As filed with the Securities and Exchange Commission on August 8, 1996
Registration No. 333-08309
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-4/A
(Amendment No.2)
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
----------------------
WHITNEY HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
----------------------
LOUISIANA 6711 72-6017893
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number Identification No.)
incorporation
or organization)
----------------------
228 St. Charles Avenue
New Orleans, Louisiana 70130
(504) 586-7117
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive office)
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Joseph S. Schwertz, Jr., Esq. Copies to: Copies to:
Secretary Patrick J. Butler, Jr., Esq. James J. Reeves, Esq.
Whitney Holding Corporation Milling, Benson, Woodward, 730 Bayfront Parkway, Suite 4-B
228 St. Charles Ave. - Room 622 Hillyer, Pierson & Miller, L.L.P. Pensacola, FL 32501
New Orleans, LA 70130 909 Poydras Street, Suite 2300
(504) 586-3474 New Orleans, LA 70112
(Name, address, including zip code, and
telephone number, including area code, of
agent for service)
</TABLE>
Approximate Date of Commencement of Proposed Sale to the Public
Upon the effective date of the mergers described in this registration statement.
----------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box. |_|
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
<PAGE>
WHITNEY HOLDING CORPORATION
CROSS REFERENCE SHEET
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Item of Form S-4 Location in Prospectus
- ---------------- ----------------------
A. Information About the Transaction
1. Forepart of Registration Statement and Cover Page
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Cover; Table of Contents
of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed Summary
Charges and Other Information
4. Terms of the Transaction Summary; The Plan of Merger
5. Pro Forma Financial Information Unaudited Pro Forma Condensed Combined
Financial Information; Unaudited Pro Forma
Condensed Combined Financial Information
(Liberty Holding Company and Liberty Bank
Transaction Only)
6. Material Contacts with the Company Being The Plan of Merger - Background; The Plan
Acquired of Merger - Reasons for the Plan of Merger;
The Plan of Merger - Recommendation of the
Company's and the Bank's Board of
Directors
7. Additional Information Required for *
Reoffering by Persons and Parties Deemed
to be Underwriters
8. Interests of Named Experts and Counsel *
9. Disclosure of Commission Position on *
Indemnification for Securities Act Liabilities
B. Information About the Registrant
10. Information with Respect to S-3 Registrants Inside Cover; Summary; Information about
Whitney
11. Incorporation of Certain Information by Information about Whitney; Incorporation of
Reference Certain Documents by Reference
12. Information with Respect to S-2 or S-3 *
Registrants
13. Incorporation of Certain Information by *
Reference
14. Information with Respect to Registrants *
other than S-2 or S-3 Registrants
</TABLE>
<PAGE>
WHITNEY HOLDING CORPORATION
CROSS REFERENCE SHEET
<TABLE>
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Item of Form S-4 Location in Prospectus
- ---------------- ----------------------
C. Information About the Company Being Acquired
15. Information with Respect to S-3 Companies *
16. Information with Respect to S-2 or S-3 *
Companies
17. Information with Respect to Companies Information about the Company and the
other than S-2 or S-3 Companies Bank
D. Voting and Management Information
18. Information if Proxies, Consents or
Authorizations are to be Solicited
(1) Date, Time and Place Information The Meetings - General
(2) Revocability of Proxy The Meetings - Solicitation, Voting and
Revocation of Proxies
(3) Dissenters' Rights of Appraisal Dissenters' Rights
(4) Persons Making Solicitation The Meetings - General; The Meetings -
Solicitation, Voting and Revocation of
Proxies
(5) Interests of Certain Persons in Summary - Interests of Certain Persons in the
Matters to be Acted upon; Voting Mergers; The Plan of Merger - Interests of
Securities and Principal Holders Certain Persons in the Mergers; Information
Thereof About the Company and the Bank - Security
Holdings of Principal Shareholders and
Management
(6) Vote Required for Approval The Meetings - Shares Entitled to Vote;
Quorum; Vote Required
(7) Directors and Executive Officers; Information About the Company and the
Executive Compensation; Certain Bank
Relationships and Related
Transactions
19. Information if Proxies, Consents or *
Authorizations are not to be Solicited or in
an Exchange Offer
*Not applicable or answer is in the negative.
</TABLE>
<PAGE>
LIBERTY HOLDING COMPANY
LIBERTY BANK
201 N. Palafox Street
Pensacacola, Florida 32501
August 12, 1996
Dear Shareholder:
You are cordially invited to attend joint special meetings of shareholders
of Liberty Holding Company (the "Company") and Liberty Bank (the "Bank"), to be
held in the main office of Liberty Bank, 201 N. Palafox Street, Pensacola,
Florida 32501, on Tuesday, September 17, 1996 at 2:00 p.m., local time.
The purpose of the special meetings will be to consider and vote upon an
Agreement and Plan of Merger dated April 23, 1996, as amended, and a related
merger agreement (collectively, the "Plan of Merger") among the Company, Liberty
Bank, Whitney Holding Corporation ("Whitney") and its wholly-owned subsidiary
Whitney National Bank of Florida ("WNB-Florida"). Pursuant to the Plan of
Merger, the Company will merge into Whitney, Liberty Bank will merge into
WNB-Florida, and each outstanding share of common stock of the Company and each
outstanding share of common stock of the Bank not owned by the Company will be
converted into shares of Whitney common stock as more fully described in the
attached Proxy Statement-Prospectus. You are urged to read the enclosed Proxy
Statement-Prospectus in its entirety for a more complete description of the
terms of the Plan of Merger.
The Boards of Directors of the Company and the Bank have unanimously
approved the Plan of Merger and believe it is in the best interests of the
Company's and the Bank's shareholders. Allen C. Ewing & Co., an investment
banking firm experienced in the valuation of banking institutions, has advised
your Boards of Directors that, in its opinion, the consideration to be received
by the Company's and the Bank's shareholders in the Plan of Merger is fair to
such shareholders from a financial point of view and that the allocation of such
consideration between shareholders of the Company and shareholders of the Bank
is fair, from a financial point of view, to the shareholders of each. Upon
approval of the Plan of Merger, you would receive common stock of Whitney, one
of the largest Louisiana-based bank holding companies, and as a new shareholder
of Whitney, you would own stock that is publicly traded on the NASDAQ Stock
Market. Through WNB-Florida, a national bank subsidiary of Whitney formed to
facilitate the proposed mergers, Whitney will be able to offer a broad range of
banking services in our market area and may be able to compete more effectively
in the changing economic and legal environment facing all financial
institutions. It is a condition to the consummation of the mergers that the
Company and Whitney receive an opinion that the mergers will qualify as a
tax-free reorganization for federal income tax purposes.
The accompanying Notices of Special Meeting and Proxy Statement-Prospectus
contain information about the proposed mergers. Please read carefully these
materials and the documents incorporated therein by reference, copies of which
are available as indicated under the caption "Incorporation of Certain Documents
by Reference."
The Boards of Directors recommend that you vote FOR the Plan of Merger and
urge you to sign and date the enclosed proxy and return it promptly in the
accompanying envelope in order to ensure that your vote is represented. Of
course, if you attend the special meetings, you nevertheless may vote in person,
even though you previously returned your proxy.
Very truly yours,
Conald D. Mansfield Ronald L. Bruce
President of Liberty Holding Company President and Chief Executive Officer
of Liberty Bank
<PAGE>
LIBERTY HOLDING COMPANY
201 N. Palafox Street
Pensacola, Florida 32501
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, SEPTEMBER 17, 1996
To the Holders of Common Stock of Liberty Holding Company:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Company Meeting") of Liberty Holding Company (the "Company") will be held at
the main office of its subsidiary, Liberty Bank, 201 N. Palafox Street,
Pensacola, Florida 32501, on Tuesday, September 17, 1996 at 2:00 p.m.,
local time, for the following purposes:
1. To consider and vote upon a proposal to approve an Agreement
and Plan of Merger dated April 23, 1996, as amended, and a
related merger agreement (collectively, the "Plan of Merger")
pursuant to which, among other things: (a) the Company would
merge into Whitney Holding Corporation ("Whitney"), (b)
Liberty Bank would merge into Whitney National Bank of
Florida, a newly formed, wholly-owned bank subsidiary of
Whitney, and (c) each outstanding share of common stock of the
Company would be converted into shares of Whitney common stock
as determined in accordance with the terms of the Plan of
Merger, all as more fully described in the attached Proxy
Statement-Prospectus.
2. To transact such other business as may properly come before
the Company Meeting or any adjournments thereof.
Only shareholders of record at the close of business on
August 1, 1996 are entitled to notice of and to vote at the Company
Meeting or any adjournment thereof. Dissenting shareholders who comply with the
procedural requirements of Sections 1301-20 of the Florida Business Corporation
Act are or may be entitled to assert dissenters' rights under that Act.
Shareholders are cordially invited to attend the Company Meeting in
person. Whether or not you plan to attend the Company Meeting, you are urged to
complete, date and sign the enclosed proxy and to return it promptly.
By order of the Board of Directors
of Liberty Holding Company
William A. Hunt
Secretary
Pensacola, Florida
August 12, 1996
- -------------------------------------------------------------------------------
I M P O R T A N T
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE COMPANY MEETING
REGARDLESS OF THE NUMBER THAT YOU HOLD. PLEASE PROMPTLY COMPLETE, SIGN AND MAIL
THE ENCLOSED PROXY IN THE ACCOMPANYING POST-PAID ENVELOPE, WHETHER OR NOT YOU
INTEND TO BE PRESENT AT THE COMPANY MEETING. YOU MAY REVOKE YOUR PROXY AT ANY
TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY
OF THE COMPANY OR BY EXECUTION OF A PROXY OF A LATER DATE FILED WITH THE
SECRETARY OF THE COMPANY AT OR BEFORE THE MEETING. IN ADDITION, IF YOU ATTEND
THE COMPANY MEETING, YOU MAY REVOKE YOUR PROXY BY VOTING IN PERSON.
- -------------------------------------------------------------------------------
<PAGE>
LIBERTY BANK
201 N. Palafox Street
Pensacola, Florida 32501
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, SEPTEMBER 17, 1996
To the Holders of Common Stock of Liberty Bank:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Bank Meeting") of Liberty Bank will be held at its main office, 201 N. Palafox
Street, Pensacola, Florida 32501, on Tuesday, September 17, 1996 at
2:00 p.m. local time, for the following purposes:
1. To consider and vote upon a proposal to approve an Agreement
and Plan of Merger dated April 23, 1996, as amended, and a
related merger agreement (collectively, the "Plan of Merger")
pursuant to which, among other things: (a) Liberty Holding
Company (Liberty Bank's parent corporation) (the "Company")
would merge into Whitney Holding Corporation ("Whitney"), (b)
Liberty Bank would merge into Whitney National Bank of Florida,
a newly formed, wholly-owned bank subsidiary of Whitney, and
(c) each outstanding share of common stock of Liberty Bank not
owned by the Company would be converted into shares of Whitney
common stock as determined in accordance with the terms of the
Plan of Merger, all as more fully described in the attached
Proxy Statement-Prospectus.
2. To transact such other business as may properly come before
the Bank Meeting or any adjournments thereof.
Only shareholders of record at the close of business on
August 1, 1996 are entitled to notice of and to vote at the Bank
Meeting or any adjournment thereof. Dissenting shareholders who comply with the
procedural requirements of 12 U.S.C. ss.215a will be entitled to receive payment
of the cash value of their shares based upon the appraisal prescribed by 12
U.S.C. ss.215a.
Shareholders are cordially invited to attend the Bank Meeting in
person. Whether or not you plan to attend the Bank Meeting, you are urged to
complete, date and sign the enclosed proxy and to return it promptly.
By order of the Board of Directors
of Liberty Bank
Richard A. Davis
Secretary
Pensacola, Florida
August 12, 1996
- -------------------------------------------------------------------------------
I M P O R T A N T
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE BANK MEETING REGARDLESS
OF THE NUMBER THAT YOU HOLD. PLEASE PROMPTLY COMPLETE, SIGN AND MAIL THE
ENCLOSED PROXY IN THE ACCOMPANYING POST-PAID ENVELOPE, WHETHER OR NOT YOU INTEND
TO BE PRESENT AT THE BANK MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE
IT IS VOTED BY GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF LIBERTY
BANK OR BY EXECUTION OF A PROXY OF A LATER DATE FILED WITH THE SECRETARY OF
LIBERTY BANK AT OR BEFORE THE BANK MEETING. IN ADDITION, IF YOU ATTEND THE BANK
MEETING, YOU MAY REVOKE YOUR PROXY BY VOTING IN PERSON.
- -------------------------------------------------------------------------------
<PAGE>
LIBERTY HOLDING COMPANY
LIBERTY BANK
PROXY STATEMENT FOR SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD TUESDAY, SEPTEMBER 17, 1996
WHITNEY HOLDING CORPORATION
PROSPECTUS
Common Stock, No Par Value
This Proxy Statement-Prospectus is being furnished to holders of common
stock, par value $1.00 per share ("Company Common Stock"), of Liberty Holding
Company (the "Company") and to holders of common stock, par value $5.00 per
share ("Bank Common Stock"), of Liberty Bank (the "Bank") in connection with the
solicitation of proxies by the Company's and the Bank's Boards of Directors for
use at joint Special Meetings of Shareholders of the Company (the "Company
Meeting") and the Bank (the "Bank Meeting") to be held on
Tuesday, September 17, 1996, at 2:00 p.m., local time, at the Bank's main
main office, 201 N. Palafox Street, Pensacola, Florida 32501, and at any
adjournment thereof. The purpose of the Company Meeting and the Bank Meeting is
to consider and vote upon a proposal to approve an Agreement and Plan of Merger
and a related merger agreement (collectively, the "Plan of Merger") between the
Company and the Bank, on the one hand, and Whitney Holding Corporation
("Whitney") and Whitney National Bank of Florida ("WNB-Florida"), on the other
hand. The Plan of Merger provides for, among other things, the merger of the
Company into Whitney (the "Company Merger") and the merger of the Bank into WNB-
Florida (the "Bank Merger" and, collectively with the Company Merger, the
"Mergers"). Upon consummation of the Mergers, except as described herein,
each outstanding share of Company Common Stock and each outstanding share of
Bank Common Stock that is not owned by the Company would be converted into
shares of common stock, no par value, of Whitney ("Whitney Common Stock") in
the manner described herein, with cash being paid for any fractional share
interests. See "The Plan of Merger - Description of the Plan of Merger --
Conversion of Common Stock." Consummation of the Company Merger requires
the approval of the holders of at least a majority of the outstanding shares of
Company Common Stock; consummation of the Bank Merger requires the approval of
the holders of at least two-thirds of the outstanding shares of Bank Common
Stock. Directors, executive officers and certain principal shareholders of the
Company and executive officers of the Bank beneficially owning an
aggregate of approximately 75.9% of the Company Common Stock have
agreed, subject to certain conditions, to vote their shares in favor of the
Plan of Merger. Consummation of the Mergers is also subject to the satisfaction
of certain other conditions, including obtaining necessary regulatory approvals.
This Proxy Statement-Prospectus covers up to 523,740 shares
of Whitney Common Stock that may be issued upon consummation of the Mergers,
as determined on the basis of the pricing formula described herein. The
actual number of shares of Whitney Common Stock to be issued will be
determined in accordance with the terms of the Plan of Merger. See "The
Plan of Merger - Description of the Plan of Merger -- Conversion of
Common Stock." The outstanding shares of Whitney Common Stock are, and the
shares of Whitney Common Stock offered hereby will be, included for
quotation on the NASDAQ National Market System. The closing price per share of
Whitney Common Stock on the NASDAQ National Market System on
August 6, 1996 was $30.625.
This Proxy Statement-Prospectus, and the accompanying Notices of
Special Meeting and forms of proxy, are being first mailed to shareholders of
the Company and the Bank on or about August 12, 1996.
THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE PROPOSED
MERGERS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCU-
RACY OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS
OF ANY BANK OR NON-BANK SUBSIDIARY OF WHITNEY AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE
FUND OR ANY OTHER GOVERNMENTAL AGENCY.
This Proxy Statement-Prospectus is dated August 12, 1996
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Proxy Statement-Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by Whitney,
the Company or the Bank. This Proxy Statement-Prospectus shall not constitute an
offer to sell or exchange or the solicitation of an offer to purchase any
security, or the solicitation of a proxy, nor shall there be any such sale,
exchange or solicitation in any jurisdiction in which, or to any person to whom,
it is unlawful to make such an offer, solicitation of an offer or proxy
solicitation. Neither the delivery of this Proxy Statement-Prospectus nor any
distribution of securities made hereunder shall, under any circumstances, create
any implication that the information herein is correct as of any time subsequent
to the date hereof or that there has been no change in the affairs of Whitney,
the Company or the Bank since the date hereof.
All information contained herein with respect to the Company and the
Bank has been provided by the Company and the Bank, and Whitney is relying on
the accuracy of that information. All information contained herein with respect
to Whitney has been provided by Whitney, and the Company and the Bank are
relying on the accuracy of that information.
AVAILABLE INFORMATION
Whitney is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith is
required to file reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, together with proxy statements and
other information filed by Whitney, can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at 7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition,
Whitney Common Stock is included for quotation on the NASDAQ National Market
System (Symbol: WTNY), and such reports, proxy statements and other information
concerning Whitney can be inspected at the offices of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Whitney has filed with the Commission a Registration Statement on Form
S-4 ("Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the Whitney Common Stock offered by this Proxy
Statement-Prospectus. This Proxy Statement-Prospectus does not contain all of
the information set forth in the Registration Statement or the exhibits thereto.
Such additional information can be inspected and copied as set forth above.
Statements contained in this Proxy Statement-Prospectus as to the contents of
any documents are necessarily summaries of the documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission. For further information with respect to Whitney and
the transactions contemplated hereby, reference is made to the Registration
Statement, including the exhibits thereto and any documents incorporated by
reference therein.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement-Prospectus incorporates documents by reference
that are not presented herein or delivered herewith. See "Information about
Whitney -- Incorporation of Certain Information about Whitney by Reference."
Whitney hereby undertakes to provide copies of any such documents, other than
exhibits to such documents that are not specifically incorporated by reference
therein, without charge to any person, including any beneficial owner of Company
or Bank Common Stock, to whom this Proxy Statement-Prospectus is delivered, upon
the written or oral request of such person to Whitney Holding Corporation,
Attention: Edward B. Grimball, Chief Financial Officer, 228 St. Charles Avenue,
New Orleans, Louisiana 70130 (Telephone: (504) 586-7252). In order to ensure
timely delivery of the documents, any request should be made by
September 10, 1996.
<PAGE>
TABLE OF CONTENTS
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SUMMARY.........................................................................................................iii
Parties to the Mergers.................................................................................iii
Whitney .....................................................................................iii
The Company and the Bank......................................................................iii
The Special Meetings...................................................................................iii
General .....................................................................................iii
Purpose of the Meetings.......................................................................iii
Vote Required...........................................................................................iv
Reasons for the Plan of Merger..........................................................................iv
Recommendation of the Company's and the Bank's Boards of Directors......................................iv
Fairness Opinion of Allen C. Ewing & Co.................................................................iv
The Plan of Merger................................................................................... iv
General ................................................................................... iv
Exchange of Certificates........................................................................v
Regulatory Approvals and Other Conditions to Consummation of the Mergers.......................vi
Waiver, Amendment and Termination..............................................................vi
Accounting Treatment...................................................................................vii
Certain Federal Income Tax Consequences................................................................vii
Dissenters' Rights.....................................................................................vii
Interests of Certain Persons...........................................................................vii
Market Prices..................................................................................... . vii
Comparative Rights of Shareholders....................................................................viii
Selected Financial Data of the Company..................................................................ix
Selected Financial Data of the Bank......................................................................x
Selected Financial Data of Whitney......................................................................xi
Comparative Per Share Data.............................................................................xii
THE MEETINGS......................................................................................................1
General ................................................................................................1
Purpose of the Meetings..................................................................................1
Shares Entitled to Vote; Quorum; Vote Required...........................................................1
Solicitation, Voting and Revocation of Proxies...........................................................2
THE PLAN OF MERGER................................................................................................2
General ................................................................................................2
Background...............................................................................................2
Reasons for the Plan of Merger...........................................................................3
General .......................................................................................3
Whitney .......................................................................................3
The Company and the Bank........................................................................3
Recommendation of the Company's and the Bank's Boards of Directors.......................................4
Fairness Opinion of Allen C. Ewing & Co..................................................................4
Description of the Plan of Merger........................................................................7
General .......................................................................................7
Conversion of Common Stock......................................................................7
Exchange of Certificates........................................................................9
Transfer and Exchange Agents...................................................................10
Regulatory Approvals and Other Conditions of the Mergers.......................................10
Effective Date.................................................................................11
Conduct of Business Prior to the Effective Date................................................11
Century Branch.................................................................................12
Waiver, Amendment and Termination..............................................................12
i
<PAGE>
Expenses.......................................................................................13
Interests of Certain Persons............................................................................13
Employee Benefits..............................................................................13
ESOP ......................................................................................13
Management.....................................................................................13
Indemnification and Insurance............................................................ .. 13
Status Under Federal Securities Laws; Certain Restrictions on Resales ..................................14
Accounting Treatment....................................................................................14
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..........................................................................15
DISSENTERS' RIGHTS...............................................................................................16
The Company.............................................................................................16
The Bank ...............................................................................................18
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.....................................................19
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Liberty Holding Company and Liberty Bank Transaction Only)....................................................27
INFORMATION ABOUT THE COMPANY AND THE BANK.......................................................................35
Description of Business.................................................................................35
Competition.............................................................................................35
Supervision and Regulation..............................................................................35
Market Prices and Dividends.............................................................................36
Property ...............................................................................................37
Employees...............................................................................................37
Security Holdings of Principal Shareholders and Management..............................................37
THE COMPANY'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................................................................40
INFORMATION ABOUT WHITNEY........................................................................................53
General ...............................................................................................53
Market Prices of and Dividends Declared on Whitney Common Stock ........................................54
Incorporation of Certain Information about Whitney by Reference.........................................55
COMPARATIVE RIGHTS OF SHAREHOLDERS...............................................................................55
Description of Whitney Common Stock.....................................................................56
Comparison of Whitney Common Stock and Company and Bank Common Stock....................................60
LEGAL MATTERS....................................................................................................63
EXPERTS..........................................................................................................63
OTHER MATTERS....................................................................................................63
CITIZENS CONSOLIDATED FINANCIAL STATEMENTS.......................................................................F-1
Appendix A - Agreement and Plan of Merger (including Amendment).........................................A-1
Appendix B - Fairness Opinion of Allen C. Ewing & Company...............................................B-1
Appendix C - Sections 1301-20 of the Florida Business Corporation
Act and Selected Provisions of 12 U.S.C. ss.215a.....................................................C-1
</TABLE>
ii
<PAGE>
SUMMARY
The following summary is not intended to be complete and is qualified
in its entirety by the more detailed information appearing elsewhere herein, the
appendices hereto and the documents incorporated herein by reference.
Shareholders are urged to read carefully all such material.
Parties to the Mergers
Whitney. Whitney Holding Corporation, a Louisiana corporation
("Whitney") is a multi-bank holding company registered pursuant to the Bank
Holding Company Act of 1956. Whitney became an operating entity in 1962 with
Whitney National Bank ("Whitney Bank") as its only significant subsidiary.
Whitney Bank, which has its headquarters in Orleans Parish, Louisiana, has been
engaged in general banking business in the City of New Orleans since 1883. It
currently operates 59 branches in south Louisiana and a foreign branch
on Grand Cayman in the British West Indies. In December 1994, Whitney
established the Whitney Bank of Alabama and, through this new banking
subsidiary, acquired the Mobile area operations of The Peoples Bank, Elba,
Alabama on February 17, 1995. Whitney Bank of Alabama operates eight branches
and one loan production office serving metropolitan Mobile, Alabama and the
Alabama Gulf Coast region.
Whitney National Bank of Florida ("WNB-Florida") is a wholly-owned
subsidiary of Whitney that was organized under the National Banking Act to
facilitate the mergers described herein. See "The Meetings - Purpose of the
Meetings" and "The Plan of Merger - General."
Whitney and its subsidiaries are sometimes referred to collectively
herein as "Whitney's consolidated group." At March 31 1996, Whitney had total
consolidated assets of approximately $3.499 billion and total consolidated
deposits of approximately $2.768 billion. Whitney's principal executive offices
are at 228 St. Charles Avenue, New Orleans, Louisiana 70130, and its telephone
number is (504) 586-7117. See "Information About Whitney."
The Company and the Bank. Liberty Holding Company, a Florida
corporation ("the Company"), is a bank holding company that owns 99.3% of the
outstanding stock of Liberty Bank (the "Bank"). At March 31, 1996, the Company
had total consolidated assets of approximately $50,967,000, total consolidated
deposits of approximately $43,637,000 and total shareholders equity of
approximately $6,196,000. The Company and the Bank are sometimes referred to
herein collectively as "the Company's consolidated group."
Liberty Bank, a Florida state-chartered bank, is a full-service
commercial bank, without trust powers, doing business through its offices in
Pensacola and Century, Florida. At March 31, 1996, the Bank had total assets of
approximately $50,967,000, total deposits of approximately $44,540,000 and total
shareholders equity of $5,474,000.
The Company's and the Bank's principal executive offices are located at
201 N. Palafox Street, Pensacola, Florida 32501, and their telephone number is
(904) 435-6700. See "Information About the Company and the Bank."
The Special Meetings
General. Special meetings of the shareholders of the Company (the
"Company Meeting") and of the Bank (the "Bank Meeting") will be held on
Tuesday, September 17, 1996 at the time and place set forth in the
accompanying Notices of Special Meeting of Shareholders. Only record holders
of the common stock, $1.00 par value per share, of the Company ("Company Common
Stock") and of the common stock, $5.00 par value per share, of the Bank ("Bank
Common Stock") at the close of business on August 1, 1996 are entitled
to notice of and to vote at the applicable Meeting. On that date, there were
1,388,794 shares of Company Common Stock and 198,000 shares of Bank
Common Stock issued and outstanding, each of which is entitled to one vote
on each matter properly to come before the respective Meetings. The Company
Meeting and the Bank Meeting are sometimes referred to as the "Meetings."
Purpose of the Meetings. The purpose of the Meetings is to vote upon a
proposal to approve an Agreement and Plan of Merger dated April 23, 1996, as
amended, and a related merger agreement (collectively, the "Plan of Merger"),
copies of which are attached hereto as Appendix A, pursuant to which, among
other things, the Company will
iii
<PAGE>
merge into Whitney (the "Company Merger")
and the Bank will merge into WNB-Florida (the "Bank Merger" which, together with
the Company Merger, are collectively called the "Mergers"), with the result that
shareholders of the Company and the Bank will receive shares of Whitney Common
Stock (and cash in lieu of fractional shares) as described below under " - The
Plan of Merger -- Conversion of Common Stock." See "The Meetings - Purpose of
the Meetings."
Vote Required
The Plan of Merger must be approved by the affirmative vote of holders
of at least a majority of the outstanding shares of Company Common Stock and by
the holders of at least two-thirds of the outstanding shares of Bank Common
Stock. Directors, executive officers and certain principal shareholders of the
Company and executive officers of the Bank beneficially owning an
aggregate of 1,053,411 shares, or approximately 75.9%, of the outstanding
shares of Company Common Stock have agreed, subject to certain conditions, to
vote their shares in favor of the Plan of Merger at the Company Meeting. The
Company, as the holder of 99.3% of the outstanding Bank Common Stock, has
agreed, subject to certain conditions, to vote in favor of the Plan of Merger
at the Bank Meeting. Whitney, as the sole shareholder of WNB-Florida, must
approve the Plan of Merger. Under Louisiana law, shareholders of Whitney are not
required to approve the Plan of Merger. See "The Meetings - Shares Entitled to
Vote; Quorum; Vote Required."
Reasons for the Plan of Merger
The Boards of Directors of the Company and the Bank believe that the
approval of the Plan of Merger is in the best interests of the Company, the Bank
and their respective shareholders. In reaching their decision, the Boards
considered a number of factors, including the Company's, the Bank's and
Whitney's business and prospects; the price to be received by Company and Bank
shareholders and the substantial premium that such price represented over the
book value of the Company and Bank Common Stock and recent sale prices of the
Company Common Stock; and, the opinion of Allen C. Ewing & Co. that the
consideration to be received by the Company's and the Bank's shareholders is
fair to such shareholders from a financial point of view and that the allocation
of such consideration between shareholders of the Company and those of the Bank
is fair, from a financial point of view, to the shareholders of each. See "The
Plan of Merger - Background" and "The Plan of Merger - Reasons for the Plan of
Merger."
Recommendation of the Company's and the Bank's Boards of Directors
THE BOARDS OF DIRECTORS OF THE COMPANY AND THE BANK HAVE UNANIMOUSLY
APPROVED THE PLAN OF MERGER AND RECOMMENDS THAT THEIR SHAREHOLDERS VOTE FOR
APPROVAL OF THE PLAN OF MERGER.
Fairness Opinion of Allen C. Ewing & Co.
Allen C. Ewing & Co. ("Ewing") has rendered its opinion to the
Company's and the Bank's Boards of Directors that, based on and subject to the
assumptions made, the factors considered, the review undertaken and the
limitations stated, (a) the consideration to be received by the Company's and
the Bank's shareholders under the Plan of Merger is fair to their respective
shareholders from a financial point of view, and (b) the allocation of the
Purchase Price (defined in "- The Plan of Merger -- Conversion of Common Stock,"
below) between shareholders of the Company and those of the Bank is fair, from a
financial point of view, to the shareholders of each. Ewing's opinion is
directed only to the fairness of the terms of the Plan of Merger from a
financial point of view and does not constitute a recommendation to any
shareholder on how to vote at the Meetings. See "The Plan of Merger -- Fairness
Opinion of Allen C. Ewing & Co."
A copy of the fairness opinion of Ewing is attached as Appendix B and
should be read in its entirety.
The Plan of Merger
General. Pursuant to the Plan of Merger, if all conditions to the
Mergers are satisfied or waived, on the effective date of the Mergers, the
Company will be merged with and into Whitney, and the separate existence of the
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<PAGE>
Company will cease, and the Bank will be merged with and into WNB-Florida,
and the separate existence of the Bank will cease.By reason of the Company
Merger,each outstanding share of Company Common Stock (other than shares as to
which dissenters' rights have been perfected and not withdrawn)will be converted
into a number of shares of common stock,no par value,of Whitney ("Whitney Common
Stock") with an aggregate market value of approximately $10.17; and, by reason
of the Bank Merger, each outstanding share of Bank Common Stock (other than
shares as to which dissenters' rights have been perfected and not withdrawn)
will be converted into a number of shares of Whitney Common Stock with an
aggregate market value of approximately $65.70; provided, that, in each such
case, the Average Market Price (as defined below) of Whitney Common Stock is not
less than $27.00 nor greater than $35.00.
The "Average Market Price" is defined as the average of the closing per
share trading prices of Whitney Common Stock (adjusted appropriately for any
stock split, stock dividend, recapitalization, reclassification or similar
transaction that is effected, or for which a record date occurs) on the 20
trading days preceding the fifth trading day immediately prior to the effective
date of the Company Merger; provided, however, that if the Average Market Price
as so calculated is less than $27.00 or greater than $35.00, the "Average Market
Price" to be used in calculating the number of shares of Whitney Common Stock to
be issued in the Mergers shall be $27.00 or $35.00, as the case may be. It is a
condition to the Company's and the Bank's obligations to consummate the Mergers
that the Average Market Price of the Whitney Common Stock, calculated without
regard to the foregoing proviso, shall not be less than $27.00, and it is a
condition to Whitney's obligations to consummate the Mergers that the Average
Market Price as so calculated not be more than $35.00. The actual number of
shares of Whitney Common Stock that will be received by a Company or a Bank
shareholder by reason of the Mergers will vary depending upon, among other
things, the Average Market Price of the Whitney Common Stock and the number of
shares of Company Common Stock and Bank Common Stock outstanding on the
effective date of the Mergers. On August 6, 1996, the closing trading
price for a share of Whitney Common Stock was $30.625, and if such date
had been the effective date of the Company Merger, the Average Market Price
would have been $30.084.
In lieu of issuing any fractional share of Whitney Common Stock, each
shareholder of the Company or the Bank who would otherwise be entitled thereto
will receive a cash payment (without interest) equal to such fractional share
multiplied by the Average Market Price.
See "The Plan of Merger - Description of the Plan of Merger," "The Plan
of Merger - Description of the Plan of Merger -- Conversion of Common Stock" and
"The Plan of Merger - Description of the Plan of Merger -- Regulatory Approvals
and Other Conditions of the Mergers."
For information regarding restrictions on the transfer of Whitney
Common Stock received pursuant to the Plan of Merger applicable to certain of
the Company's and the Bank's shareholders, see "Status Under Federal Securities
Laws; Certain Restrictions on Resales."
Exchange of Certificates. Upon consummation of the Mergers, a letter of
transmittal, together with instructions for the exchange of certificates
representing shares of Company or Bank Common Stock for certificates
representing shares of Whitney Common Stock, will be mailed to each person who
was a shareholder of record of the Company or the Bank on the effective date of
the Mergers. Shareholders are requested not to send in their stock certificates
until they have received a letter of transmittal and further written
instructions.
Shareholders of the Company or the Bank who cannot locate their stock
certificates are urged to contact promptly:
Donna Minton
Liberty Holding Company/Liberty Bank
201 N. Palafox Street
Pensacola, Florida 32501
(904) 435-6700
A new stock certificate will be issued to replace the lost certificate(s) only
upon execution by the shareholder of an affidavit certifying that his
certificate(s) cannot be located and containing an agreement to indemnify the
Company, the
v
<PAGE>
Bank and Whitney against any claim that may be made against the
Company, the Bank or Whitney by the owner of the certificate(s) alleged to have
been lost or destroyed. The Company, the Bank or Whitney may also require the
shareholder to post a bond in such sum as is sufficient to support the
shareholder's agreement to indemnify the Company, the Bank and Whitney. See "The
Plan of Merger - Description of the Plan of Merger -- Exchange of Certificates."
Regulatory Approvals and Other Conditions to Consummation of the
Mergers. In addition to approval by the shareholders of the Company and the
Bank, consummation of the Mergers is conditioned upon, among other things, (i)
the accuracy on the date of closing of the representations and warranties, and
the compliance with covenants, made in the Plan of Merger by each party, and the
absence of any material adverse change in the financial condition, results of
operations, business or prospects of the other party's consolidated group, (ii)
the receipt by Whitney and WNB-Florida of required regulatory approvals, (iii)
the receipt by Whitney of assurances that the Mergers may be accounted for as a
pooling-of-interests, (iv) the receipt by Whitney and the Company of opinions as
to the qualification of the Mergers as a tax-free reorganization under
applicable law, (v) the Company's and the Bank's receipt of a letter from Ewing,
dated as of the date of the Meetings, in form and substance satisfactory to the
Company and the Bank, confirming its fairness opinion to the Boards of Directors
of the Company and the Bank and (vi) certain other conditions customary for
agreements of this sort. It is a condition to Whitney's obligations to
consummate the Mergers that the Average Market Price of the Whitney Common Stock
(calculated without regard to the limitations contained in the definition of
Average Market Price) shall not be more than $35.00, unless Whitney has executed
a definitive merger or other acquisition agreement with a third party as a
result of which Whitney would cease to be an independent, public company. It is
a condition to the Company's and the Bank's obligations that the Average Market
Price of the Whitney Common Stock as so calculated shall not be less than
$27.00. The parties intend to consummate the Mergers as soon as practicable
after all of the conditions to the Mergers have been met or waived.
On July 12, 1996, Whitney filed an application seeking
approval of the Bank Merger and an interim bank charter for WNB-Florida from the
Office of the Comptroller of the Currency (the "Comptroller"). Whitney has also
filed applications with the Board of Governors of the Federal Reserve System
(the "Reserve Board") seeking approval of the Company Merger and with the
Reserve Board and the Federal Deposit Insurance Corporation in connection with
the formation of WNB-Florida. There can be no assurance that these
approvals will be be obtained prior to the Meetings, or that this or the
other conditions to consummation of the Mergers will be satisfied by such
date or at all. See "The Plan of Merger - Description of the Plan of Merger --
Regulatory Approvals and Other Conditions of the Mergers."
Waiver, Amendment and Termination. The Plan of Merger provides that
each of the parties to the Plan of Merger may waive any of the conditions to its
obligation to consummate the Mergers other than approval by the shareholders of
the Company and the Bank, the absence of a stop order suspending the
effectiveness of the Registration Statement of which this Proxy
Statement-Prospectus forms a part, the receipt of all necessary regulatory
approvals, the satisfaction of all requirements prescribed by law for
consummation of the Mergers, and the Company's and the Bank's receipt of a
letter from Ewing dated as of the date of the Meetings, in form and substance
satisfactory to the Company and the Bank, confirming Ewing's fairness opinion to
the Boards of Directors of the Company and the Bank.
The Plan of Merger may be amended, at any time before or after its
approval by the shareholders of the Company and the Bank, by the mutual
agreement of the Boards of Directors of the parties to the Plan of Merger;
provided that, under the Louisiana Business Corporation Law ("LBCL") any
amendment made subsequent to shareholder approval of the Company Merger may not
alter the amount or type of shares into which the Company Common Stock will be
converted, alter any term of the Articles of Incorporation of Whitney as the
surviving entity in the Company Merger, or alter any term or condition of the
Plan of Merger in a manner that would adversely affect any shareholder of the
Company.
The Plan of Merger may be terminated at any time prior to the effective
date (i) by the mutual consent of Whitney and the Company; (ii) in the event of
a breach of any representation, warranty or covenant in the Plan of Merger that
cannot be cured by the earlier of 15 days after written notice of such breach or
November 30, 1996; (iii) if the Mergers have not occurred by November 30, 1996;
(iv) if the number of shares of Company and Bank Common Stock as to which the
holders thereof are, on the effective date, legally entitled to assert
dissenting shareholders rights plus the number of shares to which the holders
thereof are entitled to receive cash payments in lieu of fractional shares,
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<PAGE>
exceeds that number of shares of Company and Bank Common Stock that would
preclude pooling-of-interests accounting for the Mergers (i.e., if, after the
Meetings, more than 10% of the Company and Bank Common Stock would be subject to
exchange for cash rather than Whitney Common Stock as the result of holders
exercising dissenters' rights or receiving cash in lieu of fractional shares);
(v) if the Company receives a written offer with respect to another acquisition
transaction and the Board of Directors of the Company determines in good faith,
after consultation with its financial advisers and counsel, that such
transaction is more favorable to the Company's shareholders than the
transactions contemplated by the Plan of Merger; or (vi) on the basis of certain
other grounds specified in the Plan of Merger. The Plan of Merger provides for a
termination fee of $786,000 payable to Whitney if the Company terminates the
Plan of Merger under the circumstances described in clause (v) of the preceding
sentence. See "The Plan of Merger - Description of the Plan of Merger -- Waiver,
Amendment and Termination."
Accounting Treatment
Whitney intends to account for the Mergers as a pooling-of-interests,
and it is a condition to Whitney's obligation to consummate the Mergers that
neither Whitney's independent public accountants nor the Commission shall have
taken the position that the Plan of Merger does not qualify for
pooling-of-interests accounting treatment. See "The Plan of Merger - Accounting
Treatment."
Certain Federal Income Tax Consequences
Consummation of the Mergers is conditioned upon receipt by Whitney and
the Company of an opinion from Arthur Andersen LLP to the effect that, among
other things, each of the Mergers will qualify as a tax-free reorganization
under applicable law and that each Company or Bank shareholder who receives
Whitney Common Stock pursuant to the Mergers will not recognize gain or loss
except with respect to the receipt of cash (i) in lieu of fractional shares of
Whitney Common Stock or (ii) pursuant to the exercise of dissenters' rights.
Because of the complexity of the tax laws, each shareholder should consult his
tax advisor concerning the applicable federal, state and local income tax
consequences of the Mergers. See "Certain Federal Income Tax Consequences."
Dissenters' Rights
Shareholders of the Company and the Bank who perfect dissenters' rights
will not receive Whitney Common Stock but will instead be entitled to receive
the "fair value" of their shares, as determined under Sections 1301-20 of the
Florida Business Corporation Act (in the case of the Company), or the value of
their shares in cash, as determined under 12 U.S.C. ss.215a (in the case of the
Bank). Failure to comply with statutory procedures in the exercise of
dissenters' rights will nullify such rights. See "Dissenters' Rights."
Interests of Certain Persons
The executive officers and members of the Boards of Directors of the
Company and the Bank have interests in the Mergers that are in addition to their
interest as shareholders of the Company. These interests include, among others,
payments and other benefits to be received by one of the Bank's former executive
officers pursuant to an agreement with the Bank; the continued employment of
certain executive officers by Whitney after the effective date; the continuation
of certain employee benefits generally; and provisions in the
Plan of Merger relating to indemnification of directors and officers of the
Company and the Bank and continuation of directors and officers liability
insurance.
See "The Plan of Merger - Interests of Certain Persons."
Market Prices
On April 22, 1996, the last trading day preceding the date that Whitney
and the Company publicly announced that they had entered into the Plan of
Merger, the closing sales price for a share of Whitney Common Stock, as quoted
on the NASDAQ National Market System, was $30.50. No assurance can be given as
to the market price of Whitney Common Stock on the effective date of the Company
Merger. On August 6, 1996, the closing sales price for a share of
Whitney Common Stock was $30.625, and if such date had been the effective
date of the Company Merger, the
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<PAGE>
Average Market Price would have been
$30.084. See "The Plan of Merger - Description of the
Plan of Merger -- Regulatory Approvals and Other Conditions of the Mergers."
Neither the Company Common Stock nor the Bank Common Stock is traded on
any exchange, and there is no established public trading market for such stock.
There are no bid or asked prices available for Company or Bank Common stock.
Other than purchases of Company Common Stock and related warrants pursuant to a
private offering by the Company in 1994, the exercise of certain of those
warrants in 1995 and May 1996, one purchase of 587 shares of Company Common
Stock in May 1995 at approximately $3.75 per share, and one purchase of 1,000
shares of Company Common Stock in February 1996 at $4.20 per share and a
purchase of one share of Bank Common Stock in August 1994 at $21.00 per share,
neither the Company nor the Bank is aware of any transactions in Company or Bank
Common Stock. No assurance can be given that these trades were effected on an
arm's-length basis. See "Information About the Company and the Bank - Market
Prices and Dividends."
Comparative Rights of Shareholders
If the Mergers are consummated, shareholders of the Company and the
Bank, other than those exercising dissenters' rights, will become shareholders
of Whitney, and their rights will be governed by and be subject to Whitney's
Articles of Incorporation and Bylaws rather than those of the Company and the
Bank. Whitney's Articles of Incorporation contain provisions that are different
from those of the Company and the Bank, some of which may have the effect of
discouraging a third party from seeking to obtain control of Whitney in a
transaction not approved by Whitney's Board of Directors. See "Comparative
Rights of Shareholders."
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<PAGE>
Selected Financial Data of the Company
The following selected financial data with respect to each of the
fiscal years in the five-year period ended December 31, 1995 have been derived
from the Company's audited consolidated financial statements. The selected
financial data for the three months ended March 31, 1996 and 1995 have been
derived from the Company's unaudited financial statements, which, in the opinion
of the Company's management, reflect all adjustments that are necessary for a
fair presentation of the results of operations for the interim periods
presented. The results of operations for the three-month period ended March 31,
1996 are not necessarily indicative of the results to be expected for the entire
year. The information set forth below should be read in conjunction with the
Company's consolidated financial statements and notes thereto appearing
elsewhere in this Proxy Statement-Prospectus.
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C>
Three months ended
March 31 Years ended December 31,
------------------- -----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- ---------- ----------- ---------- ---------- --------- ---------
(In thousands, except per share data, unaudited)
Average Balance Sheet Data:
Total assets........................ $50,542 $47,306 $48,219 $47,874 $44,347 $42,219 $44,517
Total earning assets................ 44,482 41,287 42,134 41,956 38,726 36,441 38,869
Total loans......................... 36,368 31,573 32,821 32,176 30,278 28,702 32,611
Total investment in securities...... 4,860 5,560 5,323 5,770 5,065 3,538 4,051
Interest bearing deposits........... 31,785 30,388 30,824 31,553 29,903 29,766 32,098
Noninterest bearing deposits........ 11,704 10,834 10,792 10,477 9,770 8,147 8,591
Shareholders' equity................ 6,395 5,700 5,779 5,248 4,084 3,304 3,070
Income Statement Data:
Total interest income............... $1,036 $921 $3,973 $3,572 $3,194 $3,188 $3,971
Net interest income................. 663 604 2,529 2,422 2,018 1,723 1,800
Provision for possible loan losses.. -0- -0- -0- -0- 30 110 386
Non-interest income................. 114 98 468 622 838 708 494
Non-interest expense................ 550 518 2,112 2,214 2,059 1,909 1,868
Net income.......................... 144 121 583 610 487 310 32
Per Share Data:
Primary earnings per share.......... $.11 $.09 $.43 $ .47 $.42 $.30 $.03
Fully diluted earnings per share.... .10 .08 .41 .44 .42 .30 .03
Cash dividends per share............ .045 .025 .10 .10 .025 -0- -0-
Book value per share, end of period. 4.63 4.16 4.57 4.03 3.78 3.36 3.06
Key Ratios:
Net income as a percent of
average assets.................... 1.14% 1.02% 1.21% 1.27% 1.10% 0.73% 0.07%
Net income as a percent of
average equity.................... 9.01% 8.49% 10.09% 11.62% 11.92% 9.38% 1.04%
Allowance for loan losses as
a percent of loans and leases
at period end..................... 1.38% 1.43% 1.38% 1.35% 1.63% 1.98% 1.95%
Average equity as a percent
of average total assets........... 12.65% 12.05% 11.98% 10.96% 9.21% 7.82% 6.90%
Dividend payout ratio............... 41.94% 27.65% 23.02% 20.72% 5.94% - -
</TABLE>
ix
<PAGE>
Selected Financial Data of the Bank
The following selected financial data with respect to each of the fiscal
years in the five-year period ended December 31, 1995 have been derived from the
Bank's audited financial statements. The selected financial data for the three
months ended March 31, 1996 and 1995 have been derived from the Bank's unaudited
financial statements, which, in the opinion of the Bank's management, reflect
all adjustments that are necessary for a fair presentation of the results of
operations for the interim periods presented. The results of operations for the
three-month period ended March 31, 1996 are not necessarily indicative of the
results to be expected for the entire year. The information set forth below
should be read in conjunction with the Bank's financial statements and notes
thereto appearing elsewhere in this Proxy Statement-Prospectus.
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C>
Three months ended
March 31 Years ended December 31,
------------------- --------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- --------- ---------- ---------- ----------
(In thousands, except per share data, unaudited)
Average Balance Sheet Data:
Total assets........................ $50,542 $47,306 $48,219 $47,874 $44,347 $42,219 $44,517
Total earning assets................ 44,482 41,287 42,134 41,956 38,726 36,441 38,869
Total loans......................... 36,368 31,573 32,821 32,176 30,278 28,702 32,611
Total investment in securities...... 4,860 5,560 5,323 5,770 5,065 3,538 4,051
Interest bearing deposits........... 32,684 31,239 31,695 32,349 29,903 29,766 32,098
Noninterest bearing deposits........ 11,704 10,834 10,792 10,477 9,770 8,172 8,591
Shareholders' equity................ 5,496 4,849 5,076 4,608 4,224 3,807 3,525
Income Statement Data:
Total interest income............... $1,036 $921 $3,973 $3,572 $3,194 $3,188 $3,971
Net interest income................. 652 596 2,488 2,403 2,018 1,753 1,841
Provision for possible loan losses.. -0- -0- -0- -0- 30 110 386
Non-interest income................. 114 98 467 622 838 708 494
Non-interest expense................ 544 518 2,109 2,187 2,044 1,874 1,868
Net income.......................... 140 114 548 622 505 376 74
Per Share Data:
Primary earnings per share.......... $ .71 $ .58 $ 2.77 $ 3.14 $ 2.55 $ 1.90 $.37
Fully diluted earnings per share.... .71 .58 2.77 3.14 2.55 1.90 .37
Cash dividends per share............ .15 .30 .60 .60 .15 -0- -0-
Book value per share, end of period. 27.65 24.90 27.41 24.07 22.84 20.43 18.54
Key Ratios:
Net income as a percent of
average assets.................... 1.11% 0.96% 1.14% 1.30% 1.14% 0.89% 0.17%
Net income as a percent of
average equity.................... 10.19% 9.40% 10.80% 13.50% 11.96% 9.88% 2.10%
Allowance for loan losses as
a percent of loans and leases
at period end..................... 1.38% 1.43% 1.38% 1.35% 1.63% 1.98% 1.95%
Average equity as a percent
of average total assets........... 10.87% 10.25% 10.52% 9.62% 9.52% 9.02% 7.92%
Dividend payout ratio............... 40.24% 25.95% 21.65% 19.09% 5.88% - -
</TABLE>
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<PAGE>
Selected Financial Data of Whitney
The following selected financial data with respect to each of the fiscal
years in the five-year period ended December 31, 1995 and for the three-month
periods ended March 31, 1996 and 1995 have been derived from the consolidated
financial statements of Whitney's consolidated group and should be read in
conjunction with the information concerning Whitney that has been incorporated
by reference in this Proxy Statement-Prospectus. The selected financial data for
the three months ended March 31, 1996 and 1995 have been derived from Whitney's
unaudited financial statements, which, in the opinion of Whitney's management,
reflect all adjustments that are necessary for a fair presentation of the
results of operations for the interim periods presented. The results of
operations for the three-month period ended March 31, 1996 are not necessarily
indicative of the results to be expected for the entire year. Selected financial
data for the years 1991 through 1995 have been restated to reflect the merger,
effective March 8, 1996, of First Citizens BancStock, Inc. into Whitney, which
was accounted for as a pooling-of-interests.
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C>
Three months ended
March 31, Years ended December 31,
------------------------ --------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- ----------- ----------- --------
(In thousands, except per share data, unaudited)
Average Balance Sheet Data:
Total assets....................... $ 3,432,566 $ 3,123,194 $ 3,188,930 $ 3,182,674 $ 3,117,512 $ 3,061,976 $3,031,841
Total earning assets............... 3,116,772 2,817,285 2,880,631 2,877,898 2,817,526 2,761,104 2,717,010
Total loans........................ 1,596,782 1,191,481 1,321,533 1,096,672 1,056,679 1,225,546 1,450,497
Total investment in securities..... 1,487,937 1,594,055 1,505,492 1,704,687 1,637,619 1,362,006 1,096,086
Interest bearing deposits.......... 1,899,937 1,795,598 1,813,093 1,860,866 1,855,153 1,871,189 1,858,429
Noninterest bearing deposits....... 817,919 787,603 811,616 792,448 765,457 723,932 681,233
Shareholders' equity............... 368,024 326,432 339,145 298,142 239,663 193,280 184,530
Income Statement Data:
Total interest income.............. $ 56,941 $49,805 $ 213,295 $ 192,750 $186,105 $195,079 $ 223,303
Net interest income................ 35,815 33,672 141,428 135,247 131,424 122,321 107,314
Provision for (reduction in) reserve
for possible loan losses......... - 100 (9,400) (26,004) (59,625) 4,415 46,692
Non-interest income................ 8,697 8,636 33,205 34,129 33,216 29,557 28,341
Non-interest expense............... 32,905 29,164 (119,481) (112,394) (108,237) (120,615) (112,303)
Net income (loss).................. 8,037 8,945 44,349 56,198 79,228 22,415 (3,181)
Per Share Data:
Primary earnings (loss) per share.. $ 0.47 $ 0.53 $ 2.61 $ 3.39 $ 4.81 $ 1.37 $ (0.19)
Fully diluted earnings (loss) per
share.............................. 0.47 0.53 2.60 3.39 4.81 1.37 (0.19)
Cash dividends per share........... 0.22 0.18 0.77 0.60 0.41 0.09 0.02
Book value per share, end of period 21.75 19.80 21.69 19.29 17.07 12.46 11.17
Key Ratios:
Net income (loss) as a percent of
average assets................... 0.94% 1.16% 1.39% 1.77% 2.54% 0.73% (0.10%)
Net income (loss) as a percent of
average equity................... 8.76% 11.11% 13.08% 18.85% 33.06% 11.60% (1.72%)
Net interest margin................ 4.75% 4.99% 5.05% 4.85% 4.79% 4.54% 4.06%
Allowance for loan losses as
a percent of loans and leases
at period end.................... 2.60% 3.16% 2.48% 3.06% 4.28% 8.74% 7.94%
Average equity as a percent
of average total assets.......... 10.58% 10.50% 10.75% 10.20% 8.71% 6.41% 5.97%
Dividend payout ratio.............. 46.81% 33.96% 29.50% 17.70% 8.52% 6.57% -
</TABLE>
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Comparative Per Share Data
The following table presents certain information for Whitney, the
Company and the Bank on an historical, unaudited pro forma combined and
unaudited pro forma equivalent basis. The unaudited pro forma combined
information is based upon the historical financial condition and results of
operations of the companies and adjustments directly attributable to the Plan of
Merger based on estimates derived from information currently available. This
information does not purport to be indicative of the results that would actually
have been obtained if the Mergers had been consummated on the date or for the
periods indicated below, or the results that may be obtained in the future.
Whitney expects to account for the Mergers using the pooling-of-interests method
applied in accordance with generally accepted accounting principles.
<TABLE>
<C> <C> <C> <C> <C> <C> <C>
Historical Pro Forma Company Bank
--------------------------------
Whitney Company Bank Combined(1)(2) Equivalent(3) Equivalent(4)
------- ------- ------- -------------- ------------- -------------
Earnings per common share:
Years ended:
December 31, 1995................. $ 2.61 $ 0.43 $ 2.77 $ 2.58 $ 0.84 $ 5.46
December 31, 1994................. $ 3.39 $ 0.47 $ 3.03 $ 3.33 $ 1.09 $ 7.06
December 31, 1993................. $ 4.81 $ 0.42 $ 2.55 $ 4.71 $ 1.54 $ 9.98
Three months ended March 31, 1996 $ 0.47 $ 0.11 $ 0.71 $ 0.47 $ 0.15 $ 1.00
Dividends declared per common share:
Years ended:
December 31, 1995................. $ 0.77 $ 0.10 $ 0.60 $ 0.76 $ 0.25 $ 1.61
December 31, 1994................. $ 0.60 $ 0.10 $ 0.60 $ 0.59 $ 0.19 $ 1.25
December 31, 1993................. $ 0.41 $ 0.03 $ 0.15 $ 0.40 $ 0.13 $ 0.85
Three months ended March 31, 1996 $ 0.22 $ 0.05 $ 0.00 $ 0.22 $ 0.07 $ 0.46
Book value per common share:
As of March 31, 1996.................. $21.75 $ 4.61 $ 27.65 $21.50 $ 7.02 $ 45.54
As of December 31, 1995............... $21.69 $ 4.57 $ 27.41 $21.36 $ 6.97 $ 45.24
</TABLE>
(1) Assumes an Average Market Price of Whitney Common Stock of $31.00 and
the issuance of 456,161 shares of Whitney Common Stock to effect the
Mergers, including 2,895 shares of Whitney Common Stock issued to the
shareholders of the Bank, other than the Company, in the Bank Merger.
(2) Includes the pro forma combined operations of Whitney and the Company.
(3) The Company Equivalent is calculated by multiplying the amount in the
pro forma combined column by an exchange ratio of .3264 at the assumed
Average Market Price of $31.00.
(4) The Bank Equivalent is calculated by multiplying the amount in the pro
forma combined column by an exchange ratio of 2.1181 at the assumed
Average Market Price of $31.00.
In addition to the proposed Mergers, Whitney has another
merger transaction pending. There can be no assurance that any or all
of these transactions will be completed. Pro forma information giving effect
to all of these acquisitions is included beginning at page 19 of this
Proxy Statement-Prospectus.
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<PAGE>
THE MEETINGS
General
This Proxy Statement-Prospectus is furnished to shareholders of Liberty
Holding Company (the "Company") and to shareholders of Liberty Bank (the "Bank")
in connection with the solicitation of proxies on behalf of their respective
Board of Directors for use at a special meeting of shareholders of the Company
(the "Company Meeting") and a special meeting of shareholders of the Bank (the
"Bank Meeting," and together with the Company Meeting, the "Meetings") to be
held on the date and at the time and place specified in the accompanying Notices
of Special Meeting of Shareholders, or any adjournments thereof.
The Company and Whitney Holding Corporation ("Whitney") have each
supplied all information included herein with respect to it and its consolidated
subsidiaries. The Company and its subsidiary are sometimes collectively referred
to herein as "the Company's consolidated group" and Whitney and its subsidiaries
are sometimes collectively referred to herein as "Whitney's consolidated group."
Purpose of the Meetings
The purpose of the Meetings is to consider and vote upon a proposal to
approve an Agreement and Plan of Merger dated April 23, 1996, as amended,
between Whitney and its newly-formed, wholly-owned banking subsidiary Whitney
National Bank of Florida ("WNB-Florida"), on the one hand, and the Company and
the Bank, on the other hand, and a related Agreement of Merger between
WNB-Florida and the Bank (the "Bank Merger Agreement" and, together with the
Agreement and Plan of Merger, the "Plan of Merger"). Pursuant to the Plan of
Merger, the Company will merge into Whitney (the "Company Merger"), and the Bank
will merge into WNB-Florida (the "Bank Merger," which, together with the Company
Merger, are collectively called the "Mergers"). In consideration of the Mergers,
each outstanding share of common stock, $1.00 par value, of the Company
("Company Common Stock") and common stock, $5.00 par value, of the Bank ("Bank
Common Stock") not owned by the Company will be converted into a number of
shares of common stock, no par value, of Whitney ("Whitney Common Stock") as
described elsewhere in this Proxy Statement-Prospectus under the heading
captioned "The Plan of Merger - Description of the Plan of Merger -- Conversion
of Common Stock."
Shares Entitled to Vote; Quorum; Vote Required
Only holders of record of Company Common Stock and Bank Common Stock at
the close of business on August 1, 1996 are entitled to notice of
and to vote at the respective Meeting. On that date there were 1,388,794
shares of Company Common Stock and 198,000 shares of Bank Common Stock
outstanding, each of which is each entitled to one vote on each matter properly
brought before the Meetings.
With respect to consideration of the Plan of Merger and any other
matter properly brought before each Meeting, the presence at the Meeting, in
person or by proxy, of the holders of a majority of the outstanding shares of
Company Common Stock or Bank Common Stock, as the case may be, is necessary to
constitute a quorum. The Plan of Merger must be approved by the affirmative vote
of the holders of at least a majority of the outstanding shares of Company
Common Stock and by the affirmative vote of the holders of at least two-thirds
of the outstanding shares of Bank Common Stock. Abstentions and broker non-votes
will have the effect of votes against the Plan of Merger but will cause a
shareholder otherwise entitled to dissenters' rights to forfeit any claim to
such rights. Broker non-votes will be counted for purposes of determining the
presence of a quorum.
Directors, executive officers and certain principal shareholders of the
Company and executive officers of the Bank beneficially owning an
aggregate of 1,053,411 shares, or approximately 75.9% of the outstanding
Company Common Stock, have agreed, subject to certain conditions, to vote in
favor of the Plan of Merger at the Company Meeting. The Company, as the holder
of approximately 99.3% of the outstanding shares of Bank Common Stock, has
agreed, subject to approval of the Plan of Merger by the shareholders of the
Company, to vote in favor of the Plan of Merger at the Bank Meeting.
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Louisiana law does not require that shareholders of Whitney approve the
Plan of Merger. Whitney, as the sole shareholder of WNB-Florida, must approve
the Bank Merger Agreement.
Solicitation, Voting and Revocation of Proxies
Forms of proxy for use at the Meetings accompany this Proxy
Statement-Prospectus and will permit each holder of record of Company Common
Stock and Bank Common Stock, as the case may be, on the record date for the
Meetings to vote the shares held by him at the appropriate Meeting. A
shareholder may use a proxy whether or not he intends to attend either Meeting
in person. Duly executed proxies will authorize the persons named therein to
vote on all other matters that properly come before the Company Meeting and the
Bank Meeting, as applicable, or any adjournments. Where a shareholder specifies
his choice on the proxy with respect to the proposal to approve the Plan of
Merger, the shares represented by the proxy will be voted in accordance with
such specification. If no such specification is made, the shares will be voted
in favor of the Plan of Merger. If a Company shareholder returns a proxy and
does not specify on the proxy an instruction to vote against the Plan of Merger,
he will not be able to exercise dissenters' rights with respect to the Company
Merger unless he revokes that proxy and gives written notice to the Company at
or prior to the Company Meeting of his intent to demand payment for his shares
if the Company Merger is effectuated. If a Bank shareholder returns a proxy and
does not specify on the proxy an instruction to vote against the Plan of Merger,
he will not be able to exercise dissenters' rights with respect to the Bank
Merger unless he either attends the Bank Meeting in person and votes against the
Plan of Merger or gives written notice at or prior to the Bank Meeting to the
presiding officer that he dissents from the Plan of Merger. See "Dissenters'
Rights." A proxy may be revoked by (i) giving written notice of revocation at
any time before its exercise to the Secretary of the Company or the Bank, as the
case may be, or (ii) executing and delivering to the Secretary at any time
before its exercise a later dated proxy. In addition, shareholders who attend
either Meeting may revoke their proxies by voting in person.
In addition to soliciting proxies by mail, directors, officers and
employees of the Company and the Bank, without receiving additional compensation
therefor, may solicit proxies by telephone and in person. Arrangements will also
be made with brokerage firms and other custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of shares of Company and
Bank Common Stock, and the Company will reimburse such parties for reasonable
out-of-pocket expenses incurred in connection therewith. The Bank will pay the
cost of soliciting proxies.
THE PLAN OF MERGER
General
The transactions contemplated by the Plan of Merger are to be effected
in accordance with the terms and conditions set forth in the Plan of Merger,
which is incorporated herein by reference. The following brief description does
not purport to be complete and is qualified in its entirety by reference to the
Plan of Merger, a copy of which is attached hereto as Appendix A.
The ultimate result of the transactions contemplated by the Plan of
Merger will be that the business, properties, debts and liabilities of the
Company will become the business, properties, debts and liabilities of Whitney;
the business, properties, debts and liabilities of the Bank will become the
business, properties, debts and liabilities of WNB-Florida; and the shareholders
of the Company and the Bank will become shareholders of Whitney. The steps taken
to achieve this result involve the following transactions: (i) the Company will
merge into Whitney and the separate existence of the Company will cease; (ii)
the Bank will merge into WNB-Florida and the separate existence of the Bank will
cease and (iii) shareholders of the Company and the Bank will receive the
consideration described below under the heading captioned " - Description of the
Plan of Merger -- Conversion of Common Stock."
Background
In February 1996, representatives of Whitney Holding Company contacted
Thomas D. Tait, then Chairman of the Board of Liberty Bank, to arrange a meeting
at which they expressed Whitney's general interest in acquiring or merging with
a banking institution in the market area served by the Bank. On February 13,
1996, the Company's and
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<PAGE>
the Bank's Boards of Directors authorized Thomas D. Tait, C. Dale Mansfield,
Robert E. Boothe, Jr. and Legal Counsel, James J. Reeves, to meet with
representatives of Whitney to discuss Whitney's previous expression of interest
and to retain such advisors as deemed necessary in connection with such
discussions. The above-named individuals met with representatives of Whitney on
February 24, 1996 and the parties discussed the general terms of any proposal
Whitney might make, including the range of suggested values for the Company and
the Bank. This meeting was reported to the Boards of Directors of the Company
and the Bank, and on April 3, 1996, the Boards authorized the execution of a
confidentiality agreement and approved negotiations to enter into a definitive
agreement with Whitney.
On April 10, 1996, the Boards retained Allen C. Ewing & Co. ("Ewing")
as the Company's and the Bank's financial advisor to provide advice and
assistance with respect to strategic alternatives available to the Company and
the Bank, to perform related valuation analyses and to assist the Company and
the Bank in the event of a merger or other business combination. The Boards
selected Ewing based on its knowledge of financial institutions in general and
its experience as a financial advisor in mergers and acquisitions of financial
institutions, particularly in the southern region of the U.S. The Boards of
Directors of the Company and the Bank met on April 17, 1996 and on April 18,
1996. During the April 18, 1996 meeting, Ewing, the Company's and the Bank's
counsel and their independent auditors reviewed the terms of the proposed
agreement. At that same meeting, Ewing delivered its oral opinion to the Boards
of Directors and the Boards, in turn, voted to enter into a Plan of Merger.
Thereafter, Whitney, the Company and the Bank executed an agreement and plan of
merger on April 23, 1996, which was amended on July 9, 1996.
Reasons for the Plan of Merger
General. The financial and other terms of the Plan of Merger are the
result of arm's-length negotiations between representatives of the Company, the
Bank and Whitney. Determination of the consideration to be received by
shareholders of the Company and the Bank was based upon many factors considered
by the Boards of Directors of Whitney, the Company and the Bank, including the
comparative financial condition, historical results of operations, current
business and future prospects of Whitney, the Company and the Bank, the market
price and historical earnings per share of the Whitney Common Stock, and the
desirability of combining the financial and managerial resources of Whitney and
the Company to pursue consumer and commercial banking business in the markets
currently served by the Bank.
Whitney. Whitney's business strategy includes expansion eastward along
the Interstate 10 corridor to Panama City, Florida. One component of this
strategy is the development of a significant banking presence in the Florida
panhandle. Because the Bank is located in Pensacola, Florida, a sizeable city
and metropolitan area in the Florida panhandle contiguous to Whitney Bank of
Alabama's operations in the Mobile, Alabama and the Alabama Gulf Coast region,
Whitney's management identified the Bank as an institution that fit well in its
eastward expansion strategy.
In deciding to pursue an acquisition of the Company and the Bank,
Whitney's management and the Executive Committee of Whitney's Board of Directors
noted, among other things, (i) the Bank's existing four-branch network, (ii) its
well-developed retail customer base and good reputation in the small business
market and (iii) a determination that Whitney and the Company and the Bank had
compatible operating and business philosophies.
The Company and the Bank. The Boards of Directors of the Company and
the Bank believe that approval of the Plan of Merger is in the best interests of
the Company, the Bank and their respective shareholders. In reaching their
decision to approve the terms of the Plan of Merger, the Boards of Directors of
the Company and the Bank considered a number of factors, including, without
limitation, the following:
1. The Boards' familiarity with the Bank's and the Company's business,
operations, financial condition, earnings and prospects, and their investigation
of similar matters concerning Whitney.
2. The current and prospective economic environment and competitive
constraints facing the Bank and the Company, including specifically the
increasing regulatory burdens on small, community based banks and the greater
variety of products and services that larger competitors can offer to customers.
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<PAGE>
3. The price to be received by the Bank's and the Company's
shareholders, including the substantial premium which that price represented and
the favorable comparison to prices recently received by shareholders of other
similarly situated banks, and the relation of such price to the Boards' views of
alternatives to the Mergers.
4. The financial presentations and advice of Ewing, the Company's and
the Bank's independent financial advisors, and the opinion of Ewing that the
consideration to be received by the Bank's and the Company's shareholders
pursuant to the Plan of Merger, and the allocation of such consideration between
the Company's and the Bank's shareholders, is fair from a financial point of
view.
5. The expectation that the receipt of the Whitney Common Stock will be
a tax-free transaction to the Bank's and the Company's shareholders.
6. The liquidity that the Mergers would provide to current Bank and
Company shareholders, with the Whitney Common Stock to be issued in the Mergers
being included for quotation on the NASDAQ (National Market System).
7. The "market risk" protection afforded to Bank and Company
shareholders pursuant to the Plan of Merger in the event of a decline in the
price of Whitney Common Stock before the fifth trading day prior to the
effective date of the Company Merger.
8. The effects of the Mergers on customers and employees of the Bank.
The discussion of the information and factors considered and given
weight by the Boards of Directors of the Company and the Bank is not intended to
be exhaustive. In view of the variety of factors considered in connection with
their evaluation of the Plan of Merger, the Boards did not quantify or otherwise
assign relative weights to the specific factors considered in reaching their
determination. In addition, individual members of the Boards may have given
different weights to different factors.
Recommendation of the Company's and the Bank's Boards of Directors
THE BOARDS OF DIRECTORS OF THE COMPANY AND THE BANK HAVE UNANIMOUSLY
APPROVED THE PLAN OF MERGER AND UNANIMOUSLY RECOMMEND THAT THE COMPANY'S AND THE
BANK'S SHAREHOLDERS VOTE FOR APPROVAL OF THE PLAN OF MERGER.
Fairness Opinion of Allen C. Ewing & Co.
The Boards of Directors of the Company and the Bank retained Allen C.
Ewing & Co. ("Ewing") in April of 1996 to advise the Company and the Bank in
their ongoing negotiations with Whitney, to advise the Company and the Bank as
to whether or not other bank holding companies would offer better terms and
price, for the other purposes described above under the heading "- Background"
and for the purpose of rendering its Opinion (the "Opinion") to the Company and
the Bank as to the fairness, from a financial point of view, of any merger
transaction proposed by the Boards. A representative of Ewing attended the
meetings of the Company's and the Bank's Boards held on April 17, 1996, and at
the April 18 meeting Ewing delivered its oral Opinion stating that, based upon
and subject to certain assumptions, the offer made by Whitney to the holders of
Company Common Stock and to the minority holders of Bank Common Stock was fair,
from a financial point of view, and that the allocation of that consideration
between the shareholders of the Company and the shareholders of the Bank was
fair, from a financial point of view, to the shareholders of each. That oral
Opinion was confirmed by Ewing's written Opinion dated May 29, 1996, which has
been updated through the date of this Proxy Statement-Prospectus. The
full text of Ewing's Opinion is attached as Appendix B to this Proxy Statement-
Prospectus and is incorporated herein by reference. The description of the
Opinion set forth herein is qualified in its entirety by reference to
Appendix B. Shareholders of the Company and the Bank are urged to read the
Opinion in its entirety.
No limitations were imposed on the scope of Ewing's analysis or the
procedures followed by Ewing in rendering its Opinion. Ewing was not requested
to and did not make any recommendations to the Board as to the
4
<PAGE>
amount of the consideration to be paid to the Company and Bank shareholders,
which was determined through arms-length negotiations between the parties.
Ewing's Opinion is directed to the Boards of Directors of the Company
and the Bank only and does not constitute a recommendation to any shareholder as
to how such shareholder should vote on the Plan of Merger. Ewing has not been
requested to opine as to and the Opinion does not in any manner address the
underlying business decision by the Boards to enter into the Plan of Merger.
In issuing its Opinion, Ewing assumed and relied upon the accuracy and
completeness of the financial and other information used by it in arriving at
its Opinion as provided by the Company. Ewing made no independent verification
of the supplied information, nor did Ewing conduct a physical inspection of the
properties and facilities of the Company or the Bank, nor did Ewing make or
obtain any evaluation or appraisal of the assets or liabilities of the Company
or the Bank, nor did Ewing review any credit or loan files from the Bank's loan
portfolio. The Opinion is based upon market and economic conditions as they
existed on the date of the Opinion.
In arriving at its Opinion, Ewing reviewed and analyzed: (i) the Plan
of Merger; (ii) financial and operating information with respect to the
business, operations and prospects of the Company furnished to it by the
Company; (iii) the calculations made by the Company's Board of Directors in
allocating that portion of the purchase price to be paid for the shares of Bank
Common Stock owned by shareholders other than the Company, (iv) a comparison of
the historical financial results of the Bank with those of other banks in
Florida which it determined relevant; (v) a comparison of the financial terms of
the Mergers with the terms of selected other recent transactions in Florida
which it determined comparable; (v) a review of the trading patterns and
financial condition of Whitney common shares as to how their market value
compared with other comparable regional bank holding companies. Ewing had
discussions with the management of the Company and the Bank concerning its
historical operations and future prospects and undertook analyses and
investigations as it deemed appropriate. Ewing also considered the prospects as
to whether or not a better price and terms could be negotiated with another
qualified party, and after reviewing those prospects with the Company,
recommended to the Company that it was in the Company's best interests to accept
the Whitney proposal while it was being offered to the Company.
The following paragraphs summarize the most pertinent portions of the
financial and comparative analysis prepared by Ewing in arriving at its Opinion.
The following summary does not purport to be a complete description of the
analysis performed or the matters considered by Ewing in arriving at its
Opinion.
The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances. Therefore, such an
opinion is not readily susceptible to summary description. Furthermore, in
arriving at its Opinion, Ewing did not attribute any particular weight to any
one factor considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Ewing believes that its
analysis must be considered as a whole and that considering any portions of such
analysis and of the factors considered, without considering all analyses and
factors, could create a misleading or incomplete view of the process underlying
its Opinion. In its analysis, Ewing made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the Company's and the Bank's control. Any
estimates contained in these analyses are not necessarily indicative of actual
values or predictive of future results or values, which may be significantly
more or less favorable than as set forth therein. Analyses relating to the value
of businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold. In addition, as described above, Ewing's
Opinion, along with its presentations to the the Company's and the Bank's
Boards, was just one of the many factors taken into consideration by the the
Company's and the Bank's Boards.
Trading History of Company and Bank Common Stock. In view of the fact
that the Company Common Stock (84 shareholders) and the Bank Common Stock (24
shareholders other than the Company) are closely held, Ewing found that there
was no meaningful trading market in the shares of Company Common Stock or Bank
Common Stock.
Selection of Valuation Method. In valuing financial institutions,
Ewing believes that there are several methods available to determine if a
prospective transaction is fair, from a financial point of view, to the
shareholders of the
5
<PAGE>
institution to be acquired. These methods include: (i) Comparison Method: A
comparison of the purchase price of the transaction with prices paid for similar
banks based on ratios commonly used in the industry including price/book,
price/earnings, and price/deposits; (ii) Control Premium Method: This method
only applies to selling companies where there is a public market for their
shares, and, as there is not an active market for the shares of the Company or
the Bank, this method does not apply; (iii) Net Asset or Liquidating Value
Method: This method does not apply to healthy banks and is only used in periods
of severely depressed markets; (iv) Discounted Cash Flow Method: This method is
often used in valuing banks, but Ewing's experience is that this method has less
validity in valuing small banks. The method is based on the ability to forecast
earnings and dividends for a period of years with an estimate of the value of a
projected sale at the end of the period. The present value of these projected
cash flows representing the value of Liberty is determined using an array of
discount rates reflecting the credibility of the projections. Earnings for small
banks tend to be volatile for many reasons including normal banking activities
such as the addition of a new branch, a new marketing program, the hiring of new
banking officers, all of which can have an adverse affect on current earnings.
For these reasons, earnings projections for smaller banks tend to have poor
reliability which, in Ewing's opinion, lessens the value of the discounted cash
flow method for smaller banks. Ewing believes that the comparison method
provides the soundest choice for determining the fairness of the proposed
transaction.
Analysis of Comparable Companies. Using publicly available information
including information prepared by SNL Securities, Ewing compared the financial
performance of the Company with two relevant groups of banks. In the first
group, Ewing compared five performance indicators of the Company with the
average experience for the same performance indicators of 250 independent
Florida community banks. The performance indicators utilized by Ewing for this
comparison included the return on average assets for 1995 which was 1.16% for
the Company vs. 1.07% for the 250 Florida banks; the return on average equity
for 1995 which was 10.09% for the Company vs. 10.96% for the 250 Florida banks;
the equity/assets ratio which for the Company as of 12/31/95 was 11.95% vs.
8.93% for the 250 Florida banks; the ratio of non-performing assets/assets which
for the Company was .01% vs. .42% for the 250 Florida banks; and the ratio of
operating expenses/operating revenues which was 70.50% for the Company vs.
70.54% for the 250 Florida banks.
In the second group, Ewing compared three performance indicators of the
Company with the average experience for the same performance indicators of nine
selected comparable banks which were merged with larger companies in 1994 and
1995. The performance indicators utilized by Ewing for this comparison included
the return on average equity which was 10.09% for the Company vs. 13.84% for the
nine banks; the ratio of non-performing assets/assets which was .01% for the
Company vs. .73% for the nine banks; and the ratio of equity/assets which was
11.95% for the Company vs. 8.52% for the nine banks.
Analysis of Comparable Transactions. Using publicly available
information, Ewing reviewed certain terms and financial characteristics of
selected transactions involving the acquisition of healthy banks by commercial
bank holding companies in 1994, 1995 and 1996. In view of the Company's high
asset quality and favorable operating comparisons with the two groups of banks
discussed in the Comparable Company Analysis, Ewing selected transactions for
comparison purposes involving high-performing banks in Florida. Ewing selected
transactions that occurred in a similar economic environment involving
institutions of comparable size. Because of the large amount of consolidation
activity in the Florida banking market, Ewing determined that there were a
sufficient number of transactions involving comparable banks in Florida to
provide a sufficiently large universe for comparison purposes. Ewing further
determined that economic conditions in Florida banking since 1993 have been
favorable to commercial banking, and it is Ewing's opinion that transactions
that occurred during the period from 1993 to date have occurred in a period of
similar economic conditions and are suitable for comparison with this
transaction. Ewing identified 82 transactions that occurred during this period
involving Florida banks, and Ewing selected nine transactions that took place
between 1994 and 1995 which Ewing believes were comparable to this transaction.
The comparable transaction group includes the following transactions (identified
by acquiree/acquiror): Security National Bank, Winter Park, FL/Huntington
Bancshares, Inc., Columbus, OH; Peoples State Bank, New Port Richey, FL/SunTrust
Banks, Inc., Atlanta, GA; Reliance Bank, Melbourne, FL/Huntington Bancshares,
Inc., Columbus, OH; Community Bank of the Islands, Sanibel, FL/Barnett Banks,
Inc., Jacksonville, FL; Key Biscayne Bancorp, Key Biscayne, FL/SunTrust Banks,
Inc., Atlanta, GA; Citizens National Bank, Macclenny, FL/South Trust
Corporation, Birmingham, AL; First State Bank, Deland, FL/South Trust
Corporation, Birmingham, AL; American Bank and Trust, Pensacola, FL/Whitney
Holding Corporation, New Orleans, LA. Ewing utilized the three pricing
comparisons that are generally utilized in the industry for comparing the
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relative prices paid in transactions of this kind. These ratios are: acquisition
price/book value as of the quarter ended prior to announcement which was 2.23x
for the Company vs. 2.17x for the nine banks; acquisition price/trailing
twelve-month earnings which was 24.13x for the Company vs. 18.52x for the nine
banks; acquisition price as a percentage of deposits as of the quarter ended
prior to announcement which was 31.90% for the Company vs. 20.20% for the nine
banks. Because the reasons for and circumstances surrounding each of the
transactions analyzed were diverse and because of the inherent differences
between the operations of the Company and the selected companies, Ewing believed
that a strict reliance on the quantitative comparable transaction analysis is
not meaningful without further qualitative considerations. Ewing believed that
the proper use of a comparable transaction analysis would involve qualitative
judgments concerning differences between the characteristics of these
transactions and the Mergers which may have affected the acquisition value of
the acquired companies and the Company. The qualitative factors considered by
Ewing in connection with its Opinion included Ewing's views as to the number of
potential buyers in each of these transactions and the ability of the acquirors
to implement cost savings and business synergies. In addition, Ewing considered
the business conditions and prospects in the various markets in which these
acquired companies operate.
Analysis of Whitney Common Stock. Ewing performed an analysis as to the
profitability, quality, and growth potential for the shares of Whitney, which
included an analysis of the performance ratios of Whitney, an analysis of
Whitney's non-performing assets, and a comparison of its price/earnings and
price/book ratios with other comparable regional bank holding companies.
Compensation of Allen C. Ewing & Co. Ewing acted as a financial advisor
to the Company in addition to rendering its Opinion to the Company and the Bank.
As compensation for its services, Ewing will earn a fee of approximately
$71,000.
Description of the Plan of Merger
General. Pursuant to the Plan of Merger, if all conditions to the
Mergers are satisfied or waived, on the effective date of the Mergers, the
Company will be merged with and into Whitney, and the separate existence of the
Company will cease, and the Bank will be merged with and into WNB-Florida, and
the separate existence of the Bank will cease. By reason of the Company Merger,
each outstanding share of Company Common Stock (other than shares as to which
dissenters' rights have been perfected and not withdrawn) will be converted into
a number of shares of common stock, no par value, of Whitney ("Whitney Common
Stock") with an aggregate market value of approximately $10.17; and, by reason
of the Bank Merger, each outstanding share of Bank Common Stock (other than
shares as to which dissenters' rights have been perfected and not withdrawn)
will be converted into a number of shares of Whitney Common Stock with an
aggregate market value of approximately $65.70; provided, that, in each such
case, the Average Market Price (as defined below) of Whitney Common Stock is not
less than $27.00 nor greater than $35.00. See "Conversion of Common Stock,"
below.
Conversion of Common Stock. The Plan of Merger provides that, assuming
no fractional shares or perfected dissenters' rights, shareholders of the
Company and the Bank will receive a total number of shares of Whitney Common
Stock equal to $14,140,983 (the "Purchase Price"), divided by the "Average
Market Price" of Whitney Common Stock. The "Average Market Price" is defined as
the average of the closing per share trading prices of Whitney Common Stock
(adjusted appropriately for any stock split, stock dividend, recapitalization,
reclassification or similar transaction that is effected, or for which a record
date occurs) on the 20 trading days preceding the fifth trading day immediately
prior to the effective date of the Company Merger, as reported in the Wall
Street Journal; provided, however, that if the Average Market Price as so
calculated is less than $27.00 or greater than $35.00, the "Average Market
Price" to be used in calculating the number of shares of Whitney Common Stock to
be issued in the Mergers shall be $27.00 or $35.00, as the case may be. The
total number of shares of Whitney Common Stock to be issued by reason of the
Mergers (the "Total Shares") will vary depending upon the Average Market Price
of the Whitney Common Stock.
By reason of the Company Merger, each issued and outstanding share of
Company Common Stock (other than shares at to which dissenters' rights have been
perfected and not withdrawn) will be converted into a number of shares of
Whitney Common Stock equal to the quotient of (a) the "Company Percentage" (as
defined below) of the Total Shares divided by (b) the total number of shares of
Company Common Stock issued and outstanding on the effective date of the Company
Merger. By reason of the Bank Merger, each issued and outstanding share of Bank
Common Stock
7
<PAGE>
not owned by the Company will be converted into a number of shares of Whitney
Common Stock equal to the quotient of (a) the "Bank Percentage" (as defined
below) of the Total Shares divided by (b) the total number of shares of Bank
Common Stock issued and outstanding on the effective date of the Bank Merger.
Shares of Company Common Stock and Bank Common Stock that are held by the
Company or the Bank (other than shares held by the Bank in a fiduciary capacity
other than for the Company) will not be considered outstanding and will be
cancelled (and not converted) by virtue of the Mergers. As of May 31, 1996,
there were outstanding 1,388,794 shares of Company Common Stock and 1,367 shares
of Bank Common Stock not owned by the Company.
The term "Bank Percentage" means the percentage obtained by dividing
(a) the dollar amount obtained by multiplying (i) the Purchase Price minus the
book value of all assets of the Company other than the Bank Common Stock held by
it by (ii) the percentage of the outstanding shares of Bank Common Stock owned
by persons other than the Company, by (b) the total Purchase Price. The book
value of all assets of the Company other than the Bank Common Stock held by it
was approximately $1,140,000 as of May 31, 1996. The term "Company Percentage"
means the result obtained by subtracting the Bank Percentage from 100%.
The following table sets forth examples of the number of shares of
Whitney Common Stock into which each share of Company Common Stock and Bank
Common Stock would be converted on the effective date of the Mergers, assuming
that the Average Market Price for Whitney Common Stock is as specified below.
<TABLE>
<C> <C> <C> <C>
Total Number of
Shares of
Assumed Average Whitney Number of Whitney Number of Whitney
Market Price of Whitney Common Common Stock Shares Per Shares Per Bank
Stock To Be Issued Company Share* Share*
------------------------------ --------------- ----------------- -----------------
$27.00 523,740 0.3747 2.4319
29.00 487,620 0.3489 2.2642
31.00 456,161 0.3264 2.1181
33.00 428,515 0.3066 1.9897
35.00 404,028 0.2891 1.8760
</TABLE>
- -----------------------------
* Based on 1,388,794 shares of Company Common Stock and 1,367 shares of
Bank Common Stock, the number of shares outstanding (and not owned by
the Company), respectively, on May 31, 1996, and a book value of
$1,140,000 for the assets of the Company other than Bank Common Stock as
of such date. Due to fluctuations in such book value and in the trading
prices of Whitney Common Stock, the actual number of shares to be
received by the Company's and the Bank's shareholders, respectively,
cannot currently be determined.
The Plan of Merger provides that the total number of shares of Whitney
Common Stock to be issued in the Mergers becomes fixed at the upper end and the
lower end of the range of Average Market Prices set forth in the preceding
table, such that if the calculation of Average Market Price were to result in an
amount less than $27.00, 523,740 shares of Whitney Common Stock would be issued
in the Mergers regardless of their market value, and if the calculation of
Average Market Price were to result in an amount exceeding $35.00, 404,028
shares of Whitney Common Stock would be issued in the Mergers regardless of
their market value. Accordingly, it is a condition to the Company's and the
Bank's obligations to consummate the Mergers that the Average Market Price of
the Whitney Common Stock as so calculated not be less than $27.00, and it is a
condition to Whitney's obligations to consummate the Mergers that the Average
Market Price as so calculated not be more than $35.00. If the Company and the
Bank were to waive this condition to their obligation to consummate the Company
Merger, the aggregate market value of the Whitney Common Stock to be issued in
the Mergers may be lower than it would be if the calculation of Average Market
Price resulted in an amount between $27.00 and $35.00. If, on the other hand,
Whitney were to waive this condition to its obligation to consummate the
Mergers, the aggregate market value of the Whitney Common Stock to be issued in
the Mergers may
8
<PAGE>
be higher than it would be if such calculation resulted in a price within the
specified range. See "-- Regulatory Approvals and Other Conditions to
Consummation of the Mergers;" "The Plan of Merger - Description of the Plan of
Merger -- Conversion of Common Stock;" and "The Plan of Merger - Description of
the Plan of Merger -- Regulatory Approvals and Other Conditions of the Mergers."
On August 6, 1996, the closing trading price for a share of
Whitney Common Stock was $30.625, and if such date had been the effective
date of the Company Merger, the Average Market Price would have been
$30.084. See "The Plan of Merger - Description of the Plan of Merger --
Conversion of Common Stock."
The Purchase Price includes $5.25 for each of the 45,500 1996 Warrants
(as defined elsewhere in this Proxy Statement-Prospectus under the heading
"Information About the Company and the Bank - Market Prices and Dividends") duly
and validly exercised after the date the Plan of Merger was executed. The
exercise price for each such 1996 Warrant was $5.25 per share. The remaining
45,497 1996 Warrants were not exercised and have expired in accordance with
their terms.
In lieu of issuing any fractional share of Whitney Common Stock, each
shareholder of the Company or the Bank who would otherwise be entitled thereto
will receive a cash payment (without interest) equal to such fractional share
multiplied by the Average Market Price. Because the per share exchange ratio in
the Company Merger is less than one-to-one, any shareholder of the Company
holding less than three (or four, depending upon the Average Market Price)
shares of Company Common Stock will not receive any Whitney Common Stock in the
Company Merger, but instead will receive solely cash in exchange for his shares
of Company Common Stock.
For information regarding restrictions on the transfer of Whitney
Common Stock received pursuant to the Plan of Merger applicable to certain of
the Company's and the Bank's shareholders, see "Status Under Federal Securities
Laws; Certain Restrictions on Resales."
Exchange of Certificates. On the effective date of the Mergers, each
Company and Bank shareholder will cease to have any rights as a shareholder of
the Company or the Bank and his sole rights will pertain to the shares of
Whitney Common Stock into which his shares of Company or Bank Common Stock have
been converted pursuant to the Mergers, except for any such shareholder who is
entitled to statutory dissenters' rights pursuant to Sections 1301-20 of the
Florida Business Corporation Act or 12 U.S.C. ss.215a and except for the right
to receive cash for any fractional shares. See "Dissenters' Rights."
Promptly after the consummation of the Mergers, Whitney is required (a)
to deposit with the exchange agent selected by Whitney for the Mergers
certificates representing the shares of Whitney Common Stock and the cash in
lieu of fractional shares to be issued and paid in exchange for shares of
Company and Bank Common Stock and (b) send or cause to be sent to each person
who was a shareholder of record of the Company or the Bank on the effective date
of the Mergers (excluding holders of shares as to which dissenters' rights have
been perfected and not withdrawn or otherwise forfeited under applicable law) a
letter of transmittal, together with instructions for the exchange of
certificates representing shares of Company and Bank Common Stock for
certificates representing shares of Whitney Common Stock.
Shareholders are requested not to send in their Company or Bank Common
Stock certificates until they have received a letter of transmittal and further
written instructions after the effective date of the Mergers. Please do NOT send
in your stock certificates with your proxy.
After the effective date of the Mergers and until surrendered,
certificates representing Company or Bank Common Stock will be deemed for all
purposes, other than the payment of dividends or other distributions, if any, in
respect of Whitney Common Stock, to represent the number of whole shares of
Whitney Common Stock into which such shares have been converted. Whitney, at its
option, may decline to pay former shareholders of the Company and the Bank who
become holders of Whitney Common Stock pursuant to the Mergers any dividends or
other distributions that may have become payable to holders of record of Whitney
Common Stock following the effective date of the Mergers until they have
surrendered their certificates evidencing ownership of shares of Company or Bank
Common Stock, at which time any such dividends or other distributions will be
paid, without interest.
9
<PAGE>
Shareholders of the Company or the Bank who cannot locate their stock
certificates are urged to contact promptly:
Donna Minton
Liberty Holding Company/Liberty Bank
201 N. Palafox Street
Pensacola, Florida 32501
(904) 435-6700
A new stock certificate will be issued to replace the lost certificate(s) only
upon execution by the shareholder of an affidavit certifying that his
certificate(s) cannot be located and containing an agreement to indemnify the
Company, the Bank and Whitney against any claim that may be made against the
Company, the Bank or Whitney by the owner of the certificate(s) alleged to have
been lost or destroyed. The Company, the Bank or Whitney may also require the
shareholder to post a bond in such sum as is sufficient to support the
shareholder's agreement to indemnify the Company, the Bank and Whitney.
Transfer and Exchange Agents. Boatmen's Trust Company serves as
Transfer Agent and Registrar for Whitney Common Stock and will act as Exchange
Agent in connection with the Mergers. The Company acts as Transfer Agent and
Registrar for the Company and Bank Common Stock.
Regulatory Approvals and Other Conditions of the Mergers. In addition
to approval by the shareholders of the Company and the Bank and satisfaction of
the other conditions described below, consummation of the Mergers will require
the approvals of the Board of Governors of the Federal Reserve System (the
"Reserve Board") and the Office of the Comptroller of the Currency (the
"Comptroller"). On July 12, 1996, Whitney filed an application
seeking the approval of the Bank Merger and an interim bank charter for
WNB-Florida from the Comptroller, which was accepted on July 15, 1996.
On July 16, 1996, Whitney received preliminary approval from the
Comptroller of an interim bank charter for WNB-Florida, and the Comptroller
accepted WNB-Florida's organization certificate and articles of association on
August 12, 1996, at which time WNB- Florida's corporate existence began.
Whitney has also filed applications with the Reserve Board seeking
approval of the Company Merger and the Reserve Board and the Federal Deposit
Insurance Corporation (the "FDIC") in connection with the formation of WNB-
Florida.
Whitney is currently awaiting final approval of each of the foregoing
applications; however,there can be no assurance that they will be obtained
prior to the Meetings or at all.
The obligations of the parties to the Plan of Merger are also subject
to other conditions set forth in the Plan of Merger, including, among others:
(i) the accuracy on the date of closing of the representations and warranties,
and the compliance with covenants, made in the Plan of Merger by each party, and
the absence of any material adverse change in the financial condition, results
of operations, business or prospects of the other party's consolidated group,
(ii) the receipt by Whitney and WNB-Florida of required regulatory approvals,
(iii) the receipt by Whitney of assurances that the Mergers may be accounted for
as a pooling-of-interests, (iv) the receipt by Whitney and the Company of
opinions as to qualification of the Mergers as a tax-free reorganization under
applicable law, (v) the Company's and the Bank's receipt of a letter from Ewing,
dated as of the date of the Meetings, in form and substance satisfactory to the
Company and the Bank, confirming its fairness opinion to the Boards of Directors
of the Company and the Bank and (vi) certain other conditions customary for
agreements of this sort. In addition, it is a condition to Whitney's obligations
that the Average Market Price of the Whitney Common Stock (calculated without
regard to the limitations contained in the definition of Average Market Price)
shall not be more than $35.00, unless Whitney has executed a definitive merger
or other acquisition agreement with a third party as a result of which Whitney
would cease to be an independent, public company. It is also a condition to the
Company's and the Bank's obligations that the Average Market Price of the
Whitney Common Stock as so calculated shall not be less than $27.00. See " -
Conversion of Common Stock."
The parties intend to consummate the Mergers as soon as practicable
after all of the conditions to the Mergers have been met or waived; however,
there can be no assurance that the conditions to the Mergers will be satisfied.
10
<PAGE>
Effective Date. As soon as practicable after shareholder and regulatory
approval is obtained and all other conditions to the consummation of the Plan of
Merger have been satisfied or waived, a Certificate of Merger respecting the
Company Merger will be executed by Whitney and filed for recordation with the
Secretary of State of Louisiana, and the Bank Merger Agreement will be executed
on behalf of WNB-Florida and the Bank and filed with the Comptroller. Articles
of Merger respecting the Company Merger will also be filed with the Florida
Department of State. The Company Merger will be effective at the date and time
specified in a certificate issued by the Louisiana Secretary of State, and the
Bank Merger will be effective at the time and date specified in a certificate or
other written record issued by the Comptroller. It is intended that the Bank
Merger will be consummated immediately after consummation of the Company Merger.
Whitney, the Company and the Bank are not able to predict the effective date of
the Company Merger or the Bank Merger and no assurance can be given that the
transactions contemplated by the Plan of Merger will be effected at any time.
See "- Regulatory Approvals and Other Conditions of the Mergers."
Conduct of Business Prior to the Effective Date. The Company and the
Bank have agreed pursuant to the Plan of Merger that, prior to the effective
date, each will conduct its business only in the ordinary course consistent with
past practices and that, without the prior written consent of the chief
executive officer of Whitney or his duly authorized designee, and except as
otherwise provided in the Plan of Merger, each will not, among other things, (a)
declare or pay any dividend, declare or make any distribution on or directly or
indirectly combine, redeem, reclassify, purchase or otherwise acquire any shares
of capital stock or authorize the creation or issuance of or issue any
additional shares of capital stock or securities or obligations convertible into
or exchangeable therefor except the payment of regular quarterly dividends by
the Company in the amount of 3(cent) per share and the issuance of shares of
Company Common Stock upon exercise of the 1996 Warrants; (b) amend its Articles
of Incorporation or Association or By-Laws or adopt or amend any resolution or
agreement concerning indemnification of directors or officers; (c) enter into or
modify any agreement requiring the payment of any salary, bonus, extra
compensation, pension or severance payment to any of its current or former
directors, officers or employees except such agreements as are terminable at
will without penalty or other payment by it, or increase the compensation of any
such person in any manner inconsistent with its past practices; (d) except in
the ordinary course of business consistent with past practices, place or suffer
to exist on any of its assets or properties any mortgage, pledge, lien, charge
or other encumbrances (except as allowed under the Plan of Merger) or cancel any
material indebtedness owing to it or any claims it may have possessed, or waive
any right of substantial value or discharge or satisfy any material non-current
liability; (e) acquire another business or merge or consolidate with another
entity or sell or otherwise dispose of a material part of its assets except in
the ordinary course of business consistent with past practices; (f) commit any
act that is intended or reasonably may be expected to result in any of its
representations and warranties becoming untrue in any material respect or in any
of the conditions to the Mergers not being satisfied or in a violation of any
provision of the Plan of Merger, except as may be required by applicable law;
(g) commit or fail to take any action that is intended or reasonably may be
expected to result in a material breach or violation of any applicable law,
statute, rule, governmental regulation or order; (h) fail to maintain its books,
accounts and records in the usual manner on a basis consistent with that
previously employed; (i) fail to pay or to make adequate provision in all
material respects for the payment of all taxes, interest payments and penalties
due and payable, except those being contested in good faith by appropriate
proceedings and for which sufficient reserves have been established; (j) dispose
of investment securities in amounts or in a manner inconsistent with past
practices, or make investments in non-investment grade securities or that are
inconsistent with past investment practices; (k) enter into any new line of
non-banking business; (l) charge off (except as required by law or regulatory
authorities or generally accepted accounting principles consistently applied) or
sell (except for a price not materially less than the value thereof) any of its
portfolio of loans, discounts or financing leases, or sell any asset held as
other real estate or other foreclosed assets for an amount materially less than
100% of its book value as of March 31, 1996; (m) make any extension of credit
that, when added to all other extensions of credit to a borrower and its
affiliates, would exceed the Company's or the Bank's applicable regulatory
lending limits; (n) take or cause to be taken any action that would disqualify
the Mergers as a "pooling-of-interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code; or (o) agree or commit to do any of the foregoing.
In addition, the Company and the Bank have agreed that neither of them
will, without the prior approval of Whitney, solicit, initiate or encourage
inquiries or proposals with respect to, or, except to the extent required in the
written opinion of its counsel to discharge properly the directors' fiduciary
duties to the Company's consolidated group and its shareholders, furnish any
information relating to, or participate in any negotiations or discussions
concerning, any acquisition or purchase of all or a substantial portion of its
assets, or of a substantial equity interest in it, or any
11
<PAGE>
business combination
with it (other than as contemplated by the Plan of Merger). The Company and the
Bank have also agreed that in no event will any such information be supplied
except pursuant to a confidentiality agreement in form and substance
substantially the same as the confidentiality agreement previously executed
between the Company and Whitney, that they will each instruct their respective
officers, directors, agents and affiliates to refrain from doing any of the
foregoing and that they will notify Whitney immediately if any such inquiries or
proposals are received by, any such information is requested from or any
discussions or negotiations are sought to be initiated with, the Company, the
Bank or any of their officers, directors, agents or affiliates. Notwithstanding
the foregoing, nothing contained in the Plan of Merger shall be deemed to
prohibit any officer or director of the Company or the Bank from taking any
action that in the written opinion of counsel to the Company or the Bank is
required by law or is required to discharge his fiduciary duties to the
Company's consolidated group and its shareholders.
Century Branch. Under the terms of the Plan of Merger, Whitney and
WNB-Florida have agreed to operate the Bank's Century, Florida branch (the
"Century Branch") for at least two years following the effective date of the
Company Merger, and WNB-Florida will not close or sell the Century Branch
without first using its best efforts to offer it for sale under a purchase and
assumption transaction to any bank owned by a "group of local investors." A
"group of local investors" is defined as a group the majority of which is
controlled by individuals residing within a 30-mile radius of Century, Florida.
Waiver, Amendment and Termination. The Plan of Merger provides that the
parties thereto may waive any of the conditions to their respective obligations
to consummate the Mergers other than approval by the shareholders of the Company
or the Bank, the absence of a stop order suspending the effectiveness of the
Registration Statement of which this Proxy Statement-Prospectus forms a part,
the receipt of all necessary regulatory approvals, the satisfaction of all
requirements prescribed by law for consummation of the Mergers, and the
Company's and the Bank's receipt of a letter from Ewing dated as of the date of
the Meetings, in form and substance satisfactory to the Company and the Bank,
confirming Ewing's fairness opinion to the Boards of Directors of the Company
and the Bank. A waiver must be in writing.
The Plan of Merger, including all related agreements, may be amended or
modified at any time, before or after approval by the shareholders of the
Company and the Bank, by the mutual agreement in writing of the Boards of
Directors of the parties to the Plan of Merger; provided that, under the LBCL,
any amendment made subsequent to shareholder approval of the Company Merger may
not alter the amount or type of shares into which the Company Common Stock will
be converted, alter any term of the Articles of Incorporation of Whitney as the
surviving entity, or alter any term or condition of the Plan of Merger in a
manner that would adversely affect any shareholder of the Company. Additionally,
the Plan of Merger may be amended at any time by the sole action of the chief
executive officers of the respective parties to the Plan of Merger to correct
typographical errors or to change erroneous references or cross-references, or
in any other manner that is not material to the substance of the transactions
contemplated by the Plan of Merger.
The Plan of Merger may be terminated at any time prior to the effective
date of the Company Merger by (i) the mutual consent of the respective Boards of
Directors of Whitney and the Company; (ii) the Board of Directors of either
Whitney or the Company in the event of a breach by any member of the
consolidated group of the other of them of any representation, warranty or
covenant in the Plan of Merger that cannot be cured by the earlier of 15 days
after written notice of such breach or November 30, 1996; (iii) the Board of
Directors of either Whitney or the Company if by November 30, 1996 all the
conditions to closing required by the Plan of Merger have not been met or waived
or cannot be met, or the Mergers have not occurred, by November 30, 1996; (iv)
Whitney, if the number of shares of Company and Bank Common Stock as to which
the holders thereof are, on the effective date of the Mergers, legally entitled
to assert dissenting shareholders rights plus the number of shares to which the
holders thereof are entitled to receive cash payments in lieu of fractional
shares, exceeds that number of shares of Company and Bank Common Stock that
would preclude pooling-of-interests accounting for the Mergers (i.e., if , after
the Meetings, more than 10% of the Company and Bank Common Stock would be
subject to exchange for cash rather than Whitney Common Stock as the result of
holders exercising dissenters' rights or receiving cash in lieu of fractional
shares); (v) Whitney if the Plan of Merger fails to receive the requisite
vote of the Company's or the Bank's shareholders; (vi) Whitney if the
Company's or the Bank's Board of Directors (A) withdraws, modifies or changes
its recommendation to its shareholders as contained herein or resolves to do
so, (B) recommends to its shareholders any other merger, consolidation, share
12
<PAGE>
exchange, business combination or other
similar transaction, any sale, lease, transfer or other disposition of all or
substantially all of the assets of any member of the Company's consolidated
group or any acquisition of 15% or more of any class of the Company's capital
stock or (C) makes any announcement of a proposal, plan or intention to do any
of the foregoing; or (vii) the Company, if the Company receives a written offer
with respect to any transaction described in (vi) above and the Board of
Directors of the Company determines in good faith, after consultation with its
financial advisors and counsel, that such transaction is more favorable to the
Company's shareholders than the transactions contemplated by the Plan of Merger.
The Plan of Merger provides for a termination fee of $786,000 payable to Whitney
if the Company terminates the Plan of Merger under the circumstances described
in clause (vii) of the preceding sentence. The provisions in the Plan of Merger
regarding confidentiality, payment of the termination fee and certain
miscellaneous matters will survive any termination of the Plan of Merger.
Expenses. The Plan of Merger provides that regardless of whether the
Mergers are consummated, expenses incurred in connection with the Plan of Merger
and the transactions contemplated thereby shall be borne by the party that has
incurred them.
Interests of Certain Persons
Employee Benefits. Whitney has agreed that, at the effective time of
the Mergers, all persons then employed by the Company and the Bank shall be
eligible for such employee benefits as are generally available to employees of
Whitney's Louisiana and Alabama banking subsidiaries having like tenure, officer
status and compensation levels, except that (a) all executive and senior level
management bonuses, stock options, restricted stock and similar benefits will be
at the discretion of WNB-Florida's Compensation Committee, (b) all Company and
Bank employees who are employed at the effective time of the Mergers will be
given full credit for all prior service as employees of the Company or the Bank,
provided, however, that all such employees shall be treated as newly hired
WNB-Florida employees for all purposes of Whitney's or Whitney's Louisiana and
Alabama banking subsidiaries' Defined Benefit Pension Plan (i.e., prior service
credit with the Company and the Bank will not be considered in determining
future benefits under Whitney's or Whitney's banking subsidiaries' Defined
Benefit Pension Plan).
ESOP. Whitney intends to terminate the Bank's Employee Stock Ownership
Plan (the "Plan") after the effective date of the Mergers, which will cause all
participants in the Plan, including certain directors and executive officers of
the Company and the Bank, to become fully vested in their Plan interests.
Management. Thomas D. Tait resigned as Chairman of the Board of the
Bank on the date the Plan of Merger was executed to accept his appointment as a
vice president of Whitney, and upon the formation of WNB-Florida, he will be
appointed to serve as chairman and chief executive officer of WNB-Florida.
WNB-Florida and Mr. Tait will enter into an employment agreement on
substantially the same terms and conditions as Whitney's employment agreements
with similarly situated officers in Whitney's consolidated group.
Effective July 1, 1996, Jerry W. Morrison resigned as president, chief
executive officer and director of the Bank and as director of the Company.
Pursuant to an agreement entered into between Mr. Morrison and the Company and
the Bank in connection with his resignation, Mr. Morrison has agreed to remain
an employee of both the Company and the Bank, serving as special consultant to
the Boards of Directors through the first to occur of September 30, 1996 or the
closing of the Mergers. He will be compensated for such services at the rate of
$2,000 per month, plus out-of-pocket expenses and will maintain his employee
benefits through the period.
Immediately prior to consummation of the Company Merger, Mr. Morrison's
employment will terminate and the Bank will pay him a lump sum cash payment
equal to the balance of his regular salary for 1996 plus the allocated portion
of the Bank's 1995 and 1996 Executive Incentive (Bonus), if any, to which he
would otherwise be entitled. At the earlier of the Bank Merger or December 31,
1996, ownership of a $500,000 life insurance policy that the Bank currently
carries on Mr. Morrison will be transferred to him.
Indemnification and Insurance. Whitney has agreed that all rights to
indemnification and all limitations of liability existing in favor of
indemnified parties under the Company's Articles of Incorporation and By-Laws
and in the Articles of Incorporation and By-Laws of the Bank (as the case may
be) as in effect on April 23, 1996 with respect to
13
<PAGE>
matters occurring prior to or
on the effective date of the Mergers will survive the Mergers for three years.
Whitney has also agreed to use its best efforts to cause those persons serving
as officers and directors of the Company and the Bank on the effective date of
the Mergers to be covered for three years thereafter by the directors and
officers liability insurance policy maintained by the Company and the Bank (or a
substitute policy) with respect to acts or omissions occurring prior to or on
the effective date of the Mergers, subject to certain conditions. In addition,
Whitney has agreed to indemnify, under certain conditions, the Company's and the
Bank's directors, officers and controlling persons against certain expenses and
liabilities, including certain liabilities arising under federal securities
laws.
No director or executive officer of the Company or the Bank owns any
shares of Whitney Common Stock. No director or executive officer of Whitney has
any personal interest in the Mergers other than by reason of his holdings of
Whitney Common Stock, nor do such directors or executive officers own any shares
of the Company or Bank Common Stock.
Status Under Federal Securities Laws; Certain Restrictions on Resales
The shares of Whitney Common Stock to be issued to shareholders of the
Company and the Bank pursuant to the Plan of Merger have been registered under
the Securities Act of 1933 (the "Securities Act"), thereby allowing such shares
to be freely traded without restriction by persons who will not be "affiliates"
(as that term is defined in the Securities Act and the rules and regulations
thereunder) of Whitney or who were not "affiliates" of the Company or the Bank.
Directors and certain officers and shareholders of the Company and the
Bank may be deemed to be "affiliates" of the Company or the Bank. Such persons
may resell Whitney Common Stock received by them pursuant to the Mergers only if
the shares are registered for resale under the Securities Act or an exemption
from the registration requirements of the Securities Act is available. All such
persons should carefully consider the limitations imposed by Rules 144 and 145
promulgated under the Securities Act prior to effecting any resales of Whitney
Common Stock. Each such affiliate has entered into an agreement not to sell
shares of Whitney Common Stock received by him in violation of the Securities
Act.
Further, in accordance with the requirements for using the
pooling-of-interests method of accounting, shareholders of the Company and the
Bank who may be deemed "affiliates" of the Company or the Bank have agreed not
to sell the shares of Whitney Common Stock received by them in the Mergers until
at least 30 days of post-closing combined earnings of Whitney and the Company
have been published by Whitney. Whitney has agreed to publish such an earnings
release as promptly as practicable following receipt of such financial results.
Accounting Treatment
It is a condition to Whitney's obligation to consummate the Mergers
that it receive assurances from its and the Company's independent public
accountants that the Mergers may be accounted for as a pooling-of-interests
under the requirements of Opinion No. 16 of the Accounting Principles Board of
the American Institute of Certified Public Accountants and the published rules
and regulations of the Securities and Exchange Commission (the "Commission") for
accounting and financial reporting purposes. Under the pooling-of-interests
method of accounting, after certain adjustments necessary to conform the basis
of presentation of the Whitney and Company information, the recorded assets and
liabilities of Whitney and the Company will be carried forward to Whitney's
consolidated financial statements at their recorded amounts, the consolidated
earnings of Whitney will include earnings of Whitney and the Company for the
entire fiscal year in which the Mergers occur and the reported earnings of
Whitney and the Company for prior periods will be combined and restated as
consolidated earnings of Whitney. See "- Description of the Plan of Merger --
Regulatory Approvals and Other Conditions of the Mergers" and "- Status Under
Federal Securities Laws; Certain Restrictions on Resales."
14
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the opinion of Arthur Andersen LLP that
Whitney and the Company expect to receive concerning the material federal income
tax consequences to holders of Company and Bank Common Stock resulting from the
Plan of Merger. Consummation of the Mergers is conditioned upon receipt by
Whitney and the Company of such opinion dated the date set for consummation of
the Plan of Merger. The following is based upon applicable federal law and
judicial and administrative interpretations on the date hereof, any of which is
subject to change at any time, and representations of management of Whitney and
of the Company.
(a) The Company Merger will qualify as a reorganization under Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"); the
Bank Merger will qualify as a reorganization under Section 368 of the Code; and,
the Company, the Bank, Whitney and WNB-Florida each will be a "party to a
reorganization" within the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by the Company, the Bank,
Whitney or WNB-Florida as a result of the Mergers.
(c) No gain or loss will be recognized by a shareholder of the Company
or the Bank on the receipt solely of Whitney Common Stock in exchange for his
shares of Company or Bank Common Stock.
(d) The tax basis of the shares of Whitney Common Stock to be received
by shareholders of the Company and the Bank pursuant to the Mergers will be the
same as the basis of the shares of Company or Bank Common Stock surrendered in
exchange therefor, decreased by the amount of basis allocated to any cash
received in lieu of fractional shares that are hypothetically received by the
shareholder and redeemed for cash.
(e) The holding period of the shares of Whitney Common Stock to be
received by shareholders of the Company and the Bank pursuant to the Mergers
will, in each instance, include the holding period of the respective shares of
Company or Bank Common Stock exchanged therefor, provided that the shares of
Company or Bank Common Stock are held as capital assets on the effective date of
the Mergers.
(f) The payment of cash to shareholders of the Company and the Bank in
lieu of fractional share interests of Whitney Common Stock will be treated as if
the fractional shares were distributed as part of the exchange and then redeemed
by Whitney. These cash payments will be treated as having been received as a
distribution in redemption of that fractional share interest subject to the
conditions and limitations of Section 302 of the Code. If a fractional share of
Whitney Common Stock would constitute a capital asset in the hands of a
redeeming shareholder, any resulting gain or loss will be characterized as
capital gain or loss in accordance with the provisions and limitations of
Subchapter P of Chapter 1 of the Code.
(g) A shareholder of the Company or the Bank who perfects his statutory
right to dissent to the Mergers and who receives solely cash in exchange for his
Company or Bank Common Stock will be treated as having received such cash
payment as a distribution in redemption of his shares of Company or Bank Common
Stock, subject to the provisions and limitations of Section 302 of the Code.
After such distribution, if the former shareholder of the Company or the Bank
does not actually or constructively own any Company or Bank Common Stock, the
redemption will constitute a complete termination of interest and be treated as
a distribution in full payment in exchange for the Company or Bank Common Stock
redeemed.
The opinion of Arthur Andersen LLP is not binding on the Internal
Revenue Service, which could take positions contrary to the conclusions in such
opinion.
As a result of the complexity of the tax laws, and because the tax
consequences to any particular shareholder may be affected by matters not
discussed herein, it is recommended that each shareholder of the Company and the
Bank consult his personal tax advisor concerning the applicable federal, state
and local income tax consequences of the Mergers.
15
<PAGE>
DISSENTERS' RIGHTS
The following summaries do not purport to be complete statements of the
procedures to be followed by Company or Bank shareholders desiring to exercise
their dissenters' rights and are qualified in their entirety by reference to the
provisions of Sections 1301-1320 of the Florida Business Corporation Act (in the
case of Company shareholders), and 12 U.S.C. ss.215a (in the case of Bank
shareholders), the full texts of which are attached as Appendix C to this Proxy
Statement-Prospectus. Since the preservation and exercise of dissenters' rights
require strict adherence to the provisions of these laws, Company and Bank
shareholders who might desire to exercise such rights should review such laws
carefully, timely consult their own legal advisors and strictly follow the
provisions of applicable law. A Company or Bank shareholder's failure to follow
any of the applicable procedures may result in termination or waiver of his
dissenters' rights.
Whitney has the right to terminate the Plan of Merger if the number of
shares of Company and Bank Common Stock as to which the holders thereof, on the
effective date of the Company Merger, legally entitled to assert dissenting
shareholders' rights plus the number of shares to which the holders thereof are
entitled to receive cash payments in lieu of fractional shares, exceeds that
number of shares of Company and Bank Common Stock that would preclude
pooling-of-interests accounting for the Mergers. See "The Plan of Merger -
Description of the Plan of Merger -- Waiver, Amendment and Termination."
The Company
Only Company shareholders who are shareholders of record as of the
close of business on August 1, 1996, the record date for the
Company Meeting, will be entitled to exercise dissenters' rights under
applicable Florida law. A shareholder of the Company who wishes to exercise his
dissenters' rights under Florida law must (i) prior to the vote at the Company
Meeting, deliver written notification to the Company of his intent to demand
payment for his shares if the Plan of Merger is consummated and (ii) not vote
his shares in favor of the Plan of Merger. A vote against approval of the Plan
of Merger (or an abstention from voting) will not in itself constitute a
sufficient objection to the Plan of Merger for a Company shareholder to exercise
dissenters' rights under Florida law. In addition, because proxies that are
signed and returned without specifications as to how they should be voted
will be voted in favor of the Plan of Merger, a Company shareholder who returns
such a proxy will not be entitled to exercise dissenters' rights unless he
revokes that proxy prior to the vote of Company shareholders on the Plan of
Merger.
A Company shareholder who perfects his dissenters' rights will be
entitled to demand that he be paid the "fair value" (determined as described
below) for his shares of Company Common Stock in lieu of receiving shares of
Whitney Common Stock in the Company Merger. "Fair value" is defined as the value
of the shares of Company Common Stock as of the close of business on the day
prior to the date on which the Company shareholders authorize the proposed
action, excluding any appreciation or depreciation in anticipation of the
corporate action unless exclusion would be inequitable. Holders of Company
Common Stock who intend to exercise their dissenters' rights should bear in mind
that the "fair value" of their shares of Company Common Stock could be more
than, the same as, or less than, the consideration they would receive pursuant
to the Plan of Merger.
A Company shareholder wishing to exercise his dissenters' rights
should, prior to the vote at the Company Meeting, deliver the written
notification described above to the Company at the following address:
William A. Hunt, Secretary
Liberty Holding Company
201 N. Palafox Street
Pensacola, Florida 32501
If the Company shareholders approve the Plan of Merger at the Company
Meeting, the Company must, within 10 days thereafter, give written notice of
such approval to each Company shareholder who notified the Company of his intent
to demand payment and who did not vote his shares in favor of the Plan of
Merger. Within 20 days after such notice from the Company, each such shareholder
who elects to dissent must file with the Company a notice of election to dissent
(an "Election Notice"), stating his name and address, the number of shares with
respect to which he dissents
16
<PAGE>
and a demand for payment of the fair value for his shares. The dissenting
shareholder must also deposit his Company stock certificates with the Company
simultaneously with the filing of his Election Notice.
Within 10 days after the expiration of the period for filing an
Election Notice or within 10 days after the Company Merger is effected,
whichever is later, (but in no case later than 90 days after the Company's
shareholders approve the Plan of Merger), the Company must make a written offer
to pay each dissenting shareholder who has filed an Election Notice an amount
that the Company estimates to be the fair value for his shares. The Company's
offer must be accompanied by the Company's current balance sheet and profit and
loss statement. If the Company Merger has not been consummated within 90 days
after the date on which the Company's shareholders approve the Plan of Merger,
the Company's offer of payment may be made conditional upon the consummation of
the Company Merger.
If the dissenting shareholder accepts the Company's offer within 30
days, payment for his shares shall be made within 90 days of the Company's offer
or the consummation of the Company Merger, whichever is later. Upon payment of
the agreed value, the dissenting shareholder ceases to have any interest in his
shares.
If the Company fails to make an offer within the prescribed period or
if it makes the offer and any dissenting shareholder fails to accept the offer
within the 30-day period, the Company shall, within 30 days after receipt of an
Election Notice given within 60 days after the consummation of the Company
Merger, or may, at its election, at any time within 60 days after the
consummation of the Company Merger, petition the Circuit Court of Escambia
County, Florida, requesting that the fair value of such shares be determined.
The Court shall also determine whether each dissenting shareholder is entitled
to payment for his shares. If the Company fails to institute the proceeding as
required, any dissenting shareholder may do so in the name of the Company. All
dissenting shareholders who have not agreed to accept the Company's offer will
be made parties to the action against their shares and are entitled to judgment
against the Company for the amount of the fair value of their shares. The Court
may appoint persons as appraisers to receive evidence and recommend a decision
on the question of fair value. The Company will pay each dissenting shareholder
the amount found due within 10 days after the Court's final determination. Upon
payment of the judgment, the dissenting shareholders shall cease to have any
interest in their shares.
The costs and expenses of any such proceeding, including reasonable
compensation for appraisers, but excluding the fees for counsel and experts used
by any party shall be determined by the Court and assessed against the Company.
However, the Court may assess all or any part of such costs and expenses against
a shareholder if the Court finds that the shareholder's refusal to accept the
Company's offer was arbitrary, vexatious or not in good faith. If the Court
determines that the fair value of the shares materially exceeds the amount of
the Company's offer or if the Company fails to make an offer, the Court may
award to any dissenting shareholder reasonable compensation for attorneys and
experts employed by such shareholder in the proceeding.
Once a dissenting shareholder files an Election Notice with the Company
as described above, he is only entitled to payment as provided by Section 1320
of the Florida Business Corporation Act and is not entitled to vote or exercise
any other rights of shareholder. A dissenting shareholder may withdraw his
Election Notice in writing at any time before the Company makes its offer to pay
for his shares. After the Company makes its offer, the Election Notice may be
withdrawn only if the Company consents to the withdrawal.
The right of a dissenting shareholder to be paid fair value of his
shares will cease, and he will be reinstated as a shareholder, with all rights
as described in the statute as of the date on which he filed the Election
Notice, if one of the following events occurs: (i) the Election Notice is
withdrawn; (ii) the Plan of Merger is abandoned or rescinded or the Company's
shareholders revoke the authority to effect the Company Merger; (iii) no demand
or petition for determining fair value by a court has been made or filed within
the time limits provided under Section 1320 of the Florida Business Corporation
Act; or (iv) a court of competent jurisdiction determines that the dissenting
shareholder is not entitled to the relief provided by that Section.
Once the Company Merger is effected, Whitney, as the surviving
corporation, will be subject to, and will be required to perform, all of the
obligations of the Company described above. Accordingly, on or after the
effective date of the Company Merger, dissenting shareholders of the Company
should send any communications regarding their rights to Joseph S. Schwertz,
Jr., Secretary, Whitney Holding Corporation, 228 St. Charles Avenue, New
Orleans, Louisiana
17
<PAGE>
70130. All communications should be signed by or on behalf of the dissenting
Company shareholder in the form in which his shares are registered on the
Company's books.
The Bank
Each shareholder of the Bank entitled to vote on the Plan of Merger who
objects to the Plan of Merger shall be entitled to the rights and remedies of
dissenting shareholders provided under the Bank Merger Act, 12 U.S.C. ss.215a
("Section 215a"), a copy of which is included in Appendix C to this Proxy
Statement-Prospectus, and any such shareholder who follows the procedures
specified in Section 215a will be entitled to receive the value of his shares of
Bank Common Stock in cash. A Bank shareholder must comply strictly with the
procedures set forth in Section 215a.
To exercise the right of dissent, a Bank shareholder (a) must vote
against the Plan of Merger or otherwise notify the Secretary of the Bank in
writing at or prior to the Bank Meeting that he dissents from the Plan of Merger
and (b) must also, within thirty days after the effective date of the Bank
Merger, deliver to Whitney a written request for the value of his shares of Bank
Common Stock in cash accompanied by the surrender of his certificates
representing such shares of Bank Common Stock. Such written requests should be
delivered either in person or by mail (certified mail, return receipt requested,
being the recommended form of transmittal) to Joseph S. Schwertz, Jr.,
Secretary, Whitney Holding Corporation, 228 St. Charles Avenue, New Orleans,
Louisiana 70130.
The value of the shares of Bank Common Stock held by a dissenting
shareholder will be determined, as of the effective date of the Bank Merger, by
an appraisal made by three appraisers, one to be selected by the holders of a
majority of the Bank Common Stock the owners of which have exercised their
dissenters' rights, one to be selected by the directors of Whitney, and one to
be selected by the two appraisers so selected. The valuation agreed upon by any
two of the three appraisers will govern. If the value so fixed is not
satisfactory to any dissenting Bank shareholder who has requested payment, that
Bank shareholder may, within five days after being notified of the appraised
value of his shares, appeal to the Comptroller, which will cause a reappraisal
to be made that will be final and binding as to the value of the shares of such
shareholder. If for any reason one or more of the appraisers are not selected,
or the appraisers so selected fail to determine the value of the Bank Common
Stock within ninety days after the effective date of the Bank Merger, the
Comptroller will cause an appraisal of such shares to be made upon the written
request of any interested party, and such appraisal will be final and binding on
all parties. Whitney will pay the expenses of the Comptroller in making any
appraisal or reappraisal described above.
The value of the shares of Bank Common Stock held by dissenting
shareholders ascertained as described above will be promptly paid to the
dissenting shareholders. The shares of Whitney Common Stock that would have been
delivered to the dissenting Bank shareholders had they not requested payment in
accordance with Section 215a must be sold at an advertised public auction, and
Whitney has the right to purchase any or all of such shares. If the shares of
Whitney Common Stock are sold at the public auction at a price greater than the
amount paid to the dissenting Bank shareholders, the excess in such sale price
must be paid to such dissenting shareholders.
Prior to the effective date of the Bank Merger, dissenting shareholders
of the Bank should send any communications regarding their rights to Richard A.
Davis, Secretary of Liberty Bank, 201 N. Palafox Street, Pensacola, Florida
32501. On or after the effective date of the Bank Merger, dissenting
shareholders of the Bank should send any communications regarding their rights
to Joseph S. Schwertz, Jr., Secretary, Whitney Holding Corporation, 228 St.
Charles Avenue, New Orleans, Louisiana 70130. All such communications should be
signed by or on behalf of the dissenting Bank shareholder in the form in which
his shares are registered on the Bank's books.
18
<PAGE>
UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
In addition to the proposed merger with the Company, Whitney has a
merger pending with American Bank & Trust, a Florida state-chartered banking
association headquartered in Pensacola, Florida ("AB&T"). The unaudited pro
forma condensed combined balance sheet as of March 31, 1996 and the unaudited
pro forma condensed combined statements of income for the three months ended
March 31, 1996 and 1995 and for the years ended December 31, 1995, 1994 and 1993
appearing on the following pages give effect to the proposed mergers with the
Company and AB&T. A brief description of each of these mergers follows.
Whitney and WNB-Florida, on the one hand, and the Company and the Bank,
on the other hand, have signed a definitive agreement to merge the institutions,
more fully described in this Proxy Statement-Prospectus. Pursuant to the Plan of
Merger, the Company will be merged with and into Whitney and the Bank will be
merged into WNB-Florida, and in consideration thereof, the shareholders of the
Company and the minority shareholders of the Bank will receive shares of Whitney
Common Stock having a value of approximately $14,140,000. The exact number of
shares will be determined at the time the Company Merger is effected. See "The
Plan of Merger - Description of the Plan of Merger -- Conversion of Common
Stock."
Whitney and WNB-Florida have also signed a definitive agreement to
merge AB&T with and into WNB- Florida (the "AB&T Merger"). Under the terms of
that definitive agreement, shareholders and certain option holders of AB&T will
receive shares of Whitney Common Stock having a value of approximately
$10,250,000, subject to a reduction in certain limited circumstances. The exact
number of shares of Whitney Common Stock to be issued to the shareholders and
option holders of AB&T will be determined at the time that the AB&T Merger is
effected.
Each of these proposed mergers is expected to be accounted for as a
pooling-of-interests, and the pro forma financial information set forth on the
following pages has been prepared to reflect the consummation of all of the
proposed mergers. No assurance can be given, however, that any or all of these
mergers will be consummated, and consummation of the Mergers, on the one hand,
and the AB&T Merger, on the other hand, is not a condition to consummation of
the other.
On March 8, 1996, Whitney completed a merger with First Citizens
BancStock, Inc. ("Citizens") and its wholly-owned subsidiary, The First National
Bank in St. Mary Parish, which was accounted for as a pooling-of-interests;
accordingly, Whitney's financial statements have been restated to include the
operations of Citizens. Whitney's results of operations include nonrecurring
costs associated with the Citizens merger of approximately $2.2 million, net of
income tax, for the three months ended March 31, 1996.
The unaudited pro forma combined balance sheet at March 31, 1996, set
forth below, gives effect to the Mergers and the AB&T Merger under the
pooling-of-interests accounting method as if such mergers had occurred on March
31, 1996. The unaudited pro forma combined statements of income for the years
ended December 31, 1995, 1994 and 1993 and the three months ended March 31, 1996
and 1995 combine the historical statements of income of Whitney, the Company and
AB&T as if the Mergers and the AB&T Merger had been effective as of January 1,
1993. The costs associated with the Mergers and AB&T Merger, estimated to be
approximately $700,000, will be accounted for as a current period expense upon
consummation of such mergers, and have not been reflected in the pro forma
financial statements.
The following unaudited pro forma condensed combined financial
information should be read in conjunction with the consolidated financial
statements and notes thereto of Whitney's consolidated group incorporated herein
by reference. The pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the operating results or financial
position that would have occurred if the Mergers and the AB&T Merger had been
consummated in accordance with the assumptions set forth under "Notes to
Unaudited Pro Forma Condensed Combined Financial Statements," nor is it
necessarily indicative of future operating results or financial position.
19
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Unaudited)
March 31, 1996
(In Thousands)
<TABLE>
<C> <C> <C> <C> <C> <C>
Historical
---------------------------------------------
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) AB&T Adjustments Combined
--------------- -------------- ----- ----------- ---------
ASSETS
Cash and due from financial institutions......... $ 238,115 $ 4,435 $ 1,546 $ 244,096
Securities available for sale.................... 182,723 4,402 26,448 213,573
Securities held to maturity...................... 1,311,249 640 -- 1,311,889
Federal funds sold............................... 45,000 2,775 1,840 49,615
Loans and leases................................. 1,592,994 36,791 26,707 1,656,492
Less: reserve for possible loan losses........... 41,406 507 339 42,252
----------- ----------- ----------- -----------
Net loans and leases............................. 1,551,588 36,284 26,368 1,614,240
Bank premises and equipment (net)................ 88,526 1,904 1,751 92,181
Other real estate owned (net).................... 4,662 -- 101 4,763
Other assets..................................... 77,502 527 694 78,723
----------- ----------- ----------- -----------
TOTAL ASSETS.............................. $ 3,499,365 $ 50,967 $ 58,748 $ 3,609,080
=========== =========== =========== ===========
LIABILITIES
Deposits......................................... $ 2,767,744 $ 43,637 $ 53,689 $ 2,865,070
Federal funds purchased and other borrowings..... 329,938 633 -- 330,571
Accrued expenses and other liabilities........... 31,376 463 484 32,323
----------- ----------- ----------- -----------
TOTAL LIABILITIES......................... 3,129,058 44,733 54,173 3,227,964
Minority interest in Liberty Bank................ 38 (38) 0
EQUITY
Capital stock.................................... 2,800 1,343 1,174 (2,517) 2,800
Capital surplus.................................. 64,665 3,150 3,425 2,555 73,795
Retained earnings................................ 310,377 1,904 (115) (137) 312,029
Net unrealized holding gains on available-
for-sale securities........................... 35 (64) 91 62
Less: Treasury stock............................. (7,570) (137) -- 137 (7,570)
----------- ----------- ----------- -----------
TOTAL EQUITY.............................. $ 370,307 $ 6,196 $ 4,575 38 $ 381,116
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY...................... $ 3,499,365 $ 50,967 $ 58,748 $ 3,609,080
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
20
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Three Months Ended March 31, 1996
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C> <C>
Historical
--------------------------------------------
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) AB&T Adjustments Combined
-------------- -------------- ---- ----------- ---------
Interest income.................................. $ 56,941 $ 1,035 $ 1,170 $ 59,146
Interest expense................................. 21,126 372 638 22,136
-------- -------- -------- ---------
Net interest income.............................. 35,815 663 532 37,010
Provision for (reduction in) reserve for
possible loan losses........................... 0 0 0 0
-------- -------- -------- ---------
Net interest income after provision
for possible loan losses...................... 35,815 663 532 37,010
Non-interest income.............................. 8,697 114 72 8,883
Non-interest expense............................. 32,905 550 272 33,727
Minority interest in income of Liberty Bank...... - (1) - 1 0
-------- -------- -------- ---------
Income before income taxes....................... 11,607 226 332 1 12,166
Income taxes..................................... 3,570 82 123 3,775
-------- -------- -------- ---------
Net income....................................... $ 8,037 $ 144 $ 209 1 $ 8,391
======== ======== ======== =========
Weighted average shares outstanding:
Primary........................................ 17,096,949 456,161 330,645 17,883,755
Filly diluted.................................. 17,099,787 456,161 330,645 17,886,593
Earnings per share:
Primary........................................ $0.47 $0.32 $0.63 $0.47
Fully diluted.................................. $0.47 $0.32 $0.63 $0.47
</TABLE>
See accompanying notes.
21
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Three Months Ended March 31, 1995
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C> <C>
Historical
-----------------------------------------
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) AB&T Adjustments Combined
-------------- -------------- ---- ----------- ---------
Interest income.................................. $ 49,805 $ 921 $ 763 $ 51,489
Interest expense................................. 16,133 317 380 16,830
-------- -------- -------- ---------
Net interest income.............................. 33,672 604 383 34,659
Provision for (reduction in) reserve for
possible loan losses........................... 100 0 20 120
-------- -------- -------- ---------
Net interest income after provision
for possible loan losses...................... 33,572 604 363 34,539
Non-interest income.............................. 8,636 98 76 8,810
Non-interest expense............................. 29,164 518 273 29,955
Minority interest in income of Liberty Bank...... - (1) - 1 0
-------- -------- -------- ---------
Income before income taxes....................... 13,044 183 166 1 13,394
Income taxes..................................... 4,099 62 62 4,223
-------- -------- -------- ---------
Net income....................................... $ 8,945 $ 121 $ 104 1 $ 9,171
======== ======== ======== =========
Weighted average shares outstanding
Primary................................... 16,877,358 456,161 330,645 17,664,164
Fully diluted............................. 16,877,358 456,161 330,645 17,664,164
Earnings per share
Primary................................... $0.53 $0.27 $0.31 $0.52
Fully diluted............................. $0.53 $0.27 $0.31 $0.52
</TABLE>
See accompanying notes.
22
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Year Ended December 31, 1995
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C> <C>
Historical
------------------------------------------
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) AB&T Adjustments Combined
-------------- -------------- ---- ----------- ---------
Interest income.................................. $ 213,295 $ 3,973 $ 4,391 $ 221,659
Interest expense................................. 71,867 1,444 2,631 75,942
--------- --------- --------- ----------
Net interest income.............................. 141,428 2,529 1,760 145,717
Provision for (reduction in) reserve for
possible loan losses.......................... (9,400) 0 20 (9,380)
--------- --------- --------- ----------
Net interest income after provision
for loan losses............................... 150,828 2,529 1,740 155,097
-------- --------- --------- ----------
Non-interest income.............................. 33,205 467 297 33,969
Non-interest expense............................. 119,481 2,112 1,087 122,680
Minority interest in income of Liberty Bank...... - (4) - 4 0
--------- --------- --------- ----------
Income before income taxes.................... 64,552 880 950 4 66,386
Income taxes..................................... 20,203 297 354 20,854
-------- --------- --------- ----------
Net income....................................... $ 44,349 $ 583 $596 4 $ 45,532
========= ========= ========= ==========
Weighted average shares outstanding
Primary................................... 16,971,801 456,161 330,645 17,758,607
Fully diluted............................. 17,049,308 456,161 330,645 17,836,114
Earnings per share
Primary................................... $ 2.61 $1.28 $1.80 $2.56
Fully diluted............................. $ 2.60 $1.28 $1.80 $2.55
</TABLE>
See accompanying notes.
23
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Year Ended December 31, 1994
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C> <C>
Historical
---------------------------------------------
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) AB&T Adjustments Combined
-------------- -------------- ---- ----------- ----------
Interest income.................................. $ 192,750 $ 3,572 $ 2,431 $ 198,753
Interest expense................................. 57,503 1,150 866 59,519
-------- --------- --------- ----------
Net interest income.............................. 135,247 2,422 1,565 139,234
Provision for (reduction in) reserve for
possible loan losses.......................... (26,004) 0 135 (25,869)
-------- --------- --------- ----------
Net interest income after provision
for loan losses............................... 161,251 2,422 1,430 165,103
-------- --------- --------- ----------
Non-interest income.............................. 34,129 622 213 34,964
Non-interest expense............................. 112,394 2,214 1,053 115,661
Minority interest in income of Liberty Bank...... - (4) - 4 0
--------- --------- --------- ----------
Income before income taxes....................... 82,986 826 590 4 84,406
Income taxes..................................... 26,788 216 (188) 26,816
-------- --------- --------- ----------
Net income....................................... $ 56,198 $ 610 $ 778 4 $ 57,590
========= ========= ========= ==========
Weighted average shares outstanding
Primary................................... 16,588,783 456,161 330,645 17,375,589
Fully diluted......................... 16,588,783 456,161 330,645 17,375,589
Earnings per share
Primary................................... $ 3.39 $1.34 $2.35 $3.31
Fully diluted......................... $ 3.39 $1.34 $2.35 $3.31
</TABLE>
See accompanying notes.
24
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Year Ended December 31, 1993
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C> <C>
Historical
------------------------------------------
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) AB&T Adjustments Combined
-------------- -------------- ---- ----------- ---------
Interest income.................................. $ 186,105 $ 3,194 $ 2,259 $ 191,558
Interest expense................................. 54,681 1,176 873 56,730
-------- --------- --------- ----------
Net interest income.............................. 131,424 2,018 1,386 134,828
Provision for (reduction in) reserve for
possible loan losses.......................... (59,625) 30 300 (59,295)
Net interest income after provision
for loan losses............................... 191,049 1,988 1,086 194,123
--------- --------- --------- ----------
Non-interest income.............................. 33,216 838 201 34,255
Non-interest expense............................. 108,237 2,059 1,176 111,472
Minority interst in income of Liberty Bank....... - (3) - 3 0
--------- --------- --------- ----------
Income before income taxes and
cumulative effect of accounting changes....... 116,028 764 111 3 116,906
Income taxes..................................... 37,145 277 (102) 37,320
Income before effect of accounting
changes...................................... 78,883 487 213 3 79,586
Cumulative effect of accounting
changes, net................................. 345 - - 345
--------- --------- --------- ----------
Net income....................................... $ 79,228 $ 487 $ 213 3 $ 79,931
========= ========= ========= ==========
Weighted average shares outstanding
Primary................................... 16,456,782 456,161 330,645 17,243,588
Fully diluted......................... 16,456,782 456,161 330,645 17,243,588
Earnings per share
Primary................................... $ 4.81 $1.07 $0.64 $4.64
Fully diluted......................... $ 4.81 $1.07 $0.64 $4.64
</TABLE>
See accompanying notes.
25
<PAGE>
WHITNEY HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
To calculate pro forma information, it has been assumed that the number
of outstanding shares of Whitney Common Stock includes shares to be issued upon
consummation of the Mergers and the AB&T Merger. In connection with these
proposed mergers, Whitney will issue shares of Whitney Common Stock to the
shareholders of the Company, to the minority shareholders of the Bank, to the
shareholders of AB&T and to the holders of any unexercised options to acquire
AB&T common stock ("AB&T Options").
Under the terms of the Plan of Merger, Whitney will issue Whitney
Common Stock with an aggregate value at the date of the Mergers of approximately
$14,140,000 (calculated based on the Average Market Price). The number of shares
of Whitney Common Stock to be exchanged in the Mergers will be determined by the
Average Market Price of Whitney Common Stock, which will be no less than $27.00
per share nor more than $35.00 per share, except as otherwise provided in the
Plan of Merger. For purposes of the accompanying pro forma financial statements,
the Whitney Common Stock is assumed to have an Average Market Price in the
Mergers of $31.00 per share, resulting in the issuance of 453,266
shares of Whitney Common Stock for all the common stock of the Company (an
exchange ratio of 0.3264) and 2,895 shares of Whitney Common Stock for all the
common stock of the Bank held by shareholders other than the Company (an
exchange ratio of 2.1181). Certain warrants to acquire shares of Company Common
Stock that were outstanding during periods presented, but that have expired in
accordance with their terms prior to May 31, 1996, were not material and
have not been considered in calculating pro forma earnings per share.
Under the terms of the definitive agreement governing the AB&T Merger
(the "AB&T Agreement), Whitney will issue Whitney Common Stock with an aggregate
value at the date of the AB&T Merger of approximately $10,250,000 (calculated
based on the Average Market Price (as defined in the AB&T Agreement) and
assuming that (a) none of the AB&T Options are exercised prior to the effective
date of the AB&T Merger and (b) the Deductible Amount (as defined in the AB&T
Agreement) is zero). The number of shares of Whitney Common Stock to be
exchanged in the AB&T Merger will be determined by the Average Market Price of
Whitney Common Stock, as defined in the AB&T Agreement, which will be no less
than $27.00 per share nor more than $35.00 per share, except as provided in the
AB&T Agreement. For purposes of the accompanying pro forma financial statements,
the Whitney Common Stock is assumed to have an Average Market Price in the AB&T
Merger of $31.00 per share, resulting in the issuance of 298,378 shares of
Whitney Common Stock upon conversion of the American Bank and Trust common stock
by reason of the AB&T Merger (an exchange ratio of 0.6353), and the issuance of
32,267 shares of Whitney Common Stock in exchange for unexercised AB&T Options
to acquire 75,936 shares of American Bank and Trust Bank common stock.
The historical earnings per share and weighted average shares
outstanding amounts for the Company and AB&T reflect the equivalent shares of
Whitney Common Stock expected to be exchanged in connection with the Mergers and
the AB&T Merger based on an assumed Average Market Price of $31.00 per share of
Whitney Common Stock, with none of the AB&T Options being exercised prior to the
AB&T Merger and a Deductible Amount of zero.
There is no stated par value of Whitney Common Stock. In accordance
with the pooling-of-interests method of accounting, the historical equities of
the merged companies are combined.
26
<PAGE>
WHITNEY HOLDING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Liberty Holding Company and Liberty Bank Transaction Only)
The following unaudited pro forma condensed combined financial information
gives effect to the proposed merger of the Company into Whitney and of the Bank
into WNB-Florida using the pooling-of-interests method of accounting and should
be read in conjunction with the consolidated financial statements and notes
thereto of Whitney's consolidated group incorporated herein by reference and of
the Company's consolidated group included elsewhere in this Proxy
Statement-Prospectus. The pro forma information is presented for illustrative
purposes only, and is not necessarily indicative of the operating results or
financial position that would have occurred if the Mergers had been consummated
in accordance with the assumptions set forth under "Notes to Unaudited Pro Forma
Condensed Combined Financial Statements (Liberty Holding Company and Liberty
Bank Transaction Only)," nor is it necessarily indicative of future operating
results or financial position.
Under the terms of the Plan of Merger, shareholders of the Company and
minority shareholders of the Bank will receive shares of Whitney Common Stock
with a value of approximately $14,140,000. The exact number of shares will be
determined at the time the Company Merger is effected. See "The Plan of Merger -
Description of the Plan of Merger -- Conversion of Common Stock."
On March 8, 1996, Whitney completed a merger with First Citizens BancStock,
Inc. ("Citizens") and its wholly-owned subsidiary, The First National Bank in
St. Mary Parish, which was accounted for as a pooling-of-interests; accordingly,
Whitney's financial statements have been restated to include the operations of
Citizens. Whitney's results of operations include nonrecurring costs associated
with the Citizens merger of approximately $2.2 million, net of income tax, for
the three months ended March 31, 1996.
The unaudited pro forma condensed combined balance sheet at March 31, 1996,
set forth below, gives effect the Mergers under the pooling-of-interests
accounting method as if the Mergers had occurred on March 31, 1996. The
unaudited pro forma condensed combined statements of income for the years ended
December 31, 1995, 1994 and 1993 and the three months ended March 31, 1996 and
1995 combine the historical statements of income of Whitney and the Company as
if the Mergers had been effective as of January 1, 1993. The cost associated
with the Mergers, estimated to be approximately $400,000, will be accounted for
as a current period expense upon consummation of the Mergers and has not been
reflected in the following pro forma financial statements.
27
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Liberty Holding Company and Liberty Bank Transaction Only)
(Unaudited)
March 31, 1996
(In Thousands)
<TABLE>
<C> <C> <C> <C> <C>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ----------- ---------
ASSETS
Cash and due from financial institutions... $ 238,115 $ 4,435 $ 242,550
Securities available for sale.............. 182,723 4,402 187,125
Securities held to maturity................ 1,311,249 640 1,311,889
Federal funds sold......................... 45,000 2,775 47,775
Loans and leases........................... 1,592,994 36,791 1,629,785
Less: reserve for possible loan losses..... 41,406 507 41,913
----------- ----------- -----------
Net loans and leases....................... 1,551,588 36,284 1,587,872
Bank premises and equipment (net).......... 88,526 1,904 90,430
Other real estate owned (net).............. 4,662 - 4,662
Other assets............................... 77,502 527 78,029
----------- ----------- -----------
TOTAL ASSETS........................ $ 3,499,365 $ 50,967 $ 3,550,332
=========== =========== ===========
LIABILITIES
Deposits................................... $ 2,767,744 $ 43,637 $ 2,811,381
Federal funds purchased and other
borrowings............................. 329,938 633 330,571
Accrued expenses and other liabilities..... 31,376 463 31,839
----------- ----------- -----------
TOTAL LIABILITIES................... 3,129,058 44,733 3,173,791
Minority interest in Liberty Bank.......... 38 (38) -0-
EQUITY
Capital stock.............................. 2,800 1,343 (1,343) 2,800
Capital surplus............................ 64,665 3,150 1,381 69,196
Retained earnings.......................... 310,377 1,904 (137) 312,144
Net unrealized holding gains on available-
for-sale securities..................... 35 (64) (29)
Less: Treasury stock....................... (7,570) (137) 137 (7,570)
----------- ----------- -----------
TOTAL EQUITY........................ $ 370,307 $ 6,196 38 $ 376,541
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY................ $ 3,499,365 $ 50,967 $ 3,550,332
=========== =========== ===========
</TABLE>
See accompanying notes.
28
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Liberty Holding Company and Liberty Bank Transaction Only)
(Unaudited)
Three Months Ended March 31, 1996
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ----------- ---------
Interest income............................ $56,941 $ 1,035 $57,976
Interest expense........................... 21,126 372 21,498
-------- -------- --------
Net interest income........................ 35,815 663 36,478
Provision for (reduction in) reserve for
possible loan losses..................... 0 0 0
-------- -------- --------
Net interest income after provision
for possible loan losses................ 35,815 663 36,478
Non-interest income........................ 8,697 114 8,811
Non-interest expense....................... 32,905 550 33,455
Minority interest in income of Liberty Bank - (1) 1 0
-------- -------- --------
Income before income taxes................. 11,607 226 1 11,834
Income taxes............................... 3,570 82 3,652
-------- -------- --------
Net income................................. $ 8,037 $ 144 1 $ 8,182
======== ======== ========
Weighted average shares outstanding:
Primary.................................. 17,096,949 456,161 17,553,110
Filly diluted............................ 17,099,787 456,161 17,555,948
Earnings per share:
Primary.................................. $0.47 $0.32 $0.47
Fully diluted............................ $0.47 $0.32 $0.47
</TABLE>
See accompanying notes.
29
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Liberty Holding Company and Liberty Bank Transaction Only)
(Unaudited)
Three Months Ended March 31, 1995
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ----------- ---------
Interest income............................ $ 49,805 $ 921 $ 50,726
Interest expense........................... 16,133 317 16,450
-------- -------- --------
Net interest income........................ 33,672 604 34,276
Provision for (reduction in) reserve for
possible loan losses..................... 100 0 100
-------- -------- --------
Net interest income after provision
for possible loan losses................ 33,572 604 34,176
Non-interest income........................ 8,636 98 8,734
Non-interest expense....................... 29,164 518 29,682
Minority interest in income of Liberty Bank - (1) 1 0
-------- -------- --------
Income before income taxes................. 13,044 183 1 13,228
Income taxes............................... 4,099 62 4,161
-------- -------- --------
Net income................................. $ 8,945 $ 121 1 $ 9,067
======== ======== ========
Weighted average shares outstanding
Primary............................. 16,877,358 456,161 17,333,519
Fully diluted....................... 16,877,358 456,161 17,333,519
Earnings per share
Primary............................. $0.53 $0.27 $0.53
Fully diluted....................... $0.53 $0.27 $0.53
</TABLE>
See accompanying notes.
30
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Liberty Holding Company and Liberty Bank Transaction Only)
(Unaudited)
Year Ended December 31, 1995
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ----------- ---------
Interest income............................ $ 213,295 $ 3,973 $ 217,268
Interest expense........................... 71,867 1,444 73,311
--------- --------- ----------
Net interest income........................ 141,428 2,529 143,957
Provision for (reduction in) reserve for
possible loan losses.................... (9,400) 0 (9,400)
--------- --------- ----------
Net interest income after provision
for loan losses......................... 150,828 2,529 153,357
--------- --------- ----------
Non-interest income........................ 33,205 467 33,672
Non-interest expense....................... 119,481 2,112 121,593
Minority interest in income of Liberty Bank - (4) 4 0
--------- ---------- ----------
Income before income taxes................. 64,552 880 4 65,436
Income taxes............................... 20,203 297 20,500
--------- --------- ----------
Net income................................. $ 44,349 $ 583 4 $ 44,936
========= ========= ==========
Weighted average shares outstanding
Primary............................. 16,971,801 456,161 17,427,962
Fully diluted....................... 17,049,308 456,161 17,505,469
Earnings per share
Primary............................. $ 2.61 $1.28 $2.58
Fully diluted....................... $ 2.60 $1.28 $2.57
</TABLE>
See accompanying notes.
31
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Liberty Holding Company and Liberty Bank Transaction Only)
(Unaudited)
Year Ended December 31, 1994
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ----------- ---------
Interest income............................ $ 192,750 $ 3,572 $ 196,322
Interest expense........................... 57,503 1,150 58,653
--------- --------- ----------
Net interest income........................ 135,247 2,422 137,669
Provision for (reduction in) reserve for
possible loan losses.................... (26,004) 0 (26,004)
--------- --------- ----------
Net interest income after provision
for loan losses......................... 161,251 2,422 163,673
--------- --------- ----------
Non-interest income........................ 34,129 622 34,751
Non-interest expense....................... 112,394 2,214 114,608
Minority interest in income of Liberty Bank - (4) 4 0
--------- ----------
Income before income taxes................. 82,986 826 4 83,816
Income taxes............................... 26,788 216 27,004
--------- --------- ----------
Net income................................. $ 56,198 $ 610 4 $ 56,812
========= ========= ==========
Weighted average shares outstanding
Primary............................. 16,588,783 456,161 17,044,944
Fully diluted................... 16,588,783 456,161 17,044,944
Earnings per share
Primary............................. $ 3.39 $1.34 $3.33
Fully diluted................... $ 3.39 $1.34 $3.33
</TABLE>
See accompanying notes.
32
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
(Liberty Holding Company and Liberty Bank Transaction Only)
(Unaudited)
Year Ended December 31, 1993
(In Thousands, except for share data)
<TABLE>
<C> <C> <C> <C> <C>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- ------------- ----------- ----------
Interest income............................ $ 186,105 $ 3,194 $ 189,299
Interest expense........................... 54,681 1,176 55,857
--------- --------- ----------
Net interest income........................ 131,424 2,018 133,442
Provision for (reduction in) reserve for
possible loan losses.................... (59,625) 30 (59,595)
Net interest income after provision
for loan losses......................... 191,049 1,988 193,037
--------- --------- ----------
Non-interest income........................ 33,216 838 34,054
Non-interest expense....................... 108,237 2,059 110,296
Minority interest in income of Liberty Bank - (3) 3 0
--------- ---------- ----------
Income before income taxes and
cumulative effect of accounting changes 116,028 764 3 116,795
Income taxes.............................. 37,145 277 37,422
Income before effect of accounting
changes................................ 78,883 487 3 79,373
Cumulative effect of accounting
changes, net........................... 345 - 345
--------- --------- ----------
Net income................................. $ 79,228 $ 487 3 $ 79,718
========= ========= ==========
Weighted average shares outstanding
Primary............................. 16,456,782 456,161 16,912,943
Fully diluted................... 16,456,782 456,161 16,912,943
Earnings per share
Primary............................. $ 4.81 $1.07 $4.71
Fully diluted................... $ 4.81 $1.07 $4.71
</TABLE>
See accompanying notes.
33
<PAGE>
WHITNEY HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Liberty Holding Company and Liberty Bank Transaction Only)
(Unaudited)
To calculate pro forma information, it has been assumed that the number
of outstanding shares of Whitney Common Stock includes shares to be issued upon
consummation of the Mergers. In connection with the Mergers, Whitney will issue
shares of Whitney Common Stock to the shareholders of the Company and to the
minority shareholders of the Bank.
Under the terms of the Plan of Merger, Whitney will issue Whitney
Common Stock with an aggregate value at the date of the Mergers of approximately
$14,140,000 (calculated based on the Average Market Price). The number of shares
of Whitney Common Stock to be exchanged in the Mergers will be determined by the
Average Market Price of Whitney Common Stock, which will be no less than $27.00
per share nor more than $35.00 per share, except as otherwise provided in the
Plan of Merger. For purposes of the accompanying pro forma financial statements,
the Whitney Common Stock is assumed to have an Average Market Price in the
Mergers of $31.00 per share, resulting in the issuance of 453,266
shares of Whitney Common Stock for all the common stock of the Company (an
exchange ratio of 0.3264) and 2,895 shares of Whitney Common Stock for all the
common stock of the Bank held by shareholders other than the Company (an
exchange ratio of 2.1181). Certain warrants to acquire shares of Company
Common Stock that were outstanding during periods presented, but that have
expired in accordance with their terms prior to May 31, 1996, were not
material and have not been considered in calculating pro forma earnings per
share.
The historical earnings per share and weighted average shares
outstanding amounts for the Company reflect the equivalent shares of Whitney
Common Stock expected to be exchanged in connection with the Mergers based on an
assumed Average Market Price of $31.00 per share of Whitney Common Stock.
There is no stated par value of Whitney Common Stock. In accordance
with the pooling-of-interests method of accounting, the historical equities of
the merged companies are combined.
34
<PAGE>
INFORMATION ABOUT THE COMPANY AND THE BANK
Description of Business
The Company is a Florida corporation and a registered bank holding
Company under the Bank Holding Company Act of 1956 (the "BHCA"). The Company was
incorporated in 1981 and acquired more than 99% of the stock of the Bank
pursuant to a reorganization in which the shareholders of the Bank became
shareholders of the Company. From that date to the present, the Bank has been
the Company's only subsidiary. As of March 31, 1996, the Bank had total assets
of approximately $50,967,000 and total deposits of approximately $44,541,000,
and the Company had total consolidated assets of approximately $50,967,000,
total deposits of approximately $43,637,000 and shareholders' equity of
approximately $6,196,000.
The Bank, a Florida state chartered Bank, commenced operations as a
consumer bank in 1974 as the Bank of Cantonment in Cantonment, Florida. The Bank
had one location until 1978, at which time the Bank of Cantonment acquired a
branch in the Pensacola area on Davis Highway. At approximately the same time,
the owners changed the name of the Bank to Liberty Bank of Cantonment. After the
Bank became a subsidiary of the Company, the Company was purchased in 1985 by a
group of Pensacola investors who changed the name of the Bank to Liberty Bank
and acquired a downtown location to enhance the Bank's presence in Pensacola,
Florida.
The Bank offers a full range of interest bearing and non interest
bearing accounts, including checking accounts, money market accounts, individual
retirement accounts, regular interest bearing savings accounts, certificates of
deposit, commercial loans, residential mortgage loans, Small Business
Administration loans and consumer installment loans. In addition, the Bank
provides such consumer services as wire transfers, access to automatic teller
services, traveler's checks, cashier's checks, safe deposit boxes, bank by mail
services and direct deposit. The address of the principal executive office of
the Company and the Bank is 201 N. Palafox Street, Pensacola, Florida 32501. The
telephone number at that address is (904) 435-6700.
The Bank operates from a total of four branches, including its downtown
Pensacola principal office. The other branches are located at: (1) Davis Highway
Branch; 5330 North Davis Highway, Pensacola, Florida 32522; (2) Century Branch;
82102 North Century Boulevard, Century, Florida 32530; and (3) Nine Mile Branch;
9329 North Palafox Street, Pensacola, FL 32504.
Competition
The Bank experiences competition in attracting deposits and lending
funds. Primary competitors of the Bank are other commercial banks, savings and
loan associations located in the Bank's market area and, to a lesser extent,
finance companies, insurance companies, credit unions, credit card organizations
and other financial institutions located in the geographic area in which the
Bank competes. The Bank competes with other financial institutions to make loans
to customers and to obtain deposits of customers. This competition is generally
based on the interest rates charged on loans or paid on deposits. The Bank faces
increasing competition from larger financial institutions, many of which have
entered the competitive area of the Bank by making acquisitions as a result of
the Riegel-Neal Interstate Banking and Branching Act of 1994. That Act permitted
adequately capitalized and managed bank holding companies to acquire banks in
any state, subject to certain limitations, regardless of whether the acquisition
would be prohibited by applicable state law.
Supervision and Regulation
General. In addition to the generally applicable state and federal laws
governing businesses and employers, the Company and the Bank are extensively
regulated by special state and federal laws and regulations applicable only to
financial institutions and their parent companies. Laws regulating consumer
finance transactions, collections and confidentiality and the safety and
soundness of financial institutions regulate virtually all aspects of the
operations of the Company and the Bank. These laws and regulations are intended
to protect consumers rather than the shareholders of the Company. Any change in
these applicable laws or regulations may have a material effect on the business
of the Company and the Bank.
35
<PAGE>
The Company. As a bank holding company, the Company is subject to
regulation by the Reserve Board and is required to file with the Reserve Board
both quarterly and annual reports and to furnish such additional information as
the Reserve Board may require pursuant to the BHCA. The Reserve Board has the
right to conduct examinations of the Company and the Bank, and its approval is a
condition to any merger or consolidation with any other bank or holding company.
See "The Plan of Merger-Description of the Plan of Merger--Regulatory Approvals
and Other Conditions of the Mergers." The Company is prohibited from engaging in
any activities other than those found by the Reserve Board to be closely related
to banking or managing and controlling banks.
The Bank. The Bank is a state chartered Bank, a member of the Federal
Reserve system and has its deposits insured up to $100,000 per depositor by the
Federal Deposit Insurance Corporation. The Bank is regulated and subject to
periodic examination by these government authorities, each of which issue
regulations that impose restrictions on the nature and amount of loans and
investments the Bank may make.
Substantially all of the funds used by the Company to pay dividends to
its shareholders are derived from dividends from the Bank. The Bank's ability to
declare and pay dividends is subject to regulatory guidelines.
Monetary Policy. Monetary policies and regulatory authorities,
including the Reserve Board, have a significant effect on the business of the
Company and the Bank. The Reserve Board supervises and regulates the national
supply of bank credit through the sale of U. S. government securities, changes
in the discount rate on bank borrowings from the Reserve Board and changes in
reserve requirements with respect to member bank deposits. The Reserve Board
also regulates the types of loans and investments in which banks may
participate. These regulatory efforts can affect the overall business of the
Bank and interest rate it charges on loans or pays for deposits. The effect of
future Reserve Board policies on the business of the Bank cannot be predicted
with certainty.
Capital Adequacy Guidelines. Regulatory authorities governing the
operations of the Bank establish minimum capital requirements of the Company and
the Bank designed to reduce risk in operations, to account for off-balance sheet
exposure and to insure adequate liquidity in the Bank. See "The Company's
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Market Prices and Dividends
Neither the Company Common Stock nor the Bank Common Stock is
registered on a stock exchange or included for quotation on an automated
quotation system. Any market in such stock is made only through isolated
transactions between sellers and purchasers. Pursuant to a private offering of
Company Common Stock made under the terms of a Private Offering Memorandum dated
January 14, 1994 (the "Offering"), the Company sold 182,000 shares of Company
Common Stock at a price of $4.75 per share. In addition, for each share of
Common Stock purchased in the Offering, the holder received a warrant to
purchase Company Common Stock at a price of $4.95 per share exercisable no later
than May 1995 (a "1995 Warrant") and a warrant to purchase Company Common Stock
at a purchase price of $5.25 per share exercisable no later than May 1996 (a
"1996 Warrant"). The price was arbitrarily determined by the Board of Directors
of the Company after consultation with the certified public accountants to the
Company. During 1995, 3,000 shares of Company Common Stock were issued upon
exercise of 1995 Warrants at $4.95 per share; and during 1996, 45,500 shares of
Company Common Stock were issued upon exercise of 1996 Warrants at $5.25 per
share. All other 1995 and 1996 Warrants have expired in accordance with their
terms without being exercised. Other than purchases made pursuant to this
Offering (and the exercise of 1995 and 1996 Warrants) at the prices described
above, one purchase of 587 shares of Company Common Stock in May 1995 at
approximately $3.75 per share, one purchase of 1,000 shares of Company Common
Stock in February 1996 at $4.20 per share and a purchase of one share of Bank
Common Stock in August 1994 at $21.00 per share, the Company and the Bank are
not aware of any sales and purchases of Company or Bank Common Stock. No
assurance can be given that these trades were effected on an arm's-length basis.
The following table sets forth, for the periods indicated, the
dividends declared by the Company and by the Bank. The Company's ability to
declare and pay dividends after April 23, 1996 is subject to the Plan of Merger.
See "The Plan of Merger - Description of the Plan of Merger -- Conduct of
Business Prior to the Effective Date."
36
<PAGE>
Dividends Declared
<TABLE>
<C> <C> <C>
Company Bank
------- ----
1994
First Quarter.............................................. $.025 $.015
Second Quarter............................................. .025 .015
Third Quarter.............................................. .025 .015
Fourth Quarter............................................. .025 .015
1995
First Quarter.............................................. $.025 $.015
Second Quarter............................................. .025 .015
Third Quarter.............................................. .025 .015
Fourth Quarter............................................. .045 .0185
1996
First Quarter.............................................. $.030 $.018
Second Quarter............................................. .030 .018
Third Quarter.............................................. -0- -0-
(through August 1, 1996)
</TABLE>
As of August 1, 1996, there were 85 record shareholders of the
Company (with a total of 1,388,794 issued and outstanding shares) and 24
record shareholders of the Bank, other than the Company (with a total of 198,000
issued and outstanding shares, 1,367 of which are held by shareholders other
than the Company).
Property
The Bank owns the land and buildings at its 5530 North Davis Highway
and 201 N. Palafox Street branches. The Bank owns the building and leases the
land at its 8120 N. Century Boulevard branch. The land and building at 9329 N.
Palafox Street are leased by the Bank. All of the properties owned or leased by
the Bank are located in Escambia County, Florida. The Bank considers all of its
properties to be in good condition.
Employees
The Bank employs approximately 35 persons full time and considers
its relationship with its employees to be good.
Security Holdings of Principal Shareholders
and Management
The following tables set forth certain information as of
August 1, 1996, with respect to the beneficial ownership of the
outstanding shares of Company Common Stock by (i) all persons who beneficially
own more than 5% of the outstanding shares and (ii) all directors and executive
officers of the Company. Each person has sole voting and investment power with
regard to the shares listed opposite his or her name unless otherwise noted. The
Company owns more than 99% of the outstanding shares of Bank Common Stock, and
no director or executive officer of the Company or the Bank beneficially owns
any other shares of Bank Common Stock.
37
<PAGE>
PRINCIPAL SHAREHOLDERS
<TABLE>
<C> <C> <C>
Name and Address Number of Shares
of Beneficial Owner Beneficially Owned Percent of Class
------------------- ------------------ ----------------
William A. Hunt 122,124(1) 8.79%
P. O. Box 6068
Pensacola, Florida 32503
Douglas Eugene Killinger 111,319 8.02%
2629 Delmar Drive
Gulf Breeze, Florida 32561
Liberty Holding Company 124,164(2) 8.94%
Employee Stock Ownership Trust
201 N. Palafox Street
Pensacola, Florida 32501
Conald D. Mansfield 123,887(1)(3) 8.92%
P. O. Box 5205 - Brent Station
Pensacola, Florida 32505
Jerry W. Morrison 77,391(4) 5.57%
1145 Sawgrass Drive
Gulf Breeze, Florida 32561
John Phelps 238,664 17.19%
P. O. Box 1952
Pensacola, Florida 32589
James J. Reeves 126,931(5) 9.14%
730 Bayfront Parkway
Suite 4B
Pensacola, Florida 32501
Wilson B. Robertson 91,416 6.58%
8625 N. Palafox Street
Pensacola, Florida 32514
Martha Wilder 103,855(1) 7.48%
P. O. Box 1645
Pensacola, Florida 32597
</TABLE>
- ----------------------------------
(1) Does not include 124,164 shares held by the Liberty Holding Company
Employee Stock Ownership Trust, of which the named individual serves as
a trustee.
(2) The trustees of this trust are William A. Hunt, Conald D. Mansfield,
Martha Wilder and Robert E. Boothe, Jr., each of whom has or shares
voting power with respect to the listed shares.
(3) Includes 24,788 shares registered in the name of Mr. Mansfield and his
wife.
38
<PAGE>
(4) Includes 41,593 shares held jointly with Mr. Morrison's wife. Also
includes 12,727 shares held by Mr. Morrison's wife, as to which he
disclaims beneficial ownership.
(5) Includes 330 shares held by a corporation of which Mr. Reeves is the
sole shareholder, 415 shares held by certain trusts of which Mr. Reeves
is the sole trustee and 1,547 shares held jointly with his wife. Also
includes 1,500 shares held by Mr. Reeves' wife, as to which he
disclaims beneficial ownership.
DIRECTORS & EXECUTIVE OFFICERS
<TABLE>
<C> <C> <C>
Name of Number of Shares
Beneficial Owner Beneficially Owned Percent of Class
- ------------------- -----------------
Robert E. Boothe, Jr. 14,825(1) 1.07%
Ronald L. Bruce 0 --
Richard A. Davis 38,002(2) 2.74%
Lewis Doman 11,626(3) 0.84%
William A. Hunt 122,124(1) 8.79%
Conald D. Mansfield 123,887(1)(4) 8.92%
Wilson B. Robertson 91,416 6.58%
Martha Wilder 103,855(1) 7.48%
All directors and executive officers 505,735(1) 36.42%
as a group (8 persons)
</TABLE>
- -----------------------------
(1) Does not include 124,164 shares held by the Liberty Holding Company
Employee Stock Ownership Trust, of which the named individual serves as
a trustee.
(2) As trustee of the Davis Family Trust.
(3) Includes 1,000 shares held by Mr. Doman's wife, as to which Mr. Doman
disclaims beneficial ownership.
(4) Includes 24,788 shares registered in the name of Mr. Mansfield and his
wife.
39
<PAGE>
THE COMPANY'S MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements of the Company and related Notes appearing elsewhere in the
Proxy Statement/Prospectus.
Review of Results of Operations -- For the Three Month Period Ended March 31,
1996 as Compared to the Three Month Period Ended March 31, 1995
Earnings Summary
The Company reported net income of approximately $144,000 or $0.11 per
share for the three months ended March 31, 1996, compared to net income of
approximately $121,000 or $0.09 per share for the three months ended March 31,
1995.
Net income increased 18.9% in 1996 as compared to the comparable period
in 1995. The most significant factors affecting net income for the periods
mentioned are highlighted below.
- An increase in average loans as a percentage of average interest-
earning assets from 77.6% in 1995 to 82.9% in 1996.
- An increase in the average rate on average loans, net of unearned
interest, from 10.08% in 1995 to 10.11% in 1996.
- Maintenance of high asset quality and reserve coverage ratios. Net
recoveries were approximately $3,000 and $29,000 in 1996 and 1995,
respectively.
- In recognition of these net recoveries, there were no loan provisions
made in the three months ended March 31, 1996 and 1995.
- Annualized noninterest expenses as a percent of average assets were
4.4% in 1996 and 1995.
- The annualized yield on interest earning assets increased from 9.01% in
1995 to 9.39% in 1996; however, the annualized rate paid on
interest-bearing liabilities increased from 4.17% in 1995 to 4.68% in
1996.
Net earnings for the three months ended March 31, 1996 resulted in an
annualized return on average assets of 1.14% compared to 1.02% in 1995. The
annualized return on average stockholders' equity was 9.01% in 1996 and 8.5% in
1995.
Net Interest Income
Net interest income is the difference between interest and fees earned
on loans, securities and other interest-earning assets (interest income) and
interest paid on deposits (interest expense) and represents the principal source
of earnings for the Company. Net interest income is affected by changes in the
volume of interest-earning assets and interest-bearing liabilities, and the
rates earned or paid thereon.
For the purposes of this earnings analysis, net interest income has
been adjusted to a fully taxable equivalent basis for certain investments
included in interest-earning assets. Interest-earning assets, including loans,
have been presented as averages, net of unearned income.
Net interest income on a fully tax equivalent basis for the three
months ended March 31, 1996 increased 9.6% to $672,000 from $613,000 for the
same period in 1995. The annualized net interest margins between
interest-earning assets and interest-bearing liabilities increased to 6.04% for
the three months ended March 31, 1996 from 5.94% for
40
<PAGE>
the three months ended March 31, 1995. The annualized net yield on
interest-earning assets was 4.71% in 1996 compared to 4.84% in 1995. The net
interest margin and net yield on interest-earning assets are affected by several
factors. Among them are Federal Reserve Bank monetary policies, competitive
pressures, and the composition of interest-earning assets and interest-bearing
liabilities. The annualized net interest margins and the annualized net yields
on interest-earning assets for 1996 and 1995 remained virtually consistent when
considering the stabilization of interest rates in 1995 and 1996.
Interest income on a fully tax equivalent basis increased approximately
$114,000 to $1.04 million from $930,000 for the three months ended March 31,
1996 form the comparable period in 1995. This increase was attributable
primarily to the increase in the average interest-earning assets of 7.7% for the
period ended March 31, 1996 as compared to the period ended March 31, 1995, and
the increase in the yield on interest-earning assets. The annualized yield on
interest-earning assets for the three months ended March 31, 1996 and 1995 was
9.39% and 9.01%, respectively. The mix of interest-earning assets relative to
loans increased from 77.6% for the three months ended March 31, 1995 to 82.9%
for the three months ended March 31, 1996. The annualized yield on average loans
was 10.11% for the three months ended March 31, 1996 compared to 10.08% for the
three months ended March 31, 1995. For the periods ended March 31, 1996 and
1995, investment securities represented 10.9% and 13.5%, respectively, of
interest-earning assets. For the three months ended March 31, 1996 and 1995, the
annualized yield on investment securities on a fully tax equivalent basis was
6.17% and 5.61%, respectively. Interest-earning assets as a percentage of total
average assets increased from 87.3% in 1995 to 88.0% in 1996.
Interest expense increased approximately $55,000 or 17.4% to
approximately $372,000 for the three months ended March 31, 1996, from
approximately $317,000 for the comparable 1995 period. The fluctuations in
interest expense from 1995 to 1996 were attributable to the increases in the
cost of funds, changes in the mix of interest-bearing liabilities, and increases
in the volume of interest-bearing liabilities. The annualized average rate paid
on interest-bearing liabilities was 4.68% and 4.17% for the three months ended
March 31, 1996 and 1995, respectively. During the three months ended March 31,
1996, the volume of interest-bearing liabilities averaged $31.8 million, or 4.6%
higher than the $30.4 million average for the three months ended March 31, 1995.
Interest-bearing demand deposits represented 30.7% of interest-bearing
liabilities during the 1996 period as compared to 35.6% during the period ended
March 31, 1995. The annualized yields paid on these deposits were 3.12% and
2.96% for the three months ended March 31, 1996 and 1995, respectively. Time
deposits represented 63.1% of interest-bearing liabilities during the 1996
period as compared to 58.8% during the period ended 1995. The annualized yields
paid on time deposits during the three months ended March 31, 1996 and 1995 were
5.64% and 5.04%, respectively.
Noninterest Income
The Company derives a significant portion of its noninterest income
from traditional retail banking services including various account charges and
service fees.
Noninterest income from deposit accounts is significantly affected by
competitive pricing of these services and the volume of noninterest-bearing
accounts. Service charge income was $99,000 and $85,000 for the three months
ended March 31, 1996 and 1995, respectively. Net gains realized on the sale of
mortgage loans and the guaranteed portion of U.S. Small Business Administration
loans in the secondary market were $11,000 and $5,000 for the three months ended
March 31, 1996 and 1995, respectively. The gains/losses realized on the sale of
investment securities were not significant for the three months ended March 31,
1996 and 1995.
Noninterest Expense
Noninterest expense was $550,000 for the three months ended March 31,
1996, 6.1% higher than the three months ended March 31, 1995. Noninterest
expense for the three months ended March 31, 1995 was $518,000. Annualized
noninterest expense as a percentage of average assets was 4.35% in 1996 and
4.38% in 1995. Salaries and employee benefits amounted to $273,000 for the three
months ended March 31, 1996 and 1995. Occupancy expense was $41,000 in 1996 and
$37,000 in 1995. Other expense increased $28,000 or 13.2% to $237,000 for the
three months ended March 31, 1996. Other expense for the three months ended
March 31, 1995 was $209,000.
41
<PAGE>
Income Taxes
The provision for income taxes for the three months ended March 31,
1996 and 1995 was $82,000 and $62,000, respectively. The Company is subject to
federal and state taxes at combined rates of approximately 38%. These rates are
reduced or increased for certain nontaxable income or nondeductible expenses.
There were no tax credits or loss carryforwards available in 1996 or
1995 for financial reporting purposes. The Company accounts for income taxes
under Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, which requires an asset and liability approach for financial accounting
and reporting for income taxes.
Review of Financial Condition -- For the Period Ended March 31, 1996 as Compared
to the Period Ended March 31, 1995
Securities
Securities Held to Maturity: The Company accounts for its investment
securities under Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities. Securities held to
maturity are those securities that management has the ability and intent to hold
to maturity, and are reported at amortized cost. Securities classified as held
to maturity amounted to $640,000 and $2,026,000 at March 31, 1996 and 1995,
respectively. Securities held to maturity at March 31, 1996 consisted solely of
state and municipal securities, and at March 31, 1995, this classification
consisted of U.S. Government agency securities and state and municipal
securities.
Using the carrying value at March 31, 1996, scheduled maturities for
securities held to maturity were 42% of the total classification in one year or
less, 39% in one to five years, and 19% in five to ten years.
Securities Available for Sale: Securities available for sale represent
those securities that the Company intends to hold for an indefinite period of
time or that may be sold in response to changes in interest rates, liquidity
needs, prepayment risk and other similar factors. These securities are recorded
at market value with unrealized gains or losses, net of any tax effect,
reflected as a component of shareholders' equity. Securities available for sale
totaled $4.4 million and $3.4 million at March 31, 1996 and 1995, respectively.
This increase was partially a result of a reclassification from securities held
to maturity of $1.1 million in December 1995. The reclassification was a result
of a one-time exemption granted by the Financial Accounting Standards Board. The
exemption permitted the movement of selected securities between classifications
without jeopardizing the classification of all securities. Net unrealized
depreciation on securities available for sale was $64,000 and $178,000, net of
taxes, at March 31, 1996 and 1995, respectively. Securities available for sale
consisted primarily of U.S. Government agency securities and state and municipal
securities.
Using the carrying value at March 31, 1996, scheduled maturities for
securities available for sale were 25% of the total classification in one to
five years, 56% in five to ten years, 15% after ten years, and 4% with no stated
maturity.
Loans
Loans, net of unearned interest, increased $4.7 million or 14.5% to
$36.8 million at March 31, 1996 from $32.1 million for the comparable 1995
period. The allowance for loan losses was $507,000 and $461,000 as of March 31,
1996 and 1995, respectively. The most significant concentration of loans
consisted of those secured by real estate.
The Company seeks to maintain adequate liquidity and minimize exposure
to interest rate volatility. Contractual maturities may vary significantly from
actual maturities due to loan extensions, early pay-offs due to refinancing or
other factors. Fluctuations in interest rates are also a major factor in early
loan pay-offs. The uncertainties, particularly with respect to interest rates,
of future events make it difficult to predict actual maturities. The Company has
not maintained records related to trends of early-payoff since management does
not believe such trends would present any significantly more accurate estimate
of actual maturities than the contractual maturities.
42
<PAGE>
Deposits
Total deposits increased $1.9 million or 4.6% to $43.6 million at March
31, 1996 from $41.7 million for the comparable 1995 period. Time deposits at
March 31, 1996 and 1995 were $20.7 million and $18.3 million, respectively. Time
deposits represent 47.5% and 44.0% of total deposits at March 31, 1996 and 1995,
respectively. Interest bearing demand deposits decreased $1.2 million or 12.1%
to $8.5 million for the period ended March 31, 1996 from $9.7 million for the
comparable period in 1995. Savings as a percentage of total deposits remained at
a consistent level in 1995 to 1996. Savings totaled $2.1 million at March 31,
1996 and $1.8 million at March 31, 1995. Demand deposits were $12.4 million and
$11.9 million at March 31, 1996 and 1995, respectively.
Review of Results of Operations - For the Fiscal Years Ended December 31, 1995,
1994 and 1993
Earnings Summary
The Company reported net income of approximately $583,000 or $0.43 per
share for the year ended December 31, 1995, compared to net income of
approximately $610,000 or $0.47 per share for the year ended December 31, 1994.
Net income for 1993 was approximately $487,000 or $0.42 per share.
Net income decreased 4.6% in 1995, increased 25.4% and 57.0% in 1994
and 1993, respectively. The most significant factors affecting net income for
the periods mentioned are highlighted below.
- Average loan growth in 1995 of 1.8% following an increase of 6.1%
in 1994.
- An increase in the average rate on average loans, net of unearned
interest, from 9.14% in 1993 to 10.49% in 1995.
- Maintenance of high asset quality and reserve coverage ratios. Net
recoveries were approximately $73,000 in 1995 while in 1994 net
charge-offs were approximately $91,000 or 0.28% of average net
loans.
- In recognition of these low net charge-offs, no loan provisions
were made in the years ending December 31, 1995 and 1994. The
provision for loan losses was $30,000 for the year ending December
31, 1993.
- Noninterest expenses as a percent of average assets were reduced to
4.4% in 1995 from 4.6% in 1994.
- Included in noninterest income were the gains on the sale of
mortgage loans and the sale of the guaranteed portion of U.S. Small
Business Administration loans in the secondary market. These
amounts totaled $69,000, $203,000, and $276,000 for the years
ending December 31, 1995, 1994, and 1993, respectively.
Net earnings in 1995 resulted in a return on average assets of 1.21%
compared to 1.28% and 1.10% during 1994 and 1993, respectively. The return on
average stockholders' equity was 10.08% in 1995, 11.63% in 1994, and 11.92% in
1993.
Net Interest Income
Net interest income is the difference between interest and fees earned
on loans, securities and other interest-earning assets (interest income) and
interest paid on deposits (interest expense) and represents the principal source
of earnings for the Company. Net interest income is affected by changes in the
volume of interest-earning assets and interest-bearing liabilities, and the
rates earned or paid thereon.
Net interest income on a fully tax equivalent basis increased 4.4% to
$2.56 million in 1995 from $2.46 million in 1994 and 21.3% in 1994 from $2.03
million in 1993. The net interest margin between interest-earning assets and
interest-bearing liabilities increased to 6.09% for the year ended December 31,
1995 from 5.86% for the year ended December 31, 1994. The net interest margin in
1993 was 5.25%. The net yield on interest-earning assets was 4.85%
43
<PAGE>
in 1995 compared to 4.97% in 1994 and 4.37% in 1993. The net interest margin and
net yield on interest-earning assets are affected by several factors. Among them
are Federal Reserve Bank monetary policies, competitive pressures, and the
composition of interest-earning assets and interest-bearing liabilities. After
declining consistently from 1989 through 1992 and remaining virtually flat
throughout 1993, short-term interest rates increased dramatically in 1994 and
continued to increase into late 1995 before starting to decline. Net interest
margins remained virtually flat from 1993 to 1994, while increasing competitive
pressures resulted in an increase in cost of funds in 1995. This increase is
primarily responsible for the decrease in the net interest margin from 1994 to
1995.
Interest income on a fully tax equivalent basis increased approximately
$401,000 to $4.01 million for the year ended December 31, 1995 from $3.61
million for the comparable period in 1994. Interest income on a fully equivalent
tax basis for 1993 was $3.21 million. These increases were attributable
primarily to the increases in the average interest-earning assets of 0.4% and
8.3% for the years ended December 31, 1995 and 1994, respectively, and the
increases in the yield on interest-earning assets. The yield on interest-earning
assets for the years ended December 31, 1995, 1994, and 1993 was 9.51%, 8.60%,
and 8.29%, respectively. The mix of interest-earning assets relative to loans
increased from 77.9% for the year ended December 31, 1994 to 79.0% for the year
ended December 31, 1995. The yield on average loans was 10.49% for the year
ended December 31, 1995 compared to 9.53% and 9.14% for the comparable periods
ended December 31, 1994 and 1993, respectively. For the year ended December 31,
1995, investment securities represented 12.6% of average interest-earning
assets. For the comparable 1994 and 1993 periods, investment securities
represented 13.8% and 13.1%, respectively, of average interest-earning assets.
For the years ended December 31, 1995, 1994, and 1993, the yield on investment
securities on a fully tax equivalent basis was 5.90%, 5.84%, and 6.00%,
respectively. Interest-earning assets as a percentage of total average assets
increased from 87.3% in 1993 to 87.6% in 1994 to 87.4% in 1995.
Interest expense increased approximately $294,000 or 25.6% to
approximately $1.44 million for the year ended December 31, 1995, from
approximately $1.15 million for the comparable 1994 period. Interest expense for
1993 was $1.18 million. The fluctuations in interest expense from 1993 through
1995 were attributable to the volatile interest rate environment, changes in the
mix of interest-bearing liabilities, and changes in the volume of
interest-bearing liabilities. The average rate paid on interest-bearing
liabilities was 4.66%, 3.63%, and 3.94% for the years ended December 31, 1995,
1994 and 1993, respectively. During the year ended December 31, 1995, the volume
of interest-bearing liabilities averaged $31.0 million, or 2.3% less than the
$31.7 million average for the year ended December 31, 1994. The volume of
interest-bearing liabilities averaged $30.0 million in 1993. Interest-bearing
demand deposits represented 34.0% of interest-bearing liabilities for the year
ended December 31, 1995 as compared to 34.1% and 27.4% for the years ended
December 31, 1994 and 1993, respectively. The yields paid on these deposits were
3.32%, 2.83% and 2.79% for the years ended December 31, 1995, 1994, and 1993,
respectively. Time deposits represented 59.8% of interest-bearing liabilities
for the year ended December 31, 1995 as compared to 59.5% and 67.8% for the
years ended December 31, 1994 and 1993, respectively. The yields paid on time
deposits during the years ended December 31, 1995, 1994, and 1993 were 5.54%,
4.12% and 4.47%, respectively.
44
<PAGE>
AVERAGE BALANCES AND INTEREST RATES, INTEREST YIELD/RATES ON FULLY TAXABLE
EQUIVALENTS
(Table 1)
(In Thousands)
The following table details average balances of interest-earning assets and
interest-bearing liabilities, the fully taxable equivalent amount of interest
earned/paid thereon, and the fully taxable equivalent yield/rate for each of the
three years ended December 31, 1995.
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993
------------------------------ ------------------------------- ---------------------------------
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
Assets
Interest-earning assets:
Loans, net of unearned income $ 33,293 $ 3,491 10.49% $ 32,702 $ 3,118 9.53% $ 30,827 $ 2,819 9.14%
Investment securities -
Taxable 3,609 201 5.57 4,060 222 5.47 4,348 250 5.75
Nontaxable 1,714 113 6.59 1,710 115 6.73 717 54 7.53
Federal funds sold 3,360 195 5.80 3,252 141 4.34 2,547 77 3.02
Interest-bearing deposits 158 8 5.06 232 11 4.74 287 10 3.48
Total interest-earning assets 42,134 $ 4,008 9.51% 41,956 $ 3,607 8.60% 38,726 $ 3,210 8.29%
Reserve for possible loan losses (472) (526) (549)
Other assets 6,557 6,444 6,170
Total assets $ 48,219 $ 47,874 $ 44,347
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings deposits $ 1,759 $ 53 3.01% $ 1,858 $ 54 2.91% $ 1,312 $ 37 2.82%
Interest-bearing demand
deposits 10,530 350 3.32 10,830 306 2.83 8,236 230 2.79
Time deposits 18,535 1,026 5.54 18,865 777 4.12 20,355 900 4.42
Total deposits 30,824 1,429 4.64 31,553 1,137 3.60 29,903 1,167 3.90
Other borrowings 168 15 8.93 156 13 8.33 140 9 6.43
Total interest-bearing liabilities 30,992 1,444 4.66% 31,709 1,150 3.63% 30,043 1,176 3.92%
Demand deposits 10,792 10,477 9,770
Other liabilities 656 440 450
Total liabilities 42,440 42,626 40,263
Stockholders' equity 5,779 5,248 4,084
Total liabilities and
stockholders' equity $ 48,219 $ 47,874 $ 44,347
Net interest income $ 2,564 $ 2,457 $ 2,034
Net interest margin 6.09% 5.86% 5.25%
Net interest spread 4.85% 4.97% 4.37%
45
</TABLE>
<PAGE>
Reserve and Provision for Possible Loan Losses
The provision for possible loan losses was $ -0- in 1995 and 1994, and $
30,000 in 1993. Table 2, "Reserve for Possible Loan Losses", summarizes
information concerning the reserve for possible loan losses for the five years
ended December 31, 1995. Management's estimate of the reserve for possible loan
losses and the provision for possible loan losses is based on evaluation of
collectibility of loans, past loan loss experience, changes in the nature and
volume of the loan portfolio, current economic conditions that may affect a
borrower's ability to pay, review of specific problem loans, and the
relationship of the reserve for possible loan losses to outstanding loans.
Net charge-offs (recoveries) for the year ended December 31, 1995 total $
(73,000) or (.22)% of average net loans, a decrease of $ 164,000 from $ 91,000
or .28% of net loans for the year ended December 31, 1994. The net charge-offs
for 1993, 1992 and 1991 were $ 76,000, $ 163,000 and $ 262,000, respectively.
Management considers the allowance for loan losses as of December 31, 1995 to be
adequate.
RESERVE FOR POSSIBLE LOAN LOSSES
(Table 2)
(In Thousands)
The following table summarizes information concerning the allowance for
loan losses:
<TABLE>
<C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
-------- -------- -------- -------- ------
Net Loans Outstanding - Year End $ 36,587 $ 31,760 $ 32,002 $ 28,725 $31,779
Average Net Loans - During Year $ 33,293 $ 32,707 $ 30,827 $ 28,133 $32,421
Allowance for loan losses:
Balance - Beginning of Year $ 431 $ 522 $ 568 $ 621 $ 497
Provision Charged to Expense -0- -0- 30 110 386
Recoveries on Loans Previously
Charged Off 89 57 102 36 71
Loans Charged Off 16 148 178 199 333
Balance - End of Year $ 504 $ 431 $ 522 $ 568 $ 621
For the Period:
Net charge-offs (recoveries) as % of
average loans (0.22%) 0.28% 0.25% 0.57% 0.81%
Provision for loan losses as a % of net
charge-offs - - 39.47% 67.48% 147.83%
Provision for loan losses as a % of net
average loans - - 0.09% 0.39% 1.19%
Period End:
Allowance as a % of net loans 1.38% 1.35% 1.63% 1.98% 1.95%
Allowance as a % of non-performing loans
and loans more than 90 days past due 1,326.32% 64.61% - 73.57% 32.19%
</TABLE>
46
<PAGE>
Noninterest Income
The Company derives a significant portion of its noninterest income from
traditional retail banking services including various account charges and
service fees.
Noninterest income from deposit accounts is significantly affected by
competitive pricing of these services and the volume of various deposit
accounts. Service charge income decreased 6.2% to $364,000 in 1995 from $388,000
in 1994 and 2.5% in 1994 from $399,000 in 1993. Net gains realized on the sale
of mortgage loans and the guaranteed portion of U.S. Small Business
Administration loans in the secondary market were $69,000, $203,000, and
$276,000 for the years ended December 31, 1995, 1994, and 1993, respectively.
The gains realized on the sale of investment securities were not significant in
the years ended December 31, 1995 and 1994; however, gains realized on the sale
of investment securities were $112,000 for the year ended December 31, 1993.
Table 3, which follows, presents an analysis of the components of
noninterest income.
NONINTEREST INCOME
(Table 3)
(In Thousands)
The following table presents an analysis of noninterest income for 1995,
1994 and 1993 together with the amount and percent change form the prior year
for 1995 and 1994:
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C>
Change from Prior Year
-------------------------------------------------
Year Ended 12/31 1995 1994
---------------------------- ---------------------- ------------------------
1995 1994 1993 Amount % Amount %
-------- ------- ------- ---------- ---------- ----------- -----------
Service charges $ 364 $ 388 $ 399 $ (24) (6.18%) $ (11) (2.76%)
Net gains from sale of loans 69 203 276 (134) 66.01% (73) (26.44%)
Customer service fees and other income 37 31 51 6 19.35% (20) (39.21%)
Loss on trading securities 0 0 0 - - - -
Net investment securities gains (losses) (3) -0- 112 (3) 100.00% (112) (100%)
Total noninterest income $ 467 $ 622 $ 838 $ (155) 24.91% $ (216) 25.77%
</TABLE>
Noninterest Expense
Noninterest expense was $2,112,000 in 1995, 4.6% lower than 1994.
Noninterest expense for the years ending December 31, 1994 and 1993 was
$2,214,000 and $2,059,000, respectively. Noninterest expense as a percentage of
average assets was 4.38% in 1995 and 4.62% in 1994 and 1993. Salaries and
employee benefits decreased $65,000 or 5.7% in 1995 and increased $25,000 or
2.3% in 1994. Occupancy expense was $149,000 in 1995, $137,000 in 1994, and
$124,000 in 1993. Other expense decreased $49,000 or 5.2% to $896,000 for the
year ended December 31, 1995 from $945,000 for the comparable 1994 period. Other
expenses for the year ended December 31, 1993 were $829,000.
47
<PAGE>
NONINTEREST EXPENSE
(Table 4)
(In Thousands)
The following table presents an analysis of noninterest expense for
1995, 1994 and 1993 together with the amount and percent change from the prior
year for 1995 and 1994:
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Change from Prior Year
---------------------------------------------------
Year Ended 12/31 1995 1994
---------------------------- ----------------------- --------------------------
1995 1994 1993 Amount % Amount %
-------- -------- -------- ----------- ---------- ----------- -------------
Salaries and employee benefits $ 1,067 $ 1,132 $ 1,106 $ (65) (5.74) $ 26 2.35%
Occupancy expense 149 137 124 12 8.76 13 10.48
Equipment and data processing expense 247 206 162 41 19.90 44 27.16
Regulatory insurance and fees 66 105 104 (39) (37.14) 1 0.96
Other expenses:
Advertising and promotion 57 66 37 (9) (13.64) 29 78.37
Directors fees 84 78 85 6 7.69 (7) (8.23)
General insurance 33 36 41 (3) (8.33) (5) (12.19)
Other real estate expenses and charges -0- 33 46 (33) 100.00 (13) (28.26)
Postage 35 32 34 3 9.37 (2) (5.88)
Professional fees 111 107 77 4 3.74 30 38.96
Supplies 62 64 64 (2) (3.12) -0- -0-
Telephone 40 35 34 5 14.28 1 2.94
Other 161 183 145 (22) (12.02) 38 26.21
Total other expenses 583 634 563 (51) (8.04) 71 12.61
Total noninterest expense $ 2,112 $ 2,214 $ 2,059 $ (102) (4.61%) $ 155 7.52%
</TABLE>
Income Taxes
The provision for income taxes for the years ended December 31, 1995, 1994,
and 1993 was $297,000, $216,000, and $277,000, respectively. The Company is
subject to federal and state taxes at combined rates of approximately 38%. These
rates are reduced or increased for certain nontaxable income or nondeductible
expenses.
There were no tax credits or loss carryforwards available in 1995, 1994, or
1993 for financial reporting purposes. Effective January 1, 1993, the Company
adopted Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes, which requires an asset and liability approach for financial
accounting and reporting for income taxes. There was no cumulative effect on net
income for 1993 for the change in accounting principle.
Loans
Loans, net of unearned interest, increased $4.8 million or 15.2% to $36.6
million at December 31, 1995 from $31.8 million for the comparable 1994 period.
Loans, net of unearned interest, was $32.0 million at December 31, 1993. The
allowance for loan losses was $504,000 for 1995, $431,000 for 1994, and $522,000
for 1993. The most significant concentration of loans consisted of those secured
by real estate.
48
<PAGE>
A summary of the loan portfolio at December 31, follows (in thousands):
1995 1994 1993
-------- -------- ------
Commercial real estate $ 23,027 $ 21,228 $ 19,021
Construction and development 2,859 1,135 2,432
Commercial 9,161 8,081 8,197
Consumer, individual and other 1,549 1,329 2,387
Unearned income (9) (13) (35)
Total loans, net of unearned income $ 36,587 $ 31,760 $ 32,002
A summary of loan interest rate sensitivity at December 31, 1995 follows
(in thousands):
Fixed rate loan maturity:
Three months or less $ 1,164
Over three through twelve months 4,870
Over one through five years 11,092
Over five years 1,693
Variable rate loans repricing in three months or less 16,818
Variable rate loans repricing annually or more frequently, but less
frequently than quarterly 950
Total loans, net of unearned income $ 36,587
Nonperforming Assets
Table 5, which follows, summaries the Company's nonperforming assets and
loans past due 90 days or more and accruing as of December 31 for the last five
years (in thousands).
NONPERFORMING ASSETS
(Table 5)
(In Thousands)
<TABLE>
<C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
------- ------ ------- ------- ------
Nonaccrual loans $ 38 $ 667 $ -0- $ 412 $1,036
Other real estate owned -0- -0- $ 301 360 893
Accruing loans 90 days or
more past due -0- -0- -0- -0- -0-
Total nonperforming assets
and accruing loans 90 days
or more past due $ 38 $ 667 $ 301 $ 772 $ 1,929
Provision for loan losses $ -0- $ -0- $ 30 $ 110 $ 386
Net (Charge-offs) recoveries $ 73 $ (91) $ (76) $ (163) $ (262)
</TABLE>
49
<PAGE>
Investment Securities
Securities Held to Maturity: Effective January 1, 1994, the Company
adopted Statement of Financial Accounting Standards No. 115, Accounting for
Certain Investments in Debt and Equity Securities. Securities held to maturity
are those securities that management has the ability and intent to hold to
maturity, and are reported at amortized cost. Securities classified as held to
maturity amounted to $640,000 and $2,284,000 at December 31, 1995 and 1994,
respectively. Securities held to maturity at December 31, 1995 consisted solely
of state and municipal securities, and at December 31, 1994, this classification
consisted of U.S. Government agency securities and state and municipal
securities.
Prior to January 1, 1994, all investment securities were reported at
amortized cost. Investment securities were carried at $5.0 million at December
31, 1993.
Securities Available for Sale: Securities available for sale represent
those securities that the Company intends to hold for an indefinite period of
time or that may be sold in response to changes in interest rates, liquidity
needs, prepayment risk and other similar factors. These securities are recorded
at market value with unrealized gains or losses, net of any tax effect,
reflected as a component of shareholders' equity. Securities available for sale
totaled $4.6 million and $3.2 million at December 31, 1995 and 1994,
respectively. This increase was partially a result of a reclassification from
securities held to maturity of $1.1 million in December 1995. The
reclassification was a result of a one-time exemption granted by the Financial
Accounting Standards Board. The exemption permitted the movement of selected
securities between classifications without jeopardizing the classification of
all securities. Net unrealized depreciation on securities available for sale was
$27,000 and $258,000, net of taxes, at December 31, 1995 and 1994, respectively.
Securities available for sale consisted primarily of U.S. Government agency
securities and state and municipal securities.
Using the carrying value at December 31, 1995, scheduled maturities for
securities held to maturity were 42% of the total classification in one year or
less, 39% in one to five years, and 19% in five to ten years. Scheduled
maturities for securities available for sale were 39% of the total
classification in one to five years, 44% in five to ten years, 14% after ten
years, and 3% with no stated maturity.
INVESTMENT SECURITIES HELD TO MATURITY
The amortized cost and related approximate fair value of investment
securities held to maturity were as follows:
<TABLE>
<C> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ----------
December 31, 1995
State and municipal securities $ 640 $ -0- $ (4) $ 636
</TABLE>
The amortized cost and approximate fair value of investment securities held
to maturity at December 31, 1995, by contractual maturity, were as follows:
Amortized Fair
Cost Value
---------- ---------
Due in one year or less $ 270 $ 269
Due from one year to five years 250 249
Due from five years to ten years 120 118
Due after ten years -0- -0-
Total $ 640 $ 636
50
<PAGE>
INVESTMENT SECURITIES AVAILABLE FOR SALE
The amortized cost and approximate fair value of available-for-sale securities
at December 31, 1995 are summarized as follows:
<TABLE>
<C> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ----------- ---------- ------
December 31, 1995
U.S. Government agencies securities $3,570 $ 2 $ (64) $ 3,508
State and municipal securities 894 19 -0- 913
Other securities 147 -0- -0- 147
Debt securities -0- -0- -0- -0-
Equity securities -0- -0- -0- -0-
Total Investment Securities
Available for Sale $4,611 $ 21 $ (64) $ 4,568
</TABLE>
Investment securities classified as available-for-sale have contractual
maturities as of December 31, 1995, as follows:
Amortized Fair
Cost Value
--------- ------
No stated maturity $ 147 $ 147
Due from one to five years 1,798 1,772
Due from five to ten years 2,022 1,989
Due after ten years 644 660
Total $4,611 $ 4,568
The following is a summary of book values, yields and maturities on U.S.
Government agencies securities at December 31, 1995 (in thousands):
Carrying
Value Yield
-------- ------
Fixed rate:
U.S. Government agencies securities:
Within one year $ -0- $ -
Over one through five years 2,678 5.88%
Total $ 2,678
Carrying
Value
--------
Variable rate:
U.S. Government agencies securities $ 830
51
<PAGE>
Deposits
Total deposits increased $1.6 million or 3.7% to $44.5 million at December
31, 1995 from $42.9 million for the comparable 1994 period. Total deposits at
December 31, 1993 were $41.5 million. Time deposits at December 31, 1995, 1994,
and 1993 were $21.1 million, $19.2 million, and $19.7 million, respectively.
Time deposits represented 47.4%, 44.6%, and 47.5% of total deposits at December
31, 1995, 1994, and 1993, respectively. Interest bearing demand deposits
decreased 8.3% in 1995 to $10.3 million while increasing 17.2% in 1994 to $11.2
million. Savings as a percentage of total deposits remained virtually flat from
1993 through 1995. Savings totaled $1.9 million at December 31, 1995 and $1.7
million at December 31, 1994, and 1993. Demand deposits were $11.3 million,
$10.9 million, and $10.6 million at December 31, 1995, 1994, and 1993,
respectively.
A summary of the daily average balance of deposits follows (in thousands):
1995 1994 1993
-------- -------- -------
Noninterest bearing demand $ 10,792 $10,477 $ 9,770
Interest bearing demand 10,530 10,830 8,236
Savings 1,759 1,858 1,312
Time 18,535 18,865 20,355
Total $ 41,616 $ 42,030 $ 39,673
Maturities of time deposits of $ 100,000 or more at December 31, 1995 are as
follows (in thousands):
Three months or less $ 1,975
Over three through twelve months 1,680
Over one through five years 922
Total $ 4,577
Notes Payable and Debentures
Notes payable are summarized as follows at December 31: (in thousands)
1995 1994
----- -----
ESOP loan with quarterly principal payments of $ 2,621,
plus interest at prime + .5%, maturing November 2003,
secured by 21,057 shares of Company stock $ 84 $ 94
ESOP loan with quarterly principal payments of $ 5,792,
plus interest at prime, maturing February 1998, secured
by 75,780 shares of Company stock 23 46
ESOP loan with quarterly principal payments of $ 1,283,
plus interest at prime, maturing April 2001, secured by
15,581 shares of Company stock 28 33
ESOP loan with quarterly principal payments of $ 257,
plus interest at prime, maturing March 2002, secured
by 3,426 shares of Company stock 6 7
ESOP loan with quarterly principal payments of $ 257,
plus interest at prime, maturing December 2001, secured
by 3,236 shares of Company stock 7 8
----- -----
$ 148 $ 188
===== =====
52
<PAGE>
Following are maturities of notes payable for each of the next five years
at December 31, 1995:
1996 $ 40
1997 18
1998 18
1999 18
2000 18
Thereafter 36
-----
Total $ 148
=====
Liquidity
No trends in the sources or uses of cash by the Company are expected to
have an adverse impact on the Bank's liquidity position. Management believes
that the level of liquidity is sufficient to meet current and future liquidity
requirements.
On a long-term basis, the ability of the Company (on a separate company
basis) to pay its expenses, retire its debt and pay future dividends is
dependent on dividends paid to the Company by its banking subsidiary. The
banking subsidiary is also subject to capital maintenance requirements imposed
by regulatory authorities. The banking subsidiary was in compliance with all
such requirements at December 31, 1995, and management anticipates that such
requirements will continue to be met while funding the Company through the
payment of dividends.
Capital
The following table illustrates the Bank's capital ratios at December
31:
1995 1994
------- ------
Liberty Bank:
Tier I risk based capital ratio 13.88% 14.22%
Tier II risk based capital ratio 15.13 15.44
Leverage ratio 10.95 10.46
INFORMATION ABOUT WHITNEY
General
Whitney, a Louisiana corporation, is a multi-bank holding company
registered pursuant to the Bank Holding Company Act of 1956. It became an
operating entity in 1962 with Whitney National Bank ("Whitney Bank") as its only
significant subsidiary. Whitney Bank, a national banking association
headquartered in Orleans Parish, Louisiana, has been engaged in the general
banking business in the City of New Orleans continuously since 1883. Whitney
Bank currently offers banking and trust services through 59 branches
located in south Louisiana, including branches in the metropolitan areas of
New Orleans (including suburban Jefferson and St.Tammany Parishes), Baton Rouge,
Lafayette and Morgan City, and a foreign branch on Grand Cayman in the
British West Indies. In December 1994, Whitney established the Whitney Bank of
Alabama, and through this new, Alabama state-chartered banking subsidiary,
became the first Louisiana bank holding company to enter the Alabama
market through its acquisition of the Mobile area operations of The Peoples
Bank, Elba, Alabama on February 17, 1995. Whitney Bank of Alabama currently
operates eight branches and one loan production office serving metropolitan
Mobile, Alabama and the Alabama Gulf Coast region.
53
<PAGE>
Whitney Bank and Whitney Bank of Alabama (Whitney's two bank
subsidiaries) are full-service commercial banks engaged in commercial and retail
banking and in the trust business, including the taking of deposits, the making
of secured and unsecured loans, the financing of commercial transactions, the
delivery of corporate, pension and personal trust and investment services and
safe deposit rentals. Whitney Bank also issues credit cards and is active as a
correspondent for other banks.
During 1995, Whitney established Whitney Community Development
Corporation ("WCDC"), a for-profit community development corporation
incorporated under the laws of the State of Louisiana. WCDC is authorized to
make equity and debt investments in corporations or projects designed primarily
to promote community welfare, including the economic rehabilitation and
development of low-income areas by providing housing, services or jobs for
residents, or promoting small businesses that service low-income areas. The
initial capitalization of WCDC was $1,000,000.
WNB-Florida is a newly-formed, wholly-owned subsidiary of Whitney that
was organized under the National Banking Act to facilitate the Mergers and the
AB&T Merger. WNB-Florida will commence operations as a national bank
headquartered in Pensacola, Florida upon the first to occur of the Bank Merger
or the AB&T Merger. See "Unaudited Condensed Combined Pro Forma Financial
Statements."
At March 31, 1996, Whitney had consolidated total assets of
approximately $3.499 billion, consolidated total deposits of approximately
$2.768 billion and consolidated shareholders' equity of approximately $370
million. Whitney's and Whitney Bank's principal executive offices are located at
228 St. Charles Avenue, New Orleans, Louisiana 70130, and its telephone number
is (504) 586-7117.
On April 18, 1996, Whitney and WNB-Florida signed a definitive
agreement to acquire American Bank and Trust, a Florida state-chartered bank
doing business through its sole office in Pensacola, Florida. Under the terms of
that definitive agreement, shareholders and holders of any unexercised options
to acquire American Bank and Trust common stock will receive shares of Whitney
Common Stock having an aggregate value of approximately $10,250,000. See
"Unaudited Pro Forma Condensed Combined Financial Information." No assurance can
be given that Whitney's proposed acquisition of American Bank and Trust will be
consummated.
Whitney continues to explore opportunities to acquire financial
institutions as part of an expansion strategy that focuses on developing a
significant banking presence along the United States Gulf Coast from the
Texas-Louisiana border through the Florida panhandle. Discussions are
continually being carried on relating to such potential acquisitions. Whitney
may, after the date of this Proxy Statement-Prospectus, enter into one or more
acquisition agreements with one or more of such institutions; however, it is not
currently known whether Whitney's discussions will result in further
acquisitions or on what terms any such acquisitions would be made.
Market Prices of and Dividends Declared on Whitney Common Stock
Whitney Common Stock is included for quotation in the NASDAQ National
Market System under the symbol "WTNY." The following table sets forth, for the
periods indicated the high and low reported closing sale prices per share of
Whitney Common Stock as reported on the NASDAQ National Market System and the
quarterly dividends declared for each such period.
54
<PAGE>
Price Range of Common Stock and Quarterly Dividends
<TABLE>
<C> <C> <C> <C>
High Low Dividend
---- ---- --------
1994
First Quarter.............................................. $24 $21 1/2 $0.15
Second Quarter............................................. 27 1/4 21 3/4 0.15
Third Quarter.............................................. 28 1/2 25 3/4 0.17
Fourth Quarter............................................. 27 21 0.17
1995
First Quarter.............................................. $25 3/4 $22 $0.20
Second Quarter............................................. 27 3/8 24 0.20
Third Quarter.............................................. 34 26 3/4 0.20
Fourth Quarter............................................. 31 1/2 29 3/4 0.22
1996
First Quarter.............................................. $31 3/4 $29 3/4 $0.22
Second Quarter............................................. 31 3/4 29 3/4 0.25
Third Quarter............................................. 30 7/8 29 1/2 -
(through August 6, 1996)
</TABLE>
Incorporation of Certain Information about Whitney by Reference
The following documents, or the indicated portions thereof, have been
filed by Whitney with the Commission, and are incorporated by reference into
this Proxy Statement and Prospectus: Whitney's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 (the "1995 10-K"); Whitney's Form 10-K/A
(Amendment No. 1 to the 1995 10-K) filed with the Commission on July 3, 1996;
Whitney's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1996; Whitney's Current Report on Form 8-K filed with the Commission on January
19, 1996 (the "Form 8- K"); Whitney's Current Report on Form 8-K filed with the
Commission on January 26, 1996; Whitney's Current Report on form 8-K filed with
the Commission on March 25, 1996 (the "Citizens 8-K"); Whitney's Form 8-K/A
(Amendment No. 1 to the Citizens 8-K) filed with the Commission on May 21, 1996;
and the description of Whitney Common Stock set forth in Whitney's Registration
Statement under the Exchange Act, as updated and modified in its entirety by the
Form 8-K (File No. 0-1026).
In addition, all other documents that will be filed by Whitney with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") between the date of this Proxy
Statement and Prospectus and the date of the Meetings shall be deemed to be
incorporated herein by reference from the date of filing. See "Available
Information" and "Incorporation of Certain Documents by Reference" for
information with respect to securing copies of documents incorporated by
reference in this Proxy Statement and Prospectus.
Any statement contained in a document incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded to the
extent that a statement contained herein or in any other document subsequently
filed and incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Proxy Statement and Prospectus.
COMPARATIVE RIGHTS OF SHAREHOLDERS
If the shareholders of the Company and the Bank approve the Plan of
Merger and the Mergers are subsequently consummated, all shareholders of the
Company and the Bank, other than those exercising dissenters' rights, will
become shareholders of Whitney, and their rights will be governed by and be
subject to the Articles of Incorporation and Bylaws
55
<PAGE>
of Whitney rather than the Articles of Incorporation and Bylaws of the Company
and the Bank. The following is a description of the Whitney Common Stock and a
brief summary of certain of the principal differences between the rights of
shareholders of Whitney and those of the Company and the Bank not described
elsewhere herein.
Description of Whitney Common Stock
The authorized capital stock of Whitney consists of 40,000,000 shares
of Common Stock, no par value, of which 17,077,181 were outstanding on
June 30, 1996. The following description of Whitney's capital stock
is qualified in its entirety by reference to Whitney's Articles of Incorporation
and By-laws and to the applicable provisions of the LBCL.
Common Stock
Voting Rights - Non-cumulative Voting. Holders of Whitney Common Stock
are entitled to one vote per share on all matters to be voted on by the
shareholders. Holders of Whitney Common Stock do not have cumulative voting
rights. As a result, the holders of more than 50% of the Whitney Common Stock
may elect all of the directors.
Dividend Rights. Holders of outstanding Whitney Common Stock are
entitled to receive such dividends, if any, as may be declared by the Board of
Directors, in its discretion, out of funds legally available therefor.
Liquidation Rights. In the event of the liquidation of Whitney, the
holders of Whitney Common Stock are entitled to receive pro rata any assets
distributable to shareholders in respect of their shares.
Preemptive Rights. Holders of Whitney Common Stock have no preemptive
rights to subscribe for additional shares of capital stock.
Directors
The Board of Directors of Whitney is divided into five classes, as
nearly equal in number as possible, with members of each class to serve for five
years, and with one class being elected each year. Directors of Whitney must
also be shareholders of Whitney. Any director of Whitney may be removed from
office with or without cause only by the affirmative vote of at least 90% of the
voting power of Whitney present at a special meeting of the shareholders called
for that purpose. The quorum requirement for such a meeting is 90% of the total
voting power of Whitney present in person or by proxy at a special meeting
called for that purpose.
The LBCL permits corporations to (i) include provisions in their
articles of incorporation that limit the personal liability of directors and
officers for monetary damages resulting from breaches of the duty of care,
subject to certain exceptions, and (ii) indemnify directors and officers, among
others, in certain circumstances for their expenses and liabilities incurred in
connection with defending pending or threatened suits. Whitney's Articles of
Incorporation include a provision that eliminates the personal liability of
directors and officers to Whitney and its shareholders for monetary damages
resulting from breaches of the duty of care to the full extent currently
permitted by the LBCL and further provides that any amendment or repeal of that
provision will not affect the elimination or limitation of liability of an
officer or director with respect to conduct occurring prior to the time of such
amendment or appeal.
The Articles of Incorporation also provide for indemnification and
advancement of expenses of any officer, director, employee or agent of Whitney
for any action taken in good faith by that officer, director, employee or agent.
Indemnification in the case of actions by or in the right of Whitney shall be
limited to expenses actually and reasonably incurred in defense or settlement of
the action. The Board of Directors, in its discretion, may choose to provide
further indemnification to officers, directors, employees and agents of Whitney.
The Articles of Incorporation and By-laws authorize Whitney to maintain
insurance covering the actions of its officers, directors, employees and agents,
and its By-laws provide for indemnification to the fullest extent allowed under
the LBCL.
56
<PAGE>
No amendment to Whitney's Articles may amend any of the provisions
thereof relating to the Board of Directors unless such amendment receives the
affirmative vote of 90% of the voting power present at a shareholders meeting
for which there is a quorum as described above; provided, however, that such 90%
vote is not required for any amendment unanimously recommended to the
shareholders by the Board of Directors at a time when there is no Related Person
(as defined below).
Supermajority and Fair Price Provisions
Supermajority Provisions. The Articles of Incorporation contain certain
provisions designed to provide safeguards for shareholders when a Related Person
(as defined below) attempts to effect a Business Combination (as defined below)
with Whitney. In general, a Business Combination between Whitney and a Related
Person must be approved by the affirmative vote of at least 90% of the voting
power of Whitney present at a shareholders meeting, at which meeting at least
90% of the total voting power of Whitney must be present in person or by proxy
to constitute a quorum, unless certain minimum price and procedural requirements
are satisfied and the Board of Directors of Whitney has the opportunity to state
its recommendations to the shareholders in a proxy statement. If these
requirements are satisfied, only the affirmative vote of two-thirds of the
voting power present or represented at a shareholders meeting of Whitney (the
quorum for which would be the presence in person or by proxy of a majority of
the total voting power of Whitney) would be required.
A "Related Person" is defined as any person who, together with certain
persons related to him or it, is the beneficial owner of 10% or more of the
outstanding shares of Whitney stock entitled to vote in elections of directors.
The term "beneficial owner" includes persons directly or indirectly owning or
having the right to acquire or vote the stock of Whitney.
A "Business Combination" includes the following transactions: (1) any
merger or consolidation involving Whitney or its principal subsidiary; (2) any
sale or lease by Whitney or its principal subsidiary of all or a substantial
part of its assets; or (3) any sale or lease to Whitney or any of its
subsidiaries of any assets of any Related Person in exchange for securities of
Whitney or its principal subsidiary.
Fair Price Provisions. There is no requirement that 90% of the voting
power present of Whitney approve a Business Combination between a Related Person
and Whitney if all of the requirements described below are satisfied:
(1) Minimum Price Requirement. The cash, or fair market value of other
consideration, to be received per share by shareholders of Whitney in connection
with the Business Combination must bear the same or a greater percentage
relationship to the market price of Whitney Common Stock immediately prior to
the announcement of such Business Combination as the highest per share price
(including brokerage commissions and soliciting dealers' fees) that the Related
Person has theretofore paid for any of the shares of Whitney Common Stock
already owned by it bears to the market price of the Whitney Common Stock
immediately prior to the commencement of the acquisition of Whitney Common Stock
by the Related Person. In addition, the cash, or fair market value of other
consideration, to be received per share by shareholders of Whitney in such
Business Combination must not be less than (i) the highest per share price
(including brokerage commissions and soliciting dealers' fees) paid by the
Related Person in acquiring any of its holdings of Whitney Common Stock and (ii)
the earnings per share of Whitney Common Stock for the four full consecutive
fiscal quarters immediately preceding the record date for solicitation of votes
on such Business Combination, multiplied by the then price/earnings multiple (if
any) of the Related Person as customarily computed and reported in the financial
community.
(2) Procedural Requirements. The following procedural requirements must
be satisfied at all times after the Related Person becomes a Related Person: (i)
the Related Person shall have taken steps to ensure that Whitney's Board of
Directors included at all times representation by Continuing Directors (as
defined below) proportionate to the stockholdings of Whitney's shareholders not
affiliated with the Related Person; (ii) there shall have been no reduction in
the rate of dividends paid on the shares of Whitney Common Stock unless
otherwise approved by unanimous vote of the directors (iii) the Related Person
shall not have acquired any newly issued shares of Whitney stock, directly or
indirectly, except upon conversion of convertible securities acquired by it
prior to becoming a Related Person or as a result of a prorata stock dividend or
stock split; and (iv) the Related Person shall not have acquired any additional
shares
57
<PAGE>
of Whitney Common Stock or securities convertible into Whitney Common Stock
except as part of the transaction by which such Related Person became a Related
Person.
A "Continuing Director" includes a person who was a member of the Board
of Directors of Whitney elected by the shareholders prior to the time that a
Related Person acquired in excess of 10% of the stock of Whitney, or a person
recommended to succeed a Continuing Director by a majority of Continuing
Directors.
(3) Actions Prior to Becoming a Related Person. The Related Person
shall not have (i) received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees, pledges
or other financial assistance or tax credits provided by Whitney; or (ii) made
any major change in Whitney's business or equity capital structure without the
unanimous approval of the Board of Directors, in either case prior to the
consummation of the Business Combination.
(4) Proxy Statement. A proxy statement responsive to the requirements
of the Exchange Act shall be mailed to all shareholders of Whitney for the
purpose of soliciting shareholder approval of the Business Combination and shall
contain at the front thereof, in a prominent place, any recommendations as to
the advisability (or inadvisability) of the Business Combination that the
Continuing Directors, or any of them, may choose to state, and if deemed
advisable by a majority of the Continuing Directors, an opinion of a reputable
investment banking firm as to the fairness (or not) of the terms of such
Business Combination from the point of view of shareholders other than the
Related Person.
(5) Vote Necessary to Amend Articles of Incorporation. The Articles of
Incorporation provide that the affirmative vote of the holders of 90% or more of
the voting power present at a shareholders meeting for which there is a quorum
as described above is required in order to amend the fair price provisions,
provided that only a vote of the holders of a majority of the total voting power
of Whitney is required if the action to amend is unanimously recommended to
shareholders by the Board of Directors if all such directors are persons who
would be eligible to serve as Continuing Directors.
Purposes and Effect of Supermajority and Fair Price Provisions. The
fair price provisions are designed to prevent a purchaser from utilizing
two-tier pricing and similar inequitable tactics in the event of an attempted
takeover of Whitney. In the absence of the supermajority and fair price
provisions, a purchaser who acquired control of Whitney would be in a position,
by virtue of such control, to compel minority shareholders to accept a lower
price or a less desirable form of consideration than that given to other
shareholders.
The effect of the provisions is to encourage any Related Person or
potential Related Person interested in a Business Combination to negotiate the
terms of such transaction with the Board of Directors of Whitney prior to its
acquisition of a substantial amount of the capital stock of Whitney and in a
context that would provide adequate time and information so that all relevant
considerations would receive the requisite attention and, if necessary,
publicity. The Board of Directors of Whitney believes that the Continuing
Directors of Whitney are likely to be more knowledgeable than individual
shareholders in assessing the business and prospects of Whitney and are
accordingly better able to negotiate effectively with the Related Person. Also,
the provisions should help to protect those shareholders who by choice or for
lack of adequate opportunity did not sell shares in the first step of a
two-tiered offer, by ensuring that a fair price will be paid to the shareholders
in the second step of the two-tiered transaction if, but only if, the Related
Person elects to initiate a second step.
It should be noted, however, that tender offers are usually made at
premium prices above the prevailing market price of a company's stock. In
addition, acquisitions of stock by persons attempting to acquire control through
market purchases may cause the market price of the stock temporarily to reach
levels that are higher than would otherwise be the case. Because of the higher
percentage requirements for shareholder approval of any subsequent Business
Combination, and the possibility of having to pay a higher price to other
shareholders in such a Business Combination, it may become more costly for a
purchaser to acquire control of Whitney. The Articles of Incorporation may
discourage such purchases, particularly those for less than all of the shares of
Whitney, and may therefore deprive holders of the Whitney Common Stock of an
opportunity to sell their stock at a temporarily higher market price. A
potential purchaser of stock seeking to obtain control may also be discouraged
from purchasing stock because a supermajority shareholder vote would be required
in order to change or eliminate the fair price protection provisions in the
Articles of Incorporation.
58
<PAGE>
Although the supermajority and fair price provisions are designed to
assure fair treatment of all shareholders in the event of a takeover, the
provisions may also adversely affect the ability of shareholders to benefit from
certain transactions that are opposed by the Board of Directors of Whitney.
In certain instances, the fair price provisions, while providing
objective pricing criteria, could be arbitrary and not indicative of value. In
addition, a Related Person may be unable, as a practical matter, to comply with
all of the procedural requirements of the Articles of Incorporation. In these
circumstances, a potential purchaser would be forced either to negotiate with
the Continuing Directors and offer terms acceptable to them or to abandon the
proposed Business Combination.
Under the fair price provisions, in certain circumstances, a Business
Combination that might be attractive to some shareholders might never be
proposed to the shareholders by a Related Person, or if proposed, might not be
consummated. Further, the provisions may, under certain circumstances, give
holders of a minority of the voting power a veto power over a Business
Combination that the majority of shareholders may believe desirable and
beneficial. To Whitney's knowledge, on June 30, 1996, directors and
executive officers of Whitney beneficially owned approximately 1,647,000
shares (approximately 9.6%) of the Whitney Common Stock. Therefore, it
may be difficult or impossible for a Related Person to secure the
necessary supermajority vote without management's approval.
Since only the Continuing Directors will have the authority to avoid
the requirement of a supermajority shareholder vote to approve Business
Combinations if otherwise applicable, the provisions also may tend to insulate
management against the possibility of removal in the event of a takeover bid.
Further, if the Related Person were to replace all of the directors who were in
office on the date it became a Related Person (which it could not be assured of
accomplishing for at least four years because of the Board's classification),
there would be no Continuing Directors and, consequently, the 90% shareholder
vote requirement would apply to any Business Combination, unless the minimum
price and procedural requirements were satisfied.
Federal securities laws and regulations applicable to Business
Combinations govern the disclosure required to be made to minority shareholders
in order to consummate certain Business Combinations. However, the laws and
regulations do not assure that the terms of a Business Combination will be fair
from a financial standpoint. The LBCL provides that, under certain
circumstances, the affirmative vote of the holders of at least 80% of the voting
power of a Louisiana corporation is necessary in order to approve certain types
of business combinations with a related party unless the shareholders receive a
price for their shares as set forth in the LBCL and certain other conditions are
met. While the fair price protection provisions of the LBCL would apply to any
Business Combination involving Whitney and a Related Party, the Board of
Directors of Whitney believes that the fair price provisions in the Articles of
Incorporation provide additional assurance that the shareholders of Whitney will
receive an equitable price for their shares if a Business Combination is
consummated.
Considerations in Change of Control
The LBCL authorizes the Board of Directors of Whitney, when considering
any proposal to acquire control of Whitney, to take into account, among other
enumerated factors and any other factors the Board deems relevant, the interests
of Whitney's employees, creditors and the communities in which Whitney conducts
its business, as well as purely financial interests of Whitney's shareholders.
Amendment of Articles of Incorporation
Except for the 90% vote required to amend any provision of the Articles
of Incorporation relating to the Board of Directors of Whitney or the
supermajority and fair price provisions contained therein, the affirmative vote
of at least a majority of the total voting power of Whitney (i.e., a majority of
the outstanding shares of Whitney Common Stock), at a meeting the quorum for
which is the presence in person or by proxy of a majority of the total voting
power, is required to amend the Articles of Incorporation. See " -- Directors"
and " -- Supermajority and Fair Price Provisions," above.
59
<PAGE>
Amendment of By-laws
Whitney's By-Laws may be amended or repealed by the affirmative vote of
a majority of the Board of Directors of Whitney or by the affirmative vote of at
least a majority of the votes cast at a meeting of the shareholders of Whitney.
Shareholders Meetings
Shareholders holding not less than 20% of the outstanding Whitney
Common Stock may require Whitney to call a meeting of its shareholders.
Louisiana Control Share Acquisition Statute
The LBCL Control Share Acquisition Statute provides that any shares
acquired by a person or group (an "Acquiror") in an acquisition that causes such
person or group to have the power to direct the exercise of voting power in the
election of directors in excess of 20%, 33-1/3% or 50% thresholds shall have
only such voting power as shall be accorded by the holders of all shares other
than Interested Shares (as defined below) at a meeting called for the purpose of
considering the voting power to be accorded to shares held by the Acquiror.
"Interested Shares" include all shares as to which the Acquiror, any officer of
Whitney and any director of Whitney who is also an employee of Whitney may
exercise or direct the exercise of voting power. If a meeting of shareholders is
held to consider the voting rights to be accorded to an Acquiror and the
shareholders do not vote to accord voting rights to such shares, Whitney may
have the right to redeem the shares held by the Acquiror for their fair market
value.
Comparison of Whitney Common Stock and Company and Bank Common Stock
The following comparison of the rights of the holders of Whitney Common
Stock and those of holders of Company or Bank Common Stock is based on current
terms of the governing documents of the respective institutions and on the
current provisions of the Louisiana Business Corporation Law (the "LBCL"),
applicable Florida corporate law, including the Florida Business Corporation Act
(the "FBCA"), and the Florida Banking Code. Although the Whitney Common Stock is
governed by applicable provisions of the LBCL and the Company and Bank Common
Stock is governed by applicable provisions of Florida corporate law and the
Florida Banking Code, the rights of holders of such stock are similar in many
respects. For example, with respect to Whitney, the Company and the Bank: (a)
each shareholder is entitled to one vote for each share held on all matters
submitted to a vote of shareholders and none is entitled to cumulative voting
rights in the election of directors; (b) shareholders of each are entitled to
receive, pro rata, any assets distributed to the shareholders upon liquidation,
dissolution or a winding up of institution's affairs; and (c) no shareholder is
entitled to preemptive rights to subscribe for or purchase any stock or other
securities in proportion to their respective holdings upon the offering or sale
of such securities to others. Although it is impracticable to note all of the
differences between the applicable governing documents, the following is
intended to be a summary of certain significant differences between the rights
of holders of Whitney Common Stock and the rights of holders of Company and Bank
Common Stock.
Boards of Directors. Whitney's Articles of Incorporation provide for a
board of directors consisting of not less than five nor more than 25 members
divided into five classes, with directors serving five-year staggered terms
expiring for each class of directors at successive annual meetings of
shareholders. There is only one class of directors of the Company and the Bank,
consisting of no fewer than five nor more than 25 members, and such directors
are elected for one-year terms at each annual meeting of shareholders. Directors
of Whitney must also be shareholders of Whitney. There is no requirement for
directors of the Company or the Bank to own shares of Company or Bank Common
Stock; however, at least a majority of the Bank's directors must be citizens of
the United States and at least three-fifths of the directors must have resided
in the State of Florida for at least one year preceding their election and for
as long as they remain in office. In addition, Florida law requires at least one
outside director of the Bank to have at least one year's experience as an
executive officer, regulator or director of a financial institution within the
last three years. The Bank's Bylaws provide that no director shall serve as an
active member of the Board following the annual shareholders meeting immediately
subsequent to his or her 70th birthday, unless such director was one of the
directors elected to the Board at the Bank's first shareholders meeting. Neither
Whitney's nor the Company's governing documents or applicable law have similar
residency, experience or retirement requirements.
60
<PAGE>
Removal of Directors. Whitney's Articles of Incorporation provide that
a director may be removed from office, with or without cause, only by the
affirmative vote of 90% of the voting power present at a special meeting of
shareholders called for that purpose at which a "quorum" is present. A "quorum"
for these purposes means the presence, in person or by proxy, of the holders of
90% of the total voting power of Whitney. The Company's and the Bank's Articles
and Bylaws do not contain a similar provision, and under applicable Florida law,
shareholders of each may remove directors, with or without cause, by the
affirmative vote of a majority of the shares present or represented at a duly
convened special meeting of shareholders called for that purpose.
Meetings of Shareholders. Under the LBCL, special meetings of Whitney's
shareholders may be called at any time by the President or the Board of
Directors, or upon the written consent of any shareholder or shareholders
holding in the aggregate one-fifth of the total voting power of Whitney. Except
as described above, a quorum for a regular or special meeting of Whitney's
shareholders is a majority of the outstanding shares of Whitney Common Stock
entitled to vote, and a majority of votes cast is generally required for action
by Whitney's shareholders at such a meeting. For certain actions, as described
above, a larger quorum and an absolute majority or supermajority vote may be
required for shareholder action at a meeting. See "- Description of Whitney
Common Stock," above.
Under the FBCA, special meetings of Company and Bank shareholders may
be called at any time by a majority of the members of the Board of Directors or
by persons who hold not less than 10% of all votes entitled to be cast on any
proposal to be submitted at the meeting. The Company's Bylaws provide that the
president may also call a special meeting of Company shareholders, and the
Bank's Bylaws provide that the Florida State Commissioner of Banking has the
power to call special meetings of shareholders. A quorum for any meeting of
shareholders is a majority of the outstanding shares entitled to vote.
Shareholder action can be taken by the affirmative vote of a majority of the
shares present or represented at a meeting at which a quorum is present. The
FBCA provides that quorum and voting requirements may be changed only by an
amendment to the Company's or the Bank's Articles of Incorporation, which
requires shareholder approval. The Company's Bylaws state that if all
shareholders meet at any time and place and consent to the holding of a meeting
at such time and place, such a meeting shall be valid without call or notice,
and at such meeting, any corporate action may be taken.
The Bank's Bylaws state that shareholders of record who request items
of business to be placed on the agenda for a shareholders meeting may do so only
by delivering that request in writing to the Chairman of the Board of Directors
at least five days prior to any such shareholders meeting. There are no similar
requirements applicable to either Whitney or the Company.
Supermajority Vote Requirements. Whitney's Articles of Incorporation
contain supermajority voting requirements for certain business combinations. See
"- Description of Whitney Common Stock -- Supermajority and Fair Price
Provisions" and "-- Louisiana Control Share Acquisition Statute," above. Neither
the Bank's Articles of Incorporation nor applicable Florida law contain similar
provisions.
Special Voting Mechanics. The Company's Bylaws provide that voting of
shares at a shareholders meeting shall be oral, but shall be by written ballot
if such vote is demanded by the presiding officer or any shareholder. Neither
Whitney's nor the Company's governing documents or applicable law contain
similar provisions requiring oral votes at shareholders meetings.
Amendment of Articles and Bylaws. Whitney's Articles of Incorporation
may be amended by the vote of the holders of a majority of the outstanding
shares of Whitney Common Stock. Whitney's Bylaws may be made and altered by its
Board of Directors, subject to the power of the shareholders to change or repeal
any Bylaws so made.
Under Florida law applicable to the Company and the Bank, the Board of
Directors must approve an amendment to the Articles for submission to
shareholders and, unless otherwise required by the Board of Directors, such
amendment must be approved at a shareholder meeting at which a quorum is present
by the affirmative vote of all of the outstanding shares entitled to vote on the
amendment. Notwithstanding the foregoing, under the Florida Banking Code, the
Bank cannot amend its Articles without receiving the written prior approval of
the Florida Department of Banking and Finance. The Company's Bylaws may be
amended by its Board of Directors or by its shareholders; provided that any
amendment made by the shareholders may not be further amended or repealed
without the affirmative vote of the holders of a
61
<PAGE>
majority of the outstanding shares of Company Common Stock at a regular or
special meeting of shareholders. The Bank's Bylaws shall be adopted and may be
amended by a vote of the holders of a majority of the shares of Bank Common
Stock voted at a meeting of shareholders; bylaws not inconsistent with the
bylaws adopted by the shareholders and bylaws not relating to the duties, term
of office or indemnification of directors may be amended or adopted by the
directors by a two-thirds vote of those directors voting at a meeting, notice of
which was given at least 30 days prior to such meeting, and in the absence of
such notice, no amendment shall pass without at least a three-fourths vote of
the directors voting.
Inspection Rights. Any shareholder of Whitney, except a business
competitor, who has possessed at least 5% of the outstanding shares of Whitney
Common Stock for a minimum of six months has the right, upon five days' written
notice, to examine in person or by representative the books and records of
Whitney for any proper purpose. Two or more shareholders may aggregate their
holdings to reach the required 5% threshold. Business competitors, however, must
possess at least 25% of the outstanding shares of Whitney Common Stock for a
minimum of six months to obtain any such inspection rights.
A shareholder of the Company is entitled to inspect and copy, in person
or by representative, the Company's articles and bylaws, its designation of the
rights and preferences of shares, minutes of shareholder meetings and other
shareholder action for the last three years and communications with shareholders
for the last three years, if he gives the Company five business days' written
notice of his demand. Other books and records of the Company can be so inspected
and copied upon five business days' written notice only if (a) the demand is
made in good faith and for a purpose reasonably related to the shareholder's
interest as a shareholder, (b) the shareholder describes with reasonable
particularity his purpose and the records sought, and (c) the records are
directly connected with the shareholder's purpose. Under the FCBA, the Company
may deny inspection if made for an improper purpose or if the shareholder has
sold or offered for sale, directly or indirectly, the Company's shareholder list
or has improperly used information secured by any prior examination of the
Company or any other corporation within the last two years.
Under the Florida Banking Code, the Bank is prohibited from permitting
any shareholder, other than a qualified director, officer or employee of the
Bank, to have access to, or to examine and inspect, any of the books or records
of the Bank other than its general statement of condition of its general assets
and liabilities, its quarterly reports of condition and quarterly reports of
income required to be submitted to the Office of the Comptroller of Florida,
Department of Banking and Finance, and a complete list of the Bank's
shareholders indicating the number of shares held by each.
Dividends and Other Distributions. Under the LBCL, Whitney may pay
dividends out of surplus, including both earned surplus and capital surplus, in
cash, property or shares of the corporation, except when the corporation is
insolvent or would thereby be made insolvent or when the declaration or payment
thereof would be contrary to any restrictions contained in Whitney's Articles of
Incorporation. In the absence of surplus, Whitney may pay dividends out of its
net profits for the then current or the preceding fiscal year, or both, unless
at the time, or as a result of such dividends, liabilities exceed assets or
Whitney's net assets are less than the amount payable upon liquidation to any
class of securities with a preferential right to participate in assets in the
event of liquidation. The payment of dividends by a bank holding company such as
Whitney is also subject to certain regulatory constraints.
The payment of dividends or distributions by the Company and the Bank
is subject to the restrictions of the FCBA and, in the case of the Bank, the
Florida Banking Code. Under the FCBA, a corporation may not generally authorize
and make distributions if, after giving effect thereto, it would be unable to
meet its debts as they become due in the usual course of business or if the
corporation's total assets would be less than its sum of total liabilities plus
the amount that would be needed, if it were to be dissolved at the time of
distribution, to satisfy preferential rights of shareholders whose preferential
rights are superior to those receiving the dividend or other distribution.
Further, under the Florida Banking Code, a bank may declare dividends from its
net profits for the current period plus the prior two years, unless approval of
certain variances are received from the Florida Department of Banking and
Finance. No dividends may be declared at any time at which the Bank's net income
from the current year plus the prior two years is a loss, nor may any dividends
be declared that would cause the Bank's capital accounts to fall below minimum
requirements.
62
<PAGE>
LEGAL MATTERS
Milling, Benson, Woodward, Hillyer, Pierson & Miller, L.L.P., New
Orleans, Louisiana, has rendered its opinion that the shares of Whitney Common
Stock to be issued in connection with the Mergers have been duly authorized and,
if and when issued pursuant to the terms of the Plan of Merger, will be validly
issued, fully paid and non-assessable.
EXPERTS
The consolidated financial statements of the Company and its
subsidiary, and the financial statements of the Bank, at December 31, 1995 and
1994, and for each of the three years in the period ended December 31, 1994,
included in this Proxy Statement and Prospectus have been audited by Saltmarsh,
Cleveland & Gund, independent auditors, as set forth in their reports appearing
elsewhere herein, and included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Whitney and its subsidiaries
as of December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995 incorporated by reference in this Proxy Statement and
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and have been so
incorporated by reference in reliance upon the authority of such firm as experts
in accounting and auditing in giving such report.
OTHER MATTERS
At the time of the preparation of this Proxy Statement and Prospectus,
neither the Company nor the Bank had been informed of any matters to be
presented by or on behalf of the Company or the Bank or their respective
managements for action at the Meetings other than those listed in the Notices of
Special Meeting of Shareholders and referred to herein. If any other matters
properly come before the Meetings or any adjournments thereof, the persons named
in the enclosed proxies will vote on such matters according to their best
judgment.
Shareholders are urged to sign the appropriate enclosed proxy, which is
solicited on behalf of the Boards of Directors of the Company and the Bank, and
return it at once in the enclosed envelope.
BY ORDER OF THE BOARDS OF DIRECTORS
OF THE COMPANY AND THE BANK
William A. Hunt
Secretary of Liberty Holding Company
Richard A. Davis
Secretary of Liberty Bank
August 12, 1996
63
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
PENSACOLA, FLORIDA
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996 AND 1995
CONTENTS
PAGE
Consolidated Statements of Financial Condition F-2
Consolidated Statements of Income F-3
Consolidated Statements of Changes in Stockholders' Equity F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6
F-1
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
MARCH 31, 1996 AND 1995
ASSETS
1996 1995
------------ ---------
Cash and due from banks $ 4,435,236 $ 4,650,222
Federal funds sold 2,775,000 3,675,000
Securities held to maturity 640,000 2,025,761
Securities available-for-sale 4,401,899 3,426,895
Loans receivable, net of allowance for loan
losses of $ 507,335 in 1996 and $ 460,797 in 1995 36,284,455 31,680,606
Accrued interest receivable 303,440 280,076
Premises and equipment, net 1,903,833 1,856,002
Deferred income taxes - 4,779
Other assets 222,657 232,422
------------ ------------
Total Assets $ 50,966,520 $ 47,831,763
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits $ 12,383,209 $ 11,922,949
NOW and money market deposits 8,487,063 9,650,663
Savings deposits 2,054,321 1,789,136
Other time deposits 20,712,315 18,349,077
------------ ------------
Total deposits 43,636,908 41,711,825
FHLB advances 495,500 -0-
Notes payable 137,324 178,166
Accrued interest payable 177,072 145,486
Deferred income taxes 64,578 -0-
Income taxes payable 88,703 63,556
Other liabilities 131,997 116,704
------------ ------------
Total liabilities 44,732,082 42,215,737
------------ ------------
Commitments and Contingencies - -
Minority Interest in Liberty Bank 38,157 34,402
------------ ------------
Stockholders' Equity:
Common stock, $1 par value; 2,000,000 shares
authorized, 1,343,294 shares in 1996 and
1,340,294 shares in 1995 issued and outstanding 1,343,294 1,340,294
Additional paid-in capital 3,149,630 3,137,780
Retained earnings 1,904,410 1,459,916
Net unrealized depreciation on available-for-sale
securities, net of taxes of $ 39,227 in 1996
and $ 108,584 in 1995 (63,729) (178,200)
------------ ------------
6,333,605 5,759,790
Less: ESOP indebtedness (137,324) (178,166)
------------ ------------
Total stockholders' equity 6,196,281 5,581,624
------------ ------------
Total Liabilities and Stockholders' Equity $ 50,966,520 $ 47,831,763
============ ============
See accompanying notes
F-2
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
1996 1995
----------- ---------
Interest Income:
Loans receivable and fees on loans $ 932,082 $ 806,514
Investment securities 64,058 66,388
Federal funds sold 36,605 45,014
Interest-bearing deposits in banks 2,792 2,726
----------- -----------
Total interest income 1,035,537 920,642
Interest Expense on Deposits 372,105 316,641
----------- -----------
Net interest income 663,432 604,001
Provision for Loan Losses -0- -0-
Net interest income after provision for
loan losses 663,432 604,001
----------- -----------
Noninterest Income:
Service charges 98,872 84,696
Other income 14,872 13,549
----------- -----------
Total noninterest income 113,744 98,245
----------- -----------
Noninterest Expenses:
Salaries and employee benefits 272,878 272,555
Occupancy expense 40,548 36,531
Other expense 236,667 209,137
----------- -----------
Total noninterest expenses 550,093 518,223
----------- -----------
Minority Interest in Income of Liberty Bank 968 790
----------- -----------
Income Before Income Taxes 226,115 183,233
Income Taxes 81,993 62,046
----------- -----------
Net Income $ 144,122 $ 121,187
=========== ===========
Net Income Per Share of Common Stock (note 2) $ .11 $ .09
=========== ===========
See accompanying notes
F-3
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C>
Net
Unrealized
Appreciation
(Depreciation)
Common Stock on Available- Guarantee
------------------------- Retained For-Sale of ESOP
Shares Amount Surplus Earnings Securities Indebtedness Total
---------- ---------- ---------- ---------- ----------- ------------- ---------
Balance, January 1, 1995 1,340,294 $1,340,294 $3,137,780 $1,372,237 $ (257,507) $ (188,377) $5,404,427
Net income 121,187 121,187
Cash dividends paid,
$ .025 per share (33,508) (33,508)
Principal payments on
ESOP indebtedness
(note 3) 10,211 10,211
Net change in unrealized
appreciation (depreciation)
on available-for-sale
securities, net of taxes
of $ 48,787 79,307 79,307
----------- ----------- ----------- ----------- ------------ ----------- ----------
Balance, March 31, 1995 1,340,294 $ 1,340,294 $ 3,137,780 $ 1,459,916 $ (178,200) $ (178,166) $5,581,624
=========== =========== =========== =========== ============ =========== ==========
Balance, January 1, 1996 1,343,294 $ 1,343,294 $ 3,149,630 $ 1,820,736 $ (26,675) $ (147,535) $6,139,450
Net income 144,122 144,122
Cash dividends paid,
$ .045 per share (60,448) (60,448)
Principal payments on
ESOP indebtedness
(note 3) 10,211 10,211
Net change in unrealized
appreciation (depreciation)
on available-for-sale
securities, net of taxes
of $ 22,938 (37,054) (37,054)
----------- ----------- ----------- ----------- ------------ ----------- ----------
Balance, March 31, 1996 1,343,294 $ 1,343,294 $ 3,149,630 $ 1,904,410 $ (63,729) $ (137,324) $6,196,281
=========== =========== =========== =========== ============ =========== ==========
</TABLE>
See accompanying notes
F-4
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
1996 1995
--------- -------
Cash Flows From Operating Activities:
Net income $ 144,122 $ 121,187
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 29,904 19,258
Net accretion/amortization on securities 3,064 3,487
Net realized investment securities losses 78 -0-
Minority interest in Liberty Bank 577 584
Changes in operating assets and liabilities -
Decrease in mortgage loans held for sale 201,400 57,000
Increase in accrued interest receivable and
other assets (26,865) (21,689)
Decrease in accrued interest payable
and other liabilities (17,958) (875)
Increase in income taxes payable 4,060 454
------------ ------------
Net cash provided by operating activities 338,382 179,406
------------ ------------
Cash Flows From Investing Activities:
Net decrease of interest-bearing deposits -0- 298,000
Proceeds from maturities of held-to-maturity
securities -0- 250,000
Proceeds from sales and maturities of
available-for-sale securities 649,922 -0-
Principal reductions on available-for-sale
securities 9,316 10,530
Purchases of available-for-sale securities (557,144) (146,800)
Increase in loans (201,525) (351,995)
Purchases of premises and equipment (103,359) (276,938)
------------ -----------
Net cash used in investing activities (202,790) (217,203)
------------ -----------
Cash Flows From Financing Activities:
Net decrease in demand, NOW, money market
and savings deposits (515,345) (428,760)
Net decrease in time deposits (382,023) (808,395)
Advances from Federal Home Loan Bank 495,500 -0-
Dividends paid (60,448) (33,508)
----------- -----------
Net cash used in financing activities (462,316) (1,270,663)
----------- -----------
Net Decrease in Cash and Cash Equivalents (326,724) (1,308,460)
Cash and Cash Equivalents, January 1 7,536,960 9,633,682
----------- -----------
Cash and Cash Equivalents, March 31 $7,210,236 $ 8,325,222
=========== ===========
See accompanying notes
F-5
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
(Continued)
1996 1995
--------- ---------
Supplemental Disclosure of Cash Flow Information:
Interest paid $385,540 $294,606
========= ========
Income taxes paid $ 77,933 $ 61,592
========= ========
Supplemental Disclosure of Noncash
Financing Activity:
Reduction in principal portion of ESOP $ 10,211 $ 10,211
indebtedness: ========= ========
See accompanying notes
F-5
(Sheet II)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-QSB
and Item 310(b) of Regulation S-B. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three month periods ended March 31,
1996 and 1995 are not necessarily indicative of the results that may be
expected for the years ended December 31, 1996 and 1995. For further
information, refer to the consolidated financial statements and
footnotes thereto included in this Proxy Statement-Prospectus.
NOTE 2 - NET INCOME PER SHARE OF COMMON STOCK
Net income per share of common stock is computed on the weighted
average number of shares outstanding.
NOTE 3 - EMPLOYEE STOCK OWNERSHIP PLAN
The Bank has a non-contributory employee stock ownership plan ("ESOP")
covering all employees who have met certain service requirements. The
Bank's ESOP contributions are determined by its Board of Directors. At
March 31, 1996 and 1995, the Employee Stock Ownership Trust (the
"Trust") owned 118,900 shares of Liberty Holding Company common stock.
The Company is obligated to make cash contributions to the Trust to
enable it to make payments on the ESOP loans. For financial statement
purposes, the ESOP obligations have been reflected as a liability and
as a reduction of stockholders' equity. As principal payments on the
loans are made, the aforementioned liability is reduced and
stockholders' equity increased by such payments..
NOTE 4 - STOCK WARRANTS
The Company issued a Private Offering Memorandum (the "offering") on
January 14, 1994, for the issuance of 220,000 shares of voting common
stock at $ 4.75 per share in 1994 of which 182,000 shares were
purchased. The Company has also received subscriptions from
shareholders to exercise the remaining 34,000 shares at $ 4.75 per
share. In addition, for each stock share purchased shareholders
received two warrants exercisable in 1995 and 1996 at a price of $ 4.95
and $ 5.25 per share, respectively. Each warrant entitles the holder to
purchase one share for each two shares of stock purchased in the 1994
stock offering. The net proceeds from the offering and the warrants
will be used to fund future expansion. During 1995, warrants were
exercised to purchase 3,000 shares of the Company's common stock at $
4.95 per share. The remaining warrants exercisable in 1995 expired
without being exercised.
In May 1996, warrants were exercised to purchase 45,500 shares of the
Company's common stock at $ 5.25 per share.
NOTE 5 - CHANGE IN OWNERSHIP
In April 1996, the Company and the Bank entered into a agreement and
plan of merger, (the "agreement") with Whitney Holding
Corporation, ("Whitney"), a Louisiana corporation. The
agreement calls for the acquisition of the company's and Bank's stock
by Whitney through the exchange of each parties common stock. The
acquisitions are expected to be finalized in 1996.
F-6
<PAGE>
LIBERTY BANK
PENSACOLA, FLORIDA
FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996 AND 1995
CONTENTS
PAGE
Statements of Financial Condition F-8
Statements of Income F-9
Statements of Changes in Stockholders' Equity F-10
Statements of Cash Flows F-11
Notes to Financial Statements F-12
F-7
<PAGE>
LIBERTY BANK
STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
MARCH 31, 1996 AND 1995
ASSETS
1996 1995
------------- ----------
Cash and due from banks $ 4,435,236 $ 4,650,222
Federal funds sold 2,775,000 3,675,000
Securities held to maturity 640,000 2,025,761
Securities available for sale 4,401,899 3,426,895
Loans receivable, net of allowance for loan losses
of $ 507,335 in 1996 and $ 460,797 in 1995 36,284,455 31,680,606
Accrued interest receivable 303,440 280,076
Premises and equipment, net 1,903,833 1,856,002
Deferred income taxes - 4,779
Other assets 222,657 232,422
------------ ------------
Total Assets $ 50,966,520 $ 47,831,763
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits $ 12,385,057 $ 11,931,051
NOW and money market deposits 8,588,582 9,806,378
Savings deposits 2,054,321 1,789,136
Other time deposits 21,512,315 19,049,077
------------- ------------
Total deposits 44,540,275 42,575,642
FHLB advances 495,500 -0-
Accrued interest payable 177,072 145,486
Deferred income taxes 64,578 -
Income taxes payable 88,703 63,556
Other liabilities 126,022 116,704
------------- ------------
Total liabilities 45,492,150 42,901,388
------------- ------------
Commitments and Contingencies - -
Stockholders' Equity:
Common stock, $ 5 par value; 248,000 shares
authorized, 198,000 shares issued
and outstanding 990,000 990,000
Surplus 2,085,943 2,085,943
Undivided profits 2,462,599 2,033,870
Net unrealized depreciation on
available-for-sale securities, net of taxes
of $ 39,227 in 1996 and $ 108,584 in 1995 (64,172) (179,438)
------------- ------------
Total stockholders' equity 5,474,370 4,930,375
------------- ------------
Total Liabilities and Stockholders' Equity $ 50,966,520 $ 47,831,763
============= ============
See accompanying notes
F-8
<PAGE>
LIBERTY BANK
STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
1996 1995
----------- -----------
Interest Income:
Loans receivable and fees on loans $ 932,082 $ 806,514
Investment securities 64,058 66,388
Federal funds sold 36,605 45,014
Interest-bearing deposits in banks 2,792 2,726
----------- -----------
Total interest income 1,035,537 920,642
Interest Expense on Deposits 383,165 324,918
----------- -----------
Net interest income 652,372 595,724
Provision for Loan Losses -0- -0-
Net interest income after provision for
loan losses 652,372 595,724
----------- -----------
Noninterest Income:
Service charges 98,872 84,696
Other income 14,872 13,549
----------- -----------
Total noninterest income 113,744 98,245
----------- -----------
Noninterest Expenses:
Salaries and employee benefits 272,878 272,555
Occupancy expense 40,548 36,531
Other expense 230,484 208,403
----------- -----------
Total noninterest expenses 543,910 517,489
----------- -----------
Income Before Income Taxes 222,206 176,480
Income Taxes 81,993 62,046
----------- -----------
Net Income $ 140,213 $ 114,434
=========== ===========
Net Income Per Share of Common Stock (note 2) $ .71 $ .58
=========== ===========
See accompanying notes
F-9
<PAGE>
LIBERTY BANK
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<C> <C> <C> <C> <C> <C>
Net
Unrealized
Appreciation
(Depreciation)
on Available-
Common Undivided For-Sale
Stock Surplus Profits Securities Total
------------ ------------ ----------- -------------- -----
Balance, January 1, 1995 $ 990,000 $ 2,085,943 $ 1,949,136 $ (259,297) $4,765,782
Net income 114,434 114,434
Cash dividends paid,
$ .15 per share (29,700) (29,700)
Net change in unrealized
appreciation (depreciation)
on available-for-sale
securities, net of taxes
of $ 49,126 79,859 79,859
----------- ----------- ----------- ----------- ------------
Balance March 31, 1995 $ 990,000 $ 2,085,943 $ 2,033,870 $ (179,438) $ 4,930,375
=========== =========== =========== =========== ============
Balance, January 1, 1996 $ 990,000 $ 2,085,943 $ 2,378,815 $ (26,861) $ 5,427,897
Net income 140,213 140,213
Cash dividends paid,
$ .30 per share (56,429) (56,429)
Net change in unrealized
appreciation (depreciation)
on available-for-sale
securities, net of taxes
of $ 23,098 (37,311) (37,311)
----------- ----------- ----------- ----------- ------------
Balance, March 31, 1996 $ 990,000 $ 2,085,943 $ 2,462,599 $ (64,172) $ 5,474,370
=========== =========== =========== =========== ============
</TABLE>
See accompanying notes
F-10
<PAGE>
LIBERTY BANK
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
1996 1995
------------- ----------
Cash Flows From Operating Activities:
Net income $ 140,213 $ 114,434
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 29,904 19,258
Net accretion/amortization on securities 3,064 3,487
Net realized investment securities losses 78 -0-
Changes in operating assets and liabilities -
Decrease in mortgage loans held for sale 201,400 57,000
Increase in accrued interest receivable and
other assets (26,865) (21,689)
Decrease in accrued interest payable and
other liabilities (23,926) (875)
Increase in income taxes payable 4,060 454
----------- -----------
Net cash provided by operating activities 327,928 172,069
----------- -----------
Cash Flows From Investing Activities:
Net decrease of interest-bearing deposits -0- 298,000
Proceeds from maturities of held-to-maturity
securities -0- 250,000
Proceeds from sales and maturities of
available-for-sale securities 649,922 -0-
Principal reductions on available-for-sale
securities 9,316 10,530
Purchases of available-for-sale securities (557,144) (146,800)
Increase in loans (201,525) (351,995)
Purchases of premises and equipment (103,359) (276,938)
----------- -----------
Net cash used in investing activities (202,790) (217,203)
----------- -----------
Cash Flows From Financing Activities:
Net decrease in demand, NOW, money
market and savings deposits (508,910) (425,231)
Net decrease in time deposits (382,023) (808,395)
Advances from Federal Home Loan Bank 495,500 -0-
Dividends paid (56,429) (29,700)
----------- -----------
Net cash used in financing activities (451,862) (1,263,326)
----------- -----------
Net Decrease in Cash and Cash Equivalents (326,724) (1,308,460)
Cash and Cash Equivalents, January 1 7,536,960 9,633,682
----------- -----------
Cash and Cash Equivalents, March 31 $ 7,210,236 $ 8,325,222
=========== ===========
See accompanying notes
F-11
<PAGE>
LIBERTY BANK
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
(Continued)
1996 1995
---------- ---------
Supplemental Disclosure of Cash Flow Information:
Interest paid $ 396,600 $ 302,883
========== =========
Income taxes paid $ 77,933 $ 61,592
========== =========
See accompanying notes
F-11
(Sheet II)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for the
interim financial information and the instructions to Form 10-QSB and
Item 310(b) of Regulation S-B. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three month periods ended March 31, 1996 and
1995 are not necessarily indicative of the results that may be expected
for the years ended December 31, 1996 and 1995. For further
information, refer to the financial statements and footnotes thereto
included in this Proxy Statement-Prospectus.
NOTE 2 - NET INCOME PER SHARE OF COMMON STOCK
Net income per share of common stock is computed on the number of
shares outstanding.
NOTE 3 - EMPLOYEE STOCK OWNERSHIP PLAN
The Bank has a non-contributory employee stock ownership plan ("ESOP")
covering all employees who have met certain service requirements. The
Bank's ESOP contributions are determined by its Board of Directors. At
March 31, 1996 and 1995, the Employee Stock Ownership Trust (the
"Trust") owned 118,900 shares of Liberty Holding Company common stock.
NOTE 4 - CHANGE IN OWNERSHIP
In April 1996, the Bank entered into a agreement and plan of merger,
(the "agreement") with Whitney Holding Corporation,
("Whitney"), a Louisiana corporation. The agreement calls for the
acquisition of the Bank's stock by Whitney through the exchange of
each parties common stock. The acquisition is expected to be finalized
in 1996.
F-12
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
PENSACOLA, FLORIDA
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
CONTENTS
PAGE
Independent Auditor's Report F-14
Consolidated Statements of Financial Condition F-15
Consolidated Statements of Income F-16
Consolidated Statements of Changes in Stockholders' Equity F-17
Consolidated Statements of Cash Flows F-18
Notes to Consolidated Financial Statements F-19
F-13
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Liberty Holding Company and Subsidiary
Pensacola, Florida
We have audited the accompanying consolidated statements of financial condition
of Liberty Holding Company and Subsidiary as of December 31, 1995 and 1994, and
the related consolidated statements of income, changes in stockholders' equity,
and cash flows for each of the three years in the periods ended December 31,
1995. 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 audit 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Liberty Holding
Company and Subsidiary as of December 31, 1995, 1994 and 1993, and the
consolidated results of their operations and cash flows for each of the three
years in the periods ended December 31, 1995 in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company changed its
method of accounting for investments in 1994 and income taxes in 1993.
/s/ Saltmarsh, Cleaveland & Gund
Pensacola, Florida
January 19, 1996
F-14
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1995 AND 1994
ASSETS
1995 1994
------------- -----------
Cash and due from banks $ 4,861,960 $ 5,458,682
Federal funds sold 2,675,000 4,175,000
Interest-bearing deposits in banks -0- 298,000
Securities held to maturity (notes 1 and 2) 640,000 2,283,588
Securities available-for-sale (notes 1 and 2) 4,567,544 3,158,100
Loans receivable, net of allowance for loan
losses of $ 504,428 in 1995 and $ 431,336
in 1994 (notes 1 and 3) 36,082,930 31,328,611
Mortgage loans held for sale (note 1) 201,400 57,000
Accrued interest receivable 337,899 295,012
Foreclosed real estate (note 1) -0- -0-
Premises and equipment, net (notes 1 and 4) 1,830,378 1,598,322
Deferred income taxes (notes 1 and 8) -0- 53,105
Other assets 161,333 195,797
------------- ------------
Total Assets $ 51,358,444 $ 48,901,217
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits $ 11,260,507 $ 10,856,069
NOW and money market deposits 10,280,502 11,206,340
Savings deposits 1,898,929 1,729,099
Other time deposits 21,094,338 19,157,472
------------- ------------
Total deposits 44,534,276 42,948,980
Notes payable (note 5) 147,535 188,377
Accrued interest payable 190,507 123,451
Deferred income taxes (notes 1 and 8) 87,676 -0-
Income taxes payable 84,643 63,102
Other liabilities 136,520 139,614
------------- ------------
Total liabilities 45,181,157 43,463,524
------------- ------------
Commitments and Contingencies (note 9) - -
Minority Interest in Liberty Bank 37,837 33,266
------------- ------------
Stockholders' Equity:
Common stock, $ 1 par value; 2,000,000
shares authorized, 1,343,294 shares in
1995 and 1,340,294 shares in 1994 issued
and outstanding 1,343,294 1,340,294
Additional paid-in capital 3,149,630 3,137,780
Retained earnings 1,820,736 1,372,237
Net unrealized depreciation on available-
for-sale securities,
net of taxes of $ 16,129 in 1995
and $ 156,910 in 1994 (26,675) (257,507)
------------- ------------
6,286,985 5,592,804
Less: ESOP indebtedness (note 5) (147,535) (188,377)
------------- ------------
Total stockholders' equity (note 7) 6,139,450 5,404,427
------------- ------------
Total Liabilities and Stockholders' Equity $ 51,358,444 $ 48,901,217
============= ============
The accompanying notes are an integral
part of these financial statements
F-15
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<C> <C> <C> <C>
1995 1994 1993
----------- ----------- ----------
Interest Income:
Loans receivable and fees on loans $ 3,490,782 $ 3,118,488 $ 2,819,281
Investment securities 278,854 300,932 287,274
Federal funds sold 195,466 141,251 76,979
Interest-bearing deposits in banks 8,176 10,946 10,389
----------- ----------- -----------
Total interest income 3,973,278 3,571,617 3,193,923
Interest Expense on Deposits 1,444,140 1,149,645 1,176,389
----------- ----------- -----------
Net interest income 2,529,138 2,421,972 2,017,534
Provision for Loan Losses (note 3) -0- -0- 30,000
----------- ----------- -----------
Net interest income after provision for loan losses 2,529,138 2,421,972 1,987,534
----------- ----------- -----------
Noninterest Income:
Service charges 364,353 388,398 398,523
Net investment securities gains (losses) (3,250) -0- 112,267
Net gains from sale of loans 69,385 202,679 275,501
Other income 36,241 31,267 52,079
----------- ----------- -----------
Total noninterest income 466,729 622,344 838,370
----------- ----------- -----------
Noninterest Expenses:
Salaries and employee benefits 1,066,765 1,131,415 1,106,109
Occupancy expense 149,371 137,303 124,268
Other expense 895,969 945,067 828,521
----------- ----------- -----------
Total noninterest expenses 2,112,105 2,213,785 2,058,898
----------- ----------- -----------
Minority Interest in Income of Liberty Bank (3,787) (4,296) (3,490)
----------- ----------- -----------
Income Before Income Taxes 879,975 826,235 763,516
Income Taxes (notes 1 and 8) 297,333 215,808 276,547
----------- ----------- -----------
Net Income $ 582,642 $ 610,427 $ 486,969
=========== =========== ===========
Net Income Per Share of Common Stock (note 1) $ .43 $ .47 $ .42
=========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-16
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C>
Net
Unrealized
Appreciation
(Depreciation)
Common Stock on Available- Guarantee
---------------------------- Retained For-Sale of ESOP
Shares Amount Surplus Earnings Securities Indebtedness Total
--------- -------------- ----------- ----------- ------------- ------------ ----------
Balance, January 1, 1993 1,158,094 $ 1,158,094 $2,454,530 $ 430,294 $ -0- $ (154,725) $3,888,193
Net income 486,969 486,969
Issuance of common stock 200 200 750 950
Cash dividends paid, $ .025
per share (28,949) (28,949)
Principal payments of ESOP
indebtedness (notes 5 and 10) 30,357 30,357
----------- ---------- ---------- ----------- ------------ ----------- ---------
Balance, December 31, 1993 1,158,294 $ 1,158,294 $2,455,280 $ 888,314 $ -0- $ (124,368) $4,377,520
Adjustment to beginning
balance for change in
accounting principle,
net of taxes of $5,100 8,369 8,369
Net income 610,427 610,427
Issuance of common stock 182,000 182,000 682,500 864,500
Cash dividends paid, $.10
per share (126,504) (126,504)
Net change in unrealized gains
on available-for-sale
securities, net of taxes of (265,876) (265,876)
$162,100
Loan proceeds for ESOP
(notes 5 and 10) (102,229) (102,229)
Principal payments on ESOP
indebtedness (notes 5 and 10) 38,220 38,220
----------- ----------- ----------- ----------- ----------- ---------- --------
<PAGE>
Balance, December 31, 1994 1,340,294 1,340,294 3,137,780 1,372,237 (257,507) (188,377) 5,404,427
Net income 582,642 582,642
Issuance of common stock 3,000 3,000 11,850 14,850
Cash dividends paid, $ .10 per share (134,143) (134,143)
Principal payments on ESOP
indebtedness (notes 5 and 10) 40,842 40,842
Net change in unrealized gains on
available-for- sale securities,
net of taxes of $ 140,781 230,832 230,832
----------- -------- ----------- ---------- ----------- ----------- -----------
Balance, December 31, 1995 $ 1,343,294 $ 1,343,294 $ 3,149,630 $1,820,736 $ (26,675) $ (147,535) $ 6,139,450
=========== =========== =========== ========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-17
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<C> <C> <C> <C>
1995 1994 1993
----------- ----------- ----------
Cash Flows From Operating Activities:
Net income $ 582,642 $ 610,427 $ 486,969
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 108,956 78,486 69,666
Provision for loan losses -0- -0- 30,000
Net accretion/amortization on securities 12,957 36,908 (12,833)
Net realized investment securities (gains) losses 3,250 -0- (112,267)
Minority interest in Liberty Bank 2,967 3,449 3,284
Changes in operating assets and liabilities -
(Increase) decrease in mortgage loans held for sale (144,400) 439,895 (291,895)
Increase in accrued interest receivable and
other assets (102,627) (89,186) (71,899)
Decrease in foreclosed real estate -0- 300,817 58,928
Increase in accrued interest payable and other liabilities 63,962 15,086 59,273
Increase in income taxes payable 21,541 22,310 67,442
----------- ----------- ----------
Net cash provided by operating activities 549,248 1,418,192 286,668
----------- ----------- ----------
Cash Flows From Investing Activities:
Net decrease (increase) of interest-bearing deposits 298,000 (99,000 198,000
Proceeds from maturities of held-to-maturity securities 550,000 -0- -
Proceeds from sales and maturities of
available-for-sale securities 896,750 500,000 -
Principal reductions on available-for-sale securities 41,515 51,777 -
Purchases of held-to-maturity securities -0- (1,186,800) -
Purchases of available-for-sale securities (897,112) (250,000) -
Proceeds from sales, maturities and principal
reductions on investment securities - - 8,662,307
Purchases of investment securities - - (8,692,110)
Net (increase) decrease in loans (4,754,319) 151,445 (2,660,618)
Purchases of premises and equipment (246,807) (32,881) (143,477)
Net cash settlement on branch acquisition -0- -0- 1,756,095
----------- ----------- -----------
Net cash used in investing activities (4,111,973) (865,459) (879,803)
----------- ----------- -----------
Cash Flows From Financing Activities:
Net (decrease) increase in demand, NOW, money
market and savings deposits (351,570) 1,986,165 982,830
Net increase (decrease) increase in time deposits 1,936,866 (576,752) 693,190
Proceeds from issuance of common stock 14,850 864,500 950
Dividends paid (134,143) (126,504) (28,949)
----------- ----------- -----------
Net cash provided by financing activities 1,466,003 2,147,409 1,648,021
----------- ----------- -----------
Net (Decrease) Increase in Cash and Cash Equivalents (2,096,722) 2,700,142 1,054,886
Cash and Cash Equivalents at Beginning of Year 9,633,682 6,933,540 5,878,654
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 7,536,960 $ 9,633,682 $ 6,933,540
=========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-18
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Continued)
1995 1994 1993
----------- ----------- ----------
Supplemental Disclosure of
Cash Flow Information:
Interest paid $ 1,377,084 $ 1,136,363 $ 1,218,869
=========== =========== ===========
Income taxes paid $ 275,792 $ 193,498 $ 209,105
=========== =========== ===========
Supplemental Disclosure of
Noncash Financing Activity:
Reduction in principal
portion of ESOP indebtedness $ 40,842 $ 38,220 $ 30,357
=========== =========== ==========
Proceeds from borrowings
- ESOP debt $ -0- $ 102,229 $ -0-
=========== =========== ==========
The accompanying notes are an integral
part of these financial statements
F-18
(Sheet II)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
Liberty Holding Company, (the "Company"), is a bank holding company
organized under the laws of the State of Florida.
Principles of Consolidation:
The consolidated financial statements include the accounts of the
Company and its majority owned subsidiary, Liberty Bank (the "Bank").
The Company owned 99.3% of the outstanding stock of Liberty Bank as of
December 31, 1995 and 1994. All material intercompany balances and
transactions have been eliminated in consolidation.
Accounting 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.
Cash Equivalents:
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks, and federal funds sold. Generally,
federal funds are sold for one-day periods.
Investment Securities:
Effective January 1, 1994, the Bank adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities. Investment securities that management has the
ability and intent to hold to maturity are classified as
held-to-maturity and reported at cost, adjusted for amortization of
premiums and accretion of discounts using methods approximating the
interest method. Other investment securities are classified as
available-for-sale and are carried at fair value. Unrealized holding
gains and losses, net of taxes, on available-for-sale securities are
reported as a net amount in a separate component of stockholders' equity
until realized. Gains or losses on the sale of securities are determined
using the specific identification method.
Loans Receivable:
Loans are stated at the amount of unpaid principal, reduced by unearned
discounts and an allowance for loan losses. Unearned discount on
installment loans is recognized as income over the terms of the loans by
the interest method. Interest on other loans is calculated by using the
simple interest method on daily balances of the principal amount
outstanding.
F-19
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loans Receivable (continued):
The allowance for loan losses is established through a provision for
loan losses charged to expense. Loans are charged against the allowance
for loan losses when management believes that the collectibility of the
principal is unlikely. The allowance is an amount that management
believes will be adequate to absorb possible losses on existing loans
that may become uncollectible, based on evaluations of the
collectibility of loans and prior loan loss experience. The evaluations
take into consideration such factors as changes in the nature and volume
of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the
borrowers' ability to pay.
Effective January 1, 1995, the Bank adopted Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for Impairment of
a Loan ("SFAS 114") and Statement of Financial Accounting Standard No.
118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures. In accordance with SFAS 114, loans are
considered impaired when it is probable that the Bank will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. When impairment is identified it is measured based on the
present value of expected future cash flows discounted at the loan's
effective interest rate, except as a practical expedient, at the fair
value of collateral if the loan is considered collateral dependent. When
identified, the impaired amount of the loan is recognized through a
provision for impairment and a corresponding valuation allowance.
Subsequent changes in the measurement of impairment are adjusted through
the valuation allowance. 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 Bank's adoption of these accounting standards did not have
a material effect on the financial condition and results of operations
of the Bank.
For other non-accrual loans for which impairment has not been recognized
the accrual of interest is discontinued on a loan when management
believes, after considering economic and business conditions and
collection efforts, that the borrower's financial condition is such that
the collection of interest is questionable.
Mortgage Banking Activities:
The Bank originates mortgage loans for portfolio investments or sale in
the secondary market. During the period of origination, mortgage loans
are designated as held either for sale or investment purposes. Mortgage
loans held for sale are carried at cost as all such loans are sold under
floating commitments.
Sale of Loan Participations:
The Bank originates loans partially guaranteed by the U.S. Small
Business Administration. The Bank may sell the guaranteed portion of
certain of these loans in the secondary market at a premium. The
premiums on these transactions are recorded as gains on sales of loans
and included in noninterest income.
F-19
(Sheet II)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreclosed Real Estate:
Foreclosed real estate includes property acquired through, or in lieu
of, loan foreclosure and is initially recorded at the lower of cost or
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 cost or fair value minus
estimated cost to sell. Any write-downs based on the asset's fair value
at the date of acquisition are charged to the allowance for loan losses.
Cost incurred in maintaining foreclosed real estate and subsequent
write-downs to reflect declines in the fair value of the property are
included in other expenses.
Premises and Equipment:
Premises and equipment are carried at cost, net of accumulated
depreciation. Depreciation is computed using the straight-line method
over the estimated useful lives of the assets. The cost of leasehold
improvements is amortized using the straight-line method over the lease
term or estimated useful lives of the improvement whichever is shorter.
When assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts, and any
resulting gain or loss is reflected in income for the period. The cost
of maintenance and repairs is charged to expense as incurred,
significant renewals and betterments are capitalized.
Income Taxes:
The Bank and the Company file consolidated federal and state income tax
returns. Income taxes are provided for the tax effects of transactions
reported in the Financial statements and consist of taxes currently due
plus deferred tax assets or liabilities based on taxable effects of
certain temporary differences. Temporary differences are differences
between the tax bases of assets or liabilities and their reported
amounts in the Financial statements that will result in taxable or
deductible amounts in future years when the reported amount of the
assets or liabilities are recovered or settled, respectively.
During 1993, the Company adopted Statement of Financial Standards
No.109, Accounting for Income Taxes. There was no cumulative effect on
net income for 1993 for the change in accounting principle.
Net Income Per Share of Common Stock:
Net income per share of common stock is computed on the weighted average
number of shares outstanding.
Reclassifications:
Certain prior year amounts have been reclassified to conform to the
current year presentation.
F-19
(Sheet III)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 2 - INVESTMENT SECURITIES
Securities have been classified in the statement of financial condition
according to management's intent. The carrying amount of securities and
their approximate fair values at December 31, 1995 and 1994, are as
follows:
<TABLE>
<C> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ----------- ------------ -----------
Held-To-Maturity:
December 31, 1995 -
State and municipal securities $ 640,000 $ -0- $ (4,254) $ 635,746
=========== =========== =========== ===========
December 31, 1994 -
U.S. Government agency securities $ 549,891 $ 375 $ -0- $ 550,266
State and municipal securities 1,733,697 -0- (100,799) 1,632,898
----------- ----------- ----------- -----------
$ 2,283,588 $ 375 $ (100,799) $ 2,183,164
=========== =========== =========== ===========
Available-For-Sale:
December 31, 1995 -
U.S. Government agency securities $ 3,569,946 $ 2,197 $ (63,957) $ 3,508,186
State and municipal securities 893,788 18,770 -0- 912,558
Other securities 146,800 -0- -0- 146,800
----------- ----------- ----------- -----------
$ 4,610,534 $ 20,967 $ (63,957) $ 4,567,544
=========== =========== =========== ===========
December 31, 1994 -
U.S. Government agency securities $ 3,574,307 $ 435 $ (416,642) $ 3,158,100
=========== =========== =========== ===========
</TABLE>
F-19
(Sheet IV)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 2 - INVESTMENT SECURITIES (Continued)
As a result of a one-time exemption allowed by the Financial Accounting
Standards Board the Bank elected to reclassify certain securities
classified as held-to-maturity to available-for-sale. The amortized
cost and fair value of these securities amounted to $ 1,093,774 and $
1,096,390, respectively.
Gross realized gains and (losses) on sales of available-for-sale
securities amounted to $ 11,000 and $ (14,250) in 1995, respectively.
The amortized cost and fair value of investment maturities at December
31, 1995, by contractual maturity, are summarized below. Expected
maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call
or prepayment penalties.
The scheduled maturities of securities at December 31, 1995, are as
follows:
<TABLE>
<C> <C> <C> <C> <C>
Held-To-Maturity Available-For-Sale
---------------------------- ---------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ----------- -----------
No stated maturity $ -0- $ -0- $ 146,800 $ 146,800
Due in one year or less 270,000 268,934 -0- -0-
Due from one to five years 250,000 248,907 1,797,504 1,772,250
Due from five to ten years 120,000 117,905 2,022,441 1,988,570
Due after ten years -0- -0- 643,789 659,924
----------- ----------- ----------- -----------
$ 640,000 $ 635,746 $ 4,610,534 $ 4,567,544
=========== =========== =========== ===========
</TABLE>
Investment securities, with a amortized cost and fair value of
approximately $ 2,022,260 and $ 1,982,800 at December 31, 1995,
respectively and $ 899,200 and $ 783,000 at December 31, 1994,
respectively, were pledged to secure public deposits and for other
purposes required or permitted by law.
F-19
(Sheet V)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 3 - LOANS RECEIVABLE
Major classification of loans receivable are summarized as follows:
1995 1994
------------- -----------
Commercial real estate $23,027,065 $21,228,464
Real estate - construction and development 2,859,100 1,135,112
Commercial 9,161,124 8,080,991
Installment 1,549,323 1,328,750
------------- ------------
36,596,612 31,773,317
Unearned discounts (9,254) (13,370)
Allowance for loan losses (504,428) (431,336)
------------- ------------
Loans receivable, net $ 36,082,930 $ 31,328,611
============= ============
The Bank grants commercial, real estate and consumer loans primarily in
Escambia County, Florida. Although the Bank's loan portfolio is
diversified, a significant portion of its loans are secured by real
estate.
Loans on which the accrual of interest has been discontinued or reduced,
for which impairment had not been recognized, amounted to $ 37,900, $
666,698 and $ -0- at December 31, 1995, 1994 and 1993, respectively. If
interest on these loans had been accrued, such income would have
approximated $ 7,065 in 1995 , $ 29,500 in 1994, and $ -0- in 1993.
Interest income on those loans is recorded only when received.
Changes in the allowance for loan losses are summarized as follows:
1995 1994 1993
--------- ---------- --------
Balance, beginning of year $431,336 $522,133 $568,394
Provision charged to operations -0- -0- 30,000
Loans charged off (16,364) (148,325) (177,854)
Recoveries 89,456 57,528 101,593
--------- ---------- ---------
Balance, end of year $ 504,428 $ 431,336 $ 522,133
========= ========== =========
F-19
(Sheet VI)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 4 - PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
1995 1994
----------- ----------
Land $ 305,181 $ 305,181
Buildings 1,428,218 1,425,818
Leasehold improvements 31,467 31,467
Furniture and equipment 752,086 471,651
Construction in progress 58,176 -0-
----------- -----------
2,575,128 2,234,117
Less: Accumulated depreciation
and amortization (744,750) (635,795)
----------- -----------
$1,830,378 $1,598,322
Depreciation and amortization expense charged to operations amounted to
$ 108,956 in 1995, $ 78,486 in 1994 and $ 69,666 in 1993.
NOTE 5 - NOTES PAYABLE
Notes payable are summarized as follows:
<TABLE>
<C> <C> <C>
1995 1994
--------- ---------
ESOP loan with quarterly principal payments of $ 2,621, plus interest
at prime + .5%, maturing November 2003,
secured by 21,057 shares of Company stock $ 83,880 $ 94,365
ESOP loan with quarterly principal payments of $ 5,792, plus interest
at prime, maturing February 1998, secured
by 75,780 shares of Company stock 22,922 46,091
ESOP loan with quarterly principal payments of $ 1,283, plus interest
at prime, maturing April 2001, secured by
15,581 shares of Company stock 28,189 33,321
ESOP loan with quarterly principal payments of $ 257, plus interest at
prime, maturing March 2002, secured by
3,426 shares of Company stock 6,143 7,171
ESOP loan with quarterly principal payments of $ 257, plus interest at
prime, maturing December 2001, secured
by 3,236 shares of Company stock 6,401 7,429
-------- ----------
$ 147,535 $ 188,377
======== ==========
</TABLE>
F-19
(Sheet VII)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 5 - NOTES PAYABLE (Continued)
Following are maturities of notes payable for each of the next five
years:
1996 $ 40,594
1997 17,672
1998 17,672
1999 17,672
2000 17,672
Thereafter 36,253
----------
$ 147,535
==========
NOTE 6 - TIME DEPOSITS
Time deposits to Bank customers amounting to $ 100,000 or more,
amounted to $ 4,576,911 in 1995 and $ 5,379,164 in 1994.
At December 31, 1995, the scheduled maturities of time deposits are as
follows:
1996 $ 17,981,082
1997 2,047,645
1998 1,065,611
-------------
$ 21,094,338
NOTE 7 - STOCKHOLDERS' EQUITY
The Board of Directors of the Bank may, subject to statutory
limitations, declare dividends on net profits of the Bank.
NOTE 8 - INCOME TAXES
The provision for income taxes consist of the following:
1995 1994 1993
--------- ---------- --------
Current tax provision:
Federal $261,501 $187,217 $262,173
State 35,832 28,591 14,374
--------- ---------- ---------
$ 297,333 $ 215,808 $ 276,547
========= ========== =========
F-19
(Sheet VIII)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 8 - INCOME TAXES (Continued)
The provision for income taxes differs from that computed by applying
the statutory federal income tax rate to income before income taxes as
follows:
<TABLE>
<C> <C> <C> <C>
1995 1994 1993
--------- ---------- ---------
Tax based on statutory rate $287,576 $284,937 $259,595
State tax, net of federal benefit 23,649 18,870 9,487
Effect of tax-exempt income (26,449) (26,991) (14,215)
Loan loss provisions currently deductible -0- (55,360) (15,566)
Other, net 12,557 (5,648) 37,246
--------- ---------- ---------
$ 297,333 $ 215,808 $ 276,547
========= ========== =========
</TABLE>
The tax effects of each type of significant item that gave rise to
deferred taxes are:
1995 1994
--------- --------
Deferred tax assets:
Net unrealized depreciation on
available-for-sale securities $ 16,129 $ 156,910
Allowance for loan losses 41,561 41,561
Other 21,441 -0-
--------- ---------
79,131 198,471
Deferred tax liabilities:
Depreciation (166,807) (145,366)
--------- ---------
Net deferred tax (liability) asset $ (87,676) $ 53,105
========= =========
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Commitments:
At December 31, 1995, the Bank had firm purchase commitments outstanding
amounting to approximately $ 52,500. These commitments relate to
equipment to be used in its new branch location as described below.
F-19
(Sheet IX)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)
Leases:
During 1995, the Bank signed a 10 year lease agreement for a new branch
located in Escambia County, Florida. Lease payments are scheduled to
begin in conjunction with the opening of the branch in March 1996. The
lease requires the payment of taxes, insurance, and maintenance cost in
addition to rental payments. In addition, the Bank leases equipment and
land under operating leases expiring through 1997. Future minimum lease
payments under operating leases having remaining terms in excess of one
year are summarized as follows:
1996 $ 40,800
1997 44,100
1998 36,500
1999 36,500
2000 36,500
Thereafter 191,500
---------
Total future minimum rental payments $ 385,900
=========
Rental expense related to operating leases amounted to approximately
$14,800 in 1995, $ 8,500 in 1994 and $ 8,845 in 1993.
Financial Instruments:
The Financial statements do not reflect various commitments that arise
in the normal course of business, to meet the financial needs of
customers. These include commitments to extend credit and letters of
credit, and involve to varying degrees, elements of credit, interest
rate, and liquidity risk in excess of the amounts reflected in the
Statement of Financial Condition.
Commitments to extend credit, which amounted to approximately $
2,983,000 at December 31, 1995, represent legally binding agreements to
lend to a customer as long as all established contractual conditions are
satisfied. Commitments generally have fixed expiration dates or other
termination clauses. Since many commitments expire without being funded,
total commitment amounts do not necessarily represent future liquidity
requirements.
Standby letters of credit are conditional commitments issued by the Bank
guaranteeing the performance of a customer to a third party. At December
31, 1995, the Bank had approximately $ 192,800 in standby letters of
credit outstanding.
The Bank's exposure to credit loss in the event of non-performance by
the other party to commitments to extend credit and letters of credit is
represented by the contractual amount of these instruments. As these
off-balance-sheet financial instruments have essentially the same credit
risk involved in extending loans, the Bank generally uses the same
credit and collateral policies in making these commitments and
conditional obligations as it does for on-balance-sheet instruments. The
Bank does not anticipate any material losses as a result of these
commitments.
F-19
(Sheet X)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)
Unused Line of Credit:
At December 31, 1995, the Bank had $ 4,000,000 of unused lines of credit
with the Federal Home Loan Bank to be drawn upon as needed, with
interest to be determined at the time of the draw. The line is secured
by a blanket lien on the Bank's residential mortgage loans.
Litigation:
The Bank is a party to legal actions normally associated with financial
institutions, the aggregate effect of which, in management's and legal
counsel's opinion, would not be significant to the Bank's financial
condition.
NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN
The Bank has a non-contributory employee stock ownership plan ("ESOP")
covering all employees who have met certain service requirements. The
Bank's ESOP contributions are determined by its Board of Directors. At
December 31, 1995 and 1994, the Employee Stock Ownership Trust (the
"Trust") owned 118,900 shares of Liberty Holding Company Common
stock. Contributions to the Trust amounted to $ 67,800 in 1995,
$ 65,850 in 1994 and $ 56,100 in 1993, of which $ 14,574 in 1995,
$ 13,135 in 1994, and $ 8,674 in 1993 was allocated to interest expense.
The Company is obligated to make cash contributions to the Trust to
enable it to make payments on the ESOP loans (see Note 5). For financial
statement purposes, the ESOP obligations have been reflected as a
liability and as a reduction of stockholders' equity. As principal
payments on the loans are made, the aforementioned liability is reduced
and stockholders' equity increased by such payments.
NOTE 11- RELATED PARTY TRANSACTIONS
At December 31, 1995, certain officers, directors and their related
interest and an affiliated party were indebted to the Bank in the
aggregate amount of approximately $ 2,991,300. Governing regulations
require that these loans be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time
for comparable transactions with unrelated persons. Also, certain
related parties maintain deposit balances with the Bank in the aggregate
amount of approximately $ 3,204,000 at December 31, 1995.
During the 1995, the Bank contracted with a Director's company to
remodel one of the Bank's branches. Total payments under the terms of
the contract amounted to approximately $ 50,800 in 1995.
In addition, an affiliated party provides various legal services to the
Bank in the normal course of business. Total legal fees paid to this
affiliated party amounted to approximately $ 49,000 in 1995, $ 33,740 in
1994 and $ 32,531 in 1993.
Certain stockholders of the Corporation are also members of the Board of
Directors of the Bank.
F-19
(Sheet XI)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 12 - CONCENTRATIONS OF CREDIT RISK
The Bank maintains cash balances and federal funds sold at several
financial institutions in Alabama and Florida. Accounts at each
institution are insured by the Federal Deposit Insurance Corporation
(FDIC) up to $ 100,000. Uninsured federal funds sold amounted to
approximately $ 2,475,000 at December 31, 1995. The Bank's management
monitors these institutions on a quarterly basis in order to determine
that the institutions meet "well-capitalized" guidelines as established
by the FDIC.
NOTE 13 - REGULATORY MATTERS
Banks are 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.
The regulations require the Bank to meet specific capital adequacy
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 classification is
also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors. Management believes, as
of December 31, 1995, that the Bank meets all capital requirements to
which it is subject.
NOTE 14 - STOCK WARRANTS
The Company issued a Private Offering Memorandum (the "offering") on
January 14, 1994, for the issuance of 220,000 shares of voting common
stock at $ 4.75 per share in 1994 of which 182,000 shares were
purchased. The Bank has also received subscriptions from shareholders to
exercise the remaining 34,000 shares at $ 4.75 per share. In addition,
for each stock share purchased shareholders received two warrants
exercisable in 1995 and 1996 at a price of $ 4.95 and $ 5.25 per share,
respectively. Each warrant entitles the holder to purchase one share for
each two shares of stock purchased in the 1994 stock offering. The net
proceeds from the offering and the warrants will be used to fund future
expansion. During 1995, warrants were exercised to purchase 3,000 shares
of common stock at $ 4.95 per share. The remaining warrants exercisable
in 1995 expired without being exercised.
NOTE 15 - BRANCH ACQUISITION
In October 1993, the Bank acquired the Century, Florida branch of
Liberty Holding Company and Subsidiary of Fort Walton. The acquisition
included cash and cash items, loans, fixed assets and deposits. The
transaction was recorded as a purchase and the acquired assets and
liabilities were recorded at Liberty Holding Company and Subsidiary of
Fort Walton's net carrying amount.
F-19
(Sheet XII)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 16 - FAIR VALUES OF FINANCIAL INSTRUMENTS
During 1995, the Bank adopted Statement of Financial Accounting
Standards No. 107, Disclosures about Fair Value of Financial
Instruments, ("SFAS 107"). SFAS 107 requires that the Bank disclose
estimated fair values for its financial instruments. The following
methods and assumptions were used by the Bank in estimating fair values
of financial instruments as disclosed herein:
Cash and cash equivalents:
The carrying amounts of cash and short-term instruments approximate
their fair value.
Held-to-maturity and available-for-sale securities:
Fair values for securities are based on quoted market prices where
available. If quoted market prices are not available, fair values are
based on quoted market prices of comparable instruments.
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 (for example, one-to-four family
residential), 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 ("CDs") approximate
their fair values at the reporting date. Fair values for fixed-rate CDs
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.
Accrued interest:
The carrying amounts of accrued interest approximate their fair values.
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
standings.
F-19
(Sheet XIII)
<PAGE>
LIBERTY HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 16 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
Limitations:
Fair value estimates are made at a specific point in time and are based
on relevant market information which is continuously changing. Because
no quoted market prices exist for a significant portion of the Company's
financial instruments, fair values for such instruments are based on
management's assumptions with respect to future economic conditions,
estimated discount rates, estimates of the amount and timing of future
cash flows, expected loss experience, and other factors. These estimates
are subjective in nature involving uncertainties and matters of
significant judgment; therefore, they cannot be determined with
precision. Changes in the assumptions could significantly affect the
estimates.
The estimated fair values of the Company's financial instruments at
December 31, 1995 are as follows:
Carrying Fair
Amount Value
------------- -------------
Financial assets:
Cash and cash equivalents $ 7,536,960 $ 7,536,960
Securities held-to-maturity 640,000 635,746
Securities available-for-sale 4,567,544 4,567,544
Loans receivable 36,082,930 36,111,929
Mortgage loans held for sale 201,400 201,400
Accrued interest receivable 337,899 337,899
Financial liabilities:
Deposits 44,534,276 44,595,593
Accrued interest payable 190,507 190,507
Off-balance-sheet liabilities:
Commitments to extend credit -- 2,983,000
Stand-by letters of credit -- 192,800
F-19
(Sheet XIV)
<PAGE>
LIBERTY BANK
PENSACOLA, FLORIDA
FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
CONTENTS
PAGE
Independent Auditor's Report F-21
Statements of Financial Condition F-22
Statements of Income F-23
Statements of Changes in Stockholders' Equity F-24
Statements of Cash Flows F-25
Notes to Financial Statements F-26
F-20
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Liberty Bank
Pensacola, Florida
We have audited the accompanying statements of financial condition of Liberty
Bank as of December 31, 1995 and 1994, and the related statements of income,
changes in stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Bank'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 audit 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 financial statements referred to above present fairly, in
all material respects, the financial position of Liberty Bank as of December 31,
1995 and 1994, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Bank changed its
method of accounting for investments in 1994 and income taxes in 1993.
/s/ Saltmarsh, Cleaveland & Gund
Pensacola, Florida
January 19, 1996
F-21
<PAGE>
LIBERTY BANK
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1995 AND 1994
ASSETS
1995 1994
------------- ------------
Cash and due from banks $ 4,861,960 $ 5,458,682
Federal funds sold 2,675,000 4,175,000
Interest-bearing deposits in banks -0- 298,000
Securities held to maturity (note 1 and 2) 640,000 2,283,588
Securities available for sale (notes 1 and 2) 4,567,544 3,158,100
Loans receivable, net of allowance for loan
losses of $ 504,428 in 1995 and $ 431,336
in 1994 (notes 1 and 3) 36,082,930 31,328,611
Mortgage loans held for sale (note 1) 201,400 57,000
Accrued interest receivable 337,899 295,012
Premises and equipment, net (notes 1 and 4) 1,830,378 1,598,322
Deferred income taxes (notes 1 and 7) -0- 53,105
Other assets 161,333 195,797
------------- ------------
Total Assets $ 51,358,444 $ 48,901,217
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits $ 11,262,564 $ 10,868,918
NOW and money market deposits 10,375,377 11,353,779
Savings deposits 1,898,929 1,729,099
Other time deposits (note 5) 21,894,338 19,857,472
------------- ------------
Total deposits 45,431,208 43,809,268
Accrued interest payable 190,507 123,451
Deferred income taxes (notes 1 and 7) 87,676 -0-
Income taxes payable 84,643 63,102
Other liabilities 136,513 139,614
------------- ------------
otal liabilities 45,930,547 44,135,435
------------- ------------
Commitments and Contingencies (note 8) - -
Stockholders' Equity:
Common stock, $ 5 par value; 248,000 shares
authorized, 198,000 shares issued
and outstanding 990,000 990,000
Surplus 2,085,943 2,085,943
Undivided profits 2,378,815 1,949,136
Net unrealized depreciation on available-
for-sale securities, net of taxes of
$16,129 in 1995 and $156,910 in 1994 (26,861) (259,297)
------------- ------------
Total stockholders' equity (note 6) 5,427,897 4,765,782
------------- ------------
Total Liabilities and Stockholders' Equity $ 51,358,444 $ 48,901,217
============= ============
The accompanying notes are an integral
part of these financial statements
F-22
<PAGE>
LIBERTY BANK
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<C> <C> <C> <C>
1995 1994 1993
----------- ----------- ----------
Interest Income:
Loans receivable and fees on loans $ 3,490,782 $ 3,118,488 $ 2,819,281
Investment securities 278,854 300,932 287,274
Federal funds sold 195,466 141,251 76,979
Interest-bearing deposits in banks 8,176 10,946 10,389
----------- ----------- -----------
Total interest income 3,973,278 3,571,617 3,193,923
Interest Expense on Deposits 1,484,864 1,168,584 1,176,389
----------- ----------- -----------
Net interest income 2,488,414 2,403,033 2,017,534
Provision for Loan Losses (note 3) -0- -0- 30,000
----------- ----------- -----------
Net interest income after provision for loan losses 2,488,414 2,403,033 1,987,534
----------- ----------- -----------
Noninterest Income:
Service charges 364,353 388,398 398,523
Net investment securities gains (losses) (3,250) -0- 112,267
Net gains from sale of loans 69,385 202,679 275,501
Other income 36,241 31,267 52,079
----------- ----------- -----------
Total noninterest income 466,729 622,344 838,370
----------- ----------- -----------
Noninterest Expenses:
Salaries and employee benefits 1,066,765 1,131,415 1,106,109
Occupancy expense 149,371 137,303 124,268
Other expense 893,195 918,608 813,814
----------- ----------- -----------
Total noninterest expenses 2,109,331 2,187,326 2,044,191
----------- ----------- -----------
Income Before Income Taxes 845,812 838,051 781,713
Income Taxes (notes 1 and 7) 297,333 215,808 276,547
----------- ----------- -----------
Net Income $ 548,479 $ 622,243 $ 505,166
=========== =========== ===========
Net Income Per Share of Common Stock (note 1) $ 2.77 $ 3.03 $ 2.55
=========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-23
<PAGE>
LIBERTY BANK
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<C> <C> <C> <C> <C> <C>
Net
Unrealized
Appreciation
(Depreciation)
on Available-
Common Undivided For-Sale
Stock Surplus Profits Securities Total
----------- ------------ ----------- ------------ ------------
Balance, January 1, 1993 $ 990,000 $ 2,085,943 $ 970,231 $ -- $ 4,046,174
Net income 505,166 505,166
Cash dividends paid,
$ .15 per share (29,701) (29,701)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1993 990,000 2,085,943 1,445,696 -- 4,521,639
Adjustment to beginning balance
for change in accounting principle,
net of taxes of $ 5,100 8,428 8,428
Net income 622,243 622,243
Cash dividends paid,
$ .60 per share (118,803) (118,803)
Net change in unrealized
appreciation on available-
for-sale securities, net of
taxes of $ 162,010 (267,725) (267,725)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1994 990,000 2,085,943 1,949,136 (259,297) 4,765,782
Net income 548,479 548,479
Cash dividends paid,
$ .60 per share (118,800) (118,800)
Net change in unrealized
appreciation on available-
for-sale securities, net of
taxes of $ 140,781 232,436 232,436
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1995 $ 990,000 $ 2,085,943 $ 2,378,815 $ (26,861) $ 5,427,897
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-24
<PAGE>
LIBERTY BANK
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<C> <C> <C> <C>
1995 1994 1993
------------ ------------ -----------
Cash Flows From Operating Activities:
Net income $ 548,479 $ 622,243 $ 505,166
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 108,956 78,486 69,666
Provision for loan losses -0- -0- 30,000
Net accretion/amortization on securities 12,957 36,908 (12,833)
Net realized investment securities (gains) losses 3,250 -0- (112,267)
Changes in operating assets and liabilities -
(Increase) decrease in mortgage loans held for sale (144,400) 439,895 (291,895)
Increase in accrued interest receivable and
other assets (102,627) (89,186) (71,899)
Decrease in foreclosed real estate -0- 300,817 58,928
Increase in accrued interest payable and
other liabilities 63,955 21,617 52,742
Increase in income taxes payable 21,541 22,310 67,442
----------- ----------- -----------
Net cash provided by operating activities 512,111 1,433,090 295,050
----------- ----------- -----------
Cash Flows From Investing Activities:
Net decrease (increase) of interest-bearing deposits 298,000 (99,000) 198,000
Proceeds from maturity of held-to-maturity securities 550,000 -0- -
Proceeds from sales and maturities of
available-for-sale securities 896,750 500,000 -
Principal reductions on available-for-sale securities 41,515 51,777 -
Purchases of held-to-maturity securities -0- (1,186,800) -
Purchases of available-for-sale securities (897,112) (250,000) -
Proceeds from sales, maturities and principal
reductions of investment securities - - 8,662,307
Purchases of investment securities - - (8,692,110)
Net (increase) decrease in loans (4,754,319) 151,445 (2,660,618)
Purchases of premises and equipment (246,807) (32,881) (143,477)
Net cash settlement on branch acquisition - - 1,756,095
----------- ----------- -----------
Net cash used in investing activities (4,111,973) (865,459) (879,803)
----------- ----------- -----------
Cash Flows From Financing Activities:
Net (decrease) increase in demand, NOW, money
market and savings deposits (414,926) 2,128,066 976,150
Net increase in time deposits 2,036,866 123,248 693,190
Dividends paid (118,800) (118,803) (29,701)
----------- ----------- -----------
Net cash provided by financing activities 1,503,140 2,132,511 1,639,639
----------- ----------- -----------
Net (Decrease) Increase in Cash and Cash Equivalents (2,096,722) 2,700,142 1,054,886
Cash and Cash Equivalents at Beginning of Year 9,633,682 6,933,540 5,878,654
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 7,536,960 $ 9,633,682 $ 6,933,540
=========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-25
<PAGE>
LIBERTY BANK
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Continued)
1995 1994 1993
----------- ----------- -----------
Supplemental Disclosure of Cash
Flow Information:
Interest paid $ 1,417,808 $ 1,136,363 $ 1,218,869
=========== =========== ===========
Income taxes paid $ 275,792 $ 193,498 $ 209,105
=========== =========== ===========
The accompanying notes are an integral
part of these financial statements
F-25
(Sheet II)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ownership:
Liberty Bank (the "Bank") is a 99.3% owned subsidiary of Liberty Holding
Company, Inc. (the "Corporation"), a bank holding company organized
under the laws of the State of Florida.
Accounting 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.
Cash Equivalents:
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks, and federal funds sold. Generally,
federal funds are sold for one-day periods.
Investment Securities:
Effective January 1, 1994, the Bank adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities. Investment securities that management has the
ability and intent to hold to maturity are classified as
held-to-maturity and reported at cost, adjusted for amortization of
premiums and accretion of discounts using methods approximating the
interest method. Other investment securities are classified as
available-for-sale and are carried at fair value. Unrealized holding
gains and losses, net of taxes, on available-for-sale securities are
reported as a net amount in a separate component of stockholders' equity
until realized. Gains or losses on the sale of securities are determined
using the specific identification method.
Loans Receivable:
Loans are stated at the amount of unpaid principal, reduced by unearned
discounts and an allowance for loan losses. Unearned discount on
installment loans is recognized as income over the terms of the loans by
the interest method. Interest on other loans is calculated by using the
simple interest method on daily balances of the principal amount
outstanding.
The allowance for loan losses is established through a provision for
loan losses charged to expense. Loans are charged against the allowance
for loan losses when management believes that the collectibility of the
principal is unlikely. The allowance is an amount that management
believes will be adequate to absorb possible losses on existing loans
that may become uncollectible, based on evaluations of the
collectibility of loans and prior loan loss experience. The evaluations
take into consideration such factors as changes in the nature and volume
of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the
borrowers' ability to pay.
F-26
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loans Receivable (continued):
Effective January 1, 1995, the Bank adopted Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for Impairment of
a Loan ("SFAS 114") and Statement of Financial Accounting Standard No.
118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures. In accordance with SFAS 114, loans are
considered impaired when it is probable that the Bank will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. When impairment is identified it is measured based on the
present value of expected future cash flows discounted at the loan's
effective interest rate, except as a practical expedient, at the fair
value of collateral if the loan is considered collateral dependent. When
identified, the impaired amount of the loan is recognized through a
provision for impairment and a corresponding valuation allowance.
Subsequent changes in the measurement of impairment are adjusted through
the valuation allowance. 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 Bank's adoption of these accounting standards did not have
a material effect on the financial condition and results of operations
of the Bank.
For other non-accrual loans for which impairment has not been recognized
the accrual of interest is discontinued on a loan when management
believes, after considering economic and business conditions and
collection efforts, that the borrower's financial condition is such that
the collection of interest is questionable.
Mortgage Banking Activities:
The Bank originates mortgage loans for portfolio investments or sale in
the secondary market. During the period of origination, mortgage loans
are designated as held either for sale or investment purposes. Mortgage
loans held for sale are carried at cost as all such loans are sold under
floating commitments.
Sale of Loan Participations:
The Bank originates loans partially guaranteed by the U.S. Small
Business Administration. The Bank may sell the guaranteed portion of
certain of these loans in the secondary market at a premium. The
premiums on these transactions are recorded as gains on sales of loans
and included in noninterest income.
Foreclosed Real Estate:
Foreclosed real estate includes property acquired through, or in lieu
of, loan foreclosure and is initially recorded at the lower of cost or
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 cost or fair value minus
estimated cost to sell. Any write-downs based on the asset's fair value
at the date of acquisition are charged to the allowance for loan losses.
Costs incurred in maintaining foreclosed real estate and subsequent
write-downs to reflect declines in the fair value of the property are
included in other expenses.
F-26
(Sheet II)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Premises and Equipment:
Premises and equipment are carried at cost, net of accumulated
depreciation. Depreciation is computed using the straight-line method
over the estimated useful lives of the assets. The cost of leasehold
improvements is amortized using the straight-line method over the lease
term or estimated useful lives of the improvements, whichever is
shorter. When assets are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is reflected in income for the period. The cost
of maintenance and repairs is charged to expense as incurred,
significant renewals and betterments are capitalized.
Income Taxes:
The Bank and the Company file consolidated federal and state income tax
returns. Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due
plus deferred tax assets or liabilities based on taxable effects of
certain temporary differences. Temporary differences are differences
between the tax bases of assets or liabilities and their reported
amounts in the financial statements that will result in taxable or
deductible amounts in future years when the reported amount of the
assets or liabilities are recovered or settled, respectively.
During 1993, the Bank adopted Statement of Financial Standards No. 109,
Accounting for Income Taxes. There was no cumulative effect on net
income for 1993 for the change in accounting principle.
Net Income Per Share of Common Stock:
Net income per share of common stock is computed on the number of shares
outstanding.
Reclassifications:
Certain prior year amounts have been reclassified to conform to the
current year presentation.
F-26
(Sheet III)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 2 - INVESTMENT SECURITIES
Securities have been classified in the statement of financial condition
according to management's intent. The carrying amount of securities and
their approximate fair values at December 31, 1995 and 1994, are as
follows:
<TABLE>
<C> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ------------ -----------
Held-To-Maturity:
December 31, 1995 -
State and municipal securities $ 640,000 $ -0- $ (4,254) $ 635,746
=========== =========== =========== ===========
December 31, 1994 -
U.S. Government agency securities $ 549,891 $ 375 $ -0- $ 550,266
State and municipal securities 1,733,697 -0- (100,799) 1,632,898
----------- ----------- ----------- -----------
$ 2,283,588 $ 375 $ (100,799) $ 2,183,164
=========== =========== =========== ===========
Available-For-Sale:
December 31, 1995 -
U.S. Government agency securities $ 3,569,946 $ 2,197 $ (63,957) $ 3,508,186
State and municipal securities 893,788 18,770 -0- 912,558
Other securities 146,800 -0- -0- 146,800
----------- ----------- ----------- -----------
$ 4,610,534 $ 20,967 $ (63,957) $ 4,567,544
=========== =========== =========== ===========
December 31, 1994 -
U.S. Government agency securities $ 3,574,307 $ 435 $ (416,642) $ 3,158,100
=========== =========== =========== ===========
</TABLE>
As a result of a one-time exemption allowed by the Financial Accounting
Standards Board, the Bank elected to reclassify certain securities
classified as held-to-maturity to available-for-sale. The amortized
cost and fair value of these securities amounted to $ 1,093,774 and $
1,096,390, respectively.
Gross realized gains and (losses) on sales of available-for-sale
securities amounted to $ 11,000 and $ (14,250) in 1995, respectively.
The amortized cost and fair value of investment maturities at December
31, 1995, by contractual maturity, are summarized below. Expected
maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call
or prepayment penalties.
F-26
(Sheet IV)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 2 - INVESTMENT SECURITIES (Continued)
The scheduled maturities of securities at December 31, 1995, are as
follows:
<TABLE>
<C> <C> <C> <C> <C>
Held-To-Maturity Available-For-Sale
---------------------------- --------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ---------- -----------
No stated maturity $ -0- $ -0- $ 146,800 $ 146,800
Due in one year or less 270,000 268,934 -0- -0-
Due from one to five years 250,000 248,907 1,797,504 1,772,250
Due from five to ten years 120,000 117,905 2,022,441 1,988,570
Due after ten years -0- -0- 643,789 659,924
----------- ----------- ----------- -----------
$ 640,000 $ 635,746 $ 4,610,534 $ 4,567,544
=========== =========== =========== ===========
</TABLE>
Investment securities, with a amortized cost and fair value of
approximately $ 2,022,260 and $ 1,982,800 at December 31, 1995,
respectively, and $ 899,200 and $ 783,000 at December 31, 1994,
respectively, were pledged to secure public deposits and for other
purposes required or permitted by law.
NOTE 3 - LOANS RECEIVABLE
Major classification of loans receivable are summarized as follows:
1995 1994
------------ -------------
Commercial real estate $ 23,027,065 $ 21,228,464
Real estate - construction
and development 2,859,100 1,135,112
Commercial 9,161,124 8,080,991
Installment 1,549,323 1,328,750
---------------- --------------
36,596,612 31,773,317
Unearned discounts (9,254) (13,370)
Allowance for loan losses (504,428) (431,336)
---------------- --------------
Loans receivable, net $ 36,082,930 $ 31,328,611
================ ==============
The Bank grants commercial, real estate and consumer loans primarily in
Escambia County, Florida. Although the Bank's loan portfolio is
diversified, a significant portion of its loans are secured by real
estate.
Loans on which the accrual of interest has been discontinued or reduced,
for which impairment had not been recognized, amounted to $ 37,900, $
666,698 and $ -0- at December 31, 1995, 1994 and 1993, respectively. If
interest on these loans had been accrued, such income would have
approximated $ 7,065 in 1995, $ 29,500 in 1994. and $ -0- in 1993.
Interest income on those loans is recorded only when received.
Changes in the allowance for loan losses are summarized as follows:
1995 1994 1993
--------- ---------- ---------
Balance, beginning of year $ 431,336 $ 522,133 $ 568,394
Provision charged to operations -0- -0- 30,000
Loans charged off (16,364) (148,325) (177,854)
Recoveries 89,456 57,528 101,593
--------- ---------- ---------
Balance, end of year $ 504,428 $ 431,336 $ 522,133
========= =========== =========
F-26
(Sheet V)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 4 - PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
1995 1994
----------- -----------
Land $ 305,181 $ 305,181
Buildings 1,428,218 1,425,818
Leasehold improvements 31,467 31,467
Furniture and equipment 752,086 471,651
Construction in progress 58,176 -0-
----------- -----------
2,575,128 2,234,117
Less: Accumulated depreciation and amortization (744,750) (635,795)
--------- -----------
$ 1,830,378 $ 1,598,322
=========== ===========
Depreciation and amortization expense charged to operations amounted to
$ 108,956 in 1995, $ 78,486 in 1994, and $ 69,666 in 1993.
NOTE 5 - TIME DEPOSITS
Time deposits to Bank customers amounting to $ 100,000 or more,
amounted to $ 4,576,911 in 1995 and $ 5,379,164 in 1994.
At December 31, 1995, the scheduled maturities of time deposits are as
follows:
1996 $ 18,781,082
1997 2,047,645
1998 1,065,611
-------------
$ 21,894,338
=============
NOTE 6 - STOCKHOLDERS' EQUITY
The Board of Directors of the Bank may, subject to statutory
limitations, declare dividends on net profits of the Bank.
NOTE 7 - INCOME TAXES
The provision for income taxes consists of the following:
1995 1994 1993
--------- ---------- ---------
Current tax provision:
Federal $261,501 $187,217 $262,173
State 35,832 28,591 14,374
--------- ---------- ---------
$ 297,333 $ 215,808 $ 276,547
========= ========== =========
F-26
(Sheet VI)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 7 - INCOME TAXES (Continued)
The provision for income taxes differs from that computed by applying
the statutory federal income tax rate to income before income taxes as
follows:
<TABLE>
<C> <C> <C> <C>
1995 1994 1993
--------------- --------------- -----------
Tax based on statutory rate $ 287,576 $ 284,937 $ 265,782
State tax, net of federal benefit 23,649 18,870 9,487
Effect of tax-exempt income (26,449) (26,991) (14,215)
Loan loss provisions currently deductible -0- (55,360) (15,566)
Other, net 12,557 (5,648) 31,059
--------- ---------- ---------
$ 297,333 $ 215,808 $ 276,547
========= ========== =========
</TABLE>
The tax effects of each type of significant item that gave rise to
deferred taxes are as follows:
1995 1994
---------- -----------
Deferred tax assets:
Net unrealized depreciation on
available-for-sale securities $ 16,129 $ 156,910
Allowance for loan losses 41,561 41,561
Other 21,441 -0-
--------- ----------
79,131 198,471
Deferred tax liabilities:
Depreciation (166,807) (145,366)
--------- ----------
Net deferred tax (liability) asset $ (87,676) $ 53,105
========= ==========
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Commitments:
At December 31, 1995, the Bank had firm purchase commitments outstanding
amounting to approximately $ 52,500. These commitments relate to
equipment to be used in its new branch location as described below.
Leases:
During 1995, the Bank signed a 10 year lease agreement for a new branch
located in Escambia County, Florida. Lease payments are scheduled to
begin in conjunction with the opening of the branch in March 1996. The
lease requires the payment of taxes, insurance, and maintenance costs in
addition to rental payments. In addition, the Bank leases equipment and
land under operating leases expiring through 1997. Future minimum lease
payments under operating leases having remaining terms in excess of one
year are summarized as follows:
1996 $ 40,800
1997 44,100
1998 36,500
1999 36,500
2000 36,500
Thereafter 191,500
----------
Total future minimum rental payments $ 385,900
==========
Rental expense related to operating leases amounted to approximately
$ 14,800 in 1995, $ 8,500 1994 and $ 8,845 in 1993.
F-26
(Sheet VII)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)
Financial Instruments:
The financial statements do not reflect various commitments that arise
in the normal course of business, to meet the financial needs of
customers. These include commitments to extend credit and letters of
credit, and involve to varying degrees, elements of credit, interest
rate, and liquidity risk in excess of the amounts reflected in the
Statement of Financial Condition.
Commitments to extend credit, which amounted to approximately $
2,983,000 at December 31, 1995, represent legally binding agreements to
lend to a customer as long as all established contractual conditions are
satisfied. Commitments generally have fixed expiration dates or other
termination clauses. Since many commitments expire without being funded,
total commitment amounts do not necessarily represent future liquidity
requirements.
Standby letters of credit are conditional commitments issued by the Bank
guaranteeing the performance of a customer to a third party. At December
31, 1995, the Bank had approximately $ 192,800 in standby letters of
credit outstanding.
The Bank's exposure to credit loss in the event of non-performance by
the other party to commitments to extend credit and letters of credit is
represented by the contractual amount of these instruments. As these
off-balance-sheet financial instruments have essentially the same credit
risk involved in extending loans, the Bank generally uses the same
credit and collateral policies in making these commitments and
conditional obligations as it does for on-balance-sheet instruments. The
Bank does not anticipate any material losses as a result of these
commitments.
Unused Lines of Credit:
At December 31, 1995, the Bank had $ 4,000,000 of unused lines of credit
with the Federal Home Loan Bank to be drawn upon as needed, with
interest to be determined at the time of the draw. The line is secured
by a blanket lien on the Bank's residential mortgage loans.
Litigation:
The Bank is a party to legal actions normally associated with financial
institutions, the aggregate effect of which, in management's and legal
counsel's opinion, would not be significant to the Bank's financial
condition.
NOTE 9 - EMPLOYEE STOCK OWNERSHIP PLAN
The Bank has a non-contributory employee stock ownership plan ("ESOP")
covering all employees who have met certain service requirements. The
Bank's ESOP contributions are determined by its Board of Directors. At
December 31, 1995 and 1994, the Employee Stock Ownership Trust (the
"Trust") owned 118,900 shares of Liberty Holding Company common
stock. Contributions to the Trust amounted to $ 67,800 in 1995,
$ 65,850 in 1994 and $ 56,100 in 1993.
F-26
(Sheet VIII)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 10 - RELATED PARTY TRANSACTIONS
At December 31, 1995, certain officers, directors and their related
interest and an affiliated party were indebted to the Bank in the
aggregate amount of approximately $ 2,991,300. Governing regulations
require that these loans be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time
for comparable transactions with unrelated persons. Also, certain
related parties including the Corporation, maintain deposit balances
with the Bank in the aggregate amount of approximately $ 4,100,655 at
December 31, 1995.
During 1995, the Bank contracted with a Director's company to remodel of
one of the Bank's branches. Total payments under the terms of the
contract amounted to approximately $ 50,800 in 1995.
In addition, an affiliated party provides various legal services to the
Bank in the normal course of business. Total legal fees paid to this
affiliated party amounted to approximately $ 49,000 in 1995, $ 33,740 in
1994 and $ 32,531 in 1993.
Certain stockholders of the Corporation are also members of the Board of
Directors of the Bank.
NOTE 11 - CONCENTRATIONS OF CREDIT RISK
The Bank maintains accounts at several financial institutions in Alabama
and Florida. Accounts at each institution are insured by the Federal
Deposit Insurance Corporation ("FDIC") up to $ 100,000. Uninsured
federal funds sold amounted to $2,475,000, at December 31, 1995. The
Bank's management monitors these institutions on a quarterly basis in
order to determine that the institutions meet "well-capitalized"
guidelines as established by the FDIC.
NOTE 12 - REGULATORY MATTERS
Banks are 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.
The regulations require the Bank to meet specific capital adequacy
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 classification is
also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors. Management believes, as
of December 31, 1995, that the Bank meets all capital requirements to
which it is subject.
NOTE 13 - BRANCH ACQUISITION
In October 1993, the Bank acquired the Century, Florida branch of
Liberty Holding Company and Subsidiary of Fort Walton. The acquisition
included cash and cash items, loans, fixed assets and deposits. The
transaction was recorded as a purchase and the acquired assets and
liabilities were recorded at Liberty Holding Company and Subsidiary of
Fort Walton's net carrying amount.
F-26
(Sheet IX)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 14 - FAIR VALUES OF FINANCIAL INSTRUMENTS
During 1995, the Bank adopted Statement of Financial Accounting
Standards No. 107, Disclosures about Fair Value of Financial
Instruments, ("SFAS 107"). SFAS 107 requires that the Bank disclose
estimated fair values for its financial instruments. The following
methods and assumptions were used by the Bank in estimating fair values
of financial instruments as disclosed herein:
Cash and cash equivalents:
The carrying amounts of cash and short-term instruments approximate
their fair value.
Held-to-maturity and available-for-sale securities:
Fair values for securities are based on quoted market prices where
available. If quoted market prices are not available, fair values are
based on quoted market prices of comparable instruments.
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 (for example, one-to-four family
residential), 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 ("CDs") approximate
their fair values at the reporting date. Fair values for fixed-rate CDs
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.
Accrued interest:
The carrying amounts of accrued interest approximate their fair values.
F-26
(Sheet X)
<PAGE>
LIBERTY BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 14 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
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
standings.
Limitations:
Fair value estimates are made at a specific point in time and are based
on relevant market information which is continuously changing. Because
no quoted market prices exist for a significant portion of the Bank's
financial instruments, fair values for such instruments are based on
management's assumptions with respect to future economic conditions,
estimated discount rates, estimates of the amount and timing of future
cash flows, expected loss experience, and other factors. These
estimates are subjective in nature involving uncertainties and matters
of significant judgment; therefore, they cannot be determined with
precision. Changes in the assumptions could significantly affect the
estimates.
The estimated fair values of the Bank's financial instruments at
December 31, 1995 are as follows:
Carrying Fair
Amount Value
-------- ------------
Financial assets:
Cash and cash equivalents $ 7,536,960 $ 7,536,960
Securities held-to-maturity 640,000 635,746
Securities available-for-sale 4,567,544 4,567,544
Loans receivable 36,082,930 36,111,929
Mortgage loans held for sale 201,400 201,400
Accrued interest receivable 337,899 337,899
Financial liabilities:
Deposits 45,431,208 45,492,525
Accrued interest payable 190,507 190,507
Off-balance-sheet liabilities:
Commitments to extend credit -- 2,983,000
Stand-by letters of credit -- 192,800
F-26
(Sheet XI)
<PAGE>
APPENDIX A
Agreement and Plan of Merger
(including Amendment)
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made April 23, 1996,
between Whitney Holding Corporation ("Whitney"), a Louisiana corporation, on the
one hand, and Liberty Holding Company ("Holding"), a Florida corporation, and
Liberty Bank ("Bank"), a Florida chartered state bank, on the other hand.
Whitney and Holding shall be hereinafter collectively referred to as the
"Constituent Corporations".
Preamble
The Boards of Directors of Whitney and Holding have each determined
that it is desirable and in the best interests of their respective corporations
and shareholders that Holding merge into Whitney (the "Company Merger"). The
Boards of Directors of Whitney and Bank have each determined that it is
desirable and in the best interests of each such institution and its
shareholders that Bank merge into a national banking association to be formed by
Whitney (the "Bank Merger") on the terms and subject to the conditions set forth
in this Agreement and in the Bank Merger Agreement (as hereinafter defined). The
Company Merger and the Bank Merger shall be hereinafter collectively referred to
as the "Mergers".
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
Section 1. The Mergers and Closing
1.01. Mergers.
(a) Following the expiration of the Review Period (as
hereinafter defined), Whitney shall, in good faith, take expeditious steps to
form a national banking association (the "Acquiring Bank") as a wholly owned
subsidiary of Whitney. Upon its formation, Whitney will cause the Acquiring Bank
to execute this Agreement as a party.
(b) Prior to the Effective Date (as hereinafter defined),
Whitney shall prepare a certificate of merger substantially in the form of
Exhibit 1.01(b) attached hereto (the "Certificate of Merger"), pursuant to
which, Holding will, subject to the conditions stated herein and therein, merge
into Whitney, which will be the Surviving Corporation.
(c) Promptly after the formation of the Acquiring Bank, the
Boards of Directors of the Acquiring Bank and Bank will execute the merger
agreement annexed hereto as Exhibit 1.01(c) (the "Bank Merger Agreement"),
pursuant to which, on the terms set forth herein and subject to the conditions
set forth in Section 6 hereof, Bank will merge with and into the Acquiring Bank,
which shall be the surviving bank.
(d) Effects of Mergers. The Company Merger shall have the
effects set forth in the Louisiana Business Corporation Law ("LBCL"). Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property and assets, rights, privileges and all debts, liabilities
and obligations of Holding will become the assets, rights, privileges, debts,
liabilities and obligations of Whitney as the surviving corporation in the
Company Merger. The Bank Merger shall have the effects set forth in the national
banking laws and Florida state banking laws. Without limiting the generality of
the foregoing, and subject thereto, at the effective time of the Bank Merger,
all the property and assets, rights, privileges and all debts, liabilities and
obligations of Bank will become the assets, rights, privileges, debts,
liabilities and obligations of the Acquiring Bank as the surviving association
in the Bank Merger.
1.02. The Closing. The "Closing" of the transactions contemplated
hereby will take place in the Board Room of Whitney, 228 St. Charles Avenue,
Second Floor, New Orleans, Louisiana 70130 (or such other place to which the
parties may agree), at 10:00 a.m., New Orleans Time, on a mutually agreeable
date as soon as practicable following satisfaction of the conditions set forth
in subparagraphs (a), (b) and (d) of subsection 6.01 hereof, or if no date has
been agreed to, on any date specified by any party to the others upon 10 days
notice following satisfaction of such conditions.
A-1
<PAGE>
The date on which the Closing occurs is herein called the "Closing Date". If all
conditions set forth in Section 6 hereof are satisfied or waived by the party
entitled to grant such waiver, at the Closing (a) the Constituent Corporations
shall each provide to the other such proof of satisfaction of the conditions set
forth in Section 6 as the party whose obligations are conditioned upon such
satisfaction may reasonably request, (b) the certificates, letters and opinions
required by Section 6 shall be delivered, (c) the proper persons will complete
the Certificate of Merger, (d) the appropriate officers of the parties shall
execute, deliver and acknowledge the Bank Merger Agreement and (e) the parties
shall take such further action as is required to effect the Company Merger and
the Bank Merger and to otherwise consummate the transactions contemplated by
this Agreement. If on any date established for the Closing all conditions in
Section 6 hereof have not been satisfied or waived by the party entitled to
grant such waiver, then any party, on one or more occasions, may declare a delay
of the Closing of such duration, not exceeding 10 business days, as the
declaring party shall select, but no such delay shall extend beyond the date set
forth in subparagraph (c) of subsection 7.01, and no such delay shall interfere
with the right of any party to terminate this Agreement pursuant to Section 7.
1.03. The Effective Date and Time. The Certificate of Merger will be
filed with and recorded by the Louisiana Secretary of State immediately after
(or concurrently with) the Closing, and the Company Merger will be effective on
the date (the "Effective Date") and time (the "Effective Time") specified
therein. At such time, appropriate articles of merger in respect of the Company
Merger shall also be filed with the Florida Department of State. Immediately
following (or concurrently with) the Closing, the Bank Merger Agreement shall be
filed with and recorded by the Office of the Comptroller of the Currency and the
Bank Merger shall be effective at the date and time specified in the Bank Merger
Agreement.
1.04. Surviving Corporations. The governing documents (i.e. the
articles of incorporation and by-laws and equivalents) of Whitney and the
Acquiring Bank in effect immediately prior to the Effective Time shall be the
governing documents of Whitney and the Acquiring Bank, as the surviving entities
in the Mergers, until duly amended in accordance with the terms thereof and
applicable law. The directors and officers of Whitney and the Acquiring Bank in
office immediately prior to the Effective Time shall be the directors and
officers of Whitney and the Acquiring Bank, as the surviving entities in the
Mergers, and shall serve in such capacity in accordance with the articles of
incorporation and by-laws of the surviving entities. Each share of Whitney
common stock, no par value ("Whitney Common Stock") and capital stock of Whitney
and the Acquiring Bank issued and outstanding immediately prior to the Effective
Time shall remain issued and outstanding from and after the Effective Time, and
in the case of the Acquiring Bank, shall be the capital stock of the Acquiring
Bank.
1.05. Tax Consequences. It is the intention of the parties hereto that
the Mergers shall constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement shall constitute a "plan of reorganization" for purposes of
Section 368 of the Code.
Section 2. Conversion of Stock of Holding and Bank
2.01. Conversion. (a) Company Merger. Subject to the provisions of this
Section 2, at the Effective Time, by virtue of the Company Merger and without
any action on the part of the holders thereof, the shares of Holding common
stock, par value $1.00 per share ("Holding Common Stock"), shall be converted as
follows: Except for shares issued and outstanding immediately prior to the
Effective Time as to which dissenters' rights have been perfected and not
withdrawn or otherwise forfeited under Section 1301-1320 of the Florida Business
Corporation Act ("Holding Dissenters' Shares"), and subject to the provisions of
Section 2.01(f) relating to fractional shares, each issued and outstanding share
of Holding Common Stock shall be converted into and become that number of shares
of Whitney Common Stock that is equal to the quotient obtained by dividing the
Company Percentage (as hereinafter defined) of the Maximum Deliverable Amount
(as hereinafter defined), rounded up to the nearest whole number of shares, by
the total number of issued and outstanding shares of Holding Common Stock at the
Effective Time.
(b) Bank Merger. Subject to the provisions of this Section 2,
at the effective time of the Bank Merger, by virtue of the Bank Merger and
without any action on the part of the holders thereof, the shares of Bank common
stock, par value $5.00 per share ("Bank Common Stock"), shall be converted as
follows: Except for shares as to which dissenters' rights have been perfected
and not withdrawn or otherwise forfeited under 12 U.S.C. ss.215a (which shares,
collectively with the Holding Dissenters' Shares, are hereinafter referred to as
the "Dissenters' Shares")
A-2
<PAGE>
and subject to the provisions of Section 2.01(f) relating to fractional shares,
each outstanding share of Bank Common Stock will be converted into and become
that number of shares of Whitney Common Stock that is equal to the quotient
obtained by dividing the Bank Percentage (as hereinafter defined) of the Maximum
Deliverable Amount, rounded up to the nearest whole number of shares, by the
total number of shares of Bank Common Stock issued and outstanding on the
effective date of the Bank Merger.
(c) For purposes of this Section 2, shares of Holding Common
Stock that are held by Holding or Bank (other than shares held by Bank in a
fiduciary capacity other than for Holding), and shares of Bank Common Stock that
are held by Holding or Bank (other than shares held by Bank in a fiduciary
capacity other than for Holding), shall not be considered outstanding and shall
be cancelled (and not converted) by virtue of the Mergers.
(d) Certain Defined Terms. As used in this Section 2.01
the following terms shall have the meanings set forth below:
(i) Purchase Price. The term "Purchase Price" means
$14,000,000, plus $5.25 for each share of Holding Common Stock duly and validly
issued between the date of this Agreement and the Effective Time upon the
exercise of outstanding 1996 Warrants (as defined in Section 3.02) and the
payment in cash to Holding of the exercise price therefor (the "Added Capital").
(ii) Maximum Deliverable Amount. The term
"Maximum Deliverable Amount" means the quotient obtained by dividing the
Purchase Price by the Average Market Price (as defined below).
(iii) Bank Percentage. The term "Bank Percentage"
means the percentage obtained by dividing (A) the dollar amount obtained by
multiplying (x) $14,000,000, plus the Added Capital, minus the book value of
all assets of Holding other than Bank Common Stock, by (y) the percentage of
the outstanding shares of Bank Common Stock owned by persons other than
Holding, by (B) the total Purchase Price.
(iv) Company Percentage. The term "Company
Percentage" means the result obtained by subtracting the Bank Percentage from
100%.
(e) Average Market Price. The "Average Market Price" shall be
the average of the closing per share trading prices of Whitney Common Stock
(adjusted appropriately for any stock split, stock dividend, recapitalization,
reclassification or similar transaction which is effected, or for which a record
date occurs) on the twenty (20) trading days preceding the fifth trading day
immediately prior to the Effective Time, as reported in the Wall Street Journal
(corrected for typographical errors); provided, however, that if the Average
Market Price as calculated above is less than $27.00, the Average Market Price
for purposes of this Section 2.01(e) shall be $27.00, and if the Average Market
Price as calculated above is greater than $35.00, the Average Market Price for
purposes of this Section 2.01(e) shall be $35.00.
(f) Fractional Shares. In lieu of the issuance of fractional
shares of Whitney Common Stock, each shareholder of Holding or Bank who would
otherwise be entitled thereto, upon surrender of his or her certificates that
immediately prior to the effective time of the applicable Merger represented
Holding Common Stock or Bank Common Stock, other than Dissenters' Shares, shall
receive a cash payment (without interest) equal to the fair market value at the
effective time of the applicable Merger of any fraction of a share of Whitney
Common Stock to which such holder would be entitled but for this provision. For
purposes of calculating such payment, the fair market value of a fraction of a
share of Whitney Common Stock shall be such fraction multiplied by the Average
Market Price.
(g) Exchange of Certificates. After the Effective Time, each
holder of an outstanding certificate or certificates theretofore representing a
share or shares of Holding Common Stock or Bank Common Stock (other than
Dissenters' Shares), upon surrender thereof to the exchange agent selected by
Whitney (the "Exchange Agent"), together with duly executed transmittal
materials provided pursuant to Section 2.01(i) or upon compliance by the holder
or holders thereof with the procedures of the Exchange Agent with respect to
lost, stolen or destroyed certificates, shall be entitled to receive in exchange
therefor any payment due in lieu of fractional shares and a certificate or
certificates representing the number of whole shares of Whitney Common Stock
into which such holder's shares of Holding
A-3
<PAGE>
Common Stock or Bank Common Stock were converted. Until so surrendered, each
outstanding Holding stock certificate and Bank stock certificate shall be deemed
for all purposes, other than as provided below with respect to the payment of
dividends or other distributions (if any) in respect of Whitney Common Stock, to
represent the number of whole shares of Whitney Common Stock into which such
holder's Holding Common Stock or Bank Common Stock shall have been converted.
Whitney may, at its option, refuse to pay any dividend or other distribution to
holders of unsurrendered Holding and Bank stock certificates until surrendered;
provided, however, that upon the surrender and exchange of any Holding or Bank
stock certificates there shall be paid, to the extent not previously paid, to
the record holders of the Whitney stock certificates issued in exchange therefor
the amount, without interest, of accumulated dividends and distributions, if
any, which have become payable with respect to the number of whole shares of
Whitney Common Stock into which the shares theretofore represented by such
certificates shall have been exchanged.
(h) Deposit. Promptly following the Effective Time, Whitney
shall deposit or cause to be deposited with the Exchange Agent (i) certificates
representing the shares of Whitney Common Stock and (ii) the cash in lieu of
fractional shares to be issued and paid, as the case may be, in exchange for
outstanding shares of Holding Common Stock and Bank Common Stock pursuant to
this Section 2.
(i) Transmittal Materials. Promptly after the Effective Time,
Whitney shall send or cause to be sent to each former shareholder of record of
Holding at the Effective Time, and to each former shareholder of record of Bank
at the effective time of the Bank Merger, excluding the holders, if any, of
Dissenters' Shares as to which dissenters' rights have been perfected and not
withdrawn or otherwise forfeited under Sections 1301-1320 of the Florida
Business Corporation Act and 12 U.S.C. ss.215a, as applicable, transmittal
materials for use in exchanging certificates of Holding Common Stock and Bank
Common Stock, respectively, for certificates of Whitney Common Stock.
(j) Dissenters' Shares. Holders of Dissenters' Shares shall
not be entitled to receive the shares of Whitney Common Stock and any unpaid
dividends and distributions payable thereon pursuant to this Section 2 and shall
only be entitled to receive payment of the fair cash value of such shares in
accordance with the provisions of Sections 1301-1320 of the Florida Business
Corporation Act and 12 U.S.C. ss.215a, as applicable, unless and until such
holders fail to perfect or effectively withdraw or lose their rights to such
appraisal and payment. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses such right, such shares of Holding
Common Stock or Bank Common Stock will be treated as if they had been converted
into, at the effective time of the applicable Merger, the shares of Whitney
Common Stock (and cash in lieu of fractional share), and any unpaid dividends
and distributions payable thereon, pursuant to this Section 2, without interest
thereon.
2.02. Closing Transfer Books. At the Effective Time, the stock transfer
books of Holding shall be closed and no transfer of shares of Holding Common
Stock shall be made thereafter. At the effective time of the Bank Merger, the
stock transfer books of Bank shall be closed and no transfer of shares of Bank
Common Stock shall be made thereafter.
Section 3. Representations and Warranties of Holding and Bank
Holding and Bank represent and warrant to Whitney and the Acquiring
Bank that, as of the date on which Holding delivers the Schedule of Exceptions
to Whitney and as of the Closing Date, except as set forth in the Schedule of
Exceptions:
3.01. Consolidated Group; Organization; Qualification. "Holding's
consolidated group," as such term is used in this Agreement, consists of Holding
and Bank. Holding is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, and is a bank holding company
within the meaning of the Bank Holding Company Act of 1956, as amended (the
"Bank Holding Company Act"). Bank is a state banking association, duly
organized, validly existing and in good standing under the laws of the State of
Florida. Each member of Holding's consolidated group has all requisite corporate
power and authority to own and lease its property and to carry on its business
as it is currently being conducted and to execute this Agreement and the Bank
Merger Agreement to which it is a party and to consummate the transactions
contemplated hereby, and is qualified and in good standing as a foreign
corporation in all jurisdictions in which the failure to so qualify would have a
material adverse effect on such member's financial condition, results of
operations or business.
A-4
<PAGE>
3.02. Capital Stock; Other Interests. The authorized capital stock (i)
of Holding consists of 2,000,000 shares of Holding Common Stock, of which
1,343,294 shares are issued and outstanding and no shares are held in its
treasury; and (ii) of Bank consists of 248,000 shares of common stock, of which
198,000 shares are issued and outstanding and no shares are held in its
treasury. All issued and outstanding shares of capital stock of each member of
Holding's consolidated group have been duly authorized and are validly issued,
fully paid and non-assessable, and all of the outstanding shares of Bank (other
than 1,367 shares of Bank Common Stock held by persons other than Holding) are
owned by Holding, free and clear of all liens, charges, security interests,
mortgages, pledges and other encumbrances. Other than the 1996 Warrants issued
pursuant to that certain Private Offering Memorandum of Holding dated January
14, 1994 (the "Offering Memorandum"), the holders of which are entitled to
acquire up to an aggregate of 90,997 shares of Holding Common Stock (the "1996
Warrants"), no member of Holding's consolidated group has outstanding any stock
options or other rights to acquire any shares of its capital stock or any
security convertible into such shares, or has any obligation or commitment to
issue, sell or deliver any of the foregoing or any shares of its capital stock.
The outstanding capital stock of each member of Holding's consolidated group
(including the 1996 Warrants) has been issued in compliance with all legal
requirements and in compliance with any preemptive or similar rights. The 1996
Warrants have been duly authorized and were validly issued in accordance with
the terms of the Offering Memorandum. All shares of Holding Common Stock issued
or that may be issued after the date hereof upon exercise of the 1996 Warrants
are, or will be when issued, duly authorized, validly issued, fully paid and
non-assessable. No member of Holding's consolidated group has a subsidiary
(other than Bank) or direct or indirect ownership interest exceeding 5% in any
firm, corporation, partnership or other entity.
3.03. Corporate Authorization; No Conflicts. Subject to the approval of
this Agreement and the Bank Merger Agreement by the shareholders of Holding and
Bank, respectively, in accordance with the Florida Business Corporation Law,
Florida state banking laws and applicable federal law, all corporate acts and
other proceedings required of each member of Holding's consolidated group for
the due and valid authorization, execution, delivery and performance of this
Agreement and the Bank Merger Agreement and consummation of the Mergers have
been validly taken. Subject to their approval by the shareholders of Holding and
Bank and to such regulatory approvals as are required by law, this Agreement and
the Bank Merger Agreement are legal, valid and binding obligations of Holding
and Bank and are enforceable against Holding and Bank, respectively, in
accordance with the respective terms hereof and thereof, except that enforcement
may be limited by bankruptcy, reorganization, insolvency and other similar laws
and court decisions relating to or affecting the enforcement of creditors'
rights generally and by general equitable principles. With respect to each
member of Holding's consolidated group, neither the execution, delivery or
performance of this Agreement or the Bank Merger Agreement, nor the consummation
of the transactions contemplated hereby or thereby will (i) violate, conflict
with, or result in a breach of any provision of, (ii) constitute a default (or
an event which that, with notice or lapse of time or both, would constitute a
default) under, (iii) result in the termination of or accelerate the performance
required by, or (iv) result in the creation of any lien, security interest,
charge or encumbrance upon any of its properties or assets under, any of the
terms, conditions or provisions of its articles of incorporation or association
or by-laws or any material note, bond, mortgage, indenture, deed of trust,
lease, license, agreement or other instrument or obligation to or by which it or
any of its assets is bound; or violate any order, writ, injunction, decree,
statute, rule or regulation of any governmental body applicable to it or any of
its assets.
3.04. Financial Statements, Reports and Proxy Statements. Holding has
delivered to Whitney true and complete copies of (a) the consolidated balance
sheets as of December 31, 1995 and December 31, 1994 of Holding and its
consolidated subsidiaries, the related consolidated statements of income,
shareholders' equity and cash flows for the respective years then ended, the
related notes thereto, and the report of its independent public accountants with
respect thereto (collectively, the "Financial Statements"), (b) the unaudited
consolidated balance sheets as of March 31, 1996 of Holding and its consolidated
subsidiaries, and the related unaudited statements of income, shareholders'
equity and cash flows for the three month periods then ended (collectively, the
"Interim Financial Statements"), (c) the annual report to the Board of Governors
of the Federal Reserve System ("Federal Reserve Board") for the year ended
December 31, 1995, of each member of Holding's consolidated group required to
file such reports, (d) all call reports, including all amendments thereto, made
to the Federal Deposit Insurance Corporation (the "FDIC") and the Department of
Banking and Finance, Office of the Comptroller of Florida (the "Florida
Comptroller") since December 31, 1992, of each member of Holding's consolidated
group required to file such reports and (e) all annual communications (including
any proxy information statements relating to meetings of Holding's or the Bank's
shareholders) disseminated to
A-5
<PAGE>
Holding's or the Bank's shareholders or presented to either of their Boards of
Directors at any time since December 31, 1992.
The Financial Statements and the Interim Financial Statements
have been (and all financial statements delivered to Whitney as required by this
Agreement will be) prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior periods, and
present fairly, in conformity with GAAP the consolidated results of operations
of Holding's consolidated group for the respective periods covered thereby and
the consolidated financial condition of its consolidated group as of the
respective dates thereof. All call and other regulatory reports referred to
above have been filed on the appropriate form and prepared in all material
respects in accordance with such form's instructions and the applicable rules
and regulations of the regulating federal agency. As of the date of the latest
balance sheet forming part of the Interim Financial Statements (the "Latest
Balance Sheet"), no member of Holding's consolidated group had, nor are any of
any such member's assets subject to, any material liability, commitment,
indebtedness or obligation (of any kind whatsoever, whether absolute, accrued,
contingent, matured or unmatured) which is not reflected and adequately reserved
against in accordance with GAAP. No report, including any report filed with the
Federal Reserve Board, the FDIC or the Florida Comptroller, or other report,
proxy statement or offering materials made or given to shareholders of Holding
or Bank, as of the respective dates thereof, contained, and no such report,
proxy statement, offering materials or report to shareholders filed, made or
disseminated after the date of this Agreement will contain, any untrue statement
of a material fact or omitted, or will omit, to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Financial
Statements and Interim Financial Statements are supported by and consistent with
a general ledger and detailed trial balances of investment securities, loans and
commitments, depositors' accounts and cash balances on deposit with other
institutions, copies of which have been made available to Whitney.
3.05. Loan and Investment Portfolios. All loans, discounts and
financing leases (in which a member of Holding's consolidated group is lessor)
reflected on the Latest Balance Sheet (a) were, at the time and under the
circumstances in which made, made for good, valuable and adequate consideration
in the ordinary course of business of its consolidated group, (b) are evidenced
by genuine notes, agreements or other evidences of indebtedness and (c) to the
extent secured, have been secured by valid liens and security interests which
have been perfected. Accurate lists of all loans, discounts and financing leases
as of the date of the Latest Balance Sheet (or a more recent date), and of the
investment portfolios of each member of Holding's consolidated group as of such
date, have been delivered to Whitney. Except as specifically noted on the loan
schedule attached to the Schedule of Exceptions, no member of Holding's
consolidated group is a party to any written or oral loan agreement, note or
borrowing arrangement, including any loan guaranty, that was, as of the most
recent month-end (i) delinquent by more than 30 days in the payment of principal
or interest, (ii) known by any member of Holding's consolidated group to be
otherwise in material default for more than 30 days, (iii) classified as
"substandard," "doubtful," "loss," "other assets especially mentioned" or any
comparable classification by any member of Holding's consolidated group, the
FDIC or the Florida Comptroller, (iv) an obligation of any director, executive
officer or 10% shareholder of any member of Holding's consolidated group who is
subject to Regulation O of the Federal Reserve Board (12 C.F.R. Part 215), or
any person, corporation or enterprise controlling, controlled by or under common
control with any of the foregoing, or (v) in violation of any law, regulation or
rule of any governmental authority, other than those that are immaterial in
amount.
3.06. Adequacy of Allowances for Losses. Each of the allowances for
losses on loans, financing leases and other real estate shown on the Latest
Balance Sheet is adequate in accordance with applicable regulatory guidelines
and GAAP in all material respects, and there are no facts or circumstances known
to any member of Holding's consolidated group which are likely to require in
accordance with applicable regulatory guidelines or GAAP a future material
increase in any such provisions for losses or a material decrease in any of the
allowances therefor reflected in the Latest Balance Sheet. Each of the
allowances for losses on loans, financing leases and other real estate reflected
on the books of Holding's consolidated group at all times from and after the
date of the Latest Balance Sheet is adequate in accordance with applicable
regulatory guidelines and GAAP in all material respects, and there are no facts
or circumstances known to any member of Holding's consolidated group which are
likely to require in accordance with applicable regulatory guidelines or GAAP a
future material increase in any of such provisions for losses or a material
decrease in the allowances therefor reflected in the Latest Balance Sheet.
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3.07. Absence of Certain Changes or Events. Since the date of the
Latest Balance Sheet, no member of Holding's consolidated group has declared,
set aside for payment or paid any dividend to holders of, or declared or made
any distribution on, any shares of Holding's or Bank's capital stock except for
Holding's regular $.03 per share quarterly dividend. Since the date of the
Latest Balance Sheet, there has been no event or condition of any character
(whether actual or threatened) that has had, or can reasonably be anticipated to
have, a material adverse effect on the financial condition, results of
operations or business of Holding's consolidated group. Except as may result
from the transactions contemplated by this Agreement, no such member has, since
the date of the Latest Balance Sheet:
(a) borrowed any money (except for funds, not to exceed
$230,000, to be borrowed from the Federal Home Loan Bank to finance the lease of
the Bank's 9 Mile Road Branch) or entered into any capital lease or, except in
the ordinary course of business consistent with past practices, (i) lent any
money or pledged any of its credit in connection with any aspect of its business
whether as a guarantor, surety, issuer of a letter of credit or otherwise, (ii)
mortgaged or otherwise subjected to any lien, encumbrance or other liability any
of its assets, (iii) sold, assigned or transferred any of its assets in excess
of $100,000 in the aggregate, or (iv) incurred any material liability,
commitment, indebtedness or obligation (of any kind whatsoever, whether absolute
or contingent);
(b) suffered any material damage, destruction or loss to
immovable or movable property, whether or not covered by insurance;
(c) experienced any material change in asset
concentrations as to customers or industries or in the nature and source of its
liabilities or in the mix of interest-bearing versus non-interest bearing
deposits;
(d) received notice or had knowledge or reason to believe that
any material labor unrest exists among any of its employees or that any group,
organization or union has attempted to organize any of its employees;
(e) received notice or had any knowledge or reason to
believe that any of its substantial customers has terminated or intends to
terminate such customer's relationship with it;
(f) failed to operate its business in the ordinary course
consistent with past practices, or failed to preserve its business organization
intact or to preserve the goodwill of its customers and others with whom it has
business relations;
(g) incurred any material loss except for losses adequately
reserved against on the date of this Agreement or on the Latest Balance Sheet
and expenses associated with this transaction, or waived any material right in
connection with any aspect of its business, whether or not in the ordinary
course of business;
(h) forgiven any debt owed to it, or canceled any of its
claims or paid any of its noncurrent obligations or liabilities;
(i) made any capital expenditure or capital addition or
betterment in excess of $25,000.00 (other than capital expenditures not
exceeding the $150,000 in the aggregate associated with furniture, fixtures,
equipment and the leasehold improvement and development costs for the Bank's 9
Mile Road Branch);
(j) entered into any agreement requiring the payment,
conditionally or otherwise, of any salary, bonus, extra compensation, pension or
severance payment to any of its present or former directors, officers or
employees, except such agreements as are terminable at will without any penalty
or other payment by it or increased (except for increases of not more than 8.0%
consistent with past practices) the compensation (including salaries, fees,
bonuses, profit sharing, incentive, pension, retirement or other similar
payments) of any such person whose annual compensation would, following such
increase, exceed $30,000.00; provided, however, that nothing in this Section
3.07(j) shall prohibit the payment, subject to Whitney's concurrence that the
written goals have been met, of deferred executive incentive pay for 1995 in an
amount not exceeding $10,000 in the aggregate and the payment at or prior to
Closing of 1996 executive incentive pay prorated through the Closing Date and
paid thereon (not to exceed, in the aggregate, $55,000 prorated for the period
January 1, 1996 through the Closing Date);
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(k) except as required in accordance with GAAP, changed
any accounting practice followed or employed in preparing the Financial
Statements or the Interim Financial Statements;
(l) made any loan, given any discount or entered into any
financing lease which has not been (i) made, at the time and under the
circumstances in which made, for good, valuable and adequate consideration in
the ordinary course of business, (ii) evidenced by genuine notes, agreements or
other evidences of indebtedness and (iii) fully reserved against in an amount
sufficient in accordance with applicable regulatory guidelines to provide for
all charge-offs reasonably anticipated in the ordinary course of business after
taking into account all recoveries reasonably anticipated in the ordinary course
of business; or
(m) entered into any agreement, contract or commitment to
do any of the foregoing.
3.08. Taxes. Each member of Holding's consolidated group has timely
filed all federal, state and local income, franchise, excise, real and personal
property, employment and other tax returns, tax information returns and reports
required to be filed, has paid all taxes, interest payments and penalties as
reflected therein which have become due, has made adequate provision for the
payment of all such taxes accruable for all periods ending on or before the date
of this Agreement (and will make such accruals through the Closing Date) to any
city, county, state, the United States or any other taxing authority, and is not
delinquent in the payment of any tax or material governmental charge of any
nature. The consolidated federal income tax returns of Holding's consolidated
group have not been audited by the Internal Revenue Service since prior to 1985.
No audit, examination or investigation is presently being conducted or is
presently being threatened by any taxing authority; no material unpaid tax
deficiencies or additional liabilities of any sort have been proposed to any
member of Holding's consolidated group by any governmental representative, and
no agreements for extension of time for the assessment of any tax have been
entered into by or on behalf of any member of Holding's consolidated group. Each
such member has withheld from its employees (and timely paid to the appropriate
governmental entity) proper and accurate amounts for all periods in compliance
with all tax withholding provisions of applicable federal, state and local laws
(including, without limitation, income, social security and employment tax
withholding for all forms of compensation).
3.09. Title to Assets. (a) On the date of the Latest Balance Sheet,
each member of Holding's consolidated group had and, except with respect to
assets disposed of for adequate consideration in the ordinary course of business
since such date, now has, good and merchantable title to all real property and
good and merchantable title to all other material properties and assets
reflected on the Latest Balance Sheet, and has good and merchantable title to
all real property and good and merchantable title to all other material
properties and assets acquired since the date of the Latest Balance Sheet, in
each case free and clear of all mortgages, liens, pledges, restrictions,
security interests, charges and encumbrances of any nature except for (i)
mortgages and encumbrances which secure indebtedness which is properly reflected
in the Latest Balance Sheet, which secure deposits of public funds as required
by law or which secure advances received from time to time from the Federal Home
Loan Bank; (ii) liens for taxes accrued but not yet payable; (iii) liens arising
as a matter of law in the ordinary course of business with respect to
obligations incurred after the date of the Latest Balance Sheet, provided that
the obligations secured by such liens are not delinquent or are being contested
in good faith; (iv) such imperfections of title and encumbrances, if any, as do
not materially detract from the value or materially interfere with the present
use of any of such properties or assets or the potential sale of any of such
owned properties or assets; and (v) capital leases and leases, if any, to third
parties for fair and adequate consideration. Each member of Holding's
consolidated group owns, or has valid leasehold interests in, all material
properties and assets used in the conduct of its business. Any real property and
other material assets held under lease by any such member are held under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made or and proposed to be made of such property
by such member of such property.
(b) With respect to each lease of any real property or a
material amount of personal property to which any member of Holding's
consolidated group is a party, except for financing leases in which a member of
such consolidated group is lessor, (i) such lease is in full force and effect in
accordance with its terms; (ii) all rents and other monetary amounts that have
become due and payable thereunder have been paid; (iii) there exists no default,
or event, occurrence, condition or act, which with the giving of notice, the
lapse of time or the happening of any further event, occurrence, condition or
act would become a default under such lease; and (iv) the Mergers will not
constitute a default or a cause for termination or modification of such lease.
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(c) No member of Holding's consolidated group has any legal
obligation, absolute or contingent, to any other person to sell or otherwise
dispose of any substantial part of its assets; or to sell or dispose of any of
its assets except in the ordinary course of business consistent with past
practices.
3.10. Legal Matters. (a) To the knowledge of Holding, (i) there is no
material claim, action, suit, proceeding, arbitration or investigation pending
in any court or before or by any governmental agency or instrumentality or
arbitration panel or otherwise, or threatened against any member of Holding's
consolidated group nor (ii) do any facts or circumstances exist that would be
likely to form the basis for any material claim against any member of Holding's
consolidated group that, if adversely determined, would have a material adverse
effect on Holding's consolidated group.
(b) Each member of Holding's consolidated group has complied
in all material respects with and is not in default in any material respect
under (and has not been charged or threatened with or come under investigation
with respect to any charge concerning any material violation of any provision
of) any federal, state or local law, regulation, ordinance, rule or order
(whether executive, judicial, legislative or administrative) or any order, writ,
injunction or decree of any court, agency or instrumentality.
(c) There are no material uncured violations, or violations
with respect to which material refunds or restitution may be required, cited in
any compliance report to any member of Holding's consolidated group as a result
of examination by any bank or bank holding company regulatory authority.
(d) No member of Holding's consolidated group is subject to
any written agreement, memorandum or order with or by any bank or bank holding
company regulatory authority.
(e) To the knowledge of Holding, there is no claim, action,
suit, proceeding, arbitration, or investigation, pending or threatened, in which
any material claim or demand is made or threatened to be made against any member
of Holding's consolidated group or any officer, director, advisory director or
employee, in each case by reason of any person being or having been an officer,
director, advisory director or employee of any such member.
3.11. Employee Benefit Plans. (a) Except for the plans listed on the
subsection of the Schedule of Exceptions that corresponds to this subsection
(the "ERISA Plans"), no member of Holding's consolidated group sponsors,
maintains or contributes to, and no such member has at any time sponsored,
maintained or contributed to, any employee benefit plan that is subject to any
of the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Each of the ERISA Plans has been maintained and administered
in all material respects in compliance with its terms, the provisions of ERISA
and all other applicable laws, and, where applicable, the provisions of the
Code. No ERISA Plan, including any "party in interest" or "disqualified person"
with respect thereto has engaged in a nonexempt prohibited transaction under
Section 4975 of the Code or Section 502(i) of ERISA; there is no matter relating
to any of the ERISA Plans pending or threatened, nor are there any facts or
circumstances existing that could reasonably be expected to lead to (other than
routine filings such as qualification determination filings), proceedings
before, or administrative actions by, any governmental agency; there are no
actions, suits or claims pending or threatened (including, without limitation,
breach of fiduciary duty actions, but excluding routine uncontested claims for
benefits) against any of the ERISA Plans or the assets thereof. Each member of
Holding's consolidated group has complied in all material respects with the
reporting and disclosure requirements of ERISA and the Code. None of the ERISA
Plans is a multi-employer plan within the meaning of Section 3(37) of ERISA. A
favorable determination letter has been issued by the Internal Revenue Service
with respect to each ERISA Plan that is intended to be qualified under Section
401(a) of the Code and the Internal Revenue Service has taken no action to
revoke any such letter and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification. No member of Holding's
consolidated group has sponsored, maintained or made contributions to any plan,
fund or arrangement subject to Title IV of ERISA or the requirements of Section
412 of the Code or providing for medical benefits, insurance coverage or other
similar benefits for any period extending beyond the termination of employment,
except as may be required under the "COBRA" provisions of ERISA and the Code. No
member of Holding's consolidated group is obligated to provide medical insurance
after the termination of employment, except as to COBRA.
(b) Set forth on the subsection of the Schedule of Exceptions
corresponding to this subsection is a true and complete list of each benefit
plan and benefit arrangement of any member of Holding's consolidated group
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other than the ERISA Plans. True and complete copies of all plan (including
ERISA Plan) documents and written agreements (including all amendments and
modifications thereof), together with copies of any tax determination letters,
trust agreements, summary plan descriptions, insurance contracts, investment
management agreements and the three most recent annual reports on form series
5500 with respect to such plan or arrangement have been made available to
Whitney.
(c) All group health plans of any member of Holding's
consolidated group to which Section 4980B(f) of the Code or Section 601 of ERISA
applies are in compliance in all material respects with continuation coverage
requirements of Section 4980B(f) of the Code and Section 601 of ERISA and any
prior violations of such sections have been cured prior to the date hereof.
(d) Each plan, fund or arrangement previously sponsored or
maintained by any member of Holding's consolidated group, or to which any member
of Holding's consolidated group previously made contributions which has been
terminated by any member of Holding's consolidated group was terminated in
accordance with ERISA, the Code and the terms of such plan, fund or arrangement
and no event has occurred and no condition exists that would subject any member
of Holding's consolidated group, Whitney or the Acquiring Bank to any tax,
penalty, fine or other liability as a result of, directly or indirectly, the
termination of such plan, fund or arrangement.
(e) The current fair market value of the assets of each ERISA
Plan subject to the provisions of Title IV of ERISA equals or exceeds the
present value of the accrued benefits of each such plan as of the end of the
most recent plan year, calculated on a termination and on-going basis, and there
has been no material change likely to change the funding status of any such
plan. No funding deficiency within the meaning of Section 412 of the Code exists
with respect to any ERISA Plan. All contributions required or accrued under the
terms of any plan (including any ERISA Plan) have been made and all insurance
premiums required or accrued under the terms of any plan (including any ERISA
plan) have been paid as of the date hereof.
(f) The transactions contemplated by the loan agreements dated
March 11, 1988 and February 22, 1994 with Barnett Bank and the loan agreements
dated July 2, 1991, March 9, 1992 and June 5, 1992 with Compass Bank (the
"ESOP") (the "Loan") constitute an exempt loan within the meaning of Section
4975(3) of the Code. Neither the acquisition of securities with the proceeds of
the Loan nor the retention of such securities constitutes a breach of fiduciary
duty within the meaning of Section 404(a) of ERISA. The ESOP has been created,
organized and administered in accordance with the requirements applicable to
employee stock ownership plans as defined in Section 401(a) and 4975(e)(7) of
the Code. The securities acquired by the ESOP with the proceeds of the Loan have
the status of "qualifying employer securities" as that term is defined in
Section 4975(e) of the Code and "employer securities" as that term is defined in
Section 490(1) of the Code. The Loan is not in default as of the date hereof and
the execution of the transactions contemplated hereby will not result in a
breach of or a default under the agreements evidencing the Loan.
3.12. Insurance Policies. Each member of Holding's consolidated group
maintains in force insurance policies and bonds in such amounts and against such
liabilities and hazards as are considered by it to be adequate. An accurate list
of all such insurance policies is attached to the Schedule of Exceptions. No
member of Holding's consolidated group is now liable, nor has any such member
received any notice of any material retroactive premium adjustment. All policies
are valid and enforceable and in full force and effect, and no member of
Holding's consolidated group has received any notice of a material premium
increase or cancellation with respect to any of its insurance policies or bonds.
Within the last three years, no member of Holding's consolidated group has been
refused any basic insurance coverage sought or applied for (other than certain
exclusions for coverage of certain events or circumstances as stated in such
polices), and no such member has reason to believe that its existing insurance
coverage cannot be renewed as and when the same shall expire, upon terms and
conditions standard in the market at the time renewal is sought as favorable as
those presently in effect.
3.13. Agreements. (a) No member of Holding's consolidated group is
a party to:
(i) any collective bargaining agreement;
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(ii) other than the employee benefits and plans
referred to in the section of the Schedule of Exceptions that corresponds
to subsection 3.11 of this Agreement, any employment or other agreement or
contract with or commitment to any employee except (x) the agreements,
arrangements, policies and practices referred to in the exceptions to
subparagraph (j) of subsection 3.07 of this Agreement, (y) such agreements
as are terminable without penalty upon not more than 30 days notice by the
employer and (z) the Employment Protection Agreement dated July 22, 1991
between Bank and Jerry W. Morrison, as amended to change the annual term to
be January 1 to December 31, and there are no deferred executive or
nonqualified deferred compensation arrangements (including split dollar
obligations and the like);
(iii) any obligation of guaranty or indemnification
except such indemnification of officers, directors, employees and agents of
Holding's consolidated group as on the date of this Agreement may be provided
in their respective articles of incorporation or association and by-laws
(and no indemnification of any such officer, director, employee or agent has
been authorized, granted or awarded), except if entered into in the ordinary
course of business with respect to customers of any member of Holding's
consolidated group, letters of credit, guaranties of endorsements and
guaranties of signatures;
(iv) any agreement, contract or commitment which
is or if performed will be materially adverse to the financial condition,
results of operations or business of Holding's consolidated group; or
(v) any agreement, contract or commitment
containing any covenant limiting the freedom of any member of Holding's
consolidated group (x) to engage in any line of business permitted by regulatory
authorities, (y) to compete with any person in a line of business permitted
by applicable regulatory guidelines to be engaged in by bank holding
companies or Florida chartered state banks or (z) to fulfill any of its
requirements or needs for services or products (including, for example,
contracts with vendors to supply customers with credit insurance); or
(vi) any written agreement, memorandum, letter,
order or decree, formal or informal,with any federal or state regulatory agency.
(b) The subsection of the Schedule of Exceptions that
corresponds to this subsection contains a list of each material agreement,
contract or commitment (except those entered into in the ordinary course of
business with respect to loans, lines of credit, letters of credit, depositor
agreements, certificates of deposit and similar banking activities and equipment
maintenance agreements which are not material) to which any member of Holding's
consolidated group is a party or which affects any such member. To Holding's
knowledge, no member of Holding's consolidated group has in any material respect
breached, nor is there any pending or threatened claim that it has materially
breached, any of the terms or conditions of any of such agreements, contracts or
commitments or of any material agreement, contract or commitment that it enters
into after the date of this Agreement. No member of Holding's consolidated group
is in material violation of any written agreement, memorandum, letter, order or
decree, formal or informal, with any federal or state regulatory agency.
3.14. Licenses, Franchises and Governmental Authorizations. Each member
of Holding's consolidated group possesses all licenses, franchises, permits and
other governmental authorizations necessary for the continued conduct of its
business. The deposits of Bank are insured by the FDIC to the extent provided by
applicable law, and there are no pending or threatened proceedings to revoke or
modify that insurance or for relief under 12 U.S.C. Section 1818.
3.15. Corporate Documents. Holding has delivered to Whitney, with
respect to each member of Holding's consolidated group, true and correct copies
of its articles of incorporation or articles of association, and its by-laws,
all as amended. All of the foregoing and all of the corporate minutes and stock
transfer records of each member of Holding's consolidated group are current,
complete and correct in all material respects.
3.16. Certain Transactions. No past or present director, executive
officer or five percent shareholder of any member of Holding's consolidated
group has, since January 1, 1991, engaged in any transaction or series of
transactions which, if such member had been subject to Section 14(a) of the
Exchange Act, would have been required to be disclosed pursuant to Item 404 of
Regulation S-K of the Rules and Regulations of the SEC.
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3.17. Broker's or Finder's Fees. Except for Allen C. Ewing & Company,
investment bankers, which will receive an amount not in excess of one-half of 1%
(or approximately $70,000) of the consideration for the Mergers (excluding any
portion of the consideration attributable to the Added Capital) in connection
with its rendering of financial advice, payable in accordance with the terms of
that certain letter agreement dated April 8, 1996 between Holding and Allen C.
Ewing & Company, a true and correct copy of which has been provided to Whitney,
no agent, broker, investment banker, investment or financial advisor or other
person acting on behalf of any member of Holding's consolidated group is
entitled to any commission, broker's or finder's fee from any of the parties
hereto in connection with any of the transactions contemplated by this
Agreement.
3.18. Environmental Matters. (a) (i) Each member of Holding's
consolidated group has obtained all material permits, licenses and other
authorizations that are required to be obtained by it under any applicable
Environmental Law Requirements (as hereinafter defined) in connection with the
operation of its businesses and ownership of its properties (collectively, the
"Subject Properties"), including without limitation, to the knowledge of
Holding, properties acquired by foreclosure or in settlement of loans;
(ii) Each member of Holding's consolidated group
is in compliance with all terms and conditions of such permits, licenses and
authorizations and with all applicable Environmental Law Requirements;
(iii) There are no past or present events,
conditions, circumstances, activities or plans by any member of Holding's
consolidated group related in any manner to any member of Holding's
consolidated group or the Subject Properties that did or would violate or
prevent compliance or continued compliance with any of the Environmental Law
Requirements, or give rise to any Environmental Liability, as hereinafter
defined;
(iv) To Holding's knowledge, there is no civil,
criminal or administrative action, suit, demand, claim, order, judgment,
hearing, notice or demand letter, notice of violation, investigation or
proceeding pending or threatened by any person against any member of Holding's
consolidated group, or any prior owner of any of the Subject Properties which
relates to the Subject Properties and relates in any way to any Environmental
Law Requirement or seeks to impose any Environmental Liability; and
(v) To Holding's knowledge, no member of
Holding's consolidated group is subject to or responsible for any material
Environmental Liability which is not set forth and adequately reserved against
on the Latest Balance Sheet.
(b) "Environmental Law Requirement" means all applicable
present and future statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations, concessions, franchises and
similar items, of all governmental agencies, departments, commissions, boards,
bureaus, or instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial, administrative, and regulatory
decrees, judgments and orders relating to the protection of human health or the
environment, including without limitation: (A) all requirements, including but
not limited to those pertaining to reporting, licensing, permitting,
investigation, and remediation of emissions, discharges, releases, or threatened
releases of Hazardous Materials (as such term is defined below), chemical
substances, pollutants, contaminants, or hazardous or toxic substances,
materials or wastes whether solid, liquid, or gaseous in nature, into the air,
surface water, groundwater, or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Materials, chemical substances, pollutants, contaminants, or hazardous
or toxic substances, materials or wastes, whether solid, liquid, or gaseous in
nature; (B) all requirements pertaining to protection of the health and safety
of employees or the public; and (C) all requirements pertaining to the (i)
drilling, production, and abandonment of oil and gas wells, (ii) the
transportation of produced oil and gas, and (iii) the remediation of sites
related to that drilling, production or transportation.
(c) "Hazardous Materials" shall mean: (A) Any "hazardous
substance" as defined by either the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 USC Section 9601, et seq.) ("CERCLA")
as amended from time to time, or regulations promulgated thereunder; (B)
asbestos; (C) polychlorinated biphenyls; (D) any "regulated substance" as
defined by 40 C.F.R. Section 280.12, or the FL Ad. Code, Title 62, Chapter
62-761 and Sec. 62-761.200; (E) any naturally occurring radioactive material
("NORM"), as defined by applicable
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federal or state laws or regulations as amended from time to time, irrespective
of whether the NORM is located in Florida or another jurisdiction; (F) any
non-hazardous oilfield wastes ("NOW") defined under applicable federal or state
laws or regulations, irrespective of whether those wastes are located in Florida
or another jurisdiction; (G) any substance the presence of which on the Subject
Properties is prohibited by any lawful rules and regulations of legally
constituted authorities from time to time in force and effect relating to the
Subject Properties; and (H) any other substance which by any such rule or
regulation requires special handling in its collection, storage, treatment or
disposal.
(d) "Environmental Liability" shall mean (i) any liability or
obligation arising under any Environmental Law Requirement, or (ii) any
liability or obligation under any other theory of law or equity (including
without limitation any liability for personal injury, property damage or
remediation) that results from, or is based upon or related to, the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge, release or threatened release into the
environment, of any Hazardous Material, pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
3.19. Compliance with Laws. Each member of Holding's consolidated group
is in compliance with all applicable laws, rules, regulations, orders, writs,
judgments and decrees the noncompliance with which reasonably could be expected
to have a material adverse effect on the financial condition, results of
operations or business of Holding's consolidated group taken as a whole. There
are no material uncured violations, or violations with respect to which material
refunds or restitution may be required, cited in any compliance report to any
member of Holding's consolidated group as a result of examination by any bank or
bank holding company regulatory authority, except those cited in examination
reports previously submitted to, and reviewed by, Whitney.
3.20. Intellectual Property. Each member of Holding's consolidated
group owns all trademarks, tradenames, service marks and other intellectual
property that is material to the conduct of its business.
3.21. Community Reinvestment Act. Bank has complied in all material
respects with the provisions of the Community Reinvestment Act ("CRA") and the
rules and regulations thereunder, have CRA ratings of not less than
"satisfactory," and have received no material criticism from regulators with
respect to discriminatory lending practices, and have no knowledge of any
conditions or circumstances that are likely to result in CRA ratings of less
than "satisfactory" or material criticism from regulators with respect to
discriminatory lending practices.
3.22. Accuracy of Statements. No warranty or representation made or to
be made by any member of Holding's consolidated group in this Agreement or in
any document furnished or to be furnished by any member of Holding's
consolidated group pursuant to this Agreement contains or will contain, as of
the date of this Agreement, the effective date of the Registration Statement (as
defined in subsection 5.14 hereof) and the Closing Date, an untrue statement of
a material fact or an omission of a material fact necessary to make the
statements contained herein and therein, in light of the circumstances in which
they are made, not misleading.
Section 4. Representations and Warranties of Whitney and the Acquiring
Bank
Whitney and the Acquiring Bank represent and warrant to
Holding and Bank that as of the date hereof and as of the Closing Date:
4.01. Consolidated Group; Organization; Qualification. "Whitney's
consolidated group," as such term is used in this Agreement, consists of Whitney
and Whitney National Bank ("WNB") and will include the Acquiring Bank upon its
formation and, in addition includes Whitney Bank of Alabama and several other
subsidiaries. Whitney is a corporation duly organized and validly existing under
the laws of the State of Louisiana and is a bank holding company within the
meaning of the Bank Holding Company Act. WNB is a national banking association
duly organized and validly existing and in good standing under the laws of the
United States of America. Whitney has all requisite corporate power and
authority to own and lease its property and to carry on its business as it is
currently being conducted and to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and is qualified and in good
standing as a foreign corporation in all jurisdictions in which the failure to
so qualify would have a material adverse effect on its financial condition,
results of operations or business.
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Pursuant to Section 1.01(a) of this Agreement, Whitney intends
to charter the Acquiring Bank and cause it to merge with Bank. At Closing, the
Acquiring Bank will be a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America.
The Acquiring Bank will have all requisite corporate power and authority to own
and lease its property and to carry on its business as it is intended to be
conducted and to execute and deliver this Agreement and the Bank Merger
Agreement and to consummate the transactions contemplated hereby and thereby,
and will be qualified and in good standing as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a material adverse
effect on its financial condition, results of operations or business.
4.02. Capital Stock. As of the date of this Agreement, the authorized
capital stock of Whitney consists of 40,000,000 shares of Whitney Common Stock.
As of March 31, 1996, 17,024,694 shares of Whitney Common Stock were issued and
outstanding and 561,929 shares were held in its treasury. All issued and
outstanding shares of capital stock of Whitney have been duly authorized and are
validly issued, fully paid and non-assessable. All issued and outstanding shares
of capital stock of the Acquiring Bank will be duly authorized and validly
issued, fully paid and (except as provided in 12 U.S.C. Section 55)
non-assessable. Upon the formation of the Acquiring Bank, Whitney will own all
of the issued and outstanding shares of capital stock of the Acquiring Bank free
and clear of all liens, charges, security interests, mortgages, pledges and
other encumbrances.
4.03. Corporate Authorization; No Conflicts. All corporate acts and
other proceedings required of Whitney for the due and valid authorization,
execution, delivery and performance of this Agreement and the Bank Merger
Agreement and consummation of the Merger have been, or will be prior to Closing,
validly and appropriately taken. All corporate acts and other proceedings
required of the Acquiring Bank for the due and valid authorization, execution,
delivery and performance of this Agreement and the Bank Merger Agreement and
consummation of the Bank Merger will be validly and appropriately taken prior to
Closing. Subject to such regulatory approvals as are required by law, this
Agreement and the Bank Merger Agreement are, and in the case of the Acquiring
Bank will be, legal, valid and binding obligations of Whitney and the Acquiring
Bank as the case may be, and are, and in the case of the Acquiring Bank will be,
enforceable against them in accordance with the respective terms of such
agreements, except that enforcement may be limited by bankruptcy,
reorganization, insolvency and other similar laws and court decisions relating
to or affecting the enforcement of creditors' rights generally and by general
equitable principles. With respect to each of Whitney and the Acquiring Bank,
neither the execution, delivery or performance of this Agreement or the Bank
Merger Agreement, nor the consummation of the transactions contemplated hereby
or thereby will (i) violate, conflict with, or result in a breach of any
provision of, (ii) constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, (iii) result in the
termination of or accelerate the performance required by, or (iv) result in the
creation of any lien, security interest, charge or encumbrance upon any of its
properties or assets under, any of the terms, conditions or provisions of its
articles of incorporation or by-laws (or comparable documents) or any material
note, bond, mortgage, indenture, deed of trust, lease, license, agreement or
other instrument or obligation to or by which it or any of its assets is bound;
or violate any order, writ, injunction, decree, statute, rule or regulation of
any governmental body applicable to it or any of its assets.
4.04. Financial Statements; Reports and Proxy Statements. (a) Whitney
has delivered to Holding true and complete copies of (i) the consolidated
balance sheets as of December 31, 1995 and December 31, 1994 of Whitney and its
consolidated subsidiaries, the related consolidated statements of operations,
changes in shareholders' equity and cash flows for the respective years then
ended, the related notes thereto, and the report of its independent public
accountants with respect thereto, as presented in Whitney's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 filed with the SEC
(collectively, the "Whitney Financial Statements") and (ii) the unaudited
consolidated balance sheet as of March 31, 1996 of Whitney and its consolidated
subsidiaries and the related unaudited statements of operations and cash flows
for the three month period then ended (collectively, the "Whitney's Interim
Financial Statements").
(b) The Whitney Financial Statements and the Whitney Interim
Financial Statements have been prepared in conformity with GAAP applied on a
basis consistent with prior periods, and present fairly, in conformity with
GAAP, the consolidated results of operations of Whitney's consolidated group for
the respective periods covered thereby and the consolidated financial condition
of its consolidated group as of the respective dates thereof. All call and other
regulatory reports have been filed on the appropriate form and prepared in all
material respects in accordance
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with such form's instructions and the applicable rules and regulations of the
regulating federal agency. As of the date of the latest balance sheet forming
part of the Whitney Interim Financial Statements (the "Whitney Latest Balance
Sheet"), no member of Whitney's consolidated group had, nor were any of any of
such member's assets subject to, any material liability, commitment,
indebtedness or obligation (whether absolute, contingent, matured or unmatured),
which is not reflected and adequately reserved against in the Whitney Latest
Balance Sheet in accordance with GAAP. No report filed with Federal Reserve
Board or other bank regulatory body, as of the respective dates thereof,
contained and no such report filed after the date of this Agreement will
contain, any untrue statement of a material fact or omitted, or will omit, to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
4.05. Legality of Whitney Securities. All shares of Whitney Common
Stock to be issued pursuant to the Mergers have been duly authorized and, when
so issued, will be validly and legally issued, fully paid and non-assessable,
and will be, at the time of their delivery, free and clear of all liens,
charges, security interests, mortgages, pledges and other encumbrances and any
preemptive or similar rights.
4.06. SEC Reports. Whitney has previously delivered to Holding an
accurate and complete copy of the following Whitney reports filed with the SEC
pursuant to the Exchange Act: (a) annual reports on Form 10-K for the years
ended December 31, 1993, 1994 and 1995 and (b) proxy statements for the years
1993, 1994 and 1995; as of their respective dates, no such Report or
communication contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Whitney has timely filed all reports and other documents
required to be filed by it under the Securities Act and the Exchange Act.
4.07. Absence of Certain Changes or Events. Since the date of the
Whitney Latest Balance Sheet, there has been no event or condition of any
character (whether actual or threatened) that has had, or can reasonably be
anticipated to have, a material adverse effect on the financial condition,
results of operations or business of Whitney's consolidated group taken as a
whole.
4.08. Legal Matters. (a) There are no material actions, suits,
proceedings, arbitrations or investigations pending or, to Whitney's knowledge
threatened, against any member of Whitney's consolidated group which would be
required to be disclosed in a Form 10-K or Form 10-Q pursuant to Item 103 of
Regulation S-K of the SEC's Rules and Regulations that are not so disclosed.
(b) There are no material uncured violations, or violations
with respect to which material refunds or restitution may be required, cited in
any compliance report to any member of Whitney's consolidated group as a result
of examination by any bank or bank holding company regulatory authority.
(c) No member of Whitney's consolidated group is subject to
any written agreement, memorandum or order or decree with or by any bank or bank
holding company regulatory authority.
4.09. Accuracy of Statements. No warranty or representation made or to
be made by any member of Whitney's consolidated group in this Agreement or in
any document furnished or to be furnished by any member of Whitney's
consolidated group pursuant to this Agreement contains or will contain, as of
the date of this Agreement, the effective date of the Registration Statement (as
defined in Subsection 5.14 hereof) and the Closing Date, an untrue statement of
a material fact or an omission of a material fact necessary to make the
statements contained herein and therein, in light of the circumstances in which
they are made, not misleading.
Section 5. Covenants and Conduct of Parties Prior to the Effective
Date. The parties further covenant and agree as follows:
5.01. (a) Investigations; Planning. Each member of Holding's
consolidated group shall continue to provide to Whitney and the Acquiring Bank
and to their authorized representatives full access during all reasonable times
to its premises, properties, books and records (including, without limitation,
all corporate minutes, stock transfer records and, subject to compliance with
ss.655.057 of the Florida Banking Code, regulatory examination reports), and
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to furnish Whitney and the Acquiring Bank and such representatives with such
financial and operating data and other information of any kind respecting its
business and properties as Whitney and the Acquiring Bank shall from time to
time reasonably request. Any investigation shall be conducted in a manner which
does not unreasonably interfere with the operation of the business of Holding's
consolidated group. Each member of Holding's consolidated group agrees to
cooperate with Whitney and the Acquiring Bank in connection with planning for
the efficient and orderly combination of the parties and the operation of
Whitney and the Acquiring Bank after consummation of the Mergers. In the event
of termination of this Agreement prior to the Effective Date, Whitney shall,
except to any extent necessary to assert any rights under this Agreement or the
Bank Merger Agreement, return, without retaining copies thereof, or destroy (and
certify to same under penalty of perjury) all confidential or non-public
documents, work papers and other materials obtained from Holding's consolidated
group in connection with the transactions contemplated hereby and shall keep
such information confidential, not disclose such information to any other person
or entity except as may be required by legal process, and not use such
information in connection with its business, and shall cause all of its
employees, agents and representatives to keep such information confidential and
not to disclose such information or to use it in connection with its business,
in each case unless and until such information shall come into the public domain
through no fault of Whitney and the Acquiring Bank. Whitney and the Acquiring
Bank shall continue to provide Holding's executive officers with access to their
respective executive officers, during normal business hours and upon reasonable
notice, to discuss the business and affairs of Whitney and the Acquiring Bank to
the extent customary in transactions of the nature contemplated by this
Agreement.
(b) Delivery of Schedules of Exceptions; Due Diligence.
Whitney and Holding stipulate that they have entered into this Agreement prior
to Holding's delivery of its consolidated group's Schedule of Exceptions and
prior to Whitney's completion of Whitney's customary due diligence investigation
of Holding. Holding shall deliver to Whitney, on or before the 14th day
following the date hereof, its consolidated group's Schedule of Exceptions. Upon
such delivery, such Schedules shall be initialed on behalf of Whitney and
Holding, shall be appended hereto and shall form a part hereof for all purposes.
If Holding fails to deliver its consolidated group's Schedule of Exceptions on
or before the 14th day following the date hereof, Whitney may terminate this
Agreement without liability by giving written notice of termination to Holding.
Whitney's due diligence review shall be concluded during a 21 calendar day
period commencing on the first business day following Holding's delivery to
Whitney of its Schedule of Exceptions as provided herein (the "Review Period").
At or prior to expiration of the Review Period, Whitney shall elect, by written
notice to Holding, to either (a) proceed to the Closing (subject to the
satisfaction or waiver of all other conditions to Closing) or (b) terminate the
Agreement (without liability to Holding or Bank) if, in its sole and absolute
discretion, it is not satisfied with the results of such due diligence review or
for any other reason. Absent timely delivery of written notice electing to
terminate this Agreement, Whitney shall be deemed to have elected to proceed to
the Closing, subject to all other terms and conditions of this Agreement.
5.02. Cooperation and Best Efforts. Each of the parties hereto will
cooperate with the other parties and use its best efforts to (a) procure all
necessary consents and approvals of third parties, (b) complete all necessary
filings, registrations, applications, schedules and certificates, (c) satisfy
all requirements prescribed by law for, and all conditions set forth in this
Agreement to, the consummation of the Mergers and the transactions contemplated
hereby and by the Bank Merger Agreement, and (d) effect the transactions
contemplated by this Agreement and the Bank Merger Agreement at the earliest
practicable date.
5.03. Information for, and Preparation of, Registration Statement and
Proxy Statement. Each of the parties hereto will cooperate in the preparation of
the Registration Statement referred to in Section 5.14 and a proxy statement of
Holding and Bank (the "Proxy Statement") which complies with the requirements of
the Securities Act, the rules and regulations promulgated thereunder and other
applicable federal and state laws, for the purpose of registering the Whitney
Common Stock to be issued in the Mergers and submitting this Agreement, the Bank
Merger Agreement and the transactions contemplated hereby and thereby to
Holding's shareholders for approval. Each of the parties will as promptly as
practicable after the date hereof furnish all such data and information relating
to it and its subsidiaries as any of the other parties may reasonably request
for the purpose of including such data and information in the Registration
Statement and the Proxy Statement.
5.04. Approval of Bank Merger Agreement. Whitney, as the sole
shareholder of the Acquiring Bank, shall take all action necessary to effect
shareholder approval of the Bank Merger Agreement.
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5.05. Press Releases. Whitney and Holding will cooperate with each
other in the preparation of any press releases announcing the execution of this
Agreement or the consummation of the transactions contemplated hereby. Without
the prior written consent of the chief executive officer of the other party, no
member of Holding's consolidated group or Whitney's consolidated group will
issue any press release or other written statement for general circulation
relating to the transactions contemplated hereby, except as may otherwise be
required by law and, if practical, prior notice of such release is provided to
the other parties. Whitney agrees that it will make a press release with respect
to the results of operations of Whitney and its consolidated group as promptly
as practicable following receipt of financial results covering at least thirty
(30) days of post-mergers combined operations of Whitney to permit the
termination of the limitations set forth in the Shareholder Commitments on the
ability of each person referred to in Section 5.10 to resell shares of Whitney
Common Stock in a manner inconsistent with Whitney's ability to account for the
Mergers as a pooling of interests.
5.06. Preservation of Business. To the extent consistent with sound
business practices, each member of Holding's consolidated group will use its
best efforts to preserve the possession and control of all of its assets other
than those consumed or disposed of for value in the ordinary course of business
to preserve the goodwill of customers and others having business relations with
it and to do nothing knowingly to impair its ability to keep and preserve its
business as it exists on the date of this Agreement.
5.07. Conduct of Business in the Ordinary Course. Each member of
Holding's consolidated group shall conduct its business only in the ordinary
course consistent with past practices, and shall not, without the prior written
consent of the chief executive officer of Whitney or his duly authorized
designee:
(a) declare, set aside, increase or pay any dividend, or
declare or make any distribution on, or directly or indirectly combine, redeem,
reclassify, purchase, or otherwise acquire, any shares of its capital stock or
authorize the creation or issuance of or issue any additional shares of its
capital stock or any securities or obligations convertible into or exchangeable
for its capital stock, provided that this subparagraph shall not prevent the
payment by Holding of regular quarterly dividends of $.03 per share or any
issuance of shares of Holding Common Stock upon exercise of the 1996 Warrants;
(b) amend its articles of incorporation or by-laws or
adopt or amend any resolution or agreement concerning indemnification of its
directors or officers;
(c) enter into or modify any agreement so as to require the
payment, conditionally or otherwise, of any salary, bonus, extra compensation,
pension or severance payment to any of its present or former directors, officers
or employees except such agreements as are terminable at will without any
penalty or other payment by it, or increase the compensation (including
salaries, fees, bonuses, profit sharing, incentive, pension, retirement or other
similar benefits and payments) of any such person in any manner inconsistent
with its past practices;
(d) except as described in the Schedule of Exceptions or
except in the ordinary course of business consistent with past practices, place
or suffer to exist on any of its assets or properties any mortgage, pledge,
lien, charge or other encumbrance, except those of the character described in
subsection 3.09 hereof, or cancel any material indebtedness owing to it or any
claims which it may have possessed, or waive any right of substantial value or
discharge or satisfy any material noncurrent liability;
(e) acquire another business or merge or consolidate with
another entity, or sell or otherwise dispose of a material part of its assets
or, except in the ordinary course of business consistent with past practices or
as described in the Schedule of Exceptions;
(f) commit any act that is intended or reasonably may be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Mergers set forth in Section 6 not being satisfied, or in
a violation of any provision of this Agreement, except, in every case, as may be
required by applicable law;
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(g) commit or fail to take any act which act or omission is
intended or reasonably may be expected to result in a material breach or
violation of any applicable law, statute, rule, governmental regulation or
order;
(h) fail to maintain its books, accounts and records in
the usual manner on a basis consistent with that heretofore employed;
(i) fail to pay, or to make adequate provision in all material
respects for the payment of, all taxes, interest payments and penalties due and
payable (for all periods up to the Effective Date, including that portion of its
fiscal year to and including the Effective Date) to any city, county, state, the
United States or any other taxing authority, except those being contested in
good faith by appropriate proceedings and for which sufficient reserves have
been established;
(j) dispose of investment securities in amounts or in a manner
inconsistent with past practices; or make investments in non-investment grade
securities or which are inconsistent with past investment practices;
(k) enter into any new line of non-banking business;
(l) (i) except as described in the Schedule of Exceptions,
charge off (except as may otherwise be required by law or by regulatory
authorities or by GAAP consistently applied) or sell (except for a price not
materially less than the value thereof) any of its portfolio of loans, discounts
or financing leases, or (ii) except as set forth on Schedule of Exceptions, sell
any asset held as other real estate or other foreclosed assets for an amount
materially less than 100% of its book value at the date of the Latest Balance
Sheet;
(m) make any extension of credit which, when added to all
other extensions of credit to a borrower and its affiliates, would exceed
Holding's or Bank's applicable regulatory lending limits;
(n) take or cause to be taken any action which would
disqualify the Mergers as a "pooling of interests" for accounting purposes or as
a "reorganization" within the meaning of Section 368(a) of the Code; or
(o) agree or commit to do any of the foregoing.
5.08. Additional Information. Holding and Bank will provide Whitney (a)
with prompt written notice of any material adverse change in the financial
condition, results of operations, business or prospects of any member of
Holding's consolidated group, any material breach by Holding or Bank of any of
its warranties, representations or covenants in this Agreement, or any material
action taken or proposed to be taken with respect to Holding or Bank by any
regulatory agency, (b) as soon as they become available, copies of any financial
statements, reports and other documents of the type referred to in Section 3.04
with respect to Holding or Bank, and (c) promptly upon its dissemination, any
report disseminated to Holding's or Bank's shareholders. Whitney will provide
Holding and Bank (a) with prompt written notice of any material breach by
Whitney of any of its warranties, representations or covenants in this Agreement
and (b) as soon as they become available, copies of any reports or other
documents of the type referred to in Section 4.06 of this Agreement with respect
to Whitney.
5.09. Shareholder Approval. Holding's Board of Directors shall submit
this Agreement to its shareholders for approval in accordance with the
applicable law, together with its recommendation that such approval be given, at
a special meeting of the shareholders of Holding duly called and convened for
that purpose as soon as practicable after the effective date of the Registration
Statement. Bank will submit this Agreement and the Bank Merger Agreement to
Bank's shareholders for approval in accordance with the applicable law at a
meeting duly called and convened for that purpose as soon as practicable. At
such meeting, Holding will, if the shareholders of Holding shall have so
approved this Agreement, vote all shares of Bank Common Stock held by it "for"
approval of the Bank Merger. The foregoing meetings will, if practicable, be
held on the same date but, in any event, the Bank meeting will not be convened
until the Holding meeting has been finally adjourned.
5.10. Restricted Whitney Common Stock. Holding will use its best
efforts to obtain as soon as practicable but in no event later than 30 days
prior to the Closing Date an agreement from each person who is a director,
executive
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officer or 5% beneficial owner of securities of Holding or Bank who will receive
shares of Whitney Common Stock by virtue of the Mergers to the effect that such
person will not dispose of any Holding Common Stock, Bank Common Stock, 1996
Warrants held by them or any Whitney Common Stock they receive pursuant to the
Mergers (a) in a manner that would disqualify the transactions contemplated
hereby from pooling of interests accounting treatment or (b) in the case of
Whitney Common Stock received pursuant to the Mergers, in violation of Rule 145
of the Securities Act or the rules and regulations of the SEC thereunder.
5.11. Loan Policy. No member of Holding's consolidated group will make
any loans, or enter into any commitments to make loans, which vary other than in
immaterial respects from its written loan policies, a true and correct copy of
which loan policies will be provided to Whitney concurrently with Holding's
Schedule of Exceptions, provided that this covenant shall not prohibit Bank from
extending or renewing credit or loans in the ordinary course of business
consistent with past lending practices or in connection with the workout or
renegotiation of loans in its loan portfolio on the date hereof.
5.12. No Solicitations. (a) Prior to the Effective Time or until the
termination of this Agreement, no member of Holding's consolidated group shall,
without the prior approval of Whitney, directly or indirectly, solicit, initiate
or encourage inquiries or proposals with respect to, or, except to the extent
required in the written opinion of its counsel to discharge properly its
fiduciary duties to Holding's consolidated group and its shareholders, furnish
any information relating to, or participate in any negotiations or discussions
concerning, any acquisition or purchase of all or a substantial portion of its
assets, or of a substantial equity interest in it, or any business combination
with it, other than as contemplated by transaction of the type that is referred
to in clauses (B) (i), (ii) and (iii) of subparagraph (f) of subsection 7.01 of
this Agreement (and in no event will any such information be supplied except
pursuant to a confidentiality agreement in form and substance substantially the
same as the confidentiality agreement between Holding and Whitney); and each
such member shall instruct its officers, directors, agents and affiliates to
refrain from doing any of the above, and will notify Whitney immediately if any
such inquiries or proposals are received by it, any such information is
requested from it, or any such negotiations or discussions are sought to be
initiated with it or any of its officers, directors, agents and affiliates;
provided, however, that nothing contained herein shall be deemed to prohibit any
officer or director of Holding or Bank from taking any action that in the
written opinion of counsel of Holding or Bank is required by law or is required
to discharge his fiduciary duties to Holding's consolidated group and its
shareholders.
(b) Neither the Board of Directors of Holding or Bank, nor any
committee thereof, shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Whitney, the approval or recommendation to
shareholders of this Agreement or the Mergers, (ii) approve or recommend, or
propose to recommend any takeover proposal with respect to Holding or Bank,
except such action that is required in the written opinion of its counsel to
discharge its fiduciary duties to Holding's consolidated group and its
shareholders, or (iii) modify or waive or release any party from any provision
of, or fail to enforce any provision of, if Whitney so requests such
enforcement, any confidentiality agreement entered into by Holding or Bank with
any prospective acquiror after the date of this Agreement or within two years
prior to such date.
5.13. Operating Functions. Each member of Holding's consolidated group
agrees to cooperate in the consolidation of appropriate operating functions with
Whitney to be effective on the Effective Date, provided that the foregoing shall
not be deemed to require any action that, in the opinion of such member's Board
of Directors, would adversely affect its operations if the Mergers were not
consummated.
5.14. Whitney Registration Statement. (a) Whitney will prepare and file
on Form S-4 a registration statement (the "Registration Statement") under the
Securities Act (which will include the Proxy Statement) complying with all the
requirements of the Securities Act applicable thereto, for the purpose, among
other things, of registering the Whitney Common Stock that will be issued to the
holders of Holding Common Stock and Bank Common Stock pursuant to the Mergers.
Whitney shall use its best efforts to cause the Registration Statement to become
effective as soon as practicable, to qualify the Whitney Common Stock under the
securities or blue sky laws of such jurisdictions as may be required and to keep
the Registration Statement and such qualifications current and in effect for so
long as is necessary to consummate the transactions contemplated hereby. As a
result of the registration of the Whitney Common Stock pursuant to the
Registration Statement, such stock shall be freely tradeable by the shareholders
of
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Holding except to the extent that the transfer of any shares of Whitney Common
Stock received by shareholders of Holding is subject to the provisions of Rule
145 under the Securities Act or restricted under applicable tax or pooling of
interests rules.
(b) Whitney will indemnify and hold harmless each member of
Holding's consolidated group and each of their respective directors, officers
and other persons, if any, who control Holding within the meaning of the
Securities Act from and against any losses, claims, damages, liabilities or
judgments, joint or several, to which they or any of them may become subject,
insofar as such losses, claims, damages, liabilities, or judgments (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or in any amendment or supplement thereto, or in any state
application for qualification, permit, exemption or registration as a
broker/dealer, or in any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each such person for any legal or other expenses
reasonably incurred by such person in connection with investigating or defending
any such action or claim; provided, however, that Whitney shall not be liable,
in any such case, to the extent that any such loss, claim, damage, liability, or
judgment (or action in respect thereof) arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, or any such amendment or supplement thereto,
or in any such state application, or in any amendment or supplement thereto, in
reliance upon and in conformity with information written furnished to Whitney by
or on behalf of any member of Holding's consolidated group or any officer,
director or affiliate of any such member for use therein.
5.15. Application to Regulatory Authorities. Whitney shall prepare,
as promptly as practicable, all regulatory applications and filings which are
required to be made with respect to the Mergers.
5.16. Revenue Ruling. Whitney may elect to prepare (and in that event
Holding shall cooperate in the preparation of) a request for a ruling from the
Internal Revenue Service with respect to certain tax matters in connection with
the transactions contemplated by this Agreement and the Bank Merger Agreement.
5.17. Bond for Lost Certificates. Upon receipt of notice from any of
its shareholders that a certificate representing Holding Common Stock or Bank
Common Stock has been lost or destroyed and prior to issuing a new certificate,
Holding or Bank, as the case may be, shall require such shareholder to post a
bond in such amount as is sufficient to support the shareholder's agreement to
indemnify Holding or Bank against any claim made by the owner of such
certificate, unless Whitney agrees to the waiver of such bond requirement.
5.18. Dissenters. Holding and Bank shall give Whitney (i) prompt
written notice of, and a copy of, any instrument received by Holding or Bank
with respect to the assertion or perfection of dissenters rights, and (ii) the
opportunity to participate in any and all negotiations and proceedings with
respect to dissenters rights, should Whitney desire to do so.
5.19. Withholding. Whitney shall be entitled to deduct and withhold
from the consideration otherwise payable to any holder of Holding Common Stock
or Bank Common Stock after the Effective Time such amounts as Whitney may be
required by law to deduct and withhold therefrom. All such deductions and
withholdings shall be deemed for all purposes of this Agreement and the Bank
Merger Agreement to have been paid to the person with respect to whom such
deduction and withholding was made.
5.20. Employees and Certain Other Matters. All employees of Holding and
Bank at the Effective Time shall become employees of the Acquiring Bank. Whitney
and the Acquiring Bank retain the right to terminate any such employee, and to
modify the job duties, compensation and authority of such employee. At the
Effective Time, all persons then employed by Holding and Bank shall be eligible
for such employee benefits as are generally available to employees of Whitney's
Louisiana and Alabama banking subsidiaries having like tenure, officer status
and compensation levels except (i) all executive and senior level management
bonuses, stock options, restricted stock and similar benefits shall be at the
discretion of the Acquiring Bank's Compensation Committee and (ii) all Holding
and Bank employees who are employed at the Effective Time shall be given full
credit for all prior service as employees of Holding or Bank provided, however,
that all such employees shall be treated as newly hired Acquiring Bank employees
(i.e., prior service
A-20
<PAGE>
credit with Holding and Bank shall not be considered in determining future
benefits under Whitney's or Whitney's banking subsidiaries defined benefit
pension plan) for all purposes of Whitney's or Whitney's Louisiana and Alabama
banking subsidiaries' defined benefit pension plan.
5.21. Continuing Indemnity; Insurance. Whitney covenants and agrees
that:
(a) All rights to indemnification and all limitations of
liability existing in favor of indemnified parties under Holding's Articles of
Incorporation and By-Laws and in the Articles of Incorporation and By-Laws of
Bank (as the case may be) as in effect as of the date of this Agreement with
respect to matters occurring prior to or at the later to occur of the Effective
Time or the effective time of the Bank Merger shall survive the Mergers and
shall continue in full force and effect, without any amendment thereto, for a
period of three (3) years from such applicable effective time; provided,
however, that all rights to indemnification in respect of any claim asserted or
made as to which Whitney is notified within such period shall continue until the
final disposition of such claim.
(b) Whitney shall use best efforts to cause the persons
serving as officers and directors of Holding and Bank immediately prior to the
Effective Time (in the case of Holding) and the effective time of the Bank
Merger (in the case of Bank) to be covered for a period of three (3) years from
such applicable effective time by the directors' and officers' liability
insurance policy maintained by Holding and Bank with respect to acts or
omissions occurring prior to or at the respective effective times which were
committed by such officers and directors in their capacity as such; provided
that Whitney may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous to such
directors and officers, and, provided further that Whitney shall not be
obligated to make premium payments for the insurance policies provided by this
Section 5.21 to the extent that such premiums exceed approximately two times the
annual premium for such coverage in force prior to the Effective Date.
(c) If Whitney or any of its successors or assigns (i) shall
consolidate with or merge into any corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns of Whitney shall
assume the obligations set forth in this Section 5.21.
(d) The provisions of this Section 5.21 are intended to be for
the benefit of, and shall be enforceable by, each indemnified party and his or
her heirs and representatives.
5.22. Century, Florida Branch. Whitney and the Acquiring Bank agree to
operate the Century, Florida branch of the Bank ("Century Branch") for a period
of not less than two years commencing on the Effective Date. The Acquiring Bank
will not close or sell the Century Branch without first using its best efforts
to offer it for sale under a purchase and assumption transaction to any bank
owned by a group of local residents. For purposes of this Agreement, a "group of
local residents" shall mean a group the majority of which is controlled by
individuals residing within a thirty mile radius of Century, Florida.
Section 6. Conditions of Closing
6.01. Conditions of All Parties. The obligations of each of the
parties hereto to consummate the Mergers are subject to the satisfaction of the
following conditions at or prior to the Closing:
(a) Shareholder Approval. This Agreement and the Bank
Merger Agreement shall have been duly approved by the shareholders of Holding
and Bank.
(b) Effective Registration Statement. The Registration
Statement shall have become effective prior to the mailing of the Proxy
Statement, no stop order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been instituted or, to the knowledge of any party, shall be contemplated, and
Whitney shall have received all state securities laws permits and authorizations
necessary to consummate the transactions contemplated hereby.
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<PAGE>
(c) No Restraining Action. No action or proceeding shall have
been threatened or instituted before a court or other governmental body to
restrain or prohibit the transactions contemplated by this Agreement or the Bank
Merger Agreement or to obtain damages or other relief in connection with the
execution of such agreements or the consummation of the transactions
contemplated hereby or thereby; and no governmental agency shall have given
notice to any party hereto to the effect that consummation of the transactions
contemplated by this Agreement or the Bank Merger Agreement would constitute a
violation of any law or that it intends to commence proceedings to restrain
consummation of the Mergers.
(d) Statutory Requirements and Regulatory Approval. All
statutory requirements for the valid consummation of the transactions
contemplated by the Bank Merger Agreement and this Agreement shall have been
fulfilled; all appropriate orders, consents and approvals from all regulatory
agencies and other governmental authorities whose order, consent or approval is
required by law for the consummation of the transactions contemplated by this
Agreement and the Bank Merger Agreement shall have been received; and the terms
of all requisite orders, consents and approvals shall then permit the
effectuation of the Mergers without imposing any material conditions with
respect thereto except for any such conditions that are acceptable to Whitney.
(e) Tax Opinion. Whitney and Holding shall have received the
opinion of Arthur Andersen LLP, in form and substance reasonably satisfactory to
both of them, as to certain tax aspects of the Mergers, including an opinion
that the receipt of Whitney Common Stock by Holding's and Bank's shareholders
will not be a taxable event to such shareholders.
6.02. Additional Conditions of Whitney. The obligations of Whitney
and the Acquiring Bank to consummate the Mergers are also subject to the
satisfaction of the following additional conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. The
representations and warranties of Holding and Bank contained in this Agreement
shall be true and correct in all material respects, individually and in the
aggregate, on and as of the Closing Date, with the same effect as though made on
and as of such date, except to the extent of changes permitted by the terms of
this Agreement, and each of Holding and Bank shall have in all material respects
performed all obligations and complied with all covenants required by this
Agreement and the Bank Merger Agreement to be performed or complied with by it
at or prior to the Closing. In addition, each of Holding and Bank shall have
delivered to Whitney and the Acquiring Bank its certificate dated as of the
Closing Date and signed by its chief executive officer and chief financial
officer to the effect that, except as specified in such certificate, such
persons do not know, and have no reasonable grounds to know, of any material
failure or breach of any representation, warranty or covenant made by it in this
Agreement.
(b) No Material Adverse Change. There shall not have occurred
any material adverse change from the date of the Latest Balance Sheet to the
Closing Date in the financial condition, results of operations or business of
Holding's consolidated group. Without limiting the occurrences that would
constitute such a material adverse change with respect to Bank, a decrease in
the value of Bank's investment portfolio of more than 15% from its value on
March 31, 1996 attributable to changes in general interest rate environment
shall be deemed to constitute such a change.
(c) Accountants' Letters. Whitney shall have received
"comfort" letters from Saltmarsh, Cleveland & Gund, independent public
accountants for Holding and Bank, dated, respectively, within three (3) days
prior to the date of the Proxy Statement and within three (3) days prior to the
Closing Date, in customary form for transactions of this sort and in substance
satisfactory to Whitney.
(d) Opinion of Counsel. Whitney shall have received from James
J. Reeves, general counsel to Holding and Bank, opinions, dated as of the
Closing Date, in form and substance satisfactory to Whitney. In giving such
opinions, such counsel may rely as to questions of fact upon certificates of one
or more officers of the members of Holding's consolidated group and governmental
officials and on opinions of special counsel acceptable to Whitney as to matters
of securities, employment or tax law.
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(e) Tax Consequences of Mergers. Whitney shall have
received satisfactory assurances from their independent accountants that the
consummation of the Mergers will not be a taxable event to Whitney and the
Acquiring Bank.
(f) Pooling of Interest. Prior to the expiration of the Review
Period and within three (3) days prior to the Closing Date, Saltmarsh, Cleveland
& Gund shall have rendered an opinion to Whitney, in form and substance
satisfactory to Whitney, to the effect that, based upon the facts and
circumstances then known to Saltmarsh, Cleveland & Gund, Whitney will be
permitted to account for the Mergers as a pooling of interests. Neither
Whitney's independent accountants nor the SEC shall have taken the position that
the transactions contemplated by this Agreement and the Bank Merger Agreement do
not qualify for pooling of interests accounting treatment.
(g) Shareholder's Commitment. A Shareholder's Commitment
substantially in the form specified on Exhibit 6.02(g) hereto (as contemplated
by Section 5.10) shall have been executed by each person who serves as an
executive officer or director of Holding or Bank or who owns 5% or more of the
Holding Common Stock outstanding; and Whitney shall have received from each such
person a written confirmation dated not earlier than five days prior to the
Closing Date to the effect that each representation made in such person's
Shareholder's Commitment is true and correct as of the date of such confirmation
and that such person has complied with all of his or her covenants therein
through the date of such confirmation.
(h) Regulatory Action. No adverse regulatory action shall be
pending or threatened against any member of Holding's consolidated group,
including (without limitation) any proposed amendment to any existing agreement,
memorandum, letter, order or decree, formal or informal, between any regulator
and any member of Holding's consolidated group, if such action would or could
impose any material liability on Whitney or interfere in any material respect
with the conduct of the businesses of Whitney's consolidated group following the
Mergers.
(i) Average Market Price. The Average Market Price of the
Whitney Common Stock as calculated in accordance with Section 2.01 (but without
regard to the proviso contained therein) shall not be more than $35.00, provided
that Whitney may not terminate this Agreement pursuant to this Section 6.02(i)
if Whitney has executed a definitive merger or other acquisition agreement as a
result of which Whitney would cease to be an independent, public company.
6.03. Additional Conditions of Holding and Bank. The obligations of
Holding and Bank to consummate the Mergers are also subject to the satisfaction
of the following additional conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. The
representations and warranties of Whitney and the Acquiring Bank contained in
this Agreement shall be true and correct in all material respects, individually
and in the aggregate, on the Closing Date, with the same effect as though made
on and as of such date, except to the extent of changes permitted by the terms
of this Agreement, and each of Whitney and the Acquiring Bank shall have in all
material respects performed all obligations and complied with all covenants
required by this Agreement and the Bank Merger Agreement to be performed or
complied with by it at or prior to the Closing. In addition, each of Whitney and
the Acquiring Bank shall have delivered to Holding and Bank its certificate
dated as of the Closing Date and signed by its chief executive officer and chief
financial officer to the effect that, except as specified in such certificate,
such persons do not know, and have no reasonable grounds to know, of any
material failure or breach of any representation, warranty or covenant made by
it in this Agreement.
(b) Opinion of Counsel. Holding and Bank shall have received
from Milling, Benson, Woodward, Hillyer, Pierson & Miller, L.L.P., counsel for
Whitney and the Acquiring Bank, an opinion, dated as of the Closing Date,
customary in scope and in form and substance satisfactory to Holding and Bank.
In giving such opinion, such counsel may rely as to questions of fact upon
certificates of one or more officers of Whitney or members of Whitney's
consolidated group, and governmental officials and as to matters of law other
than Louisiana or federal law on the opinions of foreign counsel retained by
them or Whitney.
(c) Opinion of Investment Bankers. Holding and Bank shall
have received letters from Allen C. Ewing & Company dated the date of the
mailing of the Proxy Statement to shareholders of Holding and Bank and
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dated the date of the meetings of the shareholders of Holding and Bank, in each
case in form and substance satisfactory to Holding and Bank, confirming such
financial advisor's prior opinion to the Boards of Directors of Holding and Bank
to the effect that the consideration to be paid in the Mergers is fair to the
shareholders of Holding and Bank from a financial point of view and that the
allocation of the Maximum Deliverable Amount between the shareholders of Holding
and the shareholders of Bank is fair from a financial point of view.
(d) Tax Opinion. Holding and Bank shall have received the
opinion of Arthur Andersen LLP as to certain tax aspects of the transactions
contemplated by this Agreement and the Bank Merger Agreement, in form and
substance satisfactory to Holding and Bank.
(e) No Material Adverse Change. There shall not have occurred
any material adverse change from Whitney's Latest Balance Sheet to the Effective
Date in the financial condition, results of operations or business of Whitney's
consolidated group taken as a whole.
(f) Average Market Price. The Average Market Price of the
Whitney Common Stock as calculated in accordance with Section 2.01 (but without
regard to the proviso contained therein) shall not be less than $27.00.
6.04. Waiver of Conditions. Any condition to a party's obligations
hereunder may be waived by that party, other than the conditions specified in
subparagraphs (a), (b) and (d) of subsection 6.01 hereof and the condition
specified in subparagraph (c) of subsection 6.03 hereof. The failure to waive
any condition hereunder shall not be deemed a breach of subsection 5.02 hereof.
Section 7. Termination
7.01. Termination. This Agreement and the Bank Merger Agreement may
be terminated and the Mergers contemplated herein abandoned at any time before
the Effective Time, whether before or after approval by the shareholders of
Holding and Bank:
(a) Mutual Consent. By the mutual consent of the Boards
of Directors of Whitney and Holding.
(b) Breach. By the Board of Directors of either Whitney or
Holding in the event of a breach by any member of the consolidated group of the
other of them of any representation or warranty contained in this Agreement or
of any covenant contained in this Agreement, which in either case cannot be, or
has not been, cured within 15 days after written notice of such breach is given
to the entity committing such breach, provided that the right to effect such
cure shall not extend beyond the date set forth in subparagraph (c) below.
(c) Abandonment. By the Board of Directors of either Whitney
or Holding if (i) all conditions to Closing required by Section 6 hereof have
not been met by or waived by Whitney or Holding by November 30, 1996, or (ii)
any such condition cannot be met by November 30, 1996 and has not been waived by
each party in whose favor such condition inures, or (iii) if the Mergers have
not been consummated by November 30, 1996, provided that the failure to
consummate the transactions contemplated hereby is not caused by the party
electing to terminate pursuant to this clause (iii).
(d) Dissenting Shareholders. By Whitney, if the number of
shares of Holding Common Stock and Bank Common Stock as to which the holders
thereof are, at the time of the Closing, legally entitled to assert dissenting
shareholders rights plus the number of such shares as to which the holders
thereof are entitled to receive cash payments in lieu of fractional shares
exceeds that number of shares of Holding Common Stock and Bank Common Stock that
would preclude pooling of interests accounting for the Mergers.
(e) Shareholder Vote. By Whitney if this Agreement or the
Company Merger fails to receive the requisite vote at any meeting of Holding
shareholders called for the purpose of voting thereon, or if this Agreement or
the Bank Merger Agreement fails to receive the requisite vote at any meeting of
Bank shareholders called for the purpose of voting thereon.
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<PAGE>
(f) Holding Recommendation. By Whitney if the Board of
Directors of Holding or Bank (A) shall withdraw, modify or change its
recommendation to its shareholders of this Agreement or the Mergers or shall
have resolved to do any of the foregoing; (B) shall have recommended to the
shareholders of Holding or Bank (or in the case of (iii) approved) any of the
following (being referred to herein as an "Acquisition Transaction") (i) any
merger, consolidation, share exchange, business combination or other similar
transaction (other than the transactions contemplated by this Agreement); (ii)
any sale, lease, transfer or other disposition of all or substantially all of
the assets of any member of Holding's consolidated group; or (iii) any
acquisition, by any person or group, of the beneficial ownership of 15% or more
of any class of Holding capital stock; or (C) shall have made any announcement
of a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(g) Prior to Notification Date. By Whitney by delivery
of a notice to terminate this Agreement pursuant to Section 5.01(b).
(h) Acquisition Transaction. By Holding in the event Holding
receives a written offer with respect to an Acquisition Transaction and the
Board of Directors of Holding determines in good faith, after consultation with
its financial advisors and counsel, that such Acquisition Transaction is more
favorable to Holding's shareholders than the transactions contemplated by this
Agreement.
7.02. Effect of Termination; Survival. Upon termination of this
Agreement pursuant to this Section 7, the Bank Merger Agreement shall also
terminate, and this Agreement and the Bank Merger Agreement shall be void and of
no effect, and there shall be no liability by reason of this Agreement or the
Bank Merger Agreement, or the termination thereof, on the part of any party or
their respective directors, officers, employees, agents or shareholders except
for any liability of a party hereto arising out of (i) an intentional breach of
any representation, warranty or covenant in this Agreement prior to the date of
termination, except if such breach was required by law or by any bank or bank
holding company regulatory authority or (ii) a breach of any covenant that
survives pursuant to the following sentence. The following provisions shall
survive any termination of this Agreement: the second last sentence of
subsection 5.01(a); subsection 7.02; subsection 7.03 and Section 8.
7.03. Termination Fee. If this Agreement is terminated pursuant to
7.01(h), then Holding shall pay or cause to be paid to Whitney upon demand a fee
of $786,000 (the "Termination Fee"), payable in same day funds.
Section 8. Miscellaneous
8.01. Notices. Any notice, communication, request, reply, advice or
disclosure (hereinafter severally and collectively "notice") required or
permitted to be given or made by any party to another in connection with this
Agreement or the Bank Merger Agreement or the transactions herein or therein
contemplated must be in writing and may be given or served by depositing the
same in the United States mail, postage prepaid and registered or certified with
return receipt requested, or by delivering the same to the address of the person
or entity to be notified, or by sending the same by a national commercial
courier service (such as Airborne Express, Federal Express, Emery Air Freight,
Network Courier, Purolator or the like) for next-day delivery provided such
delivery is confirmed in writing by such courier. Notice deposited in the mail
in the manner hereinabove described shall be effective 48 hours after such
deposit, and notice delivered in person or by commercial courier shall be
effective at the time of delivery. A party delivering notice shall endeavor to
obtain a receipt therefor. For purposes of notice, the addresses of the parties
shall, until changed as hereinafter provided, be as follows:
If to Whitney or the Acquiring Bank:
Whitney Holding Corporation
Attention: Mr. William Marks
228 St. Charles Avenue
New Orleans, Louisiana 70130
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<PAGE>
With copies to:
Whitney National Bank
Legal Department
Attention: Joseph S. Schwertz, Jr.
228 St. Charles Avenue
New Orleans, Louisiana 70130
If to Holding or Bank:
Liberty Holding Company
Attention: Jerry W. Morrison
President
201 N. Palafox
Pensacola, FL 32501
PERSONAL & CONFIDENTIAL
With copies to:
Mr. James J. Reeves
Attorney at Law
730 Bayfront Parkway, Suite 4-B
Pensacola, Florida 32501
8.02. Waiver. The failure by any party to enforce any of its rights
hereunder shall not be deemed to be a waiver of such rights, unless such waiver
is an express written waiver which has been signed by the waiving party. Waiver
of any one breach shall not be deemed to be a waiver of any other breach of the
same or any other provision hereof.
8.03. Expenses. Except as otherwise provided herein, regardless of
whether the Mergers are consummated, all expenses incurred in connection with
this Agreement and the Bank Merger Agreement and the transactions contemplated
hereby and thereby shall be borne by the party incurring them.
8.04. Headings. The headings in this Agreement have been included
solely for reference and shall not be considered in the interpretation or
construction of this Agreement.
8.05. Annexes, Exhibits and Schedules. The annexes, exhibits and
schedules to this Agreement are incorporated herein by this reference and
expressly made a part hereof.
8.06. Integrated Agreement. This Agreement, the Bank Merger Agreement,
the exhibits and schedules hereto and all other documents and instruments
delivered in accordance with the terms hereof constitute the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and there are no agreements, understanding, restrictions,
representations or warranties among the parties other than those set forth
herein or therein, all prior agreements and understandings being superseded
hereby.
8.07. Choice of Law. The validity of this Agreement and the Bank Merger
Agreement, the construction of their terms and the determination of the rights
and duties of the parties hereto in accordance therewith shall be governed by
and construed in accordance with the laws of the United States and those of the
State of Louisiana applicable to contracts made and to be performed wholly
within such State, except to the extent that the laws of the State of Florida
require this Agreement and the Bank Merger Agreement to be governed by the laws
of that state.
8.08. Parties in Interest. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that this Agreement may not be transferred or assigned by any member of
either consolidated group without the prior written consent of the other parties
hereto, including any transfer or
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<PAGE>
assignment by operation of law. Nothing in this Agreement or the Bank Merger
Agreement is intended or shall be construed to confer upon or to give any person
other than the parties hereto any rights or remedies under or by reason of this
Agreement or the Bank Merger Agreement, except as expressly provided for herein
and therein.
8.09. Amendment. The parties may, by mutual agreement of their
respective Boards of Directors, amend, modify or supplement this Agreement, the
Bank Merger Agreement, or any exhibit or schedule of any of them, in such manner
as may be agreed upon by the parties in writing, at any time before or after
approval of this Agreement and the Bank Merger Agreement and the transactions
contemplated hereby and thereby by the shareholders of the parties hereto. This
Agreement and any exhibit or schedule to this Agreement may be amended at any
time and, as amended, restated by the chief executive officers of the respective
parties (or their respective designees) without the necessity for approval by
their respective Boards of Directors or shareholders, to correct typographical
errors or to change erroneous references or cross references, or in any other
manner which is not material to the substance of the transactions contemplated
hereby.
8.10. Counterparts. This Agreement may be executed by the parties
in any number of counterparts, all of which shall be deemed an original, but all
of which taken together shall constitute one and the same document.
8.11. Non-Survival of Representations and Warranties; Covenants. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant hereto shall survive the Effective Time. Each party hereby
agrees that its sole right and remedy with respect to any breach of a
representation or warranty or covenant by the other party shall be not to close
the transactions described herein if such breach results in the nonsatisfaction
of a condition set forth in Section 6 hereof; provided, however, that the
foregoing shall not be deemed to be a waiver of any claim for an intentional
breach of a representation, warranty or covenant or for fraud except if such
breach is required by law or by any bank or bank holding company regulatory
authority; it being understood that a disclosure in any closing certificate
provided in accordance with subparagraph (a) of subsection 6.02 or subparagraph
(a) of subsection 6.03 hereof concerning an inaccuracy of a representation or
warranty shall not of itself be deemed to be an intentional breach of such
representation or warranty. The covenants of the parties set forth herein shall
survive the Effective Time in accordance with their terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
WHITNEY HOLDING CORPORATION
BY: /s/ William L. Marks
-------------------------
William L. Marks
ITS: Chairman and CEO
LIBERTY HOLDING COMPANY
BY: /s/ Martha Wilder
------------------------
Martha Wilder
ITS: Chairman of the Board
LIBERTY BANK
BY: /s/ Jerry W. Morrison
------------------------
Jerry W. Morrison
ITS: President and CEO
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<PAGE>
Exhibit 1.01(b) to
Agreement and Plan of Merger
CERTIFICATE OF MERGER
OF
LIBERTY HOLDING COMPANY
(a Florida corporation)
With And Into
WHITNEY HOLDING CORPORATION
(a Louisiana corporation)
(Filed pursuant to Section 112F
of the Louisiana Business Corporation Law)
The undersigned, acting pursuant to Section 112F of the Louisiana
Business Corporation Law ("LBCL"), hereby certifies that:
First: The name and state of incorporation of each of the corporations
that are parties to the merger to which this certificate relates (the
"Constituent Corporations") are as follows:
Name State of Incorporation
Whitney Holding Corporation Louisiana
Liberty Holding Company Florida
Second: An Agreement and Plan of Merger between the Constituent
Corporations, among others (the "Agreement"), providing for the merger (the
"Merger") of Liberty Holding Company ("Holding") with and into Whitney Holding
Corporation ("Whitney") has been approved, adopted, certified, executed and
acknowledged by each of the Constituent Corporations in accordance with the
requirements of Section 112 of the LBCL [and Section ____ of the Florida
Business Corporation Law].
Third: At the Effective Time (as defined in paragraph Seventh), Holding
will merge with and into Whitney, which shall be the surviving corporation
(sometimes referred to as the "Surviving Corporation") and the separate
existence of Holding shall cease. The name of the Surviving Corporation shall be
"Whitney Holding Corporation."
Fourth: The articles of incorporation of Whitney, as in effect on the
date this certificate is filed with the Secretary of State of Louisiana, shall
continue in full force and effect as the articles of incorporation of the
Surviving Corporation until altered, amended or repealed as provided therein or
by law.
Fifth: A copy of the executed Agreement is on file at the principal
place of business of the Surviving Corporation, located at 228 St.Charles
Avenue, New Orleans, Louisiana 70130.
Sixth: All provisions of the laws of the State of Louisiana [and
Florida] applicable to the Merger have been complied with, and a copy of the
Agreement will be furnished by the Surviving Corporation, on request and without
cost, to any stockholder of either Constituent Corporation.
Seventh: This Certificate of Merger shall be effective at _______
a.m./p.m., _______________, 1996 (the "Effective Time").
This Certificate of Merger is executed by the Surviving Corporation,
acting through its President, this ____ day of _________________________, 1996.
[Signature lines omitted]
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<PAGE>
Exhibit 1.01(c) to
Agreement and Plan of Merger
AGREEMENT OF MERGER
OF
LIBERTY BANK
INTO
ACQUIRING BANK
THIS AGREEMENT OF MERGER (this "Agreement") is made and entered into as
of this ______ day of ______________________, 199___, between Liberty Bank, a
Florida state chartered bank, domiciled at Pensacola, Florida ("Target") and
Acquiring Bank, a national banking association, organized under the laws of the
United States ("Acquiring Bank" or the "Receiving Association").
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of Acquiring Bank and Target (collectively called
the "Merging Associations") deem it advisable that Target be merged with and
into Acquiring Bank (the "Merger"), as provided in this Agreement and in the
Agreement and Plan of Merger dated __________________, 1996 (the "Plan"), among
the Merging Associations, Whitney Holding Corporation, a Louisiana corporation
("Whitney") of which Acquiring Bank is a wholly-owned subsidiary, and Liberty
Holding Company, a Florida corporation ("Holding"), which is the record and
beneficial owner of 99.____% of Target's outstanding capital stock, which sets
forth, among other things, certain representations, warranties, covenants and
conditions relating to the Merger; and
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of the Merging Associations wish to enter into
this Agreement and submit it to the respective shareholders of the Merging
Associations for approval in the manner required by law and, subject to said
approval and to approval by the Office of the Comptroller of the Currency (the
"OCC") and the Department of Banking and Finance of the Office of the
Comptroller of Florida being duly given and to such other approvals as may be
required by law, to effect the Merger, all in accordance with the provisions of
this Agreement.
NOW THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and the Merger, the parties hereto agree as follows:
1. The Merger. At the Effective Time (as defined in Section 2 hereof),
Target shall be merged with and into Acquiring Bank under the Articles of
Association of Acquiring Bank, existing Charter No. ___________, pursuant to the
provisions of, and with the effect provided in, 12 U.S.C. ss.215a, et seq. and
Florida Banking Code, ss.658:41. At the Effective Time, Acquiring Bank, the
Receiving Association, shall continue to be a national banking association, and
its business shall continue to be conducted at its main office in Pensacola,
Florida, and at its legally established branches (including, without limitation,
the legally established offices from which Target conducted business immediately
prior to the Effective Time). The Articles of Association of Acquiring Bank
shall not be altered or amended by virtue of the Merger, and the incumbency of
the directors and officers of Acquiring Bank shall not be affected by the Merger
nor shall any person succeed to such positions by virtue of the Merger.
2. Effective Time. The Merger shall become effective at the time
specified or permitted by the OCC in the certificate or other written record
issued by the OCC (the "Effective Time").
3.1 Conversion of Capital Stock of Target. (a) Subject to the
provisions of this Section 3, at the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, the shares of Target
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common stock, par value $5.00 per share ("Target Common Stock"), shall be
converted as follows: Except for shares as to which dissenters' rights have been
perfected and not withdrawn or otherwise forfeited under 12 U.S.C. ss215a
("Dissenters' Shares") and subject to the provisions of Section 3.1(e) relating
to fractional shares, each outstanding share of Target Common Stock will be
converted into and become that number of shares of Whitney Common Stock that is
equal to the quotient obtained by dividing the Target Percentage (as hereinafter
defined) of the Maximum Deliverable Amount, rounded up to the nearest whole
number of shares, by the total number of shares of Target Common Stock issued
and outstanding on the effective date of Merger.
(b) For purposes of this Section 3, shares of Target Common
Stock that are held by Holding or Target (other than shares held by Target in a
fiduciary capacity other than for Holding, shall not be considered outstanding
and shall be cancelled (and not converted) by virtue of the Merger.
(c) Certain Defined Terms. As used in this Section 3.1, the
following terms shall have the meanings as set forth below:
(i) Purchase Price. The term "Purchase Price" means
[$13,902,108]1, plus $5.25 for each share of Holding Common Stock duly and
validly issued between the date of the Plan and the Effective Time upon the
exercise of outstanding 1996 Warrants issued pursuant to that certain Private
Offering Memorandum of Holding dated January 14, 1994 (the "1996 Warrants") and
the payment in cash to Holding of the exercise price therefor (the "Added
Capital").
(ii) Maximum Deliverable Amount. The term "Maximum
Deliverable Amount" means the quotient obtained by dividing the Purchase Price
by the Average Market Price (as defined below).
(iii) Target Percentage. The term "Target Percentage"
means the percentage obtained by dividing (A) the dollar amount obtained by
multiplying (x)[$13,902,108]1, plus the Added Capital, minus the book value of
all assets of Holding other than Target Common Stock, by (y) the percentage of
the outstanding shares of Target Common Stock owned by persons other than
Holding by (B) the total Purchase Price.
(d) Average Market Price. The "Average Market Price" shall be
the average of the closing per share trading prices of Whitney Common Stock
(adjusted appropriately for any stock split, stock dividend, recapitalization,
reclassification or similar transaction which is effected, or for which a record
date occurs) on the twenty (20) trading days preceding the fifth trading day
immediately prior to the Effective Time, as reported in the Wall Street Journal
(corrected for typographical errors); provided, however, that if the Average
Market Price as calculated above is less than $27.00, the Average Market Price
for purposes of this Section 3.1(d) shall be $27.00, and if the Average Market
Price as calculated above is greater than $35.00, the Average Market Price for
purposes of this Section 3.1(d) shall be $35.00.
(e) Fractional Shares. In lieu of the issuance of fractional
shares of Whitney Common Stock, each shareholder of Target who would otherwise
be entitled thereto, upon surrender of his or her certificates that immediately
prior to the Effective Time represented Target Common Stock, other than
Dissenters' Shares, shall receive a cash payment (without interest) equal to the
fair market value at the Effective Time of any fraction of a share of Whitney
Common Stock to which such holder would be entitled but for this provision. For
purposes of calculating such payment, the fair market value of a fraction of a
share of Whitney Common Stock shall be such fraction multiplied by the Average
Market Price.
(f) Exchange of Certificates. After the Effective Time, each
holder of an outstanding certificate or certificates theretofore representing a
share or shares of Target Common Stock (other than Dissenters' Shares), upon
- -----------------------------------------------
1 As amended by the First Amendment to Agreement and Plan of Merger.
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surrender thereof to the exchange agent selected by Whitney (the "Exchange
Agent"), together with duly executed transmittal materials provided pursuant to
Section 3.1(h) or upon compliance by the holder or holders thereof with the
procedures of the Exchange Agent with respect to lost, stolen or destroyed
certificates, shall be entitled to receive in exchange therefor any payment due
in lieu of fractional shares and a certificate or certificates representing the
number of whole shares of Whitney Common Stock into which such holder's shares
of Target Common Stock were converted. Until so surrendered, each outstanding
Target stock certificate shall be deemed for all purposes, other than as
provided below with respect to the payment of dividends or other distributions
(if any) in respect of Whitney Common Stock, to represent the number of whole
shares of Whitney Common Stock into which such holder's Target Common Stock
shall have been converted. Whitney may, at its option, refuse to pay any
dividend or other distribution to holders of unsurrendered Target stock
certificates until surrendered; provided, however, that upon the surrender and
exchange of any Target stock certificates there shall be paid, to the extent not
previously paid, to the record holders of the Whitney stock certificates issued
in exchange therefor the amount, without interest, of accumulated dividends and
distributions, if any, which have become payable with respect to the number of
whole shares of Whitney Common Stock into which the shares theretofore
represented by such certificates shall have been exchanged.
(g) Deposit. Promptly following the Effective Time, Whitney
shall deposit or cause to be deposited with the Exchange Agent (i) certificates
representing the shares of Whitney Common Stock and (ii) the cash in lieu of
fractional shares to be issued and paid, as the case may be, in exchange for
outstanding shares of Target Common Stock pursuant to this Section 3.
(h) Transmittal Materials. Promptly after the Effective Time,
Whitney shall send or cause to be sent to each former shareholder of record of
Target at the Effective Time, excluding the holders, if any, of Dissenters'
Shares as to which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited under 12 U.S.C. ss.215a, transmittal materials for use in
exchanging certificates of Target Common Stock for certificates of Whitney
Common Stock.
(i) Dissenters' Shares. Holders of Dissenters' Shares shall
not be entitled to receive the shares of Whitney Common Stock and any unpaid
dividends and distributions payable thereon pursuant to this Section 3 and shall
only be entitled to receive payment of the fair cash value of such shares in
accordance with the provisions of 12 U.S.C. ss.215a, unless and until such
holders fail to perfect or effectively withdraw or lose their rights to such
appraisal and payment. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses such right, such shares of Target
Common Stock will be treated as if they had been converted into, at the
Effective Time, the shares of Whitney Common Stock (and cash in lieu of
fractional share), and any unpaid dividends and distributions payable thereon,
pursuant to this Section 3, without interest thereon.
3.2. Closing Transfer Books. At the Effective Time, the stock
transfer books of Target shall be closed and no transfer of shares of Target
Common Stock shall be made thereafter.
4. Capital Stock of the Receiving Association. The shares of the
capital stock of Acquiring Bank, the Receiving Association, issued and
outstanding immediately prior to the Effective Time shall, at the Effective
Time, continue to be issued and outstanding, and no additional shares of
Acquiring Bank shall be issued as a result of the Merger. Therefore, at the
Effective Time, the amount of capital stock of Acquiring Bank, the Receiving
Association, shall be $________________, divided into _______________ shares of
common stock, par value $________ per share.
5. Assets and Liabilities of the Merging Associations. At the Effective
Time, the corporate existence of each of the Merging Associations shall be
merged into and continued in Acquiring Bank, the Receiving Association, and such
Receiving Association shall be deemed to be the same corporation as each bank or
banking association participating in the Merger. All rights, franchises, and
interests of the individual Merging Associations in and to every type of
property (real, personal and mixed) and choses in action shall be transferred to
and vested in the Receiving Association by virtue of the Merger without any deed
or other transfer. The Receiving Association, upon the Merger and without any
order or other action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises, and interests, including appointments,
designations, and nominations, and all other rights and interests as trustee,
executor, administrator, registrar of stocks and bonds, guardian of estates, and
in every other fiduciary capacity, in the same manner and to the same extent as
such rights, franchises, and interests were held or enjoyed by any one of
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the Merging Associations at the time of the Merger, subject to the
conditions specified in 12 U.S.C.ss.215a(f). The Receiving Association shall,
from and after the Effective Time, be liable for all liabilities of the
Merging Associations.
6. Shareholder Approval; Conditions; Filing. This Agreement shall be
submitted to the shareholders of the Merging Associations for ratification and
confirmation in accordance with applicable provisions of law. The obligations of
the Merging Associations to effect the Merger shall be subject to all the terms
and conditions of the Plan. If the shareholders of the Merging Associations
ratify and confirm this Agreement, then the fact of such approval shall be
certified hereon by the Secretary of each of the Merging Associations and this
Agreement, so approved and certified, shall, as soon as is practicable, be
signed and acknowledged by the President or Chairman of the Board of each of
them. As soon as may be practicable thereafter, this Agreement, so certified,
signed and acknowledged, shall be delivered to the OCC for filing in the manner
required by law.
7. Miscellaneous. This Agreement may, at any time prior to the
Effective Time, be amended or terminated as provided in the Plan. This Agreement
may be executed in counterparts, each of which shall be deemed to constitute an
original. This Agreement shall be governed and interpreted in accordance with
federal law and the applicable laws of the State of Louisiana applicable to
contracts made and to be performed wholly with such state, except to the extent
that the laws of the State of Florida require this Agreement to be governed by
the laws of that state. This Agreement may be assigned only to the extent that
the party seeking to assign it is permitted to assign its interests in the Plan,
and subject to the same effect as any such assignment. The headings in this
Agreement are inserted for convenience only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. Capitalized terms
used herein and not otherwise defined have the meanings given to them in the
Plan.
IN WITNESS WHEREOF, this Agreement has been executed by a majority of
the directors of each of the Merging Associations, as of the day and year first
above written.
[Signature lines omitted]
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<PAGE>
Exhibit 6.02(g) to
Agreement and Plan of Merger
[Letter from affiliates of Holding and Bank]
[date]
Mr. William L. Marks
Chairman and CEO
Whitney Holding Corporation
228 St. Charles Avenue
New Orleans, La. 70130
Dear Mr. Marks:
In consideration of the benefits I will receive as a shareholder of
Liberty Holding Company ("Holding") or Liberty Bank ("Bank") from the Agreement
and Plan of Merger (the "Agreement") among Holding, Bank and Whitney Holding
Corporation ("Whitney"), I agree to vote all shares of Holding and Bank that I
own beneficially or of record in favor of approving the Agreement and the Bank
Merger Agreement (as defined therein), unless Whitney is then in breach or
default in any material respect as regards any covenant, agreement,
representation or warranty as to it contained in the Agreement.
I further agree that I will not, without the prior consent of Whitney,
transfer my shares of Holding or Bank stock prior to the Effective Date, as that
term is set forth in the Agreement.
I also acknowledge that Whitney intends to account for the acquisition
of Holding and Bank as a pooling of interests. I understand that my transfer of
any shares of Holding or Bank common stock, any warrants to acquire Holding
stock, and any Whitney common stock that I receive in exchange for Holding or
Bank stock, or warrants prior to Whitney's publication of financial results
covering at least 30 days of its operations following the Effective Date, may
impair this accounting treatment. Therefore, I agree that I will not sell or
otherwise transfer any shares of Bank stock or any warrants to acquire Holding
stock (or the Whitney stock which I receive in exchange for my Holding or Bank
stock) or over which I hold the power to sell, transfer, pledge or otherwise
alienate or encumber until:
a. the mergers have become effective and Whitney has
published financial results covering at least 30 days
of its combined operations following the Effective
Date of the mergers, or
b. the Agreement terminates.
I authorize Whitney to hold the certificates representing my shares of
Whitney common stock until the date that I am free to trade the stock in
accordance with the foregoing paragraph.
I certify that all of the shares of Holding and Bank stock of which I
hold the power to sell, transfer, pledge or otherwise alienate or encumber are
represented by the following certificates:
Certificate No. No. of shares
I have no present plan or intention to dispose of Whitney common stock
to be received in the merger.
I also understand the resale or other disposition of Whitney common
stock that I own may be governed by Rule 145 of the SEC under the Securities Act
of 1933, as amended, which Rule has been explained to me. I agree not to sell
any of the Whitney common stock to be held by me in violation of the Securities
Act of 1933, as amended, or the rules and regulations thereunder.
This letter shall constitute an irrevocable agreement of the
undersigned, and may be revoked only upon the mutual agreement of the parties.
Sincerely,
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<PAGE>
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This First Amendment to Agreement and Plan of Merger (the "Amendment")
is made as of July 9, 1996 between Whitney Holding Corporation, a Louisiana
corporation ("Whitney"), on the one hand, and Liberty Holding Company, a Florida
corporation ("Holding"), and Liberty Bank, a Florida chartered state bank
("Bank"), on the other hand. Capitalized terms used in this Amendment and not
otherwise defined shall have the meanings given to them in the Plan of Merger
(as defined below).
RECITALS
WHEREAS, Whitney, Holding and Bank are parties to that certain
Agreement and Plan of Merger dated April 23, 1996 (the "Plan of Merger");
WHEREAS, Whitney, Holding and Bank desire to amend the Plan of Merger
to adjust the Purchase Price as a result of Whitney's due diligence review of
Holding and Bank; and
WHEREAS, Whitney, Holding and Bank further desire to amend Section
1.01(a) of the Plan of Merger to reflect that upon its formation, Whitney will
cause Acquiring Bank to execute the Plan of Merger as a party, as the same may
be amended from time to time.
AGREEMENT
NOW, THEREFORE, Whitney, Holding and Bank hereby agree as follows:
1. The second sentence of Section 1.01(a) of the Plan of Merger, which
section is entitled "Mergers," is hereby amended and restated in its entirety to
provide and read as follows:
"Upon its formation, Whitney will cause Acquiring Bank to
execute this Agreement as a party, as the same may be amended from time
to time."
2. Section 2.01(d)(i) of the Plan of Merger, which subsection is
entitled "Purchase Price," is hereby amended by deleting from the first line
thereof the dollar amount "$14,000,000" and by inserting in lieu thereof the
dollar amount "$13,902,108," and a corresponding change shall be made to the
Bank Merger Agreement in the form in which it will be executed by the Boards of
Directors of Acquiring Bank and Bank.
3. Except to the extent specifically amended herein, the Plan of Merger
shall remain in full force and effect in accordance with its terms, provisions,
covenants and agreements.
4. This Amendment may be executed by the parties in any number of
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
[Signatures omitted]
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APPENDIX B
Fairness Opinion of Allen C. Ewing & Co.
<PAGE>
[Allen C. Ewing & Co. Letterhead]
May 29, 1996
Board of Directors
Liberty Holding Company
201 N. Palafox Street
Pensacola, Florida 32501-4862
Board of Directors
Liberty Bank
201 N. Palafox Street
Pensacola, Florida 32501-4862
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of Liberty Holding Company ("Company"), the one-bank
holding company for Liberty Bank ("Bank"), of Pensacola, Florida, and to the
minority shareholders of the Bank of the consideration to be paid to the
shareholders of the Company and the Bank by Whitney Holding Corporation
("Whitney") of New Orleans, Louisiana, as provided by the Agreement and Plan of
Merger ("Merger Agreement") entered into by the parties on April 23, 1996, and
the fairness of the proposed allocation of the purchase price between the
shareholders of the Company and the minority shareholders of the Bank.
Pursuant to the Merger Agreement, Whitney will offer to acquire all of the
outstanding shares and those shares created by the exercise of the 1996 warrants
held by various shareholders of the company by exchanging Whitney shares for the
outstanding shares and those shares created by the exercise of the 1996 warrants
in accordance with the terms defined in the Merger Agreement. As a result of the
proposed transaction, the Company will be merged with Whitney and the Bank will
be merged into a newly-formed banking subsidiary of Whitney.
In performing our analysis, we have, among other things:
1. Reviewed the terms of the Merger Agreement.
2. Reviewed the Call Reports for the Company and the Bank for the years
ended December 31, 1993, December 31, 1994, December 31, 1995, and the
company's and the Bank's annual audited financial statements prepared
by Saltmarsh, Cleaveland & Gund of Pensacola for the years ended 1993,
1994, and 1995.
3. Reviewed the non-performing assets of the Bank as of December 31, 1995.
4. Reviewed the financial condition of the Bank as to asset and earnings
quality, capital adequacy, etc. and the market value and quality of the
Bank's securities investments.
5. Discussed with management the operations and future prospects of the
company and the Bank, including the earnings forecast for the first
quarter ended March 31, 1996.
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Board of Directors
Page Two
May 29, 1996
6. Examined the Company's market share in the Pensacola market and the
competitive banking institutions active in the Bank's marketing area.
7. Compared the Company's financial performance with other banking
institutions operating in Florida.
8. Compared the price ratios of the proposed transaction with Whitney with
those of recent acquisitions of comparable companies in Florida.
9. Reviewed the Company's program for marketing the Company to prospective
acquirors.
10. Reviewed the calculations made by the Company's Board in allocating
that portion of the purchase price to be paid by Whitney for the
minority shares of the Bank owned by shareholders other than Liberty.
In arriving at our opinion, we have relied upon the accuracy and completeness of
the information provided to us by the company which we have used in the
accompanying analysis and upon the representations and warranties in the Merger
Agreement. We have not conducted any independent verification of such
information or performed any independent appraisal of the Company's assets and
liabilities.
Ewing's opinion is directed to the Board of Directors and does not constitute a
recommendation to any shareholder as to how such shareholder should vote at the
shareholders' meeting held in connection with the proposed transaction. Ewing
has not been requested to opine as to, and the opinion does not address, the
Board's underlying business decision to support and recommend the acquisition to
the shareholders.
Allen C. Ewing & Co. ("Ewing") is a regional investment banking firm that has
specialized in the research, trading, and provision of corporate finance
services to the banking and thrift industries in Florida. Senior members and the
author of this opinion have had extensive experience in providing a wide variety
of services involving banking institutions for over twenty-five years.
On April 17, 1996, Ewing delivered its preliminary oral opinion as to the
fairness of the proposed transaction to the Board of Directors of the Company,
subject to Ewing's subsequent confirmation of the fairness of the transaction by
its issuance of this written opinion.
Based upon the accompanying analysis and our knowledge of and experience in the
valuation of Florida banks, it is our opinion that the consideration to be paid
by Whitney for the common shares of the Company is fair, from a financial point
of view, to the shareholders of the Company; that the consideration to be paid
by Whitney for the common shares of the Bank held by the minority shareholders
is fair, from a financial point of view, to the minority shareholders of the
Bank; and that the allocation of the purchase price between the shareholders of
the Company and the shareholders of the Bank is fair, from a financial point of
view, to the shareholders of the Company and the Bank.
Very truly yours,
ALLEN C. EWING & CO.
By: /s/ Benjamin C. Bishop, Jr.
---------------------------
Benjamin C. Bishop, Jr.
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APPENDIX C
Sections 1301-20 of the Florida Business Corporation Act
and Selected Provisions of 12 U.S.C. ss.215a
<PAGE>
Sections 1301-20 of the Florida Business Corporation Act
1301. Dissenters' rights; definitions
The following definitions apply to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value
of the shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to s. 607.1104, the day prior to the date on which a copy of the
plan of merger was mailed to each shareholder of record of the subsidiary
corporation.
1302. Right of shareholders to dissent
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its
parent under s. 607.1104, and the shareholders would have been entitled to vote
on action taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to the
shareholders within 1 year after the date of sale;
(c) As provided in s.607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which will be acquired,
if the shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder
is entitled to vote on the amendment and if such amendment would adversely
affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to any
of his shares;
2. Altering or abolishing the voting rights pertaining to any of
his shares, except as such rights may be affected by the voting rights of new
shares then being authorized of any existing or new class or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of
his shares, when such exchange, cancellation, or reclassification would alter or
abolish his voting rights or alter his percentage of equity in the corporation,
or effecting a reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;
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4. Reducing the stated redemption price of any of his redeemable
shares, altering or abolishing any provision relating to any sinking fund for
the redemption or purchase of any of his shares, or making any of his shares
subject to redemption when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of
his preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of his
preferred shares; or
7. Reducing any stated preferential amount payable on any of his
preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his shares which are
adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered
in his name. In that event, his rights shall be determined as if the shares as
to which he has dissented and his other shares were registered in the names of
different shareholders.
(4) Unless the articles of incorporation otherwise provide, this
section does not apply with respect to a plan of merger or share exchange or a
proposed sale or exchange of property, to the holders of shares of any class or
series which, on the record date fixed to determine the shareholders entitled to
vote at the meeting of shareholders at which such action is to be acted upon or
to consent to any such action without a meeting, were either registered on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his shares
under this section may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
607.1320. Procedure for exercise of dissenters' rights
(1)(a) If a proposed corporate action creating dissenters' rights under
s. 607.1302 is submitted to a vote at a shareholders' meeting, the meeting
notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of ss. 607.1301, 607.1302, and
607.1320. A shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed action is
effectuated, and
2. Not vote his shares in favor of the proposed action. A proxy
or vote against the proposed action does not constitute such a notice of intent
to demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for his written consent or, if such a request is
not made, within 10 days after the date the corporation received written
consents without a meeting from the requisite number of shareholders necessary
to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a
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notice of intent to demand payment for his shares pursuant to paragraph (1)(a)
or, in the case of action authorized by written consent, to each shareholder,
excepting any who voted for, or consented in writing to, the proposed action.
(3) Within 20 days after the giving of notice to him, any shareholder
who elects to dissent shall file with the corporation a notice of such election,
stating his name and address, the number, classes, and series of shares as to
which he dissents, and a demand for payment of the fair value of his shares. Any
shareholder failing to file such election to dissent within the period set forth
shall be bound by the terms of the proposed corporate action. Any shareholder
filing an election to dissent shall deposit his certificates for certificated
shares with the corporation simultaneously with the filing of the election to
dissent. The corporation may restrict the transfer of uncertificated shares from
the date the shareholder's election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
shares. After such offer, no such notice of election may be withdrawn unless the
corporation consents thereto. However, the right of such shareholder to be paid
the fair value of his shares shall cease, and he shall be reinstated to have all
his rights as a shareholder as of the filing of his notice of election,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of such expiration or completion, but
without prejudice otherwise to any corporate proceedings that may have been
taken in the interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder
is not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which
shareholders may file their notices of election to dissent, or within 10 days
after such corporate action is effected, whichever is later (but in no case
later than 90 days from the shareholders' authorization date), the corporation
shall make a written offer to each dissenting shareholder who has made demand as
provided in this section to pay an amount the corporation estimates to be the
fair value for such shares. If the corporate action has not been consummated
before the expiration of the 90-day period after the shareholders' authorization
date, the offer may be made conditional upon the consummation of such action.
Such notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more than
12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during which
it was in existence.
(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his shares shall be made within 90 days after the
making of such offer or the consummation of the proposed action, whichever is
later. Upon payment of the agreed value, the dissenting shareholder shall cease
to have any interest in such shares.
C-3
<PAGE>
(7) If the corporation fails to make such offer within the period
specified therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the service of a
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to judgment
against the corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a
fair rate of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined
by the court and shall be assessed against the corporation, but all or any part
of such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the shares,
if the court finds that the action of such shareholders in failing to accept
such offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation.
C-4
<PAGE>
12 U.S.C. Section 215a
Dissenting shareholders
(b) If a merger shall be voted for at the called meetings by the
necessary majorities of the shareholders of each association or State bank
participating in the plan of merger, and thereafter the merger shall be approved
by the Comptroller, any shareholder of any association or State bank to be
merged into the receiving association who has voted against such merger at the
meeting of the association or bank of which he is a stockholder, or has given
notice in writing at or prior to such meeting to the presiding officer that he
dissents from the plan of merger, shall be entitled to receive the value of the
shares so held by him when such merger shall be approved by the Comptroller upon
written request made to the receiving association at any time before thirty days
after the date of consummation of the merger, accompanied by the surrender of
his stock certificates.
Valuation of shares
(c) The value of the shares of any dissenting shareholder shall be
ascertained, as of the effective date of the merger, by an appraisal made by a
committee of three persons, composed of (1) one selected by the vote of the
holders of the majority of the stock, the owners of which are entitled to
payment in cash; (2) one selected by the directors of the receiving association;
and (3) one selected by the two so selected. The valuation agreed upon by any
two of the three appraisers shall govern. If the value so fixed shall not be
satisfactory to any dissenting shareholder who has requested payment, that
shareholder may, within five days after being notified of the appraised value of
his shares, appeal to the Comptroller, who shall cause a reappraisal to be made
which shall be final and binding as to the value of the shares of the appellant.
Application to shareholders of merging associations:
appraisal by Comptroller; expenses of receiving association;
sale and resale of shares; State appraisal and merger law
(d) If, within ninety days from the date of consummation of the merger,
for any reason one or more of the appraisers is not selected as herein provided,
or the appraisers fail to determine the value of such shares, the Comptroller
shall upon written request of any interested party cause an appraisal to be made
which shall be final and binding on all parties. The expenses of the Comptroller
in making the reappraisal or the appraisal, as the case may be, shall be paid by
the receiving association. The value of the shares ascertained shall be promptly
paid to the dissenting shareholders by the receiving association. The shares of
stock of the receiving association which would have been delivered to such
dissenting shareholders had they not requested payment shall be sold by the
receiving association at an advertised public auction, and the receiving
association shall have the right to purchase any of such shares at such public
auction, if it is the highest bidder therefor, for the purpose of reselling such
shares within thirty days thereafter to such person or persons and at such price
not less than par as its board of directors by resolution may determine. If the
shares are sold at public auction at a price greater than the amount paid to the
dissenting shareholders, the excess in such sale price shall be paid to such
dissenting shareholders. The appraisal of such shares of stock in any State bank
shall be determined in the manner prescribed by the law of the State in such
cases, rather than as provided in this section, if such provision is made in the
State law; and no such merger shall be in contravention of the law of the State
under which such bank is incorporated. The provisions of this subsection shall
apply only to shareholders of (and stock owned by them in) a bank or association
being merged into the receiving association.
C-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 83 of the Louisiana Business Corporation Law ("LBCL") provides
in part that a corporation may indemnify any director, officer, employee or
agent of the corporation against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any action, suit or proceeding to which he is or was a
party or is threatened to be made a party (including any action by or in the
right of the corporation), if such action arises out of his acts on behalf of
the corporation and he acted in good faith 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.
The indemnification provisions of the LBCL are not exclusive; however,
no corporation may indemnify any person for willful or intentional misconduct. A
corporation has the power to obtain and maintain insurance, or to create a form
of self-insurance on behalf of any person who is or was acting for the
corporation, regardless of whether the corporation has the legal authority to
indemnify the insured person against such liability.
Whitney's Articles of Incorporation and By-laws provide for
indemnification for directors, officers, employees and agents or former
directors, officers, employees and agents of Whitney to the full extent
permitted by Louisiana law.
Whitney maintains an insurance policy covering the liability of its
directors and officers for actions taken in their official capacity.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Whitney
pursuant to the foregoing provision or otherwise, Whitney has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
The following Exhibits are filed as part of this Registration
Statement:
Exhibit No. Description
2 The Plan of Merger (included in the
Registration Statement as Appendix A and
incorporated herein by reference).
3.1 Articles of Incorporation of Whitney, as
amended (filed with the Commission as
an exhibit to Whitney's Quarterly Report on
Form 10-Q for the quarter ended March 31,
1993 and incorporated herein by reference).
3.2 By-laws of Whitney, as amended (filed with
the Commission on April 5,1994 as an exhibit
to Whitney's Registration Statement on Form
S-3 (File No. 33-52983) and incorporated
herein by reference).
5 Opinion of Milling, Benson, Woodward,
Hillyer, Pierson & Miller, L.L.P.
8 Form of opinion of Arthur Andersen LLP as to
certain tax matters.
II-1
<PAGE>
10.1 Stock Option Agreement between Whitney
Holding Corporation and William L. Marks
(filed with the Commission as an exhibit to
Whitney's Annual Report on form 10-K for the
year ended December 31,1990 and incorporated
herein by reference).
10.2 Executive agreement between Whitney Holding
Corporation, Whitney National Bank and
William L. Marks (filed with the Commission
as an exhibit to Whitney's Quarterly Report
on form 10-Q for the quarter ended June 30,
1993 and incorporated herein by reference).
10.3 Executive agreement between Whitney Holding
Corporation, Whitney National Bank and R.
King Milling (filed with the Commission as
an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended June 30,
1993 and incorporated herein by reference).
10.4 Executive agreement between Whitney Holding
Corporation, Whitney National Bank and
Edward B. Grimball (filed with the
Commission as an exhibit to Whitney's
Quarterly Report on form 10-Q for the
quarter ended June 30, 1993 and
incorporated herein by reference).
10.5 Executive agreement between Whitney Holding
Corporation, Whitney National Bank and
Kenneth A. Lawder, Jr. (filed with the
Commission as an exhibit to Whitney's
Quarterly Report on form 10-Q for the
quarter ended June 30, 1993 and
incorporated herein by reference).
10.6 Executive agreement between Whitney Holding
Corporation, Whitney National Bank and G.
Blair Ferguson (filed with the Commission as
an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended September
30, 1993 and incorporated herein by
reference).
10.7 Executive agreement between Whitney Holding
Corporation, Whitney National Bank and
Joseph W. May effective December 13, 1993
(filed with the Commission as an exhibit to
Whitney's Annual Report on form 10-K for the
year ended December 31, 1993 and
incorporated herein by reference).
10.8 Executive agreement between Whitney Holding
Corporation, Whitney National Bank and John
C. Hope, III, effective October 28, 1994
(filed with the Commission as an exhibit to
Whitney's Annual Report on form 10-K for the
year ended December 31, 1994 and
incorporated herein by reference).
10.9 Executive agreement between Whitney Holding
Corporation, Whitney National Bank and
Robert C. Baird, Jr. (filed with the
Commission as an exhibit to Whitney's Annual
Report on Form 10-K for the year ended
December 31, 1995 and incorporated herein
by reference).
10.10 Long-term incentive program (filed with the
Commission as an exhibit to Whitney's Annual
Report on form 10-K for the year ended
December 31, 1991 and incorporated herein
by reference).
10.11 Executive compensation plan (filed with the
Commission as an exhibit to Whitney's Annual
Report on form 10-K for the year ended
December 31, 1991 and incorporated herein by
reference).
II-2
<PAGE>
10.12 Form of restricted stock agreement between
Whitney Holding Corporation and certain of
its officers (filed with the Commission as
an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended June 30,
1992 and incorporated herein by reference).
10.13 Form of stock option agreement between
Whitney Holding Corporation and certain of
its officers (filed with the Commission as
an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended June 30,
1992 and incorporated herein by reference).
10.14 Directors' Compensation Plan (filed with the
Commission as part of Whitney's Proxy
Statement dated March 24, 1994 and
incorporated herein by reference).
10.15 Retirement Restoration Plan effective
January 1, 1995 (filed with the Commission
as an exhibit to Whitney's Annual Report on
Form 10-K for the year ended December 31,
1995 and incorporated herein by reference).
10.16 Amended and Restated Agreement and Plan of
Merger dated as of December 15, 1995 between
Whitney, Whitney National Bank and Whitney
Acquisition Corporation, on the one hand,
and First Citizens BancStock, Inc. and The
First National Bank in St. Mary Parish, on
the other hand (filed with the Commission as
an Appendix to Whitney's Registration
Statement on Form S-4 (File No. 33-65131)
and incorporated herein by reference).
21 Subsidiaries (filed with the Commission on
December 18, 1995 as an exhibit to Whitney's
Registration Statement on Form S-4 (File No.
33-65131) and incorporated herein by
reference).
23.1 Consent of Arthur Andersen LLP dated
August 8, 1996*.
23.2 Consent of Saltmarsh, Cleaveland & Gund
dated August 8, 1996*.
23.3 Consent of Allen C. Ewing & Co. dated
August 8, 1996*.
23.4 Consent of Milling, Benson, Woodward,
Hillyer, Pierson & Miller, L.L.P.,
included in Exhibit 5.
24 Powers of Attorney of directors of Whitney
Holding Corporation (contained on Page S-1
of the Registration Statement).
99.1 Forms of Proxies of Liberty Holding Company
and Liberty Bank*.
99.2 Agreement and Plan of Merger dated April 18,
1996 between Whitney Holding Corporation and
Whitney National Bank of Florida, on the one
hand, and American Bank and Trust, on the
other hand, as amended (filed with the
Commission as an Appendix to Whitney's
Registration Statement on Form S-4 (File No.
333-07871) and incorporated herein by
reference).
(b) Financial Statement Schedules
None
-----------------------------------------------------
*Filed with this Amendment. All other listed exhibits have been filed
previously
II-3
<PAGE>
Item 22. Undertakings
The undersigned Registrant hereby undertakes as follows:
(1) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Items 4, 10(b), 11, or 13 of Form S-4,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
(3) That for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
related to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(4) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.
(5) That every prospectus (i) that is filed pursuant to paragraph (4)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 2 to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New Orleans, State of Louisiana, on this 8th
day of August, 1996
WHITNEY HOLDING CORPORATION
By: /s/ William L. Marks
-----------------------------
William L. Marks
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<C> <C> <C>
/s/ William L. Marks Chairman of the Board August 8, 1996
- -------------------------------------- and Chief Executive Officer
William L. Marks
/s/ R. King Milling Director and President August 8, 1996
- --------------------------------------
R. King Milling
* Executive Vice President and August 8, 1996
- -------------------------------------- Chief Financial Officer
Edward B. Grimball (Principal Financial Officer
and Principal Accounting Officer)
* Director August 8, 1996
- --------------------------------------
Harry J. Blumenthal, Jr.
* Director August 8, 1996
- --------------------------------------
Joel B. Bullard, Jr.
* Director August 8, 1996
- --------------------------------------
James M. Cain
S-1
<PAGE>
*
- -------------------------------------- Director August 8, 1996
Angus R. Cooper, II
* Director August 8, 1996
- --------------------------------------
Robert H. Crosby, Jr.
* Director August 8, 1996
- --------------------------------------
Richard B. Crowell
- -------------------------------------- Director August , 1996
Camille A. Cutrone --
* Director August 8, 1996
- --------------------------------------
William A. Hines
* Director August 8, 1996
- --------------------------------------
Robert E. Howson
*
- -------------------------------------- Director August 8, 1996
John J. Kelly
* Director August 8, 1996
- --------------------------------------
E. James Kock, Jr.
- -------------------------------------- Director August , 1996
Alfred S. Lippman --
- -------------------------------------- Director August , 1996
John G. Phillips --
* Director August 8, 1996
- --------------------------------------
John K. Roberts, Jr.
* Director August 8, 1996
- --------------------------------------
W. P. Snyder III
- -------------------------------------- Director August , 1996
Carroll W. Suggs --
- -------------------------------------- Director August , 1996
Warren K. Watters --
* BY: /S/ R. King Milling
--------------------------------
R. King Milling
Agent and Attorney-in-Fact
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <C> <C>
Sequentially
Exhibit Numbered
Number Description Page
2 The Plan of Merger (included in the Registration Statement as
Appendix A and incorporated herein by reference).
3.1 Articles of Incorporation of Whitney, as amended (filed with
the Commission as an exhibit to Whitney's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1993 and
incorporated herein by reference).
3.2 By-laws of Whitney, as amended (filed with the Commission on
April 5, 1994 as an exhibit to Whitney's Registration Statement
on Form S-3 (File No. 33-52983) and incorporated herein by
reference).
5 Opinion of Milling, Benson, Woodward, Hillyer, Pierson &
Miller, L.L.P.
8 Form of opinion of Arthur Andersen LLP as to certain tax
matters.
10.1 Stock Option Agreement between Whitney Holding
Corporation and William L. Marks (filed with the Commission
as an exhibit to Whitney's Annual Report on form 10-K for the
year ended December 31, 1990 and incorporated herein by
reference).
10.2 Executive agreement between Whitney Holding Corporation,
Whitney National Bank and William L. Marks (filed with the
Commission as an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended June 30, 1993 and incorporated
herein by reference).
10.3 Executive agreement between Whitney Holding Corporation,
Whitney National Bank and R. King Milling (filed with the
Commission as an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended June 30, 1993 and incorporated
herein by reference).
10.4 Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Edward B. Grimball (filed with the
Commission as an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended June 30, 1993 and incorporated
herein by reference).
10.5 Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Kenneth A. Lawder, Jr. (filed with
the Commission as an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended June 30, 1993 and incorporated
herein by reference).
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
10.6 Executive agreement between Whitney Holding Corporation,
Whitney National Bank and G. Blair Ferguson (filed with the
Commission as an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended September 30, 1993 and
incorporated herein by reference).
10.7 Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Joseph W. May effective December
13, 1993 (filed with the Commission as an exhibit to Whitney's
Annual Report on form 10-K for the year ended December 31,
1993 and incorporated herein by reference).
10.8 Executive agreement between Whitney Holding Corporation,
Whitney National Bank and John C. Hope, III, effective
October 28, 1994 (filed with the Commission as an exhibit to
Whitney's Annual Report on form 10-K for the year ended
December 31, 1994 and incorporated herein by reference).
10.9 Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Robert C. Baird, Jr. (filed with the
Commission as an exhibit to Whitney's Annual Report on Form
10-K for the year ended December 31, 1995 and incorporated
herein by reference).
10.10 Long-term incentive program (filed with the Commission as an
exhibit to Whitney's Annual Report on form 10-K for the year
ended December 31, 1991 and incorporated herein by
reference).
10.11 Executive compensation plan (filed with the Commission as an
exhibit to Whitney's Annual Report on form 10-K for the year
ended December 31, 1991 and incorporated herein by
reference).
10.12 Form of restricted stock agreement between Whitney Holding
Corporation and certain of its officers (filed with the
Commission as an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended June 30, 1992 and incorporated
herein by reference).
10.13 Form of stock option agreement between Whitney Holding
Corporation and certain of its officers (filed with the
Commission as an exhibit to Whitney's Quarterly Report on
form 10-Q for the quarter ended June 30, 1992 and incorporated
herein by reference).
10.14 Directors' Compensation Plan (filed with the Commission as
part of Whitney's Proxy Statement dated March 24, 1994 and
incorporated herein by reference).
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
10.15 Retirement Restoration Plan effective January 1, 1995 (filed
with the Commission as an exhibit to Whitney's Annual Report
on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference).
10.16 Amended and Restated Agreement and Plan of Merger dated as
of December 15, 1995 between Whitney, Whitney National
Bank and Whitney Acquisition Corporation, on the one hand,
and First Citizens BancStock, Inc. and The First National Bank
in St. Mary Parish, on the other hand (filed with the
Commission as an Appendix to Whitney's Registration
Statement on Form S-4 (File No. 33-65131) and incorporated
herein by reference).
21 Subsidiaries (filed with the Commission on December 18, 1995
as an exhibit to Whitney's Registration Statement on Form S-4
(File No. 33-65131) and incorporated herein by reference).
23.1 Consent of Arthur Andersen LLP dated August 8, 1996.*
23.2 Consent of Saltmarsh, Cleaveland & Gund dated August 8, 1996.*
23.3 Consent of Allen C. Ewing & Co. dated August 8, 1996.*
23.4 Consent of Milling, Benson, Woodward, Hillyer, Pierson &
Miller, L.L.P., included in Exhibit 5.
24 Powers of Attorney of directors of Whitney Holding
Corporation (contained on page S-1 of the Registration
Statement).
99.1 Forms of Proxies of Liberty Holding Company and Liberty
Bank.*
99.2 Agreement and Plan of Merger dated April 18, 1996 between
Whitney Holding Corporation and Whitney National Bank of
Florida, on the one hand, and American Bank and Trust, on the
other hand, as amended (filed with the Commission as an
Appendix to Whitney's Registration Statement on Form S-4
(File No. 333-07871) and incorporated herein by reference).
--------------------------------
*Filed with this Amendment. All other listed exhibits have been filed previously.
</TABLE>
<PAGE>
EXHIBIT 23.1
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 16, 1996
(except with respect to the matter discussed in the first paragraph of Note 16,
as to which the date is March 8, 1996) included in Whitney Holding Corporation's
Form 10-K for the year ended December 31, 1995, and of our report dated March 8,
1996 included in Whitney Holding Corporation's Form 10-K/A for the year ended
December 31, 1995 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
New Orleans, Louisiana
August 8, 1996
<PAGE>
EXHIBIT 23.2
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated January 19, 1996 with respect to the financial
statements of Liberty Holding Company and Subsidiary and the financial
statements of Liberty Bank included in this Registration Statement (Form S-4)
and related Prospectus of Whitney Holding Corporation for the registration of
its common stock.
/s/ Saltmarsh, Cleaveland & Gund
Pensacola, Florida
August 8, 1996
<PAGE>
EXHIBIT 23.3
<PAGE>
CONSENT OF ALLEN C. EWING & CO.
We hereby consent to the filing of our opinion to Liberty Holding
Company and Liberty Bank as an exhibit to the Prospectus/Proxy Statement
included in the Registration Statement on Form S-4 of Whitney Holding
Corporation and to the references to us and to our opinion in the
Prospectus/Proxy Statement that forms a part of the Registration Statement. In
giving this consent we do not concede that we are within any category of persons
whose consent is required in the Registration Statement.
ALLEN C. EWING & CO.
By: /s/ Benjamin C. Bishop, Jr.
-----------------------------------
Benjamin C. Bishop, Jr.
Chairman of the Board
Jacksonville, Florida
August 8, 1996
<PAGE>
EXHIBIT 99.1
<PAGE>
LIBERTY HOLDING COMPANY
201 N. Palafox Street
Pensacola, Florida 32501
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS
The undersigned shareholder(s) of Liberty Holding Company (the "Company") hereby
revoke(s) any proxy heretofore given and appoint(s) Martha Wilder and Conald D.
Mansfield, and any one of them, as proxies, each with the full power of
substitution and hereby authorize(s) them to represent and to vote, as
designated below, all of the shares of common stock of the Company owned of
record by the undersigned at the close of business on August 1, 1996, at
the Special Meeting of Shareholders of the Company called for and to be held at
the main office of Liberty Bank, 201 N. Palafox Street, Pensacola, Florida
32501, on Tuesday, September 17, 1996 at 2:00 p.m., local time, and at
any adjournment thereof, as follows:
1. To consider and vote upon a proposal to approve an Agreement
and Plan of Merger dated April 23, 1996, as amended, and a
related merger agreement (collectively, the "Plan of Merger")
pursuant to which, among other things: (a) the Company would
merge into Whitney Holding Corporation ("Whitney"),(b)Liberty
Bank would merge into Whitney National Bank of Florida, a
newly formed, wholly-owned bank subsidiary of Whitney, and
(c) each outstanding share of common stock of the Company
would be converted into shares of Whitney common stock as
determined in accordance with the terms of the Plan of Merger,
all as more fully described in the accompanying Proxy
Statement-Prospectus.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, to vote upon such other matters that may
properly be brought before the meeting and any adjournment
thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE UNDERSIGNED SHAREHOLDER'S
SPECIFICATIONS HEREON. IN THE ABSENCE OF SUCH SPECIFICATION, THE PROXY WILL BE
VOTED IN FAVOR OF THE PLAN OF MERGER.
DATED:_____________________________, 1996
--------------------------------------------
(Signature of Shareholder)
--------------------------------------------
(Signature of Joint Shareholder)
When signing as attorney, executor, administrator, tutor, trustee, curator,
guardian or other fiduciary, please give full title and attach a certified copy
of authority.
Please sign, date and return your proxy promptly in the enclosed postage paid
envelope.
<PAGE>
LIBERTY BANK
201 N. Palafox Street
Pensacola, Florida 32501
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE
BANK'S BOARD OF DIRECTORS
The undersigned shareholder(s) of Liberty Bank (the "Bank") hereby revoke(s) any
proxy heretofore given and appoint(s) William A. Hunt and Ronald L. Bruce, and
any one of them, as proxies, each with the full power of substitution and hereby
authorize(s) them to represent and to vote, as designated below, all of the
shares of common stock of the Bank owned of record by the undersigned at the
close of business on August 1, 1996, at the Special Meeting of
Shareholders of the Bank called for and to be held at the Bank's main office,
201 N. Palafox Street, Pensacola, Florida 32501, on Tuesday,
September 17, 1996 at 2:00 p.m., local time, and at any adjournment
thereof, as follows:
1. To consider and vote upon a proposal to approve an Agreement
and Plan of Merger dated April 23, 1996, as amended, and a
related merger agreement (collectively, the "Plan of Merger")
pursuant to which, among other things: (a) Liberty Holding
Company (the Bank's parent corporation) (the "Company") would
merge into Whitney Holding Corporation ("Whitney"), (b)
Liberty Bank would merge into Whitney National Bank of
Florida, a newly formed, wholly-owned bank subsidiary of
Whitney, and (c) each outstanding share of common stock of
Liberty Bank not owned by the Company would be converted into
shares of Whitney common stock as determined in accordance
with the terms of the Plan of Merger, all as more fully
described in the accompanying Proxy Statement-Prospectus.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, to vote upon such other matters that may
properly be brought before the meeting and any adjournment
thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE UNDERSIGNED SHAREHOLDER'S
SPECIFICATIONS HEREON. IN THE ABSENCE OF SUCH SPECIFICATION, THE PROXY WILL BE
VOTED IN FAVOR OF THE PLAN OF MERGER.
DATED:_________________________, 1996
-------------------------------------
(Signature of Shareholder)
-------------------------------------
(Signature of Joint Shareholder)
When signing as attorney, executor, administrator, tutor, trustee, curator,
guardian or other fiduciary, please give full title and attach a certified copy
of authority.
Please sign, date and return your proxy promptly in the enclosed postage paid
envelope.
<PAGE>
LIBERTY HOLDING COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
As a participant in the Liberty Holding Company Employee Stock
Ownership Plan (the "ESOP"), you are entitled to vote shares of Liberty
Holding Company common stock, $1.00 par value, allocated to you under
the Plan in connection with the proposed merger of Liberty Holding
Company into Whitney Holding Corporation. The enclosed Proxy Statement-
Prospectus describes the terms and conditions of the proposed merger.
To vote, simply complete the voting instructions (below) and return
them to Saltmarsh, Cleaveland & Gund, the ESOP's accountants, at the
address below. Your instructions will be held in confidence. If your
instructions are not received on or before September 15, 1996, shares of
common stock allocated to you will not be voted.
------------------------------------------
VOTING INSTRUCTIONS
THESE INSTRUCTIONS ARE SOLICITED BY THE TRUSTEE
OF THE LIBERTY HOLDING COMPANY EMPLOYEE STOCK OWNERSHIP PLAN
The undersigned, a participant in the Liberty Holding Company Employee
Stock Ownership Plan, hereby instructs the trustee to vote at a special
meeting of the shareholders of Liberty Holding Company to be held on
September 17, 1996, and at any and all adjournments thereof, as follows:
FOR (___) AGAINST (___) ABSTAIN (___)
the merger of Liberty Holding Company into Whitney Holding Corporation.
THESE INSTRUCTIONS WILL BE VOTED AS SPECIFIED. IF INSTRUCTIONS ARE
NOT RECEIVED ON OR BEFORE SEPTEMBER 15, 1996, SHARES SUBJECT TO THESE
INSTRUCTIONS WILL NOT BE VOTED.
---------------------------- -------------------------
Please print name Signature
-------------------------
Date
PLEASE MARK, SIGN, DATE AND RETURN THESE
INSTRUCTIONS PROMPTLY, USING THE ENCLOSED ENVELOPE TO:
SALTMARSH, CLEAVELAND & GUND
Attn: William D. Massey
P. O. Drawer 13207
Pensacola, FL 32591-3207
<PAGE>
