<PAGE>
As filed with the Securities and Exchange Commission on January 22, 1996
Registration No. 33-65131
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
AMENDMENT NO. 1
To
FORM S-4
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 jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Identification
organization) Number) No.)
-----------------------------
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)
<TABLE>
<S> <C> <C>
Joseph S. Schwertz, Jr., Esq. Copies to: Copies to:
Secretary Patrick J. Butler, Jr., Esq. W. Cleland Dade, Esq.
Whitney Holding Corporation Milling, Benson, Woodward, Bracewell & Patterson, L.L.P.
228 St. Charles Ave. - Room 622 Hillyer, Pierson & Miller South Tower Pennzoil Place
New Orleans, LA 70130 909 Poydras Street, Suite 2300 711 Louisiana Street, Suite 2900
(504) 586-3474 New Orleans, LA 70112 Houston, TX 77002-2781
(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 company merger 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>
<TABLE>
<CAPTION>
WHITNEY HOLDING CORPORATION
CROSS REFERENCE SHEET
ITEM OF FORM S-4 LOCATION IN PROSPECTUS
- ---------------- ----------------------
<S> <C>
A. Information About the Transaction
1. Forepart of Registration Cover Page
Statement and Outside Front
Page of Prospectus
2. Inside Front and Outside Inside Cover; Table of Contents
Back Cover Pages of
Prospectus
3. Risk Factors, Ratio of Summary
Earnings to Fixed Charges
and Other Information
4. Terms of the Transaction Summary; The Plan of Merger
5. Pro Forma Financial Unaudited Pro Forma Combined
Information Financial Information
6. Material Contacts with the The Plan of Merger - Background;
Company Being Acquired The Plan of Merger - Reasons for
the Plan of Merger; Recommendation
of Citizens' 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 Inside Cover; Summary; Information
S-3 Registrants about Whitney
11. Incorporation of Certain Information about Whitney
Information 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
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WHITNEY HOLDING CORPORATION
CROSS REFERENCE SHEET
ITEM OF FORM S-4 LOCATION IN PROSPECTUS
- ---------------- ----------------------
<S> <C>
17. Information with Respect Information about Citizens
to Companies other than
S-2 or S-3 Companies
D. Voting and Management Information
18. Information if Proxies, Consents
or Authorizations are to be
Solicited
(1) Date, Time and Place The Meeting - General
Information
(2) Revocability of The Meeting - Solicitation, Voting
Proxy and Revocation of Proxies
(3) Dissenters' Rights of Dissenters' Rights
Appraisal
(4) Persons Making The Meeting - General; The Meeting
Solicitation - Solicitation, Voting and Revocation
of Proxies
(5) Interests of Certain Summary - Interests of Certain
Persons in Matters to be Persons in the Mergers; The Plan of
Acted upon; Voting Merger - Interests of Certain Persons
Securities and Principal in the Mergers; Information About
Holders Thereof Citizens - Security Holdings of
Principal Shareholders and
Management
(6) Vote Required for Approval The Meeting - Shares Entitled to
Vote; Quorum; Vote Required
(7) Directors and Executive Information About Citizens
Executive Officers;
Executive Compensation;
Certain Relationships and
Related Transactions
19. Information if Proxies, *
Consents or Authorizations are
not to be Solicited or in an
Exchange Offer
- ---------------
</TABLE>
*Not applicable or answer is in the negative.
<PAGE>
[FIRST CITIZENS BANCSTOCK, INC. LETTERHEAD]
January 23, 1996
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of First
Citizens BancStock, Inc. ("Citizens"), to be held in the main office of The
First National Bank in St. Mary Parish ("FNB"), 1100 Brashear Avenue, in the
City of Morgan City, Louisiana, on Thursday, March 7, 1996 at 10:30 a.m., local
time.
The purpose of the Special Meeting will be to consider and vote upon the
Amended and Restated Agreement and Plan of Merger and related merger agreements
(the "Plan of Merger") among Citizens, FNB, Whitney Holding Corporation
("Whitney") and its wholly-owned subsidiaries Whitney National Bank ("Whitney
Bank") and Whitney Acquisition Corporation (a company formed by Whitney to
facilitate these mergers). Pursuant to the Plan of Merger (i) Citizens and
Whitney would merge, (ii) each outstanding share of Citizens Common Stock would
be converted into shares of Whitney Common Stock on the terms stated in the Plan
of Merger, and (iii) FNB, Citizens' wholly-owned subsidiary, and Whitney Bank
would merge. You are urged to read the enclosed Proxy Statement and Prospectus
in its entirety for a more complete description of the terms of the Plan of
Merger.
The Board of Directors has unanimously approved the Plan of Merger as being in
the best interests of Citizens' shareholders. The Robinson-Humphrey Company,
Inc., an investment banking firm experienced in the valuation of banking
institutions, has advised your Board of Directors that, in its opinion, the
consideration to be received by Citizens' shareholders in the Plan of Merger is
fair to Citizens' shareholders from a financial point of view. Upon approval of
the Plan of Merger, you would receive common stock of Whitney, one of the
largest Louisiana bank holding companies. It is a condition to the consummation
of the merger that Citizens and Whitney receive an opinion that the merger will
qualify as a tax-free reorganization for federal income tax purposes. We believe
that the merger of Whitney and Citizens will create a company that is able to
compete effectively in the changing economic and legal environment facing all
financial institutions, while continuing to offer a broad range of banking
services to the market areas currently served by FNB. Moreover, Whitney's Common
Stock is quoted on the NASDAQ (National Market System), providing you with the
continued liquidity of owning a publicly traded security.
The accompanying Notice of Special Meeting and Proxy Statement and 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 BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PLAN OF MERGER AND
URGES 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 Meeting, you nevertheless may vote in person,
even though you previously returned your proxy.
Very truly yours,
Milford L. Blum, Jr.
President and Chief Executive Officer
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
1100 Brashear Avenue
Morgan City, Louisiana 70380
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MARCH 7, 1996
To the Holders of Common Stock of First Citizens BancStock, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of First Citizens BancStock, Inc. ("Citizens") will be held at the
main office of its wholly-owned subsidiary, The First National Bank in St. Mary
Parish ("FNB"), 1100 Brashear Avenue, Morgan City, Louisiana on Thursday, March
7, 1996 at 10:30 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to approve an Amended and
Restated Agreement and Plan of Merger and two related merger
agreements (collectively, the "Plan of Merger") pursuant to which,
among other things: (a) Whitney Acquisition Corporation (a wholly-
owned subsidiary of Whitney Holding Corporation ("Whitney") formed for
this purpose) would merge into Citizens, as a result of which Citizens
would become a wholly-owned subsidiary of Whitney and each outstanding
share of common stock of Citizens 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 and Prospectus; (b) Citizens would then be merged into
Whitney; and (c) FNB would merge into Whitney National Bank, a wholly-
owned bank subsidiary of Whitney.
2. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Only shareholders of record at the close of business on Friday, January 19,
1996 are entitled to notice of and to vote at the Meeting or any adjournment
thereof. Dissenting shareholders who comply with the procedural requirements of
the Louisiana Business Corporation Law will be entitled to receive payment of
the fair cash value of their shares if the Company Merger is effected upon
approval by less than 80% of the total voting power of Citizens.
Shareholders are cordially invited to attend the Meeting in person.
Whether or not you plan to attend the 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 First Citizens BancStock, Inc.
Ira A. Breaux, Jr.
Secretary
Morgan City, Louisiana
January 23, 1996
- --------------------------------------------------------------------------------
I M P O R T A N T
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE 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 MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS
VOTED BY GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF CITIZENS OR BY
EXECUTION OF A PROXY OF A LATER DATE FILED WITH THE SECRETARY OF CITIZENS AT OR
BEFORE THE MEETING. IN ADDITION, IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR
PROXY BY VOTING IN PERSON.
- --------------------------------------------------------------------------------
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MARCH 7, 1996
---------------
WHITNEY HOLDING CORPORATION
PROSPECTUS
COMMON STOCK, NO PAR VALUE
This Proxy Statement and Prospectus is being furnished to holders of common
stock, par value $1.00 per share ("Citizens Common Stock"), of First Citizens
BancStock, Inc. ("Citizens") in connection with the solicitation of proxies by
Citizens' Board of Directors for use at a Special Meeting of Shareholders of
Citizens (the "Meeting") to be held on Thursday, March 7, 1996 at 10:30 a.m.,
local time, at The First National Bank in St. Mary Parish ("FNB"), 1100 Brashear
Avenue, Morgan City, Louisiana, and at any adjournment thereof. The purpose of
the Meeting is to consider and vote upon a proposal to approve an Amended and
Restated Agreement and Plan of Merger and two related merger agreements
(collectively, the "Plan of Merger") between Citizens and FNB, on the one hand,
and Whitney Holding Corporation ("Whitney"), Whitney Acquisition Corporation
("Acquisition") and Whitney National Bank ("Whitney Bank"), on the other hand.
The Plan of Merger provides for, among other things, the merger of Acquisition,
a wholly-owned subsidiary of Whitney formed for this purpose, into Citizens (the
"Company Merger") and the merger of FNB into Whitney Bank. Upon consummation of
the Company Merger, each outstanding share of Citizens Common Stock (except for
shares as to which dissenters' rights have been perfected and not withdrawn)
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 interest. See "The Plan of Merger--Description of the
Plan of Merger--Conversion of Citizens Common Stock." Consummation of the
Company Merger requires the approval of the holders of at least two-thirds of
the outstanding shares of Citizens Common Stock present at the Meeting in person
or by proxy and is also subject to the satisfaction of certain other conditions,
including obtaining necessary regulatory approvals.
Whitney has filed a Registration Statement pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), covering up to 2,627,451 shares of
Whitney Common Stock that may be issued upon consummation of the Company Merger,
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 Citizens Common Stock." This
Proxy Statement and Prospectus constitutes a prospectus of Whitney relating to
the shares of Whitney Common Stock that are issuable to the holders of Citizens
Common Stock upon consummation of the Company Merger.
This Proxy Statement and Prospectus, and the accompanying Notice of Special
Meeting and form of proxy, are being first mailed to shareholders of Citizens on
or about January 26, 1996.
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 outstanding shares of Citizens Common Stock
are listed and traded on the American Stock Exchange, Inc. (the "AMEX"). The
closing price per share of Whitney Common Stock on the NASDAQ National Market
System on January 19, 1996 was $30.25 and the closing price per share of
Citizens Common Stock on the AMEX on January 19, 1996 was $47.50.
---------------
THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE PROPOSED COMPANY MERGER 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 AND PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
This Proxy Statement and Prospectus is dated January 23, 1996
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Proxy Statement and
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by Whitney or Citizens. This Proxy
Statement and Prospectus shall not constitute an offer by Whitney to sell or the
solicitation of an offer by Whitney to buy nor shall there be any sale of the
securities offered by this Proxy Statement and Prospectus in any state in which,
or to any person to whom, it would be unlawful prior to registration or
qualification under the laws of such state for Whitney to make such an offer or
solicitation. Neither the delivery of this Proxy Statement and Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of Whitney or Citizens since the
date hereof.
All information contained herein with respect to Citizens has been provided
by Citizens, and Whitney is relying on the accuracy of that information. All
information contained herein with respect to Whitney has been provided by
Whitney, and Citizens is relying on the accuracy of that information.
AVAILABLE INFORMATION
Each of Whitney and Citizens 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 and Citizens, 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, such reports, proxy statements and other
information concerning Citizens can be inspected at the offices of the AMEX,
the stock exchange on which Citizens Common Stock (Symbol: FIR) is traded, 86
Trinity Place, New York, New York 10006. 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 with respect to the Whitney
Common Stock offered by this Proxy Statement and Prospectus. This Proxy
Statement and Prospectus does not contain all of the information set forth in
the Registration Statement or the exhibits thereto. Statements contained in
this Proxy Statement and 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, reference is made
to the Registration Statement, including the exhibits thereto and any documents
incorporated by reference therein.
INCORPORATION BY REFERENCE
THIS PROXY STATEMENT AND 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
CITIZENS COMMON STOCK, TO WHOM THIS PROXY STATEMENT AND 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
FEBRUARY 29, 1996.
<PAGE>
TABLE OF CONTENTS
SUMMARY.................................................................... iii
The Companies and the Banks........................................... iii
Whitney.......................................................... iii
Citizens......................................................... iii
The Special Meeting................................................... iii
General.......................................................... iii
Purpose of the Meeting........................................... iii
Vote Required.................................................... iv
Reasons for the Plan of Merger; Recommendation of Citizens' Board of
Directors.......................................................... iv
Fairness Opinion of Robinson-Humphrey................................. iv
The Plan of Merger.................................................... iv
Conversion of Citizens Common Stock.............................. iv
Exchange of Certificates......................................... vi
Regulatory Approvals and Other Conditions to Consummation of the
Mergers....................................................... vi
Waiver, Amendment and Termination................................ vii
Certain Federal Income Tax Consequences.......................... vii
Dissenters' Rights............................................... vii
Interests of Certain Persons.......................................... vii
Selected Financial Data of Citizens................................... ix
Selected Financial Data of Whitney.................................... x
Comparative Per Share Data............................................ xi
Market Prices......................................................... xii
Comparative Rights of Shareholders.................................... xii
THE MEETING................................................................ 1
General............................................................... 1
Purpose of the Meeting................................................ 1
Shares Entitled to Vote; Quorum; Vote Required........................ 1
Solicitation, Voting and Revocation of Proxies........................ 1
THE PLAN OF MERGER......................................................... 2
General............................................................... 2
Background............................................................ 2
Reasons for the Plan of Merger; Recommendation of Citizens' Board
of Directors....................................................... 3
General.......................................................... 3
Whitney.......................................................... 3
Citizens......................................................... 3
Board Recommendation............................................. 4
Fairness Opinion of The Robinson-Humphrey Company, Inc................ 4
General.......................................................... 4
Valuation Methodologies.......................................... 5
Compensation of Robinson-Humphrey................................ 6
Description of the Plan of Merger..................................... 6
Conversion of Citizens Common Stock.............................. 6
Citizens Options................................................. 8
Exchange of Certificates......................................... 9
Transfer and Exchange Agents..................................... 10
Regulatory Approvals and Other Conditions of the Mergers......... 10
Effective Date................................................... 10
Conduct of Business Prior to the Effective Date.................. 10
Waiver, Amendment and Termination................................ 11
Expenses......................................................... 12
i
<PAGE>
Interests of Certain Persons.......................................... 12
Employee Benefits................................................ 12
Management....................................................... 12
Citizens Option Plans............................................ 13
Indemnification and Insurance.................................... 14
Status Under Federal Securities Laws; Certain Restrictions
on Resales......................................................... 14
Accounting Treatment.................................................. 15
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................... 15
DISSENTERS' RIGHTS......................................................... 16
UNAUDITED PRO FORMA
COMBINED FINANCIAL INFORMATION............................................. 18
INFORMATION ABOUT CITIZENS................................................. 26
Description of Business............................................... 26
Competition........................................................... 26
Supervision and Regulation............................................ 27
Market Prices and Dividends........................................... 28
Property.............................................................. 29
Employees............................................................. 29
Security Holdings of Principal Shareholders and Management............ 29
Legal Proceedings..................................................... 31
CITIZENS MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................. 31
Overview.............................................................. 31
Years Ended December 31, 1994 and 1993................................ 32
Nine Months Ended September 30, 1995.................................. 37
INFORMATION ABOUT WHITNEY.................................................. 40
General............................................................... 40
Market Prices of and Dividends Declared on Whitney Common Stock....... 40
Incorporation of Certain Information about Whitney by Reference....... 41
COMPARATIVE RIGHTS OF SHAREHOLDERS......................................... 41
Description of Whitney Common Stock................................... 42
Comparison of Whitney Common Stock and Citizens Common Stock.......... 46
Boards of Directors.............................................. 46
Removal of Directors............................................. 46
Supermajority Vote Requirements.................................. 46
Reversion........................................................ 47
Shareholder Action by Consent.................................... 47
LEGAL MATTERS.............................................................. 47
EXPERTS.................................................................... 47
OTHER MATTERS.............................................................. 48
CITIZENS CONSOLIDATED FINANCIAL STATEMENTS................................. F-1
Appendix A - Amended and Restated Agreement and Plan of Merger........ A-1
Appendix B - Fairness Opinion of The Robinson-Humphrey Company, Inc... B-1
Appendix C - Section 131 of the Louisiana Business Corporation Law.... C-1
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.
THE COMPANIES AND THE BANKS
Whitney. Whitney Holding Corporation ("Whitney") is a Louisiana 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, a national banking
association, is a full-service commercial bank 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
issuance of credit cards, the performance of pension and personal trust
services, and safe deposit rentals. Whitney Bank also is active as a
correspondent for other banks. At September 30, 1995, Whitney Bank had total
assets of approximately $2.810 billion and total deposits of approximately
$2.330 billion. 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 45 offices 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 and its subsidiaries
are sometimes referred to collectively herein as "Whitney's consolidated group."
Whitney Acquisition Corporation ("Acquisition") is a wholly-owned subsidiary of
Whitney that was organized under the laws of the State of Louisiana to
facilitate the mergers described herein. See "The Meeting - Purpose of the
Meeting" and "The Plan of Merger - General." At September 30, 1995, Whitney had
total consolidated assets of approximately $2.939 billion and total consolidated
deposits of approximately $2.425 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."
Citizens. First Citizens BancStock, Inc., a Louisiana corporation
("Citizens"), is a bank holding company that owns all of the outstanding stock
of The First National Bank in St. Mary Parish ("FNB"). At September 30, 1995,
Citizens had total consolidated assets of approximately $239.5 million and total
consolidated deposits of approximately $211.7 million. Citizens and FNB are
sometimes referred to herein collectively as "Citizens' consolidated group."
FNB, a national banking association and a wholly-owned subsidiary of Citizens,
is a full service commercial bank offering consumer and commercial banking
services at 12 locations in St. Mary, Iberia and East Baton Rouge Parishes,
Louisiana. Citizens' and FNB's principal executive offices are at 1100 Brashear
Avenue, Morgan City, Louisiana 70380, and their telephone number is
(504) 385-0330. See "Information about Citizens."
Whitney and Citizens are sometimes collectively referred to herein as the
"Companies" and Whitney Bank and FNB are sometimes collectively referred to
herein as the "Banks."
THE SPECIAL MEETING
General. A special meeting of the shareholders of Citizens (the
"Meeting") will be held on Thursday, March 7, 1996 at the time and place set
forth in the accompanying Notice of Special Meeting of Shareholders. Only
record holders of the common stock, $1.00 par value per share, of Citizens
("Citizens Common Stock") at the close of business on January 19, 1996 are
entitled to notice of and to vote at the Meeting. On that date, there were
1,266,219 shares of Citizens Common Stock issued and outstanding, each of which
is entitled to one vote on each matter properly to come before the Meeting.
Purpose of the Meeting. The purpose of the Meeting is to vote upon a
proposal to approve an Amended and Restated Agreement and Plan of Merger and two
related merger agreements (collectively, the "Plan of Merger"), copies of which
are attached hereto as Appendix A, pursuant to which, among other things,
Acquisition will merge into Citizens (the "Company Merger"), Citizens will then
immediately be merged into Whitney, and FNB will merge into
iii
<PAGE>
Whitney Bank (the "Bank Merger" which, together with the Company Merger, are
collectively called the "Mergers"), with the result that the business and
properties of FNB will become the business and properties of Whitney Bank, the
business and properties of Citizens will become the business and properties of
Whitney and shareholders of Citizens will receive shares of Whitney Common Stock
(and cash in lieu of fractional shares) as described below under " - The Plan of
Merger -- Conversion of Citizens Common Stock." See "The Meeting - Purpose of
the Meeting."
Vote Required. The Plan of Merger must be approved by the affirmative
vote of holders of at least a majority of the Citizens Common Stock outstanding
as of the record date, January 19, 1996. Directors and executive officers of
Citizens and their affiliates beneficially own an aggregate of 263,777 shares,
or approximately 20.29%, of the outstanding shares of Citizens Common Stock.
Whitney, as the sole shareholder of Acquisition, must approve the Plan of
Merger. Under Louisiana law, shareholders of Whitney are not required to approve
the Plan of Merger. See "The Meeting - Shares Entitled to Vote; Quorum; Vote
Required."
REASONS FOR THE PLAN OF MERGER; RECOMMENDATION OF CITIZENS' BOARD OF DIRECTORS.
The Board of Directors of Citizens believes that the approval of the Plan
of Merger is in the best interests of Citizens and its shareholders. In
reaching its decision, the Board considered a number of factors, including
Citizens' and Whitney's business and prospects; the price to be received by
Citizens' shareholders and the substantial premium that such price represented
over the historical trading prices for Citizens Common Stock; and the opinion of
The Robinson-Humphrey Company, Inc. ("Robinson-Humphrey") that the consideration
to be received by Citizens' shareholders upon the consummation of the Mergers is
fair, from a financial point of view. See "The Plan of Merger - Background" and
"The Plan of Merger - Reasons for the Plan of Merger; Recommendation of
Citizens' Board of Directors."
THE BOARD OF DIRECTORS OF CITIZENS HAS UNANIMOUSLY APPROVED THE PLAN OF
MERGER AND RECOMMENDS THAT ITS SHAREHOLDERS VOTE FOR APPROVAL OF THE PLAN OF
MERGER.
FAIRNESS OPINION OF ROBINSON-HUMPHREY
Robinson-Humphrey has rendered its opinion to Citizens' Board of Directors
that, as of January 23, 1996, and based on and subject to the assumptions made,
the factors considered, the review undertaken and the limitations stated, the
consideration to be received by Citizens' shareholders under the Plan of Merger
is fair to Citizens and its shareholders from a financial point of view.
Robinson-Humphrey'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 Meeting. See "The Plan
of Merger -- Fairness Opinion of The Robinson-Humphrey Company, Inc."
A copy of the fairness opinion of Robinson-Humphrey is attached as Appendix
B and should be read in its entirety.
THE PLAN OF MERGER
Conversion of Citizens Common Stock . On the date on which the Company
Merger becomes effective (the "Effective Date"), each issued and outstanding
share of Citizens 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 $49.95, provided that the Average Market
Price (as defined below) of Whitney Common Stock is not less than $25.50 or
greater than $35.50 and none of the Citizens Options (defined below) are
exercised. The actual number of shares of Whitney Common Stock received by a
Citizens shareholder on the Effective Date by reason of the Company Merger will
vary depending on, among other things, the Average Market Price of Whitney
Common Stock and the number of shares of Citizens Common Stock outstanding on
the Effective Date. Whitney also will assume Citizens' obligations under
options (the "Citizens Options") granted pursuant to Citizens' existing stock
option plans (the "Citizens Option Plans"), with each such option becoming an
option to acquire shares of Whitney Common Stock as set forth in the Plan of
iv
<PAGE>
Merger and the Citizens Option Plans. See "The Plan of Merger - Description of
the Plan of Merger -- Conversion of Citizens Common Stock."
If no Citizens Options are exercised before the effectiveness of the
Company Merger, Whitney Common Stock having an aggregate value (calculated on
the basis of the Average Market Price) of $63,245,082 would be issued to
Citizens' shareholders on the Effective Date by reason of the Company Merger.
If all of the Citizens Options are exercised before the effectiveness of the
Company Merger, Whitney Common Stock having an aggregate value (calculated on
the basis of the Average Market Price) of $67,000,000 would be issued to
Citizens' shareholders by reason of the Company Merger. The following table
sets forth examples of the number of shares of Whitney Common Stock into which
each share of Citizens Common Stock would be converted on the Effective Date,
assuming that on such date the Average Market Price for Whitney Common Stock (as
defined elsewhere in this Proxy Statement and Prospectus under the heading "The
Plan of Merger - Description of the Plan of Merger") is as specified below and
no Citizens Options are exercised on or prior to the Effective Date.
<TABLE>
<CAPTION>
TOTAL NUMBER OF
SHARES OF
ASSUMED AVERAGE WHITNEY
MARKET PRICE OF WHITNEY COMMON COMMON STOCK NUMBER OF WHITNEY
STOCK TO BE ISSUED SHARES PER CITIZENS SHARE*
- -------------------------------- --------------- --------------------------
<S> <C> <C>
$25.50 2,480,199 1.9587
28.00 2,258,753 1.7839
30.50 2,073,609 1.6376
33.00 1,916,518 1.5136
35.50 1,781,552 1.4070
- ---------------
</TABLE>
* Based on 1,266,219 shares of Citizens Common Stock, the number of shares
outstanding on January 19, 1996. Due to fluctuations in the trading prices
of Whitney Common Stock, the actual number of shares to be received by
Citizens shareholders cannot currently be determined.
The Plan of Merger provides that the total number of shares of Whitney
Common Stock to be issued in the Company Merger 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 $25.50, 2,480,199 shares of Whitney Common Stock
would be issued in the Company Merger regardless of their market value, and if
the calculation of Average Market Price were to result in an amount exceeding
$35.50, 1,781,552 shares of Whitney Common Stock would be issued in the Company
Merger regardless of their market value, in each case assuming that no Citizens
Options are exercised prior to closing. Accordingly, it is a condition to
Citizens' obligations to consummate the Mergers that the Average Market Price of
the Whitney Common Stock as so calculated not be less than $25.50, 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 $35.50. If Citizens 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 Company Merger may be
lower than it would be if the calculation of Average Market Price resulted in an
amount between $25.50 and $35.50, and each outstanding share of Citizens Common
Stock would then be converted into a number of shares of Whitney Common Stock
with a total market value less than $49.95. 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 Company
Merger may be higher than it would be if such calculation resulted in a price
within the specified range, and each outstanding share of Citizens Common Stock
would then be converted into a number of shares of Whitney Common Stock with a
total market value in excess of $49.95. See "-- Regulatory Approvals and Other
Conditions to Consummation of the Mergers;" "The Plan of Merger - Description of
the Plan of Merger --Conversion of Citizens
v
<PAGE>
Common Stock;" and "The Plan of Merger - Description of the Plan of Merger --
Regulatory Approvals and Other Conditions of the Mergers."
On January 19, 1996, the closing trading price for a share of Whitney
Common Stock was $30.25, and if such date had been the Effective Date, the
Average Market Price would have been approximately $30.61. See "The Plan of
Merger -Description of the Plan of Merger -- Conversion of Citizens Common
Stock."
Exchange of Certificates. Upon consummation of the Mergers, a letter of
transmittal, together with instructions for the exchange of certificates
representing shares of Citizens Common Stock for certificates representing
shares of Whitney Common Stock, will be mailed to each person who was a
shareholder of record of Citizens on the Effective Date. Shareholders are
requested not to send in their Citizens Common Stock certificates until they
have received a letter of transmittal and further written instructions.
Citizens shareholders who cannot locate their stock certificates are urged
to contact promptly:
First Citizens BancStock, Inc.
1100 Brashear Avenue
Morgan City, Louisiana 70380
Attention: Cynthia G. Cutrera
Shareholder Relations
(504) 385-0330
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
Citizens and Whitney against any claim that may be made against Citizens or
Whitney by the owner of the certificate(s) alleged to have been lost or
destroyed. Citizens 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
Citizens 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 Citizens, 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, Acquisition and Whitney Bank 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 Citizens of opinions as to
the qualification of the Mergers as tax-free reorganizations under applicable
law, and (iv) 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 $35.50, 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 Citizens'
obligations that the Average Market Price of the Whitney Common Stock as so
calculated shall not be less than $25.50. The Companies intend to consummate the
Mergers as soon as practicable after all of the conditions to the Mergers have
been met or waived.
On December 8, 1995, Whitney filed an application seeking approval of the
Bank Merger from the Office of the Comptroller of the Currency (the
"Comptroller") and on the same day filed an application seeking the prior
approval of the Company Merger from the Board of Governors of the Federal
Reserve System (the "Reserve Board"). The Comptroller application was accepted
on December 8, 1995, and the Reserve Board application was accepted on January
12, 1996. Whitney expects to receive the approval of the Comptroller and the
Reserve Board prior to the Meeting; however, there can be no assurance that
these approvals will be obtained, or that 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."
vi
<PAGE>
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
Citizens, the receipt of all necessary regulatory approvals, the satisfaction of
all requirements prescribed by law for consummation of the Mergers and Citizens'
receipt of a letter from Robinson-Humphrey dated as of the date of the Meeting,
in form and substance satisfactory to Citizens, confirming Robinson-Humphrey's
fairness opinion to the Board of Directors of Citizens.
The Plan of Merger may be amended, at any time before or after its approval
by the shareholders of Citizens, 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 may not alter the amount or type of shares into which
Citizens Common Stock will be converted, alter any term of the Articles of
Incorporation of Citizens 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 Citizens.
The Plan of Merger may be terminated at any time prior to the Effective
Date (i) by the mutual consent of Whitney and Citizens; (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
June 30, 1996; (iii) if the Mergers have not occurred by June 30, 1996; (iv) if
the number of shares of Citizens 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, exceeds that number of
shares of Citizens Common Stock that would preclude pooling-of-interests
accounting for the Mergers (i.e., if, after the Meeting, more than 10% of the
Citizens 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 Citizens receives a written offer
with respect to another acquisition transaction and the Board of Directors of
Citizens determines in good faith, after consultation with its financial
advisers and counsel, that such transaction is more favorable to Citizens'
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 $3.0 million payable to Whitney if
Citizens 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."
Certain Federal Income Tax Consequences. Consummation of the Mergers is
conditioned upon receipt by the Companies 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 Citizens shareholder
who receives Whitney Common Stock pursuant to the Company Merger 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 OR HER TAX ADVISOR CONCERNING THE APPLICABLE FEDERAL, STATE
AND LOCAL INCOME TAX CONSEQUENCES OF THE MERGERS. See "Certain Federal Income
Tax Consequences."
Dissenters' Rights. By complying with the specific procedures required by
the LBCL and described herein, shareholders of Citizens may have the right to
dissent from the Company Merger if the Company Merger is effected with the
approval of the holders of less than 80% of the total voting power of Citizens.
Shareholders who perfect their dissenters' rights may be entitled to receive in
cash the fair value of their shares of Citizens Common Stock. 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 Board of Directors of Citizens
and FNB have interests in the Mergers that are in addition to their interest as
shareholders of Citizens. These interests include, among others, payments to be
received by Citizens' executive officers pursuant to agreements with FNB; the
acceleration of vesting of Citizens Options held by directors and executive
officers pursuant to the terms of the Citizens Option Plans; the continued
employment of the executive officers by Whitney after the Effective Date;
provisions in the Plan of Merger
vii
<PAGE>
relating to indemnification of directors and officers of Citizens and FNB; and,
the continuation of certain employee benefits generally.
In addition, Whitney has agreed to create an advisory "city board" of
Whitney Bank, consisting of those members of Citizens' current Board of
Directors who agree to serve in such capacity, to promote business development
and customer relations in St. Mary and Iberia Parishes, Louisiana. Whitney has
also undertaken to appoint one of the members of the city board to Whitney's
Board of Directors no later than October 1, 1996 and to recommend to its
shareholders that such person be elected to the Board at Whitney's 1997 annual
meeting of shareholders.
See "The Plan of Merger - Interests of Certain Persons."
viii
<PAGE>
SELECTED FINANCIAL DATA OF CITIZENS
The following selected financial data with respect to each of the fiscal
years in the five-year period ended December 31, 1994 have been derived from
Citizens' audited consolidated financial statements. The selected financial data
for the nine months ended September 30, 1995 and 1994 have been derived from
Citizens' unaudited financial statements, which, in the opinion of Citizens'
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 nine-month period ended September 30, 1995 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 Citizens'
consolidated financial statements and notes thereto appearing elsewhere in this
Proxy Statement and Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ ------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
AVERAGE BALANCE SHEET DATA:
Total assets.................... $228,663 $224,259 $226,642 $229,177 $218,143 $176,917 $158,613
Earning assets.................. 215,558 211,267 210,847 212,625 210,186 163,838 147,516
Loans and leases, net of
unearned income and allowance.. 128,881 113,683 117,418 104,441 100,553 93,502 83,784
Investment securities........... 78,118 82,402 81,716 90,767 80,293 55,635 53,491
Interest bearing deposits....... 168,556 168,292 168,207 172,297 167,854 135,891 122,641
Noninterest bearing deposits.... 35,270 32,418 32,899 32,723 27,855 19,836 18,553
Shareholders' equity............ 24,352 22,060 21,923 20,001 17,867 16,440 15,382
INCOME STATEMENT DATA:
Total interest income........... $14,143 $12,520 $16,989 $16,575 $17,324 $16,525 $15,878
Net interest income............. 8,906 8,388 11,353 10,910 9,891 8,114 7,239
Provision for loan losses....... (250) (135) (135) (375) (1,065) (1,035) (885)
Other income.................... 1,429 1,388 1,987 2,352 2,349 1,489 1,320
Operating expenses.............. (6,137) (5,979) (8,301) (8,271) (7,992) (6,500) (5,908)
Net income...................... 2,708 2,532 3,360 2,827 2,213 1,503 1,266
PER SHARE DATA:*
Primary earnings per share...... $ 2.09 $ 2.00 $ 2.65 $ 2.23 $ 1.75 $ 1.19 $ 1.00
Fully diluted earnings per
share.......................... 2.02 2.00 2.65 2.23 1.75 1.19 1.00
Cash dividends per share........ 0.39 0.27 0.54 0.45 0.36 0.29 0.26
Book value per share, end
of period...................... 20.51 17.69 17.67 17.32 14.80 13.41 12.52
KEY RATIOS:
Net income as a percent of
average assets................. 1.18% 1.13% 1.48% 1.23% 1.01% 0.92% 0.86%
Net income as a percent of
average equity................. 11.12 11.47 15.33 14.13 12.39 9.14 8.23
Allowance for loan losses as
a percent of loans and leases
at period end.................. 1.43 1.56 1.49 1.81 1.94 1.90 1.68
Average equity as a percent
of average total assets........ 10.65 9.84 9.67 8.73 8.19 9.29 9.70
Dividend payout ratio........... 20.50 12.50 20.30 20.18 20.57 24.37 26.00
</TABLE>
_______________
* All per share data have been adjusted to reflect the five-for-one stock split
in 1993 and a 10% stock dividend in October 1994.
ix
<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, 1994 and for the nine-month
periods ended September 30, 1995 and 1994 have been derived from the
consolidated financial statements of Whitney's consolidated group and should be
read in conjunction with Whitney's 1994 Annual Report on Form 10-K and Whitney's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 that have
been incorporated by reference in this Proxy Statement and Prospectus. The
selected financial data for the nine months ended September 30, 1995 and 1994
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 nine-month period ended September
30, 1995 are not necessarily indicative of the results to be expected for the
entire year. On January 16, 1996, Whitney announced 1995 earnings of $40.9
million, or $2.77 per share, with fourth quarter earnings of $9.6 million, or
$0.64 per share.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA:
Total assets.................... $2,932,950 $2,974,214 $2,956,032 $2,888,335 $2,843,833 $2,854,924 $2,701,872
Total earning assets............ 2,641,184 2,682,240 2,667,051 2,604,901 2,550,935 2,553,172 2,374,271
Total loans..................... 1,141,124 963,469 979,254 952,238 1,124,993 1,356,995 1,439,047
Total investment in securities.. 1,448,616 1,646,605 1,622,971 1,547,701 1,281,713 1,040,451 783,131
Interest bearing deposits....... 1,639,177 1,702,611 1,692,659 1,682,856 1,703,335 1,722,538 1,538,364
Noninterest bearing deposits.... 771,213 761,358 759,549 732,734 696,077 661,403 637,797
Shareholders' equity............ 311,676 273,900 276,219 219,662 175,413 168,090 198,593
INCOME STATEMENT DATA:
Total interest income........... $ 142,085 $ 131,395 $ 175,761 $ 169,530 $ 177,755 $ 206,778 $ 219,472
Net interest income............. 94,719 93,083 123,894 120,514 112,430 99,200 96,688
Provision for (reduction
in reserve for) possible
loan losses.................... (10,000) (16,139) (26,139) (60,000) 3,350 45,387 62,266
Non-interest income............. 23,653 25,018 32,353 30,991 32,644 45,299 18,218
Non-interest expense............ 82,482 76,958 104,258 100,093 112,623 105,803 88,720
Net income (loss)............... 31,365 38,703 52,838 76,401 20,202 (4,684) (17,439)
PER SHARE DATA:
Earnings (loss) per share....... $ 2.12 $ 2.66 $ 3.63 $ 5.30 $ 1.41 $ (0.33) $ (1.21)
Dividends per share............. 0.60 0.47 0.64 0.43 0.07 - 0.85
Book value per share, end
of period...................... 22.22 19.70 20.36 17.93 12.88 11.57 11.89
KEY RATIOS:
Net income (loss) as a
percent of average assets...... 1.43% 1.74% 1.79% 2.65% 0.71% (0.16%) (0.65%)
Net income (loss) as a
percent of average equity...... 13.45 18.89 19.13 34.78 11.52 (2.79) (8.78)
Net interest margin............. 4.93 4.74 4.79 4.75 4.52 3.99 4.03
Allowance for loan losses as
a percent of loans and leases
at period end.................. 2.7 4.1 3.3 4.6 9.4 8.5 6.1
Average equity as a percent
of average total assets........ 10.63 9.21 9.34 7.61 6.17 5.89 7.35
Dividend payout ratio........... 28.27 17.66 17.66 8.18 4.75 - -
</TABLE>
x
<PAGE>
COMPARATIVE PER SHARE DATA
The following table presents certain information for Whitney and Citizens
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>
<CAPTION>
HISTORICAL
---------------------- PRO FORMA PRO FORMA CITIZENS CITIZENS
WHITNEY CITIZENS COMBINED/(1)/ COMBINED/(2)/ EQUIVALENT/(3,4)/ EQUIVALENT/(4,5)/
--------- ----------- ------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE:
Years ended:
December 31, 1994............... $ 3.63 $ 2.65 $ 3.30 $ 3.44 $ 6.46 $ 4.84
December 31, 1993............... 5.30 2.23 4.69 4.89 9.19 6.88
December 31, 1992............... 1.41 1.75 1.33 1.39 2.60 1.96
Nine months ended
September 30, 1995/(6)/......... $ 2.12 $ 2.09 $ 1.97 $ 2.05 $ 3.86 $ 2.89
DIVIDENDS DECLARED PER
COMMON SHARE:
Years ended:
December 31, 1994............... $ 0.64 $ 0.54 $ 0.58 $ 0.61 $ 1.14 $ 0.86
December 31, 1993............... 0.43 0.45 0.40 0.42 0.78 0.59
December 31, 1992............... 0.07 0.36 0.08 0.09 0.16 0.13
Nine months ended
September 30, 1995.............. $ 0.60 $ 0.39 $ 0.54 $ 0.57 $ 1.05 $ 0.78
BOOK VALUE PER COMMON
SHARE:
As of September 30, 1995......... $22.22 $20.51 $20.53 $21.40 $40.21 $30.11
As of December 31, 1994.......... $20.36 $17.67 $18.70 $19.50 $36.63 $27.44
MARKET VALUE PER COMMON
SHARE:
As of September 28,
1995/(7)/....................... $30.50 $31.25 $49.95 $49.95
As of January 19, 1996........... $30.25 $47.50 $49.95 $49.95
- --------------
</TABLE>
(1) Assuming an Average Market Price of Whitney Common Stock of $25.50 and the
issuance of 2,480,199 shares of Whitney Common Stock to effect the Company
Merger.
(2) Assuming an Average Market Price of Whitney Common Stock of $35.50 and the
issuance of 1,781,552 shares of Whitney Common Stock to effect the Company
Merger.
(3) Citizens Equivalent is calculated by multiplying the amount in the pro
forma combined column referenced to footnote 1 by the exchange ratio of
1.9587 at the $25.50 Average Market Price.
(4) The Citizens Equivalent amounts are based on an aggregate value of
$63,245,082 of Whitney Common Stock being issued to Citizens' shareholders
on the Effective Date by reason of the Company Merger and a total of
1,266,219 shares of Citizens Common Stock outstanding on the Effective
Date.
(5) Citizens Equivalent is calculated by multiplying the amount in the pro
forma combined column referenced to footnote 2 by the exchange ratio of
1.4070 at the $35.50 Average Market Price.
(6) On a fully diluted basis, Citizens' historical earnings per share for the
nine months ended September 30, 1995 were $2.02 per share. Fully diluted
earnings per share do not differ significantly from that which is
calculated on a primary basis for all other per share amounts presented.
(7) The trading day immediately preceding public announcement of the execution
of the Plan of Merger. See " - Market Prices," below.
xi
<PAGE>
MARKET PRICES
On September 28, 1995, the last trading day preceding the date that the
Companies 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. On January 19, 1996, the
closing sales price for a share of Whitney Common Stock was $30.25, and if such
date had been the Effective Date of the Mergers, the Average Market Price would
have been approximately $30.61. See "The Plan of Merger -Description of the Plan
of Merger -- Regulatory Approvals and Other Conditions of the Mergers."
The closing sales price for a share of Citizens Common Stock on the AMEX
was $31.25 on September 28, 1995. On January 19, 1996, the closing sales price
for a share of Citizens Common Stock was $47.50. No assurance can be given as
to the market price of the Citizens Common Stock on the Effective Date. See
"Information About Citizens - Market Prices and Dividends."
COMPARATIVE RIGHTS OF SHAREHOLDERS
If the Mergers are consummated, all shareholders of Citizens, 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 Citizens. Whitney's Articles of
Incorporation contain provisions that are different from those of Citizens, 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."
xii
<PAGE>
THE MEETING
GENERAL
This Proxy Statement and Prospectus is furnished to shareholders of
First Citizens BancStock, Inc. ("Citizens") in connection with the solicitation
of proxies on behalf of its Board of Directors for use at a special meeting of
shareholders of Citizens (the "Meeting") to be held on the date and at the time
and place specified in the accompanying Notice of Special Meeting of
Shareholders, or any adjournments thereof.
Citizens and Whitney Holding Corporation (collectively, the
"Companies") have each supplied all information included herein with respect to
it and its consolidated subsidiaries. Citizens and its subsidiary are sometimes
collectively referred to herein as "Citizens' consolidated group" and Whitney
Holding Corporation ("Whitney") and its subsidiaries are sometimes collectively
referred to herein as "Whitney's consolidated group."
PURPOSE OF THE MEETING
The purpose of the Meeting is to consider and vote upon a proposal to
approve an Amended and Restated Agreement and Plan of Merger between Whitney,
its wholly-owned banking subsidiary Whitney National Bank ("Whitney Bank") and
Whitney Acquisition Corporation ("Acquisition"), a wholly-owned subsidiary of
Whitney formed for this purpose, on the one hand, and Citizens and its wholly-
owned subsidiary, The First National Bank in St. Mary Parish ("FNB"), on the
other, and a related Agreement of Merger between Whitney and FNB (the "Bank
Merger Agreement") and a related Joint Agreement of Merger between Acquisition
and Citizens (the "Company Merger Agreement" and, together with the Bank Merger
Agreement and the Amended and Restated Agreement and Plan of Merger, the "Plan
of Merger"). Pursuant to the Plan of Merger, Acquisition will merge into
Citizens (the "Company Merger"), with the result that Citizens will become a
wholly-owned subsidiary of Whitney, Citizens will then immediately be merged
into Whitney and FNB will merge into Whitney Bank (the "Bank Merger," which,
together with the Company Merger, are collectively called the "Mergers"). In
consideration of the Company Merger, each outstanding share of common stock,
$1.00 par value, of Citizens ("Citizens Common Stock") will be converted into a
number of shares of common stock, no par value, of Whitney ("Whitney Common
Stock") as described under the heading captioned "The Plan of Merger -
Description of the Plan of Merger -- Conversion of Citizens Common Stock."
SHARES ENTITLED TO VOTE; QUORUM; VOTE REQUIRED
Only holders of record of Citizens Common Stock at the close of
business on January 19, 1996 are entitled to notice of and to vote at the
Meeting. On that date, there were 1,266,219 shares of Citizens Common Stock
outstanding, each of which is each entitled to one vote on each matter properly
brought before the Meeting.
With respect to consideration of the Plan of Merger and any other
matter properly brought before the Meeting, the presence at the Meeting, in
person or by proxy, of the holders of a majority of the outstanding shares of
Citizens Common Stock is necessary to constitute a quorum. The Plan of Merger
must be approved by the affirmative vote of the holders of a majority of the
total number of shares of Citizens Common Stock outstanding as of January 19,
1996, the record date for determining shareholders entitled to notice of and to
vote at the Meeting. 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
not be counted for purposes of determining the presence of a quorum.
Louisiana law does not require that shareholders of Whitney approve
the Plan of Merger. Whitney, as the sole shareholder of Acquisition, must
approve the Company Merger Agreement.
SOLICITATION, VOTING AND REVOCATION OF PROXIES
A form of proxy for use at the Meeting accompanies this Proxy
Statement and Prospectus. A shareholder may use a proxy whether or not he or
she intends to attend the Meeting in person. Duly executed proxies will
authorize the persons named therein to vote on all other matters that properly
come before the Meeting. Where a shareholder specifies
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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 shareholder does not sign and return a
proxy and specify on the proxy an instruction to vote against the Plan of
Merger, he or she will not be able to exercise dissenters' rights with respect
to the Company Merger unless such shareholder attends the Meeting in person and
votes against the Plan of Merger and gives written notice of his or her dissent
from the Plan of Merger at or prior to the Meeting. See "Dissenters' Rights." A
proxy may be revoked by (i) giving written notice of revocation at any time
before its exercise to First Citizens BancStock, Inc., 1100 Brashear Avenue,
Morgan City, Louisiana 70380, Attention: Secretary, or (ii) executing and
delivering to the Secretary at any time before its exercise a later dated proxy.
In addition, shareholders who attend the Meeting may revoke their proxies by
voting in person.
In addition to soliciting proxies by mail, directors, officers and
employees of Citizens and FNB, 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 Citizens
Common Stock, and Citizens will reimburse such parties for reasonable out-of-
pocket expenses incurred in connection therewith. Citizens has also retained
Chemical Mellon Shareholder Services, L.L.C., to assist in the solicitation of
proxies, for a fee of approximately $5,000 plus reasonable out-of-pocket
expenses. Citizens 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 Citizens
will become the business, properties, debts and liabilities of Whitney, the
business, properties, debts and liabilities of FNB will become the business,
properties, debts and liabilities of Whitney Bank and the shareholders of
Citizens will become shareholders of Whitney. The steps taken to achieve this
result involve the following transactions: (i) Acquisition will merge into
Citizens and the separate existence of Acquisition will cease, with the result
that Citizens will become a wholly-owned subsidiary of Whitney, (ii) Citizens
will immediately thereafter be merged into Whitney in a "short form" merger
permitted under the Louisiana Business Corporation Law (the "LBCL") and the
separate existence of Citizens will cease; (iii) FNB will merge into Whitney
Bank and the separate existence of FNB will cease and (iv) shareholders of
Citizens will receive the consideration described below under the heading
captioned " - Description of the Plan of Merger -- Conversion of Citizens Common
Stock."
BACKGROUND
In April 1995, representatives of Whitney contacted Milford L. Blum,
Jr., President and Chief Executive Officer of Citizens and FNB, 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 FNB. There was
no decision to go forward with a transaction at that time, and the parties
engaged in no further discussions regarding any proposed combination until July
1995. On July 11, 1995, Citizens' Board of Directors authorized the Executive
Committee of the Board of Directors to meet with representatives of Whitney to
discuss Whitney's previous expression of interest and to retain such advisors as
the committee deemed necessary in connection with such discussions. The
Executive Committee met with representatives of Whitney on July 14, 1995 and the
parties discussed the general terms of any proposal Whitney might make,
including the range of suggested values for Citizens. The Executive Committee
reported this meeting to the Board of Directors, which authorized further
preliminary discussions with Whitney.
Citizens decided on August 8, 1995 to retain Robinson-Humphrey as its
financial advisor to provide advice and assistance with respect to strategic
alternatives available to Citizens, to perform related valuation analyses and
to assist Citizens in the event of a merger or other business combination. The
Board selected Robinson-Humphrey based
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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. On August 22 and August 31,
1995, Robinson-Humphrey made presentations to Citizens' Executive Committee and
Board of Directors, respectively. Robinson-Humphrey presented a detailed
financial analysis of several banks in the State of Louisiana who had been
active in acquisitions, including Whitney, and an analysis of Citizens, assuming
that it remained independent. At these presentations Robinson-Humphrey also
reviewed the financial terms of recent Louisiana bank acquisitions.
Representatives of the parties and their respective counsel negotiated
terms of the proposed Mergers through August and September. On September 13,
1995, Whitney and Citizens executed a Confidentiality Agreement in anticipation
of Whitney commencing its preliminary due diligence review of Citizens'
operations. A meeting of Citizens' Board was held on September 27, 1995, at
which Robinson-Humphrey and Citizens' counsel and independent auditors reviewed
the terms of the proposed merger agreement. Robinson-Humphrey compared the
financial terms of the proposed transaction to comparable transactions and
orally expressed its opinion to the Board of Directors that the proposed
consideration to be received by Citizens shareholders was fair, from a financial
point of view, to Citizens and Citizens' shareholders. Robinson-Humphrey
thereafter confirmed its advice by delivering its written opinion dated
September 28, 1995. After approval by Whitney's Board on September 27 and by
Citizens' Board on September 28, Whitney and Citizens executed an agreement and
plan of merger on September 28, 1995, which was amended and restated on December
15, 1995.
On November 3, 1995, Whitney delivered to Citizens notice required
under the Plan of Merger that Whitney had completed its initial due diligence
examination of Citizens and FNB and, subject to satisfaction of the other
conditions to closing, Whitney intended to proceed to closing.
REASONS FOR THE PLAN OF MERGER; RECOMMENDATION OF CITIZENS' BOARD OF DIRECTORS
General. The financial and other terms of the Plan of Merger are the
result of arm's-length negotiations between representatives of the Companies.
Determination of the consideration to be received by Citizens' shareholders was
based upon many factors considered by the Boards of Directors of Whitney and
Citizens, including the comparative financial condition, historical results of
operations, current business and future prospects of the Companies and the
Banks, the market price and historical earnings per share of the common stock of
the Companies, and the desirability of combining the financial and managerial
resources of the Banks to pursue consumer and commercial banking business in the
markets currently served by FNB.
Whitney. Whitney's business strategy includes expansion in the Gulf
Coast region. One component of this strategy is the development of a
significant banking presence in the Acadiana region of Louisiana and an increase
in Whitney's market share in the Baton Rouge, Louisiana market. Whitney's
management identified FNB as an institution that fit well with this strategy.
FNB, headquartered in Morgan City, Louisiana, a sizeable city and metropolitan
area in Acadiana, has market presences in that region and in Baton Rouge and New
Iberia, Louisiana that Whitney's management determined would complement Whitney
Bank's existing branch network.
In deciding to pursue an acquisition of FNB and Citizens, Whitney's
management and the Executive Committee of Whitney's Board of Directors noted,
among other things, the following: (i) FNB's position as the financial
institution with the largest deposit base in St. Mary Parish; (ii) FNB's stable,
experienced management team and staff; (iii) FNB's performance during the
economic downturns of the 1980's in Louisiana; and (iv) FNB's capitalization,
reserves and asset quality. Other opportunities for expansion such as de novo
branching or affiliation with other financial institutions in the area were also
considered and determined to be less desirable than a merger with FNB because of
factors including FNB's size and location.
Citizens. The Board of Directors of Citizens believes that approval
of the Plan of Merger is in the best interests of Citizens and its shareholders.
In reaching its decision to approve the terms of the Plan of Merger, the Board
of Directors of Citizens considered a number of factors, including, without
limitation, the following:
1. The Board's familiarity with Citizens' business, operations,
financial condition, earnings and prospects, and its investigation of similar
matters concerning Whitney.
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2. The current and prospective economic environment and competitive
constraints facing Citizens, 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.
3. The price to be received by Citizens' shareholders, including the
substantial premium which that price represented over the historical trading
prices for Citizens Common Stock and the highly favorable comparison to prices
recently received by shareholders of other similarly situated banks, and the
relation of such price to the Board's view of alternatives to the Mergers.
4. The financial presentations and advice of Robinson-Humphrey,
Citizens' independent financial advisors, and the opinion of Robinson-Humphrey
that the consideration to be received by Citizens' shareholders pursuant to the
Plan of Merger is fair from a financial point of view. A copy of such opinion,
updated through the date of this Proxy Statement and Prospectus, is attached
hereto as Appendix B and is incorporated herein by reference. See " - Fairness
Opinion of The Robinson-Humphrey Company, Inc." below.
5. The expectation that the receipt of the Whitney Common Stock will
be a tax-free transaction to Citizens' shareholders.
6. The continued liquidity that the Mergers would provide to current
Citizens' shareholders.
7. The "market risk" protection afforded to Citizens' 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.
8. The effects of the Mergers on customers and employees of Citizens
and FNB.
The discussion of the information and factors considered and given
weight by the Board of Directors of Citizens is not intended to be exhaustive.
In view of the variety of factors considered in connection with its evaluation
of the Plan of Merger, the Board did not quantify or otherwise assign relative
weights to the specific factors considered in reaching its determination. In
addition, individual members of the Board may have given different weights to
different factors.
Board Recommendation. THE BOARD OF DIRECTORS OF CITIZENS HAS
UNANIMOUSLY APPROVED THE PLAN OF MERGER AND UNANIMOUSLY RECOMMENDS THAT
CITIZENS' SHAREHOLDERS VOTE FOR APPROVAL OF THE PLAN OF MERGER.
FAIRNESS OPINION OF THE ROBINSON-HUMPHREY COMPANY, INC.
General. Citizens retained Robinson-Humphrey to act as its financial
advisor in connection with the Mergers. As part of its investment banking
business, Robinson-Humphrey is regularly engaged in the valuation of securities
in connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements, and
valuations for estate, corporate and other purposes. Citizens' Board of
Directors decided to retain Robinson-Humphrey based on its experience as a
financial advisor in mergers and acquisitions of financial institutions,
particularly transactions in the southern region of the United States.
Robinson-Humphrey has rendered an opinion to Citizens' Board of Directors that,
based on the matters set forth therein, the consideration to be received
pursuant to the Company Merger is fair, from a financial point of view, to
Citizens and its shareholders. The text of such opinion is set forth in
Appendix B to this Proxy Statement and Prospectus and should be read in its
entirety.
The consideration to be received by Citizens' shareholders pursuant to
the Plan of Merger was determined by Citizens and Whitney in their negotiations.
No limitations were imposed by the Board of Directors or management of Citizens
upon Robinson-Humphrey with respect to the investigations made or the procedures
followed by Robinson-Humphrey in rendering its opinion.
In connection with rendering its opinion to Citizens' Board of
Directors, Robinson-Humphrey performed a variety of financial analyses.
However, the preparation of a fairness opinion involves various determinations
as to the
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most appropriate and relevant methods of financial analysis and the application
of those methods to the particular circumstances, and, therefore, such an
opinion is not readily susceptible to summary description.
In conducting its analyses and in arriving at its opinion, Robinson-
Humphrey has not conducted a physical inspection of any of the properties or
assets of Citizens, and has not made or obtained any independent valuation or
appraisals of any properties, assets or liabilities of Citizens. Its opinion is
based on economic, market and other conditions as in effect on, and the
information made available to it as of the date of, its analyses. In connection
with rendering its opinion, Robinson-Humphrey reviewed, and has assumed and
relied upon the accuracy and completeness of, the financial and other
information that was provided to it by Citizens or that was publicly available,
including Citizens' financial results for fiscal years 1990 through 1995, and
held discussions with senior management of Citizens. Robinson-Humphrey also
studied published financial data concerning certain other publicly traded banks
comparable to Citizens, certain financial data relating to comparable
transactions and certain information and data relating to Whitney, including its
financial statements from the fiscal years 1990 through 1995.
Valuation Methodologies. In connection with its opinion on the
Company Merger and the presentation of that opinion to Citizens' Board of
Directors, Robinson-Humphrey performed two valuation analyses with respect to
Citizens: (i) an analysis of prices and terms of recent comparable transactions
involving banks purchasing banks; and (ii) a discounted cash flow analysis. For
purposes of the comparable transaction analyses, Whitney Common Stock was valued
at $31.00 per share. Each of these methodologies is discussed briefly below.
Comparable Transaction Analysis. Robinson-Humphrey performed three
analyses of premiums paid for selected banks with comparable characteristics to
Citizens. Comparable transactions were considered to be (i) transactions since
January 1, 1994, where the seller was a bank located in Louisiana, (ii)
transactions since January 1, 1995 where the seller was a bank located in the
Southeast with total assets between $100 million and $500 million, and (iii)
transactions since January 1, 1994, where the seller was a bank located in the
Southwest with total assets between $100 and $500 million.
Based on the first of the foregoing classes of transactions, financial
institutions purchasing banks in Louisiana since January 1, 1994, the analysis
yielded a range of transaction values to book value of 1.24 times to 3.73 times,
with a mean of 2.09 times and a median of 2.14 times. These compare to a
transaction value for the Company Merger of approximately 2.52 times Citizens'
book value as of June 30, 1995.
The analysis yielded a range of transaction values as a multiple of
tangible book value for the comparable transactions ranging from 1.24 times to
3.73 times, with a mean of 2.11 times and a median of 2.17 times. These compare
to a transaction value to tangible book value at June 30, 1995 of approximately
2.52 times for the Company Merger.
The analysis yielded a range of transaction values as a multiple of
trailing twelve month earnings per share. These values ranged from 6.41 times to
26.20 times, with a mean of 13.93 times and a median of 12.98 times. These
compare to a transaction value to Citizens' last twelve months earnings as of
June 30, 1995 of approximately 17.90 times for the Company Merger.
The analysis yielded a range of transaction values as a percent of
total assets. These values ranged from 10.74 percent to 30.69 percent, with a
mean of 18.24 percent and a median of 18.46 percent. These compare to a
transaction value to the June 30, 1995 total assets of 28.92 percent for the
Company Merger.
Based on transactions since January 1, 1995, where the seller was a
bank located in the Southeast with total assets between $100 and $500 million,
the analysis yielded a range of transaction values to book value of 1.17 times
to 3.04 times, with a mean of 2.00 times and a median of 2.15 times. These
compare to a transaction value for the Company Merger of approximately 2.52
times Citizens' book value as of June 30, 1995.
The analysis yielded a range of transaction values as a multiple of
tangible book value for the comparable transactions ranging from 1.17 times to
3.29 times, with a mean of 2.10 times and a median of 2.15 times. These compare
to a transaction value to tangible book value at June 30, 1995 of approximately
2.52 times for the Company Merger.
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The analysis yielded a range of transaction values as a multiple of
trailing twelve month earnings per share. These values ranged from 6.87 times to
23.79 times, with a mean of 16.41 times and a median of 17.80 times. These
compare to a transaction value to Citizens' last twelve months earnings as of
June 30, 1995 of approximately 17.90 times for the Company Merger.
The analysis yielded a range of transaction values as a percent of
total assets. These values ranged from 6.19 percent to 26.53 percent, with a
mean of 15.77 percent and a median of 14.79 percent. These compare to a
transaction value to the June 30, 1995 total assets of 28.92 percent for the
Company Merger.
Based on transactions since January 1, 1994, where the seller was a
bank located in the Southwest with total assets between $100 and $500 million,
the analysis yielded a range of transaction values to book value of 1.26 times
to 3.73 times, with a mean of 1.99 times and a median of 1.95 times. These
compare to a transaction value for the Company Merger of approximately 2.52
times Citizens' book value as of June 30, 1995.
The analysis yielded a range of transaction values as a multiple of
tangible book value for the comparable transactions ranging from 1.12 times to
3.73 times, with a mean of 2.05 times and a median of 2.10 times. These compare
to a transaction value to tangible book value at June 30, 1995 of approximately
2.52 times for the Company Merger.
The analysis yielded a range of transaction values as a multiple of
trailing twelve month earnings per share. These values ranged from 7.70 times to
22.22 times, with a mean of 12.21 times and a median of 12.02 times. These
compare to a transaction value to Citizens' last twelve months earnings as of
June 30, 1995 of approximately 17.90 times for the Company Merger.
The analysis yielded a range of transaction values as a percent of
total assets. These values ranged from 10.30 percent to 30.69 percent, with a
mean of 17.14 percent and a median of 17.19 percent. These compare to a
transaction value to the June 30, 1995 total assets of 28.92 percent for the
Company Merger.
No company or transaction used in the comparable transaction analyses
is identical to Citizens. Accordingly, an analysis of the foregoing necessarily
involves complex considerations and judgments, as well as other factors that
affect the public trading value or the acquisition value of the company to which
it is being compared.
Discounted Cash Flow Analysis. Using discounted cash flow analysis,
Robinson-Humphrey estimated the present value of the future stream of after-tax
cash flows that Citizens could produce through 1999, under various
circumstances, assuming that Citizens performed in accordance with the
earnings/return projections of management at the time that Citizens entered into
acquisition discussions in July 1995. Robinson-Humphrey estimated the terminal
value for Citizens at the end of the period by applying multiples of earnings
ranging from 11.0 to 13.0x and then discounting the cash flow streams, dividends
paid to shareholders and terminal value using differing discount rates ranging
from 8.0 percent to 10.0 percent chosen to reflect different assumptions
regarding the required rates of return of Citizens and the inherent risk
surrounding the underlying projections. This discounted cash flow analysis
indicated a reference range of $46.2 million to $54.3 million, or $36.48 to
$42.88 per share, for Citizens.
Compensation of Robinson-Humphrey. Citizens has paid Robinson-
Humphrey $85,000 for its services to date, including the delivery of its
fairness opinion to the Board of Directors of Citizens. If the Company Merger
is consummated, Citizens will pay Robinson-Humphrey a fee equal to .875% of the
aggregate value of the transaction (less amounts previously paid). Citizens
also has agreed to reimburse Robinson-Humphrey for certain expenses reasonably
incurred in connection with their engagement and to indemnify Robinson-Humphrey
against certain liabilities arising in connection with its engagement, including
certain liabilities arising under federal securities laws.
DESCRIPTION OF THE PLAN OF MERGER
Conversion of Citizens Common Stock. Under the terms of the Plan of
Merger, on the date the Company Merger becomes effective (the "Effective Date"),
by virtue of the Company Merger and without any action on the part of the
holders thereof, each issued and outstanding share of Citizens 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
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Common Stock equal to the quotient of (a) (i) the Closing Amount (as defined
below) divided by (ii) the Average Market Price (as defined below) of a share of
Whitney Common Stock, divided by (b) the number of shares of Citizens Common
Stock issued and outstanding on the Effective Date (such quotient being referred
to herein as the "Exchange Ratio"). Whitney will also assume Citizens'
obligations under options (the "Citizens Options") granted pursuant to Citizens'
existing stock option plans (the "Citizens Option Plans"), with each such
option becoming an option to acquire shares of Whitney Common Stock as set forth
in the Plan of Merger and the Citizens Option Plans. See " - Citizens Options."
The "Closing Amount" is the aggregate value of the Whitney Common
Stock to be issued to the holders of Citizens Common Stock outstanding on the
Effective Date. It is subject to adjustment based upon the number of shares of
Citizens Common Stock that are subject to Citizens Options outstanding on the
Effective Date. As of January 19, 1996, there were 120,000 shares of Citizens
Common Stock reserved for issuance upon exercise of the Citizens Options. If
none of the Citizens Options are exercised on or prior to the Effective Date,
then the Closing Amount will be $63,245,082; if all of the Citizens Options are
so exercised, the Closing Amount will be $67,000,000. The Closing Amount will
fall somewhere within this range if some, but not all, of the Citizens Options
are exercised, based upon a formula set forth in Section 2.01(a)(iii) of the
Amended and Restated Agreement and Plan of Merger attached as Appendix A. In no
event will the value of the shares of Whitney Common Stock to be issued at the
closing of the Company Merger exceed $67,000,000, except as otherwise provided
in the Plan of Merger. See " - Regulatory Approvals and Other Conditions of the
Mergers." Assuming a Closing Amount of $63,245,082, each outstanding share of
Citizens Common Stock would be converted in the Company Merger into a number of
shares of Whitney Common Stock with an aggregate market value of approximately
$49.95.
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) on the 20 trading days preceding the fifth trading day immediately
prior to the Effective Date, as reported in the Wall Street Journal; provided,
however, that if the Average Market Price as so calculated is less than $25.50
or greater than $35.50, the "Average Market Price" to be used in calculating the
Exchange Ratio shall be $25.50 or $35.50, as the case may be. It is a condition
to Citizens' obligation to consummate the Mergers that the Average Market Price,
calculated without regard to the foregoing proviso, not be less than $25.50. If
the Average Market Price as so calculated is less than $25.50 and Citizens
elects to waive this condition to consummation of the Mergers, the aggregate
number of shares of Whitney Common Stock to be issued in the Company Merger
would remain fixed at 2,480,199 (assuming a Closing Amount of $63,245,082 (see
the table below)), and each outstanding share of Citizens Common Stock would be
converted into a number of shares of Whitney Common Stock with a total market
value less than $49.95. Similarly, it is a condition to Whitney's obligation to
consummate the Mergers that the Average Market Price as so calculated not be
greater than $35.50. If the Average Market Price as so calculated exceeds
$35.50 and Whitney elects to waive this condition to consummation of the
Mergers, the aggregate number of shares of Whitney Common Stock to be issued in
the Company Merger would remain fixed at 1,781,552 (under the same assumptions),
and each outstanding share of Citizens Common Stock would be converted into a
number of shares of Whitney Common Stock with a total market value in excess of
$49.95. See "- Regulatory Approvals and Other Conditions of the Mergers."
The following table sets forth examples of the number of shares of
Whitney Common Stock into which each share of Citizens Common Stock would be
converted on the Effective Date, assuming that no Citizens Options are exercised
on or prior to the Effective Date (resulting in a Closing Amount of
$63,245,082).
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<TABLE>
<CAPTION>
TOTAL NUMBER OF
SHARES OF
ASSUMED AVERAGE WHITNEY
MARKET PRICE OF WHITNEY COMMON COMMON STOCK NUMBER OF WHITNEY
STOCK TO BE ISSUED SHARES PER CITIZENS SHARE*
- ------------------------------ ---------------- --------------------------
<S> <C> <C>
$25.50 2,480,199 1.9587
28.00 2,258,753 1.7839
30.50 2,073,609 1.6376
33.00 1,916,518 1.5136
35.50 1,781,552 1.4070
</TABLE>
- ----------
* Based on 1,266,219 shares of Citizens Common Stock, the number of shares
outstanding on January 19, 1996. Due to fluctuations in the trading prices of
Whitney Common Stock, the number of shares to be received by Citizens
shareholders cannot currently be determined.
On January 19, 1996, the closing trading price for a share of Whitney
Common Stock was $30.25, and if such date had been the Effective Date, the
Average Market Price would have been approximately $30.61.
Shareholders who perfect dissenters' rights will not receive Whitney
Common Stock but instead would be entitled to receive the "fair cash value" of
their shares as determined under Section 131 of the LBCL if the Company Merger
is effected by the approval of less than 80% of the total voting power of
Citizens. See "Dissenters' Rights."
In lieu of the issuance of any fractional share of Whitney Common
Stock to which a holder of Citizens Common Stock may be entitled, each
shareholder of Citizens, upon surrender of the certificate or certificates that
immediately prior to the Effective Date represented Citizens Common Stock held
by such shareholder, will be entitled to receive a cash payment (without
interest) equal to such fractional share multiplied by the Average Market Price.
For information regarding restrictions on the transfer of securities
received pursuant to the Plan of Merger that may be applicable to certain
Citizens shareholders, see "-Status under Federal Securities Laws; Certain
Restrictions on Resales." For information regarding principal differences
between the rights of shareholders of Whitney and Citizens, see "Comparative
Rights of Shareholders."
Citizens Options. As of January 19, 1996, options to purchase a total
of 120,000 shares of Citizens Common Stock had been granted under Citizens
Option Plans, of which options to purchase 34,000 shares were exercisable. The
vesting of all outstanding Citizens Options will accelerate in connection with
the consummation of the Company Merger. To the extent that shares of Citizens
Common Stock are issued pursuant to the exercise of such options in accordance
with their terms prior to the effective time of the Company Merger (the
"Effective Time"), they will be converted into shares of Whitney Common Stock in
the same manner as other outstanding shares of Citizens Common Stock, and the
"Closing Amount" (as defined above) will be increased by an amount based on the
formula set forth in Section 2.01(a)(iii) of the Amended and Restated Agreement
and Plan of Merger. Under the terms of the Plan of Merger, Whitney will assume
the rights and obligations of Citizens pursuant to the Citizens Options
outstanding immediately prior to the Effective Time under the Citizens Option
Plans (each such assumed stock option existing immediately after the Effective
Time is herein referred to as a "Replacement Option"). Each Replacement Option
would entitle the holder to purchase the number of whole shares of Whitney
Common Stock equal to the product obtained by multiplying the number of shares
of Citizens Common Stock subject to such option immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole number of
shares of Whitney Common Stock. The per share exercise price for the shares of
Whitney Common Stock issuable upon the exercise of Replacement Options will be
equal to the quotient obtained by dividing the exercise price per share of
Citizens Common Stock specified under the applicable plan or option agreement
immediately prior to the Effective Time by the Exchange Ratio, rounding the
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resulting exercise price down to the nearest whole cent. Each Replacement Option
will constitute a continuation of the Citizens Option substituting (where
applicable) Whitney for Citizens and employment by Whitney or any of its
subsidiaries for employment by Citizens or any of its subsidiaries.
Notwithstanding any of the foregoing, as to any Citizens Option held by
executive officers of Citizens, the terms of any Replacement Option shall be
such that substitution of the Replacement Option for the Citizens Option would
not constitute a modification of the Citizens Option within the meaning of
Section 424(h)(3) of the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder, if such apply to the Citizens Option.
Replacement Options issued in respect of Citizens Options granted to non-
employee directors will expire 90 days after the Effective Time in accordance
with the terms of such Citizens Options. See " - Interests of Certain Persons --
Citizens Option Plans."
Whitney is required to reserve for issuance the number of shares of
Whitney Common Stock that will become issuable upon the exercise of the
Replacement Options. As soon as practicable after the Effective Time, Whitney
will execute a document evidencing the assumption by Whitney of the Citizens
Options, will file with the Commission a registration statement with respect to
the issuance or resale of shares of Whitney Common Stock subject to the
Replacement Options and will use its best efforts to have such registration
statement declared effective and thereafter to maintain the effectiveness of
such registration statement for so long as such options remain outstanding.
Exchange of Certificates. On the Effective Date, each Citizens
shareholder will cease to have any rights as a shareholder of Citizens and his
sole rights will pertain to the shares of Whitney Common Stock into which his
shares of Citizens Common Stock have been converted pursuant to the Company
Merger, except for any such shareholder who is entitled to statutory dissenters'
rights pursuant to Section 131 of the LBCL 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 Company
Merger 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
Citizens' Common Stock and (b) send or cause to be sent to each person who was a
shareholder of record of Citizens on the Effective Date (excluding holders of
shares as to which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited under Section 131 of the LBCL) a letter of transmittal,
together with instructions for the exchange of certificates representing shares
of Citizens Common Stock for certificates representing shares of Whitney Common
Stock. Shareholders are requested not to send in their Citizens Common Stock
certificates until they have received a letter of transmittal and further
written instructions.
After the Effective Date and until surrendered, certificates
representing Citizens 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 of Citizens Common Stock have been converted. Whitney, at
its option, may decline to pay former shareholders of Citizens who become
holders of Whitney Common Stock pursuant to the Company Merger any dividends or
other distributions that may have become payable to holders of record of Whitney
Common Stock following the Effective Date until they have surrendered their
certificates evidencing ownership of shares of Citizens Common Stock.
Citizens shareholders who cannot locate their stock certificates are
urged to contact promptly:
First Citizens BancStock, Inc.
1100 Brashear Avenue
Morgan City, Louisiana 70380
Attention: Cynthia G. Cutrera
Shareholder Relations
(504) 385-0330
A new stock certificate will be issued to replace the lost certificate(s) upon
execution by the shareholder of an affidavit certifying that his or her
certificate(s) cannot be located and containing an agreement to indemnify
Citizens and Whitney against any claim that may be made against Citizens or
Whitney by the owner of the certificate(s) alleged to have been lost or
destroyed. Citizens 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
Citizens and Whitney.
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<PAGE>
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 Company Merger. Chemical Mellon Shareholder
Services acts as Transfer Agent and Registrar for Citizens Common Stock.
Regulatory Approvals and Other Conditions of the Mergers. In addition
to approval by the shareholders of Citizens 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 December 8, 1995, Whitney filed an application seeking the approval of the
Bank Merger from the Comptroller and on the same day filed an application
seeking the prior approval of the Reserve Board with respect to the Company
Merger. The Comptroller application was accepted on December 8, 1995, and the
Reserve Board application was accepted on January 12, 1996. Whitney expects to
receive the required approvals prior to the Meeting; however, there can be no
assurance that they will be obtained by that time 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, Acquisition and Whitney Bank 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 Citizens of opinions as to qualification of the Mergers as tax-
free reorganizations under applicable law and (v) 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 $35.50, 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 Citizens' obligations that the Average Market Price of
the Whitney Common Stock as so calculated shall not be less than $25.50. See
" - Conversion of Citizens Common Stock."
The Companies 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.
Effective Date. The Company Merger Agreement and the Bank Merger
Agreement have been executed by the Boards of Directors of the Companies and the
Banks, respectively. The Company Merger Agreement will be executed on behalf of
the Companies and filed for recordation with the Secretary of State of Louisiana
as soon as practicable after shareholder approval is obtained and all other
conditions to the consummation of the Mergers have been satisfied or waived and
the Company Merger will be effective at the date and time specified in a
certificate issued by the Secretary of State. The Bank Merger Agreement will be
executed on behalf of the Banks and filed with the Comptroller, and the Bank
Merger will be effective at the time and date specified in a certificate or
other written record issued by the Comptroller. The Plan of Merger contemplates
that the Bank Merger will be consummated immediately after consummation of the
Company Merger and the subsequent merger of Citizens into Whitney. Whitney and
Citizens 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. Citizens and FNB 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 (i) a 1995 year-end dividend that, when combined
with the other four dividends previously or contemporaneously paid during 1995,
will not exceed 22% of net income after taxes for Citizens' consolidated group,
(ii) the payment of regular quarterly dividends during 1996 in the amount of
15 cents per share until the Effective Date and (iii) the issuance of shares of
Citizens Common Stock upon exercise of options granted prior to September 28,
1995 under the Citizens Option Plans; (b) amend its Articles of
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<PAGE>
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 (i) such agreements as are terminable at
will without penalty or other payment or increase the compensation of any such
person in any manner inconsistent with its past practices, (ii) after
consultation with Whitney's chief executive officer, bonuses may be paid to non-
executive officers in amounts in an aggregate not to exceed $150,000 and (iii)
December 1995 bonuses may be paid to employees (including executive officers) in
amounts not to exceed in the aggregate $525,000; (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 which 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 June 30, 1995; (m) make any extension of credit that, when added to
all other extensions of credit to a borrower and its affiliates, would exceed
Citizens' or FNB'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, Citizens and FNB have agreed that neither of them will,
without the prior approval of Whitney, solicit or initiate inquiries or
proposals with respect to, or, except to the extent determined by Citizens'
Board of Directors in good faith after consultation with its financial advisors
and legal counsel to be required to discharge properly the directors' fiduciary
duties to Citizens' consolidated group and its shareholders, furnish any
information relating to, or participate in any negotiations or discussions
concerning, any merger, consolidation, share exchange, business combination or
other similar transaction (other than as contemplated by the Plan of Merger),
any sale, lease, transfer or other disposition of all or substantially all of
the assets of any member of Citizens' consolidated group or any acquisition by
any person or group of the beneficial ownership of 15% or more of any class of
Citizens' capital stock. Citizens and FNB have also agreed that in no event will
any such information be supplied except pursuant to a confidentiality agreement
in form and substance as to confidentiality substantially the same as the
confidentiality agreement previously executed between Citizens 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, Citizens, FNB 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 Citizens or FNB
from taking any action that the Board of Directors of Citizens or FNB, as the
case may be, determines, in good faith after consultation with and receipt of an
opinion of counsel, is required by law or is required to discharge his fiduciary
duties to Citizens' consolidated group and its shareholders.
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
Citizens, the receipt of all necessary regulatory approvals, the satisfaction of
all requirements prescribed by law for consummation of the Mergers and Citizens'
receipt of a letter from Robinson-Humphrey dated as of the date of the
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<PAGE>
Meeting, in form and substance satisfactory to Citizens, confirming Robinson-
Humphrey's fairness opinion to the Board of Directors of Citizens. 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 its approval by the shareholders of
Citizens, 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 such shareholder approval may not alter the amount or type of
shares into which Citizens' stock will be converted, alter any term of the
Articles of Incorporation of Citizens 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 Citizens. 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 by (i) the mutual consent of the respective Boards of Directors
of Whitney and Citizens; (ii) the Board of Directors of either Whitney or
Citizens 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 June 30, 1996; (iii) the Board of Directors of either Whitney or
Citizens if by June 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 June 30, 1996; (iv) Whitney, if the number of shares of Citizens
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, exceeds that number of shares of Citizens Common Stock that
would preclude pooling-of-interests accounting for the Mergers (i.e., if , after
the Meeting, more than 10% of the Citizens 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 or Acquisition if the Plan of Merger fails to receive the requisite
vote of Citizens' shareholders; (vi) the Board of Directors of either Whitney or
Acquisition if Citizens' 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
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 Citizens' consolidated group or any acquisition of 15% or more of any
class of Citizens' capital stock or (C) makes any announcement of a proposal,
plan or intention to do any of the foregoing; or (vii) Citizens, if Citizens
receives a written offer with respect to any transaction described in (vi) above
and the Board of Directors of Citizens determines in good faith, after
consultation with its financial advisers and counsel, that such transaction is
more favorable to Citizens' shareholders than the transactions contemplated by
the Plan of Merger. The Plan of Merger provides for a termination fee of $3.0
million payable to Whitney if Citizens terminates the Plan of Merger under the
circumstances described in clause (vii) of the preceding sentence.
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 Citizens and FNB shall be eligible for
such employee benefits as are generally available to employees of Whitney Bank
having like tenure, officer status and compensation levels, except that all
subsequent executive and senior level management bonuses, stock options,
restricted stock and similar benefits will be at the discretion of Whitney
Bank's Compensation Committee. Full credit will be given for prior eligibility
and vesting purposes for years of service with Citizens or FNB under all of
Whitney Bank's benefit plans and policies; prior service with Citizens and FNB
will not be credited for purposes of determining benefits under Whitney Bank's
defined benefit pension plan.
Management. On December 14, 1995, Whitney, Whitney Bank and
Acquisition entered into an agreement with Citizens and FNB pursuant to which,
among other things, Whitney has agreed to create an advisory "city board" of
Whitney Bank consisting of members of Citizens' current Board of Directors who
agree to serve in such capacity to
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<PAGE>
promote business development and customer relations in St. Mary and Iberia
Parishes, Louisiana, subject to Whitney Bank's right to expand or reduce such
areas in accordance with its expansion and marketing plans. Members of the city
board will be appointed for three-year terms commencing on the Effective Date.
They will serve solely in an advisory capacity and will have no authority to
bind Whitney Bank or to act on its behalf. Each member of the city board will be
compensated at the rate of $500 per month for each month in which such member
attends a meeting of the city board. Whitney Bank has agreed to indemnify the
members of the city board for their actions in such capacity to the same extent
that Whitney Bank's directors and officers are entitled to be defended and
indemnified under the Articles of Association of Whitney Bank.
In addition, pursuant to that agreement, Whitney has undertaken to
appoint one of the members of the city board to Whitney's Board of Directors no
later than October 1, 1996 and to recommend to its shareholders that such person
be elected to Whitney's Board of Directors at Whitney's 1997 annual meeting of
shareholders (the "1997 Meeting"). As of the date hereof, it is not known
whether all of the members of Citizens' Board of Directors will agree to serve
on the city board, and Whitney does not intend to select the member who would be
appointed to Whitney's Board of Directors until after the Effective Date.
Information regarding Citizens' directors is set forth in Part III of Citizens'
1994 Annual Report on Form 10-KSB, which is hereby incorporated by reference
herein, and information regarding the nominee so selected will be included in
Whitney's proxy materials for the 1997 Meeting.
Upon completion of the Mergers, Milford L. Blum, Jr., President and
Chief Executive officer of Citizens and FNB, will be appointed as a Senior Vice
President of Whitney Bank and City President of its Morgan City/New Iberia
division. Whitney Bank and Mr. Blum will enter into an employment agreement on
substantially the same terms and conditions as Whitney Bank's employment
agreements with other senior vice presidents having responsibilities
substantially similar to those of Mr. Blum. Discussions are continuing regarding
the possibility of similar agreements being offered to the other executive
officers of Citizens; however, no such agreements have been reached as of the
date hereof.
FNB has entered into an Employment Agreement with Mr. Blum. Upon the
occurrence of a "change of control" (including the Mergers), FNB is obligated to
pay to Mr. Blum a sum equivalent to two times the gross income he received from
FNB for the calendar year immediately preceding the year in which the change of
control occurs. Upon the consummation of the Mergers, under these provisions of
the Employment Agreement, FNB will be obligated to pay to Mr. Blum the sum of
approximately $400,000, less deductions required by law. In addition, under the
terms of the Employment Agreement and a Split-Dollar Endorsement ancillary
thereto, FNB has purchased a $250,000 life insurance policy (the "Policy") on
the life of Mr. Blum. The Employment Agreement requires FNB to assign to Mr.
Blum the ownership of the Policy, including the cash value thereof, upon the
consummation of the Mergers. The estimated value of the policy is approximately
$37,700.
In March 1995, FNB entered into agreements with Ira A. Breaux, Jr.,
James S. Corbett, Goldie C. Cardinale and Charles L. Roy, each of whom is an
executive officer of Citizens and FNB. Each of these agreements provides that,
in the event of a "change in control," the officer shall be entitled to receive
a sum equivalent to the gross income that such officer received from FNB for the
calendar year immediately preceding the year in which the "change in control"
occurs. Citizens estimates that the payments to Mr. Breaux, Mr. Corbett, Ms.
Cardinale and Mr. Roy would be approximately $400,000 in the aggregate.
No director or executive officer of Citizens owns any shares of
Whitney Common Stock other than Camille A. Cutrone, a director of Citizens, who
owns 4,375 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 or
her holdings of Whitney Common Stock, nor do such directors or executive
officers own any shares of Citizens Common Stock.
Citizens Option Plans. The directors and executive officers of
Citizens have been granted stock options to purchase an aggregate of 120,000
shares of Citizens Common Stock pursuant to the Citizens Option Plans. All
options outstanding under the Citizens Option Plans have an exercise price equal
to the fair market value of Citizens Common Stock on the date the options were
granted. In accordance with the terms of the respective Citizens Option Plans
and the Plan of Merger, each Citizens Option outstanding under the Citizens
Option Plans on the Effective Date will become immediately exercisable and will
become a Replacement Option.
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Each of Citizens' non-employee directors holds options to purchase
5,000 shares of Citizens Common Stock under the Citizens Option Plans. The
exercise price of Bernard E. Boudreaux's Citizens Options is $23.375 per share;
the exercise price of each of the other Citizens Options granted to non-employee
directors is $20.50 per share. Assuming an Average Market Price of $25.50 per
share of Whitney Common Stock, on the Effective Date each non-employee director
would receive Replacement Options to purchase 9,794 shares of Whitney Common
Stock at an exercise price of $10.47 per share ($11.93 per share in the case of
Mr. Boudreaux).
The executive officers of Citizens hold options to purchase a total of
55,000 shares of Citizens Common Stock pursuant to the Citizens Option Plans,
each with an exercise price of $16.25 per share. The following table presents
the number and exercise price of Replacement Options each executive officer
would receive on the Effective Date, based on the number of Citizens Options
held by such officer as of January 19, 1996, and assumes that no Citizens
Options will be exercised by any director or executive officer prior to the
Effective Date.
<TABLE>
<CAPTION>
Citizens Options Replacement Options/(2)/
---------------------------------------- -----------------------------
Executive Officer No. of Shares/(1)/ Exercise Price No. of Shares Exercise Price
------------------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
Milford L. Blum, Jr. 22,000 $16.25 43,091 $8.30
Ira A. Breaux, Jr. 9,900 16.25 19,391 $8.30
Charles L. Roy 8,250 16.25 16,159 $8.30
James S. Corbett 8,250 16.25 16,159 $8.30
Goldie Cardinale 6,600 16.25 12,927 $8.30
- ------------------------
</TABLE>
(1) Represents the total number of shares subject to option. As of January 19,
1996, 40% of such options were vested; vesting of all Citizens Options will
accelerate in connection with the Company Merger in accordance with the
terms of the Citizens Options Plans. See "Information about Citizens --
Security Holdings of Principal Shareholders and Management."
(2) Based on an Average Market Price of Whitney Common Stock on the Effective
Date of $25.50 per share. The actual number of shares subject to
Replacement Options and the exercise price thereof will be determined based
on, among other things, the Average Market Price of Whitney Common Stock on
the Effective Date. See " - Description of the Plan of Merger -- Conversion
of Citizens Common Stock."
Indemnification and Insurance. Whitney has agreed that all rights to
indemnification and all limitations of liability existing in favor of
indemnified parties under Citizens' Articles of Incorporation and By-Laws and in
the Articles of Association and By-Laws of FNB (as the case may be) as in effect
on September 28, 1995 with respect to matters occurring prior to or on the
Effective Date 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 Citizens and FNB on the Effective Date to be covered for three years
thereafter by the directors and officers liability insurance policy maintained
by Citizens and FNB (or a substitute policy) with respect to acts or omissions
occurring prior to or on the Effective Date, subject to certain conditions. In
addition, Whitney has agreed to indemnify, under certain conditions, Citizens'
and FNB's directors, officers and controlling persons against certain expenses
and liabilities, including certain liabilities arising under federal securities
laws.
STATUS UNDER FEDERAL SECURITIES LAWS; CERTAIN RESTRICTIONS ON RESALES
The shares of Whitney Common Stock to be issued to shareholders of
Citizens 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 Citizens.
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Directors and certain officers of Citizens may be deemed to be
"affiliates" of Citizens. Such persons may resell Whitney Common Stock received
by them pursuant to the Company Merger 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 or her in violation of the Securities Act.
Further, in accordance with the requirements for using the pooling-of-
interests method of accounting, Citizens shareholders who may be deemed
"affiliates" of Citizens have agreed not to sell the shares of Whitney Common
Stock received by them in the Company Merger until at least 30 days of post-
closing combined earnings of Whitney and Citizens 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 Citizens' 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 Citizens information, the recorded assets and
liabilities of Whitney and Citizens 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 Citizens for the entire
fiscal year in which the Mergers occur and the reported earnings of Whitney and
Citizens for prior periods will be combined and restated as consolidated
earnings of Whitney. See "- Regulatory Approvals and Other Conditions of the
Mergers" and "- Status Under Federal Securities Laws; Certain Restrictions on
Resales."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the opinion of Arthur Andersen LLP that
the Companies expect to receive concerning the material federal income tax
consequences to holders of Citizens Common Stock resulting from the Plan of
Merger. Consummation of the Mergers is conditioned upon receipt by the Companies
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 Citizens.
(a) The Mergers will qualify as reorganizations under Sections
368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended
(the "Code"). Citizens, FNB, Whitney and Whitney Bank 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 Citizens, FNB, Whitney or
Whitney Bank as a result of the Mergers.
(c) No gain or loss will be recognized by a shareholder of Citizens on
the receipt solely of Whitney Common Stock in exchange for his shares of
Citizens Common Stock.
(d) The tax basis of the shares of Whitney Common Stock to be received
by Citizens' shareholders pursuant to the Company Merger will be the same as the
basis of the shares of Citizens 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 Citizens' shareholders pursuant to the Company Merger will, in each
instance, include the holding period of the respective shares of Citizens Common
Stock exchanged therefor, provided that the shares of Citizens Common Stock are
held as capital assets on the Effective Date.
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<PAGE>
(f) The payment of cash to Citizens' shareholders 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 Citizens shareholder who perfects his statutory right to dissent
to the Company Merger and who receives solely cash in exchange for his Citizens
Common Stock will be treated as having received such cash payment as a
distribution in redemption of his shares of Citizens Common Stock, subject to
the provisions and limitations of Section 302 of the Code. After such
distribution, if the former Citizens shareholder does not actually or
constructively own any Citizens Common Stock, the redemption will constitute a
complete termination of interest and be treated as a distribution in full
payment in exchange for the Citizens 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 CITIZENS CONSULT
HIS PERSONAL TAX ADVISOR CONCERNING THE APPLICABLE FEDERAL, STATE AND LOCAL
INCOME TAX CONSEQUENCES OF THE MERGERS.
DISSENTERS' RIGHTS
Unless the Plan of Merger is approved by the holders of at least 80%
of the total voting power of Citizens, Section 131 of the LBCL may allow a
shareholder of Citizens who objects to the Company Merger and who complies with
the provisions of that section to dissent from the Company Merger and to have
paid to him in cash the fair cash value of his shares of Citizens Common Stock
as of the day before the Meeting, as determined by agreement between the
shareholder and Whitney or by the Civil District Court, Parish of Orleans, if
the shareholder and Whitney are unable to agree upon the fair cash value.
To exercise the right of dissent, a shareholder (i) must file with
Citizens a written objection to the Plan of Merger prior to or at the Meeting
and (ii) must also vote his shares (in person or by proxy) against the Plan of
Merger at the Special Meeting. Neither a vote against the Plan of Merger nor a
specification in a proxy to vote against the Plan of Merger will in and of
itself constitute the necessary written objection to the Plan of Merger.
Moreover, by voting in favor of, or abstaining from voting on, the Plan of
Merger, or by returning the enclosed proxy without instructing the proxy holders
to vote against the Plan of Merger, a shareholder waives his rights under
Section 131. The right to dissent may be exercised only by the record owners of
the shares and not by persons who hold shares only beneficially. Beneficial
owners who wish to dissent from the Company Merger should have the record
ownership of the shares transferred to their names or instruct the record owner
to follow the Section 131 procedure on their behalf.
If the Plan of Merger is approved by less than 80% of the total number
of shares of Citizens Common Stock outstanding, then promptly after the
Effective Date written notice of the consummation of the Company Merger will be
given by Whitney by registered mail to each former shareholder of Citizens who
filed a written objection to the Plan of Merger and voted against it at such
shareholder's last address on Citizens' records. Within 20 days after the
mailing of such notice, the shareholder must file with Whitney a written demand
for payment for his shares at their fair cash value as of the day before the
Meeting and must state the amount demanded and a post office address to which
Whitney may reply. He must also deposit the certificate(s) formerly representing
his shares of Citizens Common Stock in escrow with a bank or trust company
located in Orleans Parish, Louisiana. The certificates must be duly endorsed for
transfer to Whitney upon the sole condition that they be delivered to Whitney
upon payment of the value of the shares in accordance with Section 131. With the
above-mentioned demand, the shareholder must also deliver to Whitney the written
acknowledgment of such bank or trust company that it holds the certificate(s),
duly endorsed as described above.
16
<PAGE>
Unless the shareholder objects to and votes against the Plan of Merger
(including the Company Merger), demands payment, endorses and deposits his
certificates and delivers the required acknowledgment in accordance with the
procedures and within the time periods set forth above, the shareholder will
conclusively be presumed to have acquiesced to the Company Merger and will
forfeit any right to seek payment pursuant to Section 131.
If Whitney does not agree to the amount demanded by the shareholder,
or does not agree that payment is due, it will, within 20 days after receipt of
such demand and acknowledgment, notify such shareholder in writing at the
designated post office address of either (i) the value it will agree to pay or
(ii) its belief that no payment is due. If the shareholder does not agree to
accept the offered amount, or disagrees with Whitney's assertion that no payment
is due, he must, within 60 days after receipt of such notice, file suit against
Whitney in the Civil District Court for the Parish of Orleans for a judicial
determination of the fair cash value of the shares. Any shareholder entitled to
file such suit may, within such 60-day period but not thereafter, intervene as a
plaintiff in any suit filed against Whitney by another former shareholder of
Citizens for a judicial determination of the fair cash value of such other
shareholder's shares. If a shareholder fails to bring or to intervene in such a
suit within the applicable 60-day period, he will be deemed to have consented to
Whitney's statement that no payment is due or, if Whitney does not contend that
no payment is due, to accept the amount specified by Whitney in its notice of
disagreement.
If upon the filing of any such suit or intervention Whitney deposits
with the court the amount, if any, that specified in its notice of disagreement,
and if in that notice Whitney offered to pay such amount to the shareholder on
demand, then the costs (not including legal fees) of the suit or intervention
will be taxed against the shareholder if the amount finally awarded to him,
exclusive of interest and costs, is equal to or less than the amount so
deposited; otherwise, the costs (not including legal fees) will be taxed against
Whitney.
Upon filing a demand for the value of his shares, a shareholder ceases
to have any rights of a shareholder except the rights created by Section 131.
The shareholder's demand may be withdrawn voluntarily at any time before Whitney
gives its notice of disagreement, but thereafter only with the written consent
of Whitney. If his demand is properly withdrawn, or if the shareholder otherwise
loses his dissenters' rights, he will be restored to his rights as a shareholder
as of the time of filing of his demand for fair cash value.
Prior to the Effective Date, dissenting shareholders of Citizens
should send any communications regarding their rights to First Citizens
BancStock, Inc., 1100 Brashear Avenue, Morgan City, Louisiana 70380, Attention:
Cynthia G. Cutrera, Shareholder Relations. On or after the Effective Date,
dissenting shareholders 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 shareholder in the form in which his shares
are registered on the books of Citizens. Whitney has the right to terminate the
Plan of Merger if the number of shares of Citizens 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,
exceeds that number of shares of Citizens 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 foregoing summary of Section 131 of the LBCL is qualified in its
entirety by reference to that section set forth herein as Appendix C.
17
<PAGE>
UNAUDITED PRO FORMA
COMBINED FINANCIAL INFORMATION
The following unaudited pro forma 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
and of Citizens' consolidated group included elsewhere in this Proxy Statement
and 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
Combined Financial Statements," nor is it necessarily indicative of future
operating results or financial position.
As discussed in the Notes to the Unaudited Pro Forma Combined
Financial Statements, Whitney Common Stock is assumed to have an Average Market
Price of $30.50 per share, which, assuming 1,266,219 shares of Citizens Common
Stock outstanding on the Effective Date, would result in the issuance of
2,073,609 shares of Whitney Common Stock (an exchange ratio of 1.6376) pursuant
to the Plan of Merger. See "The Plan of Merger -- Description of the Plan of
Merger -- Conversion of Citizens Common Stock." The primary and fully diluted
weighted average shares of 2,126,284 and 2,192,553, respectively, reflected for
Citizens on a pro forma basis for the nine months ended September 30, 1995
include the effect of outstanding Citizens Options, calculated using the
treasury stock method for earnings per share presentation.
The unaudited pro forma combined balance sheet at September 30, 1995,
set forth below, gives effect to the Mergers under the pooling-of-interests
accounting method as if the Mergers had occurred on September 30, 1995.
The unaudited pro forma combined statements of income for the years
ended December 31, 1994, 1993 and 1992 and the nine months ended September 30,
1995 and 1994 combine the historical statements of income of Whitney and
Citizens as if the Mergers had been effective as of January 1, 1992. The cost
associated with the Mergers, estimated to be in a range of up to $2,000,000,
will be accounted for as a current period expense upon consummation of the
Mergers and has not been reflected in the pro forma financial statements.
18
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA COMBINED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Whitney Citizens Pro Forma
(Consolidated) (Consolidated) Combined
-------------- -------------- ----------
<S> <C> <C> <C>
ASSETS
Cash and due from financial institutions............. $ 175,568 $ 7,179 $ 182,747
Interest-bearing deposits in financial institutions.. 0 150 150
Securities available for sale........................ 131,669 65,703 197,372
Securities held to maturity.......................... 1,237,348 9,439 1,246,787
Federal funds sold................................... 11,300 11,602 22,902
Loans and leases..................................... 1,259,609 138,937 1,398,546
Less: reserve for possible loan losses............... 34,112 2,026 36,138
---------- -------- ----------
Net loans and leases................................. 1,225,497 136,911 1,362,408
Bank premises and equipment (net).................... 69,248 6,301 75,549
Other real estate owned (net)........................ 5,136 168 5,304
Other assets......................................... 82,996 2,092 85,088
---------- -------- ----------
TOTAL ASSETS...................................... $2,938,762 $239,545 $3,178,307
========== ======== ==========
LIABILITIES
Deposits............................................. $2,425,229 $211,695 $2,636,924
Federal funds purchased and other borrowings......... 157,886 0 157,886
Accrued expenses and other liabilities............... 26,120 1,883 28,003
---------- -------- ----------
TOTAL LIABILITIES................................. $2,609,235 $213,578 $2,822,813
---------- -------- ----------
EQUITY
Capital stock........................................ $ 2,800 $ 1,308 $ 2,800
Capital surplus...................................... 56,164 4,010 61,482
Retained earnings.................................... 278,507 20,804 299,311
Net unrealized holding gains on available-
for-sale securities................................. 16 88 104
Less: Treasury stock................................. 7,960 243 8,203
TOTAL EQUITY...................................... $ 329,527 $ 25,967 $ 355,494
---------- -------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY.............................. $2,938,762 $239,545 $3,178,307
========== ======== ==========
</TABLE>
See accompanying notes.
19
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1995
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
Whitney Citizens Pro Forma
(Consolidated) (Consolidated) Combined
------------- -------------- ---------
<S> <C> <C> <C>
Interest income............................ $ 142,085 $ 14,143 $ 156,228
Interest expense........................... 47,366 5,237 52,603
----------- ---------- -----------
Net interest income........................ 94,719 8,906 103,625
Provision for (reduction in reserves for)
possible loan losses..................... (10,000) 250 (9,750)
----------- ---------- -----------
Net interest income after provision
for possible loan losses................. 104,719 8,656 113,375
Non-interest income........................ 23,653 1,429 25,082
Non-interest expense....................... (82,482) ( 6,137) (88,619)
----------- ---------- -----------
Income before income taxes................. 45,890 3,948 49,838
Income taxes............................... (14,525) (1,240) (15,765)
----------- ---------- -----------
Net income................................. $ 31,365 $ 2,708 $ 34,073
=========== ========== ===========
Weighted average shares outstanding:
Primary.................................. 14,774,735 2,126,284 16,901,019
Filly diluted............................ 14,782,130 2,192,553 16,974,683
Earnings per share:
Primary.................................. $2.12 $2.02
Fully diluted............................ $2.12 $2.01
</TABLE>
See accompanying notes.
20
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1994
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
Whitney Citizens Pro Forma
(Consolidated) (Consolidated) Combined
------------- -------------- ---------
<S> <C> <C> <C>
Interest income............................ $ 131,395 $ 12,520 $ 143,915
Interest expense........................... 38,312 4,132 42,444
----------- ---------- -----------
Net interest income........................ 93,083 8,388 101,471
Provision for (reduction in reserves for)
possible loan losses..................... (16,139) 135 (16,004)
----------- ---------- -----------
Net interest income after provision
for possible loan losses................. (109,222) (8,253) (117,475)
Non-interest income........................ 25,018 1,388 26,406
Non-interest expense....................... (76,958) (5,979) (82,937)
----------- ---------- -----------
Income before income taxes................. 57,282 3,662 60,944
Income taxes............................... (18,579) (1,130) (19,709)
----------- ---------- -----------
Net income................................. $ 38,703 $ 2,532 $ 41,235
=========== ========== ===========
Weighted average shares outstanding........ 14,533,596 2,073,609 16,607,205
Earnings per share......................... $2.66 $2.48
</TABLE>
See accompanying notes.
21
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
Whitney Citizens Pro Forma
(Consolidated) (Consolidated) Combined
-------------- ------------- ---------
<S> <C> <C> <C>
Interest income........................................ $ 175,761 $16,989 $ 192,750
Interest expense....................................... 51,867 5,636 57,503
--------- ------- ---------
Net interest income.................................... 123,894 11,353 135,247
Provision for (reduction in reserves for) loan losses.. (26,139) 135 (26,004)
--------- ------- ---------
Net interest income after provision
for loan losses....................................... 150,033 11,218 161,251
Non-interest income.................................... 32,353 1,987 34,340
Non-interest expense................................... (104,258) (8,301) (112,559)
--------- ------- ---------
Income before income taxes............................. 78,128 4,904 83,032
Income taxes........................................... (25,290) (1,544) (26,834)
--------- ------- ---------
Net income............................................. $ 52,838 $ 3,360 $ 56,198
========= ======= =========
Weighted average shares outstanding................... 14,557,008 2,073,609 16,630,617
Earnings per share.................................... $3.63 $3.38
</TABLE>
See accompanying notes.
22
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
Whitney Citizens Pro Forma
(Consolidated) (Consolidated) Combined
-------------- -------------- ---------
<S> <C> <C> <C>
Interest income....................................... $ 169,530 $16,575 $ 186,105
Interest expense...................................... 49,016 5,665 54,681
--------- ------- ---------
Net interest income................................... 120,514 10,910 131,424
Provision (reduction in reserve for) for loan losses.. (60,000) 375 (59,625)
--------- ------- ---------
Net interest income after provision
for loan losses...................................... 180,514 10,535 191,049
Non-interest income................................... 30,991 2,352 33,343
Non-interest expense.................................. (100,093) (8,271) (108,364)
--------- ------- ---------
Income before income taxes and cumulative
effect of changes in accounting principles........... 111,412 4,616 116,028
Income taxes.......................................... (35,645) (1,500) (37,145)
--------- ------- ---------
Income before cumulative effect of changes
in accounting principles............................. 75,767 3,116 78,883
Cumulative effect of changes in accounting
principles........................................... 634 (289) 345
--------- ------- ---------
Net income............................................ $ 76,401 $ 2,827 $ 79,228
========= ======= =========
Weighted average shares outstanding................... 14,425,007 2,073,609 16,498,616
Earnings per share.................................... $5.30 $4.80
</TABLE>
See accompanying notes.
23
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1992
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
Whitney Citizens Pro Forma
(Consolidated) (Consolidated) Combined
-------------- -------------- ---------
<S> <C> <C> <C>
Interest income...................... $ 177,755 $17,324 $ 195,079
Interest expense..................... 65,325 7,433 72,758
--------- ------- ---------
Net interest income.................. 112,430 9,891 122,321
Provision for loan losses............ 3,350 1,065 4,415
--------- ------- ---------
Net interest income after provision
for loan losses..................... 109,080 8,826 117,906
Non-interest income.................. 32,644 2,349 34,993
Non-interest expense................. (112,623) (7,992) (120,615)
--------- ------- ---------
Income before income taxes........... 29,101 3,183 32,284
Income taxes......................... (8,899) (970) (9,869)
--------- ------- ---------
Net income........................... $ 20,202 $ 2,213 $ 22,415
========= ======= =========
Weighted average shares
outstanding......................... 14,368,052 2,073,609 16,441,661
Earnings per share................... $1.41 $1.36
See accompanying notes.
</TABLE>
24
<PAGE>
WHITNEY HOLDING CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
Whitney will issue Whitney Common Stock with an aggregate value at the
date of the Mergers of approximately $63,245,082 (calculated on the basis of the
Average Market Price and assuming none of the Citizens Options are exercised
prior to the Effective Date). 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, as defined in the Plan of Merger, which will be no less
than $25.50 per share nor exceed $35.50 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
of $30.50 per share resulting in the issuance of 2,073,609 shares of Whitney
Common Stock for all the outstanding Citizens Common Stock (an exchange ratio of
1.6376) if no Citizens Options are exercised prior to the Effective Date. 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.
25
<PAGE>
INFORMATION ABOUT CITIZENS
DESCRIPTION OF BUSINESS
Citizens is a Louisiana corporation and a registered bank holding
company under the Bank Holding Company Act of 1956 (the "BHCA"). Citizens was
incorporated in 1984 and acquired all of the stock of FNB in January 1988
pursuant to a reorganization in which the shareholders of FNB became
shareholders of Citizens and FNB became Citizens' wholly-owned subsidiary. From
that date to the present, FNB has been Citizens' only subsidiary. At September
30, 1995, Citizens had total consolidated assets of approximately $239.5 million
and total consolidated deposits of approximately $211.7 million.
FNB, a national banking association, opened for business in 1933. FNB
offers a wide range of financial services (not including trust services and
international banking services) to commercial, industrial, and individual
customers. The credit services provided by FNB include inventory and accounts
receivable financing, equipment financing, letters of credit, lease financing
and loans for a number of purposes, including real estate, installment, Small
Business Administration, short-term and other personal loans. FNB also offers a
variety of deposit services, including savings accounts, individual retirement
accounts, money market deposit accounts, and interest and non-interest bearing
checking accounts. Other services FNB offers include night depository service,
safe deposit boxes, federal tax depository and bank-issued Visa credit cards.
In addition to its main Morgan City, Louisiana location, FNB has
eleven other full-service branches in St. Mary, Iberia and East Baton Rouge
Parishes. FNB also maintains an office in New Orleans, Louisiana that is solely
devoted to loan production. See " - Property."
FNB's loan portfolio generally reflects the economy of the southern
region of the State of Louisiana. While FNB attempts to maintain a relatively
diversified loan portfolio, a substantial portion of its borrowers are dependent
upon the oil and gas and related services industries. FNB's business is not
materially affected by seasonal variances.
COMPETITION
FNB experiences considerable competition in both attracting deposits
and lending funds. Competition in lending comes principally from other
commercial banks and savings and loan associations located in FNB's market area
and, to a lesser extent, from finance companies, insurance companies, credit
unions, credit card organizations and other financial institutions located both
in Louisiana and in other areas of the United States. Banks generally compete
for loan customers based on interest charges, restrictions on borrowers and
compensating balances, as well as other services offered. Competition for
deposits comes principally from other commercial banks, savings and loan
associations and credit unions in addition to government and private debt
obligation issues and other investment alternatives such as cash management
accounts and mutual funds. The primary factors in competition for deposits are
interest rates paid on accounts, convenience of office locations and the range
of services offered. Certain of FNB's competitors, some of which are affiliated
with large bank holding companies, have substantially greater resources and
lending limits, and offer services that FNB currently does not provide.
As of September 30, 1995, the Riegle-Neal Interstate Banking and
Branching Act of 1994 (the "Interstate Banking Act") allows 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. The Interstate Banking Act in certain
circumstances will also allow out-of-state branches through interstate mergers
commencing June 1, 1997, provided that each bank involved in the merger is
adequately capitalized and managed. The Interstate Banking Act further provides
for transactions involving an out-of-state bank's acquisition of a branch of an
insured bank without the acquisition of the entire bank, if permitted under the
laws of the state where the branch is located. Louisiana, however, has enacted
legislation that prohibits out-of-state bank holding companies or banks from
acquiring less than all or substantially all of the assets of a Louisiana bank
or bank holding company. The Interstate Banking Act also permits an out-of-state
bank to establish de novo branches in a state if that state expressly elects to
permit de novo branching on a non-discriminatory basis. A "de novo branch" is
defined as a branch office of a national or state bank that is originally
established as a branch and does not become a branch as a result of an
acquisition, conversion, merger or consolidation. Louisiana has enacted
legislation expressly prohibiting such de novo branching. The Interstate
26
<PAGE>
Banking Act may materially increase the competition to Citizens from out-of-
state bank holding companies with significantly greater resources.
SUPERVISION AND REGULATION
General. In addition to the generally applicable state and federal
laws governing businesses and employers, Citizens and FNB are extensively
regulated by special state and federal laws and regulations applicable only to
financial institutions and their parent companies. Virtually all aspects of
Citizens' and FNB's operations are subject to specific requirements or
restrictions and general regulatory oversight, from laws regulating consumer
finance transactions, such as the Truth in Lending Act, the Home Mortgage
Disclosure Act and the Equal Credit Opportunity Act, to laws regulating
collections and confidentiality, such as the Fair Debt Collection Practices Act,
the Fair Credit Reporting Act and the Right to Financial Privacy Act. With few
exceptions, state and federal banking laws have as their principal objective
either the maintenance of the safety and soundness of financial institutions and
the federal deposit insurance system or the protection of consumers or classes
of consumers, rather than the protection of shareholders of Citizens. Any change
in applicable laws, regulations or policies of various regulatory authorities
may have a material effect on the business, operations and prospects of
Citizens.
Citizens. As a bank holding company, Citizens 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 also may
conduct examinations of Citizens and FNB.
Pursuant to the BHCA, prior approval is a condition to any merger or
consolidation with any other bank holding company, or the acquisition of all or
substantially all of the assets of or control of a bank or bank holding company.
On December 8, 1995, Whitney filed applications seeking approval of the Bank
Merger from the Comptroller and approval of the Company Merger from the Reserve
Board. See "The Plan of Merger -- Description of the Plan of Merger --
Regulatory Approvals and Other Conditions of the Mergers." Citizens also is
prohibited from engaging directly or indirectly in activities other than those
of banking, managing or controlling banks or furnishing services to its
subsidiary banks, except that it may engage in and may own shares of companies
engaged in certain activities found by the Reserve Board to be so closely
related to banking or managing and controlling banks as to be a proper incident
thereto.
FNB. FNB is a national banking association subject to the National
Bank Act, a member of the Federal Reserve system and has its deposits insured up
to $100,000 per depositor by the Federal Deposit Insurance Corporation ("FDIC").
FNB is regulated and subject to periodic examination by the FDIC, the
Comptroller and the Reserve Board as to, among other things, the reserves it
maintains against deposits. Regulations promulgated by these agencies also
impose restrictions on the nature and amount of loans and investments which FNB
may make. In addition, FNB is subject to the Community Reinvestment Act,
pursuant to which the Comptroller assesses the record of each financial
institution it regulates, including FNB, to determine if the institution meets
the credit needs of its entire community, including low- and moderate-income
neighborhoods served by the institution.
Substantially all of the funds used by Citizens to pay dividends to
its shareholders are derived from dividends from FNB. FNB's ability to declare
dividends to Citizens is governed by regulations of the Comptroller. Under such
regulations, FNB may pay each year, without prior approval of the Comptroller,
dividends which do not exceed the total of undistributed earnings retained for
the current year plus its retained net profits for the preceding two years. At
September 30, 1995, there was an aggregate of approximately $4.5 million
available for the payment of dividends without prior approval. The Comptroller
also has the power to restrict FNB's dividend payments if such payments are
deemed an unsafe or unsound banking practice or if the Comptroller deems FNB's
capital inadequate.
Monetary Policy. In addition to general and local economic conditions,
the monetary policies of regulatory authorities, including the Reserve Board,
have a significant effect on the business of Citizens and FNB. 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 means are used in varying
combinations to influence overall growth and distribution of bank
27
<PAGE>
loans, investments and deposits, and their use may affect interest rates charged
on loans or paid for deposits. Reserve Board monetary policies have materially
affected the operating results of commercial banks in the past and are expected
to continue to do so in the future. The nature of future monetary policies and
the effect of such policies on the business and earnings of Citizens and FNB
cannot be predicted with certainty.
Capital Adequacy Guidelines. Capital management consists of providing
equity to support both current and future operations. Citizens is subject to
capital adequacy requirements issued by the Reserve Board, and FNB is subject to
similar requirements imposed by the Comptroller.
The Reserve Board and the Comptroller have adopted risk-based capital
requirements for assessing bank holding company and bank capital adequacy.
These standards define capital and establish minimum capital requirements in
relation to assets and off-balance sheet exposure, adjusted for credit risk.
The risk-based capital standards are designed to be more sensitive to
differences in risk profile among bank holding companies and banks, to account
for off-balance sheet exposure and to minimize disincentives for holding liquid
assets. Assets and off-balance sheet items are assigned to broad risk
categories, each with appropriate relative risk weights. The resulting capital
ratios represent capital as a percentage of total risk-weighted assets and off-
balance sheet items.
The Reserve Board together with the FDIC and the Comptroller have
promulgated rules implementing an interest rate risk component to the risk-based
standards as required by the Federal Deposit Insurance Corporation Improvements
Act of 1991. The minimum standard for the ratio of capital to risk-weighted
assets (including certain off-balance sheet obligations, such as standby letters
of credit) is 8.0%. At least half of the risk-based capital must consist of
common equity, retained earnings, and qualifying perpetual preferred stock, less
deductions for goodwill and various other intangibles ("Tier I capital"). The
remainder may consist of a limited amount of subordinated debt, certain hybrid
capital instruments and other debt securities, preferred stock, and a limited
amount of the general valuation allowance for loan losses ("Tier II capital").
The sum of Tier I capital and Tier II capital is "total risk-based capital." See
"Citizens Management's Discussion and Analysis of Financial Condition and
Results of Operations."
MARKET PRICES AND DIVIDENDS
Market Prices. Since September 21, 1993, Citizens Common Stock has
traded on the AMEX under the symbol FIR. The following table sets forth the high
and low reported closing sale prices per share of Citizens Common Stock as
reported on the AMEX and the quarterly dividends declared for the periods
indicated.
PRICE RANGE OF COMMON STOCK AND QUARTERLY DIVIDENDS
<TABLE>
<CAPTION>
HIGH LOW DIVIDEND
------- ------- --------
<S> <C> <C> <C>
1994
First Quarter*................ $ 17.11 $ 16.14 $0.09
Second Quarter*............... 18.86 16.82 0.09
Third Quarter*................ 20.23 18.64 0.09
Fourth Quarter................ 20.00 19.25 0.27
1995
First Quarter................. $ 24.50 $19.625 $0.12
Second Quarter................ 24.625 22.75 0.12
Third Quarter................. 50.75 24.25 0.15
Fourth Quarter................ 47.625 46.50 0.20
1996
First Quarter
(through January 19, 1996).. $ 47.75 $ 47.25 $ --
- ----------------------
</TABLE>
*Adjusted to reflect a 10% stock dividend declared on October 14, 1994.
Holders. As of January 19, 1996, there were approximately 610 record
shareholders of Citizens.
28
<PAGE>
Cash Dividends. Citizens' revenues are derived principally from
dividends paid by FNB, and regulations issued by the Comptroller limit the
amount of dividends the FNB may declare. See "-- Supervision and Regulation --
Capital Adequacy Requirements." Citizens has agreed in the Plan of Merger that
it will not declare, set aside or pay cash dividends except in specified
amounts. See "The Plan of Merger - Description of the Plan of Merger -- Conduct
of Business Prior to the Effective Date."
PROPERTY
FNB owns the buildings in which all but one of its 12 branches are
located. FNB leases the building that houses one of its Baton Rouge branches
and its New Orleans loan production office. All of the properties owned by FNB
are located in St. Mary, Iberia and East Baton Rouge Parishes. FNB considers
all of the properties it owns or leases to be in good condition.
EMPLOYEES
FNB employs approximately 150 persons full-time and considers its
relationship with its employees to be good.
SECURITY HOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Principal Shareholders. To the knowledge of Citizens, as of January
19, 1996, no person owned beneficially more than 5% of the outstanding voting
securities of Citizens.
Directors and Executive Officers. The following table sets forth
certain information as of January 19, 1996 concerning the beneficial ownership
of Citizens Common Stock by each director of Citizens, each executive officer of
Citizens whose total annual salary and bonus exceeds $100,000, and by all
directors and executive officers of Citizens and FNB as a group, determined in
accordance with Rule 13d-3 promulgated by the Commission. Unless otherwise
indicated, each person listed in the table has sole voting and investment power
with respect to the shares set forth opposite his name.
<TABLE>
<CAPTION>
Number of Shares Percent of Class
Name and Address of Beneficial Owner Beneficially Owned Beneficially Owned(1)
- -------------------------------------- ---------------------- ----------------------
<S> <C> <C>
Milford L. Blum, Jr. 17,645(1) 1.38%
P.O. Drawer 2090
Morgan City, LA 70381
Bernard E. Boudreaux, Jr. 1,000 *
Courthouse, Suite 200
300 Iberia Street
New Iberia, LA 70560
Norman H. Breaux, Jr. 7,125(2)(3) *
1501 Front Street
Morgan City, LA 70380
Camille A. Cutrone 41,903(2)(4) 3.31%
1207 Whitney Building
New Orleans, LA 70130
John M. Dilsaver, Jr. 29,380(2)(5) 2.32%
P.O. Box 2264
Morgan City, LA 70381
Kenneth B. Dupont 4,575(2) *
P.O. Box 50280
New Orleans, LA 70150-0280
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Bernhardt J. Hunter 2,100(2) *
Rt. 4, Box 710
Morgan City, LA 70380
Alfred S. Lippman 51,413(2)(6) 4.06%
P.O. Box 2526
Morgan City, LA 70381
Louis J. Mahfouz 10,559(2)(7) *
220 Hogan Street
Berwick, LA 70342
Edward A. Olivier 9,310(2) *
2202 Chatsworth Road
Franklin, LA 70538
Gerald D. Roy 8,425(2) *
P.O. Box 507
Baldwin, LA 70538
Charles A. Savoie 6,500(2) *
279 Ceylon Street
Berwick, LA 70342
Robert J. Terrebonne, Jr. 12,990(2) 1.03%
205 Mako Nako Drive
Mandeville, LA 70448
C. G. Whitley, M.D. 37,657(2)(8) 2.97%
1201 N. Prescott Drive
Morgan City, LA 70380
Directors and executive officers
as a group (18 persons) 263,777(9) 20.29%
- --------------------------------------------------------------------------------------
</TABLE>
* Less than 1%.
(1) Includes currently exercisable options to acquire 8,800 shares of Citizens
Common Stock.
(2) Includes currently exercisable options to acquire 1,000 shares of Citizens
Common Stock.
(3) Does not include 300 shares held by an investment club in which Mr. Breaux
is a member but as to which he does not participate in any decision
regarding disposition or voting, and as to which he disclaims beneficial
ownership.
(4) Includes 6,251 shares held in a trust for the benefit of Mr. Cutrone's
grandchildren, of which he is a co-trustee; 2,750 shares held in a trust
for the benefit of Mr. Cutrone's children for which he is trustee; and
7,500 shares held in testamentary trusts for the benefit of Mr. Cutrone's
children for which he is trustee. Mr. Cutrone disclaims beneficial
ownership of all such shares.
(5) Includes 15,400 shares in the name of his spouse, as to which shares Mr.
Dilsaver disclaims beneficial ownership.
(6) Includes 2,376 shares in the name of a corporation of which Mr. Lippman is
president and sole shareholder and 23,441 shares in a 401(k) Savings and
Retirement Plan and held for the benefit of Mr. Lippman.
30
<PAGE>
(7) Includes 2,860 shares in the name of Mr. Mahfouz's deceased spouse, of
whose estate Mr. Mahfouz is the executor, as to which shares Mr. Mahfouz
disclaims beneficial ownership.
(8) Includes 550 shares in the name of his spouse, as to which shares Dr.
Whitley disclaims beneficial ownership, and 19,365 shares in the name of a
corporation of which Dr. Whitley is the president and a director and in
which he owns approximately 34% of the outstanding capital stock. Dr.
Whitley disclaims beneficial ownership of two-thirds, or approximately
12,906, of the shares held by such corporation.
(9) Includes currently exercisable options to acquire 34,000 shares of Citizens
Common Stock that have been granted to Citizens' directors and executive
officers pursuant to the Citizens Option Plans, but excludes options to
purchase an additional 86,000 shares, which options would become
exercisable in connection with the consummation of the Company Merger. See
"The Plan of Merger - Description of the Plan of Merger -- Conversion of
Citizens Common Stock."
LEGAL PROCEEDINGS
On November 14, 1995, Dean Witter Reynolds, Inc. ("Dean Witter") filed
a Third-Party Demand against FNB and two other unrelated parties as third-party
defendants in each of 37 state court cases and in one consolidated federal court
case in which the plaintiffs (one of whom, Bernhardt J. Hunter, is a director of
Citizens and FNB) have sued Dean Witter for damages allegedly incurred as a
result of an investment scheme conducted by a former Dean Witter investment
broker. The plaintiffs have brought these lawsuits against Dean Witter in the
16th Judicial District Court in and for St. Mary Parish, Louisiana, and the
Federal District Court for the Western District of Louisiana (Lafayette
Division) (the "District Court") seeking an aggregate of approximately $13.2
million in damages. Dean Witter alleges that its former broker used accounts at
FNB, which were both in his name and in the name of Dean Witter, in connection
with his investment scheme, and that FNB therefore knew or should have known of
the scheme and was under an alleged duty to advise its customer, Dean Witter, of
the scheme. In its third-party pleadings, Dean Witter has asked that, in the
event of any judgment against Dean Witter, its former broker, as a co-defendant,
and FNB and others, as third-party defendants, either be held liable to the
plaintiffs jointly or severally with Dean Witter or, alternatively liable to
Dean Witter for contribution and indemnity. In December 1995, Dean Witter filed
a complaint in the District Court against FNB and the other third-party
defendants reasserting the claims made in the Third-Party Demand and seeking
indemnification for settlement payments made by Dean Witter to seven claimants
totalling approximately $183,000. FNB has denied Dean Witter's allegations, and
Citizens does not expect these lawsuits to have a material adverse effect on its
financial condition or results of operations.
CITIZENS MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Introduction
Management's discussion and analysis of financial condition and
results of operations is presented to provide insight into the current financial
condition and factors affecting the recent earnings of Citizens and should be
read in conjunction with the consolidated financial statements, the related
notes, and the consolidated selected financial data presented elsewhere herein.
The following discussion provides certain information concerning the
financial condition and results of operations of Citizens for the years ended
December 31, 1994 and 1993, and the nine months ended September 30, 1995. The
financial position and results of operations of Citizens were due primarily to
its banking subsidiary, FNB. Unless the context otherwise requires, Citizens and
FNB are collectively referred to herein as "Citizens."
Liquidity and Interest Rate Sensitivity Management
The primary functions of asset/liability management are to assure
adequate liquidity and maintain an appropriate balance between interest-earning
assets and interest-bearing liabilities. The objective of liquidity
31
<PAGE>
management is to meet the cash flow requirements of customers and of Citizens.
Customer requirements for funds include depositors who desire to withdraw funds,
as well as borrowers who need assurance that sufficient funds will be available
to meet their credit requirements. Interest rate sensitivity management seeks to
avoid fluctuating net interest margins and to enhance consistent growth of net
interest income through periods of changing interest rates.
Citizens closely monitors liquidity and seeks to invest excess funds
to increase the profitability of Citizens. In 1993, Citizens revised its
methodology for calculating its liquidity ratio to eliminate certain nonliquid
assets and capital balances. The target range under this method is 8% or better.
Management regularly monitors the investment securities market and
seeks the best possible investments for the portfolio which will generate an
acceptable spread over the prices paid for purchased liabilities (interest
bearing deposits). Citizens carefully monitors the pricing of its liabilities in
order to help maintain this spread. Citizens' investments in mortgage-backed
securities have affected Citizens liquidity to the extent that scheduled
maturities on these securities tend to be long-term, yet principal prepayments
may result in significantly shorter actual maturities. Citizens monitors the
actual maturities of its investments in mortgage-backed securities in order to
minimize the effects on Citizens' overall liquidity.
Interest rate sensitivity varies with different types of interest-
earning assets and interest-bearing liabilities. Overnight federal funds on
which rates change daily and loans which are tied to the prime rate differ
considerably from long-term investment securities and fixed-rate loans.
Similarly, time deposits over $100,000 and money market certificates are much
more interest sensitive than passbook savings accounts. The interest sensitivity
gap is the difference between total interest-sensitive assets and total
interest-sensitive liabilities. If this gap is minimized, the effect on net
interest income due to interest rate movements is theoretically reduced.
Citizens has an asset and liability management policy designed to provide a
proper balance between interest rate sensitive assets and liabilities, to
attempt to maximize interest margins and to provide adequate liquidity for
anticipated needs. See the related discussions under "Liquidity and Interest
Rate Sensitivity" below.
YEARS ENDED DECEMBER 31, 1994 AND 1993
Financial Condition
Citizens functions as a financial intermediary and, as such, its
financial condition should be reviewed in terms of trends in its sources and
uses of funds. The following comparison of average daily balances for selected
accounts indicates how Citizens has managed its sources and uses of funds:
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------- ----------------------------- -------
Average Increase (Decrease) Average Increase (Decrease) Average
Balance Amount % Balance Amount % Balance
-------- ---------- ---------- -------- ---------- --------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Uses:
Net loans...................... $117,418 $ 12,977 12.4% $104,441 $ 3,888 3.9% $100,553
Securities..................... - - - - (80,293) (100%) 80,293
Available-for-sale securities.. 72,116 (14,041) (16.3%) 86,157 86,157 100% -
Held-to-maturity securities.... 9,600 4,990 108.2% 4,610 4,610 100% -
Federal funds sold............. 9,557 (5,264) (35.5%) 14,821 (2,110) (12.5%) 16,931
Interest-bearing deposits in
other banks.................... 2,156 (440) (16.9%) 2,596 (796) (23.5%) 3,392
-------- -------- ----- -------- -------- ----- --------
Total uses..................... $210,847 $ (1,778) (0.8%) $212,625 $ 11,456 5.7% $201,169
======== ======== ======== ======== ========
Sources:
Demand deposits................ $ 32,899 $ 176 0.5% $ 32,723 $ 4,868 17.5% $ 27,855
Savings deposits............... 86,560 650 0.8% 85,910 16,876 24.4% 69,034
Time deposits.................. 81,647 (4,740) (5.5%) 86,387 (12,433) (12.6%) 98,820
Other.......................... 9,741 2,136 28.1% 7,605 2,145 39.3% 5,460
-------- -------- ----- -------- -------- ----- --------
Total sources.................. $210,847 $ (1,778) (0.8%) $212,625 $ 11,456 5.7% $201,169
======== ======== ===== ======== ======== ===== ========
</TABLE>
32
<PAGE>
Citizens uses its funds primarily to support its lending activities.
Citizens experienced growth of 12.4% in average net loan balances in 1994
compared to growth of 3.9% experienced in 1993. The growth in average loan
balances in 1994 was primarily attributable to an increase in loans processed by
the loan production office in New Orleans and as a result of new loans made in
the Baton Rouge market. The loan growth in 1993 was due to the increase in Small
Business Administration (SBA) loans and new loans generated through the New
Orleans loan production office which was opened in 1993.
The quality of Citizens' loan portfolio continued to improve in 1994
with the watch list loan's decreasing by $1,754,000 in 1994 to a balance of
$2,402,000 at December 31, 1994. In 1993, the balance of watch list loans
decreased by $4,649,000 to $4,156,000.
Effective October 31, 1991, Citizens acquired an insolvent Baton Rouge
bank in an FDIC-assisted purchase and assumption. Loans acquired from the Baton
Rouge bank were recorded net of discount. The unamortized discount totaled
$773,000 and $938,000 at December 31, 1994 and 1993, respectively. Citizens has
continued to monitor and evaluate the performance of these loans in 1994.
Citizens recognized gains of $195,000 in 1994 and $519,000 in 1993 on discounted
loans through the settlement and payout of these loans. No accretion of the
discount was recorded on loans that are currently being serviced, as Citizens
has not evaluated the ultimate collectibility as probable and is unable to
reasonably estimate the amounts and timing of collections.
Generally, the accrual of income is discontinued when the full
collection of principal is in doubt, or when the payment of principal or
interest has become contractually 90 days past due unless the obligation is both
well collateralized and in the process of collection. The following is a
reconciliation of the contractual balance to the recorded balance for all non
accrual loans as of December 31, 1994, other than $598,000 in nonaccrual Baton
Rouge loans (in thousands):
<TABLE>
<CAPTION>
Contractually Past Due Contractually Current
-------------------------------- ----------------------------- Total
Payment Performance: Collection Nonaccrual
Substantial Marginal Minimal Doubtful Other Loans
----------- -------- ------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contractual balance........... $219 $ - $ 78 $ - $ - $297
Charge-offs................... - - (19) - - (19)
Interest payments applied to
principal................... (72) - (1) - - (73)
---- ---- ---- ---- ---- ----
Recorded balance.............. $147 $ - $ 58 $ - $ - $205
==== ==== ==== ==== ==== ====
</TABLE>
For nonaccrual loans outstanding at December 31, 1994, no interest
payments were received or recognized as income in 1994 subsequent to the time
the loans were placed on nonaccrual status. Additionally, no interest income was
recognized in 1994 for payments received on loans which were on nonaccrual
status at some time during the year but not at December 31, 1994.
For purposes of the above disclosures, the following definitions have
been established by Citizens' management:
"Substantial Performance" --During the most recent twelve months, the
cash proceeds received by FNB exceeded 85% of the aggregate principal and
interest payments contractually due on the loan during the same time period.
"Marginal Performance" --During the most recent twelve months, the
cash proceeds received by FNB were less than necessary to meet the definition of
"substantial performance," but exceeded 25% of the aggregate principal and
interest contractually due on the loan during the same time period.
33
<PAGE>
"Minimal Performance"--During the most recent twelve months, the cash
proceeds received by FNB were less than necessary to meet the definition of
"marginal performance."
"Collection Doubtful"--The loan is not contractually past due at
December 31, 1994. However, the loan has been placed on nonaccrual status due to
management's doubt as to the full collectibility of principal or interest.
Accordingly, interest payments on such loans are being applied to reduce
principal to the extent necessary to eliminate doubt as to full collectibility.
"Other" --The loan is not contractually past due at December 31, 1994
nor does management have substantial doubt as to the eventual full
collectibility of principal or interest. However, management has elected to
account for receipt of interest income on a cash basis until the ability of the
debtor to satisfactorily meet contractual terms is better established.
Citizens' did not make or participate in any highly leveraged loans in
1994 or 1993.
In October 1994, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 118, Accounting
by Creditors for Impairment of a Loan--Income Recognition and Disclosures, that
amends SFAS 114 and eliminates its provisions regarding how a creditor should
report income on an impaired loan. Originally, SFAS 114 would have required
creditors to apply one of two allowable methods. As a result of the amendment,
creditors may now continue to use existing methods for recognizing income on
impaired loans, including methods that are required by certain industry
regulators. Citizens was required to comply with the new rules beginning in
1995. The effect of adopting the new rules has not been material to Citizens'
financial position or results of operations.
Historically, Citizens used funds to purchase securities or federal
funds sold. However, management used these financial instruments as sources of
funds during 1994 to fund loan growth and deposit repayments. The average
balances decreased in 1994 by a total of $14,315,000 and increased in 1993 by a
total of $8,364,000. In 1993, Citizens used funds from the increase in deposits
to purchase additional securities.
Average total deposits decreased by $3,914,000 or 1.9% and increased
by $9,311,000 or 4.8% in 1994 and 1993, respectively. The decrease in 1994
primarily relates to the decline in average time deposits resulting from FNB's
interest rates not following the general increase in interest rates during the
year causing customers to transfer maturing deposits to higher yielding
investments in other institutions. The increase for 1993 primarily related to an
increase in demand and savings deposits while the growth in time deposits slowed
due to an overall decline in interest rates during the prior year.
Liquidity and Interest Rate Sensitivity
Citizens' liquidity ratio was 11.0% at December 31, 1994 and 19.7% at
December 31, 1993. For 1994 and 1993, the ratios are higher than Citizens'
target levels of approximately 8%, thus reducing profitability slightly.
As noted in Citizens' Consolidated Statements of Cash Flows, funds in
1994 were primarily used in investing activities to fund loan growth. In 1993,
funds were provided from investing activities from the proceeds of maturing
investments which were used to purchase additional securities and fund new
loans. Also in 1993, funds were used in financing activities as a result of a
decline in deposits.
In 1993, Citizens adopted FASB SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Under SFAS No. 115, debt securities
that Citizens has both the positive intent and ability to hold to maturity may
be carried at amortized cost. Debt securities that Citizens does not have the
positive intent and ability to hold to maturity are classified either as
available-for-sale or trading and carried at fair value. Unrealized gains and
losses on securities classified as available-for sale are carried as a separate
component of shareholders' equity, net of taxes.
Unrealized gains and losses on securities classified as trading are reported in
earnings. Citizens has the positive intent and ability to hold to maturity all
municipal securities and certain obligations of U. S. Government corporations
and agencies in the portfolio. Citizens held no trading securities in 1994 or
1993. Therefore, the remaining portfolio has been classified as available-for-
sale. The unrealized loss on available-for-sale securities was $1,287,000 net of
income taxes
34
<PAGE>
of $663,000 at December 31, 1994. The unrealized gain on available-for-sale
securities was $943,000 net of income taxes of $486,000 at December 31, 1993.
Demand for loans, which generate the optimum spread for Citizens,
increased in 1994 primarily due to an increase in mortgage loans generated
through the New Orleans loan production office and the Baton Rouge branches.
Management expects that the loan portfolio will continue to grow at a gradual
pace with the increase in loans to be funded by reductions in investment
securities and deposit growth.
The table below sets forth the interest rate sensitivity analysis for
Citizens as of December 31, 1994 and is based on the repricing frequencies of
both interest-earning assets and interest-bearing liabilities for the time
intervals shown. The dollar amount of the gap, as well as the percentage that
the cumulative gap bears to total interest-earning assets, is shown for each
time frame.
<TABLE>
<CAPTION>
0-90 91-360 1-5 Over 5
Days Days Years Years Total
------- -------- ------- ------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Available-for-sale securities............. $38,259 $ 14,730 $16,327 $ - $ 69,316
Held-to-maturity securities............... 3,498 2,178 2,658 4,567 12,901
Loans..................................... 43,485 26,308 56,712 350 126,855
Federal funds sold........................ 2,225 - - - 2,225
Interest-earning deposits in other banks.. 274 100 - - 374
------- -------- ------- ------- --------
87,741 43,316 75,697 4,917 211,671
INTEREST-BEARING LIABILITIES
Interest-bearing demand deposits.......... 1,665 4,995 15,537 - 22,197
Savings deposits.......................... 22,983 28,526 8,873 - 60,382
Time deposits............................. 28,793 31,774 26,927 - 87,494
------- -------- ------- ------- --------
53,441 65,295 51,337 - 170,073
------- -------- ------- ------- --------
GAP....................................... $34,300 $(21,979) $24,360 $ 4,917 $ 41,598
======= ======== ======= ======= ========
Cumulative GAP............................ $34,300 $ 12,321 $36,678 $41,598
======= ======== ======= =======
Cumulative GAP as a Percentage of
Interest-Earning Assets.................. 16.20% 5.82% 17.33% 19.65%
======= ======== ======= =======
</TABLE>
Management did not use derivative financial instruments to adjust
Citizens' risk level to interest rate changes during 1994 or 1993.
See also "-- Overview -- Liquidity and Interest Rate Sensitivity
Management" above.
Capital Resources
In October 1994, Citizens' Board of Directors approved a 10% stock
dividend on the Citizens Common Stock. All share and per share amounts have been
adjusted to reflect this dividend.
At December 31, 1994, Citizens' shareholders' equity totaled
$22,378,000, an increase of 2.0% from $21,937,000 in 1993. The increase is due
to internally-generated earnings less dividends declared and the change in
unrealized gains/losses on available-for sale securities of $2,230,000. Citizens
declared cash dividends of $0.54 per share in 1994 compared with $0.45 per share
in 1993, for dividend payout ratios of 20.4% in 1994 and 20.2% in 1993.
Citizens' book value per share increased from $17.32 per share at December 31,
1993 to $17.67 per share at December 31, 1994.
On December 15, 1994, Citizens' Board of Directors adopted, subject to
shareholders' approval the Non-employee Directors Stock Option Plan, under which
a maximum of 100,000 shares were reserved for issuance. Options under the plan
may not be issued at less than fair market value at the date of the grant.
Citizens' shareholders approved the plan at the 1995 shareholders' meeting.
35
<PAGE>
Certain restrictions exist regarding the ability of FNB to transfer
funds to Citizens in the form of cash dividends, loans or advances. The approval
of the Comptroller is required to pay dividends in excess of FNB's earnings
retained in the current year plus retained net profits for the preceding two
years. Beginning January 1, 1995, FNB had retained earnings of $19,574,000 of
which $3,912,000 was available for distribution to Citizens as dividends without
prior regulatory approval. Under Reserve Board regulations, FNB also is limited
as to the amount it may loan to Citizens. At December 31, 1994, the maximum
amount available for transfer from FNB to Citizens in the form of loans
approximated $306,000.
Under the current risk-based capital computations, risk distinctions
are made among various items both on and off Citizens' balance sheet by
assigning risk weights to these items. The minimum risk-based capital level is
8%. The guidelines also require a Tier I capital ratio of at least 50% of total
risk-based capital. Selected capital adequacy measures for Citizens as of
December 31 are as follows:
<TABLE>
<CAPTION>
December 31,
--------------
1994 1993
------ ------
<S> <C> <C>
Risk-based capital:
Tier I 18.18% 18.11%
Tier II 1.25% 1.25%
----- -----
Total 19.43% 19.36%
===== =====
Leverage Ratio 9.94% 9.87%
===== =====
</TABLE>
The increase in these capital ratios in 1994 was due to the retention
of net earnings less dividends declared. The 1994 and 1993 risk-based capital
calculations do not include the unrealized gain/loss on available-for sale
securities in accordance with current limitations established by the regulators.
See also "Information About Citizens - Supervision and Regulation -- Capital
Adequacy Guidelines."
Results of Operations
Overview. Citizens' consolidated net income of $3,360,000 in 1994
represents an increase of 18.9% over the $2,827,000 earned in 1993. This follows
an increase of $614,000 or 28% in the prior year. On a per share basis, earnings
increased 18.8% to $2.65 in 1994 after an increase of 27.8% in 1993. The
improved operating results are attributed to continuing efforts to improve
operating efficiencies, an increase in net interest margin and a decrease in the
provision for loan losses.
A key measure of profitability used in the banking industry is the
return on average equity ratio ("ROAE"). In 1994, Citizens' ROAE was 15.3% in
comparison to an ROAE of 14.1% in 1993. The increase in 1994 ROAE is due
primarily to an increase in the net interest margin due to favorable interest
rate trends. The increase in 1993 ROAE was due to an increase in the volume of
average interest-earning assets partially offset by a decrease in the overall
yield of those assets.
Net Interest Income. The primary source of Citizens' earnings growth
in both 1994 and 1993 was net interest income, the amount by which interest and
fees on loans and securities exceed the interest expense on deposits and
borrowings. Net interest income in 1994 increased by $443,000 or 4.1% from 1993
compared to an increase of $1,019,000 or 10.3% in the preceding year. The
increase in the net interest income in 1994 was due to the increase in loans
which were funded by maturing investments with lower yields. In 1993, the
increase in net interest income was the result of an increase in available
funds, primarily from savings and time deposits, which was channeled into
mortgage-backed securities, partially off-set by the effects of a decline in
average yield due to a decline in interest rates.
Provision for Possible Loan Losses. The provision for possible loan
losses is a charge to earnings to maintain the reserve for possible loan losses
at a level consistent with management's assessment of the loan portfolio in
light of current and expected economic conditions, growth or decline in the
portfolio, and the current level of charge-offs.
Citizens has a loan review department which regularly monitors the
loan portfolio, giving special emphasis to problem loans and loans with large
balances. The loan review department computes an allowance for loan losses on
36
<PAGE>
specific loans as well as a general allowance on all other loans in the
portfolio, the latter using a computation based primarily on past loss
experience. On a quarterly basis, the loan review department recommends to
management an allowance for loan losses based on their monthly computation.
Based on the loan review department's recommendation, management will adjust, if
necessary, the amount to be contributed to the provision for possible loan
losses.
The provision for possible loan losses was $135,000 in 1994, a
decrease of $240,000 over the 1993 amount. The provision for possible loan
losses in 1993 decreased $690,000 over the 1992 amount. The decreases in the
1994 and 1993 provisions were primarily related to the results of the re-
evaluation of reserves on certain watch list loans, favorable experience with
respect to the loans acquired from the Baton Rouge bank, the payout of loans
during the year, and a reduction in net loan charge-offs. The balance of the
reserve for possible loan losses was $1,919,000 or 1.5% of loans in 1994,
compared to $1,978,000 or 1.8% of loans in 1993. The slight decrease in the
dollar amount of the reserve in 1994 and 1993 reflects management's opinion that
the credit quality of the portfolio continues to improve.
Loan net charge-offs in 1994 of $194,000 have decreased as compared to
the 1993 amount of $409,000. The decrease in the net charge-offs in 1994 and
1993 can be attributed to the decrease in nonaccrual loans. Nonaccrual loans
decreased $117,000 to $205,000 in 1994 and decreased $1,098,000 to $322,000 in
1993. In 1994 and 1993, commercial loan and lease financing receivable net
charge-offs accounted for the majority of total loan net charge-offs. Management
believes that adequate provisions have been recorded for potential losses in the
loan portfolio as of December 31, 1994.
Other Income and Expenses. Other income decreased by $365,000 or 15.5%
in 1994, as compared to an increase of $4,000 or 0.2% in 1993. The decrease in
1994 was due primarily to the decrease in gain on settlement of acquired assets.
Citizens realized gains of $195,000 in 1994 as compared to $519,000 in 1993 on
the settlement of discounted assets which were acquired in connection with the
acquisition of the insolvent Baton Rouge bank.
Other expenses increased $30,000 or 0.4% in 1994 and by $279,000 or
3.5% in 1993. The increase in 1993 is primarily attributed to an increase in
salary and employee benefits expense.
Income Taxes. Citizens adopted SFAS No. 109, Accounting for Income
Taxes, effective January 1, 1993. The cumulative effect of adopting SFAS No. 109
decreased net income in 1993 by $289,000. Under SFAS No. 109, Citizens is
required to use the liability method of accounting for income taxes as opposed
to the deferred method used in 1992.
Income tax expense totaled $1,544,000 in 1994 compared to $1,500,000
in 1993. Citizens' effective tax rates were 31.5% in 1994 and 32.5% in 1993. The
decrease in the effective tax rate is due to an increase in tax-exempt interest
income.
Citizens' net deferred tax asset at December 31, 1994 was $520,000. In
the prior year, Citizens recorded a net deferred tax liability of $630,000. The
change from the net deferred liability to the net deferred asset position was
due to the unrealized loss on securities recognized in 1994. The net deferred
tax asset consisted of deferred tax assets of $1,168,000 and deferred tax
liabilities of $648,000. Significant components of Citizens' deferred tax
position as of December 31, 1994 and 1993 were the unrealized gain/loss on
available-for-sale securities, book reserve for loan losses greater than the tax
reserve and tax over book depreciation. At December 31, 1994, no valuation
allowance has been recognized to offset the deferred tax asset.
NINE MONTHS ENDED SEPTEMBER 30, 1995
Financial Condition
Citizens' loan demand began showing signs of improvement during 1994
and this improvement has continued into the third quarter of 1995. The increase
in loans of $13,078,000 for the period ending September 30, 1995 from the year
ended December 31, 1994 has been primarily in the area of real estate loans
which increased approximately $8,976,000 and lease financing receivables which
increased approximately $3,799,000. Commercial and industrial loans increased
some $789,000 while loans to individuals and other loans decreased by some
$486,000 during this same period.
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<PAGE>
The principal amount of loans classified as delinquent has increased
to 1.6% of total loans at September 30, 1995, as compared to 1.1% of total loans
at December 31, 1994. Non-accrual loans represented .16% of total loans at
September 30, 1995 and December 31, 1994.
At September 30, 1995, the reserve for possible loan losses was
$2,026,000 which was up $107,000 from the year ended December 31, 1994. This
amount is based on Citizens' evaluation of its collateral position in its loans
in light of economic conditions in the area. Other real estate at September 30,
1995 was down $15,000 from $183,000 at December 31, 1994. These amounts consist
of properties on which FNB foreclosed.
Earning assets increased $8,340,000 (3.8%) at September 30, 1995 from
the quarter ended June 30, 1995 and increased $13,073,000 (6.2%) from the year
ended December 31, 1994. This increase was primarily in the area of loans which
increased approximately $13,078,000 along with an increase in federal funds sold
of approximately $9,377,000 while both securities and interest-bearing balances
in other banks declined by approximately $9,158,000 and $224,000 respectively.
Total assets at September 30, 1995 increased $7,848,000 (3.4%) from
the quarter ended June 30, 1995 and $13,794,000 (6.1%) from the year ended
December 31, 1994, primarily in the area of earning assets which increased by
$13,073,000 while all other assets increased some $721,000. Total deposits
increased during this nine month period by $9,381,000 with time deposits
increasing by $16,715,000 and demand and savings deposits decreasing by
$7,334,000.
Liquidity and Interest Rate Sensitivity
The liquidity ratio was 10.2% at September 30, 1995, down from 11.0%
at June 30, 1995, and 15.0% at December 31, 1994, all being higher than
Citizens' 8% target level, reducing profitability slightly.
Average net loan balances, which generate the primary source of
profitability for Citizens, increased approximately 12% in 1994 and
approximately 5% in the third quarter of 1995 as compared to 9% for the first
six months of 1995. The increase in 1994 was primarily due to an increase in
mortgage loans generated through the New Orleans loan office and the Baton Rouge
branches. Management expects that the loan portfolio will continue to grow at a
gradual pace with the increase in loans to be funded by reductions in investment
securities and deposit growth.
The cumulative excess as of September 30, 1995, of interest-earning
assets over interest-bearing liabilities for the time periods of 0-90 days and
90 days to one year were $43,128,000, or 18.0% and $17,628,000 or 7.4%,
respectively, of earning assets as compared to $35,842,000 or 16.5% and
$17,248,000 or 7.9%, respectively, at June 30, 1995 and $34,300,000 or 16.2% and
$12,321,000 or 5.8%, respectively, at December 31, 1994. The cumulative gap
continues to reflect Citizens' sentiment that rates will increase in the
upcoming periods. Although there can be no certainty that this will be the case,
Citizens believes that this sentiment is also shared by many of its depositors
who limit their reinvestments of maturing deposits to the short-term, frequently
one year or less. The primary interest-sensitive assets and liabilities in the
maturity range of one year or less are commercial, real estate and consumer
loans, available-for-sale securities and time deposits. This trend toward
shorter-term time deposits has necessitated shorter-term securities in Citizens'
portfolio. Management did not use derivative financial instruments to adjust
Citizens' risk level to interest rate changes during 1994 or the first three
quarters of 1995 nor does management presently anticipate entering into any
derivative financial instruments in the near term.
See also "-- Overview -- Liquidity and Interest Rate Sensitivity
Management" above.
Capital Resources
At September 30, 1995, Citizens' shareholders' equity totaled
$25,967,000, an increase of 3.4% from $25,098,000 at June 30, 1995 and 16.0%
from $22,378,000 at December 31, 1994. This increase is due entirely to
internally-generated earnings and the change in the net unrealized loss on
available-for-sale securities of $1,375,000 from a loss of $1,287,000 at
December 31, 1994 to a gain of $88,000 at September 30, 1995. Total dividends
declared during the quarter ended September 30, 1995 were $190,000 while total
dividends declared during the quarter ended September 30, 1994 were $115,000.
Total dividends declared for the nine months ended September 30, 1995 were
38
<PAGE>
$494,000 while total dividends declared for the nine months ended September 30,
1994 were $345,000. The dividend payout ratios (dividends paid divided by net
income) were 20.5% and 12.5% for the quarters ended September 30, 1995 and 1994,
respectively, and 18.2% and 13.6% for the nine months ended September 30, 1995
and 1994, respectively.
With the exception of expenditures of approximately $250,000 for the
opening of a new branch facility on Millerville Road in a Super Kmart in Baton
Rouge, Louisiana on June 30, 1995 and approximately $200,000 for new computer
equipment at various locations, Citizens has no material commitments for
significant capital expenditures during the next twelve months. Citizens expects
to be able to fund budgeted capital expenditures from current resources while
maintaining capital within regulatory constraints. The Reserve Board's current
minimum capital requirement is 5% for leverage capital. Citizens' capital ratios
of approximately 10.8% at both September 30, 1995 and June 30, 1995, and 9.9% at
December 31, 1994 were above the minimum regulatory requirements.
Under the current risk-based capital computations, risk distinctions
are made among various items both on and off Citizens' balance sheet by
assigning risk weights to these items. The minimum risk-based capital level is
8%. The guidelines also require a Tier I capital ratio of at least 50% of total
risk-based capital. Citizens's risk-based capital ratios were as follows:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Risk-based capital:
Tier I 18.48% 18.18%
Tier II 1.25% 1.25%
----- -----
Total 19.73% 19.43%
===== =====
Leverage Ratio 10.84% 9.94%
===== =====
</TABLE>
The aggregate increase in these capital ratios in 1995 was due to
internally generated earnings less dividends declared. Both ratios shown do not
include the unrealized gain/loss on available-for-sale securities in accordance
with current limitations established by the regulators. See also "Information
About Citizens - Supervision and Regulation -- Capital Adequacy Guidelines."
Results of Operations
Citizens' net interest margin for the period ended September 30, 1995
increased $518,000 (6.2%) from the period ended September 30, 1994. Net income
during this same period increased by $176,000 (7.0%). The increase in interest
paid on interest-bearing liabilities of $1,105,000 was more than offset by an
increase of $1,623,000 in interest earned on all interest-earning assets from
the same nine month period of a year ago.
The increase in net income of $176,000 for the period ended September
30, 1995 from the period ended September 30, 1994 is attributable to several
factors. The increase in the net interest margin of $518,000 and the increase
in other income of $41,000 were partially offset by increases in the provision
for possible loan losses of $115,000, other expenses of $158,000 and the
provision for income taxes of $110,000.
Interest and fees on loans increased $1,507,000 (17.3%) for the period
ended September 30, 1995 from the period ended September 30, 1994. This
increase was primarily due to the increase in total loans during this period.
The average interest yields on loans at September 30, 1995 were 10.0% and at
September 30, 1994 were 9.6%.
The provision for possible loan losses which is charged to operations
is based on the growth or decline in the loan portfolio, the amount of net loan
losses incurred and management's estimation of potential future losses based on
an evaluation of portfolio risk and other economic factors.
The provision for possible loan losses for the nine months ended
September 30, 1995 increased $115,000 (85.1%) from the period ended September
30, 1994. This increase reflects management's evaluation of the loan
portfolio and its belief that economic conditions prevailing in Citizens' market
area will generally continue to be represented by gradual improvement.
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<PAGE>
Other income for the period ended September 30, 1995 increased $41,000
(3.0%) from the period ended September 30, 1994. Increases in service charges
and fees assessed on deposit accounts amounted to $71,000 (8.2%) while all other
income decreased by some $30,000 (5.7%) for the same period a year ago.
Other expenses for the period ended September 30, 1995 increased
$158,000 (2.6%) from the period ended September 30, 1994. Salary and benefits
increased by $126,000 while occupancy and equipment expense increased some
$28,000 along with an increase of other expense of $4,000. Income tax expense
increased $110,000 during this period.
INFORMATION ABOUT WHITNEY
GENERAL
Whitney is the bank holding company of Whitney Bank, a national
banking association headquartered in New Orleans, offering banking and trust
services through 45 branches located throughout south Louisiana, including
branches in the metropolitan areas of New Orleans, suburban Jefferson and St.
Tammany Parishes and Baton Rouge and Lafayette, and a foreign branch on Grand
Cayman in the British West Indies. In February 1995, Whitney became the first
Louisiana bank holding company to enter the Alabama market through its
acquisition of the assets and deposits of The Peoples Bank's five offices in
Mobile, Alabama, through its newly formed state-chartered subsidiary Whitney
Bank of Alabama, which currently operates seven branches serving metropolitan
Mobile, Alabama and the Alabama Gulf Coast region.
At September 30, 1995 Whitney had consolidated total assets of
approximately $2.939 billion, consolidated total deposits of approximately
$2.425 billion and consolidated shareholders' equity of approximately $330
million. At such date, Whitney Bank had total assets of approximately $2.810
billion and total deposits of approximately $2.330 billion.
Whitney Bank and Whitney Bank of Alabama Bank are full-service
commercial banks offering a comprehensive range of commercial and retail banking
services including checking, savings and time deposits of various types,
consumer installment, real estate and commercial loans, investment services,
electronic banking facilities and wire transfer facilities. In addition, Whitney
Bank offers a full range of pension and personal trust services.
Whitney also recently formed Whitney Community Development Corporation
("WCDC"), a for-profit community development corporation, incorporated under the
laws of the State of Louisiana and located at 228 St. Charles Avenue, New
Orleans, Louisiana, 70130. WCDC was formed in order to provide equity
investments, loans and project packaging assistance for a variety of housing and
community development projects and to promote economic growth and revitalization
of distressed communities within Whitney's banking subsidiaries' trade
areas.
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.
40
<PAGE>
PRICE RANGE OF COMMON STOCK AND QUARTERLY DIVIDENDS
<TABLE>
<CAPTION>
HIGH LOW DIVIDEND
------- ------- --------
<S> <C> <C> <C>
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
(through January 19, 1996).. $31 1/4 $29 3/4 $ --
</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, 1994; Whitney's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1995; Whitney's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1995; Whitney's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1995; Whitney's Current
Report on Form 8-K filed with the Commission on January 19, 1996 (the "Form 8-
K); 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. 0-0126).
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 Meeting shall be deemed to be
incorporated herein by reference from the date of filing. See "Available
Information" 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 Citizens approve the Plan of Merger and the
Mergers are subsequently consummated, all shareholders of Citizens, 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 of Whitney rather than the Articles of Incorporation and Bylaws of
Citizens. 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 Citizens not described elsewhere herein.
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<PAGE>
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 14,878,019 were outstanding on December
31, 1995. 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.
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).
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<PAGE>
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 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.
43
<PAGE>
(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.
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
44
<PAGE>
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 December 31, 1995, directors and
executive officers of Whitney beneficially owned approximately 1,430,570 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.
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.
45
<PAGE>
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 CITIZENS COMMON STOCK
The following comparison of the rights of holders of Whitney Common
Stock and Citizens Common Stock is based on current terms of the governing
documents of the respective companies and on the current provisions of the LBCL.
The rights of holders of Citizens Common Stock and holders of Whitney Common
Stock are similar in many respects: (i) each shareholder is entitled to one
vote for each share held on all matters submitted to a vote of shareholders and
neither is entitled to cumulative voting rights in connection with the election
of directors; (ii) each shareholder is entitled to receive pro rata any assets
distributed to the shareholders upon liquidation, dissolution or a winding up of
the affairs of their respective companies; and (iii) 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 by Whitney
or Citizens of such securities to others. In addition, both the Whitney Common
Stock and the Citizens Common Stock are governed by applicable provisions of the
LBCL. Although it is impracticable to note all the differences between the
applicable governing documents of Whitney and Citizens, 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 Citizens Common
Stock.
Boards of Directors . Citizens' Articles of Incorporation provide for
three classes of directors, with directors serving three-year, staggered terms
expiring at successive annual meetings of shareholders. Whitney's Articles of
Incorporation provide for a board of directors divided into five classes, with
directors serving five-year staggered terms expiring for each class of directors
at successive annual meetings of shareholders.
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.
Citizens' Articles and By-laws do not contain a similar provision and,
under the LBCL, Citizens' directors may be removed by the affirmative vote of a
majority of the total voting power of Citizens.
Supermajority Vote Requirements . Like Whitney's Articles, Citizens'
Articles contain supermajority fair price provisions for certain business
combinations. However, Citizens' provisions are triggered if any shareholder or
group of shareholders acquires 5% of Citizens' outstanding capital stock
entitled to vote in the election of directors (an "Interested Person"), rather
than 10% of the total voting power in the case of Whitney, and the supermajority
vote that may be required to approve such a business combination or to amend
these provisions in Citizens' Articles is a majority of the shares of stock of
Citizens entitled to vote in the election of directors considered separately
from those shares held by the Interested Person, rather than, in the case of
Whitney, 90% of the total voting power. Unlike Whitney's Articles, Citizens'
Articles also contain a separate supermajority vote requirement for certain
business combinations that have not been approved by its Board of Directors,
notwithstanding satisfaction of the "fair price" requirements. These
46
<PAGE>
provisions require any such business combination to be approved by the holders
of two-thirds of the total voting power of Citizens. Whitney's Articles do not
contain such a provision; rather, Whitney is governed in this regard by
applicable provisions of the LBCL described under " - Description of Whitney
Common Stock -Louisiana Control Share Acquisition Statute." Citizens has opted
out of the LBCL Control Share Acquisition Statute and of the provisions of the
LBCL imposing fair price requirements somewhat similar to those contained in
Citizens' Articles, and as a result, such provisions of the LBCL are not
applicable to Citizens. Conversely, the Whitney Common Stock is governed by
these provisions of the LBCL because Whitney has elected not to opt out of their
application to Whitney. See " - Description of Whitney Common Stock --
Supermajority and Fair Price Provisions --- Purposes and Effect of Supermajority
and Fair Price Provisions" and " -- Louisiana Control Share Acquisition
Statute," above.
Reversion. Citizens' Articles of Incorporation provide that all
cash, property and share dividends, shares issuable in connection with a
reclassification of stock, and the redemption price of redeemed shares that are
not claimed by the shareholders entitled thereto within a reasonable time (not
less than one year in any event) despite reasonable efforts, shall revert in
full ownership to Citizens, and Citizens' obligation to pay such dividend or
redemption price or issue such shares shall thereupon cease; provided, however,
the Board of Directors may, but is not required to, thereafter pay such
dividends or redemption price or issue such shares to the person entitled
thereto.
Whitney's Articles of Incorporation do not contain a similar
provision.
Shareholder Action by Consent . Citizens' Articles of Incorporation
permit its shareholders to act by written consent that is signed only by
shareholders holding that proportion of the total voting power on the question
that is required by law or the Articles of Incorporation.
Whitney's Articles of Incorporation do not contain such a provision
and therefore, in accordance with the LBCL, its shareholders may act by written
consent only if it is unanimous.
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 Company Merger 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 Citizens and its subsidiary
at December 31, 1994 and 1993, 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 Ernst & Young LLP, independent auditors, as set forth in their
report appearing elsewhere herein, and included in reliance upon such report
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, 1994 and 1993 and for each of the three years in the period
ended December 31, 1994 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.
47
<PAGE>
OTHER MATTERS
At the time of the preparation of this Proxy Statement and Prospectus,
Citizens had not been informed of any matters to be presented by or on behalf of
Citizens or its management for action at the Meeting other than those listed in
the Notice of Special Meeting of Shareholders and referred to herein. If any
other matters properly come before the Meeting or any adjournments thereof, the
persons named in the enclosed proxy will vote on such matters according to their
best judgment.
Shareholders are urged to sign the enclosed proxy, which is solicited
on behalf of the Board of Directors of Citizens, and return it at once in the
enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS OF CITIZENS
Ira A. Breaux, Jr.
Secretary
January 23, 1996
48
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Consolidated Financial Statements for the Years Ended
December 31, 1994 and December 31, 1993:
<S> <C>
Report of Independent Auditors.............................. F-2
Consolidated Statements of Condition........................ F-3
Consolidated Statements of Income........................... F-4
Consolidated Statements of Changes in Shareholders' Equity.. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
Consolidated Financial Statements for the Nine Months Ended
September 30, 1995 (unaudited):
Consolidated Statement of Condition (unaudited)............ F-22
Consolidated Statements of Income (unaudited).............. F-23
Consolidated Statements of Cash Flows (unaudited).......... F-24
Notes to Consolidated Financial Statements (unaudited)..... F-25
</TABLE>
F-1
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors
First Citizens BancStock, Inc.
We have audited the accompanying consolidated statements of condition of First
Citizens BancStock, Inc. as of December 31, 1994 and 1993, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1994. 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 First Citizens
BancStock, Inc. at December 31, 1994 and 1993, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1994 in conformity with generally accepted accounting
principles.
As discussed in Notes 3 and 8 to the financial statements, in 1993 the Company
changed its methods for accounting for securities and income taxes.
ERNST & YOUNG LLP
New Orleans, Louisiana
January 19, 1995
F-2
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
December 31,
---------------------------
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 7,383,950 $ 6,818,448
Interest-bearing deposits in other banks 373,893 3,160,415
Federal funds sold 2,225,000 11,833,000
Available-for-sale securities 69,316,053 81,122,726
Held-to-maturity securities (estimated fair value of $12,873,100 in 1994
and $6,181,000 in 1993) 12,901,112 5,696,143
Loans 128,725,507 109,567,846
Unearned income (2,052,758) (1,689,699)
Reserve for possible loan losses (1,919,094) (1,978,492)
------------ ------------
124,753,655 105,899,655
Bank premises and equipment 6,080,035 5,736,872
Other real estate 182,737 247,737
Accrued interest receivable and other assets 2,534,831 1,669,108
------------ ------------
$225,751,266 $222,184,104
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand, noninterest-bearing $ 32,240,547 $ 32,738,401
Demand, interest-bearing 22,196,722 24,836,389
Savings 60,382,007 59,107,236
Time 87,494,655 82,318,418
------------ ------------
Total deposits 202,313,931 199,000,444
Accrued expenses and other liabilities 1,059,668 1,246,702
------------ ------------
203,373,599 200,247,146
Shareholders' equity:
Common stock, par value $1 per share--10,000,000 shares authorized; 1,307,529 1,192,500
issued and outstanding of 1,307,529 in 1994 and 1,192,500 in 1993)
Additional paid-in capital 4,009,761 1,822,500
Unrealized gains (losses) on available-for-sale securities (1,286,813) 943,566
Retained earnings 18,590,302 18,221,504
Treasury stock--41,310 shares, at cost (243,112) (243,112)
------------ ------------
22,377,667 21,936,958
------------ ------------
$225,751,266 $222,184,104
============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Interest income:
Loans $11,862,662 $10,837,573 $10,919,936
Securities:
Taxable 4,257,125 4,834,664 5,224,414
Tax-exempt 417,711 342,939 436,025
----------- ----------- -----------
4,674,836 5,177,603 5,660,439
Interest-bearing deposits 86,287 134,438 162,353
Federal funds sold 365,100 425,269 581,248
----------- ----------- -----------
Total interest income 16,988,885 16,574,883 17,323,976
Interest expense:
Deposits 5,635,877 5,653,164 7,413,262
Interest-bearing demand notes issued to the U. S. Treasury -- 11,746 19,359
----------- ----------- -----------
Total interest expense 5,635,877 5,664,910 7,432,621
----------- ----------- -----------
Net interest income 11,353,008 10,909,973 9,891,355
Provision for possible loan losses 135,000 375,000 1,065,000
----------- ----------- -----------
Net interest income after provision for possible loan losses 11,218,008 10,534,973 8,826,355
Other income:
Service charges on deposit accounts 1,156,111 1,223,566 1,178,767
Other service charges and fees 383,716 341,761 309,021
Gain on settlement of acquired assets 195,357 518,938 514,331
Other operating income 253,695 267,878 339,131
Gain (loss) on sales of securities (1,865) -- 7,257
----------- ----------- -----------
1,987,014 2,352,143 2,348,507
Other expenses:
Salaries and employee benefits 4,099,070 3,923,289 3,782,971
Occupancy 563,734 557,477 545,725
Equipment 540,542 563,099 541,797
Other 3,097,552 3,227,197 3,121,515
----------- ----------- -----------
8,300,898 8,271,062 7,992,008
----------- ----------- -----------
Income before income taxes and cumulative effect of an accounting
change for income taxes 4,904,124 4,616,054 3,182,854
Income taxes 1,544,000 1,500,000 970,000
----------- ----------- -----------
Income before cumulative effect of an accounting change for income
taxes 3,360,124 3,116,054 2,212,854
Cumulative effect of an accounting change for income taxes -- (289,000) --
----------- ----------- -----------
Net income $ 3,360,124 $ 2,827,054 $ 2,212,854
=========== =========== ===========
Income per share:
Income before cumulative effect of an accounting change for income
taxes $2.65 $2.46 $1.75
Cumulative effect of an accounting change for income taxes
-- (.23) --
----------- ----------- -----------
Net income $2.65 $2.23 $1.75
=========== =========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unrealized
Gains
(Losses) on
Additional Available Total
Common Paid-In For-Sale Retained Treasury Shareholders'
Stock Capital Securities Earnings Stock Equity
---------- ---------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1992 $1,191,500 $1,817,500 $ - $14,217,663 $(243,112) $16,983,551
Net income for the year - - - 2,212,854 - 2,212,854
Cash dividends $.36 per share - - - (460,472) - (460,472)
---------- ---------- ----------- ----------- --------- -----------
Balances at December 31, 1992 1,191,500 1,817,500 - 15,970,045 (243,112) 18,735,933
Net income for the year - - - 2,827,054 - 2,827,054
Cumulative effect of change in
accounting for securities, net of tax
Reversion of dissenting shareholders' - - 943,566 - - 943,566
rights 1,000 5,000 - - - 6,000
Cash dividends $.45 per share - - - (575,595) - (575,595)
---------- ---------- ----------- ----------- --------- -----------
Balances at December 31, 1993 1,192,500 1,822,500 943,566 18,221,504 (243,112) 21,936,958
Net income for the year - - - 3,360,124 - 3,360,124
Adjustment to unrealized gains (losses)
on available-for-sale securities, net of - - (2,230,379) - - (2,230,379)
tax
Cash dividends $.54 per share - - - (689,036) - (689,036)
Stock dividend 115,029 2,187,261 - (2,302,290) - -
---------- ---------- ----------- ----------- --------- -----------
Balances at December 31, 1994 $1,307,529 $4,009,761 $(1,286,813) $18,590,302 $(243,112) $22,377,667
========== ========== =========== =========== ========= ===========
</TABLE>
See accompanying notes.
F-5
<PAGE>
<TABLE>
<CAPTION>
FIRST CITIZENS BANCSTOCK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
-------------------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,360,124 $ 2,827,054 $ 2,212,854
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of an accounting change for income taxes - 289,000 -
Provision for possible loan losses 135,000 375,000 1,065,000
Depreciation and amortization of bank premises
and equipment 558,407 555,331 515,000
Accretion of discounts on securities (82,425) (182,152) (80,211)
Provision for losses on other real estate 8,110 80,017 127,596
Changes in operating assets and liabilities:
Unearned income 363,059 16,191 (771,731)
Accrued interest receivable and other assets (202,819) 1,053,215 (388,855)
Accrued expenses and other liabilities 299,017 (440,801) (670,180)
------------ ------------ ------------
Net cash provided by operating activities 4,438,473 4,572,855 2,009,473
INVESTING ACTIVITIES:
Proceeds from repayments of held-to-maturity securities 3,269,161 - -
Proceeds from repayments of available-for-sale securities 24,036,126 - -
Purchases of held-to-maturity securities (10,409,516) - -
Purchases of available-for-sale securities (15,590,923) - -
Proceeds from sales and maturities of securities - 27,985,920 29,478,334
Purchases of securities - (16,799,219) (60,532,780)
Net (increase) decrease in loans (19,352,112) (6,035,493) 4,834,359
Proceeds from sales of other real estate 56,890 431,968 938,491
Purchases of bank premises and equipment (901,570) (351,575) (608,202)
------------ ------------ ------------
Net cash provided by (used in) investing activities (18,891,944) 5,231,601 (25,889,798)
FINANCING ACTIVITIES:
Net increase (decrease) in demand and savings deposits (1,862,750) (3,045,386) 32,283,204
Net increase (decrease) in time deposits 5,176,237 (9,462,102) (8,719,607)
Net decrease in interest-bearing notes - (1,256,426) (253,874)
Net increase (decrease) in securities sold under repurchase agreements - (2,600,000) 2,600,000
Cash dividends (689,036) (575,595) (460,472)
------------ ------------ ------------
Net cash provided by (used in) financing activities 2,624,451 (16,939,509) 25,449,251
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents (11,829,020) (7,135,053) 1,568,926
Cash and cash equivalents at beginning of year 21,811,863 28,946,916 27,377,990
------------ ------------ ------------
Cash and cash equivalents at end of year $ 9,982,843 $ 21,811,863 $ 28,946,916
============ ============ ============
See accompanying notes.
</TABLE>
F-6
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years Ended December 31, 1994 and December 31, 1993)
1. SIGNIFICANT ACCOUNTING POLICIES
The accounting principles followed by First Citizens BancStock, Inc. (the
Company) and the methods of applying those principles conform with generally
accepted accounting principles generally practiced within the banking industry.
The significant accounting principles are summarized below.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, The First National Bank in St. Mary Parish (the
Bank). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Securities
Management determines the appropriate classification of debt securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
Debt securities are classified as held-to-maturity when the Company has the
positive intent and ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost. Debt securities not classified as held-
to-maturity are classified as available-for-sale. Available-for-sale securities
are stated at fair value, with the unrealized gains and losses, net of tax,
reported as a separate component of shareholders' equity (see Note 3).
The amortized cost of debt securities classified as held-to-maturity or
available-for-sale is adjusted for amortization of premiums and accretion of
discounts to maturity, or in the case of mortgage-backed securities, over the
estimated life of the security. Such amortization is included in interest income
from investments. Interest and dividends are included in interest income from
investments. Realized gains and losses, and declines in value judged to be
other-than-temporary are included in other income. The cost of securities sold
is based on the specific identification method.
Loans
Interest on loans is accrued daily on the outstanding principal balances except
for interest on discounted loans. Interest on discounted loans is recognized for
financial reporting purposes on the "Rule of 78s" method which does not
materially differ from the interest method.
The accrual of interest income is discontinued generally when a loan becomes 90
days past due as to principal or interest. When interest accruals are
discontinued, interest credited to income in the current year is reversed, and
interest accrued in prior years is charged to the reserve for possible loan
losses. Management may elect to continue the accrual of interest when the
estimated net realizable value of collateral is sufficient to cover the
principal balance and accrued interest and the loan is in the process of
collection, or in certain situations where management can reasonably expect to
recover the principal balance and accrued interest from guarantors of the loan.
Assets acquired through the default of loans are recorded at the lower of the
outstanding loan amounts plus accrued interest or the fair value of the assets
based on appraised value at the date acquired less estimated costs to sell. At
the time of acquisition, reductions from outstanding loan amounts to fair value
are charged against the reserve for possible loan losses.
F-7
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years Ended December 31, 1994 and December 31, 1993)
(Continued)
Reserve for Possible Loan Losses
The reserve for possible loan losses is maintained at a level believed adequate
by management to absorb potential losses in the loan portfolio. Management's
determination of the adequacy of the reserve is based on an evaluation of the
portfolio, past loan loss experience, current economic conditions, volume,
growth and composition of the loan portfolio, and other relevant factors.
Additions to the reserve for possible loan losses arise from provisions for
possible loan losses which are charged against income.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less allowances for depreciation
and amortization. Depreciation and amortization included in occupancy and
equipment expenses are computed using either the straight-line or declining-
balance method over the estimated useful lives of the assets, which generally
are 20-40 years for bank premises and 5-10 years for equipment.
Maintenance and repair costs are charged to operations; improvements are
capitalized. The cost of assets retired or otherwise disposed of and the related
accumulated depreciation are eliminated from the accounts in the year of
disposal and the resulting gains or losses are included in current operations.
Federal Income Taxes
The Company uses the liability method of accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that are expected to be in effect
when the differences are projected to reverse (see Note 8). Prior to the
adoption of Financial Accounting Standards Board (FASB) Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, income tax
expense was determined using the deferred method. Deferred income tax expense
was based on items of income and expense that were reported in different tax
years in the financial statements and tax returns and were measured at the tax
rate in effect in the year the differences originated.
Fair Values of Financial Instruments
The Company discloses fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate that value. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard, the
derived fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in immediate
settlement of the instrument.
F-8
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years Ended December 31, 1994 and December 31, 1993)
(Continued)
2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consisted of the following:
<TABLE>
<CAPTION>
1994 1993
------ ------
(In Thousands)
<S> <C> <C>
Cash and due from banks $7,384 $ 6,818
Interest-bearing deposits in other banks 374 3,160
Federal funds sold 2,225 11,833
------ -------
$9,983 $21,811
====== =======
</TABLE>
The Bank is required to maintain daily reserve balances with the Federal Reserve
Bank. The average daily reserve requirements were $1,397,000 in 1994 and
$1,700,000 in 1993.
3. SECURITIES
In May 1993, the FASB issued SFAS No. 115, Accounting for Certain Investments in
Debt and Equity Securities. As permitted under SFAS No. 115, the Company elected
to adopt the provisions of the new standard as of the end of 1993. In accordance
with SFAS No. 115, prior period financial statements were not restated to
reflect the change in accounting principle. As a result of adopting the
statement, the December 31, 1993 balance of shareholders' equity increased by
$943,566 (net of tax of $486,000) to reflect the net unrealized gain on
securities classified as available-for-sale.
The cost and estimated fair values of available-for-sale securities and held-to-
maturity securities at December 31, 1994 and 1993 were as follows :
<TABLE>
<CAPTION>
Available-For-Sale Securities
-------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
------- ---------- ----------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
December 31, 1994:
U. S. Treasury Securities $ 8,043 $ - $ (193) $ 7,850
U. S. Government corporations and
agencies obligations 24,535 17 (447) 24,105
Mortgage-backed securities 38,687 20 (1,346) 37,361
------- ------ ------- -------
$71,265 $ 37 $(1,986) $69,316
======= ====== ======= =======
December 31, 1993:
U. S. Treasury Securities $ 4,147 $ 124 $ - $ 4,271
U. S. Government corporations and
agencies obligations 34,764 33 (8) 34,789
Mortgage-backed securities 40,782 1,283 (2) 42,063
------- ------ ------- -------
$79,693 $1,440 $ (10) $81,123
======= ====== ======= =======
</TABLE>
F-9
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years Ended December 31, 1994 and December 31, 1993)
(Continued)
<TABLE>
<CAPTION>
Held-To-Maturity Securities
---------------------------
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
December 31, 1994:
U. S. Treasury Securities $ 4,482 $ - $ (14) $ 4,468
U. S. Government corporations and
agencies obligations 993 - (1) 992
Obligations of states and political
subdivisions 6,478 132 (145) 6,465
Other 948 - - 948
------- ------ ------- -------
$12,901 $ 132 $ (160) $12,873
======= ====== ======= =======
December 31, 1993:
Obligations of states and political
subdivisions $ 5,454 $ 487 $ (2) $ 5,939
Other 242 - - 242
------- ------ ------- -------
$ 5,696 $ 487 $ (2) $ 6,181
======= ====== ======= =======
</TABLE>
The amortized cost and estimated fair values of available-for-sale securities
and held-to-maturity securities at December 31, 1994, by contractual maturity,
are shown below. Expected maturities will differ from contractual maturities
because the issuers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Cost Fair Value
-------- ----------
(In Thousands)
<S> <C> <C>
Available-for-sale
Due in one year or less $ 5,012 $ 4,903
Due after one year through five years 27,566 27,052
Mortgage-backed securities 38,688 37,361
------- -------
$71,266 $69,316
======= =======
Estimated
Cost Fair Value
-------- ----------
(In Thousands)
Held-to-maturity
Due in one year or less $ 5,945 $ 5,933
Due after one year through five years 2,658 2,747
Due after five years through ten years 2,646 2,583
Due after ten years 704 662
Other 948 948
------- -------
$12,901 $12,873
======= =======
</TABLE>
F-10
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993)
(CONTINUED)
Proceeds from sales of securities during 1994 were $9,116,138. On those sales,
gross losses of $1,865 were realized. There were no sales of securities during
1993. Proceeds from sales of securities during 1992 were $12,541,000. On those
sales, gross gains of $27,257 and gross losses of $20,000 were realized.
Securities with carrying values of $20,987,000 at December 31, 1994 and
$20,858,000 at December 31, 1993 were pledged to secure public fund deposits.
4. LOANS
The carrying amounts of loans consisted of the following:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
(In Thousands)
Real estate - construction $ 3,040 $ 582
Real estate - other 64,650 49,406
Commercial and industrial 35,437 35,257
Lease financing receivables 11,395 9,656
Loans to individuals for household, family, and
other consumer expenditures 7,972 7,850
Other (including overdrafts) 6,232 6,817
128,726 109,568
Reserve for possible loan losses (1,919) (1,978)
Unearned income (2,053) (1,690)
-------- --------
$124,754 $105,900
======== ========
</TABLE>
In the ordinary course of business, the Bank made loans to its directors and
officers, as well as to entities in which they have ownership interests. The
unpaid balances of these loans approximated $419,000 at December 31, 1994 and
$326,000 at December 31, 1993. During 1994, advances totaled $574,000 and
reductions and repayments totaled $481,000.
The Bank had loans totaling $205,000 and $322,000 at December 31, 1994 and 1993,
respectively, which were no longer accruing interest. The average balance of
nonaccrual loans was $306,000 in 1994 and $915,000 in 1993. Had these loans not
been placed in a nonaccrual status, the Bank would have earned interest of
approximately $51,000 during 1994 and $119,000 during 1993. The Bank recognized
no interest income in 1994 and $51,000 of interest income in 1993, for interest
payments received during those years on nonaccrual loans.
The nonaccrual loans referred to above excluded certain other nonaccrual loans
purchased in connection with the acquisition of a bank in October 1991. These
loans, net of discounts of $273,000 and $275,000, totaled approximately $598,000
and $818,000 at December 31, 1994 and 1993, respectively.
F-11
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993)
(CONTINUED)
5. RESERVE FOR POSSIBLE LOAN LOSSES
The following is a summary of activity in the reserve for possible loan losses:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ -------
(In Thousands)
<S> <C> <C> <C>
Balance at beginning of year $1,978 $2,012 $ 2,088
Loans charged off (464) (793) (1,402)
Loan recoveries 270 384 261
------ ------ -------
Net charge-offs (194) (409) (1,141)
Provision for possible loan losses 135 375 1,065
------ ------ -------
Balance at end of year $1,919 $1,978 $ 2,012
====== ====== =======
</TABLE>
The following is a summary of loan charge-offs and recoveries by type of loan:
<TABLE>
<CAPTION>
1994 1993 1992
------------------------ ------------------------ -----------------------
Charge- Charge- Charge-
Offs Recoveries Offs Recoveries Offs Recoveries
------- ---------- ------- ---------- ------- ----------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate $ 44 $ 29 $ 40 $ 31 $ 169 $ 69
Installment 80 50 24 25 42 11
Commercial 208 121 428 184 597 95
Lease financing
receivables 132 70 301 144 594 86
---- ---- ------ ------ ------- ----
$464 $270 $ 793 $ 384 $ 1,402 $261
==== ==== ====== ====== ======= ====
</TABLE>
Net charge-offs as a percentage of average loans outstanding were .16% for 1994,
.39% for 1993, and 1.13% for 1992.
F-12
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993)
(CONTINUED)
6. BANK PREMISES AND EQUIPMENT
The following is a summary of bank premises and equipment balances by category:
<TABLE>
<CAPTION>
1994 1993
Accumulated Accumulated
Depreciation Depreciation
and Carrying and Carrying
Cost Amortization Value Cost Amortization Value
-------- ------------ -------- ------- ------------ --------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Land $ 1,488 $ - $1,488 $ 1,478 $ - $1,478
Bank premises 6,316 2,982 3,334 6,078 2,801 3,277
Furniture and 4,847 3,589 1,258 4,193 3,211 982
equipment
------- ------ ------ ------- ------ ------
$12,651 $6,571 $6,080 $11,749 $6,012 $5,737
======= ====== ====== ======= ====== ======
</TABLE>
Depreciation and amortization expense is included in the accompanying
consolidated statements of income as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
(In Thousands)
<S> <C> <C> <C>
Occupancy expenses $ 181 $ 178 $ 174
Equipment expenses 377 377 341
----- ----- -----
$ 558 $ 555 $ 515
===== ===== =====
</TABLE>
7. EMPLOYEE BENEFIT PLAN
The Bank has a retirement savings plan covering substantially all full-time
employees over the age of 21 and with 6 months or more of service. The plan
incorporates a deferred salary reduction arrangement under Internal Revenue Code
Section 401(k) and is intended to comply with all requirements for Section
401(a) tax qualified plans. Participating employees may contribute, through
salary reduction, a maximum of 15% of their annual compensation to their
participant 401(k) accounts.
The Bank may contribute discretionary amounts to the plan as determined by the
board of directors. The Bank made contributions to the plan of $25,000 in 1994
and 1993.
8. INCOME TAXES
In February 1992, the FASB issued SFAS No. 109, Accounting for Income Taxes. The
Company adopted the provisions of the new standard in its financial statements
for the year ended December 31, 1993. As permitted by SFAS No. 109, prior year
financial statements have not been restated to reflect the change in accounting
method. The cumulative effect of adopting SFAS No. 109 as of January 1, 1993
decreased net income by $289,000.
F-13
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993)
(CONTINUED)
The following is a reconciliation between income taxes based on the federal
statutory rate of 34% and income taxes reported in the consolidated statements
of income:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Income taxes based on statutory rates $1,667 $1,569 $1,082
Tax-exempt interest income (147) (117) (151)
Change in estimate of prior year income
tax expense - 27 20
Other--net 24 21 19
------ ------ ------
Income taxes $1,544 $1,500 $ 970
====== ====== ======
The components of income taxes were as follows:
1994 1993 1992
------ ------ ------
(In Thousands)
Current income tax expense $1,544 $1,467 $ 970
Deferred income tax expense - 33 -
------ ------ ------
$1,544 $1,500 $ 970
====== ====== ======
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets were as follows (in
thousands):
<TABLE>
<CAPTION>
1994 1993
------ ------
(In Thousands)
<S> <C> <C>
Deferred tax liabilities:
Depreciation $ 537 $ 547
Unrealized gain on available-for-sale securities - 486
Other 111 102
------ ------
Total deferred tax liabilities 648 1,135
Deferred tax assets:
Unrealized loss on available-for-sale securities 663 -
Reserve for loan losses 385 391
Write-down in carrying value of certain assets 79 79
Net interest income on nonaccrual loans 41 35
------ ------
Total deferred tax assets 1,168 505
------ ------
Net deferred tax asset (liability) $ 520 $ (630)
====== ======
</TABLE>
The net deferred tax asset or liability is included in the other assets or other
liabilities caption, respectively, in the accompanying financial statements.
F-14
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993)
(CONTINUED)
The components of deferred income tax expense (benefit) for the year ended
December 31, 1992 were as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Reserve for loan losses $(58)
Depreciation (1)
Write-down in carrying value of certain assets 26
Net interest income on nonaccrual loans (35)
Prepaid insurance premiums 46
Other differences 22
----
$ -
====
</TABLE>
Income taxes paid totaled $1,454,000 in 1994, $1,440,000 in 1993 and $910,000 in
1992.
9. DEPOSITS
Certificates of deposit of $100,000 or more, which are included in time deposits
were $29,374,000 at December 31, 1994 and $25,281,000 at December 31, 1993.
10. RESTRICTIONS ON SUBSIDIARY DIVIDENDS, LOANS OR ADVANCES
Dividends are paid by the Company from its assets which are provided primarily
by dividends from the Bank. However, certain restrictions exist regarding the
ability of the Bank to transfer funds to the Company in the form of cash
dividends, loans or advances. The approval of the Comptroller of the Currency is
required to pay dividends in excess of the Bank's earnings retained in the
current year plus retained net profits for the preceding two years. Beginning
January 1, 1995, the Bank has retained earnings of $19,573,500 of which
$3,911,960 was available for distribution to the Company as dividends without
prior regulatory approval.
Under Federal Reserve regulations, the Bank also is limited as to the amount it
may loan to the Company. At December 31, 1994, the maximum amount available for
transfer from the Bank to the Company in the form of loans approximated
$306,000.
F-15
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993)
(CONTINUED)
11. FIRST CITIZENS BANCSTOCK, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
Financial information for First Citizens BancStock, Inc. (parent company only)
is presented below:
<TABLE>
<CAPTION>
Balance Sheets December 31,
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
Assets
Cash $ 22,069 $ 2,202
Investment in bank subsidiary 21,346,687 21,934,756
Held-to-maturity securities 996,758 -
Other assets 12,153 -
----------- -----------
Total assets $22,377,667 $21,936,958
=========== ===========
Liabilities and shareholders' equity
Liabilities $ - $ -
Shareholders' equity 22,377,667 21,936,958
----------- -----------
Total liabilities and shareholders' equity $22,377,667 $21,936,958
=========== ===========
Statements of Income December 31,
--------------------------------------
1994 1993 1992
---------- ---------- ----------
Dividends from bank subsidiary $1,812,236 $ 660,595 $ 495,472
Other income 14,767 - -
Expenses 109,189 103,191 44,792
---------- ---------- ----------
Income before equity in undistributed income of
bank subsidiary 1,717,814 557,404 450,680
Equity in undistributed income of bank subsidiary 1,642,310 2,269,650 1,762,174
---------- ---------- ----------
Net income $3,360,124 $2,827,054 $2,212,854
========== ========== ==========
</TABLE>
F-16
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993)
(CONTINUED)
<TABLE>
<CAPTION>
Statements of Cash Flows December 31,
---------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Operating activities:
Net income $ 3,360,124 $ 2,827,054 $ 2,212,854
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed income of bank
subsidiary (1,642,310) (2,269,650) (1,762,174)
Accretion of discounts on securities (2,520) - -
Change in other assets (12,153) - -
Amortization expense - 3,792 22,744
----------- ----------- -----------
Net cash provided by operating activities 1,703,141 561,196 473,424
Investing activities:
Purchase of securities (994,238) - -
----------- ----------- -----------
Cash used in investing activity (994,238) - -
Financing activities:
Cash dividends paid (689,036) (575,595) (460,472)
----------- ----------- -----------
Cash used in financing activity (689,036) (575,595) (460,472)
----------- ----------- -----------
Increase (decrease) in cash 19,867 (14,399) 12,952
Cash at beginning of year 2,202 16,601 3,649
----------- ----------- -----------
Cash at end of year $ 22,069 $ 2,202 $ 16,601
=========== =========== ===========
</TABLE>
12. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit, letters of credit
and financial guarantees. Those instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the statements of
condition. The contract or notional amounts of those instruments reflect the
extent of involvement the Bank has in particular classes of financial
instruments.
The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit, letters of
credit and financial guarantees written is represented by the contractual
notional amount of those instruments. The Bank uses the same credit policies in
making commitments and conditional obligations as it does for on-balance-sheet
instruments. Unless noted otherwise, the Bank does not require collateral or
other security to support financial instruments with credit risk.
The Bank's off-balance-sheet financial instruments at December 31, 1994 are
summarized below. The contract or notional amounts approximate fair value as of
that date.
F-17
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993)
(CONTINUED)
<TABLE>
<CAPTION>
Contract or
Notional
Amount
--------------
(In Thousands)
Financial instruments whose contract amounts represent credit
risk:
<S> <C>
Commitments to extend credit $21,817
Letters of credit and financial guarantees written 180
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since a number of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the counterparty. Collateral held varies but may include
accounts receivable, inventory, property, plant, and equipment, and commercial
properties.
Letters of credit and financial guarantees written are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third party.
Those guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing, and similar
transactions.
The credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. The Bank holds
marketable securities as collateral supporting those commitments for which
collateral is deemed necessary.
13. SHAREHOLDERS' EQUITY
On September 27, 1994, the Company's board of directors declared a 10% stock
dividend of the Company's common stock to the shareholders of record as of
October 14, 1994. All share and per share amounts appearing in the financial
statements and notes thereto have been restated to reflect the stock dividend.
Income per share data are based on the weighted average number of shares
outstanding (after adjustment for the stock dividend) of 1,266,219 for 1994,
1993, and 1992.
The Company's 1993 Stock Option Plan, as amended, provides for the granting of
options to purchase up to 55,000 shares of common stock to officers and key
employees selected by the board of directors. Options are exercisable in
installments, subject to continued employment and such other conditions as set
forth by the committee. All options granted under the plan shall be granted at
an exercise price not less than the fair market value of a share of common stock
at the time the option is granted. The options granted during 1994 were granted
at the fair market value at the date of grant. The effects of the assumed
exercise of the outstanding stock options was excluded from the calculation of
per share data as it was immaterial.
F-18
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years Ended December 31, 1994 and December 31, 1993)
(Continued)
Information relating to the Company's stock option plan is summarized as
follows:
<TABLE>
<CAPTION>
Option
Price Range
Shares Per Share
------ -----------
<S> <C> <C>
Options granted at December 15, 1993 55,000 $16.25
Exercised - -
Expired - -
------
Options outstanding at December 31, 1994 55,000 $16.25
======
Options exercisable at December 31, 1994 11,000 $16.25
======
</TABLE>
On December 14, 1994, the board of directors adopted, subject to shareholders'
approval, a stock option plan for nonemployee directors, under which a maximum
of 100,000 shares were reserved for issuance. Options under the 1994 plan may
not be issued at less than the fair market value at date of grant.
14. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Most of the Company's business activity is with customers located within the
southern region of the State of Louisiana. The Company grants commercial and
industrial, real estate, lease financing, credit card and installment loans.
Although the Company has a diversified loan portfolio, a substantial portion of
its debtors' ability to honor their contracts is dependent upon the oil and gas
or related services industries.
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Cash and Cash Equivalents: The carrying amounts reported in the balance
sheet for cash and short-term instruments approximate those assets' fair values.
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: For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying values. The
fair value of fixed-rate loans (e.g., real estate loans (commercial and
consumer), commercial and industrial loans, lease financing receivable, and
loans to individuals) are estimated using discounted cash flow analyses, using
interest rates currently being offered for loans with similar terms to borrowers
of similar credit quality. The carrying amount of accrued interest approximates
its fair value.
Deposits: The fair values disclosed for demand deposits (e.g., interest and
noninterest checking, passbook savings, and certain types of money market
accounts) are, by definition, equal to the amount payable on demand at the
reporting date (i.e., their carrying amounts). The carrying amounts for
variable-rate, fixed-term money market accounts and certificates of deposit
approximate their fair values at the reporting date. Fair values for fixed-rate
certificates of deposit are estimated using a discounted cash flow calculation
that applies interest rates currently being offered on certificates to a
schedule of aggregated expected monthly maturities on time deposits.
F-19
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years Ended December 31, 1994 and December 31, 1993)
(Continued)
Off-Balance-Sheet Instruments: Fair values for the Company's off-balance-
sheet instruments (financial guarantees, letters of credit and lending
commitments) are based on fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the
counterparties' credit standing.
The estimated fair values of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
1994 1993
----------------- ------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- --------
<S> <C> <C> <C> <C>
(In Thousands)
Financial assets:
Cash and cash equivalents $ 9,983 $ 9,983 $ 21,811 $ 21,811
Available-for-sale securities $ 69,316 $ 69,316 $ 81,123 $ 81,123
Held-to-maturity securities $ 12,901 $ 12,873 $ 5,696 $ 6,181
Loans, net $124,754 $129,098 $105,900 $111,492
Financial liabilities:
Deposits $202,314 $202,345 $198,999 $199,484
Unrecognized financial instruments:
Commitments to extend credit $ -- $ 21,817 $ -- $ 27,478
Letters of credit and financial guarantees
written $ -- $ 180 $ -- $ 312
</TABLE>
16. QUARTERLY OPERATING RESULTS (UNAUDITED)
A summary of quarterly results of operations for the years ended December 31,
1994 and 1993 follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Quarter ended
----------------------------------------------------
March 31, June 30, September 30, December 31,
1994 1994 1994 1994
---------- --------- -------------- -------------
<S> <C> <C> <C> <C>
Total interest income $ 4,030 $4,134 $4,356 $4,469
Total interest expense 1,325 1,342 1,465 1,504
-------- ------ ------ ------
Net interest income 2,705 2,792 2,891 2,965
Provision for possible loan losses (75) -- (60) --
-------- ------ ------ ------
Net interest income after provision
for possible loan losses $ 2,630 $2,792 $2,831 $2,965
======== ====== ====== ======
Net income $ 807 $ 807 $ 918 $ 828
======== ====== ====== ======
Net income per share $ .64 $ .64 $ .72 $ .65
======== ====== ====== ======
</TABLE>
F-20
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993)
(CONTINUED)
<TABLE>
<CAPTION>
Quarter ended
---------------------------------------------------
March 31, June 30, September 30, December 31,
1993 1993 1993 1993
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Total interest income $ 4,169 $4,183 $4,165 $4,058
Total interest expense 1,520 1,420 1,368 1,357
-------- ------ ------ ------
Net interest income 2,649 2,763 2,797 2,701
Provision for possible loan losses (100) (55) (100) (120)
-------- ------ ------ ------
Net interest income after provision for
possible loan losses $ 2,549 $2,708 $2,697 $2,581
======== ====== ====== ======
Net income before cumulative effect
of an accounting change taxes $ 841 $ 715 $ 851 $ 709
Cumulative effect of an accounting
change (289) -- -- --
-------- ------ ------ ------
Net income $ 552 $ 715 $ 851 $ 709
======== ====== ====== ======
Per share data:
Net income before cumulative effect $ .67 $ .56 $ .67 $ .56
======== ====== ====== ======
Net income $ .44 $ .56 $ .67 $ .56
======== ====== ====== ======
</TABLE>
The per share amounts disclosed above differ from those previously reported in
the quarterly reports due to the stock dividend declared in the fourth quarter
of 1994.
F-21
<PAGE>
FIRST CITIZENS BANCSTOCK, INC.
CONSOLIDATED STATEMENT OF CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, 1995
------------------
(In Thousands)
<S> <C>
ASSETS
Cash and due from banks $ 7,179
Interest-bearing deposits in other banks 150
Available-for-sale securities 65,703
Held-to-maturity securities (estimated
fair value of $9,677,000) 9,439
Federal funds sold 11,602
Loans 141,660
Less: Unearned income (2,723)
Less: Reserve for possible loan losses (2,026)
--------
136,911
Bank premises and equipment 6,301
Other real estate 168
Accrued interest receivable and other assets 2,092
--------
$239,545
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand, noninterest-bearing $ 38,026
Interest-bearing time and savings 173,669
--------
Total Deposits 211,695
Accrued expenses and other liabilities 1,883
--------
213,578
Shareholders' equity:
Common stock, par value $1 per share--
10,000,000 shares authorized; 1,307,529
issued 1,308
Additional paid-in capital 4,010
Retained earnings 20,804
Unrealized gains on available-for-sale securities 88
Treasury stock -- 41,310 shares, at cost (243)
--------
25,967
--------
$239,545
========
</TABLE>
See accompanying notes.
F-22
<PAGE>
FIRST CITIZENS BANCSTOCK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ --------------------
1995 1994 1995 1994
------ ------ ------- -------
(In Thousands, except per share amounts)
<S> <C> <C> <C> <C>
Interest income:
Loans $3,555 $3,085 $10,208 $ 8,701
Interest-bearing deposits 3 15 9 73
Federal funds sold 148 93 266 293
Securities:
Taxable 1,060 1,052 3,361 3,141
Tax-exempt 101 111 299 312
------ ------ ------- -------
Total interest income 4,867 4,356 14,143 12,520
Interest expense:
Deposits 1,890 1,465 5,225 4,132
Other -- -- 12 --
------ ------ ------- -------
Total interest expense 1,890 1,465 5,237 4,132
------ ------ ------- -------
Net interest income 2,977 2,891 8,906 8,388
Provision for possible loan losses 100 60 250 135
------ ------ ------- -------
Net interest income after provision for possible loan losses 2,877 2,831 8,656 8,253
Other income:
Service charges on deposit accounts 316 301 934 863
Other service charges and fees 112 95 315 302
Other operating income 53 98 180 223
------ ------ ------- -------
481 494 1,429 1,388
Other expenses:
Salaries and employee benefits 1,042 1,016 3,135 3,009
Occupancy expense 121 97 301 306
Equipment expense 151 133 438 405
Other operating expense 678 736 2,263 2,259
------ ------ ------- -------
1,992 1,982 6,137 5,979
------ ------ ------- -------
Income before income taxes 1,366 1,343 3,948 3,662
Income taxes 442 425 1,240 1,130
------ ------ ------- -------
Net income $ 924 $ 918 $ 2,708 $ 2,532
====== ====== ======= =======
Net income per share:*
Net income per common and common equivalent shares $ .70 $ .72 $ 2.09 $ 2.00
====== ====== ======= =======
Net income per common share, assuming full dilution $ .69 $ .72 $ 2.02 $ 2.00
====== ====== ======= =======
</TABLE>
- ----------------
*Prior year amounts have been adjusted to reflect the 10% stock dividend paid
in October 1994.
See accompanying notes.
F-23
<PAGE>
FIRST CITIZENS BANCSTOCK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------
1995 1994
-------- --------
<S> <C> <C>
(In Thousands)
NET CASH PROVIDED BY OPERATING ACTIVITIES: $ 4,507 $ 2,735
INVESTING ACTIVITIES:
Proceeds from repayments of held-to-maturity
securities 4,965 1,772
Proceeds from repayments of available-for-sale
securities 5,688 20,086
Purchases of held-to-maturity securities (1,435) (9,219)
Purchases of available-for-sale securities - (9,576)
Net (increase) in loans (13,078) (16,159)
Proceeds from sale of other real estate 80 65
Purchase of bank premises and equipment (666) (771)
-------- --------
Net cash (used in) investing activities (4,446) (13,802)
FINANCING ACTIVITIES:
Net increase (decrease) in demand
and savings deposits (7,334) 242
Net increase in time deposits 16,715 1,344
Cash dividends paid (494) (345)
-------- --------
Net cash provided by financing activities 8,887 1,241
-------- --------
Increase (decrease) in cash and cash equivalents 8,948 (9,826)
Cash and cash equivalents at beginning of period 9,983 21,812
-------- --------
Cash and cash equivalents at end of period $ 18,931 $ 11,986
======== ========
</TABLE>
See accompanying notes.
F-24
<PAGE>
FIRST CITIZENS BANCSTOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(NINE MONTHS ENDED SEPTEMBER 30, 1995)
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 nine-month period ended September 30,
1995 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31, 1994.
2. SECURITIES
In May 1993, the Financial Accounting Standards Board ("FASB") issued SFAS No.
115 Accounting for Certain Investments in Debt and Equity Securities. As
permitted under SFAS No. 115, the Company elected to adopt the provisions of the
new standard as of December 31, 1993.
The cost and fair values of available-for-sale securities and held-to-maturity
securities were as follows at September 30, 1995:
<TABLE>
<CAPTION>
Available-For-Sale Securities
-----------------------------------------
Gross Gross Estima-
Unrealized Unrealized ted Fair
Cost Gains Losses Value
------- ---------- ---------- --------
(In Thousands)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 5,040 $ 6 $ (29) $ 5,017
U. S. Government agencies
and corporation obligations 34,861 218 (393) 34,686
Mortgage-backed securities 24,719 346 (13) 25,052
Equity securities 948 - - 948
------- ---- ----- -------
$65,568 $570 $(435) $65,703
======= ==== ===== =======
Held-to-Maturity Securities
-----------------------------------------
Gross Gross Estima-
Unrealized Unrealized ted Fair
Cost Gains Losses Value
------- ---------- ---------- --------
(In Thousands)
U. S. Treasury securities $ 2,009 $ - $ (2) $ 2,007
U. S. Government agencies
and corporation obligations 509 - - 509
Obligations of states and
political subdivisions $6,921 $242 $ (2) $ 7,161
------- ---- ----- -------
$9,439 $242 $ (4) $ 9,677
======= ==== ===== =======
</TABLE>
Securities with a carrying value of $21,418,000 at September 30, 1995 were
pledged to secure Public Fund deposits.
F-25
<PAGE>
FIRST CITIZENS BANCSTOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(NINE MONTHS ENDED SEPTEMBER 30, 1995)
(CONTINUED)
3. LOANS AND LEASE FINANCING RECEIVABLES
The loan portfolio consisted of the following:
<TABLE>
<CAPTION>
September 30, 1995
------------------
(In Thousands)
<S> <C>
Loans secured by real estate:
a. Construction and land development $ 6,990
b. Secured by 1-4 family residential property 25,353
c. Secured by multifamily residential property 6,329
d. Secured by nonfarm nonresidential property 37,994
Commercial and industrial loans:
To U. S. Addresses (domicile) 36,226
Loans to individuals for household, family, and
other personal expenditures:
a. Credit cards and related plans 1,454
b. Other (includes single pay & installment) 6,252
Obligations (other than securities and leases) of states
and political subdivisions in the U. S. 504
Other loans:
a. Loans for purchasing or carrying securities 11
b. All other loans 5,353
Lease financing receivables (net of unearned income) 12,908
Unearned income on loans (437)
--------
Total loans and leases, net of unearned income $138,937
========
Commercial paper included above $ -
========
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
Commercial and similar letters of credit outstanding were $165,000.
5. OTHER REAL ESTATE
Other Real Estate is property which has been foreclosed on and is carried on the
books of the Company at the lower of its appraised value or the remaining
balance of the loan it secured, as adjusted annually, if necessary, based on
current appraisals.
F-26
<PAGE>
FIRST CITIZENS BANCSTOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(NINE MONTHS ENDED SEPTEMBER 30, 1995)
(CONTINUED)
6. CHARGE-OFFS AND RECOVERIES AND RESERVE FOR POSSIBLE LOAN LOSSES
Charge-Offs and Recoveries by Type of Loan
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1995
------------------------
Charge-Off Recoveries
---------- ----------
(In Thousands)
<S> <C> <C>
Real estate - mortgages $ 19 $ 23
Commercial and industrial 42 12
Credit card and related plans 38 1
Installment loans to individuals 51 43
Lease financing receivables 110 38
---- ----
Total $260 $117
==== ====
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1995
--------------------
(In Thousands)
<S> <C>
Balance at beginning of year $1,919
Charged-off (260)
Recoveries 117
------
1,776
Provision for loan losses 250
------
Balance at end of current period $2,026
======
</TABLE>
7. EARNINGS PER SHARE
Weighted average shares outstanding are calculated using the treasury stock
method.
The decrease in earnings for the period ended September 30, 1995 from the same
period in the prior year is due to the dilutive effect of stock options of the
Company's 1993 Stock Option Plan caused by the increase in the Company's stock
price in the third quarter of 1995. No such dilution occurred in the prior
year.
8. MERGER WITH WHITNEY HOLDING CORPORATION
As discussed in the Registration Statement of which these financial statements
are a part, Citizens and FNB have entered into the Plan of Merger, upon the
consummation of which Citizens and FNB would be merged into Whitney and Whitney
Bank, respectively.
F-27
<PAGE>
APPENDIX A
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
<PAGE>
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER ("Amended and
Restated Agreement") is made December 15, 1995, between Whitney Holding
Corporation ("Whitney"), a Louisiana corporation, Whitney Acquisition
Corporation ("Acquisition"), a Louisiana corporation, and Whitney National Bank
("Whitney's Bank"), a national banking association, on the one hand, and First
Citizens BancStock, Inc. ("Citizens"), a Louisiana corporation, and First
National Bank in St. Mary Parish ("Bank"), a national banking association, on
the other hand. Whitney, Acquisition and Citizens shall be hereinafter
collectively referred to as the "Constituent Corporations".
PREAMBLE
WHEREAS, on September 28, 1995, the parties hereto entered into an
Agreement and Plan of Merger (the "Agreement") which provided for the
acquisition by Whitney of Citizens and the Bank pursuant to a merger of Citizens
into Acquisitions and a merger of the Bank into Whitney's Bank;
WHEREAS, the parties have determined that it is in their respective
best interests that the Agreement be amended and restated as permitted by
Section 8.09 of the Agreement to provide that Citizens rather than Acquisition
be the surviving entity in the merger of Citizens and Acquisition and to make
conforming changes to the Agreement and the exhibits thereto, and Whitney
desires to set out the terms on which Citizens would thereafter be immediately
merged into Whitney as permitted by Section 112(G) of the Louisiana Business
Corporation Law (the "LBCL");
WHEREAS, the boards of directors of Whitney, Acquisition and Citizens
have determined that it is desirable and in the best interests of their
respective corporations and shareholders that Acquisition merge into Citizens
(the "Company Merger"). The boards of directors of Whitney's Bank and the Bank
have each determined that it is desirable and in the best interests of each such
institution and its sole shareholder that the Bank merge into Whitney's Bank
(the "Bank Merger"). The Company Merger, the Subsidiary Merger (as hereinafter
defined) and the Bank Merger shall be hereinafter collectively referred to as
the "Mergers"; and
WHEREAS, it is the intention and agreement of the parties that this
amendment and restatement relate back to September 28, 1995 and speak as of that
date rather than as of the date of this Amended and Restated Agreement unless
the context clearly requires otherwise;
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) Promptly after execution of this Amended and Restated
Agreement, the Boards of Directors of Acquisition and Citizens will execute the
merger agreement annexed hereto as Exhibit 1.01(a) (the "Company Merger
Agreement"), pursuant to which, on the terms set forth herein and subject to the
conditions set forth in Section 6 hereof, Acquisition will merge with and into
Citizens, which shall be the surviving corporation, with the result that
Citizens will become a wholly-owned subsidiary of Whitney.
(b) Immediately following the Company Merger, the Board of Directors
of Whitney will take such action as may be necessary to cause Citizens as a
wholly-owned subsidiary of Whitney, to be merged with and into Whitney on the
terms described herein in a "short-form" merger permitted by Section 112(G) of
the LBCL (the "Subsidiary Merger"), effective immediately following the Company
Merger. Nevertheless, the failure by Whitney to consummate the Subsidiary Merger
shall have no effect on the rights of Citizens or its shareholders pursuant
hereto, including, but not limited to, the right to receive shares of Whitney
Common Stock upon the consummation of the Company Merger.
A-1
<PAGE>
(c) Promptly after execution of this Amended and Restated
Agreement, the Boards of Directors of Whitney's Bank and the 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, the Bank will merge with and into
Whitney's Bank, which shall be the surviving bank, effective immediately
following the Subsidiary Merger. The Company Merger Agreement and the Bank
Merger Agreement shall be hereinafter collectively referred to as the "Merger
Agreements."
(d) Effects of Mergers. The Company Merger shall have the effects
set forth in the 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 Acquisition will become
the assets, rights, privileges, debts, liabilities and obligations of Citizens
as the surviving corporation in the Company Merger. The Subsidiary Merger shall
have the effects set forth in the LBCL. Without limiting the generality of the
foregoing, and subject thereto, at the effective time of the Subsidiary Merger,
all the property and assets, rights, privileges and all debts, liabilities and
obligations of Citizens, as the surviving corporation in the Company Merger,
will become the assets, rights, privileges, debts, liabilities and obligations
of Whitney as the surviving corporation in the Subsidiary Merger. The Bank
Merger shall have the effects set forth in the National 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 Whitney's 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. 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 appropriate officers of the parties shall
execute, deliver and acknowledge the Merger Agreements and (d) the parties shall
take such further action as is required to consummate the transactions
contemplated by this Agreement and the Merger Agreements. 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. Immediately following (or
concurrently with) the Closing, (a) the Merger Agreements shall be filed with
and recorded by the Secretary of State of Louisiana and the Office of the
Comptroller of the Currency, as appropriate, and the Company Merger and the Bank
Merger shall be effective at the date and time specified in the Merger
Agreements, and (b) Whitney, as the surviving corporation in the Subsidiary
Merger, shall file and record with the Secretary of State of Louisiana a
certificate of merger (the "Certificate of Merger") to effect the Subsidiary
Merger at a time immediately following the Effective Time (as hereinafter
defined), and the Subsidiary Merger shall be effective at the date and time
specified in the Certificate of Merger. The date on which and the time at which
the Company Merger becomes effective are herein referred to as the "Effective
Date" and the "Effective Time," respectively.
1.04. SURVIVING CORPORATIONS.
(a) Company Merger. The Articles of Incorporation of Citizens, as
in effect immediately prior to the Effective Time, shall be amended by reason of
the Company Merger as of the Effective Time to read as set forth in Exhibit
1.01(a), and as so amended, such Articles of Incorporation shall be the Articles
of Incorporation of Citizens, as the surviving corporation in the Company Merger
until thereafter changed or amended as provided therein or by applicable law.
The Bylaws of Acquisition as in effect at the Effective Time shall be the Bylaws
of Citizens as the surviving corporation in the Company Merger until thereafter
changed or amended as provided therein or by applicable
A-2
<PAGE>
law. The directors and officers of Acquisition at the Effective Time shall be
the directors and officers of Citizens as the surviving corporation in the
Company Merger until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be. At
the Effective Time, the shares of Citizens Common Stock and the common stock of
Acquisition shall be converted as set forth in Section 2.
(b) Subsidiary Merger. Upon the consummation of the Subsidiary
Merger, it is Whitney's intent that (i) the Articles of Incorporation and Bylaws
of Whitney, as in effect immediately prior to the effective time of the
Subsidiary Merger, shall be the Articles of Incorporation and Bylaws of Whitney,
as the surviving corporation in the Subsidiary Merger; the directors and
officers of Whitney at the effective time of the Subsidiary Merger shall be the
directors and officers of Whitney as the surviving corporation in the Subsidiary
Merger until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be; and
(iii) at the effective time of the Subsidiary Merger, by virtue thereof and
without any action on the part of the shareholders, (A) each issued and
outstanding share of common stock of Citizens, as the surviving corporation in
the Company Merger, shall be cancelled and (B) each share of Whitney Common
Stock, no par value ("Whitney Common Stock"), issued and outstanding immediately
prior to the effective time of the Subsidiary Merger, shall remain issued and
outstanding from and after such effective time as the outstanding capital stock
of Whitney as the surviving corporation in the Subsidiary Merger, and no
additional shares of Whitney Common Stock shall be issued as a result of the
Subsidiary Merger.
(c) Bank Merger. The Articles of Association and Bylaws of
Whitney's Bank, as in effect immediately prior to the effective time of the Bank
Merger, shall be the Articles of Association and Bylaws of Whitney's Bank as the
surviving entity in the Bank Merger. The directors and officers of Whitney's
Bank at the effective time of the Bank Merger shall be the directors and
officers of Whitney's Bank as the surviving corporation in the Bank Merger until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be. At the effective time of
the Bank Merger and by virtue thereof, (i) all shares of capital stock of the
Bank, other than any such shares as to which dissenters' rights shall exist,
shall be cancelled and (ii) the shares of capital stock of Whitney's Bank as the
surviving entity in the Bank Merger, issued and outstanding immediately prior to
such effective time shall continue to be issued and outstanding, and no
additional shares shall be issued as a result of the Bank Merger.
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 IN THE COMPANY MERGER
2.01. CONVERSION. 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 Citizens common stock, par value
$1.00 per share ("Citizens Common Stock"), and the shares of Acquisition common
stock, no par value ("Acquisition Common Stock"), shall be converted as follows:
(a) Exchange Ratio. Except for (i) 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 131 of the LBCL
("Dissenters' Shares") and (ii) shares of Citizens Common Stock held by Citizens
as treasury shares (which shall by reason of the Company Merger be cancelled),
and subject to the provisions of Section 2.01(c) relating to fractional shares,
each issued and outstanding share of Citizens Common Stock shall be converted
into and become that number of shares of Whitney Common Stock that is equal to
the quotient (the "Exchange Ratio") obtained by dividing the Maximum Deliverable
Amount (as hereinafter defined) by the total number of issued and outstanding
shares (not treasury shares) of Citizens Common Stock at the Effective Time.
(i) Maximum Deliverable Amount. The term "Maximum Deliverable
Amount" means the quotient obtained by dividing the Closing Amount (as defined
below) by the Average Market Price (as defined below).
(ii) 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,
A-3
<PAGE>
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 $25.50, the
Average Market Price for purposes of this Section 2.01(a) shall be $25.50, and
if the Average Market Price as calculated above is greater than $35.50, the
Average Market Price for purposes of this Section 2.01(a) shall be $35.50.
(iii) Closing Amount. The term "Closing Amount" means the
Aggregate Purchase Price (as defined below) minus the number of shares of
Citizens Common Stock under option at the Effective Time (the "Closing Option
Shares") multiplied by the difference of the quotient of the Aggregate Purchase
Price plus the Closing Option Shares multiplied by the weighted average strike
price per share of the Closing Option Shares divided by the number of shares of
Citizens Common Stock outstanding at the Effective Time plus the Closing Option
Shares and the weighted average strike price per share of the Closing Option
Shares. The Closing Amount is further defined below:
The Closing Amount = Aggregate Purchase Price - (Closing Option
Shares * (((Aggregate Purchase Price + Closing Option Shares * Average Option
Strike Price Per Share)/(Citizens Common Stock Outstanding + Closing Option
Shares)) -Average Option Strike Price Per Share))
(iv) Aggregate Purchase Price. The term "Aggregate Purchase Price" is defined
as $67,000,000 if the Average Market Price is $25.50 or above. If the Average
Market Price drops below $25.50, the Aggregate Purchase Price will be equal to
the Average Market Price multiplied by 2,627,451. In no event shall the value
of the shares of Whitney Common Stock to be issued at the Closing exceed
$67,000,000.
(b) Options. Each option under Citizens' Option Plans (as
hereinafter defined) that is outstanding at the Effective Time shall be
converted into an option to acquire shares of Whitney Common Stock in the manner
set forth in Section 5.22 of this Agreement.
(c) Fractional Shares. In lieu of the issuance of fractional shares
of Whitney Common Stock, each shareholder of Citizens, upon surrender of his or
her certificate that immediately prior to the Effective Time represented
Citizens Common Stock, other than Dissenters' Shares and shares of Citizens
Common Stock held by Citizens as treasury shares (which shall by reason of the
Company Merger be cancelled), 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 at the Effective Time shall be such
fraction multiplied by the Average Market Price.
(d) Exchange of Certificates. After the Effective Time, each holder
of an outstanding certificate or certificates theretofore representing a share
or shares of Citizens Common Stock, other than Dissenters' Shares and shares of
Citizens Common Stock held by Citizens as treasury shares (which shall by reason
of the Company Merger be cancelled), 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(f) 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 Citizens Common Stock were
converted. Until so surrendered, each outstanding Citizens 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 Citizens Common Stock shall have been converted.
Whitney may, at its option, refuse to pay any dividend or other distribution to
holders of unsurrendered Citizens stock certificates until surrendered;
provided, however, that upon the surrender and exchange of any Citizens 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 of Citizens Common Stock theretofore
represented by such certificates shall have been exchanged.
A-4
<PAGE>
(e) 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 Citizens Common Stock pursuant to this Section 2.
(f) Transmittal Materials. Promptly after the Effective Time,
Whitney shall send or cause to be sent to each former shareholder of record of
Citizens 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 Section 131 of the LBCL, transmittal materials for use
in exchanging certificates of Citizens Common Stock for certificates of Whitney
Common Stock.
(g) 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 Section 2.01 and shall only be
entitled to receive payment of the fair cash value of such shares in accordance
with the provisions of Section 131 of LBCL unless and until such holders fail to
perfect or effectively withdraw or lose their rights to appraisal and payment
under the LBCL. If, after the Effective Time, any such holder fails to perfect
or effectively withdraws or loses such right, such shares of Citizens 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 Section 2.01,
without interest thereon.
(h) Acquisition Common Stock. Each issued and outstanding share of
Acquisition Common Stock shall be converted into and become one fully paid and
non-assessable share of common stock, no par value, of Citizens as the surviving
corporation in the Company Merger.
2.02. CLOSING TRANSFER BOOKS. All shares of Whitney Common Stock issued,
and any fractional share payments paid upon surrender for exchange of
certificates representing shares of Citizens Common Stock in accordance with
this Section 2 shall be deemed to have been issued in full satisfaction of all
rights pertaining to the shares of Citizens Common Stock theretofore represented
by such certificates and there shall be no further registration of transfer on
the stock transfer books of Citizens, as the surviving corporation in the
Company Merger, of the shares of Citizens Common Stock that were outstanding
immediately prior to the Effective Time.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CITIZENS
Citizens and Bank represent and warrant to Whitney, Acquisition and
Whitney's Bank that, as of the date on which Citizens 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. "Citizens'
consolidated group," as such term is used in this Agreement, consists of
Citizens and the Bank. Citizens is a corporation duly organized, validly
existing and in good standing under the laws of the State of Louisiana, and is a
bank holding company within the meaning of the Bank Holding Company Act of 1956,
as amended (the "Bank Holding Company Act"). The Bank is a national banking
association, duly organized, validly existing and in good standing under the
laws of the United States and is domiciled in the State of Louisiana. Each
member of Citizens' 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 Merger
Agreements 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.
3.02. CAPITAL STOCK; OTHER INTERESTS. The authorized capital stock
(i) of Citizens consists of 10,000,000 shares of Citizens Common Stock, of which
1,266,219 shares are issued and outstanding and 41,310 shares are held in its
treasury; and (ii) of the Bank consists of 240,000 shares of common stock, of
which 240,000 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
Citizens' consolidated group have been duly authorized and are validly issued,
fully paid and (except as provided in 12 U.S.C. Section 55) non-assessable, and
all of the outstanding shares of the Bank are owned by Citizens, free and clear
of all liens, charges, security interests, mortgages, pledges and other
encumbrances. Other than options to acquire up
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to an aggregate of 120,000 shares of Citizens Common Stock, granted under the
Option Plans (as hereinafter defined), no member of Citizens' 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
Citizens' consolidated group has been issued in compliance with all legal
requirements and in compliance with any preemptive or similar rights. No member
of Citizens' 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 Merger Agreements by the shareholders of Citizens and
the Bank, respectively, in accordance with the LBCL and applicable federal law,
all corporate acts and other proceedings required of each member of Citizens'
consolidated group for the due and valid authorization, execution, delivery and
performance of this Agreement and the Merger Agreements and consummation of the
Mergers have been validly taken. Subject to their approval by the shareholders
of Citizens and the Bank and to such regulatory approvals as are required by
law, this Agreement and the Merger Agreements are legal, valid and binding
obligations of Citizens and the Bank and are enforceable against Citizens and
the 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 Citizens' consolidated group,
neither the execution, delivery or performance of this Agreement or the Merger
Agreements, 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. Citizens
has delivered to Whitney true and complete copies of (a) the consolidated
balance sheets as of December 31, 1993 and December 31, 1994 of Citizens 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, as presented in Citizens' Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994 filed with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (collectively, the "Financial Statements"), (b) the unaudited
consolidated balance sheets as of June 30, 1994 and June 30, 1995 of Citizens
and its consolidated subsidiaries, and the related unaudited statements of
income, shareholders' equity and cash flows for the six-month periods then
ended, as presented in Citizens' Quarterly Reports on Form 10-QSB filed with the
SEC under the Exchange Act (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, 1994, of each member
of Citizens' consolidated group required to file such reports, (d) all call
reports, including all amendments thereto, made to the Office of the Comptroller
of the Currency ("OCC") since December 31, 1991, of each member of Citizens'
consolidated group required to file such reports, (e) Citizens' Annual Report to
Shareholders for 1994 and all subsequent Quarterly Reports to Shareholders, (f)
all reports filed since December 31, 1991 pursuant to the Securities Act of
1933, as amended (the "Securities Act") and pursuant to Section 13 or 15(d) of
the Exchange Act, of each member of Citizens' consolidated group required to
file such reports, and (g) all Proxy Statements disseminated to Citizens'
shareholders or the shareholders of any of its subsidiaries at any time since
December 31, 1991.
The Financial Statements and, except as indicated in the notes
thereto or, as permitted by Form 10-Q and the rules and regulations of the SEC,
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 Citizens' 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
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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 Interim Financial Statements (the "Latest Balance Sheet"), no member
of Citizens' 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, or other report, proxy statement or registration statement filed by any
member of Citizens' consolidated group with the SEC, and no report made to
shareholders of Citizens, as of the respective dates thereof, contained and no
such report, proxy statement, registration statement or report to shareholders
filed 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 Citizens' 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, except (in the case of (c) above) for (x) such loans, discounts and
financing leases for which specific reserves have been established as of June
30, 1995, and (y) such other loans, discounts and financing leases (the
outstanding principal balances of which do not exceed in the aggregate
$2,000,000) having material issues of collectibility for which specific reserves
had not been established as of June 30, 1995. 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 Citizens'
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 Citizens' 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 Citizens'
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 Citizens'
consolidated group, the OCC or the FDIC, (iv) an obligation of any director,
executive officer or 10% shareholder of any member of Citizens' 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
Bank's Directors' Loan Review Committee 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 except as contemplated
by subsection 3.05(c)(y). Each of the allowances for losses on loans, financing
leases and other real estate reflected on the books of Citizens' 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 Bank's
Directors' Loan Review Committee 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 except as contemplated by subsection
3.05(c)(y).
3.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Latest
Balance Sheet, no member of Citizens' 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 Citizens' capital stock for Citizens except
regular quarterly dividends of $.15 per share payable September 29, 1995. 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
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on the financial condition, results of operations or business of Citizens'
consolidated group, taken as a whole. 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 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 that one or more substantial customers has
terminated or intends to terminate such customers' relationship with it, with
the result being a material adverse effect on the Bank;
(f) failed to operate its business in the ordinary course
consistent with past practices, or failed to use reasonable efforts 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 material debt owed to it, or cancelled 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 $50,000, except for $250,000 spent on the KMart branch and $200,000
for computer equipment (primarily teller machines);
(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 10% 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 $50,000;
(k) except as required in accordance with GAAP, changed any
accounting practice followed or employed in preparing the Financial Statements
or 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.
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3.08. TAXES. Each member of Citizens' 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 material 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, parish, state, the United States or any other taxing
authority, and is not delinquent in the payment of any material tax or material
governmental charge of any nature. The consolidated federal income tax returns
of Citizens' consolidated group have not been audited by the Internal Revenue
Service since the date of Citizens' inception. No audit or examination is
presently being conducted by any taxing authority nor has any member of
Citizens' consolidated group received written notice from any such taxing
authority of its intention to conduct any investigation or audit or to commence
any such proceeding; no material unpaid tax deficiencies or additional
liabilities of any sort have been proposed to any member of Citizens'
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 Citizens' 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 material 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 Citizens' 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 or which secure deposits of public funds as required
by law; (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 Citizens'
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 Citizens' 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.
(c) No member of Citizens' 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 Citizens, (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 Citizens'
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 Citizens'
consolidated group that, if adversely determined, would have a material adverse
effect on Citizens' consolidated group.
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(b) Each member of Citizens' 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 Citizens' consolidated group as a result of
examination by any bank or bank holding company regulatory authority.
(d) No member of Citizens' 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 Citizens, 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
Citizens' 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 Citizens' 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
Internal Revenue Code of 1986, as amended (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 Citizens' 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 Citizens' 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.
(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 Citizens' consolidated group 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 Citizens' 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.
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(d) Each plan, fund or arrangement previously sponsored or
maintained by any member of Citizens' consolidated group, or to which any member
of Citizens' consolidated group previously made contributions which has been
terminated by any member of Citizens' 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 Citizens' consolidated group, Whitney, Acquisition or Whitney's 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.
3.12. INSURANCE POLICIES. Each member of Citizens' 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 Citizens' 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
Citizens' 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 Citizens' 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).
3.13. AGREEMENTS. (a) No member of Citizens' consolidated group is a party
to:
(i) any collective bargaining agreement;
(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 the agreements, arrangements, policies and practices
referred to in the exceptions to subparagraph (j) of subsection 3.07 of this
Agreement and such agreements as are terminable without penalty upon not more
than 30 days notice by the employer;
(iii) any obligation of guaranty or indemnification except such
indemnification of officers, directors, employees and agents of Citizens'
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 Citizens' 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 Citizens' consolidated group; or
(v) any agreement, contract or commitment containing any
covenant limiting the freedom of any member of Citizens' 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 Louisiana state or
national banks, as applicable to the Bank, 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.
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(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 Citizens' consolidated
group is a party or which affects any such member. To Citizens' knowledge, no
member of Citizens' 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.
3.14. LICENSES, FRANCHISES AND GOVERNMENTAL AUTHORIZATIONS. Each member of
Citizens' consolidated group possesses all licenses, franchises, permits and
other governmental authorizations necessary for the continued conduct of its
business. The deposits of the 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. Citizens has delivered to Whitney, with respect
to each member of Citizens' 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 Citizens' 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 Citizens' 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 would be required to be disclosed pursuant to Item 404 of
Regulation S-K of the Rules and Regulations of the SEC, other than transactions
which were so disclosed.
3.17. BROKER'S OR FINDER'S FEES. Except for The Robinson-Humphrey Company,
Inc., no agent, broker, investment banker, investment or financial advisor or
other person acting on behalf of any member of Citizens' 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 Citizens' 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 Citizens',
properties acquired by foreclosure or in settlement of loans;
(ii) Each member of Citizens' consolidated group is in
compliance with all terms and conditions of such permits, licenses and
authorizations and with all applicable Environmental Law Requirements, except
for such noncompliance as would not reasonably be expected to have, individually
or in the aggregate, a material adverse effect on the financial condition,
results of operations or business of Citizens and its consolidated group, taken
as a whole;
(iii) There are no past or present events, conditions,
circumstances, activities or plans by any member of Citizens' consolidated group
related in any manner to any member of Citizens' 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, except for such as would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the financial condition, results of operations or business of
Citizens and its consolidated group, taken as a whole;
(iv) To Citizens' 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 Citizens' 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
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(v) To Citizens' knowledge, no member of Citizens'
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 U.S.C. 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 Louisiana Administrative Code; (E) any naturally
occurring radioactive material ("NORM"), as defined by applicable federal or
state laws or regulations as amended from time to time, irrespective of whether
the NORM is located in Louisiana 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 Louisiana 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 Citizens' 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 Citizens' 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 Citizens' 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 Citizens' 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. The 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.
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3.22. ACCURACY OF STATEMENTS. No warranty or representation made or to be
made by any member of Citizens' consolidated group in this Agreement or in any
document furnished or to be furnished by any member of Citizens' 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, ACQUISITION AND
WHITNEY'S BANK
Whitney, Acquisition and Whitney's Bank represent and warrant to
Citizens and the 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, Acquisition and Whitney's Bank 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.
Acquisition is a corporation duly organized and validly existing under the laws
of the State of Louisiana. Acquisition has been incorporated and organized to
facilitate the Company Merger and has conducted no other business activity prior
to the date of this Agreement. Whitney's Bank is a national banking association
duly organized and validly existing and in good standing under the laws of the
United States of America. Whitney, Acquisition and Whitney's Bank have 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 the Merger Agreements 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 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 of Whitney Common Stock. As of
September 26, 1995, 14,832,410 shares of Whitney Common Stock were issued and
outstanding and 564,554 shares were held in its treasury. All issued and
outstanding shares of capital stock of Whitney and Whitney's Bank have been duly
authorized and are validly issued, fully paid and (except as provided in 12
U.S.C. Section 55) non-assessable. The outstanding capital stock of Whitney,
Acquisition and Whitney's Bank has been issued in compliance with all legal
requirements and any preemptive or similar rights. Whitney owns all of the
issued and outstanding shares of capital stock of Acquisition and Whitney's 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, Acquisition and Whitney's Bank for the due and
valid authorization, execution, delivery and performance of this Agreement and
the Merger Agreements and consummation of the Mergers have been validly and
appropriately taken. Subject to such regulatory approvals as are required by
law, this Agreement and the Merger Agreements are legal, valid and binding
obligations of Whitney, Acquisition and Whitney's Bank as the case may be, and
are 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, Acquisition and Whitney's
Bank, neither the execution, delivery or performance of this Agreement or the
Merger Agreements, 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 Citizens true and complete copies of (i) the consolidated balance
sheets as of December 31, 1993 and December 31, 1994 of Whitney
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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, 1994 filed with the SEC
(collectively, the "Whitney Financial Statements") and (ii) the unaudited
consolidated balance sheet as of June 30, 1995 of Whitney and its consolidated
subsidiaries and the related unaudited statements of operations and cash flows
for the six month period then ended, as presented in Whitney's quarterly report
on Form 10-Q filed with the SEC (collectively, the "Whitney's Interim Financial
Statements").
(b) The Whitney Financial Statements and the Whitney Interim
Financial Statements (each as defined in Schedule 4.04) 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 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 Company Merger have been duly authorized and, when
issued pursuant to the Company Merger Agreement, 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 Citizens 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, 1992, 1993 and 1994; (b) quarterly reports on Form 10-Q for
the three months ended March 31 and June 30, 1995; and (c) 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.
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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 Citizens'
consolidated group shall continue to provide to Whitney, Acquisition and
Whitney's 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 and stock transfer records), and to
furnish Whitney, Acquisition and Whitney's Bank and such representatives with
such financial and operating data and other information of any kind respecting
its business and properties as Whitney, Acquisition and Whitney's 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 Citizens' consolidated group. Each member of Citizens' consolidated group
agrees to cooperate with Whitney, Acquisition and Whitney's Bank in connection
with planning for the efficient and orderly combination of the parties and the
operation of Whitney, Acquisition and Whitney's Bank after consummation of the
Mergers. In the event of termination of this Agreement prior to the Effective
Date, Whitney and Acquisition shall, except to any extent necessary to assert
any rights under this Agreement or the Merger Agreements, 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 Citizens' 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,
Acquisition and Whitney's Bank. Whitney and Whitney's Bank shall continue to
provide Citizens' 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 Whitney's Bank to the extent customary
in transactions of the nature contemplated by this Agreement.
(B) DELIVERY OF SCHEDULES OF EXCEPTIONS; DUE DILIGENCE. Whitney
and Citizens stipulate that they have entered into this Agreement prior to
Citizens' delivery of its consolidated group's Schedule of Exceptions and prior
to Whitney's completion of Whitney's customary due diligence investigation of
Citizens. Citizens 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 Citizens,
shall be appended hereto and shall form a part hereof for all purposes. If
Citizens 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 Citizens.
Whitney's due diligence review shall be concluded during a 21 calendar day
period commencing on the first business day following Citizens' 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 Citizens, 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 Citizens or the Bank except as set forth in the
last sentence of this Section 5.01(b)) 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. If, after
receiving Citizens' Schedule of Exceptions, Whitney elects to terminate this
Agreement pursuant to the sixth sentence of this Section 5.01(b), then
notwithstanding any other provision hereof, Whitney shall reimburse Citizens for
the reasonable out-of-pocket expenses actually incurred by it in connection with
the transactions contemplated by this Agreement through the date of termination
up to a maximum of $150,000.
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
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conditions set forth in this Agreement to, the consummation of the Mergers and
the transactions contemplated hereby and by the Merger Agreements, and (d)
effect the transactions contemplated by this Agreement and the Merger Agreements
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
Citizens (the "Proxy Statement") which complies with the requirements of the
Securities Act of 1933 (the "Securities Act"), the Exchange Act, the rules and
regulations promulgated thereunder and other applicable federal and state laws,
for the purpose of submitting this Agreement, the Company Merger Agreement and
the transactions contemplated hereby and thereby to Citizens' 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 MERGER AGREEMENTS. Whitney, as the sole shareholder of
Acquisition and Whitney's Bank, shall take all action necessary to effect
shareholder approval of the Merger Agreements.
5.05. PRESS RELEASES. Whitney and Citizens 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 Citizens' 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 Citizens' 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 Citizens'
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) except for the declaration and payment of (i) a 1995 year-end
dividend, which, when combined with the other four dividends previously or
contemporaneously paid during 1995, will not exceed 22% of net income after
taxes for 1995 of Citizens' consolidated group and (ii) regular quarterly
dividends during 1996 in the amount of $.15 per share (at the customary time
each quarter) until the Effective Time of the Mergers, 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 dividends or distributions from any
member of Citizens' consolidated group to any other member of such consolidated
group or any issuance of shares of capital stock of Citizens upon exercise of
options granted prior to the date hereof under the Option Plans (as defined
herein);
(b) amend its articles of incorporation or association 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
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or employees except (i) 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; (ii) after consultation with Whitney's chief executive
officer, bonuses to non-executive officers in amounts in an aggregate amount not
exceeding $150,000 and (iii) December 1995 bonuses in addition to the bonuses
set forth in Section 5.07(c)(ii) to employees not to exceed in the aggregate
$525,000;
(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;
(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, parish, 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 Citizens' or
the 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.
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5.08. ADDITIONAL INFORMATION. Citizens will provide Whitney and Whitney
will provide Citizens (a) with prompt written notice of any material adverse
change in the financial condition, results of operations, business or prospects
of any member of its consolidated group, any material breach by any such member
of any of its warranties, representations or covenants in this Agreement, or any
material action taken or proposed to be taken with respect to any member of its
consolidated group 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 subsection 3.04 with respect to each member of its
consolidated group, and (c) promptly upon its dissemination, any report
disseminated to its shareholders.
5.09. CITIZENS SHAREHOLDER APPROVAL. Citizens' Board of Directors shall
submit this Agreement and the Company Merger 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
Citizens duly called and convened for that purpose as soon as practicable after
the effective date of the Registration Statement. Citizens, as the sole
shareholder of the Bank, shall take all action to effect shareholder approval of
the Bank Merger Agreement.
5.10. RESTRICTED WHITNEY COMMON STOCK. Citizens will use its best efforts
to obtain by the Closing Date an agreement from each person who is a director,
executive officer or 5% beneficial owner of securities of Citizens who will
receive shares of Whitney Common Stock by virtue of the Mergers to the effect
that such person will not dispose of any 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 or in a manner that would disqualify the
transactions contemplated hereby from pooling of interests accounting treatment.
5.11. LOAN POLICY. No member of Citizens' 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 Citizens'
Schedule of Exceptions, provided that this covenant shall not prohibit the 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 currently in its loan portfolio.
5.12. NO SOLICITATIONS. Prior to the Effective Time or until the
termination of this Agreement, no member of Citizens' consolidated group shall,
without the prior approval of Whitney, directly or indirectly, solicit or
initiate inquiries or proposals with respect to, or, except to the extent
determined by the Board of Directors of Citizens in good faith, after
consultation with its financial advisors and its legal counsel, to be required
to discharge properly the directors' fiduciary duties to Citizens' consolidated
group and its shareholders, furnish any information relating to, or participate
in any negotiations or discussions concerning, any Acquisition Transaction (as
defined in Section 7.01) or any other acquisition or purchase of all or a
substantial portion of its assets, or of a substantial equity interest in it or
withdraw its recommendation to the shareholders of Citizens of the Mergers or
make a recommendation of any other Acquisition Transaction, or any business
combination with it, other than as contemplated by this Agreement (and in no
event will any such information be supplied except pursuant to a confidentiality
agreement in form and substance as to confidentiality substantially the same as
the confidentiality agreement between Citizens 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 Citizens or the Bank from taking any action that the Board of
Directors of Citizens or the Bank, as the case may be, determines, in good faith
after consultation with and receipt of an opinion of counsel, is required by law
or is required to discharge his fiduciary duties to Citizens' consolidated group
and its shareholders.
5.13. OPERATING FUNCTIONS. Each member of Citizens' 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
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the Whitney Common Stock which will be issued to the holders of Citizens 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 Citizens except to the extent that the
transfer of any shares of Whitney Common Stock received by shareholders of
Citizens 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
Citizens' consolidated group and each of their respective directors, officers
and other persons, if any, who control Citizens 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 Citizens' 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
Citizens 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 Merger Agreements.
5.17. BOND FOR LOST CERTIFICATES. Upon receipt of notice from any of its
shareholders that a certificate representing Citizens Common Stock has been lost
or destroyed and prior to issuing a new certificate, Citizens shall require such
shareholder to post a bond in such amount as is sufficient to support the
shareholder's agreement to indemnify Citizens against any claim made by the
owner of such certificate, unless Whitney agrees to the waiver of such bond
requirement.
5.18. DISSENTERS. Citizens shall give Whitney (i) prompt written notice
of, and a copy of, any instrument received by Citizens 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 Citizens 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 Merger Agreements to have been paid to the
person with respect to whom such deduction and withholding was made.
5.20. NASDAQ/NMS. Whitney shall cause the shares of Whitney Common Stock
to be issued in the Merger to be duly authorized, validly issued, fully paid and
nonassessable, free of any preemptive or similar right and to be approved for
inclusion for trading in the NASDAQ/NMS, subject to official notice of issuance,
prior to the Effective Time.
5.21. CONTINUING INDEMNITY; INSURANCE. Whitney covenants and agrees that:
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(a) all rights to indemnification and all limitations of liability
existing in favor of indemnified parties under Citizens' Articles of
Incorporation and By-Laws and in the Articles of Association and By-Laws of the
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 Citizens and Bank immediately prior to the Effective
Time (in the case of Citizens) and the effective time of the Bank Merger (in the
case of the 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 Citizens 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 such premiums exceed 150% of the premiums paid as of the date hereof by
Citizens for such insurance.
(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. STOCK OPTION PLANS.
(a) On or prior to the Effective Time, Whitney and its Board of
Directors (or a committee thereof) will take all actions necessary to implement
the provisions contained in Sections 5.22(b) and (c), below.
(b) Replacement Options. Whitney will assume the rights and
obligations of Citizens pursuant to the stock options outstanding immediately
prior to the Effective Date under its 1993 Stock Option Plan (a "1993 Plan
Option") and its 1994 Stock Option Plan (a "1994 Stock Option", and each such
stock option existing immediately prior to the Effective Date called an
"Existing Stock Option" and each such assumed stock option existing immediately
after the Effective Date called an "Replacement Option" and the 1993 Stock
Option Plan and 1994 Stock Option Plan are collectively referred to as the
"Option Plans"). The terms of such assumption shall be as follows:
(i) Under the Replacement Option, the optionee shall have the
right to purchase the number of whole shares of Whitney Common Stock equal to
the product obtained by multiplying the number of shares of Citizens Common
Stock subject to such option immediately prior to the Effective Time by the
Exchange Ratio, rounded up to the nearest whole number of shares of Whitney
Common Stock, and the per share exercise price for the shares of Whitney Common
Stock issuable upon the exercise of such assumed options shall be equal to the
quotient obtained by dividing the exercise price per share of Citizens Common
Stock specified under the plan or agreement immediately prior to the Effective
Time by the Exchange Ratio, rounding the resulting exercise price down to the
nearest whole cent.
(ii) The Replacement Option shall not give the optionee
additional benefits which he did not have under the Existing Stock Option.
(iii) No later than the Effective Time, Whitney shall reserve
for issuance the number of shares of Whitney Common Stock that will become
issuable upon the exercise of the Replacement Options.
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(iv) Each Replacement Option shall constitute a continuation of
the Existing Stock Option substituting (where applicable) Whitney for Citizens
and employment by Whitney or any of its subsidiaries for employment by Citizens
or any of its subsidiaries. Notwithstanding the foregoing, as to a 1993 Plan
Option, the terms of any Replacement Option shall be such that the substitution
of the Replacement Option for the Existing Stock Option would not constitute a
modification of the Existing Stock Option within the meaning of Section
425(h)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder, if such apply to the Existing Stock Option.
(v) As soon as practicable after the Effective Time, Whitney
shall execute a document evidencing the assumption by Whitney of the Existing
Stock Options.
(c) Registration. As soon as practicable after the Effective Time,
Whitney shall file with the SEC a Registration Statement on Form S-8 or Form S-3
(or any successor forms) with respect to the issuance or resale of shares of
Whitney Common Stock subject to the Replacement Options and shall use its best
efforts to have such Registration Statement declared effective and thereafter to
maintain the effectiveness of such Registration Statement for so long as such
options remain outstanding.
(d) Notwithstanding the foregoing, if Whitney receives assurances
satisfactory to it in its sole discretion that it can grant replacement options
in respect of the 1994 Stock Options to eliminate the effects of (i) paragraph 5
of the agreements with respect to the 1994 Stock Options and (ii) paragraphs
6(e) and 6(f) of the 1994 Stock Option Plan, and the grant of these replacement
options will not disqualify the Mergers as a "pooling of interests" for
accounting purposes, then Whitney shall grant such replacement options.
5.23. EMPLOYEES AND CERTAIN OTHER MATTERS. All employees of Citizens
and Bank at the Effective Time shall become employees of Whitney's Bank.
Although Whitney's present intention is to retain Citizens' and Bank's
employees, Whitney's Bank retains 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 Citizens and Bank shall be eligible
for such employee benefits as are generally available to employees of Whitney's
Bank 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 the discretion of Whitney's Bank's Compensation
Committee and (ii) all Citizens and Bank employees who are employed at the
Effective Time shall be given full credit for all prior service as employees of
Citizens or Bank provided, however, that all such employees shall be treated as
newly hired Whitney's Bank employees (i.e., prior service credit with Citizens
and Bank shall not be considered in determining future benefits under Whitney's
Bank's deferred benefit pension plan) for all purposes of Whitney's Bank's
defined benefit pension plan. Contemporaneously with Citizens' delivery of its
Schedule of Exceptions, Whitney and Citizens shall supplement this Agreement
respecting the post-Closing roles of the Citizens directors and certain matters
with respect to the Bank's executive officers.
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 Company Merger
Agreement shall have been duly approved by the shareholders of Citizens.
(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.
(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 the Merger Agreements or this
Agreement or to obtain damages or other relief in connection with the execution
of such agreements
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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 the Merger Agreements or
this 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
Merger Agreements 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
Merger Agreements 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 Citizens 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 Citizens' shareholders will not be a
taxable event to such shareholders.
6.02. ADDITIONAL CONDITIONS OF WHITNEY AND ACQUISITION. The obligations of
Whitney, Acquisition and Whitney's 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 Citizens and the 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 Citizens and the Bank shall have in all material respects
performed all obligations and complied with all covenants required by this
Agreement and the Merger Agreements to be performed or complied with by it at or
prior to the Closing. In addition, each of Citizens and the Bank shall have
delivered to Whitney, Acquisition and Whitney's 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 Citizens'
consolidated group; provided, however, that (i) the incurrence by Citizens of
expenses (including fees and expenses of Robinson-Humphrey, Ernst & Young LLP,
Lippman, Mahfouz & Martin, and Bracewell & Patterson, L.L.P.), and payments to
executive officers or other employees of Citizens or Bank pursuant to agreements
set forth on the Schedule of Exceptions and (ii) the occurrence of an event
specifically permitted under Section 5.07 or otherwise expressly consented in
writing by Whitney, are expressly deemed not to constitute such a material
adverse change.
(c) Accountants' Letters. Whitney shall have received "comfort"
letters from Ernst & Young, independent public accountants for Citizens, 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 Bracewell
& Patterson, L.L.P. special counsel to Citizens and Lippman, Mahfouz & Martin,
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 Citizens'
consolidated group and governmental officials.
(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 Whitney's Bank.
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(f) Pooling of Interest. Prior to the expiration of the Review
Period and within three (3) days prior to the Closing Date, Ernst & Young 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 Ernst & Young, 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 Merger Agreements 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 Citizens or the Bank or who owns 5% or more of
the Citizens 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 Citizens' 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 Citizens' 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 $35.50, 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 CITIZENS. The obligations of Citizens 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, Acquisition and Whitney's 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, Acquisition and Whitney's Bank shall have
in all material respects performed all obligations and complied with all
covenants required by this Agreement and the Merger Agreements to be performed
or complied with by it at or prior to the Closing. In addition, each of
Whitney, Acquisition and Whitney's Bank shall have delivered to Citizens and the
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. Citizens shall have received from Milling,
Benson, Woodward, Hillyer, Pierson & Miller, counsel for Whitney, Acquisition
and Whitney's Bank, an opinion, dated as of the Closing Date, customary in scope
and in form and substance satisfactory to Citizens. 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. Citizens shall have received
letters from The Robinson-Humphrey Company, Inc. dated the date of the mailing
of the Proxy Statement to shareholders of Citizens and dated the date of the
meeting of the shareholders of Citizens, in each case in form and substance
satisfactory to Citizens, confirming such financial advisor's prior opinion to
the Board of Directors of Citizens to the effect that the consideration to be
paid in the Merger is fair to its shareholders from a financial point of view.
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(d) Tax Opinion. Citizens shall have received the opinion of
Bracewell & Patterson, L.L.P. as to certain tax aspects of the transactions
contemplated by this Agreement and the Merger Agreements, in form and substance
satisfactory to Citizens.
(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 $25.50.
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 Merger Agreements 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
Citizens:
(a) Mutual Consent. By the mutual consent of the Boards of
Directors of Whitney and Citizens.
(b) Breach. By the Board of Directors of either Whitney or Citizens
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
Citizens if (i) all conditions to Closing required by Section 6 hereof have not
been met by or waived by Whitney or Citizens by June 30, 1996, or (ii) any such
condition cannot be met by June 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 June 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
Citizens 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
Citizens Common Stock that would preclude pooling of interests accounting for
the Mergers.
(e) Shareholder Vote. By Whitney or Acquisition if this Agreement
or the Company Merger fails to receive the requisite vote at any meeting of
Citizens shareholders called for the purpose of voting thereon.
(f) Citizens Recommendation. By Whitney or Acquisition if the Board
of Directors of Citizens (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
Citizens (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
Citizens' consolidated group; or (iii) any acquisition, by any person or group,
of the beneficial
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ownership of 15% or more of any class of Citizens 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 Citizens in the event Citizens
receives a written offer with respect to an Acquisition Transaction and the
Board of Directors of Citizens determines in good faith, after consultation with
its financial advisors and counsel, that such Acquisition Transaction is more
favorable to Citizens' 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 Merger Agreements shall also terminate, and this
Agreement and the Merger Agreements shall be void and of no effect, and there
shall be no liability by reason of this Agreement or the Merger Agreements, 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 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 Citizens shall pay or cause to be paid to Whitney upon demand a fee of
$3,000,000 (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 Merger Agreements 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 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, Acquisition or Whitney's Bank:
Whitney Holding Corporation
Attention: Mr. William Marks
228 St. Charles Avenue
New Orleans, Louisiana 70130
With copies to:
Whitney National Bank
Legal Department
Attention: Joseph S. Schwertz, Jr.
228 St. Charles Avenue
New Orleans, Louisiana 70130
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If to Citizens or Bank:
First Citizens BancStock, Inc.
Attention: Milford L. Blum, Jr.
1100 Brashear Avenue
Morgan City, Louisiana 70380
With copies to:
Alfred S. Lippman, Esq.
Lippman, Mahfouz & Martin
Inglewood Mall
1025 Victor II Blvd.
Morgan City, Louisiana 70381
W. Cleland Dade, Esq.
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
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 Merger Agreements 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 Merger Agreements,
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 Merger
Agreements, 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.
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 assignment by operation of law. Nothing in
this Agreement or the Merger Agreements 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 Merger Agreements, except
as expressly provided for herein and therein.
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8.09. AMENDMENT. The parties may, by mutual agreement of their
respective Boards of Directors, amend, modify or supplement this Agreement, the
Merger Agreements, 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 Merger Agreements 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 of the Mergers. 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.
* * *
This Amended and Restated Agreement is executed on December 15, 1995
but shall be effective for all purposes as of September 28, 1995, the date of
the Agreement, as if executed and delivered on such date, unless the context
clearly requires otherwise.
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IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Agreement on the date first above written.
WHITNEY HOLDING CORPORATION
BY: /s/ William L. Marks
---------------------------------
William L. Marks
ITS: Chairman and CEO
WHITNEY ACQUISITION CORPORATION
BY: /s/ William L. Marks
---------------------------------
William L. Marks
ITS: Chairman and CEO
WHITNEY NATIONAL BANK
BY: /s/ William L. Marks
---------------------------------
William L. Marks
ITS: Chairman and CEO
FIRST CITIZENS BANCSTOCK, INC.
BY: /s/ Milford L. Blum, Jr.
---------------------------------
Milford L. Blum, Jr.
ITS: President and CEO
FIRST NATIONAL BANK IN ST. MARY PARISH
BY: /s/ Milford L. Blum, Jr.
---------------------------------
Milford L. Blum, Jr.
ITS: President and CEO
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<PAGE>
EXHIBIT 1.01(a)
TO
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
JOINT AGREEMENT OF MERGER
OF
FIRST CITIZENS BANCSTOCK, INC.
AND
WHITNEY ACQUISITION CORPORATION
THIS JOINT AGREEMENT OF MERGER (this "Joint Agreement") is dated as of the
______ day of ______________________, 199__, between First Citizens BancStock,
Inc., a Louisiana corporation ("Holding"), and Whitney Acquisition Corporation,
a Louisiana corporation ("Acquisition"); and is entered into pursuant to the
provisions of Sections 111, et seq. of the Louisiana Business Corporation Law
("LBCL").
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of Holding and Acquisition (collectively, the
"Merging Corporations") deem it advisable that Acquisition be merged with and
into Holding (the "Company Merger"), as provided in this Joint Agreement and in
the Amended and Restated Agreement and Plan of Merger dated __________________,
1995 (the "Plan") among Whitney National Bank (which is an affiliate of
Acquisition), Whitney Holding Corporation, a Louisiana corporation and the sole
shareholder of Acquisition ("Whitney"), First National Bank in St. Mary Parish
("Bank") (which is a wholly-owned subsidiary of Holding), Holding and
Acquisition, which sets forth, among other things, certain representations,
warranties, covenants and conditions relating to the Company Merger; and
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of the Merging Corporations wish to enter into
this Joint Agreement and submit it to the shareholders of Holding and
Acquisition for approval in the manner required by law and, subject to such
approval and to such other approvals as may be required, to effect the Company
Merger, all in accordance with the provisions of this Joint Agreement.
NOW THEREFORE, in consideration of the mutual benefits to be derived from
this Joint Agreement and the Company Merger, the parties hereto agree as
follows:
1. THE MERGER
In accordance with the applicable provisions of the LBCL, Acquisition shall
be merged with and into Holding; the separate existence of Acquisition shall
cease; and Holding shall be the corporation surviving the Company Merger, with
the result that Holding shall become a wholly-owned subsidiary of Whitney.
2. EFFECTIVENESS OF THE COMPANY MERGER
2.1. EFFECTIVE TIME OF THE COMPANY MERGER. The Company Merger shall become
effective at [12:01 p.m.] on the date on which this Joint Agreement, having been
executed and acknowledged in the manner required by law, is filed in the office
of the Secretary of State of Louisiana (the "Effective Time").
2.2. EFFECT OF THE COMPANY MERGER. At the Effective Time, (i) the separate
existence of Acquisition shall cease and Acquisition shall be merged with and
into Holding; (ii) Holding shall continue to possess all of the rights,
privileges and franchises possessed by it and shall, at the Effective Time,
become vested with and possess all rights, privileges and franchises possessed
by Acquisition; (iii) Holding shall be responsible for all of the liabilities
and obligations of Acquisition in the same manner as if Holding had itself
incurred such liabilities or obligations, and the
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Company Merger shall not affect or impair the rights of the creditors or of any
persons dealing with the Merging Corporations; and (iv) the Company Merger
shall, from and after the Effective Time, have all the effects provided by
applicable Louisiana law.
2.3. ARTICLES OF INCORPORATION.
(a) The Articles of Incorporation of Holding, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective
time so that Articles Two through Five thereof shall read in their entirety as
set forth on Schedule 2.3 hereto and Articles Six through Twenty shall be
deleted, and as so amended, such Articles of Incorporation shall be the Articles
of Incorporation of Holding as the surviving corporation in the Company Merger
until thereafter changed or amended as provided therein or by applicable law.
(b) The Bylaws of Acquisition as in effect at the Effective Time
shall be the Bylaws of Holding as the surviving corporation in the Company
Merger until thereafter changed or amended as provided therein or by applicable
law.
2.4. DIRECTORS AND OFFICERS. The directors and officers of Acquisition at
the Effective Time shall be the directors and officers of Holding as the
surviving corporation in the Company Merger until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
2.5. ADDITIONAL ACTIONS. If, at any time after the Effective Time, Holding
shall consider or be advised that any further assignments or assurances in law
or any other acts are necessary or desirable (a) to vest, perfect or confirm, of
record or otherwise, in Holding, title to or the possession of any property or
right of Acquisition acquired or to be acquired by reason of, or as a result of,
the Company Merger, or (b) otherwise to carry out the purposes of this Joint
Agreement, Acquisition and its proper officers and directors shall be deemed to
have granted to Holding an irrevocable power of attorney to execute and deliver
all such proper deeds, assignments and assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and possession of such
property or rights in Holding and otherwise to carry out the purposes of this
Joint Agreement; and the proper officers and directors of Holding are fully
authorized in the name of Acquisition to take any and all such action.
3. METHOD OF CARRYING COMPANY MERGER INTO EFFECT
This Joint Agreement shall be submitted to the shareholders of Holding and
Acquisition for their approval. If such approval is given, then the fact of such
approval shall be certified hereon by the Secretaries of Holding and
Acquisition, respectively. This Joint Agreement, so approved and certified,
shall, as soon as is practicable, be signed and acknowledged by the President or
Vice President of each of the Merging Corporations. As soon as may be
practicable thereafter and after the approval of all applicable regulatory
authorities and the expiration of all applicable waiting periods, this Joint
Agreement, so certified, signed and acknowledged, shall be delivered to the
Secretary of State of Louisiana for filing in the manner required by law and
shall be effective at the Effective Time; and thereafter, as soon as
practicable, a copy of the Certificate of Merger issued by the Secretary of
State of Louisiana, and certified by him to be a true copy, shall be filed for
record in the Office of the Recorder of Mortgages of the parishes in which the
Merging Corporations have their respective registered offices and in the Office
of the Recorder of Conveyances of each parish in which Acquisition has immovable
property.
4. CONVERSION OF SHARES
4.1. CONVERSION. Subject to the provisions of this Section 4, 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"), and the shares of Acquisition common stock,
no par value ("Acquisition Common Stock"), shall be converted as follows:
(a) Exchange Ratio. Except for (i) 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 131 of the LBCL
("Dissenters' Shares") and (ii) shares of Holding Common Stock held by Holding
as treasury shares (which shall by reason of the Company Merger be cancelled),
and subject to the provisions of Section 4.1(c) relating
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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, no par value ("Whitney Common Stock"), that is equal to the quotient (the
"Exchange Ratio") obtained by dividing the Maximum Deliverable Amount (as
hereinafter defined) by the total number of issued and outstanding shares (not
treasury shares) of Holding Common Stock at the Effective Time.
(i) Maximum Deliverable Amount. The term "Maximum Deliverable
Amount" means the quotient obtained by dividing the Closing Amount (as defined
below) by the Average Market Price (as defined below).
(ii) 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 $25.50, the Average Market Price
for purposes of this Section 2.01(a) shall be $25.50, and if the Average Market
Price as calculated above is greater than $35.50, the Average Market Price for
purposes of this Section 4.1(a) shall be $35.50.
(iii) Closing Amount. The term "Closing Amount" means the
Aggregate Purchase Price (as defined below) minus the number of shares of
Holding Common Stock under option at the Effective Time (the "Closing Option
Shares") multiplied by the difference of the quotient of the Aggregate Purchase
Price plus the Closing Option Shares multiplied by the weighted average strike
price per share of the Closing Option Shares divided by the number of shares of
Holding Common Stock outstanding at the Effective Time plus the Closing Option
Shares and the weighted average strike price per share of the Closing Option
Shares. The Closing Amount is further defined below:
The Closing Amount = Aggregate Purchase Price - (Closing Option
Shares * (((Aggregate Purchase Price + Closing Option Shares * Average Option
Strike Price Per Share)/(Holding Common Stock Outstanding + Closing Option
Shares)) -Average Option Strike Price Per Share))
(iv) Aggregate Purchase Price. The term "Aggregate Purchase
Price" is defined as $67,000,000 if the Average Market Price is $25.50 or above.
If the Average Market Price drops below $25.50, the Aggregate Purchase Price
will be equal to the Average Market Price multiplied by 2,627,451. In no event
shall the value of the shares of Whitney Common Stock to be issued at the
Closing exceed $67,000,000.
(b) Options. Each option under Holding's Option Plans (as defined
in the Plan) that is outstanding at the Effective Time shall be converted into
an option to acquire shares of Whitney Common Stock in the manner set forth in
Section 5.22 of the Plan.
(c) Fractional Shares. In lieu of the issuance of fractional shares
of Whitney Common Stock, each shareholder of Holding, upon surrender of his or
her certificate that immediately prior to the Effective Time represented Holding
Common Stock, other than Dissenters' Shares and shares of Holding Common Stock
held by Holding as treasury shares (which shall by reason of the Company Merger
be cancelled), 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 at the Effective Time shall be such fraction
multiplied by the Average Market Price.
(d) 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, other than Dissenters' Shares and shares of
Holding Common Stock held by Holding as treasury shares (which shall by reason
of the Company Merger be cancelled), upon surrender thereof to the exchange
agent selected by Whitney (the "Exchange Agent"), together with duly executed
transmittal materials provided pursuant to Section 4.1(f) 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 Common Stock were
converted. Until so surrendered, each outstanding Holding stock certificate
shall be deemed for all purposes, other than
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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 shall have been converted. Whitney may, at its option, refuse to
pay any dividend or other distribution to holders of unsurrendered Holding stock
certificates until surrendered; provided, however, that upon the surrender and
exchange of any Holding 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 of
Holding Common Stock theretofore represented by such certificates shall have
been exchanged.
(e) 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 pursuant to this Section 4.
(f) 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, excluding the holders, if any, of Dissenters'
Shares as to which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited under Section 131 of the LBCL, transmittal materials for use
in exchanging certificates of Holding Common Stock for certificates of Whitney
Common Stock.
(g) 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 Section 4.1 and shall only be
entitled to receive payment of the fair cash value of such shares in accordance
with the provisions of Section 131 of LBCL unless and until such holders fail to
perfect or effectively withdraw or lose their rights to appraisal and payment
under the LBCL. If, after the Effective Time, any such holder fails to perfect
or effectively withdraws or loses such right, such shares of Holding 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 Section 4.1,
without interest thereon.
(h) Acquisition Common Stock. Each issued and outstanding share of
Acquisition Common Stock shall be converted into and become one fully paid and
non-assessable share of common stock, no par value, of Citizens as the surviving
corporation in the Company Merger.
4.2. CLOSING TRANSFER BOOKS. All shares of Whitney Common Stock issued, and
any fractional share payments paid upon surrender for exchange of certificates
representing shares of Holding Common Stock in accordance with this Section 4
shall be deemed to have been issued in full satisfaction of all rights
pertaining to the shares of Holding Common Stock theretofore represented by such
certificates and there shall be no further registration of transfers on the
stock transfer books of Holding, as the surviving corporation in the Company
Merger, of the shares of Holding Common Stock that were outstanding immediately
prior to the Effective Time.
5. MISCELLANEOUS
5.1. TERMINATION. Prior to the Effective Time, this Joint Agreement may be
terminated, and the Company Merger abandoned, as set forth in the Plan.
5.2. HEADINGS. The descriptive headings of the sections of this Joint
Agreement are inserted for convenience only and do not constitute a part hereof
for any other purpose.
5.3. MODIFICATIONS, AMENDMENTS AND WAIVERS. At any time prior to the
Effective Time (notwithstanding any shareholder approval that may have already
been given), the parties hereto may, to the extent permitted by and as provided
in the Plan, modify, amend or supplement any term or provision of this Joint
Agreement.
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5.4. GOVERNING LAW. This Joint Agreement shall be governed by the laws of
the State of Louisiana (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters, including, but not limited
to, matters of validity, construction, effect and performance.
IN WITNESS WHEREOF, this Joint Agreement has been executed by a majority of
the respective Directors of each of the Merging Corporations, as of the day and
year first above written.
[Signature lines omitted]
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SCHEDULE 2.3
TO
JOINT AGREEMENT OF MERGER
Effective as of the Effective Time, Articles Two through Five of the
Articles of Incorporation of Citizens, as the surviving corporation in the
Company Merger, shall read in their entirety as follows:
ARTICLE TWO
The objects and purposes of this corporation are declared to be to engage
in any lawful activity for which corporations may be formed under the Louisiana
Business Corporation Law (the "LBCL").
ARTICLE THREE
The aggregate number of shares that this corporation shall have authority
to issue is 10,000, all of the same class and series, each without designated
par value, and all designated Common Stock. The whole voting power of the
corporation shall be vested in the Common Stock, and the holders thereof shall
be entitled to one vote for each share so held. Cash, property, or share
dividends, and shares issuable to shareholders in connection with a
reclassification of stock, that are not claimed by the shareholders entitled
thereto within a reasonable time (not less than one year in any event) after the
dividend became payable or the shares became issuable, despite reasonable
efforts by the corporation to pay the dividend or deliver the certificates for
the shares to such shareholders within such time, shall, at the expiration of
such time, revert in full ownership to the corporation, and the corporation's
obligation to pay such dividend or issue such shares, as the case may be, shall
thereupon cease; provided that the Board of Directors may, at any time, for any
reason satisfactory to it, but need not, authorize (a) payment of the amount of
any cash or property dividend or (b) issuance of any shares, ownership of which
has reverted to the corporation pursuant to this provision, to the entity that
would be entitled thereto had such revision not occurred.
ARTICLE FOUR
All powers of this corporation shall be vested in, and the business and
affairs of the corporation shall be managed by, a Board of Directors composed of
not less than three persons, the exact number (not fewer than three) to be
determined from time to time by the bylaws or by the directors or shareholders;
provided, however, that when all of the shares of capital stock of this
corporation are held of record by fewer than three persons, there need be only
as many directors as there are shareholders of record. The directors shall have
no power, by amendment of the bylaws or otherwise, to reduce the number of
directors constituting the entire Board of Directors in such a way as to shorten
the term of an incumbent director. Any director absent from a meeting of the
Board of Directors or any committee thereof may be represented by any other
director or shareholder, who may cast the vote of the absent director according
to the written instructions, general or specific, of the absent director. Either
the President or the Secretary of the corporation may call special meetings of
the Board of Directors at any time from time to time. Reasonable notice of
meetings of the Board of Directors shall be given. The members of the Board of
Directors may participate in and hold meetings of the Board by means of
conference telephone or similar communication equipment, provided that all
persons participating in the meeting can hear and communicate with each other.
ARTICLE FIVE
1. The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including any action by or in the
right of this corporation, by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
business, foreign or non-profit corporation, partnership, joint venture or other
enterprise against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; however, in case of
actions by or in the right of the corporation:
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(a) As to persons other than directors and officers, the aforesaid
indemnity shall be limited to expenses, including attorneys' fees and amounts
paid in settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the action to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such action,
but the board of directors is authorized in its discretion to pay or provide
additional indemnity in particular cases; and
(b) As to directors and officers (including those serving as such for
other entities at the request of the corporation) the aforesaid indemnity shall
be limited as provided in Subparagraph (a) only if it would permit
indemnification of an individual for the results of such individual's (i)
willful or intentional misconduct, (ii) breach of duty of loyalty to the
corporation or to the entity otherwise served by the individual, or (iii)
engaging in a transaction from which the individual derived an improper personal
benefit; and
(c) No indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
for willful or intentional misconduct in the performance of his duty to the
corporation unless and only to the extent that the court shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, he is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
2. To the extent that a director, officer, employee or agent has been
successful on the merits or otherwise in defense of any such action, suit or
proceeding, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses, including attorneys' fees, actually and reasonably
incurred by him in connection therewith.
3. Any indemnification under Paragraph l of this Article (excluding an
advance of expenses as provided in Paragraph 4), unless ordered by the court
shall be made by the corporation only as authorized in a specific case upon a
determination that the applicable standard of conduct has been met. Such
determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding;
or
(b) If such a quorum is not obtainable and the board of directors so
directs, by independent legal counsel; or
(c) By the shareholders.
4. Subsequent to the institution of such an action, suit or proceeding;
(a) As to directors (including officers who are also directors),
expenses actually and reasonably incurred in defending such an action, suit or
proceeding shall be paid by the corporation in advance of the final disposition
thereof, upon receipt of an undertaking by or on behalf of the director or
former director incurring such expenses, to repay such amount if it shall be
finally determined by a court of competent jurisdiction that he is not entitled
to be indemnified by the corporation, as authorized in this Article; and
(b) As to persons other than directors, expenses actually and
reasonably incurred in defending such an action, suit or proceeding may be paid
by the corporation in advance of the final disposition thereof, if authorized by
the board of directors, upon receipt of an undertaking by or on behalf of such
person to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation, as authorized in this Article.
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5. The indemnification and advancement of expenses provided by or granted
pursuant to this Article are subject to any validly applicable limitations of
state or federal law, but they shall not be deemed exclusive of any other rights
to which the person indemnified or obtaining advancement of expenses is entitled
under any applicable law, by-law, agreement, authorization of shareholders or
directors, regardless of whether directors authorizing such indemnification are
beneficiaries thereof, or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs and legal representative;
however, no such other indemnification measure shall permit indemnification of
any person for the results of such person's willful or intentional misconduct.
6. The corporation shall have full power to procure or maintain insurance
or other similar arrangement, all as provided in Sections 83(F) and (G) of the
LBCL.
7. An officer or director of the Company shall not be personally liable
for monetary damages to the Company or its shareholders for the breach of his
fiduciary duty as an officer or director, except as regards (i) any breach of
such director's or officer's duty of loyalty to the Company or its shareholders;
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) liability under Section 92(D) of the LBCL;
or (iv) any transaction from which the officer or director derived an improper
personal benefit.
No amendment or repeal of this Section 7 shall adversely affect any
elimination or limitation of liability of an officer or director under this
Section with respect to conduct occurring prior to the time of such amendment or
repeal.
A-37
<PAGE>
EXHIBIT 1.01(c)
TO
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AGREEMENT OF MERGER
OF
FIRST NATIONAL BANK IN ST. MARY PARISH
INTO
WHITNEY NATIONAL BANK
THIS AGREEMENT OF MERGER (this "Agreement") is made and entered into as of
this ______ day of ______________________, 1995, between First National Bank in
St. Mary Parish, a national banking association domiciled at Morgan, City,
Louisiana ("Bank"), and Whitney National Bank, a national banking association
domiciled at New Orleans, Louisiana ("WNB" or the "Receiving Association").
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of Bank and WNB (collectively called the "Merging
Associations") deem it advisable that Bank be merged with and into WNB (the
"Bank Merger"), as provided in this Agreement and in the Agreement and Plan of
Merger dated September 28, 1995 (the "Plan"), among the Merging Associations,
Whitney Holding Corporation, a Louisiana corporation ("Whitney") of which WNB is
a wholly-owned subsidiary, Whitney Acquisition Corporation, a wholly-owned
subsidiary of Whitney, and First Citizens BancStock, Inc., a Louisiana
corporation ("Holding") of which Bank is wholly-owned subsidiary, which sets
forth, among other things, certain representations, warranties, covenants and
conditions relating to the Bank 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 Comptroller of the Currency of the United States
(the "Comptroller") being duly given and to such other approvals as may be
required by law, to effect the Bank 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 Bank Merger, the parties hereto agree as follows:
1. THE BANK MERGER. At the Effective Time (as defined in Section 2
hereof), Bank and WNB shall be merged with and into WNB under the Articles of
Association of WNB, as amended, existing Charter No. 14977, pursuant to the
provisions of, and with the effect provided in, 12 U.S.C. Section 215a and La.
R.S. 6:351, et seq. At the Effective Time, WNB, the Receiving Association, shall
continue to be a national banking association, and its business shall continue
to be conducted at its main office in New Orleans, Louisiana, and at its legally
established branches (including, without limitation, the legally established
offices from which Bank conducted business immediately prior to the Effective
Time). The Articles of Association of WNB shall not be altered or amended by
virtue of the Bank Merger, and the incumbency of the directors and officers of
WNB shall not be affected by the Bank Merger nor shall any person succeed to
such positions by virtue of the Bank Merger.
2. EFFECTIVE TIME. The Bank Merger shall become effective at the time
specified or permitted by the Comptroller in a certificate or other written
record issued by the Office of the Comptroller of the Currency (the "Effective
Time").
A-38
<PAGE>
3. CANCELLATION OF CAPITAL STOCK OF BANK. At the Effective Time, by
virtue of the Bank Merger, all shares of the capital stock of Bank, other than
any such shares as to which dissenters' rights shall exist at the Effective
Time, shall be cancelled.
4. CAPITAL STOCK OF THE RECEIVING ASSOCIATION. The shares of the capital
stock of WNB, 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 WNB shall be issued as a result of
the Bank Merger. Therefore, at the Effective Time, the amount of capital stock
of WNB, 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 WNB, the Receiving Association, and such Receiving
Association shall be deemed to be the same corporation as each bank or banking
association participating in the Bank 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 Bank Merger without any
deed or other transfer. The Receiving Association, upon the Bank 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 the Merging Associations at the time of the Bank Merger, subject to
the conditions specified in 12 U.S.C. Section 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 Bank 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 Comptroller 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. 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]
A-39
<PAGE>
EXHIBIT 6.02(g)
TO
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
___________________________, 19__
Whitney Holding Corporation
228 St. Charles Avenue
New Orleans, Louisiana 70112
Gentlemen:
This letter agreement is given in connection with the proposed merger (the
"Merger") of First Citizens BancStock, Inc. ("Citizens") and Whitney Acquisition
Corporation, a wholly-owned subsidiary of Whitney Holding Corporation ("WHC").
The undersigned acknowledges that, [as a member of the Board of Directors or an
executive officer] [as the beneficial owner of 10% or more of the outstanding
common stock] of Citizens, I may be deemed to be an "affiliate" of Citizens as
that term is defined in the Securities Act of 1933 and the rules and regulations
thereunder.
I understand that resales or other dispositions of the WHC common stock, no
par value per share (the "WHC Common Stock"), to be acquired by me as a result
of the Merger, may be governed by Rules 144 and 145 under the Securities Act of
1933.
I further understand that it is a condition to the Merger that it be
accounted for as a "pooling of interests" within the meaning of Accounting
Principles Board Opinion No. 16 and that resales or other dispositions of the
WHC Common Stock by me may jeopardize the ability of WHC to account for the
Merger as a pooling of interests.
On the basis of the foregoing, and in consideration of the delivery to me
of the WHC Common Stock into which my Citizens common stock will be converted, I
agree that I will not, directly or indirectly, sell, transfer, pledge or
otherwise alienate or encumber any of the WHC Common Stock to be held by me
either (i) in violation of the Securities Act of 1933 or the rules and
regulations thereunder or (ii) until such time as financial results covering at
least 30 days of post-Merger combined operations of WHC have been published and
I have been so notified by WHC.
I understand that I have been asked to provide this letter agreement
because I may be deemed to be an "affiliate" of Citizens; however, by delivery
of this letter, I do not acknowledge that I am an "affiliate," which status I
hereby disclaim.
Very truly yours,
A-40
<PAGE>
APPENDIX B
FAIRNESS OPINION OF THE ROBINSON-HUMPHREY COMPANY, INC.
<PAGE>
[Robinson-Humphrey Letterhead]
January 23, 1996
Board of Directors
First Citizens Bancstock, Inc.
1100 Brashear Avenue
Morgan City, Louisiana 70380
Gentlemen:
In connection with the proposed acquisition of First Citizens Bancstock,
Inc. ("FIR") by Whitney Holding Corporation. ("WTNY") (the "Merger"), you have
asked us to render an opinion as to whether the financial terms of the Merger,
as provided in the Agreement and Plan of Merger dated as of September 28, 1995,
as amended by the Amended and Restated Agreement and Plan of Merger dated
December 15, 1995 (the "Merger Agreement"), among FIR, First National Bank in
St. Mary Parish, WTNY, Whitney Acquisition Corporaiton and Whitney National
Bank, are fair, from a financial point of view, to the stockholders of FIR.
Under the terms of the Merger, holders of all outstanding shares of FIR stock
will receive consideration equal to $49.95 of WTNY shares for each FIR share
held, provided the Average Market Price of the Common Stock of WTNY is within
the range specified in the Merger Agreement ($25.50 per share-$35.50 per share).
Our firm, as part of its investment banking business, is frequently
involved in the valuation of securities as related to public underwritings,
private placements, mergers, acquisitions, recapitalizations and other purposes.
In connection with our study for rendering this opinion, we have reviewed
the Merger Agreement, FIR's financial results for fiscal years 1990 through 1995
and certain documents and information we deem relevant to our analysis. We have
also held discussions with senior management of FIR for the purpose of reviewing
the historical and current operations of, and outlook for FIR, industry trends,
the terms of the proposed Merger, and related matters.
We have also studied published financial data concerning certain other
publicly traded banks which we deem comparable to FIR as well as certain
financial data relating to acquisitions of other banks that we deem relevant or
comparable. In addition, we have reviewed other published information, performed
certain financial analyses and considered other factors and information which we
deem relevant.
B-1
<PAGE>
Board of Directors
First Citizens Bancstock, Inc.
January 23, 1996
Page 2
We have reviewed similar information and data relating to WTNY including
its historical financial statements, from fiscal 1990 through 1995.
In rendering this opinion, we have relied upon the accuracy of the Merger
Agreement, the financial information listed above, and other information
furnished to us by FIR and WTNY. We have not separately verified this
information nor have we made an independent evaluation of any of the assets or
liabilities of FIR and WTNY.
Based upon the foregoing and upon current market and economic conditions,
we are of the opinion that, from a financial point of view, the terms of the
Merger as provided in the Merger Agreement are fair to the stockholders of FIR.
Very truly yours,
/S/
THE ROBINSON-HUMPHREY COMPANY, INC.
B-2
<PAGE>
APPENDIX C
SECTION 131 OF THE LOUISIANA BUSINESS CORPORATION LAW
<PAGE>
SECTION 131 OF THE LOUISIANA BUSINESS CORPORATION LAW
A. Except as provided in subsection B of this section, if a corporation
has, by vote of its shareholders, authorized a sale, lease or exchange of all of
its assets, or has, by vote of its shareholders, become a party to a merger or
consolidation, then, unless such authorization or action shall have been given
or approved by at least eighty per cent of the total voting power, a shareholder
who voted against such corporation action shall have the right to dissent. If a
corporation has become a party to a merger pursuant to R.S. 12:112(H), the
shareholders of any subsidiaries party to the merger shall have the right to
dissent without regard to the proportion of the voting power which approved the
merger and despite the fact that the merger was not approved by vote of the
shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist in the
case of:
(1) A sale pursuant to an order of a court having jurisdiction in the
premises.
(2) A sale for cash on terms requiring distribution of all or
substantially all of the net proceeds to the shareholders in accordance with
their respective interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock which, at the record
date fixed to determine shareholders entitled to receive notice of and to vote
at the meeting of shareholders at which a merger or consolidation was acted on,
were listed on a national securities exchange, or were designated as a national
market system security on an inter-dealer quotation system by the National
Association of Securities Dealers, unless the articles of the corporation
issuing such stock provide otherwise or the shares of such shareholders were not
converted by the merger or consolidation solely into shares of the surviving or
new corporation.
C. Except as provided in the last sentence of this subsection, any
shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than eighty
percent of the total voting power, and the merger, consolidation or sale, lease
or exchange of assets authorized thereby be effected, the corporation shall
promptly thereafter give written notice thereof, by registered mail, to each
shareholder who filed such written objection to, and voted his shares against,
such action, at such shareholder's last address on the corporation's records.
Each such shareholder may, within twenty days after the mailing of such notice
to him, but not thereafter, file with the corporation a demand in writing for
the fair cash value of his shares as of the day before such vote was taken;
provided that he state in such demand the value demanded, and a post office
address to which the reply of the corporation may be sent, and at the same time
deposit in escrow in a chartered bank or trust company located in the parish of
the registered office of the corporation, the certificates representing his
shares, duly endorsed and transferred to the corporation upon the sole condition
that said certificates shall be delivered to the corporation upon payment of the
value of the shares determined in accordance with the provisions of this
section. With his demand the shareholder shall deliver to the corporation, the
written acknowledgment of such bank or trust company that it so holds his
certificates of stock. Unless the objection, demand and acknowledgment aforesaid
be made and delivered by the shareholder within the period above limited, he
shall conclusively be presumed to have acquiesced in the corporate action
proposed or taken. In the case of a merger pursuant to R.S. 12:112(H), the
dissenting shareholder need not file an objection with the corporation nor vote
against the merger, but need only file with the corporation, within twenty days
after a copy of the merger certificate was mailed to him, a demand in writing
for the cash value of his shares as of the day before the certificate was filed
with the secretary of state, state in such demand the value demanded and a post
office address to which the corporation's reply may be sent, deposit the
certificates representing his shares in escrow as hereinabove provided, and
deliver to the corporation with his demand the acknowledgment of the escrow bank
or trust company as hereinabove prescribed.
D. If the corporation does not agree to the value so stated and demanded,
or does not agree that a payment is due, it shall, within twenty days after
receipt of such demand and acknowledgment, notify in writing the shareholder, at
the designated post office address, of its disagreement, and shall state in such
notice the value it will agree to pay if any payment should be held to be due;
otherwise it shall be liable for, and shall pay to the dissatisfied shareholder,
the value demanded by him for his shares.
C-1
<PAGE>
E. In case of disagreement as to such fair cash value, or as to whether
any payment is due, after compliance by the parties with the provisions of
subsections C and D of this section, the dissatisfied shareholder, within sixty
days after receipt of notice in writing of the corporation's disagreement, but
not thereafter, may file suit against the corporation, or the merged or
consolidated corporation, as the case may be, in the district court of the
parish in which the corporation or the merged or consolidated corporation, as
the case may be, has its registered office, praying the court to fix and decree
the fair cash value of the dissatisfied shareholder's shares as of the day
before such corporate action complained of was taken, and the court shall, on
such evidence as may be adduced in relation thereto, determine summarily whether
any payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may, within such sixty-
day period but not thereafter, intervene as a plaintiff in such suit filed by
another shareholder, and recover therein judgment against the corporation for
the fair cash value of his shares. No order or decree shall be made by the court
staying the proposed corporate action, and any such corporate action may be
carried to completion notwithstanding any such suit. Failure of the shareholder
to bring suit, or to intervene in such a suit, within sixty days after receipt
of notice of disagreement by the corporation shall conclusively bind the
shareholder (1) by the corporation's statement that no payment is due, or (2) if
the corporation does not contend that no payment is due, to accept the value of
his shares as fixed by the corporation in its notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become liable for
the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation, as the
case may be, shall, in its notice of disagreement, have offered to pay the
dissatisfied shareholder on demand an amount in cash deemed by it to be the fair
cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as the
case may be; otherwise the costs of the proceeding shall be taxed against such
shareholder.
H. Upon filing a demand for the value of his shares, the shareholder
shall cease to have any of the rights of a shareholder except the rights
accorded by this section. Such a demand may be withdrawn by the shareholder at
any time before the corporation gives notice of disagreement, as provided in
subsection D of this section. After such notice of disagreement is given,
withdrawal of a notice of election shall require the written consent of the
corporation. If a notice of election is withdrawn, or the proposed corporate
action is abandoned or rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares, his share certificates shall be
returned to him (and, on his request, new certificates shall be issued to him in
exchange for the old ones endorsed to the corporation), and he shall be
reinstated to all his rights as a shareholder as of the filing of his demand for
value, 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.
C-2
<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 Amended and Restated Agreement and Plan of Merger
dated December 15, 1995 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.
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 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).
10.10 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).
10.11 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).
10.12 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
II-2
<PAGE>
Report on form 10-Q for the quarter ended June 30,
1992 and incorporated herein by reference).
10.13 Directors' Compensation Plan (filed with the
Commission as part of Whitney's Proxy Statement dated
March 24, 1994 and incorporated herein by reference).
10.14 Letter Agreement dated December 14, 1995 among
Whitney, Acquisition, Whitney Bank, Citizens and FNB.
21 Subsidiaries
23.1 Consent of Arthur Andersen LLP dated January 19,
1996*
23.2 Consent of Ernst & Young LLP dated January 18, 1996*
23.3 Consent of Milling, Benson, Woodward, Hillyer,
Pierson & Miller, included in Exhibit 5.
24 Powers of Attorney of directors of Whitney Holding
Corporation (contained on page S-1 of the
Registration Statement).
99 Form of Proxy of First Citizens BancStock, Inc.*
- -------------
*Filed with this Amendment. All other listed exhibits have been filed
previously.
(b) Financial Statement Schedules
None
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.
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<PAGE>
(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. 1 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 22nd day of January, 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. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ William L. Marks Chairman of the Board January 22, 1996
- ---------------------------------- and Chief Executive Officer
William L. Marks
/s/ R. King Milling Director and President January 22, 1996
- ----------------------------------
R. King Milling
* Executive Vice President and January 22, 1996
- ---------------------------------- Chief Financial Officer
Edward B. Grimball (Principal Financial Officer
and Principal Accounting Officer)
* Director January 22, 1996
- ----------------------------------
Harry J. Blumenthal, Jr.
* Director January 22, 1996
- ----------------------------------
Joel B. Bullard, Jr.
* Director January 22, 1996
- ----------------------------------
James M. Cain
* Director January 22, 1996
- ----------------------------------
Angus R. Cooper, II
* Director January 22, 1996
- ----------------------------------
Robert H. Crosby, Jr.
</TABLE>
S-1
<PAGE>
<TABLE>
<S> <C> <C>
* Director January 22, 1996
- ----------------------------------
Richard B. Crowell
* Director January 22, 1996
- ----------------------------------
William A. Hines
* Director January 22, 1996
- ----------------------------------
Robert E. Howson
* Director January 22, 1996
- ----------------------------------
John J. Kelly
* Director January 22, 1996
- ----------------------------------
E. James Kock, Jr.
* Director January 22, 1996
- ----------------------------------
John G. Phillips
* Director January 22, 1996
- ----------------------------------
John K. Roberts, Jr.
Director January , 1996
- ----------------------------------
W. P. Snyder III
* Director January 22, 1996
- ----------------------------------
Warren K. Watters
*By: /s/ R. King Milling
- ----------------------------------
R. King Milling
Agent and Attorney-in-Fact
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
<C> <S> <C>
2 Amended and Restated Agreement and Plan of Merger dated
December 15, 1995 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.
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).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
<C> <S> <C>
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 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).
10.10 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).
10.11 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).
10.12 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).
10.13 Directors' Compensation Plan (filed with the Commission
as part of Whitney's Proxy Statement dated March 24, 1994
and incorporated herein by reference).
10.14 Letter Agreement dated December 14, 1995 among Whitney,
Acquisition, Whitney Bank, Citizens and FNB.
21 Subsidiaries
23.1 Consent of Arthur Andersen LLP dated January 19, 1996*
23.2 Consent of Ernst & Young LLP dated January 18, 1996*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
<C> <S> <C>
23.3 Consent of Milling, Benson, Woodward, Hillyer, Pierson &
Miller, included in Exhibit 5.
24 Powers of Attorney of directors of Whitney Holding
Corporation (contained on page S-1 of the Registration
Statement).
99 Form of Proxy of First Citizens BancStock, Inc.*
- --------------
*Filed with this Amendment. All other listed exhibits have been filed
previously.
</TABLE>
<PAGE>
EXHIBIT 8
______________, 1996
* * * D R A F T * * *
BY HAND
Whitney Holding Corporation
Attention: Mr. William Marks
228 St. Charles Avenue
New Orleans, Louisiana 70130
First Citizens BancStock, Inc.
Attention: Mr. Milford L. Blum, Jr.
1100 Brashear Avenue
Morgan City, Louisiana 70381
Dear Messrs. Marks and Blum:
This opinion is being furnished to you in connection with the proposed
acquisition of First Citizens BancStock, Inc. ("Citizens") and its wholly owned
banking subsidiary, First National Bank in St. Mary Parish ("Bank"), by Whitney
Holding Corporation ("Whitney"), which is expected to be completed on _______
__, 1996 ("the Effective Date"). You have requested our opinion concerning the
following:
. Whether the merger of Whitney Acquisition Corporation ("Acquisition"), a
wholly-owned subsidiary of Whitney, into Citizens will qualify as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended ("the Code").
. Whether the merger of Citizens into Whitney will qualify as a reorganization
under Section 368(a)(1)(A) of the Code.
. That the exchange of Citizens common stock to the extent exchanged for
Whitney common stock will not give rise to gain or loss for federal income
tax purposes to the holders of Citizens common stock with respect to such
exchange.
. Whether the merger of Bank into Whitney National Bank ("WNB"), a wholly-owned
banking subsidiary of Whitney, will qualify as a reorganization under Section
368(a)(1)(A) of the Code.
You have asked for our opinion on the federal income tax consequences to
Whitney, Citizens, Acquisition, Bank, WNB and the stockholders of Citizens. We
have not considered any nonincome tax, state, local or foreign income tax
consequences, and, therefore, do not express any opinion regarding the treatment
that would be given the mergers by the applicable authorities on any nonincome
tax or any state, local or foreign tax issues. We also express no opinion on
nontax issues, such as corporate law or securities law matters, including, but
not limited to, all securities law disclosure requirements.
In rendering our opinion, we have relied upon the accuracy and completeness of
the facts and information as contained in the Amended and Restated Agreement and
Plan of Merger dated as of ___________ __, 1995 ("Plan of Merger"), including
all exhibits attached thereto, and the representations included below. To the
extent there are any changes to the Plan of Merger or representations, our
opinion may be affected accordingly.
The discussion and conclusions set forth below are based upon the Code, the
Treasury Regulations, and existing administrative and judicial interpretations
thereof as of the Effective Date, all of which are subject to change. All
section references are to the Internal Revenue Code of 1986, as amended, unless
otherwise stated. If there is a change in the Code, the Treasury Regulations or
public rulings thereunder, the current Internal Revenue Service rulings or
releases, or in the prevailing judicial interpretation of the foregoing, the
opinion expressed herein would necessarily have to be
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 2
______________, 1996
* * * D R A F T * * *
re-evaluated in light of any such changes. We have no responsibility to update
this opinion for events, transactions, changes in the above-listed law and
authority or circumstances occurring after the Effective Date.
This opinion is solely for the benefit of Citizens and Whitney and is not
intended to be relied upon by anyone other than Citizens and Whitney. Although
you do hereby have our express consent to inform WNB, Acquisition, Bank, and
Citizens common stockholders of our opinion by including copies of this letter
as an exhibit to the Agreement and as an exhibit in the Registration Statement
on Form S-4 for the proposed transactions, we assume no responsibility for any
tax consequences to them. Instead, each of these parties should consult and rely
upon the advice of his/her counsel, accountant or other tax advisor. Except to
the extent expressly permitted hereby, and without the prior written consent of
this firm, this letter may not be quoted in whole or in part or otherwise
referred to in any documents or delivered to any other person or entity.
PROPOSED TRANSACTIONS
- ---------------------
Our understanding of the proposed transactions, as described in the Plan of
Merger, is as follows:
A. Acquisition, a wholly-owned subsidiary of Whitney formed for the purpose of
effecting the Plan of Merger, will be merged with and into Citizens
("Company Merger") on the Effective Date pursuant to Louisiana Business
Corporation Law.
B. On the Effective Date and pursuant to the Company Merger, the common
stockholders of Citizens will receive shares of Whitney common stock
proportionate in value, based on the terms contained in Section 2.01 of the
Plan of Merger. The number of shares of Whitney common stock to be received
by the common stockholders of Citizens will represent an ownership interest
in Whitney common stock of less than 50% of the total outstanding stock of
Whitney. In lieu of issuing fractional shares of Whitney common stock as a
result of the merger, common stockholders of Citizens will be entitled to
receive a cash payment equal to such fractional share multiplied by the
designated value of a share of Whitney common stock.
C. Immediately following the Company Merger, and as part of the same overall
transaction, Citizens will be merged with and into Whitney ("Subsidiary
Merger") pursuant to Louisiana Business Corporation Law.
D. Immediately following the Subsidiary Merger, Bank will then be merged with
and into WNB ("Bank Merger") pursuant to 12 U.S.C. Section 215a and La.
R.S. Section 6:351, et seq., at the time specified or permitted by the
Comptroller of the Currency in a certificate or other written record issued
by his office. All shares of Bank stock will be canceled and no shares of
Whitney or WNB or other consideration will be issued in exchange therefor.
Unless stockholders of Citizens common stock holding at least eighty (80)
percent of the voting rights of Citizens approve the plan of reorganization,
objecting stockholders of Citizens may dissent from the Company Merger, and
instead receive cash in exchange for their shares of Citizens common stock,
based on the fair market value of such stock determined under Section 131 of the
Louisiana Business Corporation Law (La. R.S. Section 12:131).
Representations
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 3
______________, 1996
* * * D R A F T * * *
The following representations have been made to us by representatives of
Whitney, Acquisition, WNB, Citizens, and Bank:
a) Whitney, Acquisition, Citizens, WNB, Bank, and stockholders of Citizens
will pay their respective expenses, if any, incurred in connection with the
successful consummation of the transactions.
b) There is no intercorporate indebtedness existing between Whitney and
Citizens, between Acquisition and Citizens, or between Bank and WNB, that
was issued, acquired, or will be settled at a discount.
c) Acquisition will be merged with and into Citizens pursuant to Louisiana
Business Corporation Law.
d) The Citizens common stockholders will have unrestricted rights of ownership
of Whitney common stock received in the transaction, and their ability to
retain the Whitney common stock received in the transaction will not be
limited in any way.
e) The ratio for the exchange of shares of Citizens common stock for Whitney
common stock in the transaction was negotiated through arm's length
bargaining. Accordingly, the fair market value of the Whitney common stock
to be received by Citizens common stockholders in the transaction will be
approximately equal to the fair market value of the Citizens common stock
surrendered by such stockholders in the exchange.
f) The payment of cash in lieu of fractional shares of Whitney common stock is
solely for the purpose of avoiding the expense and inconvenience to Whitney
of issuing fractional shares and does not represent separately bargained-
for consideration. The total cash consideration that will be paid in the
transaction to the Citizens stockholders instead of issuing fractional
shares of Whitney common stock will not exceed (1) one percent of the total
consideration that will be issued in the transaction to the Citizens
stockholders in exchange for their shares of Citizens common stock. The
fractional share interests of each Citizens stockholder will be aggregated,
and no Citizens stockholder will receive cash for such fractional share
interests in an amount equal to or greater than the value of one full share
of Whitney common stock.
g) None of the parties to the transactions are investment companies as
defined in Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
h) Following the Company Merger, Citizens will hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair
market value of its gross assets and at least 90 percent of the fair market
value of Acquisition's net assets and at least 70 percent of the fair
market value of Acquisition's gross assets held immediately prior to the
transaction. For purposes of this representation, amounts paid by Citizens
or Acquisition to dissenters, amounts paid by Citizens or Acquisition to
shareholders who receive cash or other property, amounts used by Citizens
or Acquisition to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by Citizens will
be included as assets of Citizens or Acquisition, respectively, immediately
prior to the transaction.
i) The fair market value of the assets of Bank transferred to WNB will equal
or exceed the sum of the liabilities assumed by WNB plus the amount of
liabilities, if any, to which the transferred assets are subject.
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 4
______________, 1996
* * * D R A F T * * *
j) None of the compensation received by any stockholder-employees of Citizens
or Bank will be separate consideration for, or allocable to, any of their
shares of Citizens common stock; none of the shares of Whitney common stock
received by any stockholder-employees will be separate consideration for,
or allocable to, any employment agreement; and the compensation paid to any
stockholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length
for similar services.
k) Citizens will be merged with and into Whitney under the Plan of Merger,
pursuant to Louisiana Business Corporation Law.
l) Bank will be merged with and into WNB pursuant to 12 U.S.C. Section 215a
and La. R.S. Section 6:351, et seq.
The following additional representations have been made to us by representatives
of Whitney, Acquisition, and WNB:
m) Whitney has no plan or intention to reacquire any of its stock issued in
the Company Merger.
n) The proposed transactions are being undertaken for reasons germane to the
continuance of the business of Whitney and WNB.
o) Prior to the Company Merger, Whitney will be in control of Acquisition
within the meaning of Section 368(c)(1) of the Code.
p) No stock of Acquisition will be issued in the Company Merger.
q) Whitney and WNB have no plan or intention to sell or otherwise dispose of
the stock of Bank or any of the assets of Citizens or Bank acquired in the
transactions, except for dispositions made in the ordinary course of
business or transfers described in Section 368(a)(2)(c) of the Code.
r) Following the transactions, Whitney and WNB will continue the historic
business of Citizens and Bank, respectively, or use a significant portion
of these historic business assets in the operation of a trade or business.
s) Acquisition will have no liabilities assumed by Citizens, and will not
transfer to Citizens any assets subject to liabilities in the Company
Merger.
t) Whitney does not own, nor has it owned during the past five years, any
shares of stock of Citizens.
u) Acquisition was organized by Whitney solely to acquire Citizens.
v) Acquisition carried on no business other than to participate in the merger
with Citizens.
The following representations have been made to us by representatives of
Citizens and Bank:
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 5
______________, 1996
* * * D R A F T * * *
w) There is no plan or intention by the Citizens common stockholders who own
five percent or more of Citizens stock, and to the best of the knowledge of
the management of Citizens, there is no plan or intention on the part of
the remaining common stockholders of Citizens to sell, exchange, or
otherwise dispose of a number of shares of Whitney common stock received in
the Company Merger that would reduce the stockholders' ownership of Whitney
common stock to a number of shares having a value, as of the Effective
Date, of less than (50) fifty percent of the value of all the formerly
outstanding common stock exchanged for cash in lieu of fractional shares of
Whitney stock will be treated as outstanding Citizens common stock on the
Effective Date. Moreover, shares of Citizens common stock and shares of
Whitney common stock held by Citizens stockholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the transaction will be
considered in making this representation.
x) On the Effective Date, the fair market value of the assets of Citizens will
exceed the sum of its liabilities plus the amount of liabilities, if any,
to which the assets are subject.
y) The proposed transaction is being undertaken for reasons germane to the
continuance of the business of Citizens and Bank.
z) Neither Citizens nor Bank is under the jurisdiction of a court in a Title
II or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
aa) The liabilities of Citizens and Bank assumed by Whitney and WNB,
respectively, and the liabilities to which the transferred assets of
Citizens and Bank are subject were incurred by Citizens and Bank in the
ordinary course of business.
bb) In the Company Merger, shares of Citizens stock representing control of
Citizens, as defined in Section 368(c)(1) of the Code, will be exchanged
solely for the voting stock of Whitney. For purposes of this
representation, shares of Citizens stock exchanged for cash or other
property originating with Whitney will be treated as outstanding Citizens
stock on the Effective Date.
cc) Citizens has no plan or intention to issue additional shares of its stock
that would result in Whitney losing control of Citizens within the meaning
of Section 368(c)(1) of the Code.
dd) At the time of the Company Merger, Citizens will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in Citizens that, if
exercised or converted, would affect Whitney's acquisition or retention of
control of Citizens, as defined in Section 368(c)(1) of the Code.
ANALYSIS OF APPLICABLE FEDERAL TAX PROVISIONS
- ---------------------------------------------
A. Exchange of Whitney Stock for Citizens Stock
--------------------------------------------
Section 354(a)(1) addresses the effects of corporate reorganizations on
shareholders, providing in general that no gain or loss shall be recognized if
stock or securities in a corporation a party to a reorganization are, in
pursuance of the plan
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 6
______________, 1996
* * * D R A F T * * *
of reorganization, exchanged solely for stock or securities in such corporation
or in another corporation, a party to the reorganization.
For purposes of Code Section 354, the terms "reorganization" and "party to a
reorganization" mean only a reorganization or a party to a reorganization as
defined in Sections 368(a) and 368(b). Section 368(a)(1)(A) states that the term
reorganization includes a statutory merger or consolidation. Reg. Section 1.368-
2(b)(1) states that in order for a transaction to qualify as a reorganization
under Section 368(a)(1)(A), the transaction must be a merger or consolidation
effected pursuant to the corporation laws of the United States or State or
Territory or the District of Columbia. Under Section 368(b), the term party to a
reorganization includes both corporations in the case of a reorganization
resulting from the acquisition by one corporation of stock or properties of
another. In the case of a reorganization qualifying under Section 368(a)(1)(A)
by reason of Section 368(a)(2)(E), the term "party to a reorganization" includes
the corporation controlling the merged corporation before the merger.
Section 368(a)(2)(E) provides that a transaction otherwise qualifying under
Section 368(a)(1)(A) shall not be disqualified by reason of the fact that the
stock of a corporation which before the merger was in control of the merged
corporation is used in the transaction, if after the transaction, the
corporation surviving the merger holds substantially all of its properties and
the properties of the merged corporation; and in the transaction, former
shareholders of the surviving corporation exchanged, for an amount of voting
stock of the controlling corporation, an amount of stock in the surviving
corporation which constitutes control of such corporation.
Each of the requirements of this definition must be satisfied. First, the
surviving corporation, Citizens, must hold "substantially all" of its assets and
the assets of the acquired corporation, Acquisition. The "substantially all"
requirement has not been statutorily defined. The determination of
"substantially all" is based upon all the facts and circumstances of each
transaction. The Internal Revenue Service's advance ruling guidelines (Rev.
Proc. 86-42) provide that the "substantially all" requirement will be met if at
least 90% of the fair market value of the net assets and at least 70% of the
fair market value of the gross assets of Acquisition immediately before the
merger are transferred to Citizens. Further, Citizens must hold at least 90% of
the fair market value of its net assets and at least 70% of the fair market
value of its gross assets. Second, a controlling interest of Citizens shares
must be exchanged for Whitney stock. The control requirement is met if Whitney
owns at least 80% of Citizens' total combined voting power and at least 80% of
the total number of shares of each of the other classes of stock of Citizens (if
any) (Rev. Rul. 59-259). Third, the merger of Acquisition into Citizens must be
such that the transaction would have qualified as a merger under Section
368(a)(1)(A) had Citizens merged directly into Whitney, the controlling
corporation. The proposed transaction should meet all the definitional
requirements of a reverse triangular merger under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code. First, it has been represented that Citizens will hold
substantially all of its assets and the assets of Acquisition. Second, a
controlling interest in Citizens will be exchanged for Whitney stock. Third,
based on the representations made, the merger of Citizens will qualify as a
merger under state law (Treas. Reg. Section 1.368-1).
In certain instances, the IRS has treated the combination of transactions
represented here by the Company Merger followed by the Subsidiary Merger as a
single statutory merger under Section 368(a)(1)(A) (PLR 9420027, PLR 9539018).
Such treatment has been based on (i) such a combination of transactions being
treated as an integrated plan under the step-transaction doctrine and (ii) the
two mergers qualifying as statutory mergers under applicable state law.
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 7
______________, 1996
* * * D R A F T * * *
B. Additional Regulatory Requirements Relating to Tax-Free Reorganizations
-----------------------------------------------------------------------
The regulations under Section 368 require as a part of a reorganization a
continuity of the business enterprise under the modified corporate form, a bona
fide business purpose for the reorganization, and a continuity of interest
therein on the part of those persons who, directly or indirectly, were owners of
the enterprise prior to the reorganization. Reg. Section 1.368-1(d)(2) states
that the continuity of business enterprise requirement is met if the acquiring
corporation either continues the acquired corporation's historic business or
uses a significant portion of the acquired corporation's business assets in the
operation of a trade or business. Based on the representations set forth above,
the continuity of business enterprise requirement is met with respect to the
assets and business operations of Citizens and Bank.
Reg. Section 1.368-2(g) indicates that in addition to coming within the scope of
the specific language of Sec. 368(a), a reorganization must also be "undertaken
for reasons germane to the continuance of the business of a corporation a party
to the reorganization." If the transaction or series of transactions has no
business or corporate purpose, then the plan is not a reorganization pursuant to
Section 368(a). [Reg. Section 1.368-1(c).] Based on the representations set
forth above, the transactions meet the business purpose requirement.
The continuity of interest requirement does not require that all shareholders of
the acquired corporation have a proprietary interest in the surviving
corporation after the acquisition; it is not even necessary for a substantial
percentage of such shareholders to have such an interest. Rather, the IRS
announced in Rev. Proc. 77-37 that it would rule that the continuity of interest
requirement is met so long as one or more of the acquired corporation's
shareholders retain a sufficient proprietary interest in the continuing
corporation. The IRS indicated in Rev. Proc. 77-37 that a sufficient proprietary
interest is an equity interest of the acquiring corporation with a value that is
at least 50% of the total equity value of the acquired corporation.
In addition to meeting the continuity of interest requirement immediately after
the reorganization, the former shareholders of the acquired corporation must
retain their interest in the acquiring corporation for some time after the
reorganization. The courts have ruled that the tax-free nature of the
reorganization may be retroactively invalidated if the continuity of interest is
not maintained either because, at the time of the reorganization, the
shareholders intended to dispose of the proprietary interest soon after the
reorganization (Christian Est. v. Comr., T.C. Memo 1989-413) or because a
shareholder disposes of stock immediately following the reorganization in
accordance with a pre-existing commitment to sell (American Wire Fabrics Corp.
v. Comr., 16 TC 607). The courts have generally looked to the intent of the
shareholders at the time of the reorganization to determine whether the
continuity of interest requirement is subsequently violated.
The Internal Revenue Service has ruled that the continuity of interest
requirement was met in situations similar to the proposed transactions (PLR
8839036, PLR 8903054, PLR 9319017 and PLR 9325026). It should be noted, however,
that a private letter ruling (PLR) is directed only to the taxpayer who
requested it. Section 6110(j)(3) provides that it may not be used or cited as
precedent. On the other hand, a PLR does represent an indication of how the IRS
may view the tax consequences of a taxpayer with similar facts and
circumstances. In these rulings, a corporation and its wholly-owned subsidiary
were simultaneously merged into the acquiring parent and its wholly-owned
subsidiary, respectively, as part of the same overall transaction.
Based on the above representations made by representatives of Citizens and Bank,
the continuity of interest requirement is met with respect to the transactions.
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 8
______________, 1996
* * * D R A F T * * *
C. Other Operational Code Provisions
---------------------------------
Section 356(a)(1) provides that if Section 354 would apply to an exchange but
for the fact that the property received in the exchange consists not only of
property permitted to be received under Section 354 without the recognition of
gain but also of other property or money then the gain, if any, to the recipient
shall be recognized but not in excess of the sum of money and the fair market
value of the property received.
Section 356(c) states that no loss from the exchange may be recognized by the
shareholder.
In other official pronouncements, the Internal Revenue Service has characterized
the distribution of cash as part of a reorganization and in a transaction
subject to Section 356 by applying the redemption principles under Section 302.
Section 302 provides, in part, that a redemption will be treated as a
distribution in part or full payment in exchange for stock if it can meet the
tests of that section.
In Rev. Rul. 66-365, the IRS announced that in a transaction qualifying as a
reorganization under Section 368(a)(1)(A) of the Code where a cash payment is
made by the acquiring corporation in lieu of fractional shares and such cash is
not separately bargained for, such cash payment will be treated under Section
302 of the Code as a redemption of fractional share interests. Therefore, each
shareholder's redemption will be treated as a distribution in full payment in
exchange for his, her, or its fractional share interest under Section 302(a) of
the Code and accorded capital gain or loss treatment provided the redemption is
not essentially equivalent to a dividend and that the fractional shares redeemed
constitute a capital asset in the hands of the holder as discussed below. In
Rev. Proc. 77-41, the IRS stated that "a ruling will usually be issued under
Section 302(a) of the Code that cash to be distributed to shareholders in lieu
of fractional share interests arising in corporate reorganizations...will be
treated as having been received in part or in full payment in exchange for the
stock redeemed if the cash distribution is undertaken solely for the purpose of
saving the corporation the expense and inconvenience of issuing and transferring
fractional shares, and is not separately bargained-for consideration."
Under Section 358(a)(1), in the case of an exchange to which Section 354 or
Section 356 applies, the basis of property which is permitted to be received
under such section without the recognition of gain or loss shall be the same as
that of the property exchanged, decreased by the amount of any money received by
the recipient, and increased by the amount which was treated as a dividend and
the amount of other gain recognized by the recipient as a result of the
transaction.
It should be noted that where cash is received in lieu of fractional shares, the
substance of the transaction is that of a hypothetical receipt of the fractional
shares and then a redemption of such shares. Therefore, the basis that is to be
allocated to the stock of the acquiring corporation received must be allocated
to the shares retained and the fractional shares hypothetically received. The
gain or loss attributable to the receipt of cash in lieu of fractional shares is
measured by comparing the cash received with the basis allocated to the
fractional shares that are hypothetically received, and such gain or loss is
recognized as discussed earlier.
In other instances where other property or money is also received under Section
356, the redemption principles of Section 302 are applied to determine if the
payments should be treated as dividend distributions or payments in exchange for
stock. Thus, cash payments made by the acquiring corporation to a dissenting
shareholder of the acquired corporation in a reorganization under Section 368
are treated as made in exchange for the shareholder's stock if the
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 9
______________, 1996
* * * D R A F T * * *
payment meets the requirements of Section 302. The Supreme Court in Clarke vs.
Comr., 489 U.S. 726, applied the tests of Section 302 by viewing the exchange
involving cash or other property as a "hypothetical post-reorganization
redemption." The Court viewed the exchange as first an exchange of solely stock
of the acquiring corporation for the acquired company stock, followed by an
exchange by the shareholder of the newly acquired stock for cash from the
acquiring corporation. The Section 302 tests were applied to the second
hypothetical exchange.
One of the tests of Section 302 provides that where there is a complete
redemption of all of a shareholder's stock in a corporation (after consideration
of the constructive ownership rules of Section 302(c)), the redemption payment
is treated as made entirely in exchange for the shareholder's stock in the
corporation (Section 302(b)(3)). The constructive ownership rules of Section
302(c) are generally contained in Section 318 and provide that an individual or
entity is treated as owning the stock owned by certain other related individuals
and entities. Where there is a complete termination of the shareholder's
interest, the constructive ownership rules may be waived if certain conditions
are met.
Code Section 361(a) states that, as a general rule, no gain or loss is to be
recognized by a corporation if such corporation is a party to a reorganization
and exchanges property, in pursuance of the plan of reorganization, solely for
stock or securities in another corporation a party to the reorganization.
Section 361(b) states that if Section 361(a) would apply to an exchange but for
the fact that the property received in exchange consists not only of stock or
securities afforded nonrecognition treatment under Section 361(a), but also of
other property or money, then provided the corporation receiving such other
property or money distributes it in pursuance to the plan of reorganization, no
gain to the corporation shall be recognized from the exchange. Section 361(a)
states that as a general rule no gain or loss shall be recognized to a
corporation a party to a reorganization on the distribution to its shareholders
of any stock in another corporation which is a party to the reorganization if
such stock was received by the distributing corporation in the exchange.
Section 1032(a) states that no gain or loss shall be recognized by a corporation
on the receipt of money or other property in exchange for such corporation's
stock, including treasury stock.
Code Section 362(b) states that the basis of property received by the acquiring
corporation in a reorganization is the same as it would be in the hands of the
transferor of the assets, increased by any gain recognized by the transferor.
The transferor for purposes of the preceding sentence is Citizens.
Section 1221 defines a capital asset as property held by the taxpayer which is
not inventory or other property held by the taxpayer primarily for sale to
customers in the ordinary course of a trade or business, property used in the
taxpayer's trade or business subject to the allowance for depreciation under
Section 167, a copyright, literary, musical or artistic composition, a letter or
memorandum, or similar property created by the personal efforts of the taxpayer,
accounts or notes receivable acquired in the ordinary course of a trade or
business for services rendered or from the sale of inventory or other property
held by the taxpayer primarily for sale to customers in the ordinary course of
business, or a publication of the United States Government which is received
from the United States Government or any agency thereof other than by purchase
at the price at which it is offered for sale to the public.
Section 1223(1) states that in determining the period for which a taxpayer has
held property received in an exchange, there shall be included the period for
which he, she, or it held the property exchanged if the property has, for the
purpose of determining gain or loss from a sale or exchange, the same basis as
the property exchanged and the property exchanged was a capital asset as defined
in Section 1221 as of the date of the exchange.
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 10
______________, 1996
* * * D R A F T * * *
Section 1223(2) states that for determining the period for which the taxpayer
has held property however acquired there shall be included the period for which
such property was held by another person if the property has the same basis in
whole or in part in his hands as it would have had in the hands of such other
person.
Subchapter P of Chapter 1 of the Code provides limitations on the recognition of
capital gains and losses including, but not limited to, the allowance of capital
losses to the extent of capital gains with respect to corporate taxpayers and
the allowance of up to $3,000 of net capital losses with respect to taxpayers
other than corporate taxpayers.
OPINION
- -------
Based upon all of the foregoing, including representations of the management of
Whitney and the management of Citizens, it is our opinion with respect to the
Company Merger that:
a) The merger of Acquisition with and into Citizens, as described above,
will constitute a tax-free reorganization under Section 368 of the Code
(Section 368(a)(1)(A) and Section 368(a)(2)(E)).
b) Acquisition, Whitney, and Citizens will each be "a party to a
reorganization" (Section 368(b)).
c) No gain or loss will be recognized by the common stockholders of Citizens
on the receipt of Whitney common stock in exchange for the surrendered
Citizens common stock pursuant to the plan of reorganization (Section
354(a)(1)).
d) The tax basis of shares of Whitney common stock to be received by Citizens
common stockholders will be the same as the tax basis of the shares of
Citizens common stock surrendered in exchange therefor, decreased by the
amount of basis allocated to the fractional shares that are hypothetically
received by the stockholder and redeemed for cash, and increased by any
gain recognized on the exchange (not including any gain recognized for the
receipt of cash in lieu of fractional shares) (Section 358(a)(1)).
e) The holding period of the Whitney stock received by the Citizens common
stockholders will include the period during which the Citizens common stock
surrendered in exchange therefor was held, provided that the Citizens
common stock is held as a capital asset in the hands of the Citizens
stockholders on the Effective Date (Section 1223(1)).
f) The payment of cash in lieu of fractional share interests of Whitney common
stock will be treated as if each fractional share was distributed as part
of the exchange and then redeemed by Whitney. Pursuant to Section 302(a) of
the Code, these cash payments will be treated as having been received as
distributions in full payment in exchange for the Whitney common stock. Any
gain or loss recognized upon such exchange (as determined under Section
1001 and subject to the limitations of Section 267) will be capital gain or
loss provided the fractional share would constitute a capital asset in the
hands of the exchanging stockholder (Rev. Rul. 66-365 and Rev. Proc. 77-
41).
g) Each shareholder of Citizens who elects to dissent from the merger
transaction involving Citizens and Acquisition under the provisions of
Section 131 of the Business Corporation Law of Louisiana, and receives cash
in exchange for his shares of Citizens common stock, will be treated as
receiving such payment in
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 11
______________, 1996
* * * D R A F T * * *
complete redemption of his shares of Citizens, provided such shareholder
does not actually or constructively own any Citizens common stock after the
exchange under the provisions and limitations of Section 302.
h) No gain or loss will be recognized by Acquisition on the transfer of all
of its assets to Citizens (Section 361).
i) No gain or loss will be recognized by Citizens as a result of the Company
Merger (Section 361).
j) The tax basis of the assets in Citizens subsequent to the Merger will be
the same as the tax basis of the assets held immediately before the
exchange by Citizens and Acquisition, respectively (Section 362(b)).
Based upon all of the foregoing, including representations of the management of
Whitney and WNB, and the management of Citizens and Bank, it is our opinion with
respect to the Subsidiary Merger and Bank Merger that:
k) The merger of Citizens with and into Whitney, as described above, will
constitute a tax-free reorganization under Section 368 of the Code (Section
368(a)(1)(A)).
l) Whitney and Citizens will each be "a party to a reorganization" (Section
368(b)).
m) No gain or loss will be recognized by Citizens on the transfer of all of
its assets to Whitney pursuant to the plan of reorganization (Section 361).
n) No gain or loss will be recognized by Whitney on the receipt by Whitney of
substantially all of the assets of Citizens in constructive exchange for
Whitney stock (Section 1032(a)).
o) The tax basis of Citizens' assets in the hands of Whitney will be the same
as the basis of those assets in the hands of Citizens immediately prior to
the merger (Section 362(b)). The tax basis of Citizens' assets in the hands
of Whitney will not be increased by any cash paid to dissenters or cash
paid in lieu of fractional shares.
p) The holding period of the assets of Citizens in the hands of Whitney will
include the period during which such assets were held by Citizens (Section
1223(2)).
q) The merger of Bank with and into WNB, as described above, will constitute a
reorganization under Section 368 of the Code (Section 368(a)(1)(A)).
r) WNB and Bank will each be a "party to a reorganization" (Section 368(b)).
s) No gain or loss will be recognized by Whitney on the merger of Bank into
WNB (Section 354(a)(1)).
t) No gain or loss will be recognized by Bank on the transfer of all of its
assets to WNB pursuant to the plan of reorganization (Section 361).
u) The tax basis of Bank's assets in the hands of WNB will be the same as the
basis of those assets in the hands of Bank immediately prior to the
transaction (Section 362(b)). The tax basis of Bank's assets in the hands
of WNB will not be increased by any cash paid to dissenters or cash paid in
lieu of fractional shares.
<PAGE>
Mr. William Marks
Mr. Milford L. Blum, Jr.
Page 12
______________, 1996
* * * D R A F T * * *
v) The holding period of the assets of Bank in the hands of WNB will include
the period during which such assets were held by Bank (Section 1223(2).
It should be noted that there is the potential for the IRS to consider the
combination of the Company Merger followed by the Subsidiary Merger as a single
statutory merger under the step-transaction doctrine. Such a position would not
impair the tax-free status of the overall transaction. It would merely cause the
existence of Acquisition to be ignored for tax purposes, thereby recasting the
entire series of transactions as two statutory mergers under Section
368(a)(1)(A) of the Code - the first being Citizens into Whitney and the second
being Bank into WNB.
We express no opinion on the impact, if any, on any other sections of the Code,
including but not limited to Section 382, other than that as stated immediately
above, and neither this opinion nor any prior statements are intended to imply
or to be an opinion on any other matters.
In analyzing the authorities relevant to the potential tax issues outlined in
this opinion we have applied the standards of "substantial authority" and "more
likely than not proper," as used in Section 6662 under current law. Based upon
our analysis, we have concluded that there is substantial authority for the
indicated tax treatment of the transaction, and we also believe the indicated
tax treatment of the transaction is more likely than not proper.
This opinion is based solely upon our interpretation of the Code and income tax
regulations as further interpreted by court decisions, rulings, and procedures
issued by the Internal Revenue Service, as of the date of this letter. Our
opinion may be subject to change in the event of changes in any of the foregoing
authorities, some of which could be retroactive. The opinion expressed herein is
not binding on the Internal Revenue Service, and there can be no assurance that
the Internal Revenue Service will not take a position contrary to any of the
opinions expressed herein. Further, WNB, Bank, and Citizens common stockholders
are urged to discuss the consequences of the proposed transactions with their
own tax advisors.
Very truly yours,
ARTHUR ANDERSEN LLP
By
Kay Gravolet Priestly
cc: Joseph S. Schwertz, Jr.
Elizabeth B. Martin
Lance W.Behnke
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement (No. 33-65131) of our report dated
January 13, 1995 (except with respect to the matter discussed in the last
paragraph of Note 14, as to which the date is February 17, 1995) included in
Whitney Holding Corporation's Form 10-K for the year ended December 31, 1994 and
to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
New Orleans, Louisiana
January 19, 1996
<PAGE>
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 19, 1995 with respect to the consolidated
financial statements of First Citizens BancStock, Inc. included in Amendment No.
1 to the Registration Statement (Form S-4) (33-65131) and related Prospectus of
Whitney Holding Corporation for the registration of its common stock.
/s/ERNST & YOUNG LLP
New Orleans, Louisiana
January 18, 1996
<PAGE>
EXHIBIT 99
FIRST CITIZENS BANCSTOCK, INC.
1100 Brashear Avenue
Morgan City, Louisiana 70380
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS
The undersigned shareholder(s) of First Citizens BancStock, Inc. (the "Company")
hereby revoke(s) any proxy heretofore given and appoint(s) Goldie C. Cardinale,
Alfred S. Lippman and A.F. Sauls, Jr., 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 held of record by the undersigned at the close of business on January
19, 1996, at the Special Meeting of Shareholders of the Company called for and
to be held at the main office of The First National Bank in St. Mary Parish,
1100 Brashear Avenue, Morgan City, Louisiana, on Thursday, March 7, 1996 at
10:30 a.m., local time, and at any adjournment thereof, as follows:
1. The proposal to approve an Amended and Restated Agreement and Plan of
Merger and two related merger agreements (collectively, the "Plan of
Merger") pursuant to which, among other things: (a) Whitney
Acquisition Corporation (a wholly-owned subsidiary of Whitney Holding
Corporation ("Whitney") formed for this purpose) would merge into
Citizens, as a result of which Citizens would become a wholly-owned
subsidiary of Whitney and each outstanding share of common stock of
Citizens 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 and
Prospectus; (b) Citizens would then be merged into Whitney; and (c)
FNB would merge into Whitney National Bank, a wholly-owned bank
subsidiary of Whitney.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Such other matters which 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.
