. No securities were sold in 1996 or 1995.
-37-
<PAGE> 40
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. LOANS
The components of loans in the statements of condition at December 31
were as follows:
<TABLE>
<CAPTION>
(In Thousands)
--------------------
1996 1995
-------- --------
<S> <C> <C>
Commercial $ 1,065 $ 1,330
Commercial real estate 2,345 2,594
Residential real estate 9,572 7,568
Consumer 2,731 2,367
Agricultural 1,366 1,134
Less: Allowance for loan losses (255) (262)
-------- --------
$ 16,824 $ 14,731
======== ========
</TABLE>
An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 261,601 $ 279,961 $ 313,636
Loans charged off -- (15,802) (869)
Recoveries 8,218 20,548 2,194
Provision (credit) for loan losses (15,000) (23,106) (35,000)
--------- --------- ---------
Balance, end of year $ 254,819 $ 261,601 $ 279,961
========= ========= =========
</TABLE>
The current year's allowance for loan losses of $254,819 was considered
adequate to provide for future losses and resulted in a credit in
provisions for loan losses of $15,000.
Included in other assets is $171,076 at December 31, 1995, of property
acquired through foreclosure. There are no impaired loans or property
acquired through foreclosures at December 31, 1996.
4. TIME DEPOSITS
At December 31, 1996, the scheduled maturities of time deposits are as
follows: (in thousands)
<TABLE>
<S> <C>
Within 3 months or less $ 4,945
Over 3 months through 12 months 7,137
Over 1 year through 5 years 2,344
Over 5 years 1,282
-------
$15,708
=======
</TABLE>
-38-
<PAGE> 41
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. PROPERTIES AND EQUIPMENT
Components of properties and equipment included in the statement of
condition at December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cost:
Land $ 276,990 $ 276,990
Bank premises 1,278,978 1,278,403
Furniture and equipment 518,636 452,175
----------- -----------
Total cost 2,074,604 2,007,568
Less: accumulated depreciation (1,409,750) (1,302,720)
----------- -----------
Net book value $ 664,854 $ 704,848
=========== ===========
</TABLE>
Depreciation expense amounted to $119,589, $114,029 and $111,082 for the
years ended December 31, 1996, 1995, and 1994, respectively.
6. NOTES PAYABLE
Long-Term Debt
The Bank periodically borrows funds from the Federal Home Loan Bank under
an Advances, Collateral Pledge and Security Agreement dated April 20,
1994. Under this agreement, the Bank is eligible to receive advances up to
a maximum amount, based on the value of collateral pledged as determined
by FHLB guidelines. Each advance has a fixed rate, determined as of the
date of the advance and a repayment term of 113-132 months. All advances
are secured by a blanket floating lien on all of the Bank's 1-4 single
family first mortgage loans, Federal Home Loan Bank stock and deposits
with the Federal Home Loan Bank. The carrying amounts and assigned values
of collateral pledged under this agreement are as follows:
<TABLE>
<CAPTION>
December 31, 1996
------------------------
Carrying Assigned
Amount Value
---------- ----------
<S> <C> <C>
FHLB stock $ 202,100 $ 202,100
Deposits with FHLB 66,140 66,140
1-4 single family first mortgage 9,451,390 6,143,403
---------- ----------
$9,719,630 $6,411,643
========== ==========
+ 110%
Maximum advances available $ 5,828,766
Advances outstanding (1,276,531)
-----------
$ 4,552,235
===========
</TABLE>
-39-
<PAGE> 42
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. NOTES PAYABLE (continued)
Advances outstanding under this agreement totalled $1,378,374 at December
31, 1995.
Scheduled future principal payments of advances outstanding as of December
31, 1996 are as follows:
<TABLE>
<S> <C>
1997 $ 109,749
1998 118,274
1999 127,463
2000 137,370
2001 148,052
Thereafter 635,623
------------
$ 1,276,531
============
</TABLE>
The weighted average interest rate of all advances outstanding as of
December 31, 1996 was 7.5%. Interest expense on these advances amounted to
$86,808, $99,793 and $6,167 for 1996, 1995 and 1994, respectively.
Demand Notes Payable
The Company owes a note payable to a bank in the principal amount of
$2,900,000, which is due on demand and bears interest at the Chase
Manhattan Prime rate plus 1%. The interest rate on the note in effect at
December 31, 1996 was 9.25%. Under the terms of this note, if no demand is
made, the note is payable in full on January 15, 1997. Interest is payable
on the note upon maturity. This loan is secured, by a pledge of 100% of
the Subsidiary Bank's common stock. Subsequent to the date of these
financial statements, the Company renewed this note payable under
essentially the same terms for a 90 day period. As of December 31, 1995,
the Company owed $3,600,000 under a similar borrowing arrangement with
this Bank.
The Company owes to an individual a note payable dated December 8, 1995 in
the amount of $200,000, bearing interest at New York Prime, but not less
than 8.75% per annum. Interest is payable monthly. The principal was
scheduled to mature on December 31, 1996. As the holder of the note has
not made demand for payment as of December 31, 1996, the principal remains
outstanding and interest continues to accrue under the original terms.
This note is secured by 100% of the Subsidiary Bank's common stock,
subordinate to the security interest of the debtee bank mentioned in the
previous paragraph. This individual is a shareholder of the Company.
-40-
<PAGE> 43
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. INCOME TAXES
The source and tax effect of items reconciling income tax expense to the
amount computed by applying the federal income tax rates in effect to
income before income tax expense for the years ended December 31, 1996,
1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1996 % 1995 % 1994 %
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Tax based on statutory rate $ 112,289 34.0% $ 55,824 34.0% ($46,269) (34.0%)
Tax exempt interest (485) (.1) (1,943) (1.2) -- --
Effect of tax brackets -- -- (9,763) (5.9) -- --
Change in valuation allowance -- -- (375,244) (228.6) 46,269 34.0
Non-deductible expenses 1,388 .4 -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
$ 113,192 34.3% ($ 331,126) (201.7%) $ -- --
========== ========== ========== ========== ========== ==========
</TABLE>
In accordance with Statement of Financial Accounting Standards No. 109,
deferred income taxes are provided on the tax effect of changes in
temporary differences. Deferred tax assets are subject to a valuation
allowance if their realization is less likely than not. Deferred tax
assets (liabilities) which are included in other assets (net) on the
accompanying statements of condition are comprised of the following at
December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Unrealized investment gains - available for sale $ -- ($ 46,237)
Stock dividends received on investments (8,874) (4,964)
Allowance for loan losses (200,048) (194,924)
Depreciation on premises and equipment -- (342)
--------- ---------
Gross deferred tax liability (208,922) (246,467)
--------- ---------
Unrealized investment losses - available-for-sale 552 --
Writedowns of foreclosed property -- 102,572
Net operating loss carryforward 662,016 672,620
Depreciation on premises and equipment 8,650 --
Business credit carryforwards and other 9,379 10,354
--------- ---------
Gross deferred tax asset 680,597 785,546
Valuation allowance -- --
--------- ---------
680,597 785,546
--------- ---------
Net deferred tax asset $ 471,675 $ 539,079
========= =========
</TABLE>
In 1994 the net deferred tax asset was reduced to zero through allowance
due the litigation (see Note 9). In 1995 the valuation allowance was
removed due to the outcome of the litigation.
-41-
<PAGE> 44
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. INCOME TAX (continued)
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Taxes payable currently $ -- $ -- $ --
Deferred tax expense (benefit) 113,192 (331,126) --
---------- ---------- ----------
$ 113,192 $( 331,126) $ --
========== ========== ==========
</TABLE>
At December 31, 1996, the Company has available net operating loss
carryforwards of approximately $1,950,000 which may provide tax benefits
that will begin to expire in 2000. These carryforwards could become
limited under applicable Sections of the 1986 Internal Revenue Code if
more than a 50% change of ownership occurs.
8. RELATED PARTIES
Certain officers and directors, and companies in which they have 10
percent or more beneficial ownership, were indebted to the Bank in the
aggregate amounts of $763,650 and $754,278 at December 31, 1996 and 1995,
respectively. During 1996 and 1995, $593,568 and $363,834 of new loans
were made, and loan repayments totaled $584,196 and $267,110,
respectively.
9. CONTINGENCIES AND COMMITMENTS
The Bank's financial statements do not reflect various commitments and
contingent liabilities which arise in the normal course of business and
which involve elements of credit risk, interest rate risk and liquidity
risk. These commitments and contingent liabilities are described in Note
14 - Financial Instruments.
Litigation
The Company is a plaintiff in an action seeking declaration of the amount,
if any, due under promissory notes evidencing advances by the defendant
creditor to or for the benefit of Great Guaranty Bancshares in 1987-88. In
its reconventional demand, the defendant sought judgment on the notes and,
in the alternative, 90% of the capital stock of the holding company in
exchange for cancellation of the notes. After trial on the merits in
August 1994, the defendant's alternative demand for delivery of holding
company stock in exchange for cancellation of indebtedness was denied, but
judgment for approximately $3.6 million was awarded against the holding
company on the notes. The trial court's judgment was appealed by both
parties.
In 1995 the Company delivered to the defendants the judgment amount, with
reservation of all rights on appeal. The delivery of the judgment amount
was financed through a loan with an area bank. The stock of the Bank is
pledged as collateral on this debt of its holding company. (See Note 6)
-42-
<PAGE> 45
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. CONTINGENCIES AND COMMITMENTS (continued)
In December 1996, the appellate court modified the trial court's judgment
and reduced the amount due to the defendant to approximately $1.8 million.
If the appellate court's ruling becomes the final judgment, a balance
would be owed back to the Company of approximately $1.8 million plus
accrued interest from July 10, 1995 (the date the trial court's judgment
was delivered to the defendant).
In March 1997, the defendant requested review of the appellate court's
ruling by the Supreme Court of Louisiana. As of the date of issuance of
these consolidated financial statements, it is uncertain whether or not
this case will be heard by the Supreme Court. Should the Supreme Court
decline to hear the appeal, the appellate court's ruling would become the
final judgment, and, thus, the Company would be entitled to recoup the
$1.8 million overpayment plus accrued interest. Should the Supreme Court
accept the case for review, its decision would be final.
Inasmuch as the judgment in this case is not final, neither the
overpayment resulting from the appellate court's ruling nor the interest
accrued thereon is recorded in the statements of condition.
The Company and its subsidiary are also parties to other litigation and
claims arising in the normal course of business. Management, after
consultation with legal counsel, believes that the liabilities, if any,
arising from such litigation and claims will not be material to the
Company.
10. SIGNIFICANT GROUP CONCENTRATION OF CREDIT RISK
All of the Bank's loans and commitments have been granted to customers in
the Bank's market area and the concentrations of credit by type of loan
are set forth in Note 3. The distribution of commitments to extend credit
approximates the distribution of loans outstanding. Commitments to extend
credit were granted primarily to agricultural and commercial borrowers.
Although the Bank has a diversified loan portfolio, a substantial portion
of its debtors' ability to honor their contracts is dependent upon the
agribusiness economic sector.
11. REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken, could
have a direct material effect on the Bank's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Bank must meet specific capital guidelines that
involve quantitative measures of the Bank's assets, liabilities and
certain off-balance sheet items as calculated under regulatory accounting
practices. The Bank's capital amounts and classification are also subject
to qualitative judgments by the regulators about components, risk
weightings, and other factors.
-43-
<PAGE> 46
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. REGULATORY MATTERS (continued)
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I capital (as defined in the
regulations) to risk- weighted assets (as defined), and of Tier I capital
(as defined) to average assets (as defined). In addition to the minimum
levels of capital which are standard for all Banks under the authority of
the FDIC, the Bank must maintain a minimum Tier 1 leverage capital ratio
of 7%. This higher standard is a required condition to the Bank's release
from a cease and desist order in 1993. Management believes, as of
December 31, 1996, that the Bank meets all capital adequacy requirements
to which it is subject.
As of December 31, 1996, the most recent notification from the Office of
the Comptroller of the Currency categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be
categorized as well capitalized, the Bank must maintain minimum total
risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in
the table. There are no conditions or events since that notification that
management believes have changed the institution's category.
The Bank's actual capital amounts (in thousands) and ratios as of
December 31, 1996 and 1995 are also presented in the table.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
------------------- ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital
(to Risk Weighted Assets) $ 3,701 19.2% $ 1,543 )=8.0% $ 1,928 )=10.0%
Tier I Capital
(to Risk Weighted Assets) 3,460 17.9 771 )=4.0 1,157 )=6.0
Tier I Capital
(to Average Assets) 3,460 8.4 1,655 )=4.0 2,068 )=5.0
As of December 31, 1995:
Total Capital
(to Risk Weighted Assets) 4,096 23.8 1,421 )=8.0 1,777 )=10.0
Tier I Capital
(to Risk Weighted Assets) 3,835 22.3 711 )=4.0 1,066 )=6.0
Tier I Capital
(to Average Assets) 3,835 9.4 1,622 )=4.0 2,028 )=5.0
</TABLE>
-44-
<PAGE> 47
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. RESTRICTIONS ON DIVIDENDS
The Bank is subject to certain restrictions on the amount of dividends
that it may declare without prior regulatory approval. The amount that
the Bank may declare in any one year is equal to one-half of the current
year's earnings, exclusive of non-recurring items. At December 31, 1996,
there is no amount available for dividends.
13. EMPLOYEE BENEFITS
The Bank maintains a 401(k) plan for its employees, which allows them to
make contributions to the plan with pre-tax salary reductions. The Bank
matches contributions dollar for dollar up to three percent of employees'
gross salary. Contributions to the plan were $22,831 and $10,348 for 1996
and 1995, respectively.
14. FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend
credit, standby letters of credit and financial guarantees. Those
instruments involve, to varying degrees, elements of credit and
interest-rate risk in excess of the amount recognized in the statement of
financial position. The contract or notional amounts of those instruments
reflect the extent of the Bank's involvement in particular classes of
financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit,
standby letters of credit, and financial guarantees written is
represented by the contractual notional amount of those instruments. The
Bank uses the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments. Unless otherwise
noted, the Bank does not require collateral or other security to support
financial instruments with credit risk.
Commitments to Extend Credit and Financial Guarantees. Commitments to
extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and
may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank's experience has
been that approximately 60 percent of loan commitments are drawn upon by
customers. The Bank evaluates each customer's creditworthiness on a
case-by-case basis. The amount of collateral obtained, if it is deemed
necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the counter-party. Collateral held varies but may
include accounts receivable; inventory, property, plant, and equipment;
and income-producing commercial properties.
The Bank has not been required to perform on any financial guarantees
during the past two years. The Bank has not incurred any losses on its
commitments in either 1996 or 1995.
-45-
<PAGE> 48
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. FINANCIAL INSTRUMENTS (continued)
The estimated fair values of the Company's financial instruments were as
follows:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------- ------- ------- -------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks,
interest-bearing deposits
with banks, and federal funds sold $ 3,695 $ 3,695 $ 3,551 $ 3,551
Securities available for sale 19,761 19,761 20,526 20,526
Restricted equity securities 202 202 191 191
Loans receivable 16,824 16,564 14,731 14,830
Accrued interest receivable 356 356 372 372
Financial liabilities:
Deposit liabilities 36,232 36,265 34,989 35,269
Short-term borrowings 700 700 -- --
Long-term debt 1,285 1,345 1,387 1,387
Bank note payable 2,900 2,900 3,600 3,600
Off-balance-sheet instruments:
Commitments to extend credit -- -- -- --
Credit card arrangements -- -- -- --
</TABLE>
A summary of the Bank's commitments and contingent liabilities at
December 31, 1996, is as follows:
<TABLE>
<CAPTION>
Notional
Amount
------------
<S> <C>
Commitments to extend credit $ 3,991,262
Credit card arrangements 450,950
</TABLE>
-46-
<PAGE> 49
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. BANK ONLY FINANCIAL STATEMENTS
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1996 AND 1995
A S S E T S
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash and due from banks $ 2,406,805 $ 1,725,550
Interest-bearing deposits with banks 1,288,571 --
Federal funds sold -- 1,825,000
Investment securities - available for sale 19,761,011 20,525,539
Restricted investments in equity securities 202,100 190,600
Loans, net of allowance for loan losses 16,823,712 14,731,246
Properties and equipment, net 664,854 704,848
Accrued interest receivable 355,583 371,516
Other assets 279,644 486,401
----------- -----------
TOTAL ASSETS $41,782,280 $40,560,700
=========== ===========
</TABLE>
-47-
<PAGE> 50
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. BANK ONLY FINANCIAL STATEMENTS (continued)
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1996 AND 1995
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES
Demand deposits $ 6,307,152 $ 7,565,089
NOW deposits 5,053,484 3,297,949
Savings deposits 9,168,044 9,066,175
Time deposits, $100,000 and over 1,168,073 739,137
Other time deposits 14,539,820 14,320,907
------------ ------------
Total deposits 36,236,573 34,989,257
Notes payable 1,276,531 1,378,374
Accrued expenses and other liabilities 110,111 268,447
Federal funds purchased 700,000 --
------------ ------------
Total liabilities 38,323,215 36,636,078
------------ ------------
COMMITMENTS AND CONTINGENT LIABILITIES -- --
SHAREHOLDER'S EQUITY
Common stock - $7.50 par value
Authorized - 200,000 shares; issued
and outstanding - 96,242 shares 721,815 721,815
Capital surplus 4,958,601 4,816,639
Accumulated deficit (2,220,279) (1,703,586)
Unrealized gain (loss) on securities
available for sale, net of tax of ($552)
and $46,237, respectively (1,072) 89,754
------------ ------------
Total shareholder's equity 3,459,065 3,924,622
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 41,782,280 $ 40,560,700
============ ============
</TABLE>
-48-
<PAGE> 51
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. BANK ONLY FINANCIAL STATEMENTS (continued)
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 1,671,939 $ 1,485,824 $ 1,193,181
Interest on investment securities 1,210,354 1,456,679 1,203,397
Interest on federal funds sold 105,250 53,622 94,746
Interest on deposits with banks 61,860 1,044 65,786
----------- ----------- -----------
Total interest income 3,049,403 2,997,169 2,557,110
----------- ----------- -----------
INTEREST EXPENSE
Interest on borrowed funds 100,203 86,808 6,167
Interest on deposits 959,466 919,873 838,009
----------- ----------- -----------
Total interest expense 1,059,669 1,006,681 844,176
----------- ----------- -----------
NET INTEREST INCOME 1,989,734 1,990,488 1,712,934
----------- ----------- -----------
PROVISION (CREDIT) FOR CREDIT LOSSES (15,000) (23,106) (35,000)
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 2,004,734 2,013,594 1,747,934
----------- ----------- -----------
OTHER INCOME
Service charges on deposit accounts 342,481 342,179 225,401
Other service charges and fees 27,738 16,078 29,663
Net investment securities gains (losses) -- -- (6,497)
Other income 25,617 1,840 19,867
----------- ----------- -----------
395,836 360,097 268,434
----------- ----------- -----------
OTHER EXPENSE
Salaries and employee benefits 887,540 885,009 902,879
Occupancy expense 227,632 200,996 235,877
Legal fees 15,654 18,571 49,795
Data processing 170,990 154,139 89,640
Other expense 379,201 397,117 469,411
----------- ----------- -----------
1,681,017 1,655,832 1,747,602
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 719,553 717,859 268,766
INCOME TAX EXPENSE (BENEFIT) 245,551 (141,782) 101,173
----------- ----------- -----------
NET INCOME $ 474,002 $ 859,641 $ 167,593
=========== =========== ===========
</TABLE>
-49-
<PAGE> 52
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. PARENT ONLY FINANCIAL STATEMENTS
CONDENSED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------------- -----------
<S> <C> <C>
ASSETS
Cash in subsidiary bank $ 2,421 $ 8,761
Investment in subsidiary 3,459,065 3,924,622
Dividends receivable - 114,000
Deferred tax asset 395,185 404,788
---------------- ----------------
Total Assets $ 3,856,671 $ 4,452,171
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued interest payable $ 58,476 $ 79,697
Due to subsidiary bank 127,134 127,134
Notes payable 3,100,000 3,800,524
---------------- ----------------
Total Liabilities 3,285,610 4,007,355
---------------- ----------------
Preferred stock - Series A, no par; 500,000 shares
authorized; 24,462 shares issued and outstanding 126,037 126,037
Preferred stock - Series B, no par; 2,000,000 shares
authorized; 21,559 shares issued and outstanding 111,080 111,080
Common stock - $7.50 par value; 500,000 shares
authorized; 143,374 shares issued and outstanding 1,075,305 1,075,305
Paid in surplus 2,411,471 2,411,471
Retained deficit (3,151,760) (3,368,831)
Unrealized gain (loss) on securities AFS (1,072) 89,754
---------------- ----------------
Total Shareholders' Equity 571,061 444,816
---------------- ----------------
Total Liabilities and Shareholders' Equity $ 3,856,671 $ 4,452,171
================ ================
</TABLE>
-50-
<PAGE> 53
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. PARENT ONLY FINANCIAL STATEMENTS (CONTINUED)
CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
INCOME
Dividends received from subsidiary $ 990,694 $ 350,639 128,943
----------- ----------- -----------
990,694 350,639 128,943
----------- ----------- -----------
EXPENSES
Interest expense 296,488 224,249 58,902
Legal fees 92,230 300,534 273,067
Other expenses 572 28,889 72,884
----------- ----------- -----------
389,290 553,672 404,853
----------- ----------- -----------
INCOME (LOSS) BEFORE EQUITY IN
UNDISTRIBUTED EARNINGS
OF SUBSIDIARY 601,404 (203,033) (275,910)
Equity in undistributed earnings
of subsidiary (516,692) 509,003 38,650
----------- ----------- -----------
INCOME (LOSS) BEFORE TAXES 84,712 305,970 (237,260)
INCOME TAX EXPENSE (BENEFIT) (132,359) (189,345) (101,173)
----------- ----------- -----------
NET INCOME (LOSS) $ 217,071 $ 495,315 ($ 136,087)
=========== =========== ===========
</TABLE>
-51-
<PAGE> 54
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. PARENT ONLY FINANCIAL STATEMENTS (CONTINUED)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 217,071 $ 495,315 ($ 136,087)
Adjustments to reconcile net
income (loss) to cash provided
by operating activities:
Equity in undistributed earnings
of subsidiary 516,692 (509,003) (38,650)
Changes in operating assets and liabilities:
Dividends receivable 114,000 -- --
Accrued interest payable (21,220) (1,532,722) 58,902
Income tax benefit derived from tax
loss generated (132,359) (189,345) (101,173)
----------- ----------- -----------
Cash (used in) provided by operating activities 694,184 (1,735,755) (217,008)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of notes payable -- 3,800,524 --
Payments on note payable (700,524) (2,076,117) --
Proceeds of issuance of preferred stock -- 17,917 219,200
----------- ----------- -----------
Cash (used in) provided by financing activities (700,524) 1,742,324 219,200
----------- ----------- -----------
Net increase (decrease) in cash (6,340) 6,569 2,192
Cash - beginning of year 8,761 2,192 --
----------- ----------- -----------
Cash - end of year $ 2,421 $ 8,761 $ 2,192
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 317,707 $ 1,677,364 $ --
=========== =========== ===========
Income taxes $ -- $ -- $ --
=========== =========== ===========
</TABLE>
-52-
<PAGE> 55
PART III EXHIBITS
EXHIBIT INDEX
Exhibit 2.1 Articles of Incorporation
Exhibit 2.2 By-laws
Exhibit 3.1 Form of Stock Certificate for Common Stock
Exhibit 3.2 Stock Redemption Agreement
Exhibit 3.3 Written Agreement with Federal Reserve Board
Exhibit 6.1 Agreement for Cash Sale of Real Estate by Guaranty
Bank & Trust Company to H.T. Olinde, Jr.
Exhibit 6.2 Secured Promissory Note dated November 17, 1995,
payable by Great Guaranty Bancshares, Inc. to James
E. Kissner, with related Pledge and Security
Agreement dated December 8, 1995 by Bancshares in
favor of James E. Kissner
- 53 -
<PAGE> 56
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
GREAT GUARANTY BANCSHARES, INC.
Dated: April 30, 1997 By: /s/ DANIEL R. DOMINGUE, JR.
--------------------------------------
Daniel R. Domingue, Jr.
Authorized Representative
- 54 -
<PAGE> 57
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT INDEX
- ------- -------------
Exhibit 2.1 Articles of Incorporation
Exhibit 2.2 By-laws
Exhibit 3.1 Form of Stock Certificate for Common Stock
Exhibit 3.2 Stock Redemption Agreement
Exhibit 3.3 Written Agreement with Federal Reserve Board
Exhibit 6.1 Agreement for Cash Sale of Real Estate by Guaranty
Bank & Trust Company to H.T. Olinde, Jr.
Exhibit 6.2 Secured Promissory Note dated November 17, 1995,
payable by Great Guaranty Bancshares, Inc. to James
E. Kissner, with related Pledge and Security
Agreement dated December 8, 1995 by Bancshares in
favor of James E. Kissner
<PAGE> 1
EXHIBIT 2.1
ARTICLES OF INCORPORATION
OF
GREAT GUARANTY BANCSHARES, INC.
I, the undersigned natural person of the age of eighteen (18) years or
more, acting as an incorporator of a corporation (hereinafter called the
"Corporation") under the Louisiana Business Corporation Act, do hereby adopt
the following Articles of Incorporation for the Corporation:
ARTICLE ONE: NAME
The name of the Corporation is Great Guaranty Bancshares, Inc.
ARTICLE TWO: DURATION
The Corporation's period of duration is perpetual.
ARTICLE THREE: PURPOSE
The purpose or purposes for which the Corporation is organized are:
(a) To act as a bank holding company;
(b) To transact any and all lawful business for which corporations
may be formed under the Louisiana Business Corporation Act;
(c) To buy, sell, lease, and deal in services, personal property,
and real property;
(d) To do each and every thing necessary, suitable, or proper for
the accomplishment of any of the purposes or for the
attainment of any one or more of the objects herein enumerated
or which at any time appear conducive to or expedient for the
protection or benefit of the Corporation.
The foregoing clauses shall be construed as powers as well as objects
and purposes, and the matter expressed in each clause shall, unless herein
otherwise expressly provided, be in nowise limited by reference to or inference
from the terms of any other clause, but shall be regarded as independent
objects, purposes and powers, and shall not be construed to limit or restrict
in any manner the meaning of the general terms or the general powers of the
Corporation.
ARTICLE FOUR: STOCK
The Corporation is authorized to issue one class of shares, which
shall be designated "common shares." The total number of common shares which
the Corporation is authorized to issue is 250,000 shares, and the par value of
each such shares is $7.50.
<PAGE> 2
ARTICLE FIVE: PREEMPTIVE RIGHTS
The holders of the common shares shall have preemptive rights.
ARTICLE SIX: CUMULATIVE VOTING
Cumulative voting is prohibited.
ARTICLE SEVEN: ADOPTION OF BYLAWS
The Board of Directors of the Corporation may adopt the initial bylaws
of the Corporation and may thereafter alter, amend, or repeal the bylaws of the
Corporation or may adopt new bylaws.
ARTICLE EIGHT: INTERESTED PARTIES
A contract or transaction between the Corporation and any other Person
(as used herein the term "Person" means an individual, firm, trust,
partnership, joint venture, association, corporation, political subdivision or
instrumentality, or other entity) shall not be affected or invalidated by the
fact that (a) any director, officer, or security holder of the Corporation is
also a party to, or has a direct or indirect interest in, such contract or
transaction; or (b) any director, officer, or security holder of the
Corporation is in any way connected with such other Person or with any of its
officers or directors.
Every person who may become a director of the Corporation is hereby
relieved from any liability that might otherwise exist from contracting which
the Corporation for the benefit of himself or of any Person in which he has any
interest, whether or not the interested director's presence at a meeting or his
vote or votes were necessary to obligate the Corporation in such transaction,
if such interest shall have been disclosed to or known to, the Corporation's
directors or shareholders who shall have approved such transaction and the
contract or transaction was fair as to the Corporation as of the time it was
authorized, approved or ratified by the Board of Directors.
ARTICLE NINE: INDEMNIFICATION
Section A. The Corporation may indemnify any person who was or is a
party or is threatened with being made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (all such actions, suits, and proceedings and accompanying
modifiers being comprehended by the term "Proceeding") (excluding actions by,
or in the right of, the Corporation), by reason of the fact that he is or was a
director, employee, or officer of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee, or agent of
another Person. Such indemnification may be made only against those expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
Proceeding if (i) he is successful on the merits or otherwise; or (ii) he acted
in the transaction which is the subject of the Proceeding in good faith and in
a manner he reasonably
<PAGE> 3
believed to be in or not opposed to the best interest of the Corporation, and,
with respect to any criminal Proceeding, he had no reasonable cause to believe
his conduct was unlawful. The termination of any Proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonable believed to be in or not
opposed to the best interest of the Corporation, nor, with respect to any
criminal Proceeding, that he had reasonable cause to believe that his conduct
was unlawful.
Section B. The Corporation may indemnify any person who was or is a
party or is threatened with being made a party to a Proceeding by or in the
right of the Corporation by reason of the fact that he is or was a director,
employee, or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee, or agent of another Person.
Such indemnification may be made against expenses (including attorney's fees
and amounts paid in settlement not exceeding, in the judgment of the Board of
Directors, the estimated expense of litigating the action to conclusion)
actually and reasonably incurred by such person in connection with the defense
or settlement of such Proceeding if (i) he is successful on the merits or
otherwise; or (ii) he acted in the transaction which is the subject of the
Proceeding in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the Corporation. However, no indemnification
may be made in respect of any claim, issue or mater in relation to which such
person shall have been adjudged to be liable for negligence or misconduct in
the performance of his duty to the Corporation. Notwithstanding the foregoing
exception, indemnification may be made to the extent that the court in which
such Proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnification for such
expenses as the court of appropriate jurisdiction shall deem proper.
Section C. Any indemnification under Section A or Section B of this
Article Nine (other than one ordered by court) may be made by the Corporation
only upon a determination that indemnification of such person is proper in the
circumstances because he has met the applicable standard of conduct set forth
in such Section. Such determination shall be made by the Board of Directors by
a majority vote of a quorum consisting of directors who were not parties to
such Proceedings; or, if such a quorum is not obtainable (or, even if
obtainable, if a quorum of disinterested directors so directs), by independent
legal counsel in a written opinion, or by the shareholders of the Corporation.
Section D. Expenses incurred in defending a civil or criminal
Proceeding may be paid by the Corporation in advance of the final disposition
of such party in the manner provided in Section C of this Article Nine only
when the Corporation has received an undertaking by or on behalf of the person
who is to receive such payment to repay such amount unless it shall ultimately
be determined that he is entitled to be indemnified by the Corporation as
authorized in this Article Nine.
Section E. In determining whether the standard of conduct set forth
in Section A or Section B has been met, it may be determined that a person has
met the standard as to some matters but not as to others, and the amount of
indemnification may be accordingly prorated.
<PAGE> 4
Section F. The indemnification provided by Sections A through E shall
not be exclusive of any other rights to which a person may be entitled by law,
bylaw, agreement, vote of shareholders, or otherwise.
Section G. The indemnification provided by Sections A through E shall
inure to the heirs, executors, and administrators of any person entitled to
indemnification under this Article Nine.
Section H. The Corporation may purchase and maintain insurance on any
person who is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another Person against any liability incurred by him in any such
position, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under Sections A
through E.
ARTICLE TEN: REPURCHASE OF STOCK
The Corporation is authorized to purchase, directly or indirectly, its
own shares to the extent of the aggregate of the unrestricted surplus and in
all other instances allowed by Section 55 of Title 12 of the Louisiana Revised
Statutes, the provisions of which statute are made a part hereof by reference,
without submitting such purchase to a vote of the shareholders of the
Corporation.
ARTICLE ELEVEN: VOTING PERCENTAGES
Except as otherwise provided in these Articles, the bylaws or by
provision of law, a majority of votes actually cast shall decide any matter
properly before any shareholders' or directors' meeting organized for the
transaction of business, except that directors shall be elected by plurality.
Notwithstanding the above, amendment of these articles shall require the
consent of 2/3 of the total shares outstanding.
ARTICLE TWELVE: REVERSION OF UNCLAIMED DIVIDENDS,
REDEMPTION PAYMENTS AND RECLASSIFICATION SHARES
Any and all cash, property or share dividends, shares issuable to
shareholders in connection with a reclassification of stock, and the redemption
price of redeemed shares, which are not claimed by the shareholders entitled
thereto within a reasonable time (not less than one year in any event) after
the dividend or redemption price became payable or the shares became issuable,
despite reasonable efforts by the Corporation to pay the dividend or redemption
price or deliver the certificates for the shares to such shareholders within
such time, shall, at the expiration of such time, revert in full ownership to
the Corporation, and the Corporation's obligation to pay such dividend or
redemption price or issue such shares, as the case may be, shall thereupon
cease; provided that the Board of Directors may, at any time, for any reason
satisfactory to it, but need not, authorize (a) payment of the amount of any
cash or property dividend or redemption price or (b) issuance of any shares,
ownership of which has reverted to
<PAGE> 5
the Corporation pursuant to the provision of this Article Twelve, to the entity
who or which would be entitled thereto had such reversion not occurred.
ARTICLE THIRTEEN: SEVERABILITY
If any part of these articles shall be held invalid or inoperative for
any reason, the remaining parts, so far as it is possible and reasonable, shall
remain valid and operative.
ARTICLE FOURTEEN: INCORPORATOR
The name and address of the incorporator is:
Name Address
---- -------
Joseph D. Martin 175 New Roads Street
New Roads, Louisiana 70760
/s/Joseph D. Martin
---------------------------------
Joseph D. Martin
Sworn to and subscribed before me the 11th day of February, 1981.
/s/Joseph D. Martin
---------------------------------
Joseph D. Martin
Witnesses
/s/Larry J. Roberts
- --------------------------
/s/Brenda Calvert
- --------------------------
/s/James Dewey
--------------------------------
Notary
<PAGE> 6
STATE OF LOUISIANA
PARISH OF POINTE COUPEE
ARTICLES OF AMENDMENT TO ARTICLES
OF INCORPORATION OF GREAT GUARANTY BANCSHARES, INC.
BEFORE ME, the undersigned Notary Public, in and for the Parish of
Pointe Coupee, State of Louisiana personally came and appeared:
R. KEITH MILLER, President of Great Guaranty Bancshares, Inc., and,
LARRY J. ROBERTS, Secretary of Great Guaranty Bancshares, Inc., who,
after being duly sworn did depose and say:
That at the annual meeting of shareholders held May 23, 1985,
pursuant to all required notices and provisions of La. R.S. 12 Section 31
through 33, at which meeting 123,011 shares, of 143,374 outstanding shares,
were represented, and that all shares at said meeting, being 85.8% of the
outstanding common shares, voted to amend the Articles of Incorporation of
Great Guaranty Bancshares, Inc. as follows:
1.
Article Four is amended to read as follows:
This Corporation is authorized to issue two classes of shares to be
designated respectively as "Common Stock" and "Preferred Stock."
There shall be an aggregate of five hundred thousand (500,000) Shares
of Common Stock having a par value of Seven and 50/100 ($7.50) Dollars
per share. There shall be an aggregate of five hundred thousand
(500,000) shares of Preferred Stock having no par value. No share of
Preferred Stock or any series thereof shall entitle the holder thereof
to any vote on any matter except as expressly required by law. The
Board of Directors of this Corporation is authorized to amend these
Articles of Incorporation from time to time at any time to fix the
preferences, limitations and relative rights of the shares of
Preferred Stock and to establish and fix variations in relative rights
as between any series of any preferred class.
2.
Article Nine is amended to read as follows:
<PAGE> 7
Section A. the Corporation SHALL indemnify any person who has or is a
party or is threatened with being made a party to any threatened,
pending, or completed action, suit, or proceedings, whether civil,
criminal, administrative, or investigative (all such actions, suits,
and proceedings and accompanying modifiers being comprehended by the
term "Proceeding") (INCLUDING actions by, or in the right of, the
Corporation), by reason of the fact that he is or was serving at the
bequest of the Corporation as a director, officer, employee, or agent
of another Person. Such indemnification made by made only against
those expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by such
person in connection with such Proceeding if (i) he is successful on
the merits or otherwise; or (ii) he acted in the transaction which is
the subject of the Proceeding in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of
the Corporation, and, with respect to any criminal Proceeding, he had
no reasonable cause to believe his conduct was unlawful. The
termination of any Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in or
not opposed to the best interest of the Corporation, nor, with respect
to any criminal Proceeding, that he had reasonable cause to believe
that his conduct was unlawful.
SECTION B. The Corporation SHALL indemnify any person who was or is a
party or is threatened with being made a party to a Proceeding by or
in the right of the Corporation by reason of the fact that he is or
was a director employee, or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another Person. Such indemnification SHALL be
made against expenses (including attorneys' fees and amounts paid in
settlement not exceeding, in the judgment of the Board of Directors,
the estimated expense of litigating the action to conclusion) actually
and reasonably incurred by such person in connection with the defense
or settlement of such Proceeding if (i) he is successful on the merits
or otherwise or (ii) he acted in the transaction which is he subject
of the Proceeding in good faith and in a manner he reasonably believed
to be in or not opposed to the best interest of the Corporation.
However, no indemnification may be made in respect of any claim,
issue, or matter in relation to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance
of his duty to the Corporation. Notwithstanding the foregoing
exception, indemnification may be made to the extent that the court in
which such Proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonable
entitled to indemnification for such expenses as the court of
appropriate jurisdiction shall deem proper.
<PAGE> 8
Thus done and signed in the presence of me, Notary, and the
undersigned competent witnesses on this ___ day of June, 1985, at Guaranty Bank
and Trust Company, New Roads, Louisiana.
WITNESSES:
/s/Candace Bueche GREAT GUARANTY BANCSHARES, INC.
- ------------------------------
/s/Michael E. Parks By: /s/R. Keith Miller
- ------------------------------ ---------------------------------
R. Keith Miller, President
GREAT GUARANTY BANCSHARES, INC.
By: /s/Larry J. Roberts
---------------------------------
Larry J. Roberts, Secretary
/s/James C. Dewey
------------------------------------
JAMES C. DEWEY, NOTARY PUBLIC
<PAGE> 9
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF GREAT GUARANTY BANCSHARES, INC.
Each of the undersigned, President and Secretary,
respectively, of Great Guaranty Bancshares, Inc. (the "Corporation"), does
hereby certify that the following resolutions amending the Articles of
Incorporation of the Corporation was duly adopted pursuant to La. Rev. Stat.
12:31 , by the affirmative vote of the holders of at least two- thirds (2/3) of
the voting power of the Corporation at a special meeting of the stockholders
held on January 24, 1986.
131,271 shares (approximately 91.59%) of stock of the
Corporation were represented at the meeting of which 107,559 shares
(approximately 75% of total outstanding shares) were voted for the Amendment
and 23,712 shares (approximately 16.5% of total outstanding shares) were voted
against the Amendment.
Article IV of the Articles of Incorporation of the Corporation
were amended by said resolution as follows:
This Corporation is authorized to issue two classes of shares
to be designated respectively as "Common Stock" and "Preferred
Stock." There shall be an aggregate of five hundred thousand
(500,000) shares of Common Stock having a par value of Seven
and 50/100 ($7.50) Dollars per share. The Preferred Stock
shall be divided into two Series of stock; Series A Preferred
Stock and Series B Preferred Stock. There shall be an
aggregate of five hundred thousand (500,000) shares of Series
A Preferred Stock having no par value. No share of Series A
Preferred Stock shall entitle the holder thereof to any vote
on any matter except as expressly required by law. There
shall be an aggregate of two million (2,000,000) shares of
Series B Preferred Stock having no par value. Each share of
Series B Preferred Stock shall have voting rights equal to the
voting rights of each share of Common stock. Notwithstanding
Article Five below, no share of Preferred Stock shall be
subject to preemptive rights. The Board of Directors of this
Corporation is authorized to amend these Articles of
Incorporation from time to time at any time to fix the
preferences, limitations and relative rights of the Preferred
Stock and to establish and fix variations in relative rights
as between any series or special series of any preferred
class.
Dated this 24th day of January, 1986.
GREAT GUARANTY BANCSHARES, INC.
By: /s/R. Keith Miller
--------------------------------
R. KEITH MILLER, President
/s/Larry Roberts
--------------------------------
LARRY ROBERTS, Secretary
<PAGE> 10
STATE OF LOUISIANA
PARISH OF POINTE COUPEE
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF
GREAT GUARANTY BANCSHARES, INC.
BEFORE ME, the undersigned Notary Public, and in the presence of the
undersigned competent witnesses, personally came and appeared R. Keith Miller,
being the current President of this corporation, GREAT GUARANTY BANCSHARES,
INC., who declared to me in the presence of the undersigned witnesses that a
special meeting of the Board of Directors of this corporation, duly noticed and
held on the 11th day of November, 1992, at which a proper quorum was present,
pursuant to authority granted to said board by a vote of the Shareholders of
this Corporation held on the 24th day of January, 1986, by unanimous agreement
of said Board, Article IV of the Articles of Incorporation of Great Guaranty
Bancshares, Inc. was amended to add a section at the end of existing Article IV
to read as follows:
A. Additional Terms of Series B Preferred Stock
(1) Dividends. The series B Preferred Stock and the common stock
shall rank pari passu for dividend purposes so the each shall receive
dividends when, as and if declared by the Board of Directors of the
corporation out of funds legally available therefore, share for share
at the same rate.
(2) Liquidation Rights.
(a) Upon the liquidation, dissolution or winding up (whether
voluntary or involuntary) of the corporation, the holders of the
shares of Series B Preferred Stock shall be entitled to receive and to
be paid out of the assets of the corporation available for
distribution to its shareholders, before any payment or distribution
shall be made on the common stock or on any other class or series of
stock ranking junior to the Series B Preferred Stock, upon
liquidation, the amount of $1.00 per share.
(b) After the payment to the holders of the shares of Series
B Preferred Stock of the full preferential amounts provided for in
subsection (2) (a) hereof, and after payments required to be made on
any other series of preferred stock ranking junior to the Series B
Preferred Stock have been made, to the extent funds are available
therefor, the holders of the common stock shall be entitled to receive
the amount of $1.00 per share, and thereafter the remainder of the
assets and funds of the corporation available for distribution to the
shareholders of the corporation shall be distributed ratably among all
the holders of Series B Preferred Stock and the holders of the common
stock on a share for share basis.
(c) If upon any such liquidation, dissolution or winding up
of this corporation, the assets distributable among the holders of the
Series B Preferred Stock are insufficient to permit the payment in
full of the preferential amounts as provided for in subsection
<PAGE> 11
(2) (a) hereof, then the entire assets to be distributed shall be
distributed among the holders of the Series B Preferred Stock then
outstanding, ratably, in proportion to the full preferential amounts
to which they are respectively entitled.
(d) Neither the sale of all or substantially all of the
property or business of the corporation, nor the merger or
consolidation of all of the corporation into or with any other
corporation or the merger or consolidation of any other corporation
into or with the corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purpose
of this subsection (2).
Thus executed in multiple originals this 19th day of November, 1992,
in the presence of the undersigned Notary Public and witnesses.
Witnesses:
/s/Audrey Beauvais Great Guaranty Bancshares, Inc.
- -------------------------------
/s/Sheryl Noel By: /s/R. Keith Miller
- ------------------------------- ------------------------------
R. Keith Miller, President
/s/Larry J. Roberts
------------------------------
Secretary
/s/James C. Dewey
------------------------------------
James C. Dewey, Notary Public
<PAGE> 12
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
GREAT GUARANTY BANCSHARES, INC.
Pursuant to the provisions of the Louisiana Business Corporation Law,
Great Guaranty Bancshares, Inc. adopts the following Articles of Amendment to
its Articles of Incorporation by unanimous consent of the Board of Directors in
accordance with authority granted to said Board by vote of the Shareholders of
this corporation at a meeting of the Shareholders held on the 24th day of
January, 1986, to establish the rights, privileges and preferences of the
Series A and Series B Preferred Stock of this Corporation as follows:
Section A of Article IV of the Articles of Incorporation of Great
Guaranty Bancshares, Inc. is hereby amended to read in its entirety as follows:
"A. Additional Terms of Series A and Series B Preferred Stock
(1) Dividends. The Series A and Series B Preferred Stock and the
common stock shall rank pari passu for dividend purposes so
that each shall receive dividends when, as and if declared by
the Board of Directors of the corporation out of funds legally
available therefor, share for share, at the same rate.
(2) Liquidation Rights.
(a) Upon the liquidation, dissolution or winding up
(whether voluntary or involuntary) of the
corporation, the holders of the shares of Series A
and Series B Preferred Stock shall be entitled to
receive and to be paid out of the assets of the
corporation available for distribution to its
shareholders, before any payment or distribution
shall be made on the common stock or on any other
class or series of stock ranking junior to the Series
A and Series B Preferred Stock, upon liquidation, the
amount of $1.00 per share.
(b) After the payment to the holders of the shares of
Series A and Series B Preferred Stock of the full
preferential amounts provided for in subsection
(2)(a) hereof, and after payments required to be made
on any other series of preferred stock ranking junior
to the Series A and Series B Preferred Stock have
been made, to the extent funds are available
thereafter, the holders of the common stock shall be
entitled to receive the amount of $1.00 per share,
and thereafter the remainder of the assets and funds
of the corporation available for distribution to the
shareholders of the corporation shall be distributed
ratably among all the holders of Series A and Series
B Preferred Stock and the holders of the common stock
on a share for share basis.
<PAGE> 13
(c) If upon any such liquidation, dissolution or winding
up of this corporation, the assets distributable
among the holders of the Series A and Series B
Preferred Stock are insufficient to permit the
payment in full of the preferential amounts as
provided for in subsection (2)(a) hereof, then the
entire assets to be distributed shall be distributed
among the holders of the Series A and Series B
Preferred Stock then outstanding, ratably, in
proportion to the full preferential amounts to which
they are respectively entitled.
(d) Neither the sale of all or substantially all of the
property or business of the corporation, nor the
merger or consolidation of all of the corporation
into or with any other corporation or the merger or
consolidation of any other corporation into or with
the corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary,
for the purposes of this subsection (2)."
Thus adopted by unanimous written consent of the Board of Directors of
Great Guaranty Bancshares, Inc.
Executed this 28th day of December, 1995, by the undersigned officers
of the corporation in the presence of the undersigned competent witnesses and
Notaries Public.
WITNESSES: GREAT GUARANTY BANCSHARES, INC.
/s/ Charles Demoulin By: /s/ F. Gregory Roy
- ---------------------------- ---------------------------------
F. Gregory Roy, Secretary
/s/ Daniel Domingue
- ----------------------------
/s/ Bob D. Tucker
----------------------------
Notary Public
WITNESSES: GREAT GUARANTY BANCSHARES, INC.
/s/ Charles Demoulin By: /s/ H.T. Olinde, Jr.
- ---------------------------- ---------------------------------
H.T. Olinde, Jr., Chairman
of the Board
/s/ Daniel Domingue
- ----------------------------
/s/ Bob D. Tucker
----------------------------
Notary Public
<PAGE> 1
EXHIBIT 2.2
BYLAWS
OF
GREAT GUARANTY BANCSHARES, INC.
A Louisiana Corporation
ARTICLE ONE: OFFICES
1.01 Offices. The Corporation may have offices at such places,
both within and without the State of Louisiana, as the board of directors may
from time to time determine or the business of the Corporation may require.
ARTICLE TWO: SHAREHOLDERS
2.02 Annual Meetings. An annual meeting of shareholders of the
Corporation shall be held during each calendar year on such date and at such
time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. At such meeting, the shareholders shall
elect directors and transact such other business as may properly be brought
before the meeting.
2.02 Special Meetings. A special meeting of the shareholders may
be called at any time by the president, the board of directors, or the holders
of not less than ten percent of all shares entitled to vote at such meeting.
Only such business shall be transacted at a special meeting as may be stated or
indicated in the notice of such meeting.
2.03 Place of Meetings. The annual meeting of shareholders may be
held at any place within or without the State of Louisiana as may be designated
by the board of directors. Special meetings of shareholders may be held at any
place within or without the State of Louisiana as may be designated by the
person or persons calling such special meeting as provided in Section 2.02. If
no place for a meeting is designated, it shall be held at the registered office
of the Corporation.
2.04 Notice. Written or printed notice stating the place, day, and
hour of each meeting of shareholders, and, in case of a special meeting, the
purpose of purposes for which the meeting is called, shall be delivered not
less than ten nor more than 50 days before the date of the meeting, either
personally or by mail, by or at the direction of the president, the secretary,
or the person calling the meeting, to each shareholder of record entitled to
vote at such meeting.
2.05 Voting List. At least ten days before each meeting of
shareholders, the secretary shall prepare a complete list of shareholders
entitled to vote at such meeting, arranged in alphabetical order, including the
address of each shareholder and the number of voting shares held by each
shareholder. For a period of ten days prior to such meeting, such list shall
be kept on file at the registered office of the Corporation and shall be
subject to inspection by any shareholder during usual business hours. Such
list shall be produced at such meeting, and at all time during such meeting
shall be subject to inspection by any shareholder. The original stock
<PAGE> 2
transfer books shall be prima facie evidence as to who are the shareholders
entitled to examine such list or stock transfer books.
2.06 Voting of Shares. Treasury shares, shares of the
Corporation's own stock owned by another corporation the majority of the voting
stock of which is owned or controlled by the Corporation, and shares of the
Corporation's own stock held by the Corporation in a fiduciary capacity shall
not be shares entitled to vote or to be counted in determining the total number
of outstanding shares. Shares held by an administrator, executor, guardian, or
conservator may be voted by him, either in person or by proxy, without transfer
of such shares into his name so long as such shares form a part of the estate
and are in the possession of the estate being served by him. Shares standing
in the name of a trustee may be voted by him, either in person or by proxy,
only after the shares have been transferred into his name as trustee. Shares
standing in the name of a receiver may be voted by such receiver, and shares
held by or under the control of a receiver may be voted by such receiver
without transfer of such shares into his name if authority to do so is
contained in the court order by which such receiver was appointed. Shares
standing in the name of another domestic or foreign corporation of any type or
kind may be voted by such officer, agent, or proxy as the bylaws of such
corporation may provide, or, in the absence of such provision, as the board of
directors of such corporation may determine. A shareholder whose shares are
pledged shall be entitled to vote such shares until they have been transferred
in to the name of the pledgee, and thereafter, the pledgee shall be entitled to
vote such shares.
2.07 Quorum. The holders of a majority of the outstanding shares
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at any meeting of shareholders, except as otherwise provided by law, the
articles of incorporation, or these bylaws. If a quorum shall not be present
or represented at any meeting of shareholders, a majority of the shareholders
entitled to vote at the meeting, who are present in person or represented by
proxy, may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At any reconvening of an adjourned meeting at which a quorum shall be present
or represented any business may be transacted which could have been transacted
at the original meeting. If a quorum had been present or represented.
2.08 Majority Vote; Withdrawal of Quorum. If a quorum is present
in person or represented by proxy at any shareholders meeting, the vote of the
holders of a majority of the outstanding shares entitled to vote, present in
person or by proxy, shall decide any question brought before such meeting,
unless the question is one on which, by express provision of law, the articles
of incorporation, or these bylaws, a different vote is required, in which event
such express provision shall govern and control the decision of such question.
The shareholders present at a duly convened meeting may continue to transact
business until adjournment, notwithstanding any withdrawal of shareholders
which may leave less than a quorum remaining.
2.09 Method of Voting; Proxies. Every shareholder of record shall
be entitled at every meeting of shareholders to one vote on each matter
submitted to a vote, for every share standing in his name on the original stock
transfer books of the Corporation except to the extent that the voting rights
of the shares of any class or classes are limited or denied by the articles of
<PAGE> 3
incorporation. Such books shall be prima facie evidence as to the identity of
shareholders entitled to vote. At any meeting of shareholders, every
shareholder having the right to vote may vote either in person or by a proxy
executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Every such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid
after 11 months from the date of its execution, unless otherwise provided in
the proxy. If no date is stated on a proxy, such proxy shall be presumed to
have been executed on the date of the meeting at which it is to be voted. Each
proxy shall be revocable unless expressly provided therein to be irrevocable or
unless otherwise made irrevocable by law.
2.10 Closing of Transfer Books; Record Date. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any reconvening thereof or entitled to receive payment of any
dividend or in order to make a determination of shareholders for any other
proper purpose, the board of directors may provide that the stock transfer
books of the Corporation shall be closed for a stated period but not to exceed
in any event 50 days. If the stock transfer books are closed for the purpose
of determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the stock transfer books, the board
of directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than 50
days and, in case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not closed and if
no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders or entitled to receive
payment of a dividend, the date on which the notice of the meeting is mailed or
the date on which the resolution of the board of directors declaring such
dividend is adopted, as the case may be, shall be the record ate for such
determination of shareholders.
2.11 Presiding Officials at Meetings. Unless some other person or
persons are elected by a vote of a majority of the shares then entitled to vote
at a meeting of shareholders, the president shall preside at and the secretary
shall prepare minutes of each meeting of shareholders.
ARTICLE THREE: DIRECTORS
3.01 Management. The business and affairs of the Corporation shall
be managed by the board of directors, subject to the restrictions imposed by
law, the articles of incorporation, or these bylaws.
3.02 Number; Election; Term; Qualification. The first board of
directors shall consist of the number of directors named in the articles of
incorporation. Thereafter, the number of directors which shall constitute the
entire board of directors shall be determined by resolution of the board of
directors at any meeting thereof or by the shareholders at any meeting thereof,
but shall never be less than one. At each annual meeting of shareholders,
directors shall be elected to hold office until the next annual meeting of
shareholders and until their successors are
<PAGE> 4
elected and qualified. No director need be a shareholder, a resident of the
State of Louisiana, or a citizen of the United States.
3.03. Decreases in Number. No decrease in the number of directors
constituting the entire board of directors shall have the effect of shortening
the term of any incumbent director.
3.04 Removal. At any meeting of shareholders called expressly for
that purpose, any director or the entire board of directors may be removed,
with or without cause, by a vote of the holders of a majority of the shares
then entitled to vote on the election of directors.
3.05 Vacancies; Increases in Number. Any vacancy occurring in the
board of directors (by death, resignation, removal, or otherwise) may be filled
by the affirmative vote of a majority of the remaining directors though less
than a quorum of the board of directors. A director elected to fill a vacancy
shall be elected to serve for the unexpired term of his predecessor in office.
In case of any increase in the number of directors constituting the entire
board of directors, the additional directors shall be elected at a meeting of
shareholders.
3.06 First Meeting. Each newly elected board of directors may hold
its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of shareholders, and no notice of such meeting shall be
necessary.
3.07 Regular Meetings. Regular meetings of the board of directors
may be held without notice at such times and places as may be designated from
time to time by resolution of the board of directors and communicated to all
directors.
3.08 Special Meetings. A special meeting of the board of directors
shall be held whenever called by any director at such time and place as such
director shall designate in the notice of such special meeting. The director
call any special meeting shall cause notice of such special meeting to be given
to each director at least 24 hours before such special meeting. Neither the
business to be transacted at, nor the purpose of, any special meeting of the
board of directors need be specified in the notice or waiver of notice of any
special meeting.
3.09 Quorum; Majority Vote. At all meetings of the board of
directors, a majority of the directors fixed in the manner provided in these
bylaws shall constitute a quorum for the transaction of business. If a quorum
is not present at a meeting, a majority of the directors may adjourn the
meeting from time to time, without notice other than an announcement at the
meeting, until a quorum is present. The vote of a majority of the directors
present at a meeting at which a quorum is in attendance shall be the act of the
board of directors, unless the vote of a different number is required by the
articles of incorporation or these bylaws.
3.10 Procedure; Minutes. At meetings of the board of directors,
business shall be transacted in such order as the board of directors may
determine from time to time. The board of directors shall appoint at each
meeting a person to preside at the meeting and a person to act as secretary of
the meeting. The secretary of the meeting shall prepare minutes of the meeting
<PAGE> 5
which shall be delivered to the secretary of the Corporation for placement in
the minute books of the Corporation.
3.11 Presumption of Assent. A director of the Corporation who is
present at any meeting of the board of directors at which action on any matter
is taken shall be presumed to have assented to the action unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall forward any dissent by
certified or registered mail to the secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
3.12 Compensation. Directors, in their capacity as directors, may
receive, by resolution of the board of directors, a fixed sum and expenses of
attendance, if any, for attending meetings of the board of directors or a
stated salary. No director shall be precluded from serving the Corporation in
any other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.01 Designation. The board of directors may be resolution adopted
by a majority of the entire board of directors designate executive and other
committees.
4.02. Number; Qualification; Term. Each committee shall consist of
one or more directors appointed by resolution adopted by a majority of the
entire board of directors. The number of committee members may be increased or
decreased from time to time by resolution adopted by a majority of the entire
board of directors. Each committee member shall serve as such until the
expiration of his term as a director or his earlier resignation, unless sooner
removed as a committee member or as a director.
4.03. Authority. The executive committee, unless expressly
restricted in the resolution adopted by a majority of the entire board of
directors establishing the executive committee, shall have and may exercise all
of the authority of the board of directors in the management of the business
and affairs of the Corporation. Each other committee, to the extent expressly
provided for in the resolution adopted by a majority of the entire board of
directors establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
affairs of the Corporation. However, no committee shall have the authority of
the board of directors in reference to;
(a) amending the articles of incorporation;
(b) approving a plan of merger or consolidation;
(c) recommending to the shareholders the sale, lease, or exchange
of all or substantially all of the property and assets of the
Corporation otherwise than in the usual and regular course of
its business
<PAGE> 6
(d) recommending to the shareholders a voluntary dissolution of
the Corporation or a revocation thereof;
(e) amending, altering, or repealing these bylaws of adopting new
bylaws;
(f) filling vacancies in or removing members of the board of
directors or of any committee;
(g) electing or removing officers or committee members;
(h) fixing the compensation of any committee member; and
(i) altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be amenable or
repealable.
In the resolution adopted by a majority of the entire board of directors
establishing an executive or other committee, the board of directors may
expressly authorize such committee to declare dividends or to authorize the
issuance of shares of the Corporation.
4.04 Committee Changes. The board of directors shall have the
power at any time to fill vacancies in, to change the membership of, and to
discharge any committee. However, a committee member may be removed by the
board of directors, only if, in the judgment of the board of directors, the
best interests of the Corporation will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
4.05 Regular Meetings. Regular meetings of any committee may be
held without notice at such times and places as may be designated from time to
time by resolution of the committee and communicated to all committee members.
4.06 Special Meetings. A special meeting of any committee may be
held whenever called by any committee member at such time and place as such
committee member shall designate in the notice of such special meeting. The
committee member calling any special meeting shall cause notice of such special
meeting to be given to each committee member at least 12 hours before such
special meeting. Neither the business to be transacted at, nor the purpose of,
any special meeting of any committee need be specified in the notice or waiver
of notice or any special meeting.
4.07 Quorum; Majority Vote. At all meetings of any committee, a
majority of the number of committee members designated by the board of
directors shall constitute a quorum for the transaction of business. If a
quorum is not present at a meeting of any committee, a majority of the
committee members present may adjourn the meeting from time to time, without
notice other than an announcement at the meeting, until a quorum is present.
The vote of a majority of the committee members present at any meeting at which
a quorum is in attendance shall be the act of a committee, unless the vote of a
different number is required by the articles of incorporation or these bylaws.
<PAGE> 7
4.08 Minutes. Each committee shall cause minutes of its
proceedings to be prepared and shall report the same to the board of directors
upon the request of the board of directors. The minutes of the proceedings of
each committee shall be delivered to the secretary of the Corporation for
placement in the minute books of the Corporation.
4.09 Compensation. Committee members may, by resolution of the
board of directors, be allowed a fixed sum and expenses of attendance, if any,
for attending any committee meetings or a stated salary.
4.10 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed upon it or such
director by law.
ARTICLE FIVE: GENERAL PROVISIONS RELATING TO MEETINGS
5.01 Notice. Whether by law, the articles of incorporation, or
these bylaws, notice is required to be given to any shareholder, director, or
committee member and no provision is made as to how such notice shall be given,
it shall be construed to mean that notice may be given either (a) in person,
(b) in writing, by mail, (c) except in the case of a shareholder, by telegram,
telex, cable, telecopies, or similar means, or (d) by any other method
permitted by law. Any notice required or permitted to be given hereunder
(other than personal notice) shall be addressed to such shareholder, director,
or committee member at his address as it appears on the books of the
Corporation or, in the case of a shareholder, on the stock transfer records of
the Corporation or at such other place as such shareholder, director, or
committee member is known to be at the time notice is mailed or transmitted.
Any notice required or permitted to be given by mail shall be deemed to be
delivered and given at the time when the same is deposited in the United States
mail, postage prepaid. Any notice required or permitted to be given by
telegram, telex, cable, telecopier, or similar means shall be deemed to be
delivered and given at the time transmitted.
5.02 Waiver of Notice. Whenever by law, the articles of
incorporation, or these bylaws, any notice is required to be given to any
shareholder, director, or committee member of the Corporation a waiver thereof
in writing signed by the person or persons entitled to such notice, whether
before or after the time notice should have been given, shall be equivalent to
the giving of such notice. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
a meeting of the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
5.03 Telephone and Similar Meetings. Shareholders, directors, or
committee members may participate in and hold a meeting by means of a
conference telephone or similar communications equipment by means of which
persons participating in the meeting can hear each other. Participation in
such a meeting shall constitute presence in person at such meeting, except
where a person participates in the meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or convened.
<PAGE> 8
5.04 Action Without Meeting. Any action which may be taken, or is
required by law, the articles of incorporation, or these bylaws to be taken, at
a meeting of shareholders, directors, or committee members may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders, directors, or committee members, as the case
may be, entitled to vote with respect to the subject matter thereof, and such
consent shall have the same force and effect as a unanimous vote of such
shareholders, directors, or committee members, as the Secretary of State of
Louisiana or in any certificate or other document delivered to any person. The
consent may be in one or more counterparts so long as each shareholder,
director, or committee member signs one of the counterparts. The signed
consent shall be placed in the minute books of the Corporation.
ARTICLE SIX: OFFICERS AND OTHER AGENTS
6.02 Number; Titles; Election; Term. The Corporation shall have a
president, a secretary, a treasurer, and such other officers and agents as the
board of directors may deem desirable. The board of directors shall elect a
president, treasurer, and secretary at its first meeting at which a quorum
shall be present after the annual meeting of shareholders or whenever a vacancy
exists. The board of directors, then, or from time to time, may also elect or
appoint one or more other officers or agents as it shall deem advisable. Each
officer and agent shall hold office for the term for which he is elected or
appointed and until his successor has been elected or appointed and qualified.
Unless otherwise provided in the resolution of the board of directors electing
or appointing an officer or agent, his term of office shall extend to and
expire at the meeting of the board of directors following the next annual
meeting of shareholders, or, if earlier, at his death, resignation, or removal.
Any two or more offices may be held by the same person, except that the
president and the secretary shall not be the same person. No officer or agent
need be a shareholder, a director, a resident of the State of Louisiana, or a
citizen of the United States.
6.02 Removal. Any officer or agent elected or appointed by the
board of directors may be removed by the board of directors, only if, in the
judgment of the board of directors, the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an
officer or agent shall not of itself create contract rights.
6.03 Vacancies. Any vacancy occurring in any office of the
Corporation may be filled by the board of directors.
6.04 Authority. Officers shall have such authority and perform
such duties in the management of the Corporation as are provided in these
bylaws or as may be determined by resolution of the board of directors not
inconsistent with these bylaws.
6.05 Compensation. The compensation, if any, of officers shall be
fixed, increased, or decreased from time to time by the board of directors;
provided, that the board of directors may by resolution delegate to any one or
more officers of the Corporation the authority to fix such compensation.
<PAGE> 9
6.06 Chairman of the Board. The chairman of the board, if any,
shall be an officer of the Corporation and, subject to the direction of the
board of directors, shall perform such executive, supervisory, and management
functions and duties as may be assigned to him from time to time by the board
of directors.
6.07 President. The President shall be the chief executive officer
of the Corporation and, subject to the supervision of the board of directors,
shall have general management of the business and affairs of the Corporation in
the ordinary course of its business with all such powers with respect to such
business and affairs as may be reasonably incident to such responsibilities,
including but not limited to, the power to employ, discharge, or suspend
employees and agents of the Corporation, to fix the compensation of employees
and agents, and to suspend, with or without cause, any officer of the
Corporation pending final action by the board of directors with respect to
continued suspension, removal, or reinstatement of such officer. The president
shall see that all orders and resolutions of the board of directors are carried
into effect and shall perform such other duties and have such other authority
and powers as the board of directors may from time to time prescribe.
6.08 Vice Presidents. Each vice president shall have such powers
and duties as may be prescribed from time to time by the board of directors or
as may be delegated from time to time by the president and (in the order as
designated by the board of directors, or in the absence of such designation, as
determined by the length of time each has held the office as vice president
continuously) shall exercise the powers of the president during that officer's
absence or inability to act.
6.09 Treasurer. The treasurer shall have custody of the
Corporation's funds and securities, shall keep full and accurate accounts of
receipts and disbursements, and shall deposit all moneys and valuable effects
in the name and to the credit of the Corporation in such depository or
depositories as may be designated by the board of directors. The treasurer
shall audit all payrolls and vouchers of the Corporation, receive, audit, and
consolidate all operating and financial statements of the Corporation and its
various departments, shall supervise the accounting and auditing practices of
the Corporation, and shall have charge of matters relating to taxation.
Additionally, the treasurer shall have the power to endorse for deposit,
collection or otherwise all checks, drafts, notes, bills of exchange, and other
commercial paper payable to the Corporation and to give proper receipts and
discharges for all payments to the Corporation. The treasurer shall perform
such other duties as may be prescribed from time to time by the board of
directors or as may be delegated from time to time by the president.
6.10 Assistant Treasurers. Each assistant treasurer shall perform
such duties as may be prescribed from time to time by the president. The
assistant treasurers (in the order as designated by the board of directors or,
in the absence such designation, as determined by the length of time each has
held the office of assistant treasurer continuously) shall exercise the powers
of the treasurer during that officer's absence or inability to act.
6.11 Secretary. The secretary shall maintain minutes of all
meetings of the board of directors, of any committee, and of the shareholders
or consents in lieu of such minutes in the Corporation's minute books, and
shall cause notice of such meetings to be given when requested
<PAGE> 10
by any person authorized to call such meetings. The secretary may sign with
the president in the name of the Corporation, all contracts of the Corporation
and affix the seal of the Corporation thereto. The secretary shall have charge
of the certificate books, stock transfer books, and stock papers as the board
of directors may direct, all of which shall at all reasonable times be open to
inspection by any director at the office of the Corporation during business
hours. The secretary shall perform such other duties as may be prescribed from
time to time by the board of directors or as may be delegated from time to time
by the president.
6.12 Assistant Secretaries. Each assistant secretary shall perform
such duties as may be prescribed from time to time by the board of directors or
as may be delegated from time to time by the president. The assistant
secretaries (in the order designated by the board of directors or, in the
absence of such designation, as determined by the length of time each has held
the office of assistant secretary continuously) shall exercise the powers of
the secretary during that officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.01 Certificates for Shares. The certificates for shares of stock
of the Corporation shall be in such form as shall be approved by the board of
directors in conformity with law. The certificates shall be consecutively
numbered, shall be entered as they are issued in the books of the Corporation
or in the records of the Corporation's designated transfer agent, if any, and
shall state the shareholder's name, the number of shares, and such other
matters as may be required by law. The certificates shall be signed by the
president or any vice president and also by the secretary, an assistant
secretary, or any other officer and may be sealed with the seal of the
Corporation or a facsimile thereof. If any certificate is countersigned by a
transfer agent or registered by a registrar, either of which is other than the
Corporation itself or an employee of the Corporation, the signatures of the
foregoing officers may be a facsimile.
7.02 Issuance. Shares with or without par value may be issued for
such consideration and to such persons as the board of directors may from time
to time determine, except in the case of shares with par value the
consideration must be at least equal to the par value of such shares. Shares
may not be issued until the full amount of the consideration has been paid.
7.03 Consideration for Shares. The consideration for the issuance
of shares shall consist of money paid, labor done (including services actually
performed for the Corporation), or property (tangible or intangible) actually
received. Neither promissory notes nor the promise of future services shall
constitute payment for shares. In the absence of fraud in the transaction, the
judgment of the board of directors as to the value of consideration received
shall be conclusive. When consideration, fixed as provided by law, has been
paid, the shares shall be deemed to have been issued and shall be considered
fully paid and nonassessable. The consideration received for shares shall be
allocated by the board of directors, in accordance with law, between capital
and capital surplus accounts.
7.04 Lost, Stolen, or Destroyed Certificates. The Corporation
shall issue a new certificate in place of any certificate for shares previously
issued if the registered owner of the certificate:
<PAGE> 11
(a) Claim. Makes proof in affidavit form that a previously issued
certificate for shares has been lost, destroyed, or stolen;
(b) Timely Request. Requests the issuance of a new certificate
before the Corporation has notice that the certificate has
been acquired by a purchaser for value in good faith and
without notice of an adverse claim;
(c) Bond. Gives a bond in such form, and with such surety or
sureties, with fixed or open penalty, as the board of
directors may direct, in its discretion, to indemnify the
Corporation (and its transfer agent and registrar, if any)
against any claim that may be made on account of the alleged
loss, destruction, or theft of the certificate; and
(d) Other Requirements. Satisfied any other reasonable
requirements imposed by the board of directors.
When a certificate has been lost, destroyed, or stolen, and the shareholder of
record fails to notify the Corporation within a reasonable time after he has
notice of it, and the Corporation registers a transfer of the shares
represented by the certificate before receiving such notification, the
shareholder of record is precluded from making any claim against the
Corporation for the transfer or for a new certificate.
7.05 Transfer of Shares. Shares of stock of the Corporation shall
be transferable only on the books of the Corporation by the shareholder thereof
in person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.06 Registered Shareholders. The Corporation shall be entitled to
treat the shareholder of record as the shareholder in fact of any shares and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it
shall have actual or other notice thereof, except as otherwise provided by law.
7.07 Legends. If the Corporation is authorized to issue shares of
more than one class, each certificate representing shares issued by the
Corporation (a) shall conspicuously set forth on the face or back of the
certificate a full statement of (i) all of the designations, preferences,
limitations, and relative rights of the shares of each class authorized to be
issued, and (ii) if the Corporation is authorized to issue shares of any
preferred or special class in series, the variations in the relative rights and
preferences of the shares of each such series to the extent they have been
fixed and determined and the authority of the board of directors to fix and
determine the relative rights and preferences of subsequent series; or (b)
shall conspicuously
<PAGE> 12
state on the face or back of the certificate that (i) such a statement is set
forth in the articles of incorporation on file in the office of the Secretary
of State and (ii) the Corporation will furnish a copy of such statement to the
record holder of the certificate without charge on written request to the
Corporation at its principal place of business or registered office.
If the Corporation has by its articles of incorporation limited or
denied the preemptive right of shareholders to acquire unissued or treasury
shares of the Corporation, every certificate representing shares issued by the
Corporation (a) shall conspicuously set forth upon the face or back of the
certificate a full statement of the limitation or denial of preemptive rights
contained in the articles of incorporation, or (b) shall conspicuously state on
the face or back of the certificate (i) that there is on file in the office of
the Secretary of State a full statement of the limitation or denial of
preemptive rights contained in the articles of incorporation, and (ii) that the
Corporation will furnish a copy of such statement to any shareholder without
charge upon written request to the Corporation at its principal place of
business or registered office.
If the Corporation issues any shares which are not registered under
the Securities Act of 1933, as amended, and registered or qualified under any
applicable state securities laws, the transfer of any such shares shall be
restricted in accordance with the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
'Act'), or the laws of any state, and may not be offered for
sale, sold or transferred unless a registration statement
under the Act is then in effect with respect to such shares or
an exemption from the registration requirement of the Act is
then in fact applicable to such sale, transfer or offer for
sale. In addition, these shares have been issued pursuant to
the intrastate offering exemption of the Act [Section
3(a)(11)] and Rule 147 thereunder, and may not, prior to nine
months after the last sale of any security issued by the
Corporation pursuant to the offering of which these shares are
a part, be sold to anyone not a resident of the State of
Louisiana."
In the event any restriction on the transfer, or registration of the
transfer, of shares shall be imposed or agreed to by the Corporation, each
certificate representing shares so restricted (a) shall conspicuously set forth
a full or summary statement of the restriction on the face of the certificate,
or (b) shall set forth such statement on the back of the certificate and
conspicuously refer to the same on the face of the certificate, or (c) shall
conspicuously state on the face or back of the certificate that such a
restriction exists pursuant to a specified document and (i) that the
Corporation will furnish to the record holder of the certificate without charge
upon written request to the Corporation at is principal place of business or
registered office a copy of the specified comment, or (ii) if such document is
one required or permitted by law to be and has been filed, that such specified
document is on file in the office of the Secretary of State and contains a full
statement of such restriction.
<PAGE> 13
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.01 Dividends. Subject to the provisions of the statutes and the
articles of incorporation, dividends may be declared by the board of directors
at any meeting and may be paid in cash, in property, or in shares of stock of
the Corporation. Such declaration and payment shall be at the discretion of
the board of directors.
8.02 Reserves. The board of directors may create out of funds of
the Corporation legally available therefor such reserve or reserves as the
board of directors from time to time, in its discretion, considers proper to
provide for contingencies, to equalize dividends or to repair or maintain any
property of the Corporation, or for such other purpose as the board of
directors shall consider beneficial to the Corporation. The board of directors
may modify or abolish any such reserve.
8.03 Books and Records. The Corporation shall keep correct and
complete books and records of account, shall keep minutes of the proceedings of
its shareholders, board of directors, and any committee, and shall keep at its
registered office or principal place of business, or at any office of its
transfer agent or registrar, a record of its shareholders, giving the name and
addresses of all shareholders and the number and class of the shares held by
each shareholder.
8.04 Fiscal Year. The fiscal year of the Corporation shall be
fixed by the board of directors, provided, that if such fiscal year is not
fixed by the board of directors it shall be the calendar year.
8.05 Seal. The seal, if any, of the Corporation shall be in such
form as may be approved from time to time by the board of directors.
8.06 Resignation. A director, committee member, officer, or agent
may resign by so stating at any meeting of the board of directors or by giving
written notice to the board of directors, the president, or the secretary.
Such resignation shall take effect at the time specified therein, or
immediately if no time is specified. Unless it specifies otherwise, a
resignation is effective without being accepted.
8.07 Securities of Other Corporations. The president or any vice
president of the Corporation shall have the power and authority to transfer,
endorse for transfer, vote, consent, or take any other action with respect to
any securities of another issuer which may be held or owned by the Corporation
and to make, execute, and deliver any waiver, proxy, or consent with respect to
any such securities.
8.09 Invalid Provisions. If any part of these bylaws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
<PAGE> 14
8.10 Headings. The headings used in these bylaws are for
convenience only and do not constitute matter to be construed in the
interpretation of these bylaws.
The undersigned, the Secretary of the Corporation hereby certified
that the foregoing bylaws were adopted by the board of directors of the
Corporation as of the 11th day of February, 1981.
/s/Alphonse LeBlanc
------------------------------------
Alphonse LeBlanc, Secretary
Great Guaranty Bancshares, Inc.
<PAGE> 1
EXHIBIT 3.1
NUMBER SHARES
1781
INCORPORATED UNDER THE LAWS OF THE STATE OF LOUISIANA
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
Common Stock -- Par Value $7.50 Per Share
This Certifies That is the
registered holder of
of the fully paid and non-assessable Capital Stock of
Great Guaranty Bancshares, Inc., transferable only on the books of the
Corporation by the holder hereof in person or by Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this
Certificate to be signed by its duly authorized officers, and its Corporate
Seal to be hereunto affixed at New Roads, Louisiana.
Dated:
- ----------------------------------- -----------------------------------
Secretary President
<PAGE> 2
CERTIFICATE
FOR
NUMBER OF SHARES
SHARES
OF THE
COMMON
CAPITAL STOCK
OF
GREAT GUARANTY
BANCSHARES, INC.
NEW ROADS, LOUISIANA
Issued to
---------------------
Dated
---------------------
For value received, hereby sell, assign, and transfer unto
---------------------
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- -------------------------------------------------------------------------------
shares
- ------------------------------------------------------------------------
of the Capital Stock represented by the within certificate, and do hereby
irrevocably constitute and
appoint Attorney,
--------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation, with
full power of substitution in the premises.
Dated , 19
------------------------ -----
In Presence of
-------------------------
---------------------------------------
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 3.2
STOCK REDEMPTION AGREEMENT
This Agreement is entered as of the 28th day of December, 1995, by and
among Great Guaranty Bancshares, Inc. ("Bancshares") and the undersigned
holders of Bancshares' Series A and Series B Preferred Stock (collectively the
"Shareholders").
WITNESSETH
WHEREAS, in July, 1994, the Shareholders loaned to Bancshares the sum
of TWO HUNDRED NINETEEN THOUSAND TWO HUNDRED AND NO/100 ($219,200.00) DOLLARS
pursuant to a convertible debentures of a form approved by the Bancshares Board
of Directors and by the Federal Reserve Board for funding of expenses of
Bancshares' litigation with The 400 Group; and
WHEREAS, pursuant to the said debentures, interest was to be paid on
the principal amount of each debenture at the "prime" rate, as it may from time
to time exist, as published in the Wall Street Journal, plus 1%; and
WHEREAS, on August 22, 1994, by Agreement of Bancshares and the
Shareholders, the debentures were converted into 42,896 shares of the Series B
Preferred Stock of Bancshares, at the conversion rate of $5.11 per share, based
on the parties' best estimate of the equity value of Bancshares (asset value
less liabilities) at that time; and
WHEREAS, the intent of the parties was and has remained that the
issuance of the Preferred Stock should result in no dilution to the holders of
Common Stock, and to that end each of the Shareholders granted to Bancshares
the right to redeem shares of the Preferred Stock to the extent necessary to
assure no dilution; and
WHEREAS, on current estimates of Bancshares equity value, the
Preferred Stock has value significantly in excess of $5.11 per share (assuming
Guaranty Bank value in excess of $5.5 million and Bancshares liabilities not
exceeding $4.0 million); and
WHEREAS, the parties have determined that an equitable and objectively
determinable redemption price for the Preferred Stock, consistent with the
terms of the original debentures, is the $5.11 issue price plus interest
thereon at the rate specified in the debentures.
NOW THEREFORE the parties do hereby agree that each of the 42,896
shares of Preferred Stock owned by the Shareholders may be redeemed by
Bancshares at any time through the period ending December 31, 1998, for the
redemption price of $5.11 per share plus interest thereon at the "prime rate"
plus 1%, from August 22, 1994 through the date of the redemption. The said
redemption shall occur within thirty (30) days following notice by Bancshares
to the Shareholders of Bancshares' election and intention to redeem the said
shares in accordance herewith.
AND NOW INTO THESE PRESENTS comes and appears Raymond R. Long, the
holder of 3,125 shares of Preferred stock issued in payment of indebtedness by
Bancshares to him, and
<PAGE> 2
hereby grants to Bancshares the right to redeem his said shares of Preferred
Stock on the terms and for the price specified herein applicable to the shares
of Preferred Stock held by the Shareholders.
EXECUTED in multiple original, effective as of December 28, 1995.
/s/ LEVY DABADIE, JR. /s/ JAMES E. KISSNER
- --------------------------------------- ---------------------------------
Levy Dabadie, Jr. James E. Kissner
1,018 shares, Series B Preferred Stock 4,893 shares, Series A Preferred
Stock
4,892 shares, Series B Preferred
Stock
/s/ CRAIG A. MAJOR /s/ H.T. OLINDE, JR.
- --------------------------------------- ---------------------------------
Craig A. Major H.T. Olinde, Jr.
1,957 shares, Series B Preferred Stock 19,569 shares, Series A Preferred
Stock
/s/ J.B. OLINDE /s/ F. EUGENE ROY
- --------------------------------------- ---------------------------------
J.B. Olinde F. Eugene Roy
4,892 shares, Series B Preferred Stock 4,892 shares, Series B Preferred
Stock
/s/ F. GREGORY ROY /s/ RAYMOND R. LONG
- --------------------------------------- ---------------------------------
F. Gregory Roy Raymond R. Long, Intervenor
783 shares, Series B Preferred Stock 3,125 shares, Series B Preferred
Stock
<PAGE> 1
EXHIBIT 3.3
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
:
Written Agreement by and between :
GREAT GUARANTY BANCSHARES, INC. :
New Roads, Louisiana : DOCKET NO. 85-150-WA/RB-HC
:
and :
:
FEDERAL RESERVE BANK OF ATLANTA :
Atlanta, Georgia :
WHEREAS, in order to maintain the financial soundness of Great
Guaranty Bancshares, Inc., New Roads, Louisiana ("Bancshares"), a registered
bank holding company, the Federal Reserve Bank of Atlanta (the "Reserve Bank')
and Bancshares have mutually agreed to enter into this Agreement;
WHEREAS, as of the date of this Agreement, Bancshares owns and
controls the Guaranty Bank and Trust Company, New Roads, Louisiana (the
"Bank");
WHEREAS, this Agreement is being executed in accordance with the Rules
Regarding Delegation of Authority of the Board of Governors of the Federal
Reserve System (the "Board of Governors"), specifically 12 CFR 265.2(f)(26),
and the Reserve Bank has received the prior approval of the Director of the
Division of Banking Supervision and Regulation and the General Counsel of the
Board of Governors of the Federal Reserve System to enter into this Agreement
with Bancshares; and
WHEREAS, on November 18, 1985, the board of directors of Bancshares at
a duly constituted meeting, adopted a resolution authorizing and directing
Thomas R. Bryan to enter into this Agreement on behalf of Bancshares and
consenting to compliance by Bancshares and its directors, officers, agents and
employees with each and every provision of this Agreement.
NOW THEREFORE, before the taking of any testimony or adjudication of
or finding on any issue of fact or law herein, and without this Agreement
constituting an admission of any allegation made or implied by the Board of
Governors, Bancshares and the Reserve Bank hereby agree as follows:
<PAGE> 2
1. (a) Bancshares shall not declare or pay any dividends
without the prior written approval of the Reserve Bank and the Director of the
Division of Banking Supervision and Regulation of the Board of Governors.
(b) Bancshares shall not take dividends or any other form
of payment representing a reduction of capital from the Bank without the prior
written approval of the Reserve Bank, which shall consult with the Bank's
supervisory authorities, the Commissioner of Financial Institutions of the
State of Louisiana and the Federal Deposit Insurance Corporation, with respect
to any proposed dividend payment or capital reduction.
2. (a) Bancshares shall not increase its borrowings or incur
any additional debt without the prior written approval of the Reserve Bank.
(b) Within 45 days of this Agreement, Bancshares shall
submit to the Reserve Bank a written plan to service its current debt without
incurring any additional debt.
3. Within 45 days of this Agreement, Bancshares shall submit to
the Reserve Bank a written plan to improve the capital position of the Bank
and, thereafter, to maintain an adequate capital position. The plan shall, as
a minimum, address and consider: (a) The Bank's current and future capital
requirements, including any Federal or State supervisory requests for
additional capital for the Bank, and (b) the source and timing of additional
funds to fulfill all capital requirements.
4. The plans required by paragraphs 2(b) and 3 hereof, shall be
submitted to the Reserve Bank, for review and approval, within the time periods
set forth in each paragraph. The Reserve Bank may comment on the plans within
15 days of its receipt. Acceptable plans shall be submitted to the Reserve
Bank within the required time periods. Bancshares shall adopt all approved
plans within 10 days of approval by the Reserve Bank and then fully comply with
them. During the term of this Agreement, the approved plans shall not be
amended or rescinded without the prior written approval of the Reserve Bank.
5. Within 30 days of the end of each calendar quarter (December
31, March 31, June 30, September 30) following the date of this Agreement,
Bancshares shall furnish to the Reserve Bank written progress reports detailing
the form and manner of all actions taken to secure compliance with this
Agreement and the results thereof. Along with such reports, Bancshares shall
submit to the Reserve Bank:
(a) Bancshares' parent company only balance sheet for the end of
that quarter;
(b) Bancshares' parent company only income statement for the
period ending that quarter;
(c) the Bank's Report of Condition as of the end of that quarter;
and
(d) the Bank's Report of Income for the period ending that
quarter.
<PAGE> 3
For the purposes of the above reporting requirements, all parent company only
financial statements shall be prepared in accordance with generally accepted
accounting principles. Such reports and statements may be discontinued when
the corrections required by this Agreement have been accomplished and the
Reserve Bank has, in writing, released Bancshares from making further reports.
6. All communications regarding this Agreement shall be sent to:
(a) Mr. Robert E. Heck, Vice President
Federal Reserve Bank of Atlanta
104 Marietta Street, N.W.
Atlanta, Georgia 30303-2713
Attention: BHC Inspections Support Unit
(b) Mr. Thomas R. Bryant
Chief Executive Officer
Great Guaranty Bancshares, Inc.
P. O. Box 10
New Roads, Louisiana 70760
7. The provisions of this Agreement shall be binding upon
Bancshares and all of its officers, directors, agents, employees, in their
capacities as such, and their successors and assigns.
8. Each provision of this Agreement shall remain effective and
enforceable until stayed, modified, terminated or suspended by the Reserve
Bank.
9. This Agreement is enforceable to the same extent and in the
same manner as an effective and outstanding order that has been issued and has
become final pursuant to sections 8(b) and (k) of the Federal Deposit Insurance
Act of 1966, as amended (12 U.S.C. 1818(b) and (k)). Bancshares hereby waives
all procedural requirements and statutorily required notices of the Board of
Governors in connection with this Agreement, with the exception of any notice
of default hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the 18th day of November, 1985.
Great Guaranty Bancshares, Inc. Federal Reserve Bank of Atlanta
By /s/Thomas R. Bryan /s/
-------------------------------- -------------------------------
<PAGE> 4
The undersigned directors of Bancshares each acknowledges that he has
read the foregoing Agreement and approves of the consent thereto by Bancshares.
/s/ Marion S. Monk, Jr. /s/ Simon D. Weil
- ----------------------------------- -------------------------------
Marion S. Monk, Jr. Simon D. Weil
/s/ Thomas R. Bryan /s/ Raymond R. Long
- ----------------------------------- -------------------------------
Thomas R. Bryan Raymond R. Long
/s/ R. Keith Miller /s/ John M. Olinde
- ----------------------------------- -------------------------------
R. Keith Miller John M. Olinde
/s/ Lester Bergeson /s/ Nolan C. Miller
- ---------------------------------- -------------------------------
Lester Bergeson Nolan C. Miller
/s/ George W. Gremillion
- ----------------------------------
George W. Gremillion
/s/ Anthony J. Grezaffi
- ----------------------------------
Anthony J. Grezaffi
/s/ Edwin Leonards
- ----------------------------------
Edwin Leonards
<PAGE> 1
EXHIBIT 6.1
STATE OF LOUISIANA
PARISH OF POINTE COUPEE
CASH SALE
BEFORE ME, undersigned Notary, and the undersigned competent witnesses
personally came and appeared:
GUARANTY BANK AND TRUST COMPANY (Tax I.D. No. 72-0493576), a domestic
banking corporation domiciled in the Parish of Pointe Coupee, State of
Louisiana through its duly authorized President, Daniel R. Domingue
("Vendor");
HUMPHREY THEODORE OLINDE, JR. (S.S. No. ###-##-####), a bachelor of
full capacity residing in the Parish of Pointe Coupee, State of
Louisiana, whose mailing address is 800 Olinde Street, New Roads, LA
70760 ("Vendee")
Who declare that for the price of TWO HUNDRED TEN THOUSAND AND NO/100
($210,000.00) cash, receipt of which is hereby acknowledged, Vendor does hereby
sell, transfer, convey and deliver to Vendee with full warranty of title and
subrogation to all rights and actions of warranty that Vendor may have, the
following described property, possession and delivery of which Vendee
acknowledges:
A certain tract or parcel of land, together with all buildings and
improvements thereon and all servitudes, privileges and appurtenances
relating thereto, situated in Pointe Coupee Parish, Louisiana, and
being known and designated as TRACT E on plat made by Daryl B. Patin,
R.L.S., dated September 24, 1981, a copy of which plat is recorded at
Conveyance Book 215, Entry 138 of the records of Pointe Coupee Parish,
Louisiana, which plat is made a part hereof by reference for greater
certainty of description. Said Tract is more particularly described
as follows: Begin at the intersection of the East right of way of a
street known as Major Parkway with the North right of way of Louisiana
State Highway Number 1, being the Southwest corner of TRACT E, proceed
then N 60degrees 17'48" a distance of 322.74 feet, then 61degrees
48'01" a distance of 100.06 feet, thence 62degrees 59' 14" a distance
of 99.91 feet to a point marked by a flat iron, thence N 21degrees
27'10" W a distance of 701.46 feet, thence S 65degrees 09'37" W a
distance of 629.80 feet, thence S 24degrees 50'23" E a distance of
738.58 feet to a point of beginning, all as is shown on the above
mentioned plat. TRACT E is bounded on the Southeast by Louisiana
Highway Number One (1), on the Southwest by Major Parkway, on the
Northwest by property of Oliver Major, and on the Northeast by
property of O'Neal Leonard Estate.
<PAGE> 2
Said property being the same acquired by Vendor from Great Guaranty
Bancshares, Inc. by virtue of a Cash Sale dated February 1, 1984 and
recorded at conveyance book 296, Entry 168 in the conveyance records
of the Parish of Pointe Coupee, State of Louisiana on April 24, 1986.
Taxes for the current year will be paid on a pro rata basis by Vendor.
All parties and persons signing this instrument have declared, and
warranty that they have full capacity and authority to execute it.
The Certificate of Mortgages as required by Article 336A of the
Revised Civil Code of Louisiana is dispensed with by the parties hereto. The
parties specifically waive the filings of any mortgage certificates, conveyance
certificates and paving and tax certificates and hereby agree to hold Notary
harmless for any failure to request and/or file the foregoing certificates.
No title examination was requested by the parties, and none was
performed by undersigned Notary. The parties shall defend, indemnify and hold
harmless Notary for any and all liability arising out of failure to conduct a
title search.
The property description herein was provided by the parties. Notary
in no way warrants the accuracy of the property description. Vendee shall
defend, indemnify and hold harmless Notary for any and all liability arising
out of the property description.
This Cash Sale and all of its obligations, provisions and terms shall
inure to the benefit of, and be binding upon, the heirs, successors and/or
assigns of the parties, and the Vendee and his heirs and assigns shall have and
hold the property in full ownership forever.
<PAGE> 3
THUS DONE AND SIGNED at New Roads, Louisiana, this 29th day of
December, 1995 at 10:45 o'clock a.m. in the presence of me, Notary Public, and
the undersigned competent witnesses after a due reading of the whole.
WITNESSES:
GUARANTY BANK AND TRUST
COMPANY, VENDOR
/s/ illegible By: /s/ Daniel R. Domingue
- -------------------------------- ---------------------------------
Daniel R. Domingue, President
/s/ illegible /s/ Humphrey Theodore Olinde, Jr.
- -------------------------------- ------------------------------------
Humphrey Theodore Olinde, Jr. Vendee
/s/ illegible
------------------------
NOTARY PUBLIC
<PAGE> 1
EXHIBIT 6.2
SECURED PROMISSORY NOTE
$200,000.00 November 17, 1995
New Roads, Louisiana
GREAT GUARANTY BANCSHARES, INC. (the "Company"), for value received,
hereby promises to pay to the order of James E. Kissner on or before December
31, 1996 (the "Maturity Date"), the principal sum of TWO HUNDRED THOUSAND AND
NO/100 ($200,000.00) DOLLARS, with interest on the unpaid principal balance
from the date hereof through the Maturity Date at the floating rate equal to
the "Prime Rate" as charged from time to time by New York banks, as such rate
is published in the Wall Street Journal, provided, however, that the interest
rate applicable on this note shall in no event be less than 8.75% per annum.
The aggregate amount of principal and interest thereon shall be paid by the
Company in a lump sum on the Maturity Date.
Payments of principal and interest shall be made in lawful money of
the United States of America in immediately available funds. This Note may be
paid by the Company prior to the Maturity Date without premium or penalty. All
parties hereto severally waive presentment for payment, notice of dishonor and
notice of protest. This Note shall be governed by and construed in accordance
with the laws of the State of Louisiana.
This Note is secured by a security interest in the shares of Guaranty
Bank & Trust Company ("Bank") owned by Company, being all of the common stock
of Bank and represented by certificate numbers 2809 for 76,994 shares and 2811
for 19,248 shares of the said stock. The Security interest granted hereby does
not confer voting rights nor any other right to exercise control of the said
Bank. The said security interest granted hereby is subordinate to the security
interest held in such stock by Hancock Bank, and the holder hereof hereby
designates Hancock Bank as his agent for custody of the stock subject to
Hancock Bank's security interest herein. In the event that this Note is placed
in the hands of an attorney at law for collection, the holer shall be entitled
to reasonable attorney's fees incurred in connection with actions to collect
the amount due hereunder.
GREAT GUARANTY BANCSHARES, INC.
By: /s/ H.T. Olinde, Jr.
------------------------------
H.T. Olinde, Jr.
<PAGE> 2
PLEDGE AND SECURITY AGREEMENT
STATE OF LOUISIANA
PARISH OF POINTE COUPEE
This Pledge and Security Agreement is entered as of the 8th day of
December, 1995, by and between GREAT GUARANTY BANCSHARES, INC. ("PLEDGOR"), and
JAMES E. KISSNER ("PLEDGEE"), and provides as follows:
PLEDGOR is presently indebted unto PLEDGEE for loans and advances made
and/or credit extended. In order to secure the payment and performance of all
obligations of PLEDGOR to PLEDGEE under or in connection with that certain
promissory note dated December 8, 1995, for the principal amount of $200,000
(the "Indebtedness"), and any and all renewals or extensions thereof, together
with interest thereon and all costs of collection, including attorney's fees,
PLEDGOR does by these presents pledge and hypothecate unto PLEDGEE the
securities or other property described below and sometimes referred to
hereinafter as the "Pledged Property":
96,242 shares of the Common Stock (the "Stock") of
Guaranty Bank & Trust Company, evidenced by Certificate
Numbers 2809 for 76,994 shares and 2811 for 19,248
shares. In the event that, during the term of this
pledge, any shares are issued, or dividend,
reclassification, readjustment, or any change is
declared or made in the capital structure of Guaranty
Bank & Trust Company, all new, substituted and
additional shares or securities issued by reason of any
such change shall be delivered directly to PLEDGEE and
shall be held by PLEDGEE under this Agreement in the
same manner as the shares originally pledged hereunder.
PLEDGEE acknowledges the prior and superior security interest in said
Pledged Property held by Hancock Bank and hereby appoints Hancock Bank as his
agent for custody of the Pledged Property, subject to Hancock Bank's prior
interest. Pursuant to the possession of such Stock by Hancock Bank on behalf
of PLEDGEE, PLEDGEE hereby acknowledges receipt of the Pledged Property. The
Pledged Property shall be held by PLEDGEE as general security to secure any and
all Indebtedness due or to become due by PLEDGOR. PLEDGEE and PLEDGOR agree
that PLEDGOR shall retain all voting rights in the Pledged Property and all
rights to receive dividends and other distributions paid in respect of the
Pledged Property.
In the event of non-payment of the Indebtedness secured by the Pledged
Property or any portion thereof at maturity or when otherwise due, subject to
prior satisfaction of the claims of Hancock Bank, in addition to all other
rights of a secured creditor under Louisiana law, PLEDGEE is hereby irrevocably
authorized to sell any or all of the Pledged Property held by it as security
under this Agreement at public or private sale at such time or times as it may
elect without recourse to judicial proceeding, without demand for payment,
notice or advertisement and with or without any benefit of appraisement
whatsoever, and PLEDGEE may become the purchaser of any and all said property
so sold and thereafter hold the same in its own right absolutely.
Upon the transfer of the note or notes or other evidence representing
the Indebtedness secured by this Agreement, PLEDGEE may transfer any and all of
the Pledged Property and shall be thereafter fully discharged from all
liability and responsibility with respect to the security so transferred, and
the
<PAGE> 3
transferee shall be vested with all the powers and rights of PLEDGEE with
respect to the security transferred.
PLEDGOR agrees that PLEDGEE may at its sole option at any time and
from time to time extend the date or dates for payment of any installment of
principal or interest due on any note(s) or other obligations secured hereby;
waive, release or forgive the performance of any obligations and notes secured
hereby; or otherwise grant any indulgences or agreements with respect to any
notes or obligations secured hereby, without the approval or permission of
PLEDGOR. No such action on the part of PLEDGEE shall affect this Pledge or the
rights of PLEDGEE hereunder, under any note or any other obligation, or in the
Pledged Property.
The aggregate principal amount of indebtedness caused by the Pledged
Property and by this Agreement remaining outstanding and unpaid at any time by
PLEDGOR shall not exceed TWO HUNDRED FIFTY THOUSAND AND NO/100 ($250,000.00)
DOLLARS.
Executed in New Roads, Louisiana, this 8th day of December 1995.
PLEDGOR:
GREAT GUARANTY BANCSHARES, INC.
By: /s/H.T. Olinde, Jr.
----------------------------------
H.T. Olinde, Jr., Chairman
PLEDGEE:
/s/James E. Kissner
---------------------------------------
James E. Kissner
AND NOW APPEARS HANCOCK BANK for the sole purposes of (i) consenting
to the security interest granted hereby, which security interest is subject and
subordinate to the security interest held in the Pledged Property by Hancock
Bank and (ii) accepting the appointment as PLEDGEE's agent for holding of
possession and custody of the Pledged Property for PLEDGEE, subject to Hancock
Bank's prior rights and interests therein.
HANCOCK BANK
By: /s/A. Bridger Eglin
------------------------------------
Its President
--------------------------------
-2-
