<PAGE>
As filed with the Securities and Exchange Commission on June 25, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
-----------------------------
WHITNEY HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
-----------------------------
<TABLE>
<S> <C> <C>
LOUISIANA 6711 72-6017893
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
-----------------------------
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 offices)
<TABLE>
<C> <S> <C>
Joseph S. Schwertz, Jr., Esq.
Secretary Copies to: Copies to:
Whitney Holding Corporation Patrick J. Butler, Jr., Esq. Paul S. Ware, Esq.
228 St. Charles Ave. - Room 622 Milling Benson Woodward L.L.P. Bradley Arant Rose & White LLP
New Orleans, LA 70130 909 Poydras Street, Suite 2300 2001 Park Place, Suite 1400
(504) 586-3474 New Orleans, LA 70112 Birmingham, Alabama 35203-2736
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
</TABLE>
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES
TO THE PUBLIC:
Upon submission of the Plan of Merger described in this registration statement
for the vote of shareholders of The First National Bancorp of Greenville, Inc.
-----------------------------
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. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
------------
-----------------------------
CALCULATION OF REGISTRATION FEE
===============================================================================
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED/(1)/ PER SHARE OFFERING PRICE/(2)/ FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, no par value 648,828 shares $20.9882 $13,617,745.58 $4,017.23
- -------------------------------------------------------------------------------------------------
</TABLE>
===============================================================================
(1) Based on the average of the high and low prices per share on June 19, 1998
of Whitney Holding Corporation common stock, no par value, as reported on
the Nasdaq National Market System. There is also registered hereby a
currently indeterminate number of additional shares that may be issued in
the transaction described herein under certain circumstances.
(2) Calculated in accordance with Rule 457(f)(2) based on the book value as of
May 31, 1998 of the shares of common stock of The First National Bancorp of
Greenville, Inc. to be cancelled in the merger described herein, and
included herein solely for purposes of calculating the registration fee.
-----------------------------
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>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
100 West Commerce Street
Greenville, Alabama 36037
_______________, 1998
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders (the
"Meeting") of The First National Bancorp of Greenville, Inc. ("FNB"), to be held
in the main office of The First National Bank of Greenville ("FNBG"), 100 West
Commerce Street, Greenville, Alabama 36037 on _______________, 1998 at _______
__.m., local time.
The purpose of the Meeting will be to consider and vote upon an Agreement
and Plan of Merger dated March 24, 1998 (the "Plan of Merger") among FNB,
Whitney Holding Corporation ("Whitney"), FNBG, and Whitney's wholly-owned
subsidiary Whitney National Bank ("Whitney Bank"), pursuant to which (a) FNB
would merge into Whitney (the "Company Merger") and each outstanding share
of common stock of FNB would be converted into shares of Whitney common stock on
terms stated in the Plan of Merger, and (b) FNBG would, in due course, merge
into Whitney Bank. You are urged to read the attached Proxy Statement-Prospectus
in its entirety for a more complete description of the terms of the Plan of
Merger.
The Board of Directors of FNB has unanimously approved the Plan of Merger
as being in the best interests of FNB's shareholders. The Robinson-Humphrey
Company, LLC, 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 FNB's shareholders pursuant to the Plan of
Merger is fair, from a financial point of view, to FNB's shareholders. Upon
consummation of the Plan of Merger, you would receive common stock of Whitney,
one of the largest Louisiana-based bank holding companies. It is a condition to
the consummation of the Plan of Merger that FNB and Whitney receive an opinion
that the Company Merger will qualify as a tax-free reorganization for federal
income tax purposes. The Board believes that FNB's merger into Whitney will
enhance our ability 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 FNBG. In
addition, Whitney's common stock is quoted on the Nasdaq National Market System,
providing shareholders of FNB, who pursuant to the Plan of Merger would become
shareholders of Whitney, with the liquidity of owning publicly traded
securities.
The accompanying Notice of Special Meeting of Shareholders and Proxy
Statement-Prospectus contain information about the proposed Plan of Merger.
Please read carefully these materials and the documents about Whitney
incorporated by reference herein. Copies of the documents about Whitney
incorporated by reference are available as indicated under the caption
"Documents Incorporated 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 COUNTED. Of course,
if you attend the Meeting, you nevertheless may vote in person, even though you
previously returned your proxy.
Very truly yours,
Bill M. Simms
Vice Chairman and Chief Executive Officer
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
100 West Commerce Street
Greenville, Alabama 36037
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD _________, _______________, 1998
To the Holders of Common Stock of The First National Bancorp of Greenville,
Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of The First National Bancorp of Greenville, Inc. ("FNB") will be
held at the main office of its wholly-owned subsidiary, The First National Bank
of Greenville ("FNBG"), 100 West Commerce Street, Greenville, Alabama 36037 on
__________, __________, 1998 at ____ _.m., local time, for the following
purposes:
1. To consider and vote upon a proposal to approve an Agreement and Plan of
Merger dated March 24, 1998 among Whitney Holding Corporation
("Whitney"), Whitney National Bank, FNB, and FNBG, a copy of which is
attached to the accompanying Proxy Statement-Prospectus as Appendix A
and incorporated herein by reference (the "Plan of Merger"), pursuant to
which, among other things: (a) FNB would merge into Whitney, as a result
of which FNBG would become a wholly-owned subsidiary of Whitney and each
outstanding share of common stock of FNB would be converted into shares
of Whitney common stock as determined in accordance with the terms of
the Plan of Merger and (b) FNBG would, in due course, merge into Whitney
National Bank, a wholly-owned bank subsidiary of Whitney, all as more
fully described in the attached Proxy Statement-Prospectus.
2. To transact such other business as may properly come before the Meeting
or any adjournments or postponements thereof.
Only shareholders of record at the close of business on ___________, 1998,
are entitled to notice of and to vote at the Meeting or any adjournments or
postponements thereof. Dissenting shareholders who comply with the procedural
requirements of Section 10-2B-13.01, et seq., of the Alabama Business
Corporation Act (the "ABCA") will be entitled to receive payment of the fair
value of their shares in accordance with the ABCA.
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
Mary Frances Jones
Secretary
Greenville, Alabama
___________, 1998
================================================================================
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 POSTAGE-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 FNB OR BY
EXECUTION OF A PROXY OF A LATER DATE FILED WITH THE SECRETARY OF FNB AT OR
BEFORE THE MEETING.
================================================================================
<PAGE>
PROXY STATEMENT-PROSPECTUS
- --------------------------
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD __________, ________________, 1998
----------------------------------
WHITNEY HOLDING CORPORATION
PROSPECTUS
COMMON STOCK, NO PAR VALUE
This Proxy Statement-Prospectus is being furnished to holders of common
stock, par value $1.00 per share ("FNB Common Stock"), of The First National
Bancorp of Greenville, Inc. ("FNB") in connection with the solicitation of
proxies by FNB's Board of Directors for use at a Special Meeting of Shareholders
of FNB (the "Meeting") to be held on ___________, _______________, 1998 at
___.m., local time, at the main office of The First National Bank of Greenville
("FNBG"), 100 West Commerce Street, Greenville, Alabama 36037, and at any
adjournments or postponements thereof. The purpose of the Meeting is to
consider and vote upon a proposal to approve an Agreement and Plan of Merger
dated March 24, 1998, among Whitney Holding Corporation ("Whitney"), Whitney
National Bank ("Whitney Bank"), FNB, and FNBG (the "Plan of Merger"). The Plan
of Merger provides for, among other things, the merger of FNB into Whitney (the
"Company Merger") and the subsequent merger of FNBG into Whitney Bank. Upon
consummation of the Company Merger, each outstanding share of FNB Common Stock
would be converted into shares of common stock, no par value, of Whitney
("Whitney Common Stock") in the manner described herein, with cash being paid
for any fractional share interests. See "The Plan of Merger-Description of the
Plan of Merger--Conversion of Common Stock." Consummation of the Company Merger
requires the affirmative vote of the holders of at least two-thirds of the
shares of FNB Common Stock entitled to be cast on the Plan of Merger 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 approximately
______________ 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
Common Stock." This Proxy Statement-Prospectus constitutes a prospectus of
Whitney relating to the shares of Whitney Common Stock that are issuable to the
holders of FNB Common Stock upon consummation of the Company Merger.
This Proxy Statement-Prospectus, and the accompanying Notice of Special
Meeting and form of proxy, are being first mailed to shareholders of FNB on or
about _______________, 1998.
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 "Nasdaq Stock Market"). The closing price
per share of Whitney Common Stock on ________________, 1998 was $______.
----------------------------------
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
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS.ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------
This Proxy Statement-Prospectus is dated _______________, 1998.
<PAGE>
No person has been authorized to give any information or to make any
representation in connection with the solicitation of proxies or the offering of
securities made hereby other than those contained or incorporated by reference
in this Proxy Statement-Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized by Whitney or
FNB. This Proxy Statement-Prospectus shall not constitute an offer to sell or
exchange or the solicitation of an offer to purchase any security, or the
solicitation of a proxy, nor shall there be any such sale, exchange or
solicitation in any jurisdiction in which, or to any person to whom, it is
unlawful to make such an offer, solicitation of an offer or proxy solicitation.
Neither the delivery of this Proxy Statement-Prospectus nor any distribution of
securities made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of Whitney or FNB since the date
hereof.
All information contained herein with respect to FNB has been provided by
FNB, and Whitney is relying on the accuracy of that information. All
information contained or incorporated by reference herein with respect to
Whitney has been provided by Whitney, and FNB is relying on the accuracy of that
information.
AVAILABLE INFORMATION
Whitney is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith is required to file reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports, together with proxy
statements and other information filed by Whitney, can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at 7 World Trade Center, 13th Floor, New York, New York 10048
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates, and they are also available to the public at the web
site maintained by the Commission at "http://www.sec.gov." In addition, Whitney
Common Stock is included for quotation on the Nasdaq Stock Market (Symbol:
WTNY). 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
(the "Registration Statement") under the Securities Act with respect to the
Whitney Common Stock offered by this Proxy Statement-Prospectus. This Proxy
Statement-Prospectus does not contain all of the information set forth in the
Registration Statement or the exhibits thereto. Statements contained in this
Proxy Statement-Prospectus as to the contents of any documents are necessarily
summaries of the documents, and each statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission. For
further information with respect to Whitney and the transactions described
herein, reference is made to the Registration Statement, including the exhibits
thereto and any documents incorporated by reference therein.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the Commission by Whitney
(File No. 0-1026) pursuant to the Exchange Act are incorporated by reference
into this Proxy Statement-Prospectus:
1. Whitney's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
2. Whitney's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1998; and
5. 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 Whitney's Current Report on Form 8-K filed with the
Commission on January 19, 1996.
All documents filed by Whitney pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Proxy Statement-Prospectus and
prior to the date of the Meeting described herein shall be deemed to be
ii
<PAGE>
incorporated by reference in this Proxy Statement-Prospectus and to be a part
hereof from the date of their filing. Any statement contained herein, in any
supplement hereto, or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein, or in any supplement
hereto, or in any subsequently filed document which also is, or is deemed to be,
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute a part
hereof, except as so modified or superseded.
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
UPON REQUEST FROM EDWARD B. GRIMBALL, CHIEF FINANCIAL OFFICER, WHITNEY HOLDING
CORPORATION, 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 ________________________, 1998. Whitney hereby
undertakes to provide copies of any such documents, other than exhibits thereto
that are not specifically incorporated by reference therein, without charge to
each person, including any beneficial owner of FNB Common Stock, to whom this
Proxy Statement-Prospectus is delivered, upon the written or oral request of
such person to Whitney's Chief Financial Officer at the address and telephone
number written above.
iii
<PAGE>
TABLE OF CONTENTS
SUMMARY.................................................................... vi
Parties to the Merger................................................. vi
Whitney.......................................................... vi
FNB.............................................................. vi
The Meeting........................................................... vi
General.......................................................... vi
Purpose of the Meeting........................................... vi
Vote Required......................................................... vi
Reasons for the Plan of Merger........................................ vii
Recommendation of FNB's Board of Directors............................ vii
Fairness Opinion of Robinson-Humphrey................................. vii
The Plan of Merger.................................................... vii
General.......................................................... vii
Conversion of Common Stock....................................... vii
Exchange of Certificates......................................... viii
Regulatory Approvals and Other Conditions of the Company Merger.. ix
Waiver, Amendment and Termination................................ ix
Accounting Treatment.................................................. x
Certain Federal Income Tax Consequences............................... x
Dissenters' Rights.................................................... x
Interests of Certain Persons.......................................... x
Market Prices......................................................... x
Comparative Rights of Shareholders.................................... xi
Selected Financial Data of FNB........................................ xii
Selected Financial Data of Whitney.................................... xiii
Comparative Per Share Data............................................ xiv
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........................................ 3
General.......................................................... 3
Whitney.......................................................... 4
FNB.............................................................. 4
Recommendation of FNB's Board of Directors............................ 5
Opinion of The Robinson-Humphrey Company, LLC......................... 5
Description of the Plan of Merger..................................... 7
General.......................................................... 7
Conversion of Common Stock....................................... 7
Exchange of Certificates......................................... 9
Transfer and Exchange Agents..................................... 9
Regulatory Approvals and Other Conditions of the Company Merger.. 9
Effective Date................................................... 10
Conduct of Business Prior to the Effective Date.................. 10
Waiver, Amendment and Termination................................ 11
Expenses......................................................... 12
Interests of Certain Persons.......................................... 12
iv
<PAGE>
Employee Benefits................................................ 12
Indemnification and Insurance.................................... 12
Status Under Federal Securities Laws; Certain Restrictions on Resales. 12
Accounting Treatment.................................................. 13
Pro Forma Data........................................................ 13
DISSENTERS' RIGHTS......................................................... 13
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................... 15
INFORMATION ABOUT FNB...................................................... 16
Description of Business............................................... 16
Competition........................................................... 16
Supervision and Regulation............................................ 16
Risk-Based Capital Guidelines......................................... 17
Source of Strength.................................................... 18
Market Prices and Dividends........................................... 18
Property.............................................................. 18
Employees............................................................. 19
Security Holdings of Principal Shareholders and Management............ 19
FNB'S MANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................................. 20
INFORMATION ABOUT WHITNEY.................................................. 30
General............................................................... 30
Market Prices of and Dividends Declared on Whitney Common Stock....... 31
COMPARATIVE RIGHTS OF SHAREHOLDERS......................................... 31
Description of Whitney Common Stock................................... 32
Comparison of Whitney Common Stock and FNB Common Stock............... 36
Boards of Directors.............................................. 36
Nominations of Directors......................................... 36
Removal of Directors............................................. 37
Special Meetings of Shareholders................................. 37
Supermajority Vote Requirements.................................. 37
Indemnification Rights........................................... 37
LEGAL MATTERS.............................................................. 38
EXPERTS.................................................................... 38
OTHER MATTERS.............................................................. 39
FNB FINANCIAL STATEMENTS................................................... F-1
Appendix A - Agreement and Plan of Merger............................. A-1
Appendix B - Fairness Opinion of The Robinson-Humphrey Company, LLC... B-1
Appendix C - Selected Provisions of Section 10-2B-13.01, et seq.,
of the Alabama Business Corporation Act.................. C-1
v
<PAGE>
SUMMARY
The following summary is not intended to be complete and is qualified in
its entirety by the more detailed information appearing elsewhere herein, the
appendices hereto and the documents incorporated herein by reference.
Shareholders are urged to read carefully all such material.
PARTIES TO THE MERGER
Whitney. Whitney Holding Corporation, a Louisiana corporation
("Whitney"), is a 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 headquartered in Orleans Parish, Louisiana,
has been engaged in the general banking business in southern Louisiana since
1883. It currently conducts its general banking business through more than 100
banking offices in south Louisiana, southern Mississippi and Alabama and
northwestern Florida. Whitney Bank also maintains a foreign branch on Grand
Cayman in the British West Indies.
Whitney and its subsidiaries are sometimes referred to collectively herein
as "Whitney's consolidated group." At March 31, 1998, Whitney had consolidated
assets of approximately $4.3 billion and total consolidated deposits of
approximately $3.5 billion. Whitney's principal executive offices are located
at 228 St. Charles Avenue, New Orleans, Louisiana 70130, and its telephone
number is (504) 586-7117. See "Information About Whitney."
FNB. The First National Bancorp of Greenville, Inc., an Alabama
corporation ("FNB"), is a bank holding company registered pursuant to the Bank
Holding Company Act of 1956 that owns all of the outstanding stock of The First
National Bank of Greenville ("FNBG"). At March 31, 1998, FNB had total
consolidated assets of approximately $118 million and total consolidated
deposits of approximately $102 million. FNB and FNBG are sometimes referred to
herein collectively as "FNB's consolidated group." FNBG, a national banking
association and a wholly-owned subsidiary of FNB, is a full service commercial
bank offering consumer and commercial banking services at three locations in the
Greenville, Alabama area. FNB's and FNBG's principal executive offices are at
100 West Commerce Street, Greenville, Alabama 36037, and their telephone number
is (334) 382-6511. See "Information about FNB."
THE MEETING
General. A special meeting of the shareholders of FNB (the "Meeting")
will be held on ________________, 1998 at the time and place set forth in the
accompanying Notice of Special Meeting of Shareholders. Only record holders of
common stock, $1.00 par value per share, of FNB ("FNB Common Stock") at the
close of business on __________________, 1998 are entitled to notice of and to
vote at the Meeting. On that date, there were 17,009 shares of FNB Common Stock
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 consider and
vote upon a proposal to approve an Agreement and Plan of Merger dated March 24,
1998 among Whitney, Whitney Bank, FNB and FNBG (the "Plan of Merger"), a copy of
which is attached hereto as Appendix A, pursuant to which, among other things,
FNB will merge into Whitney (the "Company Merger"), and, in due course, FNBG
will merge into 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 and shareholders of FNB will receive shares of Whitney common stock (and
cash in lieu of fractional shares) as described below under " - The Plan of
Merger." 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 two-thirds of the shares of FNB Common Stock entitled to be cast on the
Plan of Merger. Directors and executive officers of FNB and their affiliates
holding an aggregate of 4,140 shares, or approximately 24.3%, of the outstanding
shares of FNB Common
vi
<PAGE>
Stock have agreed, subject to certain conditions, to vote their shares in favor
of the Company Merger. Whitney, as the sole shareholder of Whitney Bank, 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
The Board of Directors of FNB believes that the Plan of Merger and the
Company Merger are in the best interests of FNB and its shareholders. In
unanimously approving the Plan of Merger, FNB's directors, without assigning any
relative or specific weights, considered, among other things, FNB's and
Whitney's business, prospects, and financial conditions; the financial terms and
the income tax consequences of the Plan of Merger; the price to be received by
FNB's shareholders and the premium that such price represented over the
historical trading prices for FNB Common Stock; the liquidity of Whitney common
stock; the likelihood of the Plan of Merger being approved by regulatory
authorities without undue conditions or delay; legal advice concerning the Plan
of Merger and the proposed Company Merger; the views and opinion of The
Robinson-Humphrey Company, LLC ("Robinson-Humphrey") as to the fairness of the
Purchase Price (as defined below), from a financial point of view, to the
shareholders of FNB; and in general the fairness of the terms of the Company
Merger to FNB shareholders. See "The Plan of Merger - Background" and "The Plan
of Merger - Reasons for the Plan of Merger."
RECOMMENDATION OF FNB'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF FNB HAS DETERMINED THAT THE COMPANY MERGER IS
FAIR, FROM A FINANCIAL POINT OF VIEW, AND IS IN THE BEST INTERESTS OF FNB AND
ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS OF FNB HAS UNANIMOUSLY
APPROVED THE PLAN OF MERGER AND RECOMMENDS THAT ITS SHAREHOLDERS VOTE FOR
APPROVAL OF THE PLAN OF MERGER. SEE "THE PLAN OF MERGER -RECOMMENDATION OF
FNB'S BOARD OF DIRECTORS."
FAIRNESS OPINION OF ROBINSON-HUMPHREY
Robinson-Humphrey has rendered its opinion to FNB's Board of Directors
that, based on and subject to the assumptions made, the factors considered, the
review undertaken and the limitations stated, the consideration to be received
by FNB's shareholders under the Plan of Merger is fair to FNB 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 - Opinion of
The Robinson-Humphrey Company, LLC."
A copy of the fairness opinion of Robinson-Humphrey dated July ___, 1998 is
attached as Appendix B and should be read in its entirety.
THE PLAN OF MERGER
General. Pursuant to the Plan of Merger, if all conditions are satisfied
or waived, on the effective date of the Company Merger (the "Effective Date"),
FNB will be merged into Whitney, the separate existence of FNB will cease, and
FNBG will thereby become a wholly-owned subsidiary of Whitney. Thereafter, in
due course, FNBG will be merged into Whitney Bank, and the separate existence of
FNBG will cease.
Conversion of Common Stock. By reason of the Company Merger, the
outstanding shares of FNB Common Stock (other than shares as to which
dissenters' rights have been perfected and not withdrawn) will be converted into
an aggregate number of shares of Whitney common stock, no par value ("Whitney
Common Stock"), equal to the sum of $33,455,200 plus Retained Net Income After
Tax, as defined below (the "Purchase Price"), divided by the average of the
closing per share trading prices (adjusted appropriately for any stock split,
stock dividend, recapitalization, reclassification or similar transaction that
is effected or for which a record date occurs) of Whitney Common Stock (the
"Trading Prices") on the 20 trading days preceding the fifth trading day
immediately prior to the Effective Date (the "Average Market Price"). The
actual number of shares of Whitney Common Stock that will be received by an FNB
vii
<PAGE>
shareholder by reason of the Company Merger will vary depending upon the Average
Market Price of the Whitney Common Stock and the amount of FNB's Retained Net
Income After Tax, if any.
"Retained Net Income After Tax" is defined as the consolidated retained net
income of FNB for the period March 1, 1998 through the end of the calendar month
immediately preceding the Effective Date, as agreed to by Whitney and FNB, based
on normal banking net income, less appropriate income taxes accrued and
dividends declared and/or paid and excluding any unusual or nonrecurring
additions to net income such as reversals of loan loss or other valuation
reserves and gains on the sale of investments or other assets. Retained Net
Income After Tax is not reduced by FNB's expenses for its counsel, accounting
services and investment advisor incurred in connection with the Mergers,
provided such expenses do not exceed $350,000 in the aggregate; any expenses in
excess of that limit will reduce Retained Net Income After Tax on a dollar for
dollar basis. For the period March 1, 1998 through ____________, 1998, on an
unaudited basis, FNB had Retained Net Income After Tax of approximately
$_________. This figure has not been reviewed by Whitney, and because the
determination of Retained Net Income After Tax is dependent upon the facts as of
the end of the month immediately preceding the Effective Date, it is not
possible to estimate the amount of Retained Net Income After Tax, if any, with
certainty at this time.
If Whitney issues a press release prior to the Effective Date announcing
that it is negotiating or has executed a definitive merger or other acquisition
agreement as a result of which Whitney would cease to be an independent,
publicly traded company and has not thereafter issued a press release announcing
the termination of such negotiations or definitive agreement, then the "Average
Market Price" will be the average of the Trading Prices on the 20 trading days
preceding the 10th trading day immediately prior to the first of such press
releases.
Inasmuch as the consideration to be paid by Whitney in the Company Merger
will be based on the "Average Market Price" of Whitney Common Stock as defined
in the Plan of Merger, the actual value on the Effective Date of the shares to
be received by holders of FNB Common Stock in the Company Merger may be more or
less than the Average Market Price of those shares as calculated in accordance
with the Plan of Merger.
In lieu of issuing any fractional share of Whitney Common Stock, each FNB
shareholder who would otherwise be entitled thereto will receive a cash payment
(without interest) equal to such fractional share multiplied by the Average
Market Price.
See "The Plan of Merger - Description of the Plan of Merger" and "The Plan
of Merger - Description of the Plan of Merger -- Conversion of Common Stock."
For information regarding restrictions on the transfer of Whitney Common
Stock received pursuant to the Plan of Merger applicable to certain of FNB's
shareholders, see "The Plan of Merger - Status Under Federal Securities Laws;
Certain Restrictions on Resales."
Exchange of Certificates. Upon consummation of the Company Merger, a
letter of transmittal, together with instructions for the exchange of
certificates representing shares of FNB Common Stock for certificates
representing shares of Whitney Common Stock, will be mailed to each person who
was a shareholder of record of FNB on the Effective Date. SHAREHOLDERS ARE
REQUESTED NOT TO SEND IN THEIR STOCK CERTIFICATES UNTIL THEY HAVE RECEIVED A
LETTER OF TRANSMITTAL AND FURTHER WRITTEN INSTRUCTIONS.
Shareholders of FNB who cannot locate their stock certificates are urged to
contact promptly:
Mary Frances Jones
The First National Bancorp of Greenville, Inc.
100 West Commerce Street
Greenville, Alabama 36037
(334) 382-6511
viii
<PAGE>
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 FNB
and Whitney against any claim that may be made against FNB or Whitney by the
owner of the certificate(s) alleged to have been lost or destroyed. FNB 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 FNB and Whitney.
See "The Plan of Merger - Description of the Plan of Merger -- Exchange of
Certificates."
Regulatory Approvals and Other Conditions of the Company Merger. In
addition to approval by the shareholders of FNB, consummation of the Company
Merger 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
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 FNB of opinions as to the qualification of the Mergers as
a tax-free reorganization under applicable law, (v) FNB's receipt of a letter
from Robinson-Humphrey, dated as of the date of the Meeting, in form and
substance satisfactory to FNB, confirming its fairness opinion to the Board of
Directors of FNB and (vi) certain other conditions customary for agreements of
this sort. The parties intend to consummate the Company Merger as soon as
practicable after all of the conditions to the Company Merger have been met or
waived; however, there is no assurance that such conditions will be satisfied by
the date of the Meeting or at all. See "The Plan of Merger - Description of the
Plan of Merger -- Regulatory Approvals and Other Conditions of the Company
Merger."
On June 1, 1998, Whitney filed an application with the Board of Governors
of the Federal Reserve System (the "Reserve Board") seeking approval of the
Company Merger. There can be no assurance that final approval of this
application will be obtained, or that the other conditions to consummation of
the Company Merger will be satisfied by the date of the Meeting or at all. See
"The Plan of Merger - Description of the Plan of Merger -- Regulatory Approvals
and Other Conditions of the Company Merger."
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 Company Merger other than the conditions
relating to approval by the shareholders of FNB, the absence of a stop order
suspending the effectiveness of the Registration Statement of which this
Proxy Statement-Prospectus forms a part, the receipt of all necessary regulatory
approvals, the satisfaction of all requirements prescribed by law for
consummation of the Company Merger, and FNB's receipt of a letter from
Robinson-Humphrey dated as of the date of the Meeting, in form and substance
satisfactory to FNB, confirming Robinson-Humphrey's fairness opinion to the
Board of Directors of FNB.
The Plan of Merger may be amended, at any time before or after its approval
by the shareholders of FNB, by the mutual agreement of the Boards of Directors
of the parties to the Plan of Merger; provided that, under the Louisiana
Business Corporation Law ("LBCL") any amendment made subsequent to shareholder
approval of the Company Merger may not alter the amount or type of shares into
which the FNB Common Stock will be converted, alter any term of the Articles of
Incorporation of Whitney as the surviving corporation 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 FNB.
The Plan of Merger may be terminated at any time prior to the Effective
Date (i) by the mutual consent of Whitney and FNB; (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 30 days after written notice of such breach or November
30, 1998; (iii) if the Company Merger has not occurred by November 30, 1998;
(iv) if FNB's board of directors withdraws its recommendation of the Company
Merger or recommends another acquisition transaction; (v) if FNB receives a bona
fide written offer with respect to another acquisition transaction and the Board
of Directors of FNB determines in good faith, after consultation with its
financial advisers and counsel, that such transaction is more favorable to FNB's
shareholders than the transactions contemplated by the Plan of Merger; (vi) if
the number of shares of FNB 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 FNB
Common Stock that would preclude pooling-of-interests accounting for the Mergers
(i.e., if, after the
ix
<PAGE>
Meeting, more than 10% of FNB 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); or (vii) on the basis of
certain other grounds specified in the Plan of Merger. The Plan of Merger
provides for a termination fee of $990,000 payable to Whitney if the Plan of
Merger is terminated under the circumstances described in clause (iv) or clause
(v) of the preceding sentence. See "The Plan of Merger -Description of the Plan
of Merger -- Waiver, Amendment and Termination."
ACCOUNTING TREATMENT
Whitney intends to account for the Mergers as a pooling-of-interests, and
it is a condition to Whitney's obligation to consummate the Company Merger
that (i) it receive certain assurances from FNB's independent public accountants
that the Mergers may be accounted for as a pooling-of-interests and (ii) neither
Whitney's independent public accountants nor the Commission shall have taken
the position that the transactions contemplated by the Plan of Merger do
not qualify for pooling-of-interests accounting treatment. See "The Plan of
Merger - Accounting Treatment."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Company Merger is conditioned upon receipt by Whitney
and FNB 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 FNB 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 in lieu of fractional shares of Whitney Common
Stock. BECAUSE OF THE COMPLEXITY OF THE TAX LAWS, EACH SHAREHOLDER SHOULD
CONSULT HIS TAX ADVISOR CONCERNING THE APPLICABLE FEDERAL, STATE AND LOCAL
INCOME TAX CONSEQUENCES OF THE MERGERS. See "Certain Federal Income Tax
Consequences."
DISSENTERS' RIGHTS
Shareholders of FNB who perfect dissenters' rights will not receive Whitney
Common Stock but will instead be entitled to receive the fair value of their
shares, plus accrued interest, as determined under Section 10-2B-13.01, et seq.,
of the ABCA. Failure to comply with statutory procedures in the exercise of
dissenters' rights will nullify such rights. See "Dissenters' Rights."
INTERESTS OF CERTAIN PERSONS
Certain of the executive officers and members of the Board of Directors of
FNB may be deemed to have interests in the Mergers that are in addition to their
interests, if any, as shareholders of FNB generally. These interests include,
among others, the continued employment of the executive officers by Whitney
after the Effective Date; the continuation of certain employee benefits
generally; and provisions in the Plan of Merger relating to indemnification of
directors and officers of FNB and continuation of directors and officers
liability insurance. See "The Plan of Merger - Interests of Certain Persons."
MARKET PRICES
On March 23, 1998, the last trading day preceding the date that Whitney and
FNB 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
Stock Market, was $58.375. On ___________________, 1998, the closing sales
price for a share of Whitney Common Stock was $_______, and if such date had
been the Effective Date, the Average Market Price would have been approximately
$_______. There can be no assurance as to the market value of Whitney Common
Stock on the Effective Date.
The FNB Common Stock is not traded on any exchange, and there is no
established public trading market for such stock. There are no bid or asked
prices available for FNB Common Stock; however, FNB has a policy providing that,
in accordance with guidelines filed with regulatory authorities, FNB will
purchase its own shares of FNB Common
x
<PAGE>
Stock as shares become available, which shares are then held as treasury shares.
FNB also from time to time sells the treasury shares so acquired. The price of
such shares in these transactions, whether involving a purchase or sale by FNB,
equals the book value of the FNB Common Stock as of the end of the immediately
preceding quarter. During the last two years, FNB purchased a total of 91 shares
and sold a total of 260 shares in 24 trades pursuant to this policy at prices
ranging from $694.69 to $772.02 per share. FNB's management is not aware of any
trades during that period not involving a purchase or sale by FNB. See
"Information About FNB -Market Prices and Dividends."
COMPARATIVE RIGHTS OF SHAREHOLDERS
If the Company Merger is consummated, all shareholders of FNB will become
shareholders of Whitney, and their rights will be governed by and be subject to
Whitney's Articles of Incorporation and By-laws rather than those of FNB.
Whitney's Articles of Incorporation contain provisions that are different from
those of FNB, 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."
xi
<PAGE>
SELECTED FINANCIAL DATA OF FNB
The following selected financial data with respect to each of the fiscal
years in the five-year period ended December 31, 1997 have been derived from
FNB's audited financial statements. The selected financial data for the three
months ended March 31, 1998 and 1997 have been derived from FNB's unaudited
financial statements, which, in the opinion of FNB's management, reflect all
adjustments that are necessary for a fair presentation of the results of
operations for the interim periods presented. The results of operations for the
three-month period ended March 31, 1998 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 FNB's financial statements and notes thereto
appearing elsewhere in this Proxy Statement-Prospectus.
<TABLE>
<CAPTION>
Three months ended
March 31, Years ended December 31,
-------------------- -------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- ---------- ----------
(In thousands, except per share data, unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Balance Sheet Data:
Total assets......................... $117,478 $114,618 $115,142 $111,884 $106,755 $107,069 $105,274
Total earning assets................. 107,170 104,773 105,287 103,089 100,668 101,024 99,462
Total loans.......................... 41,759 40,516 41,017 38,828 36,938 35,507 35,362
Total investment in securities....... 62,678 59,499 59,930 60,211 59,655 62,854 58,338
Interest bearing deposits............ 83,803 82,885 82,463 81,437 79,391 79,679 79,404
Noninterest bearing deposits......... 17,960 16,859 17,019 16,570 15,958 15,944 14,830
Shareholders' equity................. 13,386 12,329 12,712 11,565 10,522 10,449 10,045
Income Statement Data:
Total interest income................ $ 1,943 1,869 $ 7,611 $ 7,310 $ 6,914 $ 6,513 $ 7,054
Net interest income.................. 1,108 1,060 4,276 3,940 3,627 3,973 4,605
Provision for possible loan losses... 0 23 163 14 0 (62) (34)
Non-interest income.................. 523 227 893 725 764 859 891
Non-interest expense................. 848 769 3,132 2,956 3,027 3,039 3,085
Net income........................... 352 332 1,280 1,141 952 1,224 1,663
Per Share Data:
Basic earnings per share............. 20.68 19.64 75.29 67.55 56.51 72.30 97.08
Fully diluted earnings per share..... 20.68 19.64 75.29 67.55 56.51 72.30 97.08
Cash dividends per share............. 5.00 4.75 24.00 21.00 19.00 18.00 17.00
Book value per share, end of period.. 787.72 735.75 772.02 720.88 674.30 636.83 595.78
Key Ratios:
Net income as a percent of
average assets..................... 1.20% 1.16% 1.11% 1.02% 0.89% 1.14% 1.58%
Net income as a percent of
average equity..................... 10.52% 10.77% 10.07% 9.87% 9.05% 11.71% 16.56%
Allowance for loan losses as
a percent of loans and leases
at period end...................... 0.68% 0.44% 0.54% 0.53% 0.96% 1.44% 1.73%
Average equity as a percent
of average total assets............ 11.39% 10.76% 11.04% 10.34% 9.35% 9.78% 9.54%
Dividend payout ratio................ 24% 24% 32% 31% 34% 25% 18%
</TABLE>
xii
<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, 1997 and for the three-month periods
ended March 31, 1998 and 1997 have been derived from the consolidated financial
statements of Whitney's consolidated group and should be read in conjunction
with the information concerning Whitney that has been incorporated by reference
in this Proxy Statement-Prospectus. The selected financial data for the three
months ended March 31, 1998 and 1997 have been derived from Whitney's unaudited
financial statements, which, in the opinion of Whitney's management, reflect all
adjustments that are necessary for a fair presentation of the results of
operations for the interim periods presented. The results of operations for the
three-month period ended March 31, 1998 are not necessarily indicative of the
results to be expected for the entire year.
<TABLE>
<CAPTION>
Three months ended
March 31 Years ended December 31,
------------------------ --------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ----------- ----------- ---------- ---------- ---------- ----------
(In thousands, except per share data, unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Balance Sheet Data:
Total assets.............. $4,292,244 $4,148,314 $4,180,226 $3,993,855 $3,691,463 $3,657,259 $3,557,547
Total earning assets...... 3,903,427 3,770,588 3,806,450 3,625,756 3,338,755 3,305,898 3,212,117
Total loans............... 2,586,827 2,264,834 2,395,496 1,973,236 1,560,108 1,305,265 1,253,909
Total investment in
securities............... 1,238,057 1,446,414 1,374,531 1,600,912 1,698,578 1,891,813 1,813,940
Interest bearing deposits. 2,439,309 2,284,056 2,322,473 2,264,765 2,191,828 2,216,170 2,191,437
Noninterest bearing
deposits................. 1,014,545 937,091 955,407 905,327 892,593 844,532 808,384
Shareholders' equity...... 485,865 445,099 458,958 423,927 379,811 323,958 262,107
Income Statement Data:
Total interest income..... 74,643 70,082 $ 291,409 $ 270,620 $ 249,980 $ 224,414 $ 215,414
Net interest income....... 48,265 43,977 184,462 168,568 162,183 155,254 149,575
Reduction in reserve
(provision)
for possible loan
losses................ -- (188) 2,812 4,435 8,960 25,793 58,847
Gains (loss) on sale of
securities............... -- -- 10 19 6 (931) 58
Non-interest income....... 12,600 10,808 51,025 41,798 38,188 38,590 37,503
Non-interest expense...... (39,610) (38,514) (159,630) (149,187) (137,005) (130,105) (124,544)
Income before income tax
and effect of accounting
changes............... 21,255 16,083 78,679 65,633 72,332 88,601 121,439
Income tax expense........ 6,859 5,296 26,461 21,139 22,819 23,672 38,047
Income before effect of
accounting changes,
net................. 14,396 10,787 52,218 44,494 49,513 64,929 83,392
Cumulative effect of
accounting
changes, net........... -- -- -- -- -- -- 685
Net income................ 14,396 10,787 52,218 44,494 49,513 64,929 84,077
Per Share Data:
Earnings per share........ $ 0.69 $ 0.52 $ 2.52 $ 2.18 $ 2.46 $ 3.27 $ 4.27
Earnings per share,
assuming dilution........ 0.68 0.52 2.50 2.17 2.44 3.25 4.27
Cash dividends per share.. 0.30 0.28 1.12 0.97 0.82 0.64 0.43
Book value per share, end
of period................ 23.46 21.58 23.01 21.45 20.21 16.19 15.77
Key Ratios:
Net income as a percent of
average assets........... 1.36% 1.05% 1.25% 1.11% 1.34% 1.78% 2.36%
Net income as a percent of
average equity........... 12.02% 9.83% 11.38% 10.50% 13.04% 20.04% 32.08%
Net interest margin....... 5.13% 4.86% 4.97% 4.78% 4.98% 4.81% 4.76%
Allowance for loan losses
as a percent of loans and
leases at period end..... 1.59% 1.83% 1.62% 1.86% 2.36% 2.92% 3.97%
Average equity as a
percent of average
total assets............. 11.32% 10.73% 10.98% 10.61% 10.29% 8.86% 7.37%
Equity as a percent of
total assets at
period end............... 11.32% 10.76% 11.10% 10.44% 10.44% 9.93% 8.48%
Dividend payout ratio..... 43% 54% 44% 41% 28% 17% 9%
</TABLE>
xiii
<PAGE>
COMPARATIVE PER SHARE DATA
The following table presents certain information for Whitney and FNB 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
Company Merger 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 Company Merger using the pooling-of-interests method applied in
accordance with generally accepted accounting principles.
<TABLE>
<CAPTION>
Historical Pro Forma FNB
Whitney FNB Combined(1) Equivalent(2)
---------- --------- ----------- -------------
<S> <C> <C> <C> <C>
Basic Earnings per common share:
Years ended:
December 31, 1997.................... $ 2.52 $ 75.29 $ 2.51 $ 2.51
December 31, 1996.................... $ 2.18 $ 67.55 2.17 2.17
December 31, 1995.................... $ 2.46 $ 56.51 2.44 2.44
Three months ended March 31, 1998..... $ 0.69 $ 20.68 0.69 0.69
Dividends declared per common share:
Years ended:
December 31, 1997.................... $ 1.12 $ 24.00 1.11 1.11
December 31, 1996.................... $ 0.97 $ 21.00 0.96 0.96
December 31, 1995.................... $ 0.82 $ 19.00 0.81 0.81
Three months ended March 31, 1998..... $ 0.30 $ 5.00 0.30 0.30
Book value per common share:
As of March 31, 1998.................. $23.46 $787.72 23.43 23.43
As of December 31, 1997............... $23.01 $772.02 22.98 22.98
</TABLE>
______________________________
(1) Assumes an Average Market Price of Whitney Common Stock of $55.00, no
Retained Net Income After Tax included in the Purchase Price, and the
issuance of 608,276 shares of Whitney Common Stock to effect the Company
Merger.
(2) The FNB Equivalent is calculated by multiplying the amount in the pro forma
combined column by an exchange ratio of 35.76-to-1 at the assumed Average
Market Price of $55.00.
Whitney recently completed mergers with Meritrust Federal Savings Bank and
Louisiana National Security Bank. These transactions will be accounted for as
poolings-of-interests, but they are not considered material to Whitney for
purposes of presenting pro forma financial information. Therefore, information
regarding these transactions is not included in the foregoing table, and Whitney
historical amounts have not been restated to reflect the recently completed
acquisitions.
xiv
<PAGE>
THE MEETING
GENERAL
This Proxy Statement-Prospectus is furnished to shareholders of The First
National Bancorp of Greenville, Inc. ("FNB") in connection with the solicitation
of proxies on behalf of its Board of Directors for use at a special meeting of
shareholders of FNB (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 or postponements thereof.
FNB and Whitney Holding Corporation ("Whitney") have each supplied all
information included herein with respect to it and its consolidated
subsidiaries. FNB and its subsidiaries are sometimes collectively referred to
herein as "FNB's consolidated group," and 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 Agreement and Plan of Merger dated March 24, 1998 between Whitney and
its wholly-owned banking subsidiary, Whitney National Bank ("Whitney Bank"), on
the one hand, and FNB and its wholly-owned subsidiary, The First National Bank
of Greenville ("FNBG"), on the other (the "Plan of Merger"). Pursuant to the
Plan of Merger, FNB will merge into Whitney (the "Company Merger"), and, in due
course, FNBG 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 FNB ("FNB 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 Common Stock."
SHARES ENTITLED TO VOTE; QUORUM; VOTE REQUIRED
Only holders of record of FNB Common Stock at the close of business on
____________________, 1998 are entitled to notice of and to vote at the Meeting.
On that date there were 17,009 shares of FNB 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 FNB Common
Stock is necessary to constitute a quorum. The Plan of Merger must be approved
by the affirmative vote of the holders of at least two-thirds of the shares of
FNB Common Stock entitled to vote on the Plan of Merger. Abstentions and broker
non-votes will have the effect of votes against the Plan of Merger. Broker non-
votes will be counted for purposes of determining the presence of a quorum for
the Meeting.
Directors and executive officers of FNB holding an aggregate of 4,140
shares, or approximately 24.3% of the outstanding FNB Common Stock, have agreed,
subject to certain conditions, to vote in favor of the Plan of Merger at the
Meeting.
Louisiana law does not require that shareholders of Whitney approve the
Plan of Merger.
SOLICITATION, VOTING AND REVOCATION OF PROXIES
A form of proxy for use at the Meeting accompanies this Proxy Statement-
Prospectus and will permit each holder of record of FNB Common Stock on the
record date for the Meeting to vote the shares held by him as of such date at
the Meeting. A shareholder may use a proxy whether or not he 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 or
any adjournments or postponements thereof. Where a shareholder specifies his
choice on the proxy with respect to the proposal to approve the Plan of Merger,
the shares represented by the proxy will be voted in accordance with such
specification. IF NO SUCH SPECIFICATION IS MADE, THE SHARES WILL BE VOTED IN
FAVOR OF THE PLAN OF MERGER.
1
<PAGE>
A proxy may be revoked by (i) giving written notice of revocation at any time
before its exercise to The First National Bancorp of Greenville, Inc., 100 West
Commerce Street, Greenville, Alabama 36037, Attention: Secretary or (ii)
executing and delivering to the Secretary at any time before its exercise a
later dated proxy.
In addition to soliciting proxies by mail, directors, officers and
employees of 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 FNB Common Stock,
and FNB will reimburse such parties for reasonable out-of-pocket expenses
incurred in connection therewith. FNB 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 FNB will become
the business, properties, debts and liabilities of Whitney, and the shareholders
of FNB will become shareholders of Whitney. Upon consummation of the Company
Merger, FNBG will be a wholly-owned subsidiary of Whitney. Thereafter, in due
course, Whitney intends to cause a merger of FNBG into Whitney Bank, at which
time the business, properties, debts and liabilities of FNBG will become the
business, properties, debts and liabilities of Whitney Bank. The steps taken to
achieve this result involve the following transactions: (i) FNB will merge into
Whitney and the separate existence of FNB will cease; (ii) shareholders of FNB
will receive the consideration described below under the heading captioned " -
Description of the Plan of Merger -- Conversion of Common Stock" and (iii) FNBG
will, in due course, merge into Whitney Bank and the separate existence of FNBG
will cease.
BACKGROUND
In the summer of 1995, Elisha C. Poole, Chairman of the Board of Directors
of FNB, received unsolicited inquires regarding a possible business combination
with FNB from officers of three regional financial institutions other than
Whitney. During discussions and meetings in which Mr. Poole represented FNB, it
was made clear that FNB had no such present interest, however, it was agreed
that should FNB become interested, each of the three banks would be informed.
In the summer of 1996, a similar inquiry was received from a fourth regional
financial institution. Mr. Poole discussed the inquiry with officers of that
institution, and again Mr. Poole communicated that FNB had no present interest
in such a combination.
In the summer of 1997, Mr. Poole and Mr. Bill M. Simms, Vice Chairman of
the Board of Directors and Chief Executive Officer of FNB, acting on behalf of
FNB, called officers of the four banks, plus an additional bank which had since
expressed an interest to Mr. Simms (none of which was Whitney) and informed them
FNB would consider a proposal. Meetings were held with each group. Three of
the five financial institutions made proposals, all of which were deemed
inadequate and declined, so that by October 1, 1997, no proposals were
outstanding, no discussions were ongoing and no further discussions were
scheduled.
In February 1998, Mr. Simms received an unsolicited telephone inquiry from
representatives of Whitney regarding a possible business combination with FNB.
At that time, Mr. William L. Marks, Chairman of the Board of Directors and Chief
Executive Office of Whitney, requested to meet with Mr. Simms regarding
Whitney's interest in FNB and a possible business combination with Whitney.
On February 6, 1998, Mr. Marks and Mr. John Hope of Whitney met with Mr.
Simms and discussed the business philosophy and prospects of Whitney and FNB, as
well as a range of possible values for the possible acquisition of FNB by
Whitney. By letter to Mr. Simms dated February 9, 1998, Mr. Marks summarized
certain of the
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items discussed at the earlier meeting with Mr. Simms, and expressed Whitney's
interest in a possible business combination with FNB.
At a meeting of the Board of Directors of FNB on February 17, 1998, Mr.
Poole and Mr. Simms informed the Board of Directors of the unsolicited
indication of interest from Whitney regarding a possible business combination
with FNB, and the Board of Directors entered into a lengthy discussion regarding
the contact by Whitney and the appropriate response thereto. At the conclusion
of the discussion, the Board of Directors authorized Mr. Poole and Mr. Simms to
meet with representatives of Whitney to explore the details of Whitney's
indication of interest. The Board of Directors also authorized and directed Mr.
Poole and Mr. Simms to engage special legal counsel and an investment banker to
assist the Board of Directors in its assessment and analysis of Whitney's
indication of interest.
On March 3, 1998, Whitney sent to FNB a proposed form of Agreement and Plan
of Merger for the acquisition of FNB. On or about March 11, 1998, Messrs. Poole
and Simms engaged The Robinson-Humphrey Company, LLC ("Robinson-Humphrey") to
represent FNB in connection with the evaluation of the indication of interest
expressed by Whitney and the possible acquisition of FNB. In addition, on or
about March 11, 1998, Messrs. Poole and Simms, on behalf of FNB, retained the
law firm of Bradley Arant Rose & White LLP ("Special Counsel") as special
counsel to FNB with respect to the discussions with Whitney and the possible
sale of FNB. During early March 1998, Messrs. Poole and Simms discussed with
Special Counsel and Robinson-Humphrey the advisability of entering into a non-
binding letter of intent with Whitney and conducted certain due diligence
reviews of Whitney in conjunction with Special Counsel and Robinson-Humphrey.
Following discussions in early March 1998 among representatives of Whitney
and Robinson-Humphrey, Special Counsel and Messrs. Poole and Simms, the parties
decided not to proceed with a letter of intent and instead began negotiations
based on Whitney's proposed form of Agreement and Plan of Merger. On March 18,
1998, Messrs. Poole and Simms met with Robinson-Humphrey and Special Counsel to
discuss the draft Agreement and Plan of Merger. At that time, the parties
discussed the structure of the proposed transaction, the tax-free nature of the
transaction and various provisions of the draft Agreement and Plan of Merger, as
well as the due diligence review conducted to date with respect to Whitney.
Messrs. Poole and Simms also discussed with Special Counsel the fiduciary duties
of directors in the context of considering a possible sale of FNB. Messrs.
Poole and Simms directed Special Counsel to negotiate certain changes to the
draft Agreement and Plan of Merger with representatives of Whitney.
Between March 12, 1998 and March 23, 1998, representatives of Whitney and
FNB engaged in further discussions of and negotiations with respect to the draft
Agreement and Plan of Merger, culminating on March 24, 1998 with a revised
proposed final Agreement and Plan of Merger. On March 24, 1998, the Board of
Directors of FNB held a special meeting to consider the proposed transaction
with Whitney. At this meeting, Messrs. Poole and Simms, together with Special
Counsel to FNB, outlined the terms and conditions of the proposed transaction.
Special Counsel advised the FNB Board of Directors with regard to its fiduciary
duties to the shareholders of FNB in the context of evaluating the terms of the
transaction. Management of and Special Counsel to FNB also summarized their
findings with respect to their due diligence investigation of Whitney. In
addition, Robinson-Humphrey made a presentation to the Board of Directors of
FNB, and discussed in detail the methodologies and considerations underlying its
analyses and delivered its opinion as to the fairness of the Purchase Price (as
hereinafter defined) from a financial point of view to the shareholders of FNB.
Members of the FNB Board asked detailed questions of its Special Counsel,
management and Robinson-Humphrey and deliberated upon the merits of the Company
Merger. Thereafter, the Board of Directors of FNB unanimously approved the Plan
of Merger and the transactions contemplated thereby, and FNB executed the Plan
of Merger.
REASONS FOR THE PLAN OF MERGER
General. The financial and other terms of the Plan of Merger are the
result of arm's-length negotiations between representatives of Whitney and FNB.
Determination of the consideration to be received by FNB's shareholders was
based upon many factors considered by the Boards of Directors of Whitney and
FNB, including the comparative financial condition, historical results of
operations, current business and future prospects of Whitney, FNB, Whitney Bank
and FNBG, the market price and historical earnings per share of the common stock
of Whitney and FNB, and the desirability of combining the financial and
managerial resources of Whitney Bank and FNBG to pursue consumer and commercial
banking business in the markets currently served by FNBG.
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Whitney. Whitney's business strategy includes expansion in the Gulf Coast
region. Whitney's management identified FNBG as an institution that fit well
with this strategy. FNBG's three locations in the Greenville, Alabama area
would expand Whitney's presence in southern Alabama, bridging Whitney's Alabama
Gulf Coast branch structure with its Montgomery, Alabama branches to the north.
In deciding to pursue an acquisition of FNB and FNBG, Whitney's management
and the Executive Committee of Whitney's Board of Directors noted, among other
things, the following: (i) FNBG's deposit base and branch network in southern
Alabama; (ii) FNBG's stable, experienced management team and staff; and (iii)
FNB's capitalization and asset quality.
FNB. The Board of Directors of FNB believes that approval of the Plan of
Merger is in the best interests of FNB and its shareholders. In reaching its
decision to approve the terms of the Plan of Merger, the Board of Directors of
FNB consulted with FNB's senior management, as well as its financial and legal
advisors, and considered various factors, including, without limitation, the
following:
(a) The financial terms of the Company Merger. The presentation by
-----------------------------------------
Robinson-Humphrey indicating that the Company Merger transaction multiples for
FNB, based on the Purchase Price and the Whitney Common Stock price on March 24,
1998, were within the range of fairness with other transactions reviewed by
Robinson-Humphrey, and represented multiples of 2.5 times FNB's per common share
fully diluted tangible book value, 26.12 times last 12-months earnings, and
28.61% of total assets.
(b) Certain financial information about FNB and Whitney. Such information
---------------------------------------------------
included, but was not limited to, information with regard to recent and
historical stock performance, valuation analyses, pro forma analyses,
comparative financial and operating performance data, acquisition capacity
analyses, and comparable precedent merger and acquisition transactions presented
by Robinson-Humphrey. The Board also considered the results of due diligence on
Whitney, particularly regarding the views of Robinson-Humphrey about Whitney
Common Stock.
(c) Advice of financial advisor and fairness opinion. The opinion of
------------------------------------------------
Robinson-Humphrey (including the assumptions and financial information and
projections relied on by Robinson-Humphrey in arriving at such opinion) that, as
of March 24, 1998, the terms of the Company Merger were fair to the shareholders
of FNB from a financial point of view. See " - Opinion of The Robinson-Humphrey
Company, LLC"
(d) Tax effects of transaction and liquidity. The expectation that the
----------------------------------------
receipt of Whitney Common Stock will be a tax-free transaction to FNB's
shareholders, and the liquidity that the Company Merger would provide to FNB's
shareholders, with the Whitney Common Stock to be issued in the Company Merger
being included for quotation on the Nasdaq Stock Market.
(e) Certain nonfinancial information and terms of agreements. Special
--------------------------------------------------------
Counsel distributed copies of the Plan of Merger to the Board and generally
summarized their material provisions.
(f) Regulatory approvals. The likelihood of obtaining the regulatory
--------------------
approvals that would be required with respect to the Company Merger. See " -
Regulatory Approvals and Other Conditions of the Company Merger."
(g) Impact on FNB constituencies. The general impact of the Company
----------------------------
Merger on various constituencies serviced by FNB, including its customers,
employees and communities.
The discussion of the information and factors considered and given weight
by the Board of Directors of FNB is not intended to be exhaustive. In view of
the variety of factors considered in connection with their evaluation of the
Plan of Merger, the 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.
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RECOMMENDATION OF FNB'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF FNB HAS DETERMINED THAT THE COMPANY MERGER IS
FAIR, FROM A FINANCIAL POINT OF VIEW, AND IS IN THE BEST INTERESTS OF FNB AND
ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS OF FNB HAS UNANIMOUSLY
APPROVED THE PLAN OF MERGER AND UNANIMOUSLY RECOMMENDS THAT FNB'S SHAREHOLDERS
VOTE FOR APPROVAL OF THE PLAN OF MERGER.
OPINION OF THE ROBINSON-HUMPHREY COMPANY, LLC
General. FNB retained Robinson- Humphrey to act as its financial adviser
in connection with the Company Merger. Robinson-Humphrey has rendered an
opinion to FNB's 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 FNB's shareholders. The text of such
opinion is set forth in Appendix B to this Proxy Statement-Prospectus and should
be read in its entirety by shareholders of FNB.
The consideration to be received by FNB's shareholders in the Company
Merger was determined by FNB and Whitney in their negotiations. No limitations
were imposed by the Board of Directors or management of FNB 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 FNB's Board of Directors,
Robinson-Humphrey performed a variety of financial analyses. However, the
preparation of a fairness opinion involves various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances, and, therefore, such an opinion
is not readily susceptible to summary description. Robinson-Humphrey, in
conducting its analysis and in arriving at its opinion, has not conducted a
physical inspection of any of the properties or assets of FNB, and has not made
or obtained any independent valuation or appraisals of any properties, assets or
liabilities of FNB. Robinson-Humphrey has assumed and relied upon the accuracy
and completeness of the financial and other information that was provided to it
by FNB or that was publicly available. Its opinion is necessarily 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.
Valuation Methodologies. In connection with its opinion on the Company
Merger and the presentation of that opinion to FNB's Board of Directors,
Robinson-Humphrey performed two valuation analyses with respect to FNB: (i) an
analysis of comparable prices and terms of recent transactions involving
financial institutions acquiring banks; and (ii) a discounted cash flow
analysis. Both of these methodologies are discussed briefly below.
Comparable Transaction Analysis. Robinson-Humphrey performed three
--------------------------------
analyses of premiums paid for selected banks with comparable
characteristics to FNB. Comparable transactions were considered to be: (i)
transactions since January l, 1997, where the seller was a bank with total
assets between $100 million and $500 million; (ii) transactions since
January 1, 1997, 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, 1997 where the seller was a bank located in Alabama.
(i) Based on the first of the foregoing transactions since January
1, 1997, where the seller was a bank with total assets between $100
million and $500 million, the analysis yielded a range of transaction
values to book value of 125.95 percent to 433.83 percent, with a mean
of 248.99 percent and a median of 246.39 percent. These compare to a
transaction value for the Company Merger of 250.00 percent of FNB's
book value as of December 31, 1997.
The analysis yielded a range of transaction values as a percentage of
tangible book value for the comparable transactions ranging from
125.95 percent to 439.21 percent, with a mean of 258.19 percent and a
median of 247.30 percent. These compare to a transaction value to
tangible book value at December 31, 1997 of 250.00 percent 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
5.72 times to 45.14 times, with a mean of 21.35 times and a median of
20.75 times. These compare to a transaction value to the December 31,
1997 trailing twelve month earnings per share of 26.12 times for the
Company Merger.
Lastly, the analysis yielded a range of transaction values as a
percentage of total assets for the comparable transactions ranging
from 9.04 percent to 34.31 percent, with a mean of 22.23 percent and a
median of 22.29 percent. These compare to a transaction value to
total assets at December 31, 1997 of approximately 28.61 percent for
the Company Merger.
(ii) Based on transactions since January 1, 1997, where the seller
was a bank located in the Southeast with total assets between $100
million and $500 million, the analysis yielded a range of transaction
values to book value of 150.56 percent to 433.83 percent, with a mean
of 263.10 percent and a median of 249.42 percent. These compare to a
transaction value for the Company Merger of 250.00 percent of FNB's
book value as of December 31, 1997.
The analysis yielded a range of transaction values as a percentage of
tangible book value for the comparable transactions ranging from
150.56 percent to 439.21 percent, with a mean of 268.80 percent and a
median of 247.39 percent. These compare to a transaction value to
tangible book value at December 31, 1997 of 250.00 percent 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
12.74 times to 35.08 times, with a mean of 21.83 times and a median of
22.09 times. These compare to a transaction value to the December 31,
1997 trailing twelve month earnings per share of 26.12 times for the
Company Merger.
Lastly, the analysis yielded a range of transaction values as a
percentage of total assets for the comparable transactions ranging
from 12.02 percent to 34.31 percent, with a mean of 23.54 percent and
a median of 24.11 percent. These compare to a transaction value to
total assets at December 31, 1997 of approximately 28.61 percent for
the Company Merger.
(iii) Based on transactions since January 1, 1997, where the seller
was a bank located in Alabama, the analysis yielded a range of
transaction values to book value of 177.40 percent to 283.43 percent,
with a mean of 218.78 percent and a median of 208.01 percent. These
compare to a transaction value for the Company Merger of 250.00
percent of FNB's book value as of December 31, 1997.
The analysis yielded a range of transaction values as a percentage of
tangible book value for the comparable transactions ranging from
178.14 percent to 283.43 percent, with a mean of 223.24 percent and a
median of 212.07 percent. These compare to a transaction value to
tangible book value at December 31, 1997 of 250.00 percent 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
14.19 times to 30.51 times, with a mean of 22.14 times and a median of
22.71 times. These compare to a transaction value to the December 31,
1997 trailing twelve months earnings per share of 26.12 times for the
Company Merger.
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Lastly, the analysis yielded a range of transaction values as a
percentage of total assets for the comparable transactions ranging
from 15.32 percent to 45.79 percent, with a mean of 28.03 percent and
a median of 28.08 percent. These compare to a transaction value to
total assets at December 31, 1997 of 28.61 percent for the Company
Merger.
No company or transaction used in the comparable transaction analyses is
identical to FNB. Accordingly, an analysis of the foregoing necessarily
involves complex consideration 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 FNB could produce through 2002, under various
circumstances, assuming that FNB performed in accordance with the
earnings/return projections of management at the time that FNB entered into
acquisition discussions in February of 1998. Robinson-Humphrey estimated
the terminal value for FNB at the end of the period by applying multiples
of earnings ranging from 14.0 times to 16.0 times and then discounting the
cash flow streams, dividends paid to shareholders and terminal value using
differing discount rates (ranging from 10.0 percent to 12.0 percent) chosen
to reflect different assumptions regarding the required rates of return of
FNB and the inherent risk surrounding the underlying projections. This
discounted cash flow analysis indicated a reference range of $19.6 to $22.1
million, or $1,150.00 to $1,301.40 per share, for FNB.
Compensation of Robinson-Humphrey. Pursuant to an engagement letter dated
March 17, 1998 between FNB and Robinson-Humphrey, FNB agreed to pay Robinson-
Humphrey a $100,000 Fairness Opinion Fee at the time of rendering. FNB has also
agreed to indemnify and hold harmless Robinson-Humphrey and its officers and
employees against certain liabilities in connection with its services under the
engagement letter, except for liabilities resulting from the gross negligence of
Robinson-Humphrey.
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. FNB's 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
Southeastern region of the U.S., and its knowledge of financial institutions and
FNB in particular.
DESCRIPTION OF THE PLAN OF MERGER
General. Pursuant to the Plan of Merger, if all conditions are satisfied
or waived, on the effective date of the Company Merger (the "Effective Date"),
FNB will be merged into Whitney, the separate existence of FNB will cease and
FNBG will become a wholly-owned subsidiary of Whitney. Thereafter, in due
course, FNBG will be merged with and into Whitney Bank and the separate
existence of FNBG will cease.
Conversion of Common Stock. By reason of the Company Merger, the
outstanding shares of FNB Common Stock (other than shares as to which
dissenters' rights have been perfected and not withdrawn) will be converted into
an aggregate number of shares of Whitney Common Stock equal to the sum of
$33,455,200 plus Retained Net Income After Tax (the "Purchase Price"), divided
by the average of the closing per share trading prices (adjusted appropriately
for any stock split, stock dividend recapitalization, reclassification or
similar transaction that is effected or for which a record date occurs) of
Whitney Common Stock (the "Trading Prices") on the 20 trading days preceding the
fifth trading day immediately prior to the Effective Date (the "Average Market
Price"). The actual number of shares of Whitney Common Stock that will be
received by an FNB shareholder by reason of the Company Merger will vary
depending upon the Average Market Price of the Whitney Common Stock and the
amount of FNB's Retained Net Income After Tax, if any.
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"Retained Net Income After Tax" is defined as the consolidated retained net
income of FNB for the period March 31, 1998 through the end of the calendar
month immediately preceding the Effective Date, as agreed to by Whitney and FNB,
based on normal banking net income, less appropriate income taxes accrued and
dividends declared and/or paid and excluding any unusual or nonrecurring
additions to net income such as reversals of loan loss or other valuation
reserves and gains on the sale of investments or other assets. Retained Net
Income After Tax is not reduced by FNB's expenses for its counsel, accounting
services and investment advisor incurred in connection with the Company Merger,
provided such expenses do not exceed $350,000 in the aggregate; any expenses in
excess of that limit will reduce Retained Net Income After Tax on a dollar for
dollar basis. For the period March 31, 1998 through __________, 1998, on an
unaudited basis, FNB had Retained Net Income After Tax of approximately
$___________. This figure has not been reviewed by Whitney, and because the
determination of Retained Net Income After Tax is dependent upon the facts as of
the end of the month immediately preceding the Effective Date, it is not
possible to estimate the amount of Retained Net Income After Tax, if any, with
certainty at this time.
If Whitney issues a press release prior to the Effective Date announcing
that it is negotiating or has executed a definitive merger or other acquisition
agreement as a result of which Whitney would cease to be an independent,
publicly traded company and has not thereafter issued a press release announcing
the termination of such negotiations or definitive agreement, then the "Average
Market Price" will be the average of the Trading Prices on the 20 trading days
preceding the 10th trading day immediately prior to the first of such press
releases.
Inasmuch as the consideration to be paid by Whitney in the Company Merger
will be based on the "Average Market Price" of Whitney Common Stock as defined
in the Plan of Merger, the actual value on the Effective Date of the shares to
be received by holders of FNB Common Stock in the Company Merger may be more or
less than the Average Market Price of those shares as calculated in accordance
with the Plan of Merger. On ________, 1998, the closing trading price for a
share of Whitney Common Stock was $______, and if such date had been the
Effective Date, the Average Market Price would have been $_________.
The following table sets forth examples of the number of shares of Whitney
Common Stock into which each share of FNB Common Stock would be converted on the
Effective Date, assuming that the Average Market Price for Whitney Common Stock
is as specified below. The table does not reflect any Retained Net Income After
Tax, which would increase the number of shares of Whitney Common Stock in each
case.
ASSUMED AVERAGE TOTAL NUMBER OF SHARES OF NUMBER OF WHITNEY
MARKET PRICE OF WHITNEY COMMON WHITNEY COMMON STOCK SHARES PER
STOCK TO BE ISSUED FNB SHARE/(1)/
- ------------------------------ ------------------------- --------------
$65.00 514,695 30.26
60.00 557,587 32.78
55.00/(2)/ 608,276 35.76
50.00 669,104 39.34
45.00 743,448 43.71
_____________________________
/(1)/ Based on 17,009 shares of FNB Common Stock, the number of shares
outstanding on ____________, 1998. Due to fluctuations in the trading
prices of Whitney Common Stock and the amount, if any, of Retained Net
Income After Tax, the actual number of shares of Whitney Common Stock
to be received by FNB's shareholders cannot currently be determined.
/(2)/ The closing price of Whitney Common Stock on ____________, 1998 was
$____________.
_______________________
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In lieu of issuing any fractional share of Whitney Common Stock, each FNB
shareholder who would otherwise be entitled thereto will 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 Whitney Common
Stock received pursuant to the Plan of Merger applicable to certain of FNB's
shareholders, see " - Status Under Federal Securities Laws; Certain Restrictions
on Resales."
Exchange of Certificates. On the Effective Date, each FNB shareholder will
cease to have any rights as a shareholder of FNB and his sole rights will
pertain to the shares of Whitney Common Stock into which his shares of FNB
Common Stock have been converted pursuant to the Company Merger, except for the
right to receive cash for any fractional shares and except for any FNB
shareholder who is entitled to assert dissenters' rights pursuant to the ABCA.
See "Dissenters' Rights."
Promptly after the consummation of the Company Merger, 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 FNB
Common Stock and (b) send or cause to be sent to each person who was a
shareholder of record of FNB on the Effective Date a letter of transmittal,
together with instructions for the exchange of certificates representing shares
of FNB Common Stock for certificates representing shares of Whitney Common
Stock.
SHAREHOLDERS ARE REQUESTED NOT TO SEND IN THEIR FNB COMMON STOCK
CERTIFICATES UNTIL THEY HAVE RECEIVED A LETTER OF TRANSMITTAL AND FURTHER
WRITTEN INSTRUCTIONS AFTER THE EFFECTIVE DATE. PLEASE DO NOT SEND IN YOUR STOCK
CERTIFICATES WITH YOUR PROXY.
After the Effective Date and until surrendered, certificates representing
FNB Common Stock will be deemed for all purposes, other than the payment of
dividends or other distributions, if any, in respect of Whitney Common Stock, to
represent the number of whole shares of Whitney Common Stock into which such
shares have been converted. Whitney, at its option, may decline to pay former
shareholders of FNB 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 FNB
Common Stock, at which time any such dividends or other distributions will be
paid, without interest.
Shareholders of FNB who cannot locate their stock certificates are urged to
contact promptly:
Mary Frances Jones
The First National Bancorp of Greenville, Inc.
100 West Commerce Street
Greenville, Alabama 36037
(334) 382-6511
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 FNB
and Whitney against any claim that may be made against FNB or Whitney by the
owner of the certificate(s) alleged to have been lost or destroyed. FNB 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 FNB and Whitney.
Transfer and Exchange Agents. The Bank of New York serves as Transfer Agent
and Registrar for Whitney Common Stock and will act as Exchange Agent in
connection with the Company Merger. FNB acts as its own Transfer Agent and
Registrar for FNB Common Stock.
Regulatory Approvals and Other Conditions of the Company Merger. In
addition to approval by the shareholders of FNB and satisfaction of the other
conditions described below, consummation of the Company Merger will require the
approval of the Board of Governors of the Federal Reserve System (the "Reserve
Board"). On June 1, 1998,
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Whitney filed an application with the Reserve Board seeking the approval of the
Company Merger. Whitney is currently awaiting final approval of that
application; however, there can be no assurance that it will be obtained by the
time of the Meeting 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 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 FNB of opinions as to qualification of the Mergers as
a tax-free reorganization under applicable law, (v) FNB's receipt of a letter
from Robinson-Humphrey, dated as of the date of the Meeting, in form and
substance satisfactory to FNB, confirming its fairness opinion to the Board of
Directors of FNB and (vi) certain other conditions customary for agreements of
this sort.
The parties intend to consummate the Company Merger as soon as practicable
after all of the conditions to the Company Merger have been met or waived;
however, there can be no assurance that the conditions to the Company Merger
will be satisfied.
Effective Date. As soon as practicable after shareholder and regulatory
approval is obtained and all other conditions to the consummation of the Plan of
Merger have been satisfied or waived, a Certificate of Merger will be executed
by Whitney and filed for recordation with the Louisiana Secretary of State, and
Articles of Merger respecting the Company Merger will also be filed with the
Alabama Secretary of State. The Company Merger will be effective at the date
and time specified in a certificate issued by the Louisiana Secretary of State.
The Plan of Merger provides that Whitney may delay consummation of the Bank
Merger, and it is intended that the Bank Merger will be consummated in due
course after consummation of the Company Merger. The Office of the Comptroller
of the Currency of the United States (the "Comptroller") would have to approve
the Bank Merger. Whitney and FNB are not able to predict the Effective Date or
the effective date of 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 Company Merger." If the
Company Merger is not consummated by November 30, 1998, either Whitney or FNB
may terminate the Plan of Merger. See "- Waiver, Amendment and Termination."
Conduct of Business Prior to the Effective Date. Each of FNB and FNBG has
agreed pursuant to the Plan of Merger that, prior to the Effective Date, it 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, it 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 FNB's payment of its regular quarterly dividends in amounts not
to exceed $5.00 per share; (b) amend its articles of incorporation or
association or by-laws or adopt or amend any resolution or agreement concerning
indemnification of directors or officers; (c) enter into or modify any agreement
requiring the payment of any salary, bonus, extra compensation, pension or
severance payment to any of its current or former directors, officers or
employees, except such agreements as are terminable at will without penalty or
other payment by it, or increase the compensation of any such person in any
manner inconsistent with its past practices; (d) except in the ordinary course
of business consistent with past practices, place or suffer to exist on any of
its assets or properties any mortgage, pledge, lien, charge or other
encumbrances (except as allowed under the Plan of Merger) or cancel any material
indebtedness owing to it or any claims it may have possessed, or waive any right
of substantial value or discharge or satisfy any material non-current liability;
(e) acquire another business or merge or consolidate with another entity or sell
or otherwise dispose of a material part of its assets except in the ordinary
course of business consistent with past practices; (f) commit any act that is
intended or reasonably may be expected to result in any of its representations
and warranties becoming untrue in any material respect or in any of the
conditions to the Company Merger 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
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penalties due and payable, except those being contested in good faith by
appropriate proceedings and for which sufficient reserves have been established;
(j) dispose of investment securities in amounts or in a manner inconsistent with
past practices, or make investments in non-investment grade securities or that
are inconsistent with past investment practices; (k) enter into any new line of
non-banking business; (l) charge off (except as required by law or regulatory
authorities or generally accepted accounting principles consistently applied) or
sell (except for a price not materially less than the value thereof) any of its
portfolio of loans, discounts or financing leases, or sell any asset held as
other real estate or other foreclosed assets for an amount materially less than
100% of its book value as of December 31, 1997; (m) make any extension of credit
that, when added to all other extensions of credit to a borrower and its
affiliates, would exceed FNB's or FNBG'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, FNB and FNBG 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 FNB's 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 FNB's
consolidated group and its shareholders, furnish any information relating to, or
participate in any negotiations or discussions concerning, any acquisition or
purchase of all or a substantial portion of its assets, or of a substantial
equity interest in it, or any business combination with it (other than as
contemplated by the Plan of Merger) or withdraw its recommendation of the
Company Merger to FNB's shareholders (or recommend to its shareholders such
other transaction). FNB and FNBG have also agreed that in no event will any such
information be supplied except pursuant to a confidentiality agreement in form
and substance substantially the same as the confidentiality agreement previously
executed between FNB and Whitney, that it will instruct its officers, directors,
agents and affiliates to refrain from doing any of the foregoing and that it
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, FNB, FNBG 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 FNB or
FNBG from taking any action that the Board 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 FNB's 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 Company Merger other than the conditions relating to approval
by the shareholders of FNB, the absence of a stop order suspending the
effectiveness of the Registration Statement of which this Proxy Statement-
Prospectus forms a part, the receipt of all necessary regulatory approvals, the
satisfaction of all requirements prescribed by law for consummation of the
Company Merger, and FNB's receipt of a letter from Robinson-Humphrey dated as of
the date of the Meeting, in form and substance satisfactory to FNB, confirming
Robinson-Humphrey's fairness opinion to the Board of Directors of FNB. A waiver
must be in writing.
The Plan of Merger, including all related agreements, may be amended or
modified at any time, before or after approval by the shareholders of FNB, by
the mutual agreement in writing of the Boards of Directors of the parties to the
Plan of Merger; provided that, under the Louisiana Business Corporation Law (the
"LBCL"), any amendment made subsequent to shareholder approval of the Company
Merger may not alter the amount or type of shares into which the FNB Common
Stock will be converted, alter any term of the Articles of Incorporation of
Whitney as the surviving entity, or alter any term or condition of the Plan of
Merger in a manner that would adversely affect any shareholder of FNB.
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 FNB; (ii) the Board of Directors of either Whitney or FNB in the event of a
breach by any member of the other party's consolidated group of any
representation, warranty or covenant in the Plan of Merger that cannot be cured
by the earlier of 30 days after written notice of such breach or November 30,
1998; (iii) the Board of Directors of either Whitney or FNB if by November 30,
1998 all the conditions to closing required by the Plan of Merger have not been
met or waived or cannot be met, or if the Company Merger has not occurred by
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such date; (iv) Whitney if the Plan of Merger fails to receive the requisite
vote of FNB's shareholders; (v) Whitney if FNB's Board of Directors (A)
withdraws, modifies or changes its recommendation to its shareholders as
contained herein or resolves to do so, or (B) either (x) 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 FNB's
consolidated group or any acquisition of 15% or more of any class of FNB's
capital stock or (y) makes any announcement of any agreement to do any of the
foregoing; (vi) FNB, if FNB receives a bona fide written offer with respect to
any transaction described in (v)(B) above and the Board of Directors of FNB
determines in good faith, after consultation with its financial advisors and
counsel, that such transaction is more favorable to FNB's shareholders than the
transactions contemplated by the Plan of Merger; and (vii) Whitney, if the
number of shares of FNB 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 FNB
Common Stock that would preclude pooling-of-interests accounting for the Mergers
(i.e., if, after the Meeting, more than 10% of the FNB 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). The Plan of Merger provides for a termination fee of $990,000 payable
to Whitney if the Plan of Merger is terminated under the circumstances described
in clause (v)(B) or clause (vi) of the preceding sentence. The provisions in
the Plan of Merger regarding confidentiality, payment of the termination fee and
certain miscellaneous matters will survive any termination of the Plan of
Merger.
Expenses. The Plan of Merger provides that regardless of whether the
Company Merger is 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
Company Merger, all persons then employed by FNB and FNBG 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 (a) all
executive and senior level management bonuses, stock options, restricted stock
and similar benefits will be at the discretion of Whitney Bank's Compensation
Committee, and (b) all FNB and FNBG employees who are employed at the effective
time of the Merger will be given full credit for all prior service as employees
of FNB or FNBG, provided, however, that all such employees shall be treated as
newly hired Whitney Bank employees for all purposes of Whitney's or Whitney
Bank's defined benefit pension plan (i.e., prior service credit with FNB and
FNBG will not be considered in determining future benefits under Whitney's or
Whitney Bank's defined benefit pension plan).
Indemnification and Insurance. Whitney has agreed that all rights to
indemnification and all limitations of liability existing in favor of
indemnified parties under Section 10-2B-8.50, et seq., of the ABCA, FNB's
Articles of Incorporation and By-laws and the Articles of Association and By-
laws of FNBG as in effect on March 24, 1998 with respect to matters occurring
prior to or on the Effective Date will survive for a period concurrent with the
applicable statute of limitations. Whitney has also agreed to use its best
efforts to cause those persons serving as officers or directors of FNB and FNBG
immediately prior to the effective time of the Company Merger to be covered for
three years thereafter by the directors and officers liability insurance policy
maintained by FNB and FNBG (or a substitute policy) with respect to acts or
omissions occurring prior to or at the effective time of the Company Merger,
subject to certain conditions. In addition, Whitney has agreed to indemnify,
under certain conditions, FNB's and FNBG's directors, officers and controlling
persons against certain expenses and liabilities, including certain liabilities
arising under federal securities laws.
No director or executive officer of FNB or FNBG owns any shares of Whitney
Common Stock. No director or executive officer of Whitney has any personal
interest in the Mergers other than by reason of his holdings of Whitney Common
Stock, nor do such directors or executive officers own any shares of FNB Common
Stock.
STATUS UNDER FEDERAL SECURITIES LAWS; CERTAIN RESTRICTIONS ON RESALES
The shares of Whitney Common Stock to be issued to shareholders of FNB
pursuant to the Plan of Merger have been registered under the Securities Act of
1933, as amended (the "Securities Act"), thereby allowing such shares
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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 FNB.
Directors and certain officers and principal shareholders of FNB and FNBG
may be deemed to be "affiliates" of FNB. 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 in violation of the Securities
Act. This Proxy Statement-Prospectus does not cover resales of Whitney Common
Stock offered hereby to be received by FNB shareholders deemed to be
"affiliates" of FNB or of Whitney upon consummation of the Company Merger.
Further, in accordance with the requirements for using the pooling-of-
interests method of accounting, shareholders of FNB who may be deemed
"affiliates" of FNB 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 FNB 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 Company Merger
that (i) it receive certain assurances from FNB's independent public accountants
that the Mergers may be accounted for as a pooling-of-interests under the
requirements of Opinion No. 16 of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the published rules and
regulations of the Securities and Exchange Commission (the "Commission") for
accounting and financial reporting purposes and (ii) neither Whitney's
independent public accountants nor the Commission shall have taken the position
that the transactions contemplated by the Plan of Merger do not qualify for
pooling-of-interests accounting treatment. Under the pooling-of-interests
method of accounting, after certain adjustments necessary to conform the basis
of presentation of the Whitney and FNB information, the recorded assets and
liabilities of Whitney and FNB 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 FNB for the entire fiscal year in
which the Company Merger occurs and the reported earnings of Whitney and FNB for
prior periods will be combined and restated as consolidated earnings of Whitney.
Similar treatment will be given to any other acquisitions that are accounted for
as poolings of interests and that are consummated during the fiscal year. See
"- Description of the Plan of Merger -- Regulatory Approvals and Other
Conditions of the Company Merger" and "- Status Under Federal Securities Laws;
Certain Restrictions on Resales."
PRO FORMA DATA
In light of the respective total assets and net income of Whitney and FNB,
pro forma financial statements are not included in this Proxy Statement-
Prospectus. FNB's total assets were 3% or less of Whitney's total assets at
both March 31, 1998 and December 31, 1997, and FNB's net income for both the
three months ended March 31, 1998 and the year ended December 31, 1997 were less
than 3% of Whitney's net income for the same periods. As a result, pro forma
financial information giving effect to the Company Merger is deemed to be
immaterial.
DISSENTERS' RIGHTS
Each shareholder of FNB entitled to vote on the Plan of Merger who objects
to the Plan of Merger will be entitled to the rights and remedies of dissenting
shareholders provided under Section 10-2B-13.01, et seq., of the ABCA (the
"Dissent Provisions"), a copy of which is included in Appendix C to this Proxy
Statement-Prospectus, and any such shareholder who follows the procedures
specified in the Dissent Provisions will be entitled to receive the fair value
of his shares of FNB Common Stock in cash, plus accrued interest thereon, as of
the day prior to the Meeting. Such fair value is exclusive of any appreciation
or depreciation in anticipation of the Company Merger. The appraised value of
the FNB Common Stock, as determined under the Dissent Provisions, may differ
from the consideration that a shareholder of FNB is entitled to receive in the
Plan of Merger. A DISSENTING FNB SHAREHOLDER MUST COMPLY STRICTLY
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WITH THE PROCEDURES SET FORTH IN THE DISSENT PROVISIONS. FAILURE TO FOLLOW ANY
OF THOSE PROCEDURES MAY RESULT IN A TERMINATION OR WAIVER OF HIS DISSENTERS'
RIGHTS UNDER THE DISSENT PROVISIONS.
Under the Dissent Provisions, a shareholder of FNB may dissent from the
Plan of Merger by complying with the following procedures: (i) the dissenting
shareholder must deliver to FNB, prior to the vote being taken, written notice
of his or her intent to demand payment of his or her shares if the Plan of
Merger is effected; and (ii) the dissenting shareholder must not vote his or her
shares in favor of the Plan of Merger. Within ten (10) days after the date of
the Meeting, FNB must deliver to the dissenting shareholder a written
dissenter's notice (the "Dissenter's Notice") of the authorization of the Plan
of Merger by the shareholders, which notice shall provide such dissenting
shareholder with the procedure by which such dissenting shareholder may submit
his or her payment demand to FNB, including a form for demanding payment. The
Dissenter's Notice will notify the dissenting shareholder of the date by which
FNB must have received the payment demand, which date may be not fewer than 30
nor more than 60 days after the Dissenter's Notice is delivered. The
Dissenter's Notice will be accompanied by a copy of the Dissent Provisions. The
dissenting shareholder must demand payment in accordance with the terms of the
Dissenter's Notice. The shareholder who demands payment retains all other
rights of a shareholder until those rights are canceled or modified by the
taking of the proposed corporation action. A shareholder who demands payment
under the Dissent Provisions may not thereafter withdraw that demand and accept
the terms offered under the proposed Plan of Merger without the consent of FNB.
Within twenty (20) days after making a formal payment demand, the
dissenting shareholder must submit the certificate or certificates representing
his or her shares to FNB for notation thereon by FNB that such demand has been
made. These certificates will be returned to the shareholder by FNB. If the
dissenting shareholder fails to submit the certificates representing his or her
shares for notation, at the option of FNB, the dissenting shareholder's rights
under the Dissent Provisions will be terminated.
As soon as the Plan of Merger is adopted by the FNB shareholders, or upon
receipt of the payment demand, FNB shall offer to pay to each dissenting
shareholder who complies with the Dissent Provisions the amount FNB estimates to
be the fair value of his or her shares, plus accrued interest. This offer of
payment must be accompanied by several supporting documents, including financial
statements of the company, a statement of the estimate of the fair value of the
shares, an explanation of how the interest was calculated, a statement of the
dissenter's right to demand payment and a copy of the Dissent Provisions. Each
dissenter who agrees to accept FNB's offer of payment in full satisfaction of
his or her demand must surrender to FNB the certificate or certificates
representing his or her shares in accordance with the terms of the Dissenter's
Notice, whereupon FNB shall pay such dissenter the fair value of his or her
shares plus interest.
A dissenter may notify FNB in writing of his or her own estimate of the
fair value of his or her shares and the amount of interest due thereon, and
demand payment of this estimate, or reject FNB's offer under the Dissent
Provisions and demand payment of the fair value of his or her shares or interest
due, if (i) the dissenter believes that the amount offered by FNB is less than
the fair value of his or her shares or that the interest due is incorrectly
calculated; (ii) FNB fails to make an offer under the Dissent Provisions within
sixty (60) days after the date set for demanding payments; or (iii) FNB, having
failed to take the action to be proposed at the Meeting, does not release the
transfer restrictions imposed on the shares pursuant to the Dissent Provisions
within sixty (60) days after the date set for demanding payment. A dissenter
waives his or her right to demand payment as provided in the preceding sentence
unless he or she notifies FNB of his or her demand in writing within 30 days
after FNB offered payment for his or her shares.
If a demand for payment under the preceding paragraph remains unsettled,
FNB must commence a proceeding within 60 days after receiving such payment
demand and petition the court to determine the fair value of the shares and
accrued interest. If FNB does not commence the proceeding within the 60 day
period, it must pay each dissenter the amount demanded. Each dissenter made a
party to such proceeding is entitled to judgment for the amount the court finds
to be the fair value of his or her shares, plus accrued interest.
The costs for such an appraisal proceeding shall be assessed against FNB,
except that the court may assess costs against all or some of the dissenters, in
amounts the court finds equitable, to the extent the court finds the dissenters
acted arbitrarily, vexatiously, or not in good faith with respect to the rights
provided in the Dissent Provisions.
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Whitney has the right to terminate the Plan of Merger if the number of
shares of FNB Common Stock as to which the holders thereof, on the Effective
Date, are 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 FNB
Common Stock that would preclude pooling-of-interests accounting for the
Mergers.
The foregoing summary of the Dissent Provisions is qualified in its
entirety by reference to the text of that statute set forth herein as Appendix
C.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the opinion of Arthur Andersen LLP that
Whitney and FNB expect to receive concerning the material federal income tax
consequences to holders of FNB Common Stock resulting from the Plan of Merger.
Consummation of the Company Merger is conditioned upon receipt by Whitney and
FNB 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 FNB.
(a) The Mergers will qualify as reorganizations under Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended (the "Code"); and FNB, FNBG,
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 FNB, FNBG, Whitney or Whitney
Bank as a result of the Mergers.
(c) No gain or loss will be recognized by a shareholder of FNB on the
receipt solely of Whitney Common Stock in exchange for his shares of FNB Common
Stock.
(d) The tax basis of the shares of Whitney Common Stock to be received by
FNB's shareholders pursuant to the Company Merger will be the same as the basis
of the shares of FNB 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 FNB's shareholders pursuant to the Company Merger will include the
holding period of the shares of FNB Common Stock exchanged therefor, provided
that the shares of FNB Common Stock are held as capital assets on the Effective
Date.
(f) The payment of cash to FNB's 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 shareholder of FNB who perfects his statutory right to dissent to
the Company Merger and who receives solely cash in exchange for his FNB Common
Stock will be treated as having received such cash payment as a distribution in
redemption of his shares of FNB Common Stock, subject to the provisions and
limitations of Section 302 of the Code. After such distribution, if the former
shareholder of FNB does not actually or constructively own any FNB Common Stock,
the redemption will constitute a complete termination of interest and be treated
as a distribution in full payment in exchange for the FNB 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.
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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 FNB CONSULT HIS
PERSONAL TAX ADVISOR CONCERNING THE APPLICABLE FEDERAL, STATE AND LOCAL INCOME
TAX CONSEQUENCES OF THE MERGERS.
INFORMATION ABOUT FNB
DESCRIPTION OF BUSINESS
FNBG was incorporated under the federal banking laws on August 30, 1900,
and began business in that year. In 1983, the board and shareholders of FNBG
approved the formation of a holding company, FNB, incorporated under the laws of
the State of Alabama and registered under the Bank Holding Company Act of 1956,
as amended (the "Bank Holding Company Act"). In 1983, FNB acquired all of the
issued and outstanding stock of FNBG through an exchange offer, and since that
time, FNBG has been FNB's only subsidiary. FNB's executive office is located at
100 West Commerce Street, Greenville, Alabama and its telephone number is 334-
382-6511. At March 31, 1998, FNB had total consolidated assets of approximately
$117.5 million, and shareholder's equity of approximately $13.6 million.
FNBG conducts a full service commercial banking business in Greenville,
Alabama and the surrounding area. Since its organization, FNBG has provided most
traditional commercial banking services, including, without limitation,
depository services including checking accounts, savings accounts, certificates
of deposit and individual retirement accounts. FNBG also makes consumer
business and agricultural loans to customers within its trade area. The
services are performed for individuals, business enterprises, non-profit
organizations and for other banks and financial institutions. FNBG has
correspondent relationships with a number of large banks from which it receives
advice and services. The correspondent banks also provide a source of buying
and selling loan participations. FNBG's deposits are insured by the Federal
Deposit Insurance Corporation ("FDIC"). At March 31, 1998, FNBG had total
assets of $117.5 million and total deposit liabilities of $102.1 million.
In addition to its principal bank, located in the same location as the
executive offices of FNB, FNBG has a branch bank located at 109 Greenville
Bypass in Greenville, Alabama and a branch bank located on Railroad Street in
Georgiana, Alabama.
COMPETITION
The banking industry is highly competitive. FNBG competes in Greenville and
Butler County, Alabama for deposits and in its lending activities. Competition
among banks for customers is generally governed by factors such as interest
rates and services offered by such banks. FNBG competes primarily with three
other commercial banks and savings and loan associations for customer deposits,
including Colonial Bank, The People's Bank and First Community Bank of the
South. In addition, FNBG competes with credit unions and other non-bank
financial institutions located within and outside of FNBG's market area which
offer financial services similar to many services offered by banks.
SUPERVISION AND REGULATION
FNB. FNB is a bank holding company registered under the Bank Holding
Company Act and it operates one banking subsidiary, FNBG. As a registered bank
holding company, FNB is subject to supervision and regulation by the Reserve
Board under the Bank Holding Company Act. As a bank holding company, FNB is
required to furnish the Reserve Board an annual report of its operations at the
end of each fiscal year and to furnish such additional information as the
Reserve Board may require pursuant to the Bank Holding Company Act. The Reserve
Board may also make examinations of FNB.
The Bank Holding Company Act requires, subject to certain exceptions, every
bank holding company to obtain the prior approval of the Reserve Board (i)
before it may acquire direct or indirect ownership or control of any voting
shares of any bank if, after such acquisition, such bank holding company will
directly or indirectly own or control more than five percent of the voting
shares of such bank; (ii) before it or any of its subsidiaries, other than a
bank, may
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acquire all or substantially all of the assets of a bank; or (iii) before it may
merge or consolidate with any other bank holding company.
In addition, the Bank Holding Company Act prohibits (with specific
exceptions) FNB from engaging in nonbanking activities or from acquiring or
retaining direct or indirect control of any company engaged in nonbanking
activities. The Reserve Board by regulation or order may make exceptions for
activities determined to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. In determining whether a
particular activity is permissible, the Reserve Board considers whether the
performance of such an activity can reasonably be expected to produce benefits
to the public, such as greater convenience, increased competition or gains in
efficiency that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest or unsound
banking practices. For example, making, acquiring or servicing loans, leasing
personal property, providing certain investment or financial advice, performing
certain data processing services, acting as agent or broker in selling credit
life insurance and certain other types of insurance in connection with credit
transactions by the bank holding company and certain limited insurance
underwriting activities have all been determined by regulations of the Reserve
Board to be permissible activities. The Bank Holding Company Act does not place
territorial limitations on permissible bank-related activities of bank holding
companies. However, despite prior approval, the Reserve Board has the power to
order a holding company or its subsidiaries to terminate any activity, or
terminate its ownership or control of any subsidiary, when it has reasonable
cause to believe that continuation of such activity or such ownership or control
constitutes a serious risk to the financial safety, soundness or stability of
any bank subsidiary of that holding company.
FNBG. FNBG is a national banking association subject to supervision by the
Comptroller and has its deposits insured by the FDIC. FNBG is regulated and
subject to periodic examination by these governmental authorities, each of which
imposes regulations related to reserves, investments, loans, issuance of
securities, establishment of branches and other aspects of its operation.
RISK-BASED CAPITAL GUIDELINES
Under the Reserve Board's and the FDIC's risk-based capital guidelines
applicable to FNB, the minimum ratio of capital to risk-weighted assets
(including certain off-balance sheet items, such as standby letters of credit)
is 8%. To be considered a "well capitalized" bank under the guidelines, a bank
must have a total risk-based capital ratio in excess of 10%. At December 31,
1997, FNBG was considered "well capitalized." At least half of the total capital
is to be comprised of common equity, retained earnings and a limited amount of
perpetual preferred stock, after subtracting goodwill, and certain other
adjustments ("Tier 1 capital"). The remainder may consist of perpetual debt,
mandatory convertible debt securities, a limited amount of subordinated debt,
other preferred stock not qualifying for Tier 1 capital and a limited amount of
loan loss reserves ("Tier 2 capital"). In addition, the Reserve Board, the
Comptroller and the FDIC have adopted a minimum leverage ratio (Tier 1 capital
to total assets) of 3%. Generally, banking organizations are expected to
operate well above the minimum required capital level of 3% unless they meet
certain specified criteria, including a requirement that they have the highest
regulatory ratings. Most banking organizations are required to maintain a
leverage ratio of 3% plus an additional cushion of at least 1% to 2%. The
guidelines also provide that banking organizations experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
upon intangible assets. On December 31, 1997, FNB had a Tier 1 capital ratio of
27.3%, a total risk-based capital ratio of 27.9% and a leverage ratio of 11.2%.
Under the Financial Institutions Reform, Recovery and Enforcement Act of
1989, failure to meet the capital guidelines could subject a banking institution
to a variety of enforcement remedies available to federal regulatory
authorities, including the termination of deposit insurance by the FDIC. The
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
substantially revised the depository institution regulatory and funding
provisions of the Federal Deposit Insurance Act as well as several other federal
banking statutes. Among other things, FDICIA requires the federal banking
regulators to take prompt corrective action in respect of depository
institutions that do not meet minimum capital requirements. As of December 31,
1997, FNBG would be considered "well capitalized" under FDICIA.
17
<PAGE>
SOURCE OF STRENGTH
According to Reserve Board policy, bank holding companies are expected to
act as a source of financial strength to each subsidiary bank and to commit
resources to support each such subsidiary. This support may be required at
times when a bank holding company may not be able to provide such support. In
the event of a loss suffered or anticipated by the FDIC -- either as a result of
default of a banking subsidiary of FNB or related to FDIC assistance provided to
a subsidiary in danger of default -- the banking subsidiary of FNB may be
assessed for the FDIC's loss, subject to certain exceptions.
MARKET PRICES AND DIVIDENDS
Market Prices. FNB Common Stock is not traded on any exchange, and there
is no established public trading market for such stock. There are no bid or
asked prices available for FNB Common Stock; however, FNB has a policy providing
that, in accordance with guidelines filed with regulatory authorities, FNB will
purchase its own shares of FNB Common Stock as shares become available, which
shares are then held as treasury shares. FNB also from time to time sells the
treasury shares so acquired. The price of such shares in these transactions,
whether involving a purchase or sale by FNB, equals the book value of the FNB
Common Stock as of the end of the immediately preceding quarter. During the last
two years, FNB purchased a total of 91 shares and sold a total of 260 shares in
24 trades pursuant to this policy at prices ranging from $694.69 to $772.02 per
share. FNB's management is not aware of any trades during that period not
involving a purchase or sale by FNB.
Dividends. The following table sets forth, for the periods indicated, the
dividends declared by FNB. FNB's ability to declare and pay dividends after
March 24, 1998 is subject to the Plan of Merger. See "The Plan of Merger -
Description of the Plan of Merger -- Conduct of Business Prior to the Effective
Date."
DIVIDENDS DECLARED
1996
First Quarter............................................................$4.50
Second Quarter........................................................... 4.50
Third Quarter............................................................ 4.50
Fourth Quarter........................................................... 7.50
1997
First Quarter............................................................$4.75
Second Quarter........................................................... 4.75
Third Quarter............................................................ 4.75
Fourth Quarter........................................................... 9.75
1998
First Quarter............................................................$5.00
Second Quarter
(through June 19, 1998)................................................. 5.00
Holders. As of _________, 1998, the record date for the Meeting, there
were approximately ____ record shareholders of FNB Common Stock
PROPERTY
The main office of FNBG is housed in a two-story office building located at
100 West Commerce Street, Greenville, Alabama. The building contains
approximately 21,300 square feet and it includes parking spaces in the rear of
the building. In addition, the Bank owns its two branch locations containing
approximately 5000 square feet each, and operates one free-standing ATM.
18
<PAGE>
EMPLOYEES
As of May 31, 1998, FNBG employed 52 people full-time and 7 people part-
time, and FNB considers its relationship with its employees to be good.
SECURITY HOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Principal Shareholders. The following table reflects certain information
regarding those persons who are known by FNB to be the beneficial owner of more
than five percent of the outstanding FNB Common Stock as of the record date for
the Meeting. 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.
Name of Number of Shares
Beneficial Owner Beneficially Owned Percent of Class
---------------- ------------------ ----------------
Elisha C. Poole 1,570/(1)/ 9.2%
600 East Commerce Street
Greenville, Alabama 36037
- --------------------
/(1)/ Includes 640 shares registered in the name of Mrs. Juanita C. Poole,
Elisha Poole's wife, as to which Elisha Poole disclaims beneficial ownership.
Directors and Executive Officers. The following table sets forth certain
information as of the record date for the Meeting concerning the beneficial
ownership of FNB Common Stock by each director of FNB and by all directors and
executor officers of FNB as a group. 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.
Name of Number of Shares
Beneficial Owner Beneficially Owned Percent of Class
- ---------------- ------------------ ----------------
J. Malloy Chandler 40 *
Lewis S. Hamilton 355/(1)/ 2.1%
Albert M. Middleton 459/(2)/ 2.7%
Calvin Poole, III 535/(3)/ 3.1%
Elisha C. Poole 1,570/(4)/ 9.2%
Harold Powell 740/(5)/ 4.4%
James J. Ryan 255/(6)/ 1.5%
Bill M. Simms 82 *
Joseph M. Watts 53/(7)/ *
Carlton E. Whittle 50/(8)/ *
All directors and executive
officers as a group (11 people) 4,140 24.3%
(Footnotes appear on following page)
19
<PAGE>
- --------------------
*Indicates less than 1%
(1) Includes 100 shares owned jointly by Mr. Hamilton and his wife.
(2) Includes 59 shares registered in the name of Mrs. Joyce T. Middleton, Mr.
Middleton's wife.
(3) Includes 10 shares registered in the name of Mary Rogers Poole, Calvin
Poole's wife. Calvin Poole is Elisha Poole's son.
(4) Includes 640 shares registered in the name of Mrs. Juanita C. Poole, Elisha
Poole's wife, as to which Elisha Poole disclaims beneficial ownership.
(5) Includes 100 shares registered in the name of Powell Ford Tractor, Inc., a
company controlled by Mr. Powell.
(6) Includes: 14 shares registered in the name of Caroline P. Ryan or Edith
Ryan Waite, Mr. Ryan's wife and daughter, respectively; 5 shares registered
in the name of Caroline P. Ryan or Edith Ryan Williams, Mr. Ryan's
daughter; 18 shares registered in the name of Caroline P. Ryan or James J.
Ryan, Jr., Mr. Ryan's son; and 18 shares registered in the name of Caroline
P. Ryan or Thomas E. Ryan, Mr. Ryan's son.
(7) Includes: 2 shares registered in the name of Frances Ann Watts, Mr. Watt's
daughter; 3 shares registered in the name of James Davis Watts, Mr. Watts'
son; 3 shares registered in the name of Joseph Marshall Watts, Jr., Mr.
Watts' son; and 18 shares registered in the name of Mrs. Laura Griffith
Watts, Mr. Watts' wife.
(8) Includes 30 shares held jointly by Mr. Whittle and his wife.
FNB'S MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REVIEW OF RESULTS OF OPERATIONS - FOR THE THREE MONTH PERIOD ENDED MARCH 31,
1998 AS COMPARED TO THE THREE MONTH PERIOD ENDED MARCH 31, 1997
EARNINGS SUMMARY
FNB reported net income of approximately $352,000 or $20.68 per share for
the three months ended March 31, 1998, compared to net income of approximately
$332,000 or $19.64 per share for the three months ended March 31, 1997.
Net income for the three months ended March 31, 1998 resulted in an
annualized return on average assets of 1.20% compared to 1.11% in 1997. The
annualized return on average stockholders' equity was 10.52% through March 31,
1998 and 10.82% through March 31, 1997.
NET INTEREST INCOME
Net interest income is the difference between interest and fees earned on
loans, securities and other interest-earning assets (interest income) and
interest paid on deposits (interest expense). Net interest income is affected by
changes in volume of interest-earning assets and interest-bearing liabilities,
and the rates earned or paid thereon.
For the purposes of this earnings analysis, net interest income has been
adjusted to a fully taxable equivalent basis for certain investments included in
interest-earning assets. Interest-earning assets, including loans, have been
presented as averages, net of unearned income.
Net interest income on a fully tax equivalent basis for the three months
ended March 31, 1998 increased 3.71% to $1,117,000 from $1,077,000 for the same
period in 1997. The net interest margin between interest-earning assets
20
<PAGE>
and interest-bearing liabilities increased to 4.17% for the three months ended
March 31, 1998 from 4.11% for the three months ended March 31, 1997.
Interest income on fully tax equivalent basis increased approximately
$68,000 to $1,955,000 from $1,887,000 for the three months ended March 31, 1998
from the comparable period in 1997. The increases in interest income primarily
resulted from a change in the earnings asset mix from lower yielding short term
investments into higher yielding investments and an overall growth in earning
assets. The mix of average investments to interest-earning assets increased from
56.79% for the three months ended March 31, 1997 to 58.49% for the three months
ended March 31, 1998. The annualized yield on average investments was 6.38% for
the three months ended March 31, 1998 increased slightly when compared to 6.33%
for the three months ended March 31, 1997. For the period ended March 31, 1998
and 1997, average loans represented 38.97% and 38.67%, respectively, of average
interest-earning assets. For the three months ended March 31, 1998 and 1997, the
annualized yield on loans was 8.80% and 8.72%, respectively. Interest-earning
assets as a percentage of total average assets decreased from 93.64% in 1997 to
93.07% in 1998.
Interest expense increased approximately $26,000 or 3.21% to approximately
$835,000 for the three months ended March 31, 1998, from approximately $809,000
for the comparable 1997 period. The interest expense for 1998 and 1997 remained
virtually consistent when considering the stabilization of interest rates in
1998 and 1997. The annualized average rate paid on interest-bearing liabilities
was 3.95% and 3.86% for the three months ended March 31, 1998 and 1997,
respectively. During the three months ended March 31, 1998, the volume of
interest-bearing liabilities averaged $84,456,000, or 0.71% higher than the
$83,860,000 average for the three months ended March 31, 1997. Interest-bearing
demand deposits represented 22.42% of interest-bearing liabilities during the
1998 period as compared to 20.23% during the period ended March 31, 1997. The
annualized yields paid on interest-bearing demand deposits were 2.66% and 2.55%
for the three months ended March 31, 1998 and 1997, respectively. Time deposits
represented 48.99% of interest-bearing liabilities during the 1998 period as
compared to 49.37% during the period ended 1997. The annualized yields paid on
time deposits during the three months ended March 31, 1998 and 1997 were 5.10%
and 4.92%, respectively.
NONINTEREST INCOME
FNB derives a significant portion of its noninterest income from
traditional retail banking services including various account charges and
service fees.
Noninterest income increased approximately $26,000 or 11.45% to $253,000
for the three months ended March 31, 1998, from approximately $227,000 for the
comparable 1997 period. Service charges on deposits decreased $4,000 or 2.47% to
$158,000 for the three months ended March 31, 1998, from $162,000 for the
comparable 1997 period. Return check charges decreased $6,000 or 6.12% to
$92,000 for the three months ended March 31, 1998, from approximately $98,000
for the comparable 1997 period.
NONINTEREST EXPENSE
Noninterest expense increased approximately $79,000 or 10.27% to $848,000
for the three months ended March 31, 1998, from approximately $769,000 for the
comparable 1997 period. The increase in noninterest expenses are attributable to
an increase in operational expenses associated with the operating expense
associated with a new computer application. Salaries and employee benefits
amounted to $442,000 and $435,000 for the three months ended March 31, 1998 and
1997, respectively. Occupancy expense was $114,000 in 1998 and $101,000 in 1997.
Partially offsetting these increases was a decrease in FNB's nonperforming
assets expenses of $23,000 for the comparable 1997 period.
INCOME TAXES
The provision for income taxes for the three months ended March 31, 1998
and 1997 was $161,000 and $163,000, respectively.
21
<PAGE>
REVIEW OF FINANCIAL CONDITION -- MARCH 31, 1998 AS COMPARED TO DECEMBER 31, 1997
SECURITIES
Securities Available for Sale: Securities available for sale represent
those securities that FNB intends to hold for an indefinite period of time or
that may be sold in response to changes in interest rates or liquidity needs.
These securities are recorded at market value with unrealized gains or losses,
net of any tax effect, reflected as a component of shareholders' equity.
Securities available for sale totaled $57,309,000 at March 31, 1998 and
$63,505,000 at December 31, 1997. Net unrealized appreciation on securities
available for sale was $175,000 and $191,000 net of taxes, at March 31, 1998 and
December 31, 1997, respectively.
Average securities increased $2,748,000 or 4.59% to $62,678,000 for the
three months ended March 31, 1998 compared to $59,930,000 for average securities
for December 31, 1997. The increase in average securities was the result of the
use of cash flows from increase in deposits.
LOANS
Total loans increased $1,625,000 or 3.95% to $42,759,000 at March 31, 1998
from $41,134,000 for December 31, 1997. The primary growth in the loan
portfolio can be attributed to a $1,585,000 or 30.27% increase in commercial and
industrial loans.
FNB's loan-to-deposit ratio increased from 40.24% as of December 31, 1997
to 41.87% for March 31, 1998. The increase in FNB's loan-to-deposit ratio was a
result of an increase in loan activity and no growth in deposits.
NONPERFORMING ASSETS AND PAST DUE LOANS
Nonperforming assets consisted primarily of nonperforming loans which
increased 39.33% or $59,000 to $209,000 at March 31, 1998 from $150,000 at
December 31, 1997. FNB had no other real estate owned as of March 31, 1998 or
December 31, 1997.
ALLOWANCE AND PROVISION FOR POSSIBLE LOAN LOSSES
The allowance for possible loan losses totaled $289,000 or 0.67% of total
loans as of March 31, 1998 compared to $263,000 or 0.64% of total loans for
December 31, 1997. FNB experienced gross charge-offs of $18,000 for the three
months of 1998 compared to gross charge-offs of $253,000 during 1997. FNB had
$44,000 of recoveries for the first three months of 1998 compared to $140,000
for 1997. The year to date provision for possible loan losses was $-0- compared
to $163,000 for 1997. The allowance for loan losses reflects management's
judgment as to the level considered adequate to absorb potential losses in the
loan portfolio.
DEPOSITS
Total deposits decreased $93,000 or 0.09% to $102,127,000 at March 31, 1998
from $102,220,000 for 1997. Interest bearing demand deposits decreased $744,000
or 3.82% to $18,756,000 for the period ended March 31, 1998 from $19,500,000 for
1997. Time deposits at March 31, 1998 and December 31, 1997 were $41,489,000 and
$41,360,000, respectively. Time deposits represent 40.62% and 40.46% of total
deposits at March 31, 1998 and 1997, respectively. Noninterest-bearing demand
deposits decreased $496,000 or 2.65% to $18,233,000 for the period ended March
31, 1998 from $18,729,000 for 1997.
22
<PAGE>
REVIEW OF RESULTS OF OPERATIONS - FOR THE FISCAL YEARS ENDED DECEMBER 31, 1997,
1996, AND 1995
EARNINGS SUMMARY
FNB reported net income of approximately $1,280,000 or $75.29 per share for
the year ended December 31, 1997, compared to net income of approximately
$1,141,000 or $67.55 per share for the year ended December 31, 1996. Net Income
for 1995 was approximately $952,000 or $56.51 per share.
Noninterest income increased 23.17% or $168,000 to $893,000 for 1997
compared to $725,000 for 1996 and $764,000 in 1995.
Total loans grew at an annual rate of 1.94% or $783,000 to $41,134,000 for
1997, compared to a 9.7% growth or $3,569,000 to $40,351,000 for 1996. This
follows an increase of 9.70% or $3,569,000 to $36,782,000 for 1995.
An additional $100,000 provision for possible loan loss was recorded in the
fourth quarter of 1997, resulting in a total provision for possible loan loss of
$163,000 for 1997, compared to $14,000 for 1996 and $-0- for 1995.
Net earnings in 1997 resulted in a return on average assets of 1.11%
compared to 1.02% and 0.89% during 1996 and 1995, respectively. The return on
average stockholders equity was 11.04% in 1997, 10.34% in 1996, and 9.86% in
1995.
NET INTEREST INCOME
Net interest income is the difference between interest and fees earned on
loans, securities and other interest-assets (interest income) and interest paid
on deposits (interest expense). Net interest income is affected by changes in
volume of interest-earning assets and interest-bearing liabilities, and the
rates paid thereon. For the purposes of this earnings analysis, net interest
income has been adjusted to a fully taxable equivalent basis for certain
investments included in interest-earning assets. Interest-earning assets,
including loans, have been presented as averages, net of unearned income.
Net interest income on a fully tax equivalent basis increased 7.46% to
$4,348,000 in 1997 from $4,046,000 in 1996 and 7.92% in 1996 from $3,749,000 in
1995. The net interest margin between interest-earning assets and interest-
bearing liabilities increased to 4.13% for the year ended December 31, 1997
compared to 3.92% for the year ended December 31, 1996. The net interest margin
was 3.72% for 1995. In 1997 the average yields on average earning assets
increased 2 basis points as average rates paid on interest bearing liabilities
decreased 12 basis points. This resulted in a 13 basis points improvement in the
net interest spread for 1997. The increases in net interest income primarily
resulted from a change in higher yielding investments and an overall growth in
earning assets. In 1997 average earning assets increased $2,198,000 or 2.13%
from 1996. For 1996, average earning assets increased $2,421,000 or 2.40% from
1995.
Interest income increased approximately $267,000 to $7,683,000 for the year
ended December 31, 1997 from $7,416,000 for the comparable period in 1996.
Interest income for 1995 was $7,036,000. These increases were attributable
primarily to the change in the earning asset mix, the increases in the yield on
interest-earning assets, and an overall growth in earning assets. Average loans
comprised 38.96% of average earning assets in 1997 compared to 37.66% for 1996
and 36.69% in 1995. The yield on average earning assets increased to 7.30% in
1997 from 7.28% in 1996 and 7.11% in 1995. The yield on average loans was 8.69%
for the year ended December 31, 1997 compared to 9.03% and 9.22% for the
comparable periods ended December 31, 1996 and 1995, respectively. For 1997
average investment securities represented 56.92% of average earning assets
compared to 58.41 % for 1996 and 59.26% for 1995. For the years ended December
31, 1997, 1996 and 1995, the yield on average investment securities was 6.46%,
6.14% and 5.69 %. Average earning assets increased 2.13% or $2,198,000 to
$105,287,000 in 1997 compared to $103,089,000 in 1996 and $100,668,000 in 1995.
Interest expense decreased approximately $36,000 or 1.07% to approximately
$3,335,000 for the year ended December 31, 1997, from approximately $3,371,000
for 1996 and $3,288,000 for 1995. The decrease and increase in interest expense
were attributable to decrease in average rates and to increases in the volume of
interest-bearing
23
<PAGE>
liabilities. During 1997 the volume of interest-earning liabilities averaged
$83,931,000, or 1.76% higher than the $82,476,000 average for 1996. The volume
of interest-bearing liabilities averaged $79,413,000 for 1995. The average rate
paid on interest-bearing liabilities was 3.97%, 4.09% and 4.14% for the years
ended December 31, 1997, 1996 and 1995. Interest-bearing demand deposits
represented 21.04% of total interest-bearing liabilities for 1997 as compared to
19.60% for 1996 and 19.48% for 1995. The yields paid on interest bearing demand
deposits were 2.63% for 1997 compared to 2.62% for 1996 and 2.66% for 1995. Time
deposits represented 49.27% of interest-bearing liabilities for 1997 as compared
to 50.31% for 1996 and 49.36% for 1995. The average yields paid on time deposits
were 5.06% for 1997 compared to 5.20% for 1996 and 5.23% for 1995.
TABLE 1 - AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS)
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------- ---------------------------- ---------------------------
Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yield
(In Thousands) Balances Expense Rates Balances Expense Rates Balance Expense Rate
----------------------------- ---------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans $ 41,017 $ 3,566 8.69% $ 38,828 $ 3,505 9.03% $ 36,938 $ 3,404 9.22%
Investments 59,930 3,874* 6.46% 60,211 3,697* 6.14% 59,655 3,396 5.69%
Federal funds sold 4,279 239 5.59% 3,518 186 5.29% 4,006 232 5.79%
Interest-bearing deposits 61 4 6.56% 532 28 5.26% 69 4 5.80%
-------- ------- ------ -------- ------- ----- -------- -------- -----
Total Earning Assets 105,287 7,683 7.30% 103,089 7,416 7.28% 100,668 7,036 7.11%
Allowance for Loan Losses (178) (293) (466)
Nonearning Assets 10,033 9,088 6,553
-------- -------- --------
Total Average Assets $115,142 $111,884 $106,755
======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Interest-bearing
liabilities:
NOW $ 17,661 $ 465 2.63% $ 16,164 $ 423 2.62% $ 15,467 411 2.66%
Money Market 3,280 125 3.81% 3,768 153 4.06% 4,322 199 4.60%
Savings 20,171 585 2.90% 20,013 590 2.95% 20,407 625 3.06%
Time Deposits 41,350 2,091 5.06% 41,493 2,158 5.20% 39,196 2,051 5.23%
-------- ------- ------ -------- ------- ----- -------- -------- -----
Total Interest-Bearing
Deposits 82,462 3,266 3.96% 81,438 3,324 4.08% 79,392 3,286 4.14%
Federal funds borrowed 1,469 69 4.70% 1,038 46 4.43% 21 1 4.76%
-------- ------- ------ -------- ------- ----- -------- -------- -----
Total Interest-Bearing
Liabilities 83,931 3,335 3.97% 82,476 3,370 4.09% 79,413 3,287 4.14%
Noninterest-Bearing
Deposits 17,019 16,570 15,958
Other Liabilities 1,481 1,273 862
STOCKHOLDERS' EQUITY 12,711 11,565 10,522
-------- ------- -------- ------- -------- --------
Total Liabilities and
Equity $115,142 3,335 2.90% $111,884 3,370 3.01% 106,755 3,287 3.08%
======== ======= ====== ======== ======= ===== ======== ======== =====
NET INTEREST SPREAD $ 4,348 4.40% $ 4,046 4.27% $ 3,749 4.03%
NET INTEREST MARGIN 4.13% 3.92% 3.72%
</TABLE>
- -------------------
* Tax equivalent adjustment made to reflect benefit of nontaxable income at a
rate of 34%.
24
<PAGE>
TABLE 2 - VOLUME AND YIELD/RATE VARIANCES
TAX-EQUIVALENT BASIS
<TABLE>
<CAPTION>
1997 Compared to 1996 1996 Compared to 1995
Increase (Decrease) due to /(1)/ Increase (Decrease) due to /(1)/
(in thousands) Volume Rate Net Volume Rate Net
----------- --------- ------- ----------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans 178 (117) 61 17 181 198
Investment securities (17) 194 177 (24) 34 10
Federal funds sold 42 11 53 (12) (27) (39)
Interest-bearing deposits (33) 9 (24) 120 27 147
--- ---- --- --- --- ---
Total earnings assets 170 97 267 101 215 316
=== ==== === === === ===
Interest Expense:
Now 40 2 42 17 (5) 12
Money Market (19) (9) (28) (24) (22) (46)
Savings 6 (11) (5) (12) (23) (35)
Time Deposits (8) (59) (67) 120 (13) 107
--- ---- --- --- --- ---
Total interest bearing deposits 19 (77) (58) 101 (63) 38
Federal funds borrowed 20 3 23 45 0 45
--- ---- --- --- --- ---
Total interest bearing liabilities 39 (74) (35) 146 (63) 83
--- ---- --- --- --- ---
Net interest income 131 171 302 (45) 278 233
=== ==== === === === ===
</TABLE>
/(1)/ The change in interest due to both volume and rate has been allocated
volume and rate changes in proportion to the relationship of the absolute dollar
amounts to the change in each.
NONINTEREST INCOME
Noninterest income was $893,000 for 1997, an increase of $168,000 or
23.17%, compared to $725,000 in 1996 and $764,000 in 1995. The increase in
noninterest income for 1997 was primarily due to increases in net investment
security gains and increases in income associated with banks non-qualifying
pension plan.
<TABLE>
<CAPTION>
TABLE 3 - NONINTEREST INCOME
Dollars in thousands
Increase (Decrease) Increase (Decrease)
------------------- -------------------
Year Ended December 31, 1997 Amount Percent 1996 Amount Percent 1995
---- ------ ------- ---- ------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Service charge and service $ 651 $ 0 0.0% $ 651 92 16.5% $ 559
Trust Income 12 (1) (7.7) 13 0 0.0 13
Investment Gains (Losses) 2 101 102.0 (99) (141) (335.7) 42
Other Income 228 68 42.5 160 10 15.0 150
----- ---- ----- ----- ----- ------ -----
Total Noninterest Income $ 893 $168 232% $ 725 $ (39) (5.1)% $ 764
</TABLE>
25
<PAGE>
NONINTEREST EXPENSE
Total noninterest expense increased $176,000 or 5.95%, to $3,132,000 in
1997, compared to $2,956,000 in 1996 and $3,027,000 in 1995. The increase in
salary and other compensation was due to normal merit increases. Furniture and
equipment expense increased as a result of increased depreciation expense on new
computer system and new ATM.
FNB's operating efficiency ratio is defined as noninterest expense as a
percentage of net interest income plus noninterest income. The efficiency ratio
62.56% in 1997 compare to 63.37% for 1996 and 68.94% for 1995.
<TABLE>
<CAPTION>
TABLE 4 - NONINTEREST EXPENSE
Dollars in thousands
Increase (Decrease) Increase (Decrease)
Year Ended December 31, 1997 Amount Percent 1996 Amount Percent 1995
- ----------------------- ------ -------- ------- ------ -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and benefits $1,773 $ 113 6.81% $1,660 $ 34 2.09% $1,626
Furniture and equipment 248 49 24.62 199 0 0.00 199
Occupancy 182 (32) (14.95) 214 37 20.90 177
Computer services 16 3 23.08 13 1 8.33 12
Advertising, entertainment and PR 72 (5) (6.49) 77 (10) (11.49) 87
Director and committee fees 99 0 0.00 99 (1) (1.00) 100
Supplies 112 (5) (4.27) 117 5 4.46 112
Dues, membership and periodicals 32 3 10.34 29 0 0.00 29
Postage and delivery 105 (5) (4.55) 110 (2) (1.79) 112
Other insurance & FDIC 75 9 13.64 66 (111) (62.71) 177
Examination and audits 73 9 14.06 64 (12) (15.79) 76
Telephone and data communications 44 6 15.79 38 (1) (2.56) 39
Legal fees 35 8 29.63 27 (3) (10.00) 30
Miscellaneous fees 148 21 16.54 127 15 13.39 112
Other taxes 18 1 5.88 17 1 6.25 16
First Flight and Senior Citz expense 49 1 2.08 48 9 23.08 39
Travel and education 15 5 50.00 10 1 11.11 9
Other expenses 36 (5) (12.20) 41 (34) (45.33) 75
------ ------ ------ ------ ----- ------ ------
Total Noninterest Expense $3,132 $ 176 5.95% $2,956 $ (71) (2.35)% $3,027
====== ====== ====== ====== ===== ====== ======
Operating Efficiency Ratio 60.59% 63.37% 68.94%
Net interest income before provision 4,276 3,940 3,627
Noninterest income 893 725 764
------ ------ ------
Total 5,169 4,665 4,391
Operating Efficiency Ratio 62.56% 63.37% 68.94%
Net interest income after provision 4,113 3,925 3,627
Noninterest income 893 725 764
------ ------ ------
Total 5,006 4,650 4,391
</TABLE>
INCOME TAXES
FNB reported tax expense on income of $595,000 for 1997, $553,000 for 1996
and $411,000 for 1995. The Bank recorded net deferred taxes of $16,000 at
December 31, 1997 and $60,000 at December 31, 1996.
26
<PAGE>
SECURITIES
Investment securities averaged $59,930,000 in 1997, a 0.47% decrease
compared to the $60,211,000 securities average in 1996. In 1996 investment
securities averaged decreased 0.93% compared to the $59,655,000 securities
averaged for 1995. The decrease in average securities was the result of the
reinvestment of maturing securities into higher yielding loans.
Securities Available for Sale: Securities available for sale represent
those securities that FNB intends to hold for an indefinite period of time or
that may be sold in response to changes in interest rates or liquidity needs.
These securities are recorded at market value with unrealized gains or losses,
net of any tax effect, reflected as a component of shareholders' equity.
Securities classified as available for sale totaled $59,930,000 at December 31,
1997, compared to $60,211,000 at December 31, 1996, and $59,655,000 at December
31, 1995. The net unrealized appreciation on securities available for sale was
$132,000 at December 31, 1997, compared to $19,000 at December 1, 1996 and
$1,592,000 at December 31, 1995.
LOANS
Total loans increased $783,000 or 1.94% to $41,134,000 in 1997 compared to
1996 balance of $40,351,000. This followed an increase of $3,569,000 or 9.70% to
$40,351,000 in 1996 compared to 1995 balance of $36,782,000. The primary growth
in the loan portfolio can be attributed to a $531,000 or 2.29% increase in real
estate loans in 1997 compared to a $2,916,000 or 14.41% increase in 1996.
Commercial loans increased $76,000 or 1.47% to $5,236,000 in 1997 compared to
1996, following an increase of $673,000 or 15.00% in 1996 compared to 1995. On
the same basis consumer loans decreased $869,000 or 8.08% to $9,892,000 compared
to 1996, following a 1.01% increase in 1996 compared to 1995.
FNB's loan-to-deposit ratio for 1997 decreased to 40.24% compared to 41.03%
for 1996, which was an increase from 37.24% for 1995. FNB's management expects
continued growth in the loan portfolio although management does not expect the
loan portfolio to grow at the same rate as experienced in 1995 and 1996.
TABLE 5 - LOAN PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
Dollars in thousands
Increase (Decrease) Increase (Decrease)
------------------- -------------------
December 31, 1997 Amount Percent 1996 Amount Percent 1995
- ------------- ------- ------ ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial $ 5,236 $ 76 1.5% $ 5,160 $ 673 15.0% $ 4,487
Real Estate 23,671 531 2.3 23,140 2,916 14.4 20,224
Agriculture 713 40 6.0 673 (94) (12.3) 767
Consumer 9,892 (869) (8.1) 10,761 108 1.0 10,653
Other 1,622 1,005 162.9 617 (34) (5.2) 651
------- ------ ----- ------- ------ ----- -------
Portfolio $41,134 $ 783 1.9% $40,351 $3,569 9.7% $36,782
</TABLE>
NONPERFORMING ASSETS AND PAST DUE LOANS
Total past due loans increased $51,000 or 5.0% to $1,191,000 for December
31, 1997, compared to a decrease of $29,000 or 2.7% to $1,040,000 as of December
31, 1996. Total past due loans were $1,069,000 as of December 31, 1995. Loans
past due 30-89 days totaled $1,029,000 at December 31, 1997, compared to
$858,000 at December 31, 1996 and $919,000 at December 31, 1995. Loans past due
90 days or more and still accruing interest totaled $12,000 at December 31,
1997, compared to $77,000 at December 31, 1996 and $85,000 at December 31, 1995.
27
<PAGE>
TABLE 6 - SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Dollars in Thousands
December 31, 1997 1996 1995
- ------------ ------ ------ ------
Past Due Loans:
Loans past due 30-89 days $1,029 $ 858 $ 919
Loans past due 90 days 12 77 85
Nonaccrual loans 150 105 65
------ ------ ------
Total past due loans 1,191 1,040 1,069
Other Real Estate 0 0 0
Other Foreclosed Assets 0 0 0
------ ------ ------
Total Nonperforming Assets $1,191 $1,040 $1,069
====== ====== ======
ALLOWANCE AND PROVISION FOR POSSIBLE LOAN LOSSES
The allowance for possible loan losses totaled $263,000 or 0.64% of total
loans outstanding as of December 31, 1997, compared to $213,000 or 0.53% for
1996 and $354,000 or 0.96% for 1995. FNB experienced net charge-offs $113,000
for 1997, compared to net charge-offs of $155,000 for 1996, and net charge-offs
of $172,000 for 1995. An additional $100,000 provision for possible loan loss
was recorded in the fourth quarter of 1997. This resulted in a provision for
possible loan loss of $163,000 for 1997, compared to $14,000 for 1996, and $0
for 1995.
TABLE 7 - ANALYSIS OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
Dollars in Thousands
Year Ended December 31, 1997 1996 1995
- ----------------------- ----- ----- -----
Balance at beginning of period $ 213 $ 354 $ 526
Charge-offs (253) (239) (279)
Recoveries 140 84 107
----- ----- -----
Net Charge-offs (113) (155) (172)
Provision for possible Loan Losses 163 14 0
----- ----- -----
Balance at end of period $ 263 $ 213 $ 354
===== ===== =====
Allowance for Possible Loan Losses
as a % of Total Loans outstanding 0.64% 0.53% 0.96%
DEPOSITS
Total deposits increased $3,885,000 or 3.95%, to $102,220,000 as of
December 31, 1997, compared to a decrease of $437,000 or 0.44% to $98,335,000
for December 31, 1996. In 1995 total deposits increased $3,417,000 or 3.58% to
$98,772,000. Noninterest-bearing demand deposits increased 10.80% in 1997 to
$18,729,000 while decreasing 5.95% in 1996 to $16,904,000. Interest-bearing
demand deposits increased 15.91% or $2,676,000 in 1997 to $19,500,000 while
increasing 2.26% in 1996 to $16,824,000. Money market accounts increased 5.90%
in 1997 to $3,354,000 and decreased 33.20% in 1996 to $3,167,000. Savings
deposits remained relatively unchanged during 1997, 1996 and 1995. Time deposits
of less than $100,000 decreased 0.52% or $191,000 in 1997 to $36,632,000 and
increased 0.95% or $348,000 to $36,823,000 in 1996. Time certificates of
deposits of $100,000 or more increased 6.73% or $298,000 in 1997 to $4,728,000
and increased 8.79% or $358,000 to $4,430,000 in 1996.
28
<PAGE>
TABLE 8 - DEPOSIT ACCOUNT BALANCES
<TABLE>
<CAPTION>
Dollars in thousands
Increase/(Decrease) Increase/(Decrease)
------------------- -------------------
Year Ended December 31, 1997 Amount Percent 1996 Amount Percent 1995
------- ------ ------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand 18,729 1,825 10.80% 16,904 (1,069) -5.95% 17,973
Interest-bearing demand 19,500 2,676 15.91% 16,824 372 2.26% 16,452
Money Market accounts 3,354 187 5.90% 3,167 (1,574) -33.20% 4,741
Savings 19,277 (910) -4.51% 20,187 1,128 5.92% 19,059
Time deposits less than $100,000 36,632 (191) -0.52% 36,823 348 0.95% 36,475
Time deposits of $100,000
or more 4,728 298 6.73% 4,430 358 8.79% 4,072
------- ----- ----- ------ ------ ------ ------
Total Deposits 102,220 3,885 3.95% 98,335 (437) -0.44% 98,772
======= ===== ===== ====== ====== ====== ======
</TABLE>
CAPITAL
Capital represents shareholder ownership in FNB - the book value of assets
in excess of liabilities. Shareholders' equity totaled $13,369,000 at December
31, 1997, compared to $12,239,000 at December 31, 1996 and $11,425,000 at
December 31, 1995. FNB's common dividend payout ratio was 3.34% in 1997, 3.11%
in 1996 and 3.50% in 1995. FNB's Risk-Based Capital ratios significantly exceed
the minimum regulatory guidelines for designation as a "Well-Capitalized"
institution.
TABLE 9 - RISK-BASED CAPITAL RATIO
<TABLE>
<CAPTION>
Well-Capitalized
Minimum Regulatory
Year Ended December 31, 1997 1996 1995 Guidelines
------ ------ ------ ----------
<S> <C> <C> <C> <C>
Tier 1 (Core Capital) 27.35% 26.68% 28.45% greater than/equal to
6.00%
Tier 2 (Supplementary Capital) 0.55 0.47 0.88 greater than/equal to
4.00%
----- ----- ----- -----
Total Capital 27.90% 27.15% 29.33% greater than/equal to
10.00%
</TABLE>
LIQUIDITY
Liquidity is a measure of a bank's ability to fund loan commitments and
meet deposit maturities and withdrawals in a timely manner. The liquidity
position of FNB is founded on a stable base of core deposits. FNB's loan-to-
deposit ratio at year-end 1997 increased to 40.16%, compared to 40.96% at year-
end 1996 and 37.21% at year end 1995. Management believes that current levels
of short-term investments and securities available for sale are adequate to meet
FNB's liquidity needs.
INTEREST RATE SENSITIVITY
The interest rate sensitivity gap (the "GAP") is the difference between the
amount of interest bearing assets and interest bearing liabilities maturing in
any given time frame. A primary objective of asset/liability management is to
maximize net interest margin while not subjecting FNB to significant interest
rate risk in periods of rising or falling interest rates. At December 31, 1997,
FNB's one year repricing gap, defined as repricing assets minus repricing
liabilities as a percentage of total assets, was 29.18%, i.e. more of FNB's
liabilities than assets reprice within a one year time frame. Management
regularly reviews interest rate exposure to analyze the impact of changes in
market interest rates on net interest income. The following table details FNB's
interest rate sensitivity position at various time intervals as of December 31,
1997.
29
<PAGE>
<TABLE>
<CAPTION>
3 Months 3 to 12 1 to 3 Over 3
(Dollars in Thousands) or Less Months Years Years
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Total rate sensitive assets $ 17,195 $ 31,710 $26,789 $33,234
Total rate sensitive liabilities 58,117 25,474 1,057 90
Excess (deficiency) of interest-earning
assets over interest-bearing liabilities (40,422) 6,238 25,732 33,144
Cumulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities (46,922) (34,684) (8,952) 24,192
Cumulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities as a
percent of total assets (34.42)% (29.18)% (7.53)% 20.35%
</TABLE>
In management's opinion a significant portion of FNB's consumer deposits do
not respond to changes in interest rates to the degree the GAP would indicate.
FNB's experience has indicated that the repricing of interest-bearing demand,
money market, and savings accounts in response to changes in general market rate
does not result in rate changes of the same magnitude as changes in general
market rates. In addition, these deposit categories have historically been very
stable sources of funds to FNB.
INFORMATION ABOUT WHITNEY
GENERAL
Whitney is a Louisiana corporation and a registered bank holding company
under the Bank Holding Company Act. Whitney became an operating entity in 1962
with Whitney Bank as its only significant subsidiary. Whitney Bank, a national
banking association headquartered in Orleans Parish, Louisiana, has been engaged
in the general banking business in southern Louisiana continuously since 1883.
As a result of consolidating mergers of Whitney's other banking subsidiaries
into Whitney Bank effective January 1 and 2, 1998, Whitney Bank currently
operates through more than 100 banking offices in south Louisiana, southern
Mississippi and Alabama and northwestern Florida. Whitney Bank also maintains a
foreign branch on Grand Cayman in the British West Indies.
Whitney Bank 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 delivery of corporate, pension and personal trust and investment services
and safe deposit rentals. Whitney Bank also issues credit cards and is active as
a correspondent for other banks.
During 1995, Whitney established Whitney Community Development Corporation
("WCDC"), a for-profit community development corporation incorporated under the
laws of the State of Louisiana. WCDC is authorized to make equity and debt
investments in corporations or projects designed primarily to promote community
welfare, including the economic rehabilitation and development of low to
moderate income areas by providing housing, services or jobs for residents, or
promoting small businesses that service low to moderate income areas.
At March 31, 1998, Whitney had consolidated total assets of approximately
$4.3 billion, consolidated total deposits of approximately $3.5 billion and
consolidated shareholders' equity of approximately $490 million. Whitney's and
Whitney Bank's principal executive offices are located at 228 St. Charles
Avenue, New Orleans, Louisiana 70130, and its telephone number is (504) 586-
7117.
30
<PAGE>
Whitney continues to explore opportunities to acquire additional financial
institutions as part of an expansion strategy that focuses on developing a
significant banking presence along the United States Gulf Coast from southeast
Texas through the Florida panhandle. Thus, at any particular point in time,
including the date of this Proxy Statement-Prospectus, discussions and, in some
cases, negotiations and due diligence activities looking toward or culminating
in the execution of preliminary or definitive documents respecting potential
acquisitions may occur or be in progress. These transactions may involve Whitney
acquiring such financial institutions in exchange for cash or capital stock, and
depending upon the terms of these transactions, they may have a dilutive effect
upon the Whitney Common Stock to be issued to holders of FNB Common Stock in the
Company Merger.
Since January 1, 1998, Whitney has completed acquisitions of two financial
institutions, with total assets of approximately $340 million. As of the date of
this Proxy Statement-Prospectus, Whitney has also executed a definitive
agreement to acquire certain branch operations of another financial institution
(other than FNB), with a total of approximately $160 million in assets to be
acquired from such institution. Whitney anticipates that this other pending
acquisition will be accounted for pursuant to the purchase method of accounting.
Consummation of the pending transaction is subject to, among other things,
approval by applicable regulatory authorities.
MARKET PRICES OF AND DIVIDENDS DECLARED ON WHITNEY COMMON STOCK
Whitney Common Stock is included for quotation on the Nasdaq National
Market System (the "Nasdaq Stock Market") 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 Stock
Market and the quarterly dividends declared for each such period.
PRICE RANGE OF COMMON STOCK AND QUARTERLY DIVIDENDS
<TABLE>
<CAPTION>
HIGH LOW DIVIDEND
------- ------- --------
<S> <C> <C> <C>
1996
First Quarter.............................. $31 3/4 $29 3/4 $0.22
Second Quarter............................. 31 3/4 29 3/4 0.25
Third Quarter.............................. 32 3/4 29 1/2 0.25
Fourth Quarter............................. 35 7/8 31 3/4 0.25
1997
First Quarter.............................. $40 1/2 $34 3/4 $0.28
Second Quarter............................. 43 35 1/4 0.28
Third Quarter.............................. 47 1/4 40 0.28
Fourth Quarter............................. 59 3/4 46 1/8 0.28
1998
First Quarter.............................. $63 3/8 $51 1/8 $0.30
Second Quarter (through __________, 1998).. ______ ______ $0.30
</TABLE>
COMPARATIVE RIGHTS OF SHAREHOLDERS
If FNB's shareholders approve the Plan of Merger and the Company Merger is
subsequently consummated, all shareholders of FNB will become shareholders of
Whitney, and their rights will be governed by and be subject to the Articles of
Incorporation and By-laws of Whitney rather than the Articles of Incorporation
and By-laws of FNB. 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 FNB not described elsewhere herein.
31
<PAGE>
DESCRIPTION OF WHITNEY COMMON STOCK
The authorized capital stock of Whitney consists of 100,000,000 shares of
common stock, no par value, of which 22,491,651 were outstanding on May 31,
1998. 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, 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.
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 repeal.
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 of Incorporation may change 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).
32
<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
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 Common 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.
33
<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.
34
<PAGE>
In certain instances, the fair price provisions, while providing objective
pricing criteria, could be arbitrary and not indicative of value. In addition,
a Related Person may be unable, as a practical matter, to comply with all of the
procedural requirements of the Articles of Incorporation. In these
circumstances, a potential purchaser would be forced either to negotiate with
the Continuing Directors and offer terms acceptable to them or to abandon the
proposed Business Combination.
Under the fair price provisions, in certain circumstances, a Business
Combination that might be attractive to some shareholders might never be
proposed to the shareholders by a Related Person, or if proposed, might not be
consummated. Further, the provisions may, under certain circumstances, give
holders of a minority of the voting power a veto power over a Business
Combination that the majority of shareholders may believe desirable and
beneficial. To Whitney's knowledge, on May 31, 1998, directors and executive
officers of Whitney beneficially owned 1,998,424 shares (approximately 11%) 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.
35
<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 FNB COMMON STOCK
The following comparison of the rights of holders of Whitney Common Stock
and FNB Common Stock is based on current terms of the governing documents of the
respective companies and on the current provisions of the LBCL and the ABCA.
The rights of holders of FNB 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; (iii) neither Whitney's nor FNB's
shareholders have preemptive rights to acquire shares of stock issued by their
respective companies; and (iv) both Whitney and FNB are only authorized to issue
one class of capital stock, all of which must be designated as common stock.
Although it is impracticable to note all the differences between the applicable
governing documents of Whitney and FNB, 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 FNB Common Stock.
Boards of Directors. Whitney's Articles of Incorporation provide for a
board of directors consisting of not less than five nor more than twenty-five
members divided into five classes, with directors serving five-year staggered
terms expiring for each class of directors at successive annual meetings of
shareholders. The Articles of Incorporation of FNB do not provide for classes
of directors, and the directors of FNB each serve one-year terms. FNB's board
consists of not less than one nor more than twenty members and is currently
fixed at ten. The directors of both Whitney and FNB must also be shareholders
of their respective corporations. Whitney's directors are elected by plurality
vote; FNB's directors can only be elected by a majority of the votes cast at
such election.
Nominations of Directors. FNB's By-laws provide that nominations for
election as director made by persons other than FNB's existing management must
be made in writing and delivered or mailed to the president of FNB not less than
14 days nor more than 50 days prior to the applicable meeting of shareholders;
provided, however, that if less than 21 days' notice of such meeting is given to
shareholders, such nominations must be mailed or delivered to FNB's president
not later than the close of business on the seventh day following the date on
which the notice of meeting was mailed. The required notification must contain
the following information to the extent known to the notifying shareholder: the
name, address and principal occupation of each proposed nominee; the total
number of shares of FNB Common Stock that will be voted for each proposed
nominee; the name and residence address of the notifying shareholder and the
number of shares of FNB Common Stock owned by the notifying shareholder.
Nominations not made in accordance with the foregoing procedures may be
disregarded by the chairman of the meeting in his discretion, and the votes cast
for such nominees may be disregarded. FNB's By-laws also provide that no person
who has reached his 72nd birthday shall be eligible for a nomination for
election as a director.
Whitney's Articles of Incorporation and By-laws contain no provisions
regarding procedures for nomination of directors or limitations on the age of
its directors.
36
<PAGE>
Removal of Directors. Whitney's Articles of Incorporation provide that a
director may be removed from office, with or without cause, only by the
affirmative vote of 90% of the voting power present at a special meeting of
shareholders called for that purpose at which a "quorum" is present. A "quorum"
for these purposes means the presence, in person or by proxy, of the holders of
90% of the total voting power of Whitney. Under FNB's By-laws, FNB's directors
may be removed, with or without cause, by the affirmative vote of a majority of
the total voting power of FNB at a special meeting of shareholders called
expressly for that purpose.
Special Meetings of Shareholders. Under the LBCL, special meetings of
Whitney's shareholders may be called by the president or the board of directors,
or upon the written request of any shareholder or shareholders holding in the
aggregate one-fifth of the total voting power of Whitney. FNB's By-laws provide
that special meetings of its shareholders may be called by the president, the
chairman of the board or the board of directors, or upon the written request of
any shareholder or shareholders holding in the aggregate 25% of the total voting
power.
Supermajority Vote Requirements. Whitney's Articles of Incorporation
contain supermajority shareholder voting provisions for certain "business
combinations." Whitney's provisions are triggered if any shareholder or group
of shareholders acquires 10% of the total voting power of Whitney, and the
supermajority vote that may be required to approve such a "business combination"
or to amend these provisions in Whitney's Articles of Incorporation is 90% of
the total voting power of 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.
FNB's Articles of Incorporation do not contain supermajority vote
requirements for business combinations, and FNB, therefore, is governed in this
regard solely by the ABCA. The ABCA provides that a plan of merger or share
exchange, to be authorized by the shareholders of a corporation, must be
approved by each voting group entitled to vote separately on a plan by two-
thirds of all the votes entitled to be cast on the plan by that voting group.
The articles of incorporation may require a greater or lesser vote or a vote by
voting groups, or the board of directors may require a greater vote or a vote by
voting groups, but in no case may the vote required for shareholder approval be
set at less than a majority of the votes entitled to be cast on the plan by each
voting group. The Articles of Incorporation of FNB do not require a greater or
lesser vote or a vote by voting groups, and FNB's Board of Directors have not
required a greater vote or a vote by voting groups, and therefore the ABCA
controls in this regard.
Furthermore, the articles of incorporation of an Alabama corporation may
authorize the shareholders to adopt or amend a bylaw that fixes a greater quorum
or voting requirements for shareholders (or voting groups of shareholders) than
is required by the ABCA. The adoption or amendment of a bylaw that adds,
changes or deletes a greater quorum or voting requirement for shareholders must
meet the same quorum requirement and be adopted by the same vote and voting
groups required to take action under the quorum and voting requirement then in
effect or proposed to be adopted, whichever is greater. A bylaw that fixes a
greater quorum or voting requirement for shareholders may not be adopted,
amended or repealed by the board of directors. FNB's Bylaws provide that the
power to alter, amend or appeal the Bylaws or adopt new Bylaws shall be vested
in the Board of Directors, but that the Board of Directors may not alter, amend
or appeal any Bylaw establishing what constitutes a quorum at a meeting of
shareholders.
Indemnification Rights. Whitney's Articles of Incorporation provide that,
in addition to any rights to indemnification that a person might have by law or
otherwise, Whitney shall indemnify any person who was or is a party or is
threatened to be made a party to any action, suit or proceeding, including any
action by or in the right of Whitney, by reason of the fact that he is or was a
director, officer, employee or agent of Whitney, or is or was serving at the
request of Whitney as a director, officer, employee or agent of another business
or 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 Whitney and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. In the case of actions
by or in the right of Whitney, the indemnification provided to employees or
agents is limited to expenses not exceeding, in the judgment of the Board of
Directors, the estimated expense of litigating the action to conclusion, but the
Board of Directors is authorized in its discretion to pay or provide additional
indemnity in particular cases and, as to directors and officers, the indemnity
in such cases is similarly limited if it would permit indemnification of an
individual for (i) the results of his willful or intentional misconduct, (ii)
breach of duty of loyalty to Whitney or the entity otherwise served by the
individual or (iii)
37
<PAGE>
engaging in a transaction in which the individual derived an improper personal
benefit. No indemnification may be made in respect of a claim in which the
person seeking indemnity shall have been adjudged by a court of competent
jurisdiction to be liable for willful or intentional misconduct in the
performance of its duties to Whitney unless and only to the extent that the
court shall determine upon application that, despite the adjudication of
liability but in view of all of the circumstances of the case, he is fairly and
reasonably entitled to indemnity for such expenses that the court shall deem
proper.
FNB's By-laws provide that any person made a party to any action, suit or
proceeding by reason of the fact that he is or was a director, officer or
employee of FNB or of any other corporation for which he served as such at the
request of FNB shall be indemnified by FNB against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with any appeal therein, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such officer, director
or employee is liable for negligence or misconduct in the performance of his
duties. FNB is also permitted to reimburse any such director, officer or
employee the reasonable costs of settlement of any such action, suit or
proceeding if it is found by a majority of FNB's directors to be in the best
interest of FNB that such settlement be made and that such officer, director or
employee was not guilty of negligence or misconduct. The right of
indemnification provided directors, officers and employees of FNB under its By-
laws is non-exclusive; however, the amount of indemnity to which any officer or
director may be entitled shall be fixed by FNB's shareholders. The ABCA
provides for mandatory indemnification of a director who is successful on the
merits or otherwise in the defense of any proceeding, where he or she was a
party because he or she is or was a director of the corporation, against
reasonable expenses incurred in connection therewith, notwithstanding that he or
she was not successful in any other claim, issue or matter in any such
proceeding. The ABCA further permits a corporation to indemnify an individual
made party to a proceeding because he or she is or was a director against
liability incurred in the proceeding if the individual conducted himself or
herself in good faith and reasonably believed that the conduct was in the best
interest of the corporation or, if such conduct was not in his or her official
capacity with the corporation, that such conduct was at least not opposed to the
corporation's best interest. Further, in the case of any criminal proceeding,
the individual must have had no reasonable cause to believe his or her conduct
was unlawful. A corporation may not indemnify a director in connection with a
proceeding in which the director was adjudged liable to the corporation, or in
connection with a proceeding charging improper personal benefit to the director,
whether or not involving action in the director's official capacity in which the
director was adjudged liable on the basis that personal benefit was improperly
received by him or her. Indemnification under the ABCA is limited to reasonable
expenses incurred in connection with the proceeding. A corporation may, under
certain circumstances, pay for or reimburse the reasonable expenses incurred by
a director who is party to a proceeding in advance of final disposition of the
proceeding. Indemnification of a director is only permissible if it is
determined that the director has met the standard of conduct set forth under the
ABCA. This determination shall be made by majority vote of the board of
directors, or a committee of the board of directors, by special legal counsel
selected by the board, or by the shareholders. Officers of the corporation are
also entitled to mandatory indemnification to the same extent as a director.
LEGAL MATTERS
Milling Benson Woodward 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 FNB and its subsidiaries at
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997, included in this Proxy Statement-Prospectus, have been
audited by Wilson, Price, Barranco, Blankenship & Billingsley, P.C., independent
auditors, as set forth in their report appearing elsewhere herein, and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The consolidated financial statements of Whitney and its subsidiaries as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997 incorporated by reference in this Proxy Statement-Prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with
38
<PAGE>
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.
Arthur Andersen LLP will also render a tax opinion with respect to the
Mergers, a form of which is filed as an exhibit to the Registration Statement of
which this Proxy Statement-Prospectus forms a part.
OTHER MATTERS
At the time of the preparation of this Proxy Statement-Prospectus, FNB had
not been informed of any matters to be presented by or on behalf of FNB 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 or postponements 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 FNB, and return it at once in the enclosed
envelope.
BY ORDER OF THE BOARD OF DIRECTORS OF FNB
Mary Frances Jones, Secretary
__________, 1998
39
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1998 AND 1997
CONTENTS
PAGE
Condensed Consolidated Balance Sheets F-2
Condensed Consolidated Statements of Income F-3
Consolidated Statements of Cash Flows F-4
Notes to Consolidated Financial Statements (unaudited) F-5
F-1
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.,
GREENVILLE, ALABAMA
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IN THOUSANDS
-------------------------------------
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
----------------- -----------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 3,922 $ 3,432
Federal funds sold and securities purchased
under agreement to resell 6,625 2,250
----------------- -----------------
Total cash and cash equivalents 10,547 5,682
----------------- -----------------
Investment securities available-for-sale 57,309 63,505
Loans, net of unearned income 42,759 41,134
Allowance for loan losses (289) (263)
----------------- -----------------
Net loans 42,470 40,871
----------------- -----------------
Premise and equipment 1,025 1,001
Accrued interest receivable 1,312 1,108
Other assets 4,883 4,754
----------------- -----------------
Total assets $ 117,546 $ 116,921
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $ 18,233 $ 18,729
NOW deposits 18,756 19,500
Savings and money market deposits 23,649 22,631
Time deposits 41,489 41,360
----------------- -----------------
Total deposits 102,127 102,220
Overnight repurchase agreements 555 83
Other liabilities 1,291 1,249
----------------- -----------------
Total liabilities 103,973 103,552
----------------- -----------------
Common stock 17 17
Additional paid-in capital 924 923
Treasury stock (98) (50)
Retained earnings 12,555 12,288
Net unrealized loss on securities available for sale 175 191
----------------- -----------------
Total stockholders' equity 13,573 13,369
----------------- -----------------
Total liabilities and stockholders' equity $ 117,546 $ 116,921
================= =================
</TABLE>
See notes to the unaudited condensed consolidated financial statements.
F-2
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.,
GREENVILLE, ALABAMA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IN THOUSANDS EXCEPT SHARE AND
PER
SHARE DATA (UNAUDITED)
-----------------------------
THREE MONTHS ENDED MARCH 31,
1998 1997
------------ ------------
<S> <C> <C>
Interest and fees on loans $ 913 $ 881
Interest on investment securities 995 928
Other interest income 35 60
------------ ------------
Total interest income 1,943 1,869
------------ ------------
Interest on deposits 835 809
------------ ------------
Total interest expense 835 809
------------ ------------
Net interest income 1,108 1,060
Provision for loan losses - 23
------------ ------------
Net interest income after provision for loan losses 1,108 1,037
Noninterest income:
Other fees and service charges 158 162
Gain on sale of investment securities 8 -
Other income 87 65
Total noninterest income 253 227
------------ ------------
Noninterest expenses:
Salaries and benefits 442 435
Occupancy, furniture and equipment expense 114 101
Other operating expense 292 233
------------ ------------
Total noninterest expense 848 769
------------ ------------
Earnings before income tax provision 513 495
------------ ------------
Provision for income taxes 161 163
------------ ------------
Net income $ 352 $ 332
============ ============
Weighted average number of shares outstanding 17,021 16,907
============ ============
Net income per share $ 20.68 $ 19.64
============ ============
Dividends per share $ 5.00 $ 4.75
============ ============
</TABLE>
See notes to the unaudited condensed consolidated financial statements.
- --------------------------------------------------------------------------------
F-3
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.,
GREENVILLE, ALABAMA
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
1998 1997
------------ ------------
<S> <C> <C>
Net cash provided by operating activities $ 241 $ 522
------------ ------------
Cash flows from investing activities
Proceeds from sales, maturities and calls of investment
securities 7,209 2,131
Purchase of investment securities (1,015) (8,136)
Net (increase) in loans (1,643) (278)
Proceeds from recoveries of charged-off loans 44 27
Increase in cash surrender value of life insurance (159) (426)
Purchase of bank premises and equipment (59) (154)
------------ ------------
Net cash provided (used) by investing activities 4,377 (6,836)
------------ ------------
Cash flows from financing activities
Net (decrease) increase in deposits (93) 3,835
Net increase in repurchase agreements 472 923
Cash dividends paid (85) (80)
(Purchase) sale of treasury stock (47) 22
------------ ------------
Net cash provided by financing activities 247 4,700
------------ ------------
Net increase (decrease) in cash and cash equivalents 4,865 (1,614)
Cash and cash equivalents at beginning of period 5,682 8,196
------------ ------------
Cash and cash equivalents at March 31 $ 10,547 $ 6,582
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 846 $ 793
============ ============
Income taxes $ - $ -
============ ============
</TABLE>
See notes to the unaudited condensed consolidated financial statements.
- --------------------------------------------------------------------------------
F-4
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.,
GREENVILLE, ALABAMA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
GENERAL
The First National Bancorp of Greenville, Inc. (Company) is a one-bank holding
company of The First National Bank of Greenville (Bank). The Company, through
the Bank, provides a full range of banking and financial services to individual
and corporate customers in the Butler County, Alabama area. The consolidated
financial statements include the consolidated accounts of The First National
Bancorp of Greenville, Inc., and The First National Bank of Greenville. All
significant intercompany items have been eliminated in consolidation. In the
opinion of management of the Company, the accompanying condensed consolidated
financial statements contain all adjustments (consisting principally of normal
recurring accruals) necessary to present fairly the financial position as of
March 31, 1998, the results of operations and cash flows for the three-month
period ended March 31, 1998 and 1997. The results of operations for the three
months ended March 31, 1998 are not necessarily indicative of the results to be
expected for the full year.
LOAN IMPAIRMENT AND LOSSES
The Company had no impaired loans as of March 31, 1998 or 1997. The activity in
the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
(In thousands)
For the Three
Months
Ended March 31,
--------------------
1998 1997
--------- --------
<S> <C> <C>
Balance beginning of the period $ 263 $ 213
Provision (credit) charged to earnings - 23
Charge offs, net of recoveries 26 (58)
--------- --------
Balance end of the period $ 289 $ 178
========= ========
</TABLE>
EARNINGS PER COMMON SHARE
Earnings per common share were computed by dividing the net earnings for the
period by the weighted-average number of shares outstanding. The Company has no
outstanding options.
PENDING MERGER TRANSACTION
On March 24, 1998, the Company entered into an agreement with Whitney Holding
Corporation (Whitney) whereby Whitney would acquire all the outstanding shares
of the Company in exchange for shares of common stock of Whitney. The exchange
ratio will be determined by a formula set forth in the agreement with Whitney.
The merger is subject to a number of conditions, including regulatory and
stockholder approvals. The merger is expected to be accounted for as a pooling
of interests.
- --------------------------------------------------------------------------------
F-5
<PAGE>
FIRST NATIONAL BANCORP OF GREENVILLE, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
CONTENTS
Page
----
Independent Auditor's Report............................................... F-7
Consolidated Statements of Condition....................................... F-8
Consolidated Statements of Income.......................................... F-9
Consolidated Statements of Changes
in Shareholders' Equity................................................. F-10
Consolidated Statements of Cash Flows...................................... F-11
Notes to the Consolidated Financial Statements............................. F-13
F-6
<PAGE>
REPORT OF INDEPENDENT AUDITORS
------------------------------
To the Board of Directors and Shareholders
The First National Bancorp of Greenville, Inc.
We have audited the accompanying consolidated statements of condition of The
First National Bancorp of Greenville, Inc., and its subsidiary as of December
31, 1997 and 1996, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for the three years ended December 13,
1997, 1996, and 1995. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The First National Bancorp of
Greenville, Inc. and its subsidiary as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for the three years ended
December 31, 1997, 1996 and 1995, in conformity with generally accepted
accounting principles.
/s/ Wilson, Price, Barranco, Blankenship & Billingsley, P.C.
January 31, 1998
Montgomery, Alabama
F-7
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
CONSOLIDATED STATEMENTS OF CONDITION
DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 3,426,501 $ 3,804,983
Federal funds sold 2,250,000 4,380,000
Interest-bearing deposits 5,885 11,323
-------------- --------------
Total cash and cash equivalents 5,682,386 8,196,306
Investment securities available-for-sale 63,505,217 57,715,736
Loans 41,134,136 40,351,011
Less: Allowance for loan losses (263,320) (213,258)
-------------- --------------
Net loans 40,870,816 40,137,753
Premises and equipment, net 1,000,479 898,125
Accrued interest receivable 1,108,397 1,098,458
Other assets 4,754,122 3,942,434
-------------- --------------
Total assets $ 116,921,417 $ 111,988,812
============== ==============
LIABILITIES
Deposits:
Demand $ 18,728,633 $16,904,031
Savings and NOW 42,131,527 40,177,836
Other time 41,359,651 41,253,018
-------------- --------------
Total deposits 102,219,811 98,334,885
Overnight repurchase agreements 82,881 356,582
Other liabilities 1,249,733 1,057,983
-------------- --------------
Total liabilities 103,552,425 99,749,450
-------------- --------------
SHAREHOLDERS' EQUITY
Common stock - authorized - 26,000 shares, issued - 17,141,
outstanding - 17,070 and 16,897, respectively 17,141 17,141
Capital surplus 923,134 909,476
Retained earnings 12,288,313 11,417,487
Treasury stock; 71 shares and 244 shares, respectively, at cost (50,204) (163,472)
-------------- --------------
Total shareholders' equity - before market valuation 13,178,384 12,180,632
Net unrealized gain on securities available-for-sale,
net of tax of $151,447 in 1997 and $88,957 in 1996 190,608 58,730
-------------- --------------
Total shareholders' equity after market valuation 13,368,992 12,239,362
-------------- --------------
Total liabilities and shareholders' equity $ 116,921,417 $ 111,988,812
============== ==============
</TABLE>
See notes to the unaudited condensed consolidated financial statements.
- --------------------------------------------------------------------------------
F-8
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
INTEREST INCOME
Loans including fees $ 3,550,735 $ 3,485,186 $ 3,398,671
Investment securities:
Taxable 3,710,590 3,469,145 3,056,920
Exempt from federal taxes 110,620 169,466 226,504
------------ ------------ ------------
33,821,210 3,638,611 3,283,424
------------ ------------ ------------
Federal funds sold 239,083 186,318 232,270
------------ ------------ ------------
Total interest income 7,611,028 7,310,115 6,914,365
------------ ------------ ------------
INTEREST EXPENSE
Deposits 3,334,822 3,370,550 3,287,742
------------ ------------ ------------
Net interest income before provision
for loan losses 4,276,206 3,939,565 3,626,623
PROVISION FOR LOAN LOSSES 163,331 14,135 -
------------ ------------ ------------
Net interest income after provision for
loan losses 4,112,875 3,925,430 3,626,623
------------ ------------ ------------
NON-INTEREST INCOME
Customer service fees 650,700 651,496 559,277
Trust and custodian income 12,398 12,941 13,359
Investment securities gains (losses) 2,042 (99,362) 41,526
Other income 227,847 160,295 149,514
------------ ------------ ------------
Total non-interest income 892,987 725,370 763,676
------------ ------------ ------------
NON-INTEREST EXPENSE
Salaries 1,403,793 1,294,538 1,349,341
Employee benefits 368,806 365,013 276,507
Occupancy expenses, net 182,284 213,801 177,363
Equipment expense 248,064 199,099 198,577
Other expenses 928,555 883,597 1,025,438
------------ ------------ ------------
Total non-interest expense 3,131,502 2,956,048 3,027,226
------------ ------------ ------------
INCOME BEFORE INCOME TAXES 1,874,360 1,694,752 1,363,073
INCOME TAXES 594,581 553,334 411,356
------------ ------------ ------------
NET INCOME $ 1,279,779 $ 1,141,418 $ 951,717
============ ============ ============
NET INCOME PER COMMON SHARE $ 75.29 $ 67.55 $ 56.51
============ ============ ============
</TABLE>
See notes to the unaudited condensed consolidated financial statements.
- --------------------------------------------------------------------------------
F-9
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
<TABLE>
<CAPTION>
NET
UNREALIZED
GAIN ON
SECURITIES
COMMON CAPITAL RETAINED AVAILABLE TREASURY
STOCK SURPLUS EARNINGS FOR SALE STOCK TOTAL
------- -------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 $17,141 $883,935 $ 9,999,659 $(1,551,497) $(197,537) $ 9,151,701
Prior period adjustment 12,266 (12,266) -
------- -------- ----------- ----------- ---------- -----------
BALANCE AT DECEMBER 31, 1994
as adjusted 17,141 896,201 9,999,659 (1,551,497) (209,803) 9,151,701
Net income 951,717 951,717
Treasury Stock;
77 shares at cost 50,494 50,494
Gain on sale of
Treasury Stock 7,031 (7,031) -
Change in net unrealized
loss on securities
available-for-sale, net of
taxes of $872,554 1,591,642 1,591,642
Cash dividends
declared on common
stock ($.199 per share) (320,447) (320,447)
------- -------- ----------- ----------- --------- -----------
BALANCE AT DECEMBER 31, 1995 17,141 903,232 10,630,929 40,145 (166,340) 11,425,107
Net income 1,141,418 1,141,418
Treasury Stock;
13 shares at cost 9,112 9,112
Gain on sale of
Treasury Stock 6,244 (6,244) -
Cash dividends declared
$21.00 per share (354,860) (354,860)
Net change in unrealized
gain on securities
available-for-sale, net
of taxes of $21,548 18,585 18,585
------- -------- ----------- ----------- --------- -----------
BALANCE AT DECEMBER 31, 1996 17,141 909,476 11,417,487 58,730 (163,472) 12,239,362
Net income 1,279,779 1,279,779
Treasury Stock;
173 shares at cost 126,926 126,926
Gain on sale of
Treasury Stock 13,658 (13,658) -
Cash dividends declared
$24.00 per shae (408,953) (408,953)
Net change in unrealized gain
on securities available-for-sale,
net of taxes of $62,490 131,878 131,878
------- -------- ----------- ----------- --------- -----------
BALANCE AT DECEMBER 31, 1997 $17,141 $923,134 $12,288,313 $ 190,608 $ (50,204) $13,368,992
======= ======== =========== =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
================================================================================
F-10
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,279,779 $ 1,141,418 $ 951,717
----------- ------------ ------------
Adjustments to reconcile net income
to net cash
provided by operating activities:
Accretion (159,408) (114,325) (38,161)
Amortization 137,166 358,881 686,703
Depreciation 123,718 112,505 119,070
Provision for loan losses 163,331 14,135 -
Provision for deferred taxes 16,279 53,964 71,044
Realized investment securities
(gains) losses, net (2,042) 100,732 (8,500)
Other gains and losses, net (1,418) (3,464) 7,833
Changes in assets and liabilities:
Accrued interest receivable (9,939) 132,489 (4,764)
Other assets 56,078 (265,165) 967,750
Interest payable 38,235 (29,750) 118,160
Taxes payable 90,947 135,325 (171,528)
Other accured liabilities (16,201) (99,921) (754,734)
---------- ------------- --------------
Total adjustments 436,746 395,406 992,873
========== ============= ==============
Net cash provided by operating activities 1,716,525 1,536,824 1,944,590
---------- ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales and maturities
of investment securities 31,348,752 43,639,353 4,300,247
Purchase of investment securities (36,892,214) (42,291,978) (2,319,500)
Net increase in loans (1,041,045) (3,808,385) (495,114)
Proceeds from recoveries of
charged-off loans 139,812 84,562 106,501
Proceeds from sale of
foreclosed real estate 5,257 - 9,000
Increase in cash surrender value
of life insurance (895,132) (178,047) (194,039)
Purchase of life insurance
policies - cash value - (1,000,000) (1,510,350)
Fixed asset purchases (226,072) (93,505) (31,564)
Proceeds from sale of
fixed assets 1,000 3,500 -
---------- ------------- --------------
Net cash used by investing activities (7,559,642) (3,644,500) (134,819)
---------- ------------- --------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
===============================================================================
F-11
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand,
time and savings accounts $3,767,710 $(1,227,949) $ 137,564
Net increase in certificates
of deposits 117,216 791,194 3,278,822
Net (decrease) increase in repurchase
agreements (273,701) 244,665 111,917
Cash dividends paid (408,953) (354,860) (320,448)
Purchase of treasury stock (16,446) - -
Proceeds from sale of treasury stock 143,371 9,112 50,494
---------- ----------- -----------
Net cash provided (used) by financing
activities 3,329,197 (537,838) 3,258,349
---------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (2,513,920) (2,645,514) 5,068,120
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 8,196,306 10,841,820 5,773,700
---------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF
YEAR $ 5,682,386 $ 8,196,306 $10,841,820
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Interest $ 3,296,586 $ 3,403,356 $ 2,574,112
=========== =========== ===========
Income taxes $ 467,853 $ 542,921 $ 369,350
=========== =========== ===========
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Change in dividend payable $ 39,705 $ 35,891 $ 17,288
=========== =========== ===========
Loans foreclosed in lieu of payment $ 4,839 $ - $ -
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
===============================================================================
F-12
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
================================================================================
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
The First National Bancorp of Greenville, Inc., ("Corporation") is a one-bank
holding company of The First National Bank of Greenville ("Bank"). The
Corporation, through the Bank, provides a full range of banking and financial
services to individual and corporate customers in the Butler County, Alabama
area.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles and with general practices within
the banking industry.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Corporation
and the Bank. All significant intercompany transactions have been eliminated
in consolidation.
CASH AND DUE FROM BANKS
In conformity with regulations governing the banking industry, the Bank is
required to maintain reserve balances with the Federal Reserve Bank based
upon a percentage of deposits.
INVESTMENT SECURITIES
Investment securities are accounted for using Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities. These securities are classified in categories and
accounted for as follows:
Securities to be Held-to-Maturity. Bonds, notes and debentures for which
the Bank has the positive intent and ability to hold to maturity are
reported at cost, adjusted for amortization of premiums and accretion of
discounts.
Securities Available-for-Sale. Securities available-for-sale consist of
bonds, notes, debentures, and certain equity securities not classified as
trading securities nor as securities to be held-to-maturity.
A decline in the fair value of any security available-for-sale or held-to-
maturity below its amortized cost that is deemed other than temporary results
in a reduction in carrying amount to fair value. The impairment is charged
to earnings and a new cost basis for the security is established. The Bank
did not have any securities for which the fair value was below cost and
deemed to be other than a temporary decline.
===============================================================================
F-13
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
===============================================================================
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Unrealized holding gains and losses, net of tax, on securities
available-for-sale are reported as a net amount in a separate component of
shareholders' equity until realized.
Realized gains and losses on the sale of securities available-for-sale are
determined using the specific identification method.
Restricted equity securities consists of Federal Reserve Stock and Federal
Home Loan Bank Stock. These securities are carried at cost since there is no
open market trading.
Premiums and discounts are recognized in interest income using the interest
method over the period to maturity.
PREMISES AND EQUIPMENT
Premises and equipment are carried at cost, less accumulated depreciation.
Bank buildings and improvements are depreciated over periods ranging from 10
to 40 years, using either straight-line or accelerated depreciation methods.
Furniture and equipment are depreciated over periods ranging from 3 to 20
years, using straight-line or accelerated depreciation methods.
When assets are retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the accounts and any gain or loss is reflected
in earnings. Repairs and maintenance expenditures which do not improve or
extend the useful life of the assets are charged to earnings when incurred.
LOANS
Loans that management has the intent and ability to hold for the foreseeable
future or until maturity or payoff are reported at their outstanding
principal, adjusted for any charge-offs and the allowance for loan losses.
Interest on loans is primarily computed using the interest method based on
the principal amount outstanding.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due. When interest accrual is discontinued, all unpaid accrued
interest is reversed. Interest income is subsequently recognized only to the
extent cash payments are received.
The allowance for loan losses is increased by charges to income, and
decreased by charge-offs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is based on the Bank's loan loss
experience, known inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral, and current economic conditions.
===============================================================================
F-14
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
===============================================================================
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOANS (CONTINUED)
For impairment recognized in accordance with Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for Impairment of a
Loan, the entire change in present value of expected cash flows is reported
as bad debt expense in the same manner in which impairment initially was
recognized or as a reduction in the amount of bad debt expense that otherwise
would be reported.
FORECLOSED REAL ESTATE
Real estate properties acquired through, or in lieu of, loan foreclosure are
to be sold and are initially recorded at fair value at the date of
foreclosure establishing a new cost basis. After foreclosure, valuations are
periodically performed by management and the real estate is carried at the
lower of carrying amount or fair value less costs to sell. Gains and losses
on the sale of foreclosed real estate and writedowns resulting from periodic
reevaluation of this property are charged to other expenses.
INCOME TAXES
Provisions for income taxes are based on taxes payable or refundable for the
current year (after exclusion of nontaxable income such as interest on state
and municipal securities) and deferred taxes on temporary differences between
the tax bases of assets and liabilities and their reported amounts in the
financial statements. Deferred tax assets and liabilities are included in
the financial statements at currently enacted income tax rates applicable to
the period in which the deferred tax assets and liabilities are expected to
be realized or settled. As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through the provision for
income taxes.
PER SHARE INFORMATION
Earnings per common share are based on the weighted average common shares
outstanding during the period.
FINANCIAL INSTRUMENTS
The Bank accounts for various financial instruments to which it is a party in
the following manner:
OFF-BALANCE-SHEET INSTRUMENTS
In the ordinary course of business, the Bank has entered into
off-balance-sheet financial instruments consisting of commitments to
extend credit, commercial letters of credits and standby letters of
credit. Such financial instruments are recorded in the financial
statements when they are funded or related fees are incurred or received.
===============================================================================
F-15
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
===============================================================================
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS (CONTINUED)
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions are used by the Bank in estimating
fair values of financial instruments as disclosed herein:
Cash and cash equivalents - The carrying amounts of cash and short-term
instruments approximate their fair value.
Securities to be held-to-maturity and securities available-for-sale -Fair
values for investment securities, excluding restricted equity securities,
are based on quoted market prices. The carrying values of restricted
equity securities approximate their fair values.
Loans - The fair values of loans are estimated by discounting future cash
flows using current rates at which similar loans would be made to
borrowers with similar credit ratings for the same remaining maturities.
Risk-free rates are selected and adjusted after considering loan
maturities, frequency of rate repricing, credit quality, anticipated
prepayments and operating expenses allocable to servicing loans.
Deposit liabilities - The fair values disclosed for demand deposits are,
by definition, equal to the amount payable on demand at the reporting
date (that is, their carrying amounts). 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.
Overnight repurchase agreements - The fair value of repurchase agreements
approximates their carrying values.
Accrued interest - The carrying amounts of accrued interest receivable
approximate their fair values.
Off-balance-sheet instruments - Fair values for off-balance-sheet lending
commitments are based on fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and
the counterparts' credit standing. Since the applicable interest rate for
the Bank's commitments to extend credit and standby letters of credit is
the prevailing market rate, the Bank has determined that the contract
amount of the commitments approximates their fair value.
===============================================================================
F-16
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
===============================================================================
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
For the purposes of presentation in the consolidated statements of cash
flows, cash and cash equivalents are defined as those amounts included in the
statements of condition caption "Cash and cash equivalents."
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
B. LOANS
The major categories of loans are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1997 1996
------------- -----------
<S> <C> <C>
Commercial and industrial $ 5,235,592 $ 5,159,902
Consumer 9,892,474 10,761,588
Residential real estate 19,972,317 19,439,490
Other real estate 3,698,210 3,699,509
Agricultural 713,464 673,826
Other loans 1,622,079 616,696
------------- -----------
41,134,136 40,351,011
Allowance for loan losses (263,320) (213,258)
------------- -----------
Net loans $40,870,816 $40,137,753
============= ===========
</TABLE>
Nonaccrual loans amounted to $150,077 and $104,885 as of December 31, 1997
and 1996, respectively.
Fixed rate loans were $28,045,521 and variable rate loans were $12,938,538 as
of December 31, 1997, respectively.
===============================================================================
F-17
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
===============================================================================
B. LOANS (CONTINUED)
The transactions in the allowance for loan losses are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 213,258 $ 353,582 $ 525,717
Provision for loan losses 163,331 14,135 -
Recoveries on loans previously
charged off 139,812 84,562 106,501
Loans charged off (253,081) (239,021) (278,636)
----------- --------- ---------
Balance, end of year $ 263,320 $ 213,258 $ 353,582
=========== ========= =========
</TABLE>
There were no material impaired loans as of December 31, 1997, as determined
in conformity with Statement of Financial Accounting Standards No. 114. The
Bank is not committed to lend additional funds to debtors whose loans have
been modified.
C. INVESTMENT SECURITIES
Debt and equity securities have been classified in the consolidated
statements of condition according to management's intent.
The carrying amounts of investment securities and their approximate fair
values as of December 31 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ----------- ----------
Securities available-for-sale:
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $59,686,985 $361,663 $ 6,454 $60,042,194
Obligations of states and
political subdivisions 1,584,668 55,151 - 1,639,819
Mortgage-backed securities 338,922 12,388 - 351,310
Other securities 1,175,387 4,536 85,229 1,094,694
Restricted equity securities 377,200 - - 377,200
----------- -------- ------- -----------
$63,163,162 $433,738 $91,683 $63,505,217
=========== ========= ======= ===========
</TABLE>
================================================================================
F-18
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
C. INVESTMENT SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Securities available-for-sale:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $52,371,541 $223,225 $ 93,692 $52,501,074
Obligations of states and
political subdivisions 3,007,484 104,332 - 3,111,816
Mortgage-backed securities 526,742 20,745 - 547,487
Other securities 1,287,182 12,995 119,918 1,180,259
Restricted equity securities 375,100 - - 375,100
-------------- ---------- ---------- -----------
$57,568,049 $361,297 $213,610 $57,715,736
-------------- ---------- ---------- -----------
</TABLE>
A valuation allowance of $78,631 and $99,417 was provided as of December 31,
1997 and 1996, respectively, to reduce marketable equity securities to market
by a charge to shareholders' equity representing the gross unrealized loss.
Investment securities having an amortized cost and fair value of $17,478,285
and $17,598,286, respectively, as of December 31, 1997, and $11,392,065 and
$9,057,525, respectively, as of December 31, 1996, were pledged to secure
public deposits and for other purposes required or permitted by law.
Gross realized gains and gross realized losses on sales of securities
available-for-sale were:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Gross realized gains:
U.S. Treasury securities and obligations
of U.S. government corporations
and agencies $ 2,261 $ 8,788 $ -
Obligations of states and political subdivisions 24,067 9,976 41,526
--------- ---------- ---------
$26,328 $ 18,764 $41,526
========= ========== =========
Gross realized losses:
U.S. Treasury securities and obligations of
U. S. government corporations and agencies $24,286 $118,126 $ -
--------- ---------- ---------
$24,286 $118,126 $ -
========= ========== =========
</TABLE>
- --------------------------------------------------------------------------------
F-19
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
C. INVESTMENT SECURITIES (CONTINUED)
The scheduled maturities of securities available-for-sale as of December 31,
1997 were as follows:
AMORTIZED MARKET
COST VALUE
----------- -----------
Due in one year or less $16,150,299 $16,194,991
Due after one year through five years 40,575,349 40,845,252
Due after five years through ten years 4,479,610 4,538,172
Due after ten years 636,327 671,467
Mortgage-backed securities 338,922 351,311
Equity securities 982,655 904,024
----------- -----------
$63,163,162 $63,505,217
=========== ===========
D. INCOME TAXES
The provision for income taxes in the statement of income is summarized as
follows:
1997 1996 1995
--------- ---------- ----------
Current:
Federal $531,370 $445,207 $307,534
State 46,932 47,926 35,034
--------- ---------- ----------
Total current 578,302 493,133 342,568
--------- ---------- ----------
Deferred:
Federal 13,948 55,211 63,522
State 2,331 4,990 5,266
--------- ---------- ----------
Total deferred 16,279 60,201 68,788
--------- ---------- ----------
Total provision $594,581 $553,334 $411,356
========= ========== ==========
- --------------------------------------------------------------------------------
F-20
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
D. INCOME TAXES (CONTINUED)
The components of the net deferred income tax asset or liability included in
other assets or other liabilities are as follows:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Deferred tax liabilities:
Accretion $ (79,516) $ (38,946)
Depreciation (65,743) (67,363)
Unrealized gain on market value of securities
available-for-sale (151,447) (88,957)
Allowance for loan loss (32,749) (50,633)
--------- ---------
Gross deferred tax liabilities (329,454) (245,899)
Deferred tax assets:
Salary continuation plan 117,267 133,359
Index retirement plan 28,834 7,956
--------- ---------
Gross deferred tax assets 146,101 141,315
--------- ---------
Net deferred tax liability $(183,353) $(104,584)
========= =========
</TABLE>
The significant differences between income tax expense and the amount
computed by applying the statutory federal income tax rate of 34% to income
before income taxes were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Expected tax at statutory federal
income tax rate $637,282 $576,216 $463,445
Increase (decrease) in tax resulting
from:
Tax-exempt income (42,509) (63,388) (71,902)
State income taxes, net of federal
tax benefit 30,975 31,631 23,123
Other (31,167) 8,875 (3,310)
-------- -------- --------
Tax provision $594,581 $553,334 $411,356
======== ======== ========
</TABLE>
The types of temporary differences between the tax bases of assets and
liabilities and their financial reporting amounts that give rise to
significant portions of deferred income tax liabilities or assets are:
provision for loan losses; accretion; depreciation; and unrealized gain on
market value of debt securities available-for-sale.
- --------------------------------------------------------------------------------
F-21
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
D. INCOME TAXES (CONTINUED)
The provision for deferred income taxes is included in the financial
statements as follows:
1997 1996 1995
-------- -------- --------
Statement of income:
Continuing operations $ 16,279 $ 60,201 $ 68,788
Statement of shareholders' equity:
Deferred taxes on net change in
unrealized gain on securities
available-for-sale 62,490 21,548 872,555
-------- -------- --------
Net change in deferred taxes $ 78,769 $ 81,749 $941,343
======== ======== ========
E. PREMISES AND EQUIPMENT
The major classification of premises and equipment were as follows:
1997 1996
----------- -----------
Land, building and improvements $ 1,925,406 $ 1,865,363
Furniture, fixtures and equipment 1,757,622 1,711,354
----------- -----------
Accumulated depreciation (2,682,549) (2,678,592)
----------- -----------
Net $ 1,000,479 $ 898,125
=========== ===========
Depreciation expense for the years ending December 31, 1997, 1996, and 1995
was $123,718, $112,505 and $119,070, respectively.
The Bank leases equipment under operating leases with various expiration
dates through 2000. The future minimum lease payments by year are as
follows:
1998 $16,158
1999 12,742
2000 624
-------
$29,524
=======
The rental expense for operating leases was $16,202, $17,311 and $17,399 in
1997, 1996, and 1995, respectively.
- --------------------------------------------------------------------------------
F-22
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
F. DEPOSITS
Included in deposits are certificates of deposit of $100,000 or more and with
remaining maturities as of December 31, 1997 as follows:
Three months or less $ 947,830
Three through six months 1,320,000
Over six months 2,046,506
----------
$4,314,336
==========
G. RETIREMENT OF COMMON STOCK
The Corporation, in accordance with guidelines filed with regulatory
authorities, purchases its own shares of common stock as shares become
available. The redemption value is established quarterly by the Board of
Directors. During 1997, 1996 and 1995, 1.01%, (.08)%, and .57%,
respectively, of the prior years' outstanding stock was purchased net of
shares sold.
H. PRIOR PERIOD ADJUSTMENT
Capital Surplus and Treasury Stock as of December 31, 1994, has been adjusted
to correctly reflect the gain or loss resulting from the sale of Treasury
Stock. The correction had no effect on retained earnings or net income.
I. CONTINGENT LIABILITIES AND COMMITMENTS
In the ordinary course of business, the Corporation has various outstanding
commitments and contingent liabilities that are not reflected in the
accompanying consolidated financial statements. In addition, the Corporation
is a defendant in certain claims and legal actions arising in the ordinary
course of business. In the opinion of management, after consultation with
legal counsel, the ultimate disposition of these matters is not expected to
have a material adverse effect on the consolidated financial condition of the
Corporation.
J. RELATED PARTIES
The Bank had, and expects to have in the future, banking transactions with
directors, officers, principal shareholders, and their associates and
employees. Loans and deposits were made in the ordinary course of business
at normal credit terms, including interest rates and collateral, and do not,
in the opinion of management, involve more than a normal credit risk.
Borrowings by these parties totaled $516,599 and $397,605 with payments
totaling $295,337 and $433,097, as of December 31, 1997 and 1996,
respectively, leaving a balance of indebtedness of $558,077 and $336,815 as
of December 31, 1997 and 1996, respectively.
- --------------------------------------------------------------------------------
F-23
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
K. RESTRICTIONS ON RETAINED EARNINGS
The Bank, as a National Bank, is subject to the dividend restrictions set
forth by the Comptroller of the Currency. Under such restrictions, the Bank
may not, without the prior approval of the Comptroller of the Currency,
declare dividends in excess of the sum of the current year's earnings (as
defined) plus the retained earnings (as defined) from the prior two years.
L. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Most of the Bank's loans, commitments, and standby letters of credit have
been granted to customers located in Butler County, Alabama. All such
customers are depositors of the Bank. Investments in state and municipal
securities also involve governmental entities within the Bank's market area.
The concentrations of credit by type of loan are set forth in Note B. The
distributions of commitments to extend credit approximates the distribution
of loans outstanding. Commercial and standby letters of credit were granted
primarily to commercial borrowers. The Bank, as a matter of policy, does not
extend credit to any single borrower or group of related borrowers in excess
of the Bank's legal lending limit.
The contractual amounts of credit-related financial instruments such as
commitments to extend credit and letters of credit represent the amounts of
potential accounting loss should the contract be fully drawn upon, the
customer default and the value of any existing collateral become worthless.
M. FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers
and to reduce its own exposure to fluctuations in interest rates. These
financial instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying degrees, elements
of credit and interest rate risk in excess of the amount recognized in the
statements of financial condition. The contract or notional amounts of those
instruments reflect the extent of the Bank's involvement in particular
classes of financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit 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.
- --------------------------------------------------------------------------------
F-24
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
M. FINANCIAL INSTRUMENTS (CONTINUED)
Commitments to Extend Credit. The Bank had outstanding commitments to extend
credit of $7,062,692 at December 31, 1997. Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a
fee. Since many of the commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. The Bank evaluates each customer's credit worthiness on a case
by case basis. The amount of collateral obtained, if it is deemed necessary
by the Bank upon extension of credit, is based on management's credit
evaluation of the counterparty. Collateral held varies but may include
accounts receivable; inventory; property, plant and equipment; and income-
producing commercial properties.
As of December 31, 1997 the Bank was contingently liable for outstanding
letters of credit totaling $5,000. Standby 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. The credit risk
involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers.
The Bank has not incurred any losses on its commitments in 1997, 1996 and
1995.
The estimated fair values of the Bank's financial instruments at December 31,
1997 and 1996, respectively, were as follows:
<TABLE>
<CAPTION>
1997 1996
---------------------------- --------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Financial assets:
Cash and due from banks and
federal funds sold $ 5,682,386 $ 5,682,386 $ 8,196,306 $ 8,196,306
Securities available-for-sale 63,505,217 63,505,217 57,715,736 57,715,736
Loans 41,134,136 40,821,000 40,351,011 40,124,000
Accrued interest receivable 1,108,397 1,108,397 1,098,458 1,098,458
Financial liabilities:
Deposit liabilities 102,219,811 102,354,000 98,334,885 98,466,000
Repurchase agreements 82,881 82,881 356,582 356,582
</TABLE>
- --------------------------------------------------------------------------------
F-25
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
N. REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory--and possibly additional
discretionary--actions by regulators that, it undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Bank must meet specific capital guidelines that involve quantitative measures
of the Bank's assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practice. The Bank's capital amounts
and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) to total Tier I capital (as defined in the regulations) to risk-
weighted assets (as defined), and the Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1997, that the
Bank meets all capital adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the Federal
Deposit Insurance Corporation categorized the Bank as well capitalized under
the regulatory framework for prompt corrective action. To be categorized as
adequately capitalized the Bank must maintain minimum total risk-based, Tier
I risk-based, and Tier I leverage ratios as set forth in the table. There
are no conditions or events since that notification that management believes
have changed the institution's category.
The Bank's actual capital amounts and ratios are also presented in the table
(amounts in thousands).
<TABLE>
<CAPTION>
TO BE WELL CAPITALIZED
UNDER PROMPT
FOR CAPITAL CORRECTIVE ACTION
ACTUAL ADEQUACY PURPOSE PROVISION
----------------- ---------------- ----------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital ------- ----- ------- ----- ------- -----
(to Risk Weighted Assets) $13,363 27.9% $ 3,832 8.0% $ 4,790 10.0%
Tier I Capital
(to Risk Weighted Assets) 13,099 27.3 1,916 4.0 2,874 6.0
Tier I Capital
(to Average Assets) 13,099 11.2 4,670 4.0 5,838 5.0
As of December 31, 1996:
Total Capital
(to Risk Weighted Assets) 12,511 27.6 3,623 8.0 4,528 10.0
Tier I Capital
(to Risk Weighted Assets) 12,081 26.7 1,811 4.0 2,717 6.0
Tier I Capital
(to Average Assets) 12,081 10.8 4,465 4.0 5,582 5.0
</TABLE>
- --------------------------------------------------------------------------------
F-26
<PAGE>
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
O. RETIREMENT PLANS
The Bank has, effective January 1, 1996, a 401(k) profit sharing plan which
covers substantially all employees subject to certain age and service
requirements. Contributions to the 401(k) are elective deferrals by the
employee with the Bank contributing discretionary matching contributions.
Total contributions by the Bank in 1997 and 1996 were $23,161 and $41,519,
respectively.
The Bank also has other retirement plans covering officers, directors, and
certain employees. The net effect of the retirement plans was an increase to
net income of $2,275 for 1997 and a decrease to net income of $63,138 and
$35,960 for 1996 and 1995, respectively. Included in other liabilities in
the statement of condition are accruals for $405,838 and $392,567,
respectively, for 1997 and 1996, related to these retirement plans.
- --------------------------------------------------------------------------------
F-27
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made March 24, 1998,
between Whitney Holding Corporation ("Whitney"), a Louisiana corporation and
Whitney National Bank ("WNB"), a national banking association, on the one hand,
and The First National Bancorp of Greenville, Inc. ("Holding"), an Alabama
corporation, and The First National Bank of Greenville (the "Bank"), a national
banking association, on the other hand. Whitney and Holding shall be
hereinafter collectively referred to as the "Constituent Corporations".
PREAMBLE
WHEREAS, the boards of directors of Whitney and Holding have determined
that it is desirable and in the best interests of their respective corporations
and shareholders that Holding merge into Whitney (the "Company Merger") on the
terms and subject to the conditions set forth in this Agreement. The boards of
directors of WNB 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 WNB (the "Bank Merger") on the terms and subject to the
conditions set forth in this Agreement and the Bank Merger Agreement (as
hereinafter defined). The Company Merger and the Bank Merger shall be
hereinafter collectively referred to as the "Mergers".
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
SECTION 1. THE MERGERS AND CLOSING
1.01. MERGERS.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as hereinafter defined), Holding shall be merged with and into
Whitney, which will be the surviving corporation, in accordance with the
Louisiana Business Corporation Law (the "LBCL") and the Alabama Business
Corporation Law (the "ABCA"), and the separate corporate existence of Holding
shall thereupon cease.
(b) Prior to the Effective Date, unless Whitney elects to delay the
Bank Merger in accordance with the proviso contained in Section 1.02 hereof, the
Boards of Directors of WNB and the Bank will execute the merger agreement
annexed hereto as Exhibit 1.01(b) (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 WNB, which shall be the
surviving bank.
(c) Effects of Mergers. The Company Merger shall have the effects
set forth in the LBCL and the ABCA, as applicable. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time (as
hereinafter defined), all the property and assets, rights, privileges and all
debts, liabilities and obligations of Holding will become the property and
assets, rights, privileges, debts, liabilities and obligations of Whitney as the
surviving corporation in the Company Merger. The Bank Merger shall have the
effects set forth in the national banking laws. 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 the Bank will become the property and assets, rights, privileges,
debts, liabilities and obligations of WNB 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 9:00 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, opinions and other items
A-1
<PAGE>
required by Section 6 shall be delivered, (c) Whitney and Holding shall, as
applicable, execute a certificate of merger complying with the requirements of
Section 112(F) of the LBCL (the "Certificate of Merger") and articles of merger
complying with the requirements of Section 10-2B-11.06 of the ABCA (the
"Articles of Merger"), (d) the appropriate officers of the parties shall
execute, deliver and acknowledge the Bank Merger Agreement and (e) the parties
shall take such further action as is required to effect the Company Merger and
the Bank Merger and to otherwise consummate the transactions contemplated by
this Agreement and the Bank Merger Agreement; provided, however, that Whitney
may, in its sole discretion, delay execution, delivery, acknowledgment and
filing of the Bank Merger Agreement and the consummation of the Bank Merger
until such time as it deems appropriate, but in no event later than one year
following the approval of the Bank Merger by the Office of the Comptroller of
the Currency (the "OCC"). 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 such 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 Section 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, the Certificate of Merger shall be filed with
and recorded by the Secretary of State of Louisiana and the Articles of Merger
shall be field with and recorded by the Secretary of State of Alabama. The
Company Merger will be effective on the date (the "Effective Date") and time
(the "Effective Time") specified in the Certificate of Merger. At such time,
appropriate articles of merger in respect of the Company Merger shall also be
filed with the Alabama Secretary of State. Subject to Section 1.02, the Bank
Merger Agreement will be filed with and recorded by the OCC and the Bank Merger
shall be effective at the date and time specified in the Bank Merger Agreement.
1.04. SURVIVING CORPORATIONS.
(a) Company Merger. The Articles of Incorporation and bylaws of
Whitney, as in effect immediately prior to the Effective Time, shall remain
unchanged by reason of the Company Merger and shall be the Articles of
Incorporation and bylaws of Whitney as the surviving corporation in the Company
Merger. The directors and officers of Whitney at the Effective Time shall be
the directors and officers of Whitney 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. Each
share of Whitney common stock, no par value ("Whitney Common Stock"), issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time. At the Effective Time, the
shares of Holding Common Stock (as hereinafter defined in Section 2.01) shall be
converted as set forth in Section 2.
(b) Bank Merger. The Articles of Association and Bylaws of WNB, as
in effect immediately prior to the effective time of the Bank Merger shall
remain unchanged by reason of the Bank Merger and shall be the Articles of
Association and Bylaws of WNB as the surviving entity in the Bank Merger. The
directors and officers of WNB at the effective time of the Bank Merger shall be
the directors and officers of WNB 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 shall be canceled and (ii) the shares of capital stock
of WNB 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 Holding common stock, par value $1.00
per share ("Holding Common Stock") shall be converted as follows:
A-2
<PAGE>
(a) Exchange Ratio. Except for (i) shares of Holding Common Stock
issued and outstanding immediately prior to the Effective Time as to which
dissenters' rights have been perfected and not withdrawn or other forfeited
under Section 10-2B-13.01, et seq of the ABCA ("Dissenters' Shares") and (ii)
shares held by Holding as treasury shares, which shall by reason of the Company
Merger be canceled ("Treasury Shares"), and subject to the provisions of Section
2.01(b) relating to fractional shares, each issued and outstanding share of
Holding Common Stock shall be converted into and become that number of shares of
Whitney Common Stock that is equal to the quotient obtained by dividing the
Maximum Deliverable Amount (as hereinafter defined), rounded up to the nearest
whole number of shares, by the total number of issued and outstanding shares
(not Treasury Shares) of Holding Common Stock at the Effective Time.
(i) Purchase Price. The term "Purchase Price" means
$33,455,200, plus Retained Net Income After Tax (as hereinafter defined).
(ii) Maximum Deliverable Amount. The term "Maximum Deliverable
Amount" means the quotient obtained by dividing the Purchase Price by the
Average Market Price (as hereinafter defined).
(iii) Retained Net Income After Tax. The term "Retained Net
Income After Tax" means the consolidated retained net income for the period
beginning March 1, 1998 through the end of the calendar month immediately
preceding the Effective Date, as agreed to by the Constituent Corporations,
based on normal banking net income MINUS (x) appropriate income taxes accrued
and dividends declared and/or paid and (y) any unusual or nonrecurring additions
to net income such as reversals of loan loss or other valuation reserves and
gains on the sales of investments or other assets. Retained Net Income After Tax
shall reflect (and be reduced by) any unusual or nonrecurring deductions from
net income such as higher than usual provisions for loan losses or payments for
settlements of litigation. Retained Net Income After Tax shall not be reduced by
the Bank's expenses for legal counsel, accounting services and/or an investment
advisor incurred in connection with the Merger, provided such expenses do not
exceed, in the aggregate, $350,000; any expenses in excess of such limit shall
reduce Retained Net Income After Tax on a dollar for dollar basis.
(iv) 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) (the "Trading Price") on the twenty (20) trading days preceding the
fifth trading day immediately prior to the Effective Date, as reported in the
Wall Street Journal (corrected for typographical errors); provided, however,
that if (x) Whitney issues a press release at any time prior to the Effective
Date announcing that it is negotiating or has executed a definitive merger or
other acquisition agreement as a result of which Whitney will cease to be an
independent, publicly traded company and (y) Whitney has not thereafter issued a
press release announcing the termination of such negotiations or definitive
agreement prior to the Closing, then the "Average Market Price" shall be the
average of the Trading Price on the twenty (20) trading days preceding the tenth
trading day immediately prior to the date on which Whitney issues the first of
the applicable press releases referred to in clause (x) above.
(b) 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 Treasury Shares shall receive a
cash payment (without interest) equal to the fair market value at the Effective
Time of any fraction of a share of Whitney Common Stock to which such holder
would be entitled but for this provision. For purposes of calculating such
payment, the fair market value of a fraction of a share of Whitney Common Stock
at the Effective Time shall be such fraction multiplied by the Average Market
Price.
(c) 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 Treasury
Shares, upon surrender thereof to the exchange agent selected by Whitney (the
"Exchange Agent"), together with duly executed transmittal materials provided
pursuant to Section 2.01(e) 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
A-3
<PAGE>
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 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. The provisions of this subsection 2.01(c) are intended for the
benefit of the holders of shares of Holding Common Stock and shall be
enforceable by such holders and each such holder's heirs, representatives and
successors.
(d) Deposit. Promptly after 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 2.
(e) 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, transmittal materials for use in exchanging certificates of Holding
Common Stock for certificates of Whitney Common Stock.
(f) Dissenters' Shares. Holders of Dissenters' Shares shall not be
entitled to receive the shares of Whitney Common Stock and any unpaid dividends
and distributions payable thereon pursuant to this Section 2.01 and shall only
be entitled to receive payment of the fair value of such shares in accordance
with the provisions of Section 10-2B-13.01, et seq of the ABCA unless and until
such holders fail to perfect or effectively withdraw or lose their rights to
such appraisal and payment. If, after the Effective Time, any such holder fails
to perfect or effectively withdraws or loses such right, such shares of Holding
Common Stock 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 shares), and any unpaid dividends and distributions payable thereon,
pursuant to this Section 2.01, without interest thereon.
2.02. CLOSING TRANSFER BOOKS. At the Effective Time, the stock transfer
books of Holding shall be closed and no transfer of shares of Holding Common
Stock shall be made thereafter. At the effective time of the Bank Merger, the
stock transfer books of the Bank shall be closed and no transfer of shares of
Bank Common Stock (as hereinafter defined in Section 3.02) shall be made
thereafter. 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 2 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.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF HOLDING AND THE BANK
Holding and the Bank represent and warrant to Whitney and WNB that, as of
the date of this Agreement and as of the Closing Date, except as set forth in
the corresponding subsection of the Schedule of Exceptions (as hereinafter
defined in subsection 5.01(b)):
3.01. CONSOLIDATED GROUP; ORGANIZATION; QUALIFICATION. "Holding's
consolidated group," as such term is used in this Agreement, consists of Holding
and the Bank. Holding is a corporation duly organized, validly existing and in
good standing under the laws of the State of Alabama 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 Alabama. Each member of
Holding's consolidated group has all requisite corporate power and authority to
own and lease its property and to carry on its business as it is currently being
conducted and to execute this
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Agreement and the Bank Merger Agreement and to consummate the transactions
contemplated hereby, and is qualified and in good standing as a foreign
corporation in all jurisdictions in which the failure to so qualify would have a
Material Adverse Effect (as hereinafter defined) on such member's financial
condition, results of operations or business. For purposes of this Agreement,
"Material Adverse Effect" shall mean, with respect to Holding's consolidated
group, any effect or effects which taken individually or in the aggregate are,
or can reasonably be expected to be, material and adverse to its financial
condition, results of operations or business, provided, however, that "Material
Adverse Effect" shall not be deemed to include (a) any change occurring after
the date hereof in any federal or state law, rule or regulation or in generally
accepted accounting principles ("GAAP"), which change affects bank holding
companies or national banks generally, (b) expenses incurred in connection with
this Agreement and the transactions contemplated hereby (not to exceed $350,000
in the aggregate), (c) actions or omissions of Holding or the Bank either
specifically permitted under this Agreement or taken with the prior written
consent of Whitney in contemplation of the transactions contemplated hereby and
(d) any effect with respect to Holding or the Bank caused, in whole or in part,
by Whitney or WNB.
3.02. CAPITAL STOCK; OTHER INTERESTS. The authorized capital stock (i)
of Holding consists of 26,000 shares of Holding Common Stock, of which 17,141
shares are issued, 17,009 shares are outstanding and 71 shares are held in its
treasury; and (ii) of the Bank consists of 26,000 shares of common stock, $6.00
par value per share ("Bank Common Stock"), of which 26,000 shares are issued and
outstanding and no shares are held in its treasury. All issued and outstanding
shares of capital stock of each member of Holding's consolidated group have been
duly authorized and are validly issued, fully paid and (except as provided in 12
U.S.C. Section 55) non-assessable, and all of the outstanding shares of capital
stock of the Bank are owned by Holding, free and clear of all liens, charges,
security interests, mortgages, pledges and other encumbrances. No member of
Holding's consolidated group has outstanding any stock options or other rights
to acquire any shares of its capital stock or any security convertible into such
shares, or has any obligation or commitment to issue, sell or deliver any of the
foregoing or any shares of its capital stock. There are no agreements among
Holding and Holding's shareholders or by which Holding is bound with respect to
the voting or transfer of Holding Common Stock or granting registration rights
to any holder thereof. The outstanding capital stock of each member of
Holding's consolidated group has been issued in compliance with all legal
requirements and in compliance with any preemptive or similar rights. No member
of Holding's consolidated group has any subsidiaries (other than the Bank) or
any direct or indirect ownership interest exceeding 5% in any firm, corporation,
partnership or other entity.
3.03. CORPORATE AUTHORIZATION; NO CONFLICTS. Subject to the approval of
this Agreement and the Bank Merger Agreement by the shareholders of Holding
and the Bank, respectively, in accordance with the ABCA and applicable federal
law, all corporate acts and other proceedings required of each member of
Holding's consolidated group for the due and valid authorization, execution,
delivery and performance of this Agreement and the Bank Merger Agreement and
consummation of the Mergers have been validly and appropriately taken. Subject
to their approval by the shareholders of Holding and the Bank and to such
regulatory approvals as are required by law, this Agreement and the Bank Merger
Agreement are legal, valid and binding obligations of Holding and the Bank and
are enforceable against Holding and the Bank, respectively, in accordance with
the respective terms hereof and thereof, except that enforcement may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship, and other laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights of
creditors of insured depository institutions, (ii) general equitable principles
and (iii) laws relating to the safety and soundness of insured depository
institutions, and except that no representation is made as to the effect or
availability of equitable remedies or injunctive relief (regardless of whether
such enforceability is considered in a proceeding in equity or at law). With
respect to each member of Holding's consolidated group, neither the execution,
delivery or performance of this Agreement or the Bank Merger Agreement, nor the
consummation of the transactions contemplated hereby or thereby will (i)
violate, conflict with, or result in a breach of any provision of, (ii)
constitute a default (or an event which, 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.
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3.04. FINANCIAL STATEMENTS, REPORTS AND PROXY STATEMENTS. (a) Holding
has delivered to Whitney true and complete copies of (i) the audited
consolidated balance sheets as of December 31, 1996 and December 31, 1997 of
Holding and its consolidated subsidiaries, the related audited consolidated
statements of income, shareholders' equity and cash flows for the respective
years then ended, the related notes thereto, and the reports of its independent
public accountants with respect thereto (collectively, the "Financial
Statements"), (ii) the annual report to the Board of Governors of the Federal
Reserve System ("Federal Reserve Board") for the year ended December 31, 1997,
of each member of Holding's consolidated group required to file such reports,
(iii) all call reports, including all amendments thereto, made to the OCC since
December 31, 1993, of each member of Holding's consolidated group required to
file such reports, (iv) Holding's Annual Report to Shareholders for the year
ended 1996 and all subsequent Quarterly Reports to Shareholders, and (v) all
proxy or information statements (or similar materials) disseminated to Holding's
shareholders at any time since December 31, 1993.
(b) The Financial Statements have been (and all financial statements
delivered to Whitney as required by this Agreement will be) 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 Holding's consolidated group for the respective periods covered thereby and
the consolidated financial condition of its consolidated group as of the
respective dates thereof. All call and other regulatory reports referred to
above have been filed on the appropriate form and prepared in all material
respects in accordance with such forms' 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 Financial Statements (the "Latest Balance
Sheet"), no member of Holding's consolidated group had, nor are any of any such
member's assets subject to, any material liability, commitment, indebtedness or
obligation (of any kind whatsoever, whether absolute, accrued, contingent, known
or unknown, 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 banking regulatory agency, and no report made to
shareholders of Holding since January 1, 1994, 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 are supported by and consistent with a
general ledger and detailed trial balances of investment securities, loans and
commitments, depositors' accounts and cash balances on deposit with other
institutions, copies of which have been made available to Whitney.
3.05. LOAN AND INVESTMENT PORTFOLIOS. All loans, discounts and financing
leases (in which a member of Holding's consolidated group is lessor) reflected
on the Latest Balance Sheet (a) were, at the time and under the circumstances in
which made, made for good, valuable and adequate consideration in the ordinary
course of business of its consolidated group, (b) are evidenced by genuine
notes, agreements or other evidences of indebtedness and (c) to the extent
secured, have been secured, to the knowledge of Holding, by valid liens and
security interests which have been perfected. Accurate lists of all loans,
discounts and financing leases as of the date of the Latest Balance Sheet (or a
more recent date), and of the investment portfolios of each member of Holding's
consolidated group as of such date, will be delivered to Whitney with the
Schedule of Exceptions. Except as specifically noted on the loan schedule
attached to the Schedule of Exceptions, no member of Holding's consolidated
group is a party to any written or oral loan agreement, note or borrowing
arrangement, including any loan guaranty, that was, as of the most recent month-
end (i) delinquent by more than 30 days in the payment of principal or interest,
(ii) known by any member of Holding's consolidated group to be otherwise in
material default for more than 30 days, (iii) classified as "substandard,"
"doubtful," "loss," "other assets especially mentioned" or any comparable
classification by any member of Holding's consolidated group, the OCC or the
Federal Deposit Insurance Corporation (the "FDIC"), (iv) an obligation of any
director, executive officer or 10% shareholder of any member of Holding's
consolidated group who is subject to Regulation O of the Federal Reserve Board
(12 C.F.R. Part 215), or any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing, or (v) in
violation of any law, regulation or rule of any governmental authority, other
than those that are immaterial in amount.
3.06. ADEQUACY OF ALLOWANCES FOR LOSSES. Each of the allowances for
losses on loans, financing leases and other real estate shown on the Latest
Balance Sheet is adequate in accordance with applicable regulatory guidelines
and GAAP in all material respects, and there are no facts or circumstances known
to the Bank which are likely to require in accordance with applicable regulatory
guidelines or GAAP a future material increase in any such provisions for losses
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or a material decrease in any of the allowances therefor reflected in the Latest
Balance Sheet. Each of the allowances for losses on loans, financing leases and
other real estate reflected on the books of Holding's consolidated group at all
times from and after the date of the Latest Balance Sheet is adequate in
accordance with applicable regulatory guidelines and GAAP in all material
respects, and there are no facts or circumstances known to the Bank 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.
3.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Latest
Balance Sheet, Holding has not declared, set aside for payment or paid any
dividend to holders of, or declared or made any distribution on, any shares of
Holding's capital stock except regular dividends from the date of the Latest
Balance Sheet until the Closing Date in amounts not to exceed $5.00 per share
payable quarterly. Whitney and Holding shall cooperate in selecting the record
date of Holding's dividend for the quarter in which the Effective Time is to
occur to ensure that, with respect to such quarterly period, the holders of
Holding Common Stock do not receive both a dividend in respect of their shares
of Holding Common Stock and Whitney Common Stock or fail to receive any
dividend, and Whitney and Holding will use their best efforts to select the
Closing Date such that holders of Holding Common Stock qualify for the dividend
in respect to the Whitney Common Stock (rather than the dividend in respect to
the Holding Common Stock) declared in the quarter in which the Effective Time is
to occur. Since the date of the Latest Balance Sheet, there has been no event or
condition of any character (whether actual or threatened) that has had, or can
reasonably be anticipated to have, a Material Adverse Effect on the financial
condition, results of operations or business of Holding's consolidated group,
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 leases
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 canceled any of its
claims or paid any of its noncurrent obligations or liabilities;
(i) made any capital expenditure or capital addition or betterment in
excess of $50,000;
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(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 5% 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;
(l) made any loan, given any discount or entered into any financing
lease which has not been (i) made, at the time and under the circumstances in
which made, for good, valuable and adequate consideration in the ordinary course
of business, (ii) evidenced by genuine notes, agreements or other evidences of
indebtedness and (iii) fully reserved against in an amount sufficient in
accordance with applicable regulatory guidelines to provide for all charge-offs
reasonably anticipated in the ordinary course of business after taking into
account all recoveries reasonably anticipated in the ordinary course of
business; or
(m) entered into any agreement, contract or commitment to do any of
the foregoing.
3.08. TAXES. Each member of Holding's consolidated group has timely filed
all federal, state and local income, franchise, excise, sales and use, 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, other than taxes which are
being contested in good faith and for which adequate reserves have been made on
the Latest Balance Sheet, has made adequate provision for the payment of all
such taxes accruable for all periods ending on or before the date of this
Agreement (and will make such accruals through the Closing Date) to any city,
county, state, the United States or any other taxing authority, and is not
delinquent in the payment of any material tax or material governmental charge of
any nature. The consolidated federal income tax returns of Holding's
consolidated group have not been audited by the Internal Revenue Service since
August 1993. No audit or examination is presently being conducted by any taxing
authority nor has any member of Holding's 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 Holding's consolidated group by any governmental representative, and
no agreements for extension of time for the assessment of any tax have been
entered into by or on behalf of any member of Holding's consolidated group. Each
such member has withheld from its employees (and timely paid to the appropriate
governmental entity) proper and accurate amounts for all periods in 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 Holding's consolidated group had and, except with respect to assets
disposed of for adequate consideration in the ordinary course of business since
such date, now has, good and merchantable title to all real property and good
and merchantable title to all other material properties and assets reflected on
the Latest Balance Sheet, and has good and merchantable title to all real
property and good and merchantable title to all other material properties and
assets acquired since the date of the Latest Balance Sheet, in each case free
and clear of all mortgages, liens, pledges, restrictions, security interests,
charges and encumbrances of any nature except for (i) mortgages and encumbrances
which secure indebtedness which is properly reflected in the Latest Balance
Sheet 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, provided that the obligations secured by such
liens are not delinquent or are being contested in good faith; (iv) such
imperfections of title and encumbrances, if any, as do not materially detract
from the value or materially interfere with the present use of any of such
properties or assets or the potential sale of any of such owned properties or
assets; and (v) capital leases and leases, if any, to third parties for fair and
adequate consideration. Each member of Holding's consolidated group owns, or has
valid leasehold interests in, all material properties and assets used in the
conduct of its business. Any real property and other material assets held under
lease by any such member are held under valid, subsisting and enforceable
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leases with such exceptions as are not material and do not interfere with the
use made of and proposed to be made of such property by such member of such
property.
(b) With respect to each lease of any real property or a material
amount of personal property to which any member of Holding's consolidated group
is a party (whether as lessee or lessor), 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 Holding's consolidated group has any legal
obligation, absolute or contingent, to any other person to sell or otherwise
dispose of any substantial part of its assets or to sell or dispose of any of
its assets except in the ordinary course of business consistent with past
practices.
3.10. LEGAL MATTERS. (a) To the knowledge of Holding, (i) there is no
material claim, action, suit, proceeding, arbitration or investigation pending
in any court or before or by any governmental agency or instrumentality or
arbitration panel or otherwise, or threatened against any member of Holding's
consolidated group nor (ii) do any facts or circumstances exist that would be
likely to form the basis for any material claim against any member of Holding's
consolidated group that, if adversely determined, would have a Material Adverse
Effect on Holding's consolidated group.
(b) Each member of Holding's consolidated group has complied in all
material respects with and is not in default in any material respect under (and
has not been charged or threatened with or come under investigation with respect
to any charge concerning any material violation of any provision of) any
federal, state or local law, regulation, ordinance, rule or order (whether
executive, judicial, legislative or administrative) or any order, writ,
injunction or decree of any court, agency or instrumentality.
(c) There are no material uncured violations, or violations with
respect to which material refunds or restitution may be required, cited in any
compliance report to any member of Holding's consolidated group as a result of
examination by any bank or bank holding company regulatory authority.
(d) No member of Holding's consolidated group is subject to any
written agreement, memorandum or order with or by any bank or bank holding
company regulatory authority.
(e) To the knowledge of Holding, there is no claim, action, suit,
proceeding, arbitration, or investigation, pending or threatened, in which any
material claim or demand is made or threatened to be made against any member of
Holding's consolidated group or any officer, director, advisory director or
employee, in each case by reason of any person being or having been an officer,
director, advisory director or employee of any such member.
3.11. EMPLOYEE BENEFIT PLANS. (a) Except for the plans listed on the
subsection of the Schedule of Exceptions that corresponds to this subsection
(the "ERISA Plans"), no member of Holding's consolidated group sponsors,
maintains or contributes to, and no such member has at any time sponsored,
maintained or contributed to, any employee benefit plan that is subject to any
of the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Each of the ERISA Plans has been maintained and administered
in all material respects in compliance with its terms, the provisions of ERISA
and all other applicable laws, and, where applicable, the provisions of the
Code. No ERISA Plan, including any "party in interest" or "disqualified person"
with respect thereto has engaged in a nonexempt prohibited transaction under
Section 4975 of the Code or Section 502(i) of ERISA; there is no matter relating
to any of the ERISA Plans pending or threatened, nor are there any facts or
circumstances existing that could reasonably be expected to lead to (other than
routine filings such as qualification determination filings), proceedings
before, or administrative actions by, any governmental agency; there are no
actions, suits or claims pending or threatened (including, without limitation,
breach of fiduciary duty actions, but excluding routine uncontested claims for
benefits) against any of the ERISA Plans or the assets thereof. Each member of
Holding's consolidated group has complied in all material respects with the
reporting and disclosure requirements of ERISA and the Code. None of the
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ERISA Plans is a multi-employer plan within the meaning of Section 3(37) of
ERISA. A favorable determination letter has been issued by the Internal Revenue
Service with respect to each ERISA Plan that is intended to be qualified under
Section 401(a) of the Code and the Internal Revenue Service has taken no action
to revoke any such letter and nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification. No member of Holding's
consolidated group has sponsored, maintained or made contributions to any plan,
fund or arrangement subject to Title IV of ERISA or the requirements of Section
412 of the Code or providing for medical benefits, insurance coverage or other
similar benefits for any period extending beyond the termination of employment,
except as may be required under the "COBRA" provisions of ERISA and the Code.
(b) Set forth on the subsection of the Schedule of Exceptions
corresponding to this subsection is a true and complete list and description of
each and every benefit plan and benefit arrangement of any member of Holding's
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 will be
delivered to Whitney concurrently with the Schedule of Exceptions. No such
ERISA Plan or other plan constitutes a defined benefit pension plan or has any
"accumulated funding deficiency" within the meaning of the Code.
(c) All group health plans of any member of Holding's consolidated
group to which Section 4980B(f) of the Code or Section 601 of ERISA applies are
in compliance in all material respects with continuation coverage requirements
of Section 4980B(f) of the Code and Section 601 of ERISA and any prior
violations of such sections have been cured prior to the date hereof.
(d) Each plan, fund or arrangement previously sponsored or maintained
by any member of Holding's consolidated group, or to which any member of
Holding's consolidated group previously made contributions which has been
terminated by any member of Holding's consolidated group was terminated in
accordance with ERISA, the Code and the terms of such plan, fund or arrangement
and no event has occurred and no condition exists that would subject any member
of Holding's consolidated group, Whitney or WNB 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 Holding's consolidated group
maintains in force insurance policies and bonds in such amounts and against such
liabilities and hazards as are considered by it to be adequate. An accurate
list of all such insurance policies will be attached to the Schedule of
Exceptions. No member of Holding's consolidated group is now liable for, nor
has any such member received notice of, any material retroactive premium
adjustment. All policies are valid and enforceable and in full force and
effect, and no member of Holding's consolidated group has received any notice of
a material premium increase or cancellation with respect to any of its insurance
policies or bonds. Within the last three years, no member of Holding's
consolidated group has been refused any basic insurance coverage sought or
applied for (other than certain exclusions for coverage of certain events or
circumstances as stated in such policies), and the Bank does not have any reason
to believe that its existing insurance coverage cannot be renewed as and when
the same shall expire, upon terms and conditions standard in the market at the
time renewal is sought as favorable as those presently in effect.
3.13. AGREEMENTS. (a) No member of Holding's consolidated group is a
party to:
(i) any collective bargaining agreement;
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(ii) any employment or other agreement or contract with or
commitment to any employee other than the employee benefits and plans referred
to in the section of the Schedule of Exceptions that corresponds to Section 3.11
of this Agreement, the agreements, arrangements, policies and practices referred
to in the section of the Schedule of Exceptions that corresponds to subparagraph
(j) of Section 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 Holding's
consolidated group as on the date of this Agreement may be provided in their
respective articles of incorporation or association and by-laws (and no
indemnification of any such officer, director, employee or agent has been
authorized, granted or awarded), except if entered into in the ordinary course
of business with respect to customers of any member of Holding's consolidated
group, letters of credit, guaranties of endorsements and guaranties of
signatures;
(iv) any agreement, contract or commitment which is or if
performed will result in a Material Adverse Effect on Holding's consolidated
group; or
(v) any agreement, contract or commitment containing any
covenant limiting the freedom of any member of Holding's consolidated group (x)
to engage in any line of business permitted by regulatory authorities, (y) to
compete with any person in a line of business permitted by applicable regulatory
guidelines to be engaged in by bank holding companies or Alabama 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, nor has any
member of Holding's consolidated group been advised by any regulatory agency
that it is considering issuing or requesting any such written agreement,
memorandum, letter, order or decree.
(b) The subsection of the Schedule of Exceptions that corresponds to
this subsection contains a list of each material agreement, contract or
commitment (except those entered into in the ordinary course of business with
respect to loans, lines of credit, letters of credit, depositor agreements,
certificates of deposit and similar banking activities and equipment maintenance
agreements which are not material) to which any member of Holding's consolidated
group is a party or which affects any such member. To Holding's knowledge, no
member of Holding's consolidated group has in any material respect breached, nor
is there any pending or threatened claim that it has materially breached, any of
the terms or conditions of any of such agreements, contracts or commitments or
of any material agreement, contract or commitment that it enters into after the
date of this Agreement. The Bank is not in material violation of any written
agreement, memorandum, letter, order or decree, formal or informal, with any
federal or state regulatory agency.
3.14. LICENSES, FRANCHISES AND GOVERNMENTAL AUTHORIZATIONS. Each member
of Holding's consolidated group possesses all licenses, franchises, permits and
other governmental authorizations necessary for the continued conduct of its
business without interference or interruption. 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. Holding has delivered to Whitney, with respect
to each member of Holding's consolidated group, true and correct copies of its
articles of incorporation or articles of association, and its by-laws, all as
amended and currently in effect. All of the foregoing and all of the corporate
minutes and stock transfer records of each member of Holding's consolidated
group are current, complete and correct in all material respects.
3.16. CERTAIN TRANSACTIONS. No past or present director, executive
officer or five percent shareholder of any member of Holding's consolidated
group has, since January 1, 1992, engaged in any transaction or series of
transactions which, if such member had been subject to Section 14(a) of the
Securities Exchange Act of 1934, as
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amended (the "Exchange Act"), would be required to be disclosed pursuant to Item
404 of Regulation S-K of the Rules and Regulations of the Securities and
Exchange Commission (the "SEC").
3.17. BROKER'S OR FINDER'S FEES. Except for The Robinson-Humphrey
Company, LLC ("Robinson-Humphrey"), whose fees and right to reimbursement of
expenses are as disclosed pursuant to a contract dated March 24, 1998 (a copy of
which has been provided to Whitney), no agent, broker, investment banker,
investment or financial advisor or other person acting on behalf of any member
of Holding's consolidated group is entitled to any commission, broker's or
finder's fee from any of the parties hereto in connection with any of the
transactions contemplated by this Agreement.
3.18. ENVIRONMENTAL MATTERS. (a) (i) Each member of Holding's
consolidated group has obtained all material permits, licenses and other
authorizations that are required to be obtained by it under any applicable
Environmental Law Requirements (as hereinafter defined) in connection with the
operation of its businesses and ownership of its properties (collectively, the
"Subject Properties"), including without limitation, to the knowledge of
Holding, properties acquired by foreclosure or in settlement of loans;
(ii) Each member of Holding's consolidated group is in
compliance with all terms and conditions of such permits, licenses and
authorizations and with all applicable Environmental Law Requirements, 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 Holding 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 Holding's consolidated group
related in any manner to any member of Holding's consolidated group or the
Subject Properties that did or would violate or prevent compliance or continued
compliance with any of the Environmental Law Requirements, or give rise to any
Environmental Liability, as hereinafter defined, 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
Holding and its consolidated group, taken as a whole;
(iv) To Holding's knowledge, there is no civil, criminal or
administrative action, suit, demand, claim, order, judgment, hearing, notice or
demand letter, notice of violation, investigation or proceeding pending or
threatened by any person against any member of Holding's consolidated group, or
any prior owner of any of the Subject Properties which relates to the Subject
Properties and relates in any way to any Environmental Law Requirement or seeks
to impose any Environmental Liability; and
(v) To Holding's knowledge, no member of Holding's consolidated
group is subject to or responsible for any material Environmental Liability
which is not set forth and adequately reserved against on the Latest Balance
Sheet.
(b) "Environmental Law Requirement" means all applicable present
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.
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(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 any "hazardous waste" as defined by Ala. Code (S)22-30-
3(5) or any "hazardous substance" as defined by Ala. Code (S)22-30A-2(6) or
regulations promulgated thereunder; (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
Alabama 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 Alabama or another jurisdiction; (G) any
substance the presence of which on the Subject Properties is prohibited by any
lawful rules and regulations of legally constituted authorities from time to
time in force and effect relating to the Subject Properties; and (H) any other
substance which by any such rule or regulation requires special handling in its
collection, storage, treatment or disposal.
(d) "Environmental Liability" shall mean (i) any liability or
obligation arising under any Environmental Law Requirement, or (ii) any
liability or obligation under any other theory of law or equity (including
without limitation any liability for personal injury, property damage or
remediation) that results from, or is based upon or related to, the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge, release or threatened release into the
environment, of any Hazardous Material, pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
3.19. COMPLIANCE WITH LAWS. Each member of Holding's consolidated group
is in compliance with all applicable laws, rules, regulations, orders, writs,
judgments and decrees the noncompliance with which could cause a Material
Adverse Effect on the financial condition, results of operations or business of
Holding's consolidated group taken as a whole. There are no governmental
investigations pending or, to Holding's knowledge, threatened against any member
of Holding's consolidated group. There are no material uncured violations, or
violations with respect to which material refunds or restitution may be
required, cited in any compliance report to any member of Holding's consolidated
group as a result of examination by any bank or bank holding company regulatory
authority, except those cited in examination reports previously submitted to,
and reviewed by, Whitney.
3.20. INTELLECTUAL PROPERTY. Each member of Holding's consolidated group
owns or holds valid licenses to use all trademarks, tradenames, service marks
and other intellectual property that are 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, has CRA ratings of not less than
"satisfactory," and has received no material criticism from regulators with
respect to discriminatory lending practices, and has no knowledge of any
conditions or circumstances that are likely to result in CRA ratings of less
than "satisfactory" or material criticism from regulators with respect to
discriminatory lending practices.
3.22. ACCURACY OF STATEMENTS. No warranty or representation made or to be
made by any member of Holding's consolidated group in this Agreement or in any
document furnished or to be furnished by any member of Holding's consolidated
group pursuant to this Agreement contains or will contain, as of the date of
this Agreement, the effective date of the Registration Statement (as defined in
Section 5.14 hereof) and the Closing Date, an untrue statement of a material
fact or an omission of a material fact necessary to make the statements
contained herein and therein, in light of the circumstances in which they are
made, not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF WHITNEY AND WNB
Whitney and WNB represent and warrant to Holding and the Bank that as of
the date of this Agreement and as of the Closing Date:
4.01. CONSOLIDATED GROUP; ORGANIZATION; QUALIFICATION. "Whitney's
consolidated group," as such term is used in this Agreement, consists of Whitney
and WNB. 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
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Company Act. WNB is a national banking association duly organized and validly
existing and in good standing under the laws of the United States of America.
Each of Whitney and WNB 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 Bank Merger
Agreement to which it is a party and to consummate the transactions contemplated
hereby and thereby, 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 the financial condition, results of operations or
business of Whitney's consolidated group, taken as a whole.
4.02. CAPITAL STOCK. As of the date of this Agreement, the authorized
capital stock of Whitney consists of 40,000,000 shares of Whitney Common Stock.
As of February 26, 1998, 20,831,513 shares of Whitney Common Stock were issued
and outstanding and 338,258 shares were held in its treasury. All issued and
outstanding shares of capital stock of Whitney and WNB 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 and WNB 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 WNB free and clear of all liens, charges, security interests, mortgages,
pledges and other encumbrances.
4.03. CORPORATE AUTHORIZATION; NO CONFLICTS. Subject to approval of the
Bank Merger Agreement by Whitney as the sole shareholder of WNB, all corporate
acts and other proceedings required of Whitney and WNB for the due and valid
authorization, execution, delivery and performance of this Agreement and the
Bank Merger Agreement and consummation of the Mergers have been validly and
appropriately taken. Subject to such regulatory approvals as are required by
law, this Agreement and the Bank Merger Agreement are legal, valid and binding
obligations of Whitney and WNB 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 (i) bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship, and other laws now or hereafter in
effect relating to or affecting the enforcement of creditors' rights generally
or the rights of creditors of insured depository institutions, (ii) general
equitable principles and (iii) laws relating to the safety and soundness of
insured depository institutions, and except that no representation is made as to
the effect or availability of equitable remedies or injunctive relief
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). With respect to each of Whitney and WNB, neither the
execution, delivery or performance of this Agreement or the Bank Merger
Agreement, nor the consummation of the transactions contemplated hereby or
thereby will (i) violate, conflict with, or result in a breach of any provision
of, (ii) constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, (iii) result in the termination of
or accelerate the performance required by, or (iv) result in the creation of any
lien, security interest, charge or encumbrance upon any of its properties or
assets under, any of the terms, conditions or provisions of its articles of
incorporation or association or its by-laws (or comparable documents) or any
material note, bond, mortgage, indenture, deed of trust, lease, license,
agreement or other instrument or obligation to or by which it or any of its
assets is bound; or violate any order, writ, injunction, decree, statute, rule
or regulation of any governmental body applicable to it or any of its assets.
4.04. FINANCIAL STATEMENTS; REPORTS AND PROXY STATEMENTS. (a) Whitney
has delivered to Holding true and complete copies of (i) the consolidated
balance sheets as of December 31, 1995 and December 31, 1996 of Whitney and its
consolidated subsidiaries, the related consolidated statements of operations,
changes in shareholders' equity and cash flows for the respective years then
ended, the related notes thereto, and the report of its independent public
accountants with respect thereto, as presented in Whitney's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 filed with the SEC
(collectively, the "Whitney Financial Statements") and (ii) the unaudited
consolidated balance sheet as of September 30, 1997 of Whitney and its
consolidated subsidiaries and the related unaudited statements of operations and
cash flows for the nine-month period then ended, as presented in Whitney's
quarterly report on Form 10-Q for the quarter then ended filed with the SEC
(collectively, the "Whitney Interim Financial Statements").
(b) The Whitney Financial Statements and the Whitney Interim
Financial Statements have been prepared in conformity with GAAP applied on a
basis consistent with prior periods, and present fairly, in conformity with
GAAP, the consolidated results of operations of Whitney's consolidated group for
the respective periods covered thereby and the consolidated financial condition
of its consolidated group as of the respective dates thereof. All call
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and other regulatory reports have been filed on the appropriate form and
prepared in all material respects in accordance with such forms' 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 (of
any kind whatsoever, whether absolute, accrued, contingent, matured or
unmatured), which is not reflected and adequately reserved against in the
Whitney Latest Balance Sheet in accordance with GAAP.
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 this 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 Holding an
accurate and complete copy of the following Whitney reports filed with the SEC
pursuant to the Exchange Act: (a) annual reports on Form 10-K for the years
ended December 31, 1994, 1995 and 1996; (b) quarterly reports on Form 10-Q for
the quarters ended June 30 and September 30, 1997; and (c) proxy statements for
the years 1995, 1996 and 1997; 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 of 1933, as amended (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, nor has any member of Whitney's
consolidated group been advised by any regulatory agency that it is considering
issuing or requesting any such written agreement, memorandum, letter, order or
decree.
4.09. COMMUNITY REINVESTMENT ACT. WNB has complied in all material
respects with the provisions of the CRA and the rules and regulations
thereunder, has CRA ratings of not less than "satisfactory", and has received no
material criticism from regulators with respect to discriminatory lending
practices, and has 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.
4.10. 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 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.
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SECTION 5. COVENANTS AND CONDUCT OF PARTIES PRIOR TO THE EFFECTIVE DATE.
The parties further covenant and agree as follows:
5.01. (A) INVESTIGATIONS; PLANNING. Each member of Holding's consolidated
group shall continue to provide to Whitney and WNB 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 and WNB and such
representatives with such financial and operating data and other information of
any kind respecting its business and properties as Whitney and WNB shall from
time to time reasonably request. Any investigation shall be conducted in a
manner which does not unreasonably interfere with the operation of the business
of Holding's consolidated group. Each member of Holding's consolidated group
agrees to cooperate with Whitney and WNB in connection with planning for the
efficient and orderly combination of the parties and the operation of Whitney
and WNB (and, if applicable, the Bank) after consummation of the Company Merger.
In the event of termination of this Agreement prior to the Effective Date,
Whitney and WNB shall, except to any extent necessary to assert any rights under
this Agreement or the Bank Merger Agreement, return, without retaining copies
thereof, or destroy (and certify to same under penalty of perjury) all
confidential or non-public documents, work papers and other materials obtained
from Holding's consolidated group in connection with the transactions
contemplated hereby and shall keep such information confidential, not disclose
such information to any other person or entity except as may be required by
legal process, and not use such information in connection with its business, and
shall cause all of its employees, agents and representatives to keep such
information confidential and not to disclose such information or to use it in
connection with its business, in each case unless and until such information
shall come into the public domain through no fault of Whitney or WNB. Whitney
and WNB shall continue to provide Holding's executive officers with access to
their respective executive officers, during normal business hours and upon
reasonable notice, to discuss the business and affairs of Whitney and WNB to the
extent customary in transactions of the nature contemplated by this Agreement.
(B) DELIVERY OF SCHEDULES OF EXCEPTIONS; DUE DILIGENCE. Whitney and
Holding stipulate that they have entered into this Agreement prior to Holding's
delivery of its consolidated group's schedule of exceptions to this Agreement
(the "Schedule of Exceptions") and prior to Whitney's completion of Whitney's
customary due diligence investigation of Holding's consolidated group. Holding
shall deliver to Whitney, on or before the 14th day following the date hereof,
its consolidated group's Schedule of Exceptions. Upon such delivery, such
Schedules shall be initialed on behalf of Whitney and Holding, shall be appended
hereto and shall form a part hereof for all purposes. If Holding fails to
deliver its Schedule of Exceptions on or before the 14th day following the date
hereof, Whitney may terminate this Agreement without liability by giving written
notice of termination to Holding. Whitney's due diligence review shall be
concluded during a 14 calendar day period commencing on the first business day
following Holding's delivery to Whitney of its Schedule of Exceptions as
provided herein (the "Review Period"). At or prior to expiration of the Review
Period, Whitney shall elect, by written notice to Holding, to either (a) proceed
to the Closing (subject to the satisfaction or waiver of all other conditions to
Closing) or (b) terminate the Agreement (without liability to Holding or the
Bank) if, in its sole and absolute discretion, it is not satisfied with the
results of such due diligence review or for any other reason. Absent timely
delivery of written notice electing to terminate this Agreement, Whitney shall
be deemed to have elected to proceed to the Closing, subject to all other terms
and conditions of this Agreement. If, after receiving the Schedule of
Exceptions of Holding's consolidated group, Whitney elects to terminate this
Agreement pursuant to the sixth sentence of this subsection 5.01(b), then
notwithstanding any other provision hereof, Whitney shall reimburse Holding 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 conditions set forth in this
Agreement to, the consummation of the Mergers and the transactions contemplated
hereby and by the Bank Merger Agreement, and (d) effect the transactions
contemplated by this Agreement and the Bank Merger Agreement at the earliest
practicable date, subject to the proviso contained in Section 1.02 hereof.
5.03. INFORMATION FOR, AND PREPARATION OF, REGISTRATION STATEMENT AND
PROXY STATEMENT. Each of the parties hereto will cooperate in the preparation
of the Registration Statement referred to in Section 5.14 and a proxy statement
of Holding (the "Proxy Statement") which complies with the requirements of the
Securities Act, the Exchange
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Act, the rules and regulations promulgated thereunder and other applicable
federal and state laws, for the purpose of submitting this Agreement and the
transactions contemplated hereby to Holding's shareholders for approval. Each of
the parties will as promptly as practicable after the date hereof furnish all
such data and information relating to it and its subsidiaries as any of the
other parties may reasonably request for the purpose of including such data and
information in the Registration Statement and the Proxy Statement.
5.04. APPROVAL OF BANK MERGER AGREEMENT. Whitney, as the sole shareholder
of WNB, shall take all action necessary to effect shareholder approval of the
Bank Merger Agreement, subject to its right to delay consummation of the Bank
Merger in accordance with Section 1.02.
5.05. PRESS RELEASES. Whitney and Holding will cooperate with each other
in the preparation of any press releases announcing the execution of this
Agreement or the consummation of the transactions contemplated hereby. Without
the prior written consent of the chief executive officer of the other party, no
member of Holding's consolidated group or Whitney's consolidated group will
issue any press release or other written statement for general circulation
relating to the transactions contemplated hereby, except as may otherwise be
required by law and, if practical, prior notice of such release is provided to
the other parties. Whitney agrees that it will make a press release with respect
to the results of operations of Whitney and its consolidated group as promptly
as practicable in accordance with past practices following receipt of financial
results covering at least thirty (30) days of post-Merger combined operations of
Whitney to permit the "pooling of interest" restrictions on transfers of Whitney
Common Stock set forth in the Shareholder's Commitments referred to in Section
5.10 to be terminated.
5.06. PRESERVATION OF BUSINESS. To the extent consistent with sound
business practices, each member of Holding's consolidated group will use its
best efforts to preserve the possession and control of all of its assets other
than those consumed or disposed of for value in the ordinary course of business
to preserve the goodwill of customers and others having business relations with
it and to do nothing knowingly to impair its ability to keep and preserve its
business as it exists on the date of this Agreement.
5.07. CONDUCT OF BUSINESS IN THE ORDINARY COURSE. Each member of
Holding's consolidated group shall conduct its business only in the ordinary
course consistent with past practices, and shall not, without the prior written
consent of the chief executive officer of Whitney or his duly authorized
designee:
(a) except for the declaration and payment of regular quarterly
dividends during 1998 in accordance with Section 3.07 until the Effective Time,
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;
(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 or
employees except such agreements as are terminable at will without any penalty
or other payment by it, or increase the compensation (including salaries, fees,
bonuses, profit sharing, incentive, pension, retirement or other similar
benefits and payments) of any such person in any manner inconsistent with its
past practices;
(d) except as described in the Schedule of Exceptions or except in
the ordinary course of business consistent with past practices, place or suffer
to exist on any of its assets or properties any mortgage, pledge, lien, charge
or other encumbrance, except those of the character described in Section 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;
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(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, county, state, the
United States or any other taxing authority, except those being contested in
good faith by appropriate proceedings and for which sufficient reserves have
been established;
(j) dispose of investment securities in amounts or in a manner
inconsistent with past practices; or make investments in non-investment grade
securities or which are inconsistent with past investment practices;
(k) enter into any new line of non-banking business;
(l) (i) except as described in the Schedule of Exceptions, charge
off (except as may otherwise be required by law or by regulatory authorities or
by GAAP consistently applied) or sell (except for a price not materially less
than the value thereof) any of its portfolio of loans, discounts or financing
leases, or (ii) except as set forth on the Schedule of Exceptions, sell any
asset held as other real estate or other foreclosed assets for an amount
materially less than 100% of its book value at the date of the Latest Balance
Sheet;
(m) make any extension of credit which, when added to all other
extensions of credit to a borrower and its affiliates, would exceed Holding's or
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.
5.08. ADDITIONAL INFORMATION. Holding will provide Whitney with prompt
written notice of any material adverse change in the financial condition,
results of operations, business or prospects of any member of Holding's
consolidated group, or any material action taken or proposed to be taken by any
regulatory agency. Holding will provide Whitney and Whitney will provide
Holding with (a) prompt written notice of any material breach by any member of
such party's consolidated group of any of its warranties, representations or
covenants in this Agreement, (b) as soon as they become available, as to
Holding, true and complete copies of any examination reports, financial
statements, reports and other documents of the type referred to in Section 3.04,
and quarterly unaudited consolidated balance sheets of Holding and its
consolidated subsidiaries, and the related unaudited statements of income,
shareholders' equity and cash flows for the periods then ended, with respect to
each member of its consolidated group; and, as to Whitney, true and complete
copies of financial statements, reports and other documents of the type referred
to in Sections 4.04 and 4.06, with respect to each member of its consolidated
group, and (c) promptly upon its dissemination, any report disseminated to their
respective shareholders.
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5.09. HOLDING SHAREHOLDER APPROVAL. Holding's Board of Directors shall
submit this Agreement to its shareholders for approval in accordance with the
applicable law, together with its recommendation that such approval be given, at
a special meeting of the shareholders of Holding duly called and convened for
that purpose as soon as practicable after the effective date of the Registration
Statement. Holding, as the sole shareholder of the Bank, shall take all action
to effect shareholder approval of the Bank Merger Agreement. The foregoing
obligations of Holding and its Board of Directors specified in this Section 5.09
are subject to the proviso in the last sentence of Section 5.12.
5.10. RESTRICTED WHITNEY COMMON STOCK. Holding will use its best efforts
to obtain, no later than 20 days after the execution of this Agreement, an
agreement from each person who is a director or executive officer of Holding or
a 5% beneficial owner of securities of Holding who will receive shares of
Whitney Common Stock by virtue of the Company Merger to the effect that such
person (i) will not dispose of any Holding Common Stock or 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 or tax-free reorganization treatment, (ii) will agree to
escrow all such shares until Whitney has made a public announcement of the
financial results of at least 30 days of post-Merger combined operations
following the Effective Date and (iii) in the case of directors and executive
officers, will (a) agree to vote in favor of this Agreement and the Company
Merger all shares registered in their name individually or as to which they
otherwise have sole voting power and (b) to use their best efforts, subject to
any fiduciary duty they may have, to cause all shares as to which they share
voting power with others to be voted in favor of this Agreement and the Company
Merger (the "Shareholder's Commitment").
5.11. LOAN POLICY. No member of Holding's consolidated group will make
any loans, or enter into any commitments to make loans, which vary other than in
immaterial respects from its written loan policies, a true and correct copy of
which loan policies will be provided to Whitney concurrently with the 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 Holding's 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 Holding in good faith, after
consultation with its financial advisors and its legal counsel, to be required
to discharge properly the directors' fiduciary duties to Holding's consolidated
group and its shareholders, furnish any information relating to, or participate
in any negotiations or discussions concerning, any Acquisition 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 Holding of the Mergers or
make a recommendation of any other Acquisition Transaction, or any other
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 Holding and
Whitney); and each member of Holding's consolidated group shall instruct its
officers, directors, agents and affiliates to refrain from doing any of the
above, and will notify Whitney immediately if any such inquiries or proposals
are received by it, any such information is requested from it, or any such
negotiations or discussions are sought to be initiated with it or any of its
officers, directors, agents and affiliates; provided, however, that nothing
contained herein shall be deemed to prohibit any officer or director of Holding
or the Bank from taking any action that the Board of Directors of Holding 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 Holding's consolidated group and its shareholders.
5.13. OPERATING FUNCTIONS. Each member of Holding's consolidated group
agrees to cooperate in the consolidation of appropriate operating functions with
Whitney to be effective on the Effective Date, provided that the foregoing shall
not be deemed to require any action that, in the opinion of such member's Board
of Directors, would adversely affect its operations if the Mergers were not
consummated.
5.14. WHITNEY REGISTRATION STATEMENT. (a) Whitney will prepare and file
on Form S-4 a registration statement (the "Registration Statement") under
the Securities Act (which will include the Proxy Statement) complying
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with all the requirements of the Securities Act applicable thereto, for the
purpose, among other things, of registering the Whitney Common Stock which will
be issued to the holders of Holding Common Stock pursuant to the Company Merger.
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 Holding except to the extent that the transfer of any shares of Whitney
Common Stock received by shareholders of Holding is subject to the provisions of
Rule 145 under the Securities Act or restricted under applicable tax or pooling
of interests rules.
(b) Whitney will indemnify and hold harmless each member of Holding's
consolidated group and each of their respective directors, officers and other
persons, if any, who control Holding within the meaning of the Securities Act
from and against any losses, claims, damages, liabilities or judgments, joint or
several, to which they or any of them may become subject, insofar as such
losses, claims, damages, liabilities, or judgments (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or in any
amendment or supplement thereto, or in any state application for qualification,
permit, exemption or registration as a broker/dealer, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
such person for any legal or other expenses reasonably incurred by such person
in connection with investigating or defending any such action or claim;
provided, however, that Whitney shall not be liable, in any such case, to the
extent that any such loss, claim, damage, liability, or judgment (or action in
respect thereof) arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, or any such amendment or supplement thereto, or in any such state
application, or in any amendment or supplement thereto, in reliance upon and in
conformity with information furnished to Whitney by or on behalf of any member
of Holding's consolidated group or any officer, director or affiliate of any
such member for use therein.
(c) Promptly after receipt by an indemnified party under subparagraph
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against Whitney under such
subparagraph, notify Whitney in writing of the commencement thereof. In case
any such action shall be brought against any indemnified party and it shall
notify Whitney of the commencement thereof, Whitney shall be entitled to
participate therein and, to the extent that it shall wish, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and,
after notice from Whitney to such indemnified party of its election so to assume
the defense thereof, Whitney shall not be liable to such indemnified party under
such subparagraph for any legal expenses of other counsel or any other expenses
subsequently incurred by such indemnified party; provided, however, if Whitney
elects not to assume such defense or if counsel for the indemnified party
advises Whitney in writing that there are material substantive issues which
raise conflicts of interest between Whitney or Holding and the indemnified
party, such indemnified party may retain counsel satisfactory to it and Whitney
shall pay all reasonable fees and expenses of such counsel for the indemnified
party promptly as statements therefor are received. Notwithstanding the
foregoing, Whitney shall not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by Whitney in respect of such claim
unless in the reasonable judgment of any such indemnified party a conflict of
interest exists between such indemnified party and any other of such indemnified
parties in respect to such claims.
(d) The provisions of Section 5.14(b) and (c) are intended for the
benefit of, and shall be enforceable by, the parties entitled to indemnification
thereunder and each such party's heirs, representatives or successors.
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, subject to its right to delay
consummation of the Bank Merger in accordance with Section 1.02.
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5.16. REVENUE RULING. Whitney may elect to prepare (and in that event
Holding shall cooperate in the preparation of) a request for a ruling from the
Internal Revenue Service with respect to certain tax matters in connection with
the transactions contemplated by this Agreement and the Bank Merger Agreement.
5.17. BOND FOR LOST CERTIFICATES. Upon receipt of notice from any of its
shareholders that a certificate representing Holding Common Stock has been lost
or destroyed and prior to issuing a new certificate, Holding shall require such
shareholder to post a bond in such amount as is sufficient to support the
shareholder's agreement to indemnify Holding against any claim made by the owner
of such certificate, unless Whitney agrees to the waiver of such bond
requirement.
5.18. DISSENTERS. Holding shall give Whitney (i) prompt written notice
of, and a copy of any instrument received by Holding with respect to, any
assertion or perfection of dissenters' rights, and (ii) the opportunity to
participate in any and all negotiations and proceedings with respect to
dissenters' rights, should Whitney desire to do so.
5.19. WITHHOLDING. Whitney shall be entitled to deduct and withhold from
the consideration otherwise payable to any holder of Holding Common Stock after
the Effective Time such amounts as Whitney may be required by law to deduct and
withhold therefrom. All such deductions and withholdings shall be deemed for all
purposes of this Agreement and the Bank Merger Agreement to have been paid to
the person with respect to whom such deduction and withholding was made.
5.20. NASDAQ STOCK MARKET. Whitney shall cause the shares of Whitney
Common Stock to be issued in the Company Merger to be duly authorized, validly
issued, fully paid and non-assessable, free of any preemptive or similar right
and to be approved for quotation in the Nasdaq Stock Market National Market
System prior to or at the Effective Time.
5.21. CONTINUING INDEMNITY; INSURANCE. Whitney covenants and agrees that:
(a) all rights to indemnification (including, without limitation,
rights to mandatory advancement of expenses) and all limitations of liability
existing in favor of indemnified parties under Section 10-2B-8.50, et seq. of
the ABCA, Holding's 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
Effective Time (an "Indemnified Party") shall survive the Company Merger and
shall continue in full force and effect, without any amendment thereto, for a
period concurrent with the applicable statute of limitations; provided, however,
that all rights to indemnification in respect of any claim asserted or made as
to which Whitney is notified in writing within such period shall continue until
the final disposition of such claim. Without limiting the foregoing, in any
case in which approval is required to effectuate any indemnification, the
determination of any such approval shall be made, at the election of the
Indemnified Party, by independent counsel mutually agreed upon between Whitney
and the Indemnified Party.
(b) Promptly after receipt by an Indemnified Party of notice of the
commencement of any action, such Indemnified Party shall, if a claim in respect
thereof is to be made against Whitney under such subparagraph, notify Whitney in
writing of the commencement thereof. In case any such action shall be brought
against any Indemnified Party, Whitney shall be entitled to participate therein
and, to the extent that it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Party, and, after notice
from Whitney to such Indemnified Party of its election so to assume the defense
thereof, Whitney shall not be liable to such Indemnified Party under such
subparagraph for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Party; provided, however, if Whitney
elects not to assume such defense or if counsel for the Indemnified Party
advises Whitney in writing that there are material substantive issues which
raise conflicts of interest between Whitney or Holding and the Indemnified
Party, such Indemnified Party may retain counsel satisfactory to it, and Whitney
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Party promptly as statements therefor are received. Notwithstanding the
foregoing, Whitney shall not be obligated to pay the fees and expenses of more
than one counsel for all Indemnified Parties in respect of such claim unless in
the reasonable judgment of an Indemnified Party a conflict of interest exists
between an Indemnified Party and any other Indemnified Parties in respect to
such claims.
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(c) Whitney shall use best efforts to cause the persons serving as
officers or directors of Holding or the Bank, or both, immediately prior to the
Effective Time to be covered for a period of three (3) years from the Effective
Time by the directors' and officers' liability insurance policy maintained by
Holding and the 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 obtain such insurance if
the aggregate premium therefor exceeds $33,444.
(d) 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.
(e) 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. EMPLOYEES AND CERTAIN OTHER MATTERS. All employees of Holding and
the Bank at the Effective Time shall become or remain employees of the Bank upon
consummation of the Company Merger, and upon consummation of the Bank Merger all
employees of the Bank at the effective time of the Bank Merger shall become
employees of WNB. Although Whitney and WNB will use their best efforts to retain
Holding's and the Bank's employees either in their existing positions or other
positions in the Whitney system, Whitney, the Bank and WNB reserve the right to
terminate any such employee, and to modify the job duties, compensation and
authority of such employee. At the Effective Time, all persons then employed by
Holding and the Bank shall be eligible for such employee benefits as are
generally available to employees of WNB having like tenure, officer status and
compensation levels except (i) all executive and senior level management
bonuses, stock options, restricted stock and similar benefits shall be at the
discretion of WNB's Compensation Committee and (ii) all Holding and the Bank
employees who are employed at the Effective Time shall be given full credit for
all prior service as employees of Holding or the Bank provided, however, that
all such employees shall be treated as newly hired WNB employees (i.e., prior
service credit with Holding and the Bank shall not be considered in determining
future benefits under Whitney's or WNB's defined benefit pension plan) for all
purposes of Whitney's or WNB's defined benefit pension plan.
5.23. UNDERTAKING TO FILE REPORTS AND COOPERATE IN RULE 144 TRANSACTIONS.
Whitney covenants to use its best efforts to file in a timely manner all
material required to be filed pursuant to Section 13, 14 or 15(d) of the
Exchange Act, or the rules and regulations promulgated thereunder, so as to
continue the availability of Rule 144 for resales by affiliates of Holding and
the Bank of the shares of Whitney Common Stock received by them in the Company
Merger. In the event of any proposed sale of such Whitney Common Stock by any
such former shareholder of Holding Common Stock who receives shares of Whitney
Common Stock by reason of the Company Merger, Whitney covenants to use its best
efforts to cooperate with such shareholder so as to enable such sale to be made
in accordance with the requirements of Whitney's transfer agents and the
reasonable requirements of the broker through which such sale is proposed to be
executed. Without limiting the generality of the foregoing, Whitney agrees to
furnish, upon request and at its expense, to the extent it is able, with respect
to each such sale a written statement certifying that Whitney has filed all
reports required to be filed by it under the Exchange Act for a period of at
least one year preceding the sale of the proposed sale, and, in addition, has
filed the most recent annual report required to be filed by it thereunder.
Notwithstanding anything contained in this Section 5.23, Whitney shall not be
required to maintain the registration of the Whitney Common Stock under Section
12 of the Exchange Act if it shall at any time be entitled to deregister those
shares pursuant to the Exchange Act and the rules and regulations thereunder.
5.24. WHITNEY CONDUCT OF BUSINESS. From the date hereof through the
Closing, without the prior written consent of the chief executive officer of
Holding or his duly authorized designee, Whitney shall not 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 Code.
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SECTION 6. CONDITIONS OF CLOSING
6.01. CONDITIONS OF ALL PARTIES. The obligations of each of the parties
hereto to consummate the Company Merger are subject to the satisfaction of the
following conditions at or prior to the Closing:
(a) Shareholder Approval. This Agreement and the Company Merger
shall have been duly approved by the shareholders of Holding.
(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 this Agreement or the Bank Merger
Agreement or to obtain damages or other relief in connection with the execution
of such agreements or the consummation of the transactions contemplated hereby
or thereby; and no governmental agency shall have given notice to any party
hereto to the effect that consummation of the transactions contemplated by this
Agreement or the Bank Merger Agreement would constitute a violation of any law
or that it intends to commence proceedings to restrain consummation of the
Mergers.
(d) Statutory Requirements and Regulatory Approval. All statutory
requirements for the valid consummation of the transactions contemplated by the
Bank Merger Agreement and this Agreement shall have been fulfilled; all
appropriate orders, consents and approvals from all regulatory agencies and
other governmental authorities whose order, consent or approval is required by
law for the consummation of the transactions contemplated by this Agreement and
the Bank Merger Agreement shall have been received; and the terms of all
requisite orders, consents and approvals shall then permit the effectuation of
the Mergers without imposing any material conditions with respect thereto except
for any such conditions that are acceptable to Whitney.
(e) Tax Opinion. Whitney and Holding shall have received the opinion
of Arthur Andersen LLP, dated as of the Closing Date, in form and substance
reasonably satisfactory to both of them, as to certain tax aspects of the
Mergers, including an opinion that the receipt of Whitney Common Stock by
Holding's shareholders will not be a taxable event to such shareholders.
6.02. ADDITIONAL CONDITIONS OF WHITNEY AND WNB. The obligations of
Whitney and WNB to consummate the Company Merger are also subject to the
satisfaction of the following additional conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. The representations
and warranties of Holding and 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 Holding and the Bank shall have in all material respects performed
all obligations and complied with all covenants required by this Agreement and
the Bank Merger Agreement to be performed or complied with by it at or prior to
the Closing. In addition, each of Holding and the Bank shall have delivered to
Whitney and WNB its certificate dated as of the Closing Date and signed by its
chief executive officer and chief financial officer to the foregoing effect and
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 Effect. There shall not have occurred any
Material Adverse Effect on Holding's consolidated group from the date of the
Latest Balance Sheet to the Closing Date.
(c) Accountants' Letters. Whitney shall have received "comfort"
letters from Wilson, Price, Barranco, Blankenship & Billingsley, P.C. ("Wilson,
Price"), independent public accountants for Holding, dated,
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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 and WNB shall have received from
Bradley Arant Rose & Whitney LLP, special counsel to Holding, and Poole & Poole,
general counsel to Holding, opinions, dated as of the Closing Date, customary in
scope and in form and substance satisfactory to Whitney and WNB . In giving
such opinions, such counsel may rely as to questions of fact upon certificates
of one or more officers of the members of Holding's consolidated group and
governmental officials.
(e) Tax Consequences of Mergers. Whitney shall have received
satisfactory assurances from its independent accountants that the consummation
of the Mergers will not be a taxable event to Whitney and WNB.
(f) Pooling of Interest. Prior to the expiration of the Review
Period and within three (3) days prior to the Closing Date, Wilson, Price 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 Wilson, Price, Whitney will be permitted to account for the Mergers as a
pooling of interests. Neither Whitney's independent accountants nor the SEC
shall have taken the position that the transactions contemplated by this
Agreement and the Bank Merger Agreement do not qualify for pooling of interests
accounting treatment.
(g) Shareholder's Commitment. A Shareholder's Commitment
substantially in the form specified on Exhibit 6.02(g) hereto (as contemplated
by Section 5.10) shall have been executed by each person who serves as an
executive officer or director of Holding or who owns 5% or more of Holding
Common Stock outstanding; and Whitney shall have received from each such person
a written confirmation dated not earlier than five days prior to the Closing
Date to the effect that each representation made in such person's Shareholder's
Commitment is true and correct as of the date of such confirmation and that such
person has complied with all of his or her covenants therein through the date of
such confirmation; in each case to the extent necessary to ensure, in the
reasonable judgment of Whitney, that the Mergers will be accounted for as a
pooling of interests under GAAP and to promote compliance with Rule 145 under
the Securities Act.
(h) Regulatory Action. No adverse regulatory action shall be pending
or threatened against any member of Holding's consolidated group, including
(without limitation) any proposed amendment to any existing agreement,
memorandum, letter, order or decree, formal or informal, between any regulator
and any member of Holding's consolidated group, if such action would or could
impose any material liability on Whitney or interfere in any material respect
with the conduct of the businesses of Whitney's consolidated group following the
Mergers.
6.03. ADDITIONAL CONDITIONS OF HOLDING. The obligations of Holding to
consummate the Company Merger are also subject to the satisfaction of the
following additional conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. The representations
and warranties of Whitney and WNB contained in this Agreement shall be true and
correct in all material respects, individually and in the aggregate, on the
Closing Date, with the same effect as though made on and as of such date, except
to the extent of changes permitted by the terms of this Agreement, and each of
Whitney and WNB shall have in all material respects performed all obligations
and complied with all covenants required by this Agreement and the Bank Merger
Agreement to be performed or complied with by it at or prior to the Closing. In
addition, each of Whitney and WNB shall have delivered to Holding and the Bank
its certificate dated as of the Closing Date and signed by its chief executive
officer and chief financial officer to the foregoing effect and to the effect
that, except as specified in such certificate, such persons do not know, and
have no reasonable grounds to know, of any material failure or breach of any
representation, warranty or covenant made by it in this Agreement.
(b) Opinion of Counsel. Holding and the Bank shall have received
from Milling, Benson, Woodward, Hillyer, Pierson & Miller, L.L.P., counsel for
Whitney and WNB, an opinion, dated as of the Closing Date, customary in scope
and in form and substance satisfactory to Holding and the Bank. In giving such
opinion, such counsel may rely as to questions of fact upon certificates of one
or more officers of Whitney or members of Whitney's
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consolidated group, and governmental officials and as to matters of law other
than Louisiana or federal law on the opinions of foreign counsel retained by
them or Whitney.
(c) Opinion of Investment Bankers. Holding shall have received
letters from Robinson-Humphrey dated the date of the Proxy Statement and dated
the date of the meeting of the shareholders of Holding, in each case in form and
substance satisfactory to Holding, confirming such financial advisor's prior
opinion to the Board of Directors of Holding to the effect that the
consideration to be paid in the Company Merger is fair to its shareholders from
a financial point of view.
(d) No Material Adverse Change. There shall not have occurred any
material adverse change from the date of Whitney's Latest Balance Sheet to the
Closing Date in the financial condition, results of operations or business of
Whitney's consolidated group taken as a whole.
(e) Acquisition Proposal. Whitney shall not have executed a
definitive merger agreement or other acquisition agreement as a result of which
Whitney would cease to be an independent public company.
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 Section 6.01 hereof and the condition
specified in subparagraph (c) of Section 6.03 hereof. The failure to waive any
condition hereunder shall not be deemed a breach of Section 5.02 hereof.
SECTION 7. TERMINATION
7.01. TERMINATION. This Agreement and the Bank Merger Agreement may be
terminated and the Mergers contemplated herein abandoned at any time before the
Effective Time, whether before or after approval by the shareholders of Holding:
(a) Mutual Consent. By the mutual consent of the Boards of Directors
of Whitney and Holding.
(b) Breach. By the Board of Directors of either Whitney or Holding
in the event of a breach by any member of the consolidated group of the other of
them of any representation or warranty contained in this Agreement or of any
covenant contained in this Agreement, which in either case cannot be, or has not
been, cured within 30 days after written notice of such breach is given to the
entity committing such breach, provided that the right to effect such cure shall
not extend beyond the date set forth in subparagraph (c) below.
(c) Abandonment. By the Board of Directors of either Whitney or
Holding if (i) all conditions to Closing required by Section 6 hereof have not
been met by or waived by Whitney or Holding by November 30, 1998, or (ii) any
such condition cannot be met by November 30, 1998 and has not been waived by
each party in whose favor such condition inures, or (iii) if the Company Merger
has not been consummated by November 30, 1998, provided that the failure to
consummate the transactions contemplated hereby is not caused by the party
electing to terminate pursuant to this clause (iii).
(d) Dissenting Shareholders. By Whitney, if the number of shares of
Holding Common Stock 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 Holding
Common Stock that would preclude pooling of interests accounting for the
Mergers.
(e) Shareholder Vote. By Whitney if this Agreement or the Company
Merger fails to receive the requisite vote at any meeting of Holding
shareholders called for the purpose of voting thereon, and by Holding if this
Agreement fails to receive the requisite vote at the meeting of Holding
shareholders called by its Board of Directors for the purpose of voting thereon.
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(f) Holding Recommendation. By Whitney if the Board of Directors of
Holding (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 or; (B) either (x) shall have recommended to the shareholders
of Holding (or in the case of (iii) approved) any of the following (being
referred to herein as an "Acquisition Transaction"): (i) any merger,
consolidation, share exchange, business combination or other similar transaction
(other than the transactions contemplated by this Agreement); (ii) any sale,
lease, transfer or other disposition of all or substantially all of the assets
of any member of Holding's consolidated group; or (iii) any acquisition, by any
person or group, of the beneficial ownership of 15% or more of any class of
Holding capital stock; or (y) shall have made any announcement of any agreement
to do any of the foregoing.
(g) Acquisition Transaction. By Holding in the event Holding
receives a bona fide written offer with respect to an Acquisition Transaction
and the Board of Directors of Holding determines in good faith, after
consultation with its financial advisors and counsel, that such Acquisition
Transaction is more favorable to Holding's shareholders than the transactions
contemplated by this Agreement.
(h) Prior to Notification Date. By Whitney by delivery of a notice
to terminate this Agreement pursuant to Section 5.01.
7.02. EFFECT OF TERMINATION; SURVIVAL. Upon termination of this Agreement
pursuant to this Section 7, the Bank Merger Agreement shall also terminate, and
this Agreement and the Bank Merger Agreement shall be void and of no effect, and
there shall be no liability by reason of this Agreement or the Bank Merger
Agreement, or the termination thereof, on the part of any party or their
respective directors, officers, employees, agents or shareholders except for any
liability of a party hereto arising out of (i) an intentional breach of any
representation, warranty or covenant in this Agreement prior to the date of
termination, except if such breach was required by law or by any bank or bank
holding company regulatory authority or (ii) a breach of any covenant that
survives pursuant to the following sentence. The following provisions shall
survive any termination of this Agreement: the second to last sentence of
subsection 5.01(a), subsections 5.14(b) and (c), Section 7.02, Section 7.03 and
Section 8.
7.03. TERMINATION PAYMENT. If this Agreement is terminated by Whitney or
Holding pursuant to subsection 7.01(f)(B) or subsection 7.01(g), then Holding
(or its successor) shall pay or cause to be paid to Whitney upon demand a
termination payment of $990,000 payable in same day funds.
SECTION 8. MISCELLANEOUS
8.01. NOTICES. Any notice, communication, request, reply, advice or
disclosure (hereinafter severally and collectively "notice") required or
permitted to be given or made by any party to another in connection with this
Agreement or the Bank Merger Agreement or the transactions herein or therein
contemplated must be in writing and may be given or served by depositing the
same in the United States mail, postage prepaid and registered or certified with
return receipt requested, or by delivering the same to the address of the person
or entity to be notified, or by sending the same by a national commercial
courier service (such as Airborne Express, Federal Express, Emery Air Freight,
Network Courier, Purolator or the like) for next-day delivery provided such
delivery is confirmed in writing by such courier. Notice deposited in the mail
in the manner hereinabove described shall be effective 48 hours after such
deposit, and notice delivered in person or by commercial courier shall be
effective at the time of delivery. A party delivering notice shall endeavor to
obtain a receipt therefor. For purposes of notice, the addresses of the parties
shall, until changed as hereinafter provided, be as follows:
If to Whitney or WNB:
Mr. William L. Marks
Chairman of the Board & CEO
Whitney Holding Corporation
228 St. Charles Avenue
New Orleans, Louisiana 70130
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<PAGE>
With copies to:
Joseph S. Schwertz, Jr., Esq.
Whitney National Bank
Legal Department
228 St. Charles Avenue
New Orleans, Louisiana 70130
If to Holding or the Bank:
Mr. Bill M. Simms
The First National Bancorp of Greenville, Inc.
100 W. Commerce Street
Greenville, AL 36037
With copies to:
Elisha C. Poole, Esq.
Poole & Poole
600 E. Commerce Street
Greenville, AL 36037
and
Paul S. Ware, Esq.
Bradley Arant Rose & White LLP
2001 Park Place, Suite 1400
Birmingham, AL 35203-2736
8.02. WAIVER. The failure by any party to enforce any of its rights
hereunder shall not be deemed to be a waiver of such rights, unless such waiver
is an express written waiver which has been signed by the waiving party. Waiver
of any one breach shall not be deemed to be a waiver of any other breach of the
same or any other provision hereof.
8.03. EXPENSES. Except as otherwise provided herein, regardless of
whether the Mergers are consummated, all expenses incurred in connection with
this Agreement and the Bank Merger Agreement and the transactions contemplated
hereby and thereby shall be borne by the party incurring them.
8.04. HEADINGS. The headings in this Agreement have been included solely
for reference and shall not be considered in the interpretation or construction
of this Agreement.
8.05. ANNEXES, EXHIBITS AND SCHEDULES. The annexes, exhibits and
schedules to this Agreement are incorporated herein by this reference and
expressly made a part hereof.
8.06. INTEGRATED AGREEMENT. This Agreement, the Bank Merger Agreement,
the exhibits and schedules hereto and all other documents and instruments
delivered in accordance with the terms hereof constitute the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and there are no agreements, understanding, restrictions,
representations or warranties among the parties other than those set forth
herein or therein, all prior agreements and understandings being superseded
hereby.
8.07. CHOICE OF LAW. The validity of this Agreement and the Bank Merger
Agreement, the construction of their terms and the determination of the rights
and duties of the parties hereto in accordance therewith shall be governed by
and construed in accordance with the laws of the United States and those of the
State of Louisiana
A-27
<PAGE>
applicable to contracts made and to be performed wholly within such State,
except to the extent that the laws of the State of Alabama require this
Agreement and the Bank Merger Agreement to be governed by the laws of that
state.
8.08. PARTIES IN INTEREST. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that this Agreement may not be transferred or assigned by any member of
either consolidated group without the prior written consent of the other parties
hereto, including any transfer or assignment by operation of law. Nothing in
this Agreement or the Bank Merger Agreement is intended or shall be construed to
confer upon or to give any person other than the parties hereto any rights or
remedies under or by reason of this Agreement or the Bank Merger Agreement,
except as expressly provided for herein and therein.
8.09. AMENDMENT. The parties may, by mutual agreement of their
respective Boards of Directors, amend, modify or supplement this Agreement, the
Bank Merger Agreement, or any exhibit or schedule of any of them, in such manner
as may be agreed upon by the parties in writing, at any time before or after
approval of this Agreement and the Bank Merger Agreement and the transactions
contemplated hereby and thereby by the shareholders of the parties hereto. This
Agreement and any exhibit or schedule to this Agreement may be amended at any
time and, as amended, restated by the chief executive officers of the respective
parties (or their respective designees) without the necessity for approval by
their respective Boards of Directors or shareholders, to correct typographical
errors or to change erroneous references or cross references, or in any other
manner which is not material to the substance of the transactions contemplated
hereby.
8.10. COUNTERPARTS. This Agreement may be executed by the parties in
any number of counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same document.
8.11. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES; COVENANTS. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant hereto shall survive the Effective Time. Each party hereby
agrees that its sole right and remedy with respect to any breach of a
representation or warranty or covenant by the other party shall be not to close
the transactions described herein if such breach results in the nonsatisfaction
of a condition set forth in Section 6 hereof; provided, however, that the
foregoing shall not be deemed to be a waiver of any claim for an intentional
breach of a representation, warranty or covenant or for fraud except if such
breach is required by law or by any bank or bank holding company regulatory
authority; it being understood that a disclosure in any closing certificate
provided in accordance with subparagraph (a) of Section 6.02 or subparagraph (a)
of Section 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 and, in the absence of a specified
survival term, for the applicable statute of limitations.
(The remainder of this page left blank intentionally)
A-28
<PAGE>
IN WITNESS WHEREOF, the parties and a majority of the Boards of Directors
of Whitney and Holding have executed this Agreement on the date first above
written.
WHITNEY HOLDING CORPORATION
BY: /s/ William L. Marks
--------------------------------
William L. Marks
ITS: Chairman and CEO
Attest: /s/ Joseph S. Schwertz, Jr.
--------------------------------
Joseph S. Schwertz, Jr.
Secretary
WHITNEY NATIONAL BANK
BY: /s/ William L. Marks
--------------------------------
William L. Marks
ITS: Chairman and CEO
Attest: /s/ Joseph S. Schwertz, Jr.
--------------------------------
Joseph S. Schwertz, Jr.
Corporate Secretary
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
BY: /s/ Bill M. Simms
--------------------------------
Bill M. Simms
ITS: Vice Chairman and
Chief Executive Officer
Attest: /s/ Mary Frances Jones
--------------------------------
Mary Frances Jones
Secretary
THE FIRST NATIONAL BANK OF GREENVILLE
BY: /s/ Bill M. Simms
--------------------------------
Bill M. Simms
ITS: Vice Chairman and
Chief Executive Officer
Attest: /s/ Mary Frances Jones
--------------------------------
Mary Frances Jones
Cashier
A-29
<PAGE>
EXHIBIT 1.01(b) TO
AGREEMENT AND PLAN OF MERGER
AGREEMENT OF MERGER
OF
THE FIRST NATIONAL BANK OF GREENVILLE
INTO
WHITNEY NATIONAL BANK
THIS AGREEMENT OF MERGER (this "Agreement") is made and entered into as of
this ______ day of ______________________, 199__, between The First National
Bank of Greenville, a national banking association organized under the laws of
the United States, (the "Bank") and Whitney National Bank, a national banking
association organized under the laws of the United States ("WNB" or the
"Receiving Association").
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of WNB and the Bank (collectively called the
"Merging Associations") deem it advisable that the Bank be merged with and into
WNB (the "Bank Merger"), as provided in this Agreement and in the Agreement and
Plan of Merger dated March 24, 1998 (the "Plan"), among the Merging
Associations, Whitney Holding Corporation, a Louisiana corporation ("Whitney")
of which WNB is a wholly-owned subsidiary, and The First National Bancorp of
Greenville, Inc., an Alabama corporation ("Holding"), which is the record and
beneficial owner of 100% of the Bank's outstanding capital stock, 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 Office of the Comptroller of the Currency (the
"OCC") and, if necessary, the Alabama State Banking Department 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), the Bank shall be merged with and into WNB under the Articles of
Association of WNB, existing Charter No. 14977, pursuant to the provisions of,
and with the effect provided in, 12 U.S.C. (S)215a, 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 the 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 submitted by the Merging Associations to, or issued by the Office of the
Comptroller of the Currency (the "Effective Time").
3. CANCELLATION OF CAPITAL STOCK OF BANK. At the Effective Time, by
virtue of the Bank Merger, all shares of the capital stock of the Bank, shall be
cancelled.
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<PAGE>
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 $3,358,400, divided into 134,336
shares of common stock, par value $25.00 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. (S)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 OCC for filing in the manner
required by law.
7. MISCELLANEOUS. This Agreement may, at any time prior to the Effective
Time, be amended or terminated as provided in the Plan. This Agreement may be
executed in counterparts, each of which shall be deemed to constitute an
original. This Agreement shall be governed and interpreted in accordance with
federal law and the applicable laws of the State of Louisiana applicable to
contracts made and to be performed wholly with such state, except to the extent
that the laws of the State of Alabama require this Agreement to be governed by
the laws of that state. This Agreement may be assigned only to the extent that
the party seeking to assign it is permitted to assign its interests in the Plan,
and subject to the same effect as any such assignment. The headings in this
Agreement are inserted for convenience only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. Capitalized terms
used herein and not otherwise defined have the meanings given to them in the
Plan.
IN WITNESS WHEREOF, this Agreement has been executed by a majority of the
directors of each of the Merging Associations, as of the day and year first
above written.
[Signature lines omitted]
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<PAGE>
EXHIBIT 6.02(g) TO
AGREEMENT AND PLAN OF MERGER
[Letter from directors, executive officers
and 5% beneficial shareholders of Holding]
[date]
Mr. William L. Marks
Chairman and CEO
Whitney Holding Corporation
228 St. Charles Avenue
New Orleans, La. 70130
Dear Mr. Marks:
In consideration of the benefits I will receive as a shareholder of The
First National Bancorp of Greenville, Inc. ("Holding") from the Agreement and
Plan of Merger dated March 24, 1998 (the "Agreement") among Holding, The First
National Bank of Greenville, Whitney Holding Corporation ("Whitney") and Whitney
National Bank, I agree as follows:
[If a director or executive officer of Holding: I agree to vote all shares
of Holding common stock that I own beneficially or of record in favor of
approving the Agreement and the merger to be effected thereby, unless Whitney is
then in breach or default in any material respect as regards any covenant,
agreement, representation or warranty as to it contained in the Agreement;
provided, however, that nothing in this sentence shall be deemed to require me
to vote any shares of Holding stock over which I have or share voting power
solely in a fiduciary capacity on behalf of any person other than Holding, if I
determine, in good faith after consultation with and receipt of an opinion of
counsel, that such a vote would cause a breach of my fiduciary duties to such
other person.]
I [further] agree that I will not, without the prior consent of Whitney,
transfer any of my shares of Holding stock prior to the Effective Date, as that
term is set forth in the Agreement, except by operation of law, by will, or
under the laws of descent and distribution or, in the case of any transfer more
than 30 days before the Effective Date, where the transferee agrees in writing
to be bound by the terms of this letter.
I also acknowledge that Whitney intends to account for the acquisition of
Holding as a pooling of interests. I understand that my transfer of any shares
of Holding common stock and any Whitney common stock that I receive in exchange
for Holding stock, prior to Whitney's publication of financial results covering
at least 30 days of its operations following the Effective Date, may impair this
accounting treatment. Therefore, I agree that, without the prior consent of
Whitney, I will not, except as provided in the preceding paragraph or except by
operation of law, by will, or under the laws of descent and distribution, sell
or otherwise transfer any shares of Holding stock, (or the Whitney stock which I
receive in exchange for my Holding stock) over which I hold the power to sell,
transfer, pledge or otherwise alienate or encumber until:
a. the merger has become effective and Whitney has published financial
results covering at least 30 days of its combined operations
following the Effective Date, or
b. the Agreement terminates.
I authorize Whitney or its authorized agent to hold the certificates
representing the shares of Whitney common stock into which my shares of Holding
common stock will be converted until the date that I am free to trade those
shares in accordance with the foregoing paragraph. I understand that upon my
delivery of certificates to the Exchange Agent in compliance with Section
2.01(c) of the Agreement, I will have the right to vote the Whitney shares
received in
A-32
<PAGE>
exchange therefore and receive dividends in respect thereof during the time that
Whitney or its agent holds the shares under this letter agreement.
I certify that all of the shares of Holding stock of which I hold the power
to sell, transfer, pledge or otherwise alienate or encumber are represented by
the following certificates:
Certificate No. No. of shares
I am aware that Whitney intends to treat the merger of Holding into Whitney
(the "Merger") in a manner consistent with Section 368 of the Internal Revenue
Code. I acknowledge that applicable tax regulations require "continuity of
interest" in order for the Merger to qualify under Section 368. This
requirement is satisfied if there is no plan or intention on the part of the
shareholders of Holding to sell or otherwise dispose of Whitney stock to be
received in the Merger in an aggregate amount that would reduce their ownership
to a number of shares of Whitney stock having an aggregate value, at the time of
the Merger, of less than 50% of the total fair market value of the Holding stock
(other than shares held by Holding except in a fiduciary capacity for third
persons) outstanding immediately prior to the Merger. I have no plan or
intention to dispose of a number of shares of Whitney stock to be received by me
in the Merger which would, taking into account any plan or intention on the part
of other former shareholders of Holding to dispose of shares of Whitney stock
received in the Merger, cause the foregoing requirement not to be satisfied.
I also understand the resale or other disposition of Whitney common stock
that I receive may be governed by Rule 145 of the SEC under the Securities Act
of 1933, as amended, which Rule has been explained to me. I agree not to sell
any of the Whitney common stock to be held by me in violation of the Securities
Act of 1933, as amended, or the rules and regulations thereunder.
This letter shall constitute an irrevocable agreement of the undersigned,
and may be revoked only upon the mutual agreement of the parties. The
agreements contained in this letter will terminate upon any termination of the
Agreement under Section 7 of the Agreement.
Sincerely,
[Director, Executive Officer or
5% beneficial shareholder]
A-33
<PAGE>
APPENDIX B
FAIRNESS OPINION OF THE ROBINSON-HUMPHREY COMPANY, LLC
<PAGE>
[LETTERHEAD OF THE ROBINSON-HUMPHREY COMPANY, LLC]
July ____, 1998
First National Bancorp of Greenville, Inc.
100 West Commerce Street
Greenville, AL 36037
Dear Sirs:
We understand that First National Bancorp of Greenville, Inc. (the
"Company") has entered into an agreement to merge with and into Whitney Holding
Corporation ("Whitney"). The consideration for the merger will be in the form
of Whitney common stock and cash in lieu of fractional shares, in an aggregate
purchase price of 2.5 times book value of the Company on February 28, 1998, plus
additional ordinary retained net income after tax beginning March 1, 1998 and
continuing through the end of the month prior to the closing (the "Proposed
Transaction"). The terms and conditions of the Proposed Transaction are set
forth in more detail in Agreement and Plan of Merger (the "Agreement").
We have been requested by the Company to render our opinion with respect to
the fairness, from a financial point of view, to the Company of the
consideration to be received in the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement,
(2) publicly available information concerning the Company and Whitney which we
believe to be relevant to our inquiry, (3) financial and operating information
with respect to the business, operations and prospects of the Company furnished
to us by the Company, (4) Financial and operating information with respect to
the business, operations and prospects of Whitney furnished to us by Whitney,
(5) a comparison of the historical financial results and present financial
condition of the Company with those of other companies which we deemed relevant,
(6) a comparison of the historical financial results, present financial
condition and market trading history of Whitney with those of other companies
which we deemed relevant, and (7) a comparison of the financial terms of the
Proposed Transaction with the terms of certain other recent transactions which
we deemed relevant. In addition, we have had discussions with the management
teams of the Company and Whitney concerning each company's business, operations,
assets, present condition and future prospects and undertook such other studies,
analyses and investigations as we deemed appropriate.
B-1
<PAGE>
First National Bancorp of Greenville, Inc.
July ___, 1998
Page Two
- -------------------------------------------
We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our opinion without
independent verification. With respect to the financial forecasts/projections
of the Company and of Whitney, we have assumed that such forecasts/projections
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of the Company and of the management
of Whitney as to the future financial performance of the Company and Whitney
respectively. In arriving at our opinion, we have not conducted a physical
inspection of the properties and facilities of the Company or of Whitney and
have not made nor obtained any evaluations or appraisals of the assets or
liabilities of the Company or of Whitney. In addition, you have not authorized
us to solicit, and we have not solicited, any indications of interest from any
third party with respect to the purchase of all or a part of the Company's
business. Our opinion is necessarily based upon market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services which is contingent
upon the consummation of the Proposed Transaction. In addition, the Company has
agreed to indemnify us for certain liabilities arising out of the rendering of
this opinion. In the ordinary course of our business, we actively trade in the
equity securities of Whitney for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
received in the Proposed Transaction is fair to the Company.
Very truly yours,
THE ROBINSON-HUMPHREY COMPANY, LLC
By:
--------------------------
Managing Director
B-2
<PAGE>
APPENDIX C
SELECTED PROVISIONS OF SECTION 10-2B-13.01, ET SEQ.,
OF THE ALABAMA BUSINESS CORPORATION ACT
<PAGE>
CODE OF ALABAMA
TITLE 10. CORPORATIONS, PARTNERSHIPS AND ASSOCIATIONS
CHAPTER 2B. BUSINESS CORPORATIONS
ARTICLE 13. DISSENTERS' RIGHTS
DIVISION A. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
10-2B-13.01. DEFINITIONS
(1) "CORPORATE ACTION" means the filing of articles of merger or share
exchange by the probate judge or Secretary of State, or other action giving
legal effect to a transaction that is the subject of dissenters' rights.
(2) "CORPORATION" means the issuer of shares held by a dissenter before the
corporate action, or the surviving or acquiring corporation by merger or share
exchange of that issuer.
(3) "DISSENTER" means a shareholder who is entitled to dissent from
corporate action under Section 10-2B-13.02 and who exercises that right when and
in the manner required by Sections 10-2B-13.20 through 10-2B-13.28.
(4) "FAIR VALUE," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(5) "INTEREST" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans, or, if none, at a rate that is fair and
equitable under all circumstances.
(6) "RECORD SHAREHOLDER" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(7) "BENEFICIAL SHAREHOLDER" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(8) "SHAREHOLDER" means the record shareholder or the beneficial
shareholder.
10-2B-13.02. RIGHT TO DISSENT
(a) A shareholder is entitled to dissent from, and obtain payment of the
fair value of his or her shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by Section 10-2B-
11.03 or the articles of incorporation and the shareholder is entitled to vote
on the merger or (ii) if the corporation is a subsidiary that is merged with its
parent under Section 10-2B-11.04;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
C-1
<PAGE>
(3) Consummation of a sale or exchange by all, or substantially all,
of the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
(4) To the extent that the articles of incorporation of the
corporation so provide, an amendment of the articles of incorporation that
materially and adversely affects rights in respect to a dissenter's shares
because it:
(i) Alters or abolishes a preferential right of the shares;
(ii) Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the redemption
or repurchase of the shares;
(iii) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(iv) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or
(v) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired for
cash under Section 10-2B-6.04; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for shares under
this chapter may not challenge the corporate action creating his or her
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
10-2B-13.03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(a) A record shareholder may assert dissenters' rights as to fewer than all
of the shares registered in his or her name only if he or she dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf he
or she asserts dissenters' rights. The rights of a partial dissenter under this
subsection are determined as if the shares to which he or she dissents and his
or her other shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his or her behalf only if:
(1) He or she submits to the corporation the record shareholder's
written consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) He or she does so with respect to all shares of which he or she is
the beneficial shareholder or over which he or she has power to direct the vote.
C-2
<PAGE>
ARTICLE 13. DISSENTERS' RIGHTS
DIVISION B. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
10-2B-13.20. NOTICE OF DISSENTERS' RIGHTS
(a) If proposed corporate action creating dissenters' rights under Section
10-2B-13.02 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Section 10-2B-
13.02 is taken without a vote of shareholders, the corporation shall (1) notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken; and (2) send them the dissenters' notice described in Section
10-2B-13.22.
10-2B-13.21. NOTICE OF INTENT TO DEMAND PAYMENT
(a) If proposed corporate action creating dissenters' rights under Section
10-2B-13.02 is submitted to a vote at a shareholder's meeting, a shareholder who
wishes to assert dissenters' rights (1) must deliver to the corporation before
the vote is taken written notice of his or her intent to demand payment or his
or her shares if the proposed action is effectuated; and (2) must not vote his
or her shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a)
is not entitled to payment for his or her shares under this article.
10-2B-13.22. DISSENTERS' NOTICE
(a) If proposed corporate action creating dissenters' rights under Section
10-2B-13.02 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Section 10-2B-13.21.
(b) The dissenters' notice must be sent no later than 10 days after the
corporate action was taken, and must:
(1) State where the payment demand must be sent;
(2) Inform holders of shares to what extent transfer of the shares
will be restricted after the payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the date
the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this article.
10-2B-13.23. DUTY TO DEMAND PAYMENT
(a) A shareholder sent a dissenters' notice described in Section 10-2B-
13.22 must demand payment in accordance with the terms of the dissenters'
notice.
(b) The shareholder who demands payment retains all other rights of a
shareholder until those rights are canceled or modified by the taking of the
proposed corporate action.
C-3
<PAGE>
(c) A shareholder who does not demand payment by the date set in the
dissenters' notice is not entitled to payment for his or her shares under this
article.
(d) A shareholder who demands payment under subsection (a) may not
thereafter withdraw that demand and accept the terms offered under the proposed
corporate action unless the corporation shall consent thereto.
10-2B-13.24. SHARE RESTRICTIONS
(a) Within 20 days after making a formal payment demand, each shareholder
demanding payment shall submit the certificate or certificates representing his
or her shares to the corporation for (1) notation thereon by the corporation
that such demand has been made and (2) return to the shareholder by the
corporation.
(b) The failure to submit his or her shares for notation shall, at the
option of the corporation, terminate the shareholders' rights under this article
unless a court of competent jurisdiction, for good and sufficient cause, shall
otherwise direct.
(c) If shares represented by a certificate on which notation has been made
shall be transferred, each new certificate issued therefor shall bear similar
notation, together with the name of the original dissenting holder of such
shares.
(d) A transferee of such shares shall acquire by such transfer no rights in
the corporation other than those which the original dissenting shareholder had
after making demand for payment of the fair value thereof.
10-2B-13.25. OFFER OF PAYMENT
(a) As soon as the proposed corporate action is taken, or upon receipt of a
payment demand, the corporation shall offer to pay each dissenter who complied
with Section 10-2B-13.23 the amount the corporation estimates to be the fair
value of his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of the offer, an income statement
for that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under
Section 10-2B-13.28; and
(5) A copy of this article.
(c) Each dissenter who agrees to accept the corporation's offer of payment
in full satisfaction of his or her demand must surrender to the corporation the
certificate or certificates representing his or her shares in accordance with
terms of the dissenters' notice. Upon receiving the certificate or certificates,
the corporation shall pay each dissenter the fair value of his or her shares,
plus accrued interest, as provided in subsection (a). Upon receiving payment, a
dissenting shareholder ceases to have any interest in the shares.
C-4
<PAGE>
10-2B-13.26. FAILURE TO TAKE CORPORATE ACTION
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment, the corporation shall release the
transfer restrictions imposed on shares.
(b) If, after releasing transfer restrictions, the corporation takes the
proposed action, it must send a new dissenters' notice under Section 10-2B-13.22
and repeat the payment demand procedure.
10-2B-13.27. RESERVED
10-2B-13.28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH OFFER OF PAYMENT
(a) A dissenter may notify the corporation in writing of his or her own
estimate of the fair value of his or her shares and amount of interest due, and
demand payment of his or her estimate, or reject the corporation's offer under
Section 10-2B-13.25 and demand payment of the fair value of his or her shares
and interest due, if:
(1) The dissenter believes that the amount offered under Section 10-
2B-13.25 is less than the fair value of his or her shares or that the interest
due is incorrectly calculated;
(2) The corporation fails to make an offer under Section 10-2B-13.25
within 60 days after the date set for demanding payment; or
(3) restrictions imposed on shares within 60 days after the date set
for demanding payment.
(b) A dissenter waives his or her right to demand payment under this
section unless he or she notifies the corporation of his or her demand in
writing under subsection (a) within 30 days after the corporation offered
payment for his or her shares.
DIVISION C. JUDICIAL APPRAISAL OF SHARES
10-2B-13.30. COURT ACTION
(a) If a demand for payment under Section 10-2B-13.28 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the 60 day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(b) The corporation shall commence the proceeding in the circuit court of
the county where the corporation's principal office (or, if none in this state,
its registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares, and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided under the Alabama Rules of Civil Procedure.
C-5
<PAGE>
(d) After service is completed, the corporation shall deposit with the
clerk of the court an amount sufficient to pay unsettled claims of all
dissenters party to the action in an amount per share equal to its prior
estimate of fair value, plus accrued interest, under Section 10-2B-13.25.
(e) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(f) Each dissenter made a party to the proceeding is entitled to judgment
for the amount the court finds to be the fair value of his or her shares, plus
accrued interest. If the court's determination as to the fair value of a
dissenter's shares, plus accrued interest, is higher than the amount estimated
by the corporation and deposited with the clerk of the court pursuant to
subsection (d), the corporation shall pay the excess to the dissenting
shareholder. If the court's determination as to fair value, plus accrued
interest, of a dissenter's shares is less than the amount estimated by the
corporation and deposited with the clerk of the court pursuant to subsection
(d), then the clerk shall return the balance of funds deposited, less any costs
under Section 10-2B-13.31, to the corporation.
(g) Upon payment of the judgment, and surrender to the corporation of the
certificate or certificates representing the appraised shares, a dissenting
shareholder ceases to have any interest in the shares.
10-2B-13.31. COURT COSTS AND COUNSEL FEES
(a) The court in an appraisal proceeding commenced under Section 10-2B-
13.30 shall determine all costs of the proceeding, including compensation and
expenses of appraisers appointed by the court. The court shall assess the costs
against the corporation, except that the court may assess costs against all or
some of the dissenters, in amounts the court finds equitable, to the extent the
court finds the dissenters acted arbitrarily, vexatiously, or not in good faith
in demanding payment under Section 10-2B-13.28.
(b) The court may also assess the reasonable fees and expenses of counsel
and experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Sections 10-2B-13.20 through 10-2B-13.28; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefitted.
10-2B-13.32. STATUS OF SHARES AFTER PAYMENT
Shares acquired by a corporation pursuant to payment of the agreed value
therefor or to payment of the judgment entered therefor, as in this chapter
provided, may be held and disposed of by such corporation as in the case of
other treasury shares, except that, in the case of a merger or share exchange,
they may be held and disposed of as the plan of merger or share exchange may
otherwise provide.
C-6
<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.
The Articles of Incorporation and By-laws of Whitney Holding Corporation
("Whitney") 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
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of Whitney pursuant to the foregoing provision
or otherwise, Whitney has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following Exhibits are filed as part of this Registration
Statement:
Exhibit No. Description
2 The Plan of Merger (included in the Registration
Statement as Appendix A and incorporated herein by
reference).
5 Opinion of Milling Benson Woodward L.L.P.
8 Form of opinion of Arthur Andersen LLP as to certain
tax matters.
23.1 Consent of Arthur Andersen LLP dated June 25, 1998.
23.2 Consent of Wilson, Price, Barranco, Blankenship &
Billingsley, P.C. dated June 23, 1998.
23.3 Consent of The Robinson-Humphrey Company, LLC dated
June 24, 1998.
23.4 Consent of Milling Benson Woodward L.L.P., included
in Exhibit 5.
II-1
<PAGE>
24 Powers of Attorney of directors of Whitney Holding
Corporation (contained on page S-1 of the Registration
Statement).
99 Form of Proxy of The First National Bancorp of
Greenville, Inc.
(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.
(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-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this 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 24th day of June, 1998.
WHITNEY HOLDING CORPORATION
By: /s/ William L. Marks
----------------------------------------
William L. Marks
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
immediately below constitutes and appoints R. King Milling and Edward B.
Grimball, and each or any one of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ William L. Marks Chairman of the Board June 24, 1998
- ------------------------ and Chief Executive Officer
William L. Marks
/s/ R. King Milling Director and President June 24, 1998
- ------------------------
R. King Milling
/s/ Edward B. Grimball Executive Vice President and June 24, 1998
- ------------------------ Chief Financial Officer
Edward B. Grimball (Principal Financial Officer
and Principal Accounting Officer)
/s/ Guy C. Billups, Jr. Director June 24, 1998
- ------------------------
Guy C. Billups, Jr.
Director June __, 1998
- -------------------------
Harry J. Blumenthal, Jr.
/s/ Joel B. Bullard, Jr. Director June 24, 1998
- -------------------------
Joel B. Bullard, Jr.
S-1
<PAGE>
/s/ James M. Cain Director June 24, 1998
- -------------------------
James M. Cain
/s/ Angus R. Cooper, II Director June 24, 1998
- -------------------------
Angus R. Cooper, II
/s/ Robert H. Crosby, Jr. Director June 24, 1998
- -------------------------
Robert H. Crosby, Jr.
/s/ Richard B. Crowell Director June 24, 1998
- -------------------------
Richard B. Crowell
/s/ Camille A. Cutrone Director June 24, 1998
- -------------------------
Camille A. Cutrone
/s/ William A. Hines Director June 24, 1998
- -------------------------
William A. Hines
/s/ Robert E. Howson Director June 24, 1998
- -------------------------
Robert E. Howson
/s/ John J. Kelly Director June 24, 1998
- -------------------------
John J. Kelly
/s/ E. James Kock, Jr. Director June 24, 1998
- -------------------------
E. James Kock, Jr.
/s/ Alfred S. Lippman Director June 24, 1998
- -------------------------
Alfred S. Lippman
/s/ John G. Phillips Director June 24, 1998
- -------------------------
John G. Phillips
Director June __, 1998
- -------------------------
John K. Roberts, Jr.
/s/ Carroll W. Sugs Director June 24, 1998
- -------------------------
Carroll W. Suggs
/s/ Warren K. Watters Director June 24, 1998
- -------------------------
Warren K. Watters
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
<S> <C> <C>
2 The Plan of Merger (included in the Registration Statement as
Appendix A and incorporated herein by reference).
5 Opinion of Milling Benson Woodward L.L.P.
8 Form of opinion of Arthur Andersen LLP as to certain tax
matters.
23.1 Consent of Arthur Andersen LLP, Inc. dated June 25, 1998.
23.2 Consent of Wilson, Price, Barranco, Blankenship & Billingsley,
P.C. dated June 23, 1998.
23.3 Consent of The Robinson-Humphrey Company, LLC dated
June 24, 1998.
23.4 Consent of Milling Benson Woodward L.L.P., included in
Exhibit 5.
24 Powers of Attorney of directors of Whitney Holding
Corporation (contained on page S-1 of the Registration
Statement).
99 Form of Proxy of The First National Bancorp of Greenville,
Inc.
</TABLE>
<PAGE>
EXHIBIT 5
[MILLING BENSON WOODWARD L.L.P. LETTERHEAD]
June 25, 1998
Whitney Holding Corporation
228 St. Charles Avenue
New Orleans, LA 70130
Re: The First National Bancorp of Greenville, Inc.
Registration Statement on Form S-4
Gentlemen:
We have acted as special counsel to Whitney Holding Corporation (the
"Company") in connection with the preparation of that certain Registration
Statement on Form S-4 (the "Registration Statement") filed by the Company on the
date hereof with the Securities and Exchange Commission (the "Commission") for
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of approximately 648,828 shares of the Company's common stock, no par
value (the "Shares"), to be exchanged for all of the outstanding shares of
common stock of The First National Bancorp of Greenville, Inc. ("FNB") pursuant
to that certain Agreement and Plan of Merger dated March 24, 1998 between the
Company and Whitney National Bank, on the one hand, and FNB and The First
National Bank of Greenville on the other hand (the "Plan of Merger").
In so acting, we have examined originals, or photostatic or certified
copies, of the Plan of Merger, such records of the Company, certificates of
officers of the Company and of public officials, and such other documents as we
have deemed relevant. In such examination, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of such
documents.
Based upon the foregoing, we are of the opinion that:
(1) The Company is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Louisiana.
(2) The Shares are duly authorized and, when issued by the Company in
accordance with the terms of the Plan of Merger, will be validly issued, fully
paid and nonassessable.
<PAGE>
MILLING BENSON WOODWARD L.L.P.
June 25, 1998
Page 2
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us in the prospectus forming a part thereof
under the caption "Legal Matters." In giving this consent, we do not admit that
we are within the category of persons whose consent is required under Section 7
of the Securities Act or the general rules and regulations of the Commission.
Very truly yours,
/s/
MILLING BENSON WOODWARD L.L.P.
<PAGE>
EXHIBIT 8
_____________________________, 1998
PERSONAL AND CONFIDENTIAL
- -------------------------
BY HAND
- -------
DRAFT
-----
Mr. William L. Marks
Whitney Holding Corporation
228 St. Charles Avenue
New Orleans, Louisiana 70130
Mr. Bill M. Simms
The First National Bancorp of Greenville, Inc.
100 W. Commerce Street
Greenville, AL 36037
Dear Messrs. Marks and Simms:
This opinion is being furnished to you in connection with the proposed
acquisition of The First National Bancorp of Greenville, Inc. ("Holding") and
its wholly owned banking subsidiary, The First National Bank of Greenville
("Bank"), by Whitney Holding Corporation ("Whitney"), which will be completed on
___________________________,1998 ("the Effective Date"). You have requested our
opinion concerning the following:
. That the merger of Holding into Whitney will qualify as a reorganization
under Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
("the Code").
. That the exchange of Holding common stock to the extent exchanged solely
for Whitney common stock will not give rise to gain or loss for federal
income tax purposes to the holders of Holding common stock with respect to
such exchange.
. That 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, Holding, Bank, WNB and the stockholders of Holding. In rendering our
opinion, we have relied upon the accuracy and completeness of the facts,
assumptions, and information as contained in the Agreement and Plan of Merger
dated as of March 24, 1998 (in each case, without regard to any
<PAGE>
Mr. William L. Marks
Mr. Bill M. Simms
Page 2
_______________________, 1998
limitation based on Whitney's or Holding's knowledge or belief). ("Plan of
Merger"), including all exhibits attached thereto, the Registration Statement on
Form S-4, and the representations included below. You have represented that
such facts, assumptions, and representations are true, correct, and complete.
However, we have not independently audited or otherwise verified any of these
facts, assumptions, or representations. A misstatement or omission of any fact
or a change or amendment in any of the facts, assumptions, or representations
upon which we have relied may require a modification of all or a part of this
opinion.
PREMISE OF OPINION
- ------------------
Our opinion is based solely on our interpretation of the Code; U.S. federal
income tax regulations thereunder; relevant judicial decisions; and guidance
issued by the Internal Revenue Service (the "Service") including revenue rulings
and revenue procedures; and other authorities that we deemed relevant; in each
case as of the date of this opinion.
U.S. federal income tax laws and regulations, and the interpretations thereof,
are subject to change, which changes could adversely affect this opinion. If
there is a change in the Code, the regulations thereunder, the administrative
guidance issued thereunder, or in the prevailing judicial interpretation of the
foregoing, the opinion expressed herein would necessarily have to be reevaluated
in light of any such changes. Our opinion is as of the date of this letter and
we have no responsibility to update this opinion for changes in applicable law
or authorities occurring after this date.
Our opinion does not address the potential tax consequences of any transactions,
events, or circumstances other than the transactions as described herein. In
addition, our opinion is limited to the U.S. federal income tax consequences set
forth below. Our opinion does not address any non-income, state, local, or
foreign tax consequences of the transactions. We also express no opinion on
non-income tax issues, such as corporate law or securities matters.
This opinion does not address the U.S. federal income tax consequences of the
transactions to any Holding common stockholder that has a special status,
including (without limitation) insurance companies; financial institutions;
broker-dealers; foreign corporations; estates and trusts not subject to U.S.
federal income tax on their income regardless of source; and persons who are not
citizens or residents of the United States; and persons who acquired stock as
the result of the exercise of an employee stock option, pursuant to an employee
stock purchase plan, or otherwise as compensation.
Our opinion is not binding on the Service, and there can be no assurance that
the Service will not take positions contrary to such opinion or will not be
successful in sustaining such contrary positions. However, should the Service
challenge the U.S. federal income tax treatment of the
<PAGE>
Mr. William L. Marks
Mr. Bill M. Simms
Page 3
_______________________, 1998
matters discussed below, our opinion reflects our assessment of the probable
outcome of litigation based solely on an analysis of the existing authorities
relating to such matters.
This opinion is solely for the benefit of Holding, Whitney, Bank, and WNB, and
is not intended to be relied upon by anyone other than Holding, Whitney, Bank,
and WNB. Although you do hereby have our express consent to inform Holding
common stockholders of our opinion by including copies of this letter as an
exhibit in the Registration Statement on Form S-4 for the proposed transaction
and by making reference to us and our opinion in the Proxy Statement-Prospectus
forming a part of the Registration Statement, 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/its 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. Holding will be merged with and into Whitney ("Company Merger") on the
Effective Date and at the Effective Time pursuant to the Louisiana
Business Corporation Law and the Alabama Business Corporation Law.
B. On the Effective Date and pursuant to the Company Merger, except for
shares of Holding common stock as to which dissenter's rights have been
perfected and not withdrawn or otherwise forfeited, and except for shares
held by Holding as treasury shares which shall by reason of the Company
Merger be canceled, each issued and outstanding share of Holding common
stock shall be converted into shares of Whitney common stock based on the
terms contained in section 2 of the Plan of Merger. As a result of the
Company Merger, the stockholders of Holding will own less than 5% of the
outstanding stock of Whitney. In lieu of issuing fractional shares of
Whitney common stock as a result of the Company Merger, common
stockholders of Holding 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. Subsequent to the Company Merger, Bank will be merged with and into WNB
("Bank Merger") under the Articles of Association of WNB pursuant to the
provisions of 12 U.S.C. Section 215a, et. seq. No additional shares of WNB
stock will be issued, and all of the outstanding stock of Bank will be
canceled, as a result of the Bank Merger. The Bank
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Mr. Bill M. Simms
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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.
ADDITIONAL REPRESENTATIONS
- --------------------------
In addition to the representations included in the Plan of Merger, the following
representations have been made to us by representatives of Whitney, WNB,
Holding, and Bank:
a) Whitney, WNB, Holding, Bank, and the stockholders of Holding will pay their
respective expenses, if any, incurred in connection with the successful
consummation of the transaction.
b) There is no indebtedness existing between any member of the Holding
consolidated group, on the one hand, and any member of the Whitney
consolidated group on the other hand.
c) The fair market value of the assets of Holding transferred to Whitney will
equal or exceed the sum of the liabilities assumed by Whitney plus the
amount of liabilities, if any, to which the transferred assets are subject.
d) The shareholders of Holding do not own, directly or constructively, stock
in Whitney that comprises a 50 percent or greater controlling interest in
Whitney pursuant to Section 304(c).
e) 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.
f) None of the compensation received by any stockholders that are employees of
either Holding or Bank ("stockholder-employees") will be separate
consideration for, or allocable to, any of their shares of Holding 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.
g) Holding will be merged with and into Whitney, pursuant to the Louisiana
Business Corporation Law and the Alabama Business Corporation Law.
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Mr. Bill M. Simms
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h) Except for restrictions placed upon the disposition of Whitney common stock
pursuant to agreements made by certain officers, directors and shareholders
of Holding in the shareholder commitments referred to in Section 6.02(g) of
the Plan of Merger and Rule 145 under the federal securities laws, the
Holding 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.
i) The ratio for the exchange of shares of Holding 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 Holding common stockholders in the transaction will be
approximately equal to the fair market value of the Holding common stock
surrendered by such stockholders in exchange therefor.
j) The shareholders of Holding will receive in exchange for their Holding
common stock a number of shares of Whitney common stock having a fair
market value equal to at least 50% of the value of their Holding stock on
the Effective Date. Except for cash received for fractional shares
discussed below, under the terms of the Plan of Merger the shareholders of
Holding who do not exercise dissenters' rights will receive solely Whitney
common stock in exchange for their Holding stock. Redemptions or
acquisitions of Holding stock by Holding or any related party and
extraordinary distributions (i.e., distributions with respect to stock
other than regular, normal dividends), prior to and in connection with the
transactions will be taken into account for purposes of this
representation.
k) Neither Whitney, WNB, Holding, Bank, nor any related party has any plan or
intention to reacquire any of the stock issued in the transaction. For
purposes of this opinion, a "related party" includes any corporation (i)
that is a member of any affiliated group, as defined in Section 1504
(determined without regard to Section 1504(b)), of which Whitney is a
member, or (ii) whose purchase of Whitney stock would be treated as a
distribution in redemption of stock of Whitney under Section 304(a)(2)
(determined without regard to Reg. Section 1.1502-80).
The following representations have been made to us by representatives of Whitney
and WNB:
l) Whitney and WNB have no plan or intention to sell or otherwise dispose of
any of the assets of Holding or Bank acquired in the transactions, except
for dispositions made in the ordinary course of business or transfers
described in Section
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Mr. Bill M. Simms
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368(a)(2)(C) of the Code, and except for Bank common stock to be canceled
in the Bank Merger.
m) Neither Whitney, WNB, nor any related party under Section 304(c) currently
own any stock interest in Holding or Bank.
n) Following the transactions, Whitney and WNB will continue the historic
businesses of Holding and Bank, respectively, or use a significant portion
of these historic business assets in the operation of a trade or business.
o) 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 Holding 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 Holding
stockholders in exchange for their shares of Holding common stock. The
fractional share interests of each Holding stockholder will be aggregated,
and no Holding 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.
p) The assumption by Whitney of the liabilities of Holding, and WNB of the
liabilities of Bank, pursuant to the transactions are for bona fide
business purposes and the principal purpose of such assumptions is not the
avoidance of federal income tax on the transfer of assets of Holding to
Whitney, or Bank to WNB, respectively, pursuant to the transactions.
q) Whitney and WNB are not investment companies as defined in Sections
368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
r) The proposed transactions are being undertaken for reasons germane to the
continuance of the business of Whitney and WNB.
s) Bank will be included as a member of the Whitney consolidated group as
defined in Section 1504 immediately after the Company Merger and will
remain a member of such group until the consummation of the Bank Merger.
t) There is no plan or arrangement to have WNB leave the Whitney consolidated
group.
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Mr. Bill M. Simms
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u) WNB and Bank will be members of the same consolidated group at the time of
the Bank Merger, and all parties will treat the Bank Merger as occurring
between two members of a single consolidated group.
v) Bank will be merged with and into WNB under the Articles of Association of
WNB pursuant to the provisions of 12 U.S.C. Section 215a, et. seq.
The following representations have been made to us by representatives of Holding
and Bank:
w) The liabilities of Holding and Bank assumed by Whitney and WNB,
respectively, and the liabilities to which the transferred assets of
Holding and Bank are subject were incurred by Holding and Bank in the
ordinary course of business.
x) Holding and Bank are not investment companies as defined in Sections
368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
y) Holding and Bank are not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
z) The proposed transaction is being undertaken for reasons germane to the
continuance of the business of Holding and Bank.
ANALYSIS OF APPLICABLE FEDERAL TAX PROVISIONS
- ---------------------------------------------
A. Exchange of Whitney Stock for Holding 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 of reorganization, exchanged solely for stock or
securities in such corporation or in another corporation, a party to the
reorganization.
For purposes of 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
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Mr. Bill M. Simms
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corporations in the case of a reorganization resulting from the acquisition by
one corporation of stock or properties of another.
Based on the representations set forth above and the representations included in
the Plan of Merger, the merger of Holding into Whitney under the Louisiana
Business Corporation Law and the Alabama Business Corporation Law and the merger
of Bank into WNB under the provisions of 12 U.S.C. Sec. 215a will qualify as a
reorganization under Section 368(a)(1)(A). In addition, the merger of Bank into
WNB may qualify as a reorganization under Section 368(a)(1)(D) by virtue of
Section 354, since it may occur up to one year following the merger of Holding
into Whitney. That section provides, in relevant part, that a transfer by a
corporation of substantially all of its assets to another corporation is a tax
free reorganization if immediately after the transfer the transferor
corporation, or one or more of its shareholders (including persons who were
shareholders immediately before the transfer) is in control of the corporation
to which the assets are transferred; but only if, in pursuance of the plan of
reorganization, stock or securities of the corporation to which the assets are
transferred are distributed in a transaction which qualifies under section 354
or 356. The instant case may qualify as a type "D" reorganization because
Whitney, as the sole shareholder of Bank immediately before the merger of Bank
into WNB, will control WNB immediately after the merger (control being defined
with reference to Section 304(c) in this case). See Rev. Rul. 75-161, 1975-1 CB
114 (a type "A" reorganization may also qualify as a type "D" reorganization).
Under this Revenue Ruling, where these reorganization provisions overlap, the
provisions of Section 357(c)(1)(B) governing gain recognition where liabilities
exceed basis in a "D" reorganization may apply. However, under Reg. Section
1.1502-80(d), Section 357(c) does not apply to the transaction in question since
WNB and Bank will be members of the same consolidated group at the time of the
Bank Merger, and there is no plan or arrangement for WNB to leave the
consolidated group.
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.
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 Holding
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
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Mr. Bill M. Simms
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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).] In the Proxy Statement-Prospectus, a discussion of the reasons for
the Plan of Merger is included. In general, there is a desire to combine the
financial and managerial resources of WNB and Bank to pursue consumer and
commercial banking business in markets currently served by Bank. Whitney's
business strategy includes expansion in the Gulf Coast region, and Whitney's
management identified Bank as an institution that fits well with this strategy.
With respect to Holding and Bank, the business, prospects, and financial
conditions of Bank and Whitney, and the general favorable impact of the merger
of Holding into Whitney on various constituencies serviced by Bank, including
its customers, employees and communities were factors in the decision to
adopt the Plan of Merger. Based on the reasons stated in the Proxy
Statement-Prospectus and the representations set forth above, the transactions
meet the business purpose requirement.
The continuity of interest requirement must also be met. That doctrine does not
require that all shareholders of the acquired corporation receive a proprietary
interest in the surviving corporation in the transaction; it is not even
necessary for a substantial percentage of such shareholders to receive such an
interest. The IRS indicated in Revenue Procedure 77-37 that a sufficient
proprietary interest is an interest with a value that is at least 50% of the
total equity value of the acquired corporation. Further, unlike prior IRS
position, under recently finalized regulations such shareholders are generally
not required to retain their interests in the reorganized entity, as discussed
below.
The IRS has recently finalized regulations in the continuity of interest area
that greatly liberalize the rules. In general, provided a sufficient amount of
stock is issued in the transaction to establish requisite continuity of
interest, new Treas. Reg. (S)1.368-1(e) permits shareholders to dispose of such
stock immediately following the reorganization (provided that such disposition
is not made to the issuing corporation or a corporation related to the issuing
corporation).
Under the regulations, continuity of interest is met if, in substance, a
substantial part of the value of the proprietary interests in the target
corporation are preserved in the reorganization. In this regard, a proprietary
interest in the target corporation generally is preserved if, in a potential
reorganization, it is exchanged for a proprietary interest in the acquiring
corporation (or, for purposes of this opinion, a corporation in control of the
acquiring corporation, within the meaning of Section 368(c)). However, a
proprietary interest in the target corporation generally is not preserved if, in
connection with the potential reorganization, it is acquired for consideration
other than stock of the acquiring corporation, or stock of the acquiring
corporation furnished in the transaction is redeemed.
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Mr. Bill M. Simms
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All facts and circumstances must be considered in determining whether, in
substance, a proprietary interest in the target corporation is preserved.
Importantly, for purposes of the continuity of interest requirement, a mere
disposition of stock of the target corporation prior to a potential
reorganization to persons not related to the target corporation (as defined
below) or to persons not related to the acquiring corporation is disregarded.
In addition, a mere disposition of stock of the acquiring corporation received
in a potential reorganization to persons not related to the acquiring
corporation is disregarded. In this regard, two corporations are related if
they are members of the same affiliated group as defined in section 1504
(determined without regard to section 1504(b)); or a purchase of the stock of
one corporation by another corporation would be treated as a distribution in
redemption of the stock of the first corporation under section 304(a)(2)
(determined without regard to section 1.1502-80(b)).
In addition to the final regulations, the IRS issued temporary and proposed
regulations (Treas. Reg. 1.368-1T(e)) providing that a proprietary interest in
Target is not preserved if, in connection with a potential reorganization, it is
redeemed or acquired by a person related to Target, or to the extent that, prior
to and in connection with a potential reorganization, an extraordinary
distribution is made with respect to it.
Based on the representations set forth above, the transactions meet the
continuity of interest requirement because a sufficient proprietary interest in
Whitney is issued to the former Holding shareholders.
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 such other property. Section 356(c) states that no loss from the
exchange may be recognized by the shareholder.
In other official pronouncements (Rev. Rul. 74-515, 1974-2 C.B. 118; Rev. Rul.
74-516, 1974-2 C.B. 121), the Service has treated the distribution of cash
distributed as part of a reorganization and in a transaction subject to Section
356 considerations 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 Service 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
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Mr. Bill M. Simms
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corporation in lieu of fractional shares and is not separately bargained for,
such cash payment will be treated under Section 302 of the Code as in redemption
of fractional share interests. Therefore, each shareholder's redemption will be
treated as a distribution in full payment in exchange for his or her 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 Service
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 the amount of loss recognized by the recipient as a result of
the exchange 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 pursuant to Rev. Rul. 66-365.
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 payment meets
the requirements of Section 302. The Supreme Court in Clark 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.
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Mr. Bill M. Simms
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Note, to the extent that cash received by a dissenting shareholder represents a
payment of interest, such cash will generally be taxed as ordinary income with
no basis offset.
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(c)
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 to 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 transferors for purposes of the preceding sentence in the instant case are
Holding and Bank.
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
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Mr. William L. Marks
Mr. Bill M. Simms
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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 or she 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.
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 between $1,500 and $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, WNB, Holding, and Bank, it is our opinion that:
a) The merger of Holding with and into Whitney, as described above, will
constitute a reorganization under Section 368 of the Code (Section
368(a)(1)(A)).
b) Holding and Whitney will each be "a party to a reorganization" (Section
368(b)).
c) No gain or loss will be recognized by the common stockholders of Holding on
the receipt of solely Whitney common stock in exchange for surrendered
Holding common stock pursuant to the plan of reorganization (Section
354(a)(1)).
d) The tax basis of the Whitney common stock received by Holding common
stockholders will be the same as the basis of the Holding 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 (Section 358(a)(1)).
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Mr. Bill M. Simms
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e) The holding period of the Whitney common stock received by the Holding
common stockholders will include the period during which the Holding common
stock surrendered in exchange therefor was held, provided that the Holding
common stock is held as a capital asset in the hands of the Holding
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. Subject to the conditions and
limitations of 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 Holding who elects to dissent from the merger
transaction involving Holding and Whitney, and receives cash in exchange
for his shares of Holding common stock, will be treated as receiving such
payment (other than any amounts constituting interest, which will be
treated as ordinary income) in complete redemption of his shares of
Holding, provided such shareholder does not actually or constructively own
any Holding common stock after the exchange under the provisions and
limitations of Section 302.
h) No gain or loss will be recognized by Holding on the transfer of all of its
assets to Whitney solely in exchange for Whitney common stock and cash in
lieu of fractional shares which is subsequently distributed to Holding
common stockholders pursuant to the plan of reorganization (Section 361).
i) No gain or loss will be recognized by Whitney on the receipt by Whitney of
substantially all of the assets of Holding in exchange for Whitney stock
(Section 1032(a)).
j) The tax basis of Holding's assets in the hands of Whitney will be the same
as the basis of those assets in the hands of Holding immediately prior to
the merger (Section 362(b)). The tax basis of Holding's assets in the
hands of Whitney will not be increased by any cash paid to dissenters or
cash paid in lieu of fractional shares.
k) The holding period of the assets of Holding in the hands of Whitney will
include the period during which such assets were held by Holding (Section
1223(2)).
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Mr. Bill M. Simms
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l) 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)).
m) WNB and Bank will each be a "party to a reorganization" (Section 368 (b)).
n) No gain or loss will be recognized by Whitney or WNB on the merger of Bank
into WNB (Section 1032).
o) 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).
p) 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)).
q) 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)).
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
the opinion we have applied the standards of "substantial authority" and "more
likely than not the proper treatment," 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
the proper treatment.
Very truly yours,
ARTHUR ANDERSEN LLP
By
Charles A. Giraud, III
Copies to: Joseph S. Schwertz, Jr., Esq.
Patrick J. Butler, Jr., Esq.
Elisha C. Poole, Esq.
Paul S. Ware, Esq.
Elizabeth B. Martin
<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 of our report dated January 15, 1998
included in Whitney Holding Corporation's Form 10-K for the year ended December
31, 1997 and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
New Orleans, Louisiana
June 25, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated January 31, 1998 with respect to the financial statements of The First
National Bancorp of Greenville, Inc. and subsidiary included in this
Registration Statement on Form S-4 and the related Proxy Statement-Prospectus of
Whitney Holding Corporation, and to the reference to our firm under the heading
"Experts" in the Proxy Statement-Prospectus.
/s/ Wilson, Price, Barranco, Blankenship
& Billingsley, P.C.
June 23, 1998
Montgomery, Alabama
<PAGE>
EXHIBIT 23.3
CONSENT OF THE ROBINSON-HUMPHREY COMPANY, LLC
We hereby consent to the inclusion in this Registration Statement on Form S-4
of Whitney Holding Corporation of the form of our letter to the Board of
Directors of The First National Bancorp of Greenville, Inc., included as
Appendix B to the Proxy Statement-Prospectus that is part of the Registration
Statement, and to the references to such letter and to our firm in such Proxy
Statement-Prospectus. In giving such consent we do not hereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
The Robinson-Humphrey Company, LLC
By: /s/ Peter F. Finnerty, Jr.
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Managing Director
June 24, 1998
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EXHIBIT 99
THE FIRST NATIONAL BANCORP OF GREENVILLE, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
{_____________}, 1998
THE STATE OF ALABAMA
BUTLER COUNTY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
FIRST NATIONAL BANCORP OF GREENVILLE, INC.
KNOW ALL MEN BY THESE PRESENTS:
That I, the undersigned shareholder of THE FIRST NATIONAL BANCORP OF
GREENVILLE, INC.(the "Corporation"), Greenville, Alabama, do hereby nominate,
constitute and appoint Mr. Elisha C. Poole and Mr. Bill M. Simms, and each of
them, with full power of substitution, proxies to vote all the stock of the
Corporation, standing in the name of the undersigned on the books of the said
Corporation, which the undersigned could vote if personally present at the
Special Meeting of Shareholders to be held at THE MAIN OFFICE CONFERENCE ROOM OF
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THE FIRST NATIONAL BANK OF GREENVILLE (the "Bank") ON { },
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{ }, 1998, at { }.m., or any postponement or adjournment thereof,
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as follows:
1. To vote FOR [ ] AGAINST [ ] OR ABSTAIN [ ] with respect to
the proposal to approve an Agreement and Plan of Merger dated March 24, 1998
among Whitney Holding Corporation ("Whitney"), Whitney National Bank, the
Corporation and the Bank, pursuant to which, among other things: (a) the
Corporation would merge into Whitney, as a result of which the Bank would become
a wholly-owned subsidiary of Whitney and each outstanding share of common stock
of the Corporation would be converted into shares of Whitney common stock as
determined in accordance with the terms of the Agreement and Plan of Merger,
and (b) the Bank would, in due course, merge into Whitney National Bank, a
wholly-owned subsidiary of Whitney; and
2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS, AND IF
NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE APPROVAL OF THE
AGREEMENT AND PLAN OF MERGER DESCRIBED ABOVE.
IN WITNESS WHEREOF, I have hereunto set my hand this ______ day of
___________________, 1998.
Signature(s) of Shareholder(s)
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Please date and sign exactly as name appears hereon. If shares are held
jointly, each shareholder should sign. Agents, executors, administrators,
guardians, trustees, etc., should use full title, and, if more than one, all
should sign. If the shareholder is a corporation, please sign full corporate
name by an authorized officer.
