As filed with the Securities and Exchange Commission on March 11, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FPB Financial Corp.
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(Name of Small Business Issuer in Its Articles of Incorporation)
Louisiana 6711 72-1438784
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(State or Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation Industrial Classification Identification No.)
or Organization) Code Number)
300 West Morris Street
Hammond, Louisiana 70403
(504) 345-1880
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(Address and Telephone Number of
Principal Executive Offices and Principal Place of Business)
Fritz W. Anderson, II
President and Chief Executive Officer
FPB Financial Corp.
300 West Morris Street
Hammond, Louisiana 70403
(504) 345-1880
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(Name, Address, and Telephone Number of Agent for Service)
Copies to:
Gerald F. Heupel, Jr., Esq. Alan Schick, Esq.
Raymond A. Tiernan, Esq. Luse Lehman Gorman
Elias, Matz, Tiernan & Herrick L.L.P. Pomerenk & Schick, P.C.
734 15th Street, N.W., 12th Floor 5335 Wisconsin Avenue, N.W.
Washington, D.C. 20005 Suite 400
(202) 347-0300 Washington, D.C. 20015
(202) 274-2000
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Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
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Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Dollar Amount Offering Price Aggregate Registration
Registered to be Registered Per Share Offering Price(1) Fee
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<S> <C> <C> <C> <C>
Common Stock, par 449,650 shares(2) $10.00 $4,496,500 $1,250.03
value $.01 per share
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes shares that may be issued in the event of a 15% increase in the
maximum size of the offering.
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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Disclosure alternative used (check one): Alternative 1 Alternative 2 X
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<PAGE>
PROSPECTUS
FPB FINANCIAL CORP.
(Proposed holding company for Florida Parishes Bank)
Up to 391,000 Shares of Common Stock
Florida Parishes Bank is converting from the mutual to the stock form of
organization. As part of this conversion, FPB Financial Corp. is offering its
shares of common stock. The Bank will become a subsidiary of FPB Financial
Corp., a corporation we recently formed.
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TERMS OF THE OFFERING
We are offering a minimum of 289,000 shares and a maximum of 391,000
shares. The maximum can be increased by up to 15% to 449,650 shares with
regulatory approval.
Per Share Total
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o Purchase price: minimum to
maximum, as adjusted .............. $10.00 $2,890,000 to $4,496,500
o Offering expenses, including
underwriting discounts and
commissions: minimum to maximum,
as adjusted ....................... $1.25 to $ .80 $360,000
o Net proceeds: minimum to maximum,
as adjusted ....................... $8.75 to $9.20 $2,530,000 to $4,136,500
================================================================================
Please refer to "Risk Factors" beginning on page 8 of this document. An
investment in the common stock is subject to various risks, including possible
loss of principal.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
We have received conditional approval to list the common stock on the
Over-the-Counter Electronic Bulletin Board under the symbol "_____." The
underwriter, Trident Securities, must sell the minimum amount of securities
($2,890,000 of common stock) if any are sold. The underwriter is required to use
only its best efforts to sell the maximum amount of securities offered
($3,910,00 of common stock).
If you purchase stock through priority subscription rights we have granted
you, we must receive your order no later than 12:00 noon, central time, on
__________, 1999. We may also offer shares in a community offering to persons
who do not have priority subscription rights. We may terminate the community
offering at any time without notice. Pending completion or termination of the
offering, we will place funds we receive for stock purchases in a segregated
savings account at Florida Parishes Bank, and we will pay interest at our
passbook rate on those funds for the period the funds are held until we complete
or terminate the offering.
TRIDENT SECURITIES
_______________, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
Map of Our Market Area..................................................... iii
Questions and Answers About the Stock Offering............................. 1
Summary.................................................................... 3
Risk Factors............................................................... 8
Selected Financial Data.................................................... 13
Developments Through March 31, 1999........................................ 15
Proposed Management Purchases.............................................. 18
How Our Net Proceeds Will be Used.......................................... 18
We Intend to Pay Quarterly Cash Dividends.................................. 20
There May Be an Illiquid Market for Our Common Stock....................... 21
The Bank Meets All of Its Regulatory Capital Requirements.................. 21
Our Capitalization......................................................... 23
Pro Forma Data............................................................. 25
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................ 29
Business of FPB Financial Corp............................................. 39
Business of Florida Parishes Bank.......................................... 39
Regulation................................................................. 55
Taxation................................................................... 63
Management................................................................. 65
The Conversion............................................................. 70
Restrictions on Acquisition of FPB Financial and Florida Parishes Bank..... 86
Description of Capital Stock of FPB Financial.............................. 93
Experts.................................................................... 94
Legal and Tax Opinions..................................................... 94
Additional Information..................................................... 94
Index to Financial Statements.............................................. 96
References in this document to "we," "us", "our" and "FPB Financial" refer
to FPB Financial Corp. and, in some cases, to both FPB Financial Corp. and
Florida Parishes Bank. References to "Florida Parishes" and the "Bank" refer to
Florida Parishes Bank.
The shares of common stock offered hereby are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation or any
other government agency.
ii
<PAGE>
[Map to be inserted which shows the State of Louisiana, with an enlargement of
Tangipahoa Parish showing Hammond]
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE STOCK OFFERING
The following are frequently asked questions. You should read this entire
prospectus, including the Risk Factors beginning on page 1 and The Conversion
beginning on page ___ , for more information.
Q. HOW MANY SHARES OF STOCK ARE BEING OFFERED, AND AT WHAT PRICE?
A. We are offering for sale up to 391,000 shares of common stock at a
subscription price of $10.00 per share. We must sell at least 289,000
shares. If the appraised market value of the common stock changes due to
market or financial conditions, then, without notice to you, we may be
required to sell up to 449,650 shares.
Q. WHAT PARTICULAR FACTORS SHOULD I CONSIDER WHEN DECIDING WHETHER TO PURCHASE
THE STOCK?
A. There are many important factors for you to consider before making an
investment decision. Therefore, you should read this entire prospectus
before making your investment decision.
Q. WILL DIVIDENDS BE PAID ON THE STOCK?
A. We intend to pay quarterly cash dividends of $.05 per share on our common
stock.
Q. WILL I BE ABLE TO SELL MY STOCK AFTER I PURCHASE IT?
A. We anticipate having our stock quoted on the Over-the-Counter Electronic
Bulletin Board under the symbol "____." However, we expect the market for
our stock to be illiquid. There can be no assurance that someone will want
to buy your shares or that you will be able to sell them for more money
than you originally paid.
Q. WILL MY STOCK BE COVERED BY DEPOSIT INSURANCE OR GUARANTEED BY ANY
GOVERNMENT AGENCY?
A. No. Unlike insured deposit accounts at Florida Parishes Bank, our stock
will not be insured or guaranteed by the Federal Deposit Insurance
Corporation, or FDIC, or any other government agency.
Q. HOW MUCH STOCK MAY I SUBSCRIBE FOR?
A. The minimum subscription is 25 shares, or $250, and the maximum individual
subscription is 10,000 shares, or $100,000, subject to adjustment.
If we do not sell enough shares to depositors in the subscription offering,
the remaining shares will be sold in a community offering. All purchases by
you in the subscription and the community offering, when added together,
including purchases by persons associated with you or acting in concert
with you, may not exceed 15,000 shares, or $150,000, subject to adjustment
if the appraised market value changes.
Q. WHEN IS THE DEADLINE TO SUBSCRIBE FOR STOCK?
A. We must receive a properly signed order form with the required payment on
or before 12:00 noon, central time, on ________, 1999.
1
<PAGE>
Q. HOW DO I PURCHASE THE STOCK?
A. First, you should read this prospectus. Then, complete and return the
enclosed stock order and certification form, together with your payment.
Subscription orders may be delivered in person to our office during regular
banking hours, or by mail in the enclosed envelope marked STOCK ORDER
RETURN. Subscription orders received after the subscription offering
expiration date may be held for participation in any community offering. If
the stock offering is not completed by ________, 1999 and is not extended,
then all funds will be returned promptly with interest, and all withdrawal
authorizations will be cancelled.
Q. CAN I CHANGE MY MIND AFTER I PLACE AN ORDER TO SUBSCRIBE FOR STOCK?
A. No. After we receive your order form and payment, you may not cancel or
modify your order.
Q. HOW CAN I PAY FOR THE STOCK?
A. You have three options: (1) pay cash if it is delivered to us in person;
(2) send us a check or money order; or (3) authorize a withdrawal from your
deposit account at Florida Parishes (without any penalty for early
withdrawal). Please do not send cash in the mail.
Q. WILL I RECEIVE INTEREST ON MY SUBSCRIPTION PAYMENT?
A. Subscriptions payments will be placed in an interest-bearing escrow account
at Florida Parishes, and will earn interest at our passbook rate.
Depositors who elect to pay by withdrawal will continue to receive interest
on their accounts until the funds are withdrawn.
Q. CAN I SUBSCRIBE FOR SHARES USING FUNDS IN MY INDIVIDUAL RETIREMENT ACCOUNT
OR IRA AT FLORIDA PARISHES?
A. You cannot purchase stock with your existing IRA at Florida Parishes. You
may, however, establish a self-directed IRA with an outside trustee to
subscribe for stock using your IRA funds. Please call our Stock Information
Center (504-____________) to get more information. Please understand that
the transfer of IRA funds takes time, so please make arrangements as soon
as possible.
Q. CAN I PURCHASE STOCK ON BEHALF OF SOMEONE ELSE OR TRANSFER MY RIGHTS TO
SOMEONE ELSE?
A. No, you may only purchase stock for yourself, and you may not transfer your
subscription rights.
Q. WHAT HAPPENS IF THERE ARE NOT ENOUGH SHARES OF STOCK TO FILL ALL ORDERS?
A. If there is an oversubscription, then you may not receive any or all of the
shares you want to purchase.
Q. WHO CAN HELP ANSWER ANY OTHER QUESTIONS I MAY HAVE ABOUT THE STOCK
OFFERING?
A. For answers to other questions we encourage you to read this prospectus.
Questions may also be directed to our Stock Information Center at
504-_________ Monday through Friday, between the hours of 9:00 a.m. and
4:30 p.m.
To ensure that each person receives a Prospectus at least 48 hours prior to
the expiration date of ___________, 1999 in accordance with federal law, no
Prospectus will be mailed any later than five days prior to ________, 1999 or
hand delivered any later than two days prior to __________, 1999.
2
<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all the information that is important to you. To understand the stock
offering fully, you should read this entire document carefully, including the
financial statements and the notes to financial statements of Florida Parishes
Bank.
FPB Financial Corp.
We formed FPB Financial Corp. in February 1999 as a Louisiana corporation.
FPB Financial will be the holding company for Florida Parishes Bank following
the conversion. FPB Financial is not an operating company and has not engaged in
any significant business to date. FPB Financial's executive offices are located
at 300 West Morris Street, Hammond, Louisiana 70403, and our telephone number is
(504) 345-1880.
Florida Parishes Bank
Founded in 1922, we are a community and customer oriented federally
chartered savings bank located in Hammond, Louisiana. We conduct most of our
business in Tangipahoa Parish, Louisiana. We are the successor to Florida
Parishes Homestead Association, which changed its name to Florida Parishes Bank
when it converted to a federal mutual savings bank in February 1999.
Our business consists principally of attracting deposits from the general
public and using those funds to originate loans secured by one- to four-family
residential loans and, to a lesser extent, consumer loans, construction loans,
commercial real estate loans and land loans. Our profitability depends primarily
on our net interest income, which is the difference between the income we
receive on our loans and other assets and our cost of funds, which consists of
the interest we pay on deposits and borrowings. At December 31, 1998, we had
total assets of $41.1 million, deposits of $34.1 million and total equity of
$3.6 million.
Our executive offices are located at 300 West Morris Street, Hammond,
Louisiana 70403, and our telephone number is (504) 345-1880.
Our Conversion to Stock Form
The conversion is a series of transactions by which we will convert from
our current status as a mutual savings bank to a stock savings bank. Following
the conversion, we will retain our current name "Florida Parishes Bank," but we
will be a subsidiary of FPB Financial. As a stock savings bank, we intend to
continue to follow our same business strategies, and we will be subject to the
regulation and supervision of the Office of Thrift Supervision, the Federal
Deposit Insurance Commission and the Securities and Exchange Commission.
As part of the conversion, we are offering between $2,890,000 and
$3,910,000 of FPB Financial common stock. The purchase price will be $10.00 per
share. All investors will pay the same price per share in the offering. Subject
to regulatory approval, we may increase the amount of stock to be sold to
$4,496,500 without any further notice to you if market or financial conditions
change prior to the completion of the conversion.
Depositor and borrower members as of certain eligibility dates have
priority subscription rights to purchase shares in the offering. See "The
Conversion - Subscription Offering and Subscription Rights" for a description of
the priority categories. We will offer any remaining shares in a community
offering to persons who do not receive priority subscription rights.
3
<PAGE>
How We Determined the Price Per Share and the Offering Range
The offering range is based on an independent appraisal of our pro forma
market value following the conversion by Ferguson & Company, an appraisal firm
experienced in appraisals of savings institutions. The pro forma market value is
our estimated market value assuming the sale of shares in this offering.
Ferguson & Company has estimated that in its opinion as of March 8, 1999, the
value was between $2,890,000 and $3,910,000, with a midpoint of $3,400,000. The
appraisal was based in part upon our financial condition and operations and the
effect of the additional capital we will raise from the sale of common stock in
this offering.
The purchase price will be $10.00 per share, as determined by our board of
directors. Subject to regulatory approval, we may increase the amount of common
stock offered by up to 15%. Accordingly, at the minimum of the offering range,
we are offering 289,000 shares, and at the maximum, as adjusted, of the offering
range we are offering 449,650 shares. The appraisal will be updated prior to the
completion of the conversion. If the pro forma market value of the common stock
at that time is either below $2,890,000 or above $4,496,500, we will notify you,
and you will have the opportunity to modify or cancel your order. See "The
Conversion - How We Determined the Price Per Share and the Offering Range" for a
description of the factors and assumptions used in determining the stock price
and offering range.
Two of the measures investors use to analyze whether a stock might be a
good investment are the ratio of the offering price to the issuer's "book value"
and the ratio of the offering price to the issuer's annual net income. Ferguson
& Company considered these ratios, among other factors, in preparing its
appraisal. Book value is the same as total equity, and represents the difference
between the issuer's assets and liabilities. The ratio of the offering price to
FPB Financial's pro forma book value ranges from 50.2% to 62.7%, and the
offering price represents between 8.8 and 11.9 times FPB Financial's pro forma
earnings for the year ended December 31, 1998. See "Pro Forma Data" for a
description of the assumptions we used in making these calculations.
The Amount of Stock You May Purchase
The minimum purchase is 25 shares. You may purchase no more than $100,000
in any single priority category. In addition, if individuals on joint accounts
with you or having the same address as you on our records also purchase shares,
or if your related interests or related persons and those with whom you are
acting in concert also purchase shares, the aggregate amount that may be
purchased by you and those other persons cannot exceed $150,000. We may decrease
or increase the maximum purchase limitation without notifying you.
How We Will Prioritize Orders If We Receive Orders for
More Shares Than Are Available
You might not receive any or all of the shares you order. If we receive
orders for more shares than are available, we will allocate stock to the
following persons or groups in order of priority.
o ELIGIBLE ACCOUNT HOLDERS - Our depositors with a balance of at least
$50 at the close of business on September 30, 1997. Any remaining
shares will be offered to:
o OUR EMPLOYEE STOCK OWNERSHIP PLAN. Any remaining shares will be
offered to:
o SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS - Our depositors with a balance
of at least $50 at the close of business on March 31, 1999. Any
remaining shares will be offered to:
o OTHER MEMBERS - Our depositors at the close of business on ________,
1999, together with our mortgage loan borrowers as of the close of
business on both February 23, 1999 and __________, 1999. Any remaining
shares will be offered to:
4
<PAGE>
o Our Directors, Officers and Employees - These individuals may also be
entitled to purchase stock in the above categories.
If the above persons do not subscribe for all of the shares offered, we
will offer the remaining shares to the general public, giving preference to
persons who reside in Tangipahoa Parish, Louisiana.
Your Subscription Rights Are Not Transferable
You may not assign or sell your subscription rights. Any transfer of
subscription rights is prohibited by law. If you exercise subscription rights,
you will be required to certify that you are purchasing shares solely for your
own account and that you have no agreement or understanding regarding the sale
or transfer of shares. We intend to pursue any and all legal and equitable
remedies if we learn of the transfer of any subscription rights. We will reject
orders that we determine to involve the transfer of subscription rights.
Deadline for Receiving Orders
If you purchase stock through the priority subscription rights we granted
you, we must receive your order no later than 12:00 noon, central time, on
________, 1999. We may also offer shares in a community offering to persons who
do not have priority subscription rights. We may terminate the community
offering at any time without notice. Pending completion or termination of the
offering, we will place funds we receive for stock purchases in a segregated
savings account at Florida Parishes Bank, and we will pay interest at our
passbook rate on those funds from the date we receive the funds until we
complete or terminate the offering.
We Intend to Pay Quarterly Dividends
We intend to pay an annual cash dividend of $.20 per share, payable
quarterly at $.05 per share. We expect to begin paying dividends following the
first full quarter after the conversion. For a discussion of our anticipated
dividend policy, including restrictions on our ability to pay dividends, see "We
Intend to Pay Quarterly Cash Dividends" on page ___.
There May Be an Illiquid Market For Our Common Stock
We have received conditional approval to list the common stock on the
Over-the-Counter Electronic Bulletin Board under the symbol "____". However, it
is unlikely that an active and liquid trading market for our stock will develop,
and you should consider the illiquid, long-term nature of an investment in our
stock. There may also be a wide spread between the bid and asked price for our
stock. For additional information about the possible market for our common
stock, see "There May Be an Illiquid Market For Our Common Stock" on page
________.
Risks in Owning Our Common Stock
Before you decide to purchase stock in the offering, you should read this
entire document, including the Risk Factors section beginning on page 8 of this
document.
The shares of common stock we are offering:
o Are not deposit accounts;
o Are not insured or guaranteed by the FDIC or any other government
agency; and
o Are not guaranteed by us.
The common stock is subject to investment risk, including the possible loss
of principal invested.
5
<PAGE>
Why We Are Converting
With the holding company structure, we will have the ability to plan and
develop long-term growth opportunities and to access the capital markets more
easily in the future. The offering will increase our capital and the amount of
funds available to us for lending and investment. This will give us greater
flexibility to diversify operations and expand into other geographic markets, if
we choose to do so. In addition, we will be able to compensate our directors,
officers and employees in the form of stock.
Use of Proceeds from the Sale of Our Common Stock
We will use the net proceeds from the offering as follows:
o 8% will be loaned to our employee stock ownership plan to fund its
purchase of common stock
o 50% will be invested in Florida Parishes Bank
o 42% will be retained by FPB Financial for general corporate purposes
and may be used to pay dividends to stockholders or to repurchase
stock
The proceeds to be invested in Florida Parishes Bank will be available for
general corporate purposes, including continued growth in the loan portfolio,
the possible opening of new branches, possible deposit or bank acquisitions, and
the purchase of investment securities.
Benefits to Management from the Offering
Our full-time employees will benefit from the offering through the purchase
of stock by our employee stock ownership plan, which is a plan that buys shares
of stock and then allocates the stock to employees over a period of time. You
can find more information about our employee stock ownership plan by reading the
section of this document entitled "Management - New Stock Benefit Plans -
Employee Stock Ownership Plan." Following the conversion, we also intend to
implement a restricted stock plan and a stock option plan, which will benefit
our officers and directors. These plans will not be implemented unless we
receive stockholder approval of the plans at least six months after the
conversion. If our restricted stock plan is approved by stockholders, our
executive officers and directors will be awarded shares of common stock at no
cost to them. If our stock option plan is approved by stockholders, stock
options will be granted at no cost to directors and officers, but such persons
will be required to pay the applicable exercise price at the time of exercise in
order to receive the shares of common stock.
6
<PAGE>
The following table summarizes the benefits that directors, officers and
employees may receive from the conversion at the midpoint of the offering range:
<TABLE>
<CAPTION>
Value of Shares
Individuals Eligible % of Based on Midpoint
Plan to Receive Awards Shares Issued of Offering Range
- ----------------------------- ---------------------- ------------- -----------------
<S> <C> <C> <C>
Employee stock ownership plan All employees 8% $272,000
Restricted stock plan Directors and officers 4% 136,000
Stock option plan Directors and officers 10% (1)
</TABLE>
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(1) Stock options will be granted with a per share exercise price at least
equal to the market price of our common stock on the date of grant. The
value of a stock option will depend upon increases, if any, in the price of
our stock during the life of the stock option.
We intend to enter into three-year employment agreements with our two
executive officers, Fritz W. Anderson, II and G. Wayne Allen. The agreements
provide that the officers would receive severance payments equal to three times
their average compensation if FPB Financial is acquired and they lose their jobs
in the acquisition. If severance was required to be paid in 1999 after
completion of the conversion, then Messrs. Anderson and Allen would receive
severance payments of approximately $151,000 and $188,000, respectively.
7
<PAGE>
RISK FACTORS
In addition to the other information in this document, you should consider
carefully the following risk factors in deciding whether to purchase our common
stock.
Higher Interest Rates Would Hurt Our Profitability
Our ability to earn a profit depends on our net interest income, which is
the difference between the interest income we earn on our interest-earning
assets, such as mortgage loans, and the interest expense we pay on our
interest-bearing liabilities, such as deposits and borrowings. Our profitability
depends on our ability to manage our assets and liabilities during periods of
changing interest rates.
A sustained increase in market interest rates could adversely affect our
earnings. Because many of our loans have fixed interest rates, our net interest
income could be adversely affected when the rates we pay on deposits and
borrowings are increasing. In addition, the market value of our fixed-rate
assets would decline if interest rates increase. Under federal regulations which
have not taken effect yet, we have greater than "normal" interest rate risk. If
these regulations applied at December 31, 1998, our capital requirement would
increase by $224,000.
We Anticipate a Low Return on Our Equity
Net income divided by equity, known as "return on equity," is a ratio many
investors use to compare the performance of a financial institution to its
peers. We expect our return on equity to decrease as compared to our performance
in recent years until we are able to increase our balance sheet by adding loans,
thereby increasing net interest income. Our return on equity will be reduced by
increased equity from the conversion and increased expenses due to added
expenses associated with our employee stock ownership plan, the costs of being a
public company and, later on, our restricted stock plan.
To grow and thereby improve our return on equity, we may seek to either
open or purchase one or more new branches. We cannot assure you that we will be
able to generate growth or successfully integrate any acquired branches. Our
ability to establish new branch offices depends on whether we can identify
advantageous locations and generate new deposits and loans from those locations
that will create an acceptable level of net income. New branches also typically
entail start-up expenses. Our ability to acquire other branches depends on
whether we can identify, acquire and integrate such branches. There appear to be
few acquisition opportunities for us in Tangipahoa Parish.
Our Mortgage-Backed Securities Yield Less Than Our Loans
We have $2.9 million of mortgage-backed securities at December 31, 1998, or
7.1% of total assets. Most of these securities have adjustable interest rates.
Our mortgage-backed securities had an average yield of 6.68% in 1998, compared
to 7.89% on our loans.
Our Consumer Loans Are Riskier Than Our Mortgage Loans
Consumer loans involve more risk than mortgage loans because consumer loans
are often either unsecured or secured by assets that depreciate in value. We
have $1.1 million of consumer loans at December 31, 1998 that are not secured by
savings accounts or first mortgages on real estate. We expect to increase the
percentage of our assets invested in consumer loans.
Our Commercial Real Estate Loans Are Riskier Than Our Residential Loans
We have $650,000 in commercial real estate loans at December 31, 1998.
These loans generally involve a higher degree of credit risk than residential
mortgages due primarily to the large amounts loaned to individual
8
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borrowers. Losses incurred on loans to a small number of borrowers could have a
material adverse impact on our income and financial condition. In addition,
unlike residential mortgage loans, commercial real estate loans depend on the
cash flow from the property or the business to service the debt. Cash flow may
be significantly affected by general economic conditions.
Our Business Is Concentrated in Tangipahoa Parish
We conduct most of our business in Tangipahoa Parish in Louisiana. Median
household and per capita income levels in Tangipahoa Parish are lower than those
for Louisiana and the United States, and the unemployment rate in the parish is
higher. Our loans are primarily made to residents of Tangipahoa Parish. As a
result, the asset quality of our loan portfolio depends upon the economy and
unemployment rate in our market area.
There Is Strong Competition Within Tangipahoa Parish
Competition in the banking and financial services industry is intense. Our
profitability depends upon our continued ability to successfully compete. We
compete in Tangipahoa Parish with commercial banks, savings institutions, credit
unions, finance companies, mutual funds, insurance companies, and brokerage and
investment banking firms. Many of these competitors have substantially greater
resources and lending limits than we do and may offer certain services that we
do not or cannot provide.
Our Stock Value May Suffer from Our Ability to Impede Potential Takeovers
Provisions in our corporate documents and in Louisiana corporate law, as
well as certain federal regulations, may make it difficult, and expensive, to
pursue a tender offer, change in control or takeover attempt that our board of
directors opposes. As a result, you may not have an opportunity to participate
in such a transaction, and the trading price of our stock may not rise to the
level of other institutions that are more vulnerable to hostile takeovers.
Anti-takeover provisions include:
o restrictions on acquiring more than 10% of our common stock and
limitations on voting rights
o the election of members of the board of directors to three-year terms
o the absence of cumulative voting by stockholders in the election of
directors
o provisions governing nominations of directors by stockholders
o provisions governing the submission of stockholder proposals
o provisions restricting special meetings of stockholders
o our ability to issue preferred stock and additional shares of common
stock without stockholder approval
o super-majority voting provisions for the approval of certain business
combinations
o super-majority voting provisions to remove directors without cause or
to amend our corporate documents
These provisions also will make it more difficult for an outsider to remove our
current board of directors or management. See "Restrictions on Acquisition of
FPB Financial and Florida Parishes Bank" for a description of anti-takeover
provisions in our corporate documents and under Louisiana law and federal
regulations.
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Our directors, executive officers and employees are expected to control a
large amount of stock, which will also impede potential takeovers. Our directors
and executive officers and our employee stock ownership plan intend to purchase
19.1% of the outstanding shares at the minimum of the offering range and 16.2%
at the maximum of the range. In addition, if we implement a restricted stock
plan with stockholder approval, an additional 4% of the common stock will be
controlled by our directors, officers and employees. These purchases, along with
potential exercises of future stock options, could make it difficult to obtain
majority support for stockholder proposals we oppose. In addition, by voting
these shares we could most likely block the approval of transactions requiring
the approval of 75% or more of the stockholders. Examples of transactions we
could block are certain business combinations or amendments to our corporate
documents. For a description of our employee stock ownership plan, restricted
stock plan and stock option plan, see "Management - New Stock Benefit Plans."
We Intend to Remain Independent
We intend to remain independent for the foreseeable future. Because we do
not plan on seeking possible acquirors, it is unlikely that we will be acquired
in the foreseeable future. Accordingly, you should not purchase our common stock
with any expectation that a takeover premium will be paid to you in the near
term.
Our Employee Stock Benefit Plans Will Increase Our Costs
We anticipate that our employee stock ownership plan will purchase 8% of
the common stock issued in the conversion, with funds borrowed from FPB
Financial. The cost of acquiring the employee stock ownership plan shares will
be between $231,200 at the minimum of the offering range and $359,720 at the
adjusted maximum of the offering range. We will record annual employee stock
ownership plan expenses in an amount equal to the fair value of shares committed
to be released to employees. If shares of common stock appreciate in value over
time, compensation expense relating to the employee stock ownership plan may
increase. We also intend to submit a restricted stock plan to our stockholders
for approval at least six months after completion of the conversion. Our
officers and directors could be awarded (at no cost to them) under the
restricted stock plan up to an aggregate of 4% of the shares issued in the
conversion. Assuming the shares of common stock to be awarded under the plan
cost the same as the purchase price in the conversion, the reduction to
stockholders' equity from the plan would be between $115,600 and $179,860. See
"Pro Forma Data " for a discussion of the increased benefit costs we will incur
after the conversion and how these costs could decrease our return on equity.
Our Employee Stock Benefit Plans May Be Dilutive
If the conversion is completed and stockholders subsequently approve a
restricted stock plan and a stock option plan, we will issue stock to our
officers and directors through these plans. If the shares for the restricted
stock plan are issued from our authorized but unissued stock, your ownership
percentage could be diluted by approximately 3.8% and the trading price of our
stock may be reduced. Your ownership percentage would also decrease by
approximately 9.1% if all potential stock options are exercised. See "Pro Forma
Data" for data on the dilutive effect of the restricted stock plan and
"Management - New Stock Benefit Plans" for a description of the plans. These
plans will also involve additional expense.
Possible Increase in the Offering Range Would Be Dilutive
We can increase the maximum of the offering range by up to 15% to reflect
changes in market or financial conditions or to fill the order of our employee
stock ownership plan. An increase in the offering will decrease our net income
per share and our stockholders' equity per share. This would also increase the
purchase price per share as a percentage of pro forma stockholders' equity per
share and net income per share.
Our Valuation Is Not Indicative of the Future Price of Our Common Stock
We cannot assure you that if you purchase common stock in the offering you
will later be able to sell it at or above the purchase price in the offering.
The final aggregate purchase price of the common stock in the
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<PAGE>
conversion will be based upon an independent appraisal. The appraisal is not
intended, and should not be construed, as a recommendation of any kind as to the
advisability of purchasing shares of common stock. The valuation is based on
estimates and projections of a number of matters, all of which are subject to
change from time to time. See "The Conversion - How We Determined the Price Per
Share and the Offering Range" for the factors considered by Ferguson & Company
in determining the appraisal.
Our Stock Price May Decline
The shares of common stock offered by this document are not savings
accounts or deposits, are not insured or guaranteed by the Federal Deposit
Insurance Corporation (the "FDIC"), the Savings Association Insurance Fund or
any other governmental agency, and involve investment risk, including the
possible loss of principal
Due to possible continued market volatility and to other factors, including
certain risk factors discussed in this document, we cannot assure you that,
following the conversion, the trading price of our common stock will be at or
above the initial per share offering price. Publicly traded stocks, including
stocks of financial institutions, have recently experienced substantial market
price volatility. These market fluctuations may be unrelated to the operating
performance of particular companies whose shares are traded. In several cases,
common stock issued by recently converted financial institutions has traded at a
price that is below the price at which such shares were sold in the initial
offerings of those companies. The purchase price of our common stock in the
offering is based on the independent appraisal by Ferguson & Company. After our
shares begin trading, the trading price of our common stock will be determined
by the marketplace, and may be influenced by many factors, including prevailing
interest rates, investor perceptions and general industry and economic
conditions.
There May Be An Illiquid Market for Our Common Stock
We expect our stock to be quoted on the Over-the-Counter Electronic
Bulletin Board. However, it is unlikely that an active and liquid trading market
for our stock will develop, due to the small size of the offering and the small
number of stockholders we expect to have. There may be a wide spread between the
bid and asked price for our common stock after the conversion. You should
consider the illiquid, long-term nature of an investment in our common stock.
There Is No Opinion or Recommendation by Our Sales Agent; Best Efforts Offering
Trident Securities will consult with and advise us with respect to the
conversion and will assist us, on a best efforts basis, in connection with the
solicitation of subscriptions and purchase orders for shares of common stock in
the offering. Trident Securities has not prepared or delivered any opinion or
recommendation with respect to the suitability of the common stock as an
investment or the appropriateness of the amount of common stock to be issued in
the conversion. Our engagement of Trident Securities and the work they
performed, including their due diligence investigation, should not be construed
by purchasers of the common stock as constituting an opinion or recommendation
relating to investment in the common stock offered by this document.
Exercise of Subscription Rights May Be Taxable
If the Internal Revenue Service determines that your subscription rights
have ascertainable value, you could be taxed as a result of your exercise of
those rights in an amount equal to their value. Ferguson & Company has given us
their opinion that the subscription rights granted to eligible members in the
conversion have no value. However, this opinion is not binding on the Internal
Revenue Service.
We Rely on Two Key Officers
Our executive officers are Fritz W. Anderson, II, President and Chief
Executive Officer, and G. Wayne Allen, Senior Vice President and Secretary. The
loss of one or both of the executive officers could have an adverse effect on
us, especially since we only have 11 employees at December 31, 1998. We intend
to enter into three-year
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employment agreements with Messrs. Anderson and Allen, but we do not intend to
obtain key-man life insurance policies on them.
We May Be Unable to Make Technological Advances;
Consequences of Year 2000 Computer Failure
Our industry is experiencing rapid changes in technology. In addition to
improving customer services, effective use of technology increases efficiency
and enables financial institutions to reduce costs. Our future success will thus
depend in part on our ability to address our customers' needs by using
technology. We cannot assure you that we will be able to effectively develop new
technology-driven products and services or be successful in marketing these
products to our customers. Many of our competitors have far greater resources
than we have to invest in technology.
Our operations are also dependent on computers and computer systems,
whether we maintain them internally or they are maintained by a third party.
Systems that do not properly recognize the correct year could produce faulty
data or cause a system to fail. We cannot assure you that we, our customers and
our third party providers will be successful in making all necessary changes to
avoid computer system failures related to the year 2000. Such failures may
include, among other things, the inability to process and underwrite loan
applications, to credit deposits and withdrawals from customer accounts, to
credit loan payments or track delinquencies, to properly reconcile and record
daily activity or to engage in similar normal banking activities. For a further
discussion of our efforts to prepare for Year 2000 issues, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations - The
Year 2000."
Our Operations Are Subject to Regulatory and Legislative Changes
We are subject to extensive government regulation, supervision and
examination. The regulatory authorities have extensive discretion in connection
with their supervisory and enforcement activities. Any change in regulation,
whether by the Office of Thrift Supervision (the "OTS"), the FDIC or the U.S.
Congress, could have a significant impact on us and our operations.
Pending legislation in the U.S. Congress provides for the modernization of
the banking system and would significantly affect the operations and regulatory
structure of the financial services industry. The legislation is intended to
permit the banking, securities and insurance industries to compete more
efficiently and more effectively. The legislation restricts the activities of
unitary holding companies that were not in existence as of October 7, 1998 and
that had not filed an application to become a unitary holding company by this
date. New unitary holding companies, such as FPB Financial, would (1) have their
activities limited to those that are financial in nature or incidental thereto,
and (2) no longer be able to be acquired by commercial companies. At this time,
we do not know what form the final legislation might take, but if enacted into
law, the legislation could increase our competition and affect our business and
operations. In addition, the legislation could reduce our value compared to
those unitary holding companies that are not subject to the new limitations.
Our Forward-Looking Statements Are Subject to Change
Certain statements in this document are forward-looking, usually containing
the words "believe," "estimate," "project," "expect," "anticipate," "intend" or
similar expressions. Forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those reflected in the
forward-looking statements. These forward-looking statements are based on our
current expectations. The risk factors set forth above are cautionary statements
that identify important factors which could cause actual results to differ
materially from those in the forward-looking statements.
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<PAGE>
SELECTED FINANCIAL DATA
The following selected financial and other data of the Bank does not
purport to be complete and is qualified in its entirety by reference to the more
detailed financial information contained elsewhere herein. You should read the
Financial Statements and related notes contained at the end of this document.
December 31, 1999
-----------------------
1998 1997
------- -------
(Dollars in Thousands)
Selected Financial
Condition and Other Data:
Total assets ..................................... $41,058 $33,260
Cash and cash equivalents(1) ..................... 2,351 4,236
Securities available for sale .................... 993 1,000
Mortgage-backed securities ....................... 2,924 4,184
Loans receivable, net ............................ 34,152 23,292
Deposits ......................................... 34,065 29,295
FHLB advances .................................... 3,200 400
Total equity ..................................... 3,570 3,339
Full service offices ............................. 1 1
Year Ended December 31,
-----------------------
1998 1997
------- -------
(In Thousands)
Selected Operating Data:
Total interest income ............................ $ 2,754 $ 2,283
Total interest expense ........................... 1,671 1,420
------- -------
Net interest income .......................... 1,083 863
Provision for loan losses ........................ 81 6
------- -------
Net interest income after provision
for losses ..................................... 1,002 857
Noninterest income ............................... 20 4
Noninterest expenses ............................. 663 524
------- -------
Income before income taxes ....................... 359 337
Income tax expense .............................. 123 123
------- -------
Net income ....................................... 236 214
Other comprehensive income (loss),
net of tax effects ............................. (4) --
------- -------
Comprehensive income ............................. $ 232 $ 214
======= =======
(Footnotes on next page)
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At or For the Year
Ended December 31,
--------------------
1998 1997
------ ------
Selected Ratios (2):
Return on average assets ......................... .64% .70%
Return on average equity ......................... 6.77 6.62
Average equity to average assets ................. 9.51 10.52
Equity to assets at end of period ................ 8.70 10.04
Interest rate spread(3) .......................... 2.46 2.30
Net interest margin(3) ........................... 2.97 2.84
Non-performing loans to total
loans at end of period(4) ...................... .59 .75
Non-performing assets to total
assets at end of period(4) ..................... .49 .53
Allowance for loan losses to total
non-accruing loans ............................. 84.23 50.61
Average interest-earning assets to
average interest-bearing liabilities ........... 111.03 111.38
Net interest income after provision
for loan losses to total
noninterest expenses ........................... 151.12 163.48
Noninterest expenses to average
total assets ................................... 1.81 1.70
- ----------
(1) Includes cash and due from banks as well as interest-earning deposits in
other institutions.
(2) With the exception of end of period ratios, all ratios are based on average
monthly balances.
(3) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average rate on interest-bearing
liabilities. Net interest margin represents net interest income as a
percentage of average interest-earning assets.
(4) Non-performing loans consist of non-accrual loans, and non-performing
assets consist of non-performing loans and, where applicable, real estate
acquired by foreclosure.
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<PAGE>
DEVELOPMENTS THROUGH MARCH 31, 1999
The selected financial and other data of the Bank set forth below does not
purport to be complete and is qualified in its entirety by reference to the more
detailed financial information contained elsewhere herein.
At At
March 31, December 31,
1999(1) 1998
--------- ------------
(Dollars in Thousands)
Selected Financial Condition and Other Data:
Total assets .................................... $ $ 41,058
Cash and cash equivalents(2) .................... 2,351
Securities available for sale ................... 993
Mortgage-backed securities ...................... 2,924
Loans receivable, net ........................... 34,152
Deposits ........................................ 34,065
FHLB advances ................................... 3,200
Total equity .................................... 3,570
Full service offices ............................ 1 1
Three Months Ended
March 31,
--------------------------
1999(1) 1998(1)
------- -------
(In Thousands)
Selected Operating Data:
Total interest income ........................... $ $ 629
Total interest expense .......................... 372
------- -------
Net interest income ........................... 257
Provision for loan losses ....................... 6
------- -------
Net interest income after provision
for loan losses ............................... 251
Noninterest income .............................. 3
Noninterest expenses ............................ 132
------- -------
Income before income taxes ...................... 122
Income tax expense .............................. 43
------- -------
Net income ...................................... 79
Other comprehensive income (loss),
net of tax effects ............................ --
------- -------
Comprehensive income ............................ $ $ 79
======= =======
(Footnotes on next page)
15
<PAGE>
At or For the
Three Months Ended
March 31,
--------------------------
1999(1) 1998(1)
------- -------
Selected Ratios (3):
Return on average assets ........................ % .95%
Return on average equity ........................ 9.40
Average equity to average assets ................ 10.10
Equity to assets at end of period ............... 10.04
Interest rate spread(4) ......................... 2.60
Net interest margin(4) .......................... 3.10
Non-performing loans to total
loans at end of period(5) ..................... .81
Non-performing assets to total
assets at end of period(5) .................... .62
Allowance for loan losses to total
non-accruing loans ............................ 45.18
Average interest-earning assets to
average interest-bearing liabilities .......... 111.20
Net interest income after provision for
loan losses to total noninterest expenses ..... 190.60
Noninterest expenses to average total assets .... .39
- ----------
(1) In the opinion of management, the unaudited financial information at March
31, 1999 and for the three months ended March 31, 1999 and 1998 reflect all
adjustments (consisting only of normal recurring accruals) which are
necessary for a fair presentation of the information as of such date and
for such periods. The operating and other data for the three months ended
March 31, 1999 may not be indicative of the operations of the Bank on an
annualized basis.
(2) Includes cash and due from banks as well as interest-earning deposits in
other institutions.
(3) With the exception of end of period ratios, all ratios are based on average
monthly balances during the indicated periods and are annualized where
appropriate.
(4) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average rate paid on interest-bearing
liabilities. Net interest margin represents net interest income as a
percent of average interest-earning assets.
(5) Non-performing loans consist of non-accruing loans, and non-performing
assets consist of non-performing loans and real estate acquired by
foreclosure where applicable.
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[Discussion of March 31, 1999 recent developments to be added.]
At March 31, 1999, the Bank's tangible and core capital both amounted to
$____ million or ____% of adjusted total assets of $____ million, and the Bank's
risk-based capital amounted to $____ million or ____% of adjusted risk-weighted
assets of $____ million.
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PROPOSED MANAGEMENT PURCHASES
The following table sets forth, for each of FPB Financial's directors and
executive officers (and their associates) and for all of the directors and
executive officers as a group, the proposed purchases of common stock, assuming
sufficient shares are available to satisfy their subscriptions. The amounts
include shares that may be purchased through individual retirement accounts.
Number of
Name and Title Shares Amount Percent(1)
- -------------------------------------------- --------- -------- ----------
G. Wayne Allen, Senior Vice
President and Secretary .................. 2,000 $ 20,000 .6%
Fritz W. Anderson, II, President
and Chief Executive Officer .............. 8,000 80,000 2.4
Bill W. Bowden, Chairman of the Board ...... 2,000 20,000 .6
Dan R. Durham, Director .................... 3,000 30,000 .9
Wilbert H. Hutchinson, Director ............ 5,000 50,000 1.5
Richard S. Inge, Director .................. 10,000 100,000 2.9
John L. McGee, Director .................... 2,000 20,000 .6
------ -------- ---
All directors and executive officers
as a group (seven persons) ............... 32,000 $320,000 9.4%
====== ======== ===
- ----------
(1) Based upon the midpoint of the offering range.
In addition, the ESOP currently intends to purchase 8% of the common stock
issued in the conversion for the benefit of officers and employees. Stock
options and stock grants may also be granted in the future to directors,
officers and employees upon the receipt of stockholder approval of FPB
Financial's proposed stock benefit plans. See "Management - New Stock Benefit
Plans" for a description of these plans.
HOW OUR NET PROCEEDS WILL BE USED
Although the actual net proceeds from the sale of our common stock cannot
be determined until the conversion is completed, it is presently anticipated
that the net proceeds from the sale of the common stock will be between $2.5
million and $3.6 million ($4.1 million assuming an increase in the offering
range by 15%). See "Pro Forma Data" and "The Conversion - How We Determined the
Price Per Share and the Offering Range" as to the assumptions used to arrive at
such amounts.
We will use the net proceeds from the offering as follows:
o 8% will be loaned to our employee stock ownership plan to fund its
purchase of common stock
o 50% will be used to purchase all of the common stock of Florida
Parishes Bank
o 42% will be retained by FPB Financial for general corporate purposes
18
<PAGE>
The loan to the ESOP will be $231,200 and $312,800 at the minimum and
maximum of the offering range. The ESOP will distribute the shares it purchases
to our employees as the loan is repaid over 10 years. See "Management - New
Stock Benefit Plans - Employee Stock Ownership Plan."
The net proceeds we use to purchase the capital stock of the Bank will be
used by the Bank for general corporate purposes, including increased lending
activities. On a short-term basis, the Bank may purchase investment and
mortgage-backed securities. The net proceeds received by the Bank will further
strengthen the Bank's capital position, which already exceeds all regulatory
requirements. After the conversion, the Bank's tangible capital ratio will be
9.6%, based upon the midpoint of the offering range. As a result, the Bank will
continue to be a well-capitalized institution.
We may initially use the remaining net proceeds retained by us to invest in
mortgage-backed securities issued by U.S. Government agencies and
government-sponsored enterprises, U.S. Government and federal agency securities
of various maturities, deposits in either the Bank or other financial
institutions, or a combination thereof. The net proceeds retained by us may
ultimately be used to:
o support the Bank's lending activities,
o support the future expansion of operations through establishment of
branch offices or other customer facilities, expansion into other
lending markets or diversification into other banking related
businesses, although no such transactions are specifically being
considered at this time, or
o pay regular or special cash dividends, repurchase the common stock or
pay returns of capital.
Applicable OTS conversion regulations require us to sell common stock in
the conversion in an amount equal to our estimated pro forma market value, as
determined by an independent appraisal. See "The Conversion--How We Determined
the Price Per Share and the Offering Range." As a result, we may be required to
sell more shares in the conversion than we may otherwise desire. To the extent
we have excess capital upon completion of the conversion, we intend to consider
stock repurchases, dividends and tax-free returns of capital to the extent
permitted by the OTS and deemed appropriate by the Board of Directors. A return
of capital is similar to a cash dividend, except for tax purposes it is an
adjustment to your tax basis rather than income to you. We have committed to the
OTS that we will not take any action toward paying a tax-free return of capital
during the one-year period following consummation of the conversion.
Stock repurchases will be considered by our Board of Directors following
the completion of the Conversion based upon then existing facts and
circumstances, as well as applicable statutory and regulatory requirements. Such
facts and circumstances may include but not be limited to the following:
o market and economic factors such as the price at which the stock is
trading in the market, the volume of trading, the attractiveness of
other investment alternatives in terms of the rate of return and risk
involved in the investment, the ability to increase the book value
and/or earnings per share of the remaining outstanding shares, and an
improvement in our return on equity;
o the avoidance of dilution to stockholders by not having to issue
additional shares to cover the exercise of stock options or to fund
employee stock benefit plans; and
o any other circumstances in which repurchases would be in the best
interests of FPB Financial and our stockholders.
Any stock repurchases will be subject to the determination of our Board of
Directors that the Bank will be capitalized in excess of all applicable
regulatory requirements after any such repurchases. The payment of dividends or
repurchase of stock, however, would be prohibited if the Bank's net worth would
be reduced below the
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<PAGE>
amount required for the liquidation account to be established for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders. As of the
date of this Prospectus, the initial balance of the liquidation account would be
approximately $___ million. See "We Intend to Pay Quarterly Cash Dividends,"
"The Conversion - Liquidation Rights of Certain Depositors" and "- Certain
Restrictions on Purchase or Transfer of Shares After the Conversion."
We will be a unitary savings and loan holding company which, under existing
laws, would generally not be restricted as to the types of business activities
in which we may engage, provided that the Bank continues to be a qualified
thrift lender ("QTL"). See "Regulation - FPB Financial" for a description of
certain regulations applicable to us. However, the types of businesses in which
we may engage may be restricted if pending legislation is adopted. See "Risk
Factors - Our Operations Are Subject to Regulatory and Legislative Changes."
Our net proceeds may vary because total expenses of the conversion may be
more or less than those estimated. The net proceeds will also vary if the number
of shares to be issued in the conversion is adjusted to reflect a change in the
estimated pro forma market value of the Bank. Payments for shares made through
withdrawals from existing deposit accounts at the Bank will not result in the
receipt of new funds for investment by the Bank but will result in a reduction
of the Bank's interest expense and liabilities as funds are transferred from
interest-bearing certificates or other deposit accounts.
WE INTEND TO PAY QUARTERLY CASH DIVIDENDS
Upon completion of the conversion, our Board of Directors will have the
authority to declare dividends on the common stock, subject to statutory and
regulatory requirements. We intend to pay quarterly cash dividends on the common
stock at an initial rate of $.20 per share per annum (representing 2% of the
Purchase Price), commencing with the first full calendar quarter following
consummation of the conversion. Notwithstanding the foregoing, the rate of such
dividends and the initial or continued payment thereof will depend upon a number
of factors, including the amount of net proceeds retained by us in the
conversion, investment opportunities available to us, capital requirements, our
financial condition and results of operations, tax considerations, statutory and
regulatory limitations, and general economic conditions. No assurances can be
given that any dividends will be paid or that, if paid, will not be reduced or
eliminated in future periods. Special cash dividends, stock dividends or
tax-free returns of capital may be paid in addition to, or in lieu of, regular
cash dividends. However, we have committed to the OTS that we will not take any
action toward paying a tax-free return of capital during the one-year period
following consummation of the conversion.
Dividends from us may eventually depend, in part, upon receipt of dividends
from the Bank, because FPB Financial initially will have no source of income
other than dividends from the Bank, earnings from the investment of proceeds
from the sale of Common Stock retained by us, and interest payments with respect
to our loan to the ESOP. An OTS regulation imposes limitations on "capital
distributions" by savings institutions, including cash dividends, payments by a
savings institution to repurchase or otherwise acquire its stock, payments to
stockholders of another savings institution in a cash-out merger and other
distributions charged against capital. As of December 31, 1998, the Bank was a
Tier 1 savings institution and is expected to continue to so qualify immediately
following the consummation of the conversion. Based on the Bank's regulatory
capital, the Bank would have been permitted to make a capital distribution to
FPB Financial of up to approximately $1.1 million as of January 1, 1999. See
"Regulation - The Bank - Capital Distributions."
Any payment of dividends by the Bank to FPB Financial which would be deemed
to be drawn out of the Bank's bad debt reserves would require a payment of taxes
at the then-current tax rate by the Bank on the amount of earnings deemed to be
removed from the reserves for such distribution. The Bank does not intend to
make any distribution to FPB Financial that would create such a federal tax
liability. See "Taxation."
Unlike the Bank, we are not subject to the above regulatory restrictions on
the payment of dividends to our stockholders, although the source of such
dividends may eventually depend, in part, upon dividends from the Bank
20
<PAGE>
in addition to the net proceeds retained by us and earnings thereon. We are,
however, subject to the requirements of Louisiana law, which generally permits
the payment of dividends out of surplus, except when (1) the corporation is
insolvent or would thereby be made insolvent, or (2) the declaration or payment
thereof would be contrary to any restrictions contained in the articles of
incorporation. If there is no surplus available for dividends, a Louisiana
corporation may pay dividends out of its net profits for the then current or the
preceding fiscal year or both, except that no dividend may be paid if the
corporation's assets are exceeded by its liabilities or if its net assets are
less than the amount which would be needed, under certain circumstances, to
satisfy any preferential rights of stockholders.
THERE MAY BE AN ILLIQUID MARKET FOR OUR COMMON STOCK
Because this is our initial public offering, there is no market for our
common stock at this time. Following the completion of the offering, we
anticipate that our common stock will be traded on the over-the-counter market
with quotations available through the Over-the-County Electronic Bulletin Board.
Trident has indicated its intention to make a market in our common stock. If the
common stock cannot be quoted and traded on the Over-the-Counter Electronic
Bulletin Board, we expect transactions in the common stock will be reported in
the pink sheets published by the National Quotation Bureau, Inc.
Making a market may include the solicitation of potential buyers and
sellers in order to match buy and sell orders. However, Trident will not be
subject to any obligation with respect to such efforts. The development of a
liquid public market depends upon the existence of willing buyers and sellers,
the presence of which is not within our control or of any market maker. It is
unlikely that an active and liquid trading market for the common stock will
develop due to the relatively small size of the offering and the small number of
stockholders expected following the conversion. In addition, there may be a wide
spread between the bid and ask price for our common stock after the conversion.
Under such circumstances, you could have difficulty disposing of your shares on
short notice and should not view the common stock as a short-term investment.
Accordingly, you should consider the illiquid, long-term nature of an investment
in the common stock. Furthermore, there can be no assurance that you will be
able to sell your shares at or above the Purchase Price.
THE BANK MEETS ALL OF ITS REGULATORY CAPITAL REQUIREMENTS
At December 31, 1998, the Bank exceeded all of its regulatory capital
requirements. The table on the following page sets forth the Bank's historical
capital under generally accepted accounting principles ("GAAP") and regulatory
capital at December 31, 1998 and the pro forma capital of the Bank after giving
effect to the conversion, based upon the sale of the number of shares shown in
the table. The pro forma capital amounts reflect the receipt by the Bank of 50%
of the net conversion proceeds, minus the amounts to be loaned to the ESOP and
to be contributed to our proposed restricted stock plan ("Recognition Plan").
The pro forma risk-based capital amounts assume the investment of the net
proceeds received by the Bank in assets which have a risk-weight of 50% under
applicable regulations, as if such net proceeds had been received and so applied
at December 31, 1998.
21
<PAGE>
<TABLE>
<CAPTION>
Pro Forma at December 31, 1998 Based on
--------------------------------------------------------------------------------------
289,000 340,000 391,000 449,650
Shares Sold Shares Sold Shares Sold Shares Sold
Historical at at $10.00 at $10.00 at $10.00 at $10.00
December 31, 1998 Per Share Per Share Per Share Per Share
------------------ -------------------- -------------------- -------------------- --------------------
Percent of Percent Percent Percent Percent
Amount Assets(1) Amount of Assets(1) Amount of Assets(1) Amount of Assets(1) Amount of Assets(1)
------ ---------- ------ ------------ ------ ------------ ------ ------------ ------ ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GAAP capital ........... $3,570 8.70% $4,488 10.63% $4,682 11.03% $4,876 11.43% $5,099 11.87%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Tangible capital:
Actual ............... $3,575 8.71% $4,493 10.66% $4,687 11.06% $4,881 11.45% $5,104 11.90%
Requirement .......... 615 1.50 632 1.50 636 1.50 639 1.50 643 1.50
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Excess ............... $2,960 7.21% $3,861 9.16% $4,051 9.56% $4,242 9.95% $4,461 10.40%
====== ===== ====== ===== ====== ===== ====== ====== ====== =====
Core capital(2):
Actual ............... $3,575 8.71% $4,493 10.66% $4,687 11.06% $4,881 11.45% $5,104 11.90%
Requirement .......... 1,230 3.00 1,265 3.00 1,272 3.00 1,279 3.00 1,287 3.00
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Excess ............... $2,345 5.71% $3,228 7.66% $3,415 8.06% $3,602 8.45% $3,817 8.90%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Risk-based capital(2):
Actual ............... $3,730 19.50% $4,648 23.60% $4,842 24.43% $5,036 25.26% $5,259 26.21%
Requirement .......... 1,530 8.00 1,576 8.00 1,585 8.00 1,595 8.00 1,605 8.00
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Excess ............... $2,200 11.50% $3,072 15.60% $3,257 16.43% $3,441 17.26% $3,654 18.21%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
- ----------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate.
(2) Does not reflect the interest rate risk component to be added to the
risk-based capital requirements or, in the case of the core capital
requirement, the 4.0% requirement to be met in order for an institution to
be "adequately capitalized" under applicable laws and regulations. See
"Regulation - The Bank - Prompt Corrective Action."
22
<PAGE>
OUR CAPITALIZATION
The following table presents the historical capitalization of the Bank at
December 31, 1998, and our pro forma consolidated capitalization after giving
effect to the conversion, based upon the sale of the number of shares shown
below and the other assumptions set forth under "Pro Forma Data."
<TABLE>
<CAPTION>
FPB Financial - Pro Forma
Based Upon Sale at $10.00 Per Share
----------------------------------------------------------
289,000 340,000 391,000 449,650
Shares Shares Shares Shares(1)
The Bank (Minimum of (Midpoint of (Maximum of (15% above
- Historical Offering Offering Offering Maximum of
Capitalization Range) Range) Range) Offering Range)
-------------- ----------- ------------ ----------- ---------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Deposits(2) ...................... $34,065 $34,065 $34,065 $34,065 $34,065
Borrowings ....................... 3,200 3,200 3,200 3,200 3,200
------- ------ ------- ------- ------
Total deposits and
borrowings ..................... $37,265 $37,265 $37,265 $37,265 $37,265
======= ====== ====== ====== ======
Stockholders' equity:
Preferred stock, $.01 par
value, 2,000,000 shares
authorized; none to be
issued ......................... $ -- $ -- $ -- $ -- $ --
Common stock, $.01
par value, 5,000,000
shares authorized;
shares to be issued as
reflected(3) ................... -- 3 3 4 4
Additional paid-in
capital(3) ..................... -- 2,527 3,037 3,546 4,133
Retained earnings(4) 3,575 3,575 3,575 3,575 3,575
Net unrealized loss on
securities available for sale .. (5) (5) (5) (5) (5)
Less:
Common stock acquired
by the ESOP(5) ............... -- (231) (272) (313) (360)
Common stock to be
acquired by the
Recognition Plan(6) .......... -- (116) (136) (156) (180)
------- ------- ------- ------- -------
Total equity ..................... $ 3,570 $ 5,753 $ 6,202 $ 6,651 $ 7,167
======= ======= ======= ======= =======
(Footnotes on following page)
</TABLE>
23
<PAGE>
- ----------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the offering range of up to 15% to
reflect changes in market and financial conditions prior to the completion
of the conversion or to fill the order of the ESOP.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
common stock in the conversion. Such withdrawals would reduce pro forma
deposits by the amount of such withdrawals.
(3) The sum of the par value and additional paid-in capital accounts equals the
net conversion proceeds. No effect has been given to the issuance of
additional shares of common stock pursuant to our proposed stock option
plan. We intend to adopt a stock option plan and to submit such plan to
stockholders at a meeting of stockholders to be held at least six months
following completion of the conversion. If the plan is approved by
stockholders, an amount equal to 10% of the shares of common stock sold in
the conversion will be reserved for issuance under such plan. See "Pro
Forma Data" and "Management - New Stock Benefit Plans - Stock Option Plan."
(4) The retained earnings of the Bank will be substantially restricted after
the conversion. See "The Conversion - Liquidation Rights."
(5) Assumes that 8% of the common stock will be purchased by our ESOP. The
common stock acquired by the ESOP is reflected as a reduction of
stockholders' equity. Assumes the funds used to acquire the ESOP shares
will be borrowed from FPB Financial. See Note 1 to the table set forth
under "Pro Forma Data" and "Management - New Stock Benefit Plans - Employee
Stock Ownership Plan."
(6) Gives effect to the Recognition Plan which we expect to adopt following the
conversion and present to stockholders for approval at a meeting of
stockholders to be held at least six months following completion of the
conversion. No shares will be purchased by the Recognition Plan in the
conversion, and such plan cannot purchase any shares until stockholder
approval has been obtained. If the Recognition Plan is approved by our
stockholders, the plan intends to acquire an amount of common stock equal
to 4% of the shares of common stock issued in the conversion, or 11,560,
13,600, 15,640 and 17,986 shares at the minimum, midpoint, maximum and 15%
above the maximum of the offering range, respectively. The table assumes
that stockholder approval has been obtained and that such shares are
purchased in the open market at the Purchase Price. The common stock so
acquired by the Recognition Plan is reflected as a reduction in
stockholders' equity. If the shares are purchased at prices higher or lower
than the initial purchase price of $10.00 per share, such purchases would
have a greater or lesser impact, respectively, on stockholders' equity. If
the Recognition Plan purchases authorized but unissued shares from FPB
Financial, such issuance would dilute the voting interests of existing
stockholders by approximately 3.8%. See "Pro Forma Data" and "Management -
New Stock Benefit Plans - Recognition Plan."
24
<PAGE>
PRO FORMA DATA
We cannot determine the actual net proceeds from the sale of the common
stock until the conversion is completed. However, net proceeds are currently
estimated to be between $2.5 million and $3.6 million (or $4.1 million in the
event the offering range is increased by 15%) based upon the following
assumptions: (1) all shares of common stock will be sold in the subscription
offering; and (2) total expenses, including the marketing fees to be paid to
Trident, will be $360,000. Actual expenses may vary from those estimated.
We calculated pro forma net income and stockholders' equity for the year
ended December 31, 1998 as if the common stock to be issued in the offering had
been sold at the beginning of the period. The table assumes that the net
proceeds had been invested at 6.30% for the year ended December 31, 1998, which
represent the arithmetic average of the average yield on total interest-earning
assets and the average rate paid on deposits in 1998. The effect of withdrawals
from deposit accounts for the purchase of common stock has not been reflected.
We assumed a combined effective federal and state income tax rate of 38%,
resulting in an after-tax yield of 3.91% for the year ended December 31, 1998.
We calculated historical and pro forma per share amounts by dividing historical
and pro forma amounts by the indicated number of shares of common stock, as
adjusted to give effect to the shares purchased by the ESOP with respect to the
net income per share calculations. See Notes 2 and 4 to the Pro Forma Data
tables. No effect has been given in the pro forma stockholders' equity
calculations for the assumed earnings on the net proceeds. As discussed under
"How Our Net Proceeds Will Be Used," FPB Financial intends to retain 50% of the
net conversion proceeds.
The following pro forma information may not be representative of the
financial effects of the conversion at the date on which the conversion actually
occurs and should not be taken as indicative of future results of operations.
Pro forma stockholders' equity represents the difference between the stated
amount of our assets and liabilities computed in accordance with generally
accepted accounting principles. The pro forma stockholders' equity is not
intended to represent the fair market value of the common stock and may be
different than amounts that would be available for distribution to stockholders
in the event of liquidation. We did not reflect in the table the possible
issuance of additional shares equal to 10% of the common stock to be reserved
for future issuance pursuant to our proposed stock option plan, nor does book
value give any effect to the liquidation account to be established for the
benefit of Eligible Account Holders and Supplemental Eligible Account Holders or
to the Bank's bad debt reserve. See "Management - New Stock Benefit Plans" and
"The Conversion - Liquidation Rights of Certain Depositors." The table does give
effect to the Recognition Plan, which we expect to adopt following the
conversion and present (together with the stock option plan) to stockholders for
approval no earlier than the first meeting of stockholders, which is expected to
be held in April 2000. If the Recognition Plan is approved by stockholders, the
Recognition Plan intends to acquire an amount of common stock equal to 4% of the
shares of common stock issued in the conversion, either through open market
purchases, if permissible, or from authorized but unissued shares of common
stock. The table assumes that stockholder approval has been obtained and that
the shares acquired by the Recognition Plan are purchased in the open market at
$10.00 per share. There can be no assurance that stockholder approval of the
Recognition Plan will be obtained, that the shares will be purchased in the open
market or that the purchase price will be $10.00 per share.
The table on the following page summarizes historical consolidated data of
the Bank and pro forma data of FPB Financial at or for the date and period
indicated based on the assumptions set forth above and in the table and should
not be used as a basis for projection of the market value of the common stock
following the conversion.
25
<PAGE>
<TABLE>
<CAPTION>
At or For the Year Ended December 31, 1998
--------------------------------------------------------
289,000 340,000 391,000 449,650
Shares Sold Shares Sold Shares Sold Shares Sold
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share (15%
(Minimum (Midpoint (Maximum above Maximum
of Range) of Range) of Range) of Range)(8)
----------- ----------- ----------- --------------
(Dollars in Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Gross proceeds ................................ $ 2,890 $ 3,400 $ 3,910 $ 4,497
Less offering expenses ........................ 360 360 360 360
------- ------- ------- -------
Estimated net conversion proceeds ............. 2,530 3,040 3,550 4,137
Less our ESOP ................................. (231) (272) (313) (360)
Less our Recognition Plan ..................... (116) (136) (156) (180)
------- ------- ------- -------
Estimated adjusted net proceeds(1) ............ $ 2,183 $ 2,632 $ 3,081 $ 3,597
======= ======= ======= =======
Net income:
Historical .................................. $ 236 $ 236 $ 236 $ 236
Pro forma adjustments:
Income on adjusted net proceeds(1) ........ 85 103 120 140
ESOP(2) ................................... (11) (13) (15) (17)
Recognition Plan(3) ....................... (14) (17) (19) (22)
------- ------- ------- -------
Pro forma ................................. $ 296 $ 309 $ 322 $ 337
======= ======= ======= =======
Net income per share(4):
Historical .................................. $ .91 $ .78 $ .68 $ .59
Pro forma adjustments:
Income on adjusted net proceeds(1) ........ .33 .34 .34 .35
ESOP(2) ................................... (.04) (.04) (.04) (.04)
Recognition Plan (3) ...................... (.06) (.06) (.06) (.06)
------- ------- ------- -------
Pro forma basic per share ................. $ 1.14 $ 1.02 $ .92 $ .84
======= ======= ======= =======
Pro forma diluted per share ............... $ 1.11 $ .98 $ .89 $ .81
======= ======= ======= =======
Pro forma basic P/E ratio(4) .................. 8.8x 9.8x 10.9x 11.9x
======= ======= ======= =======
Number of shares used in calculating net
income per share(4):
Basic EPS ................................. 258,410 304,012 349,614 402,056
======= ======= ======= =======
Diluted EPS ............................... 267,658 314,892 362,126 416,445
======= ======= ======= =======
Stockholders' equity:
Historical .................................. $ 3,570 $ 3,570 $ 3,570 $ 3,570
Estimated net conversion proceeds ........... 2,530 3,040 3,550 4,137
Less our ESOP(2) ............................ (231) (272) (313) (360)
Less our Recognition Plan(3) ................ (116) (136) (156) (180)
------- ------- ------- -------
Pro forma stockholders' equity(5)(6) ........ $ 5,753 $ 6,202 $ 6,651 $ 7,167
======= ======= ======= =======
Stockholders' equity per share(7):
Historical .................................. $ 12.35 $ 10.50 $ 9.13 $ 7.94
Estimated net conversion proceeds ........... 8.75 8.94 9.08 9.20
Less our ESOP(2) ............................ (.80) (.80) (.80) (.80)
Less our Recognition Plan(3) ................ (.40) (.40) (.40) (.40)
------- ------- ------- -------
Pro forma stockholders' equity
per share(3)(5)(6) ...................... $ 19.90 $ 18.24 $ 17.01 $ 15.94
======= ======= ======= =======
Pro forma price to book ratio(7) .......... 50.3% 54.8% 58.8% 62.7%
======= ======= ======= =======
Number of shares used in equity
per share calculations(7) ................... 289,000 340,000 391,000 449,650
======= ======= ======= =======
</TABLE>
(Footnotes on following page)
26
<PAGE>
- ----------
(1) Estimated adjusted net proceeds consist of the estimated net conversion
proceeds, minus (i) the proceeds attributable to the purchase by our ESOP
and (ii) the value of the shares to be purchased by our Recognition Plan
after the conversion, subject to stockholder approval, at an assumed
purchase price of $10.00 per share.
(2) We assumed that 8% of the shares of common stock issued in the conversion
will be purchased by our ESOP. We also assumed that the funds used to
acquire such shares will be borrowed by the ESOP from FPB Financial. We
intend to make quarterly contributions to our ESOP over a 13-year period in
an amount at least equal to the principal and interest requirement of the
debt. The pro forma net income assumes (a) that the loan to the ESOP is
payable over 13 years, with the ESOP shares having an average fair value of
$10.00 per share in accordance with SOP 93-6, entitled "Employers'
Accounting for Employee Stock Ownership Plans," of the AICPA, (b) that the
loan to the ESOP bears a fixed interest rate of 7.75%, (c) that the ESOP
expense for the period is equivalent to the principal payment for the
period and was made at the end of the period; (d) that 1,778, 2,092, 2,406
and 2,767 shares were committed to be released with respect to the year
ended December 31, 1998, at the minimum, midpoint, maximum and 15% above
the maximum of the offering range, respectively; (e) in accordance with SOP
93-6 entitled "Employers' Accounting for Employee Stock Ownership Plans,"
only the ESOP shares committed to be released during the period were
considered outstanding for purposes of the net income per share
calculations; and (f) the effective tax rate was 38% for the period. See
"Risk Factors - Our Employee Stock Benefit Plans Will Increase Our Costs"
and "Management - New Stock Benefit Plans - Employee Stock Ownership Plan."
(3) We assumed that the Recognition Plan purchases 11,560, 13,600, 15,640 and
17,986 shares at the minimum, midpoint, maximum and 15% above the maximum
of the offering range, assuming that: (a) stockholder approval of the
Recognition Plan is received; (b) the shares were acquired by the
Recognition Plan at the beginning of the period presented in open market
purchases at the Purchase Price; (c) the amortized expense for the year
ended December 31, 1998 was 20% of the amount contributed; and (d) the
effective tax rate applicable to such employee compensation expense was
38%. Statement of Financial Accounting Standards ("SFAS") No. 128 requires
that unvested shares under the Recognition Plan be excluded from the basic
net income per share calculation but included in the diluted net income per
share calculation. We assumed that 20% of the Recognition Plan shares
vested at the beginning of the period. If the Recognition Plan purchases
authorized but unissued shares instead of making open market purchases,
then (a) the voting interests of existing stockholders would be diluted by
approximately 3.8%, and (b) the pro forma diluted net income per share for
the year ended December 31, 1998 would be $1.08, $.96, $.87 and $.79, and
pro forma stockholders' equity per share at December 31, 1998 would be
$19.53, $17.92, $16.74 and $15.71, in each case at the minimum, midpoint,
maximum and 15% above the maximum of the offering range, respectively. See
"Management - New Stock Benefit Plans - Recognition Plan."
(4) Basic net income per share calculations are determined by (a) starting with
the number of shares assumed to be sold in the conversion, (b) in
accordance with SOP 93-6, subtracting the ESOP shares which have not been
committed for release, and (c) in accordance with SFAS No. 128, subtracting
the Recognition Plan shares which have not vested. Diluted net income per
share calculations are determined by adding the unvested Recognition Plan
shares to the number of shares used to determine basic net income per
share.
27
<PAGE>
Set forth below is a reconciliation of the number of shares used in
making the net income per share calculations:
<TABLE>
<CAPTION>
Minimum Midpoint Maximum Maximum, as Adjusted
------- -------- ------- --------------------
<S> <C> <C> <C> <C>
Total shares issued ........................... 289,000 340,000 391,000 449,650
Less shares sold to ESOP ...................... 23,120 27,200 31,280 35,972
Less Recognition Plan shares .................. 11,560 13,600 15,640 17,986
------- ------- ------- -------
Subtotal .................................... 254,320 299,200 344,080 395,692
Plus ESOP shares assumed committed to be
released .................................... 1,778 2,092 2,406 2,767
Plus Recognition Plan shares assumed vested ... 2,312 2,720 3,128 3,597
------- ------- ------- -------
Number of shares used in calculating
basic net income per share .................. 258,410 304,012 349,614 402,056
Plus unvested Recognition Plan shares ......... 9,248 10,880 12,512 14,389
------- ------- ------- -------
Number of shares used in calculating diluted
net income per share ........................ 267,658 314,892 362,126 416,445
======= ======= ======= =======
</TABLE>
(5) We did not give any effect to the issuance of additional shares of common
stock pursuant to our proposed stock option plan, which we expect to adopt
following the conversion and present to stockholders for approval at a
meeting of stockholders to be held at least six months following completion
of the conversion. If the stock option plan is approved by stockholders, an
amount equal to 10% of the common stock issued in the conversion, or
28,900, 34,000, 39,100 and 44,965 shares at the minimum, midpoint, maximum
and 15% above the maximum of the offering range, respectively, will be
reserved for future issuance upon the exercise of options to be granted
under the stock option plan. The issuance of authorized but previously
unissued shares of common stock pursuant to the exercise of options under
such plan would dilute existing stockholders' interests. Assuming
stockholder approval of the plan, that all the options were exercised at
the beginning of the period at an exercise price of $10.00 per share, and
that the shares to fund the Recognition Plan are acquired through open
market purchases at the Purchase Price, (a) pro forma diluted net income
per share for the year ended December 31, 1998 would be $1.04, $.92, $.84
and $.77, and (b) pro forma stockholders' equity per share at December 31,
1998 would be $19.01, $17.49, $16.37 and $15.40, in each case at the
minimum, midpoint, maximum and 15% above the maximum of the offering range,
respectively.
(6) The retained earnings of the Bank will be substantially restricted after
the conversion. See "We Intend to Pay Quarterly Cash Dividends" and "The
Conversion - Liquidation Rights of Certain Depositors."
(7) Based on the number of shares sold in the conversion.
(8) Assumes an increase in the number of shares due to a 15% increase in the
maximum of the offering range to reflect changes in market and financial
conditions prior to completion of the conversion or to fill the order of
the ESOP.
28
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Our profitability depends primarily on the Bank's net interest income,
which is the difference between interest and dividend income on interest-earning
assets, principally loans, mortgage-backed securities and interest-earning
deposits in other institutions, and interest expense on interest-bearing
deposits and FHLB advances. Net interest income is dependent upon the level of
interest rates and the extent to which such rates are changing. Our
profitability also depends, to a lesser extent, on our noninterest income,
provision for loan losses, noninterest expense and income taxes. Net interest
income after provision for loan losses exceeded total noninterest expense by
$359,000 in 1998 and $337,000 in 1997. Total noninterest expense consists of
general, administrative and other expenses, such as compensation and benefits,
occupancy and equipment expenses, deposit insurance premiums, and miscellaneous
other expenses. The Bank had net income of $236,000 in1998 and $214,000 in 1997.
The Bank's operations and profitability are subject to changes in interest
rates, applicable statutes and regulations and general economic conditions, as
well as other factors beyond the Bank's control.
Our Exposure to Changes in Interest Rates
Our ability to maintain net interest income depends upon having a higher
yield on our assets than the rates we pay on our deposits and borrowings. Since
many of our mortgage loans have fixed interest rates, our ability to maintain a
positive interest rate spread can be adversely affected when the rates we pay on
deposits and borrowings are increasing.
We monitor and evaluate the potential impact of interest rate changes upon
the market value of the Bank 's portfolio equity on a quarterly basis, in an
attempt to ensure that interest rate risk is maintained within limits
established by the Board of Directors. We use the quarterly reports from the OTS
which show the impact of changing interest rates on our net portfolio value
("NPV"). NPV is the difference between incoming and outgoing discounted cash
flows from assets, liabilities, and off-balance sheet contracts. An institution
has greater than "normal" interest rate risk if it would suffer a loss of NPV
exceeding 2.0% of the estimated market value of its assets in the event of a 200
basis point increase or decrease in interest rates. A resulting change in NPV of
more than 2% of the estimated market value of an institution's assets will
require the institution to deduct from its risk-based capital 50% of that excess
change, if and when a rule adopted by the OTS takes effect. Under the rule, an
institution with greater than "normal" interest rate risk will be subject to a
deduction of its interest rate risk component from total capital for purposes of
calculating the risk-based capital requirement. However, the OTS has indicated
that no institution will be required to deduct capital for interest rate risk
until further notice. Because a 200 basis point increase in interest rates would
have resulted in the Bank's NPV declining by more than 2% of the estimated
market value of the Bank's assets as of December 31, 1998, the Bank would have
been subject to a capital deduction of $224,000 as of December 31, 1998 if the
regulation had been effective as of such date. The following table presents the
Bank's NPV as of December 31, 1998, as calculated by the OTS, based on
information provided to the OTS by the Bank.
29
<PAGE>
Change in Change in
Interest Rates Net Portfolio Value NPV as % of NPV as % of
in Basis Points ---------------------------- Portfolio Value Portfolio Value
(Rate Shock) Amount $ Change % Change of Assets of Assets(1)
- --------------- ------ -------- -------- --------------- ---------------
(Dollars in Thousands)
400 $1,053 $(2,892) (73.3)% 2.8% (6.9)%
300 1,867 (2,078) (52.7) 4.9 (5.0)
200 2,665 (1,280) (32.4) 6.7 (3.1)
100 3,401 (544) (13.8) 8.4 (1.3)
Static 3,945 -- -- 9.5 --
(100) 4,157 212 5.4 9.8 .5
(200) 4,161 216 5.5 9.7 .5
(300) 4,230 285 7.2 9.8 .7
(400) 4,243 298 7.6 9.7 .9
- ------------
(1) Based on the portfolio value of the Bank's assets assuming no change in
interest rates.
As shown by the table above, increases in interest rates will result in
declines in the Bank's net portfolio value based on OTS calculations as of
December 31, 1998, primarily due to the Bank's significant holdings of
fixed-rate loans. See "Risk Factors - Higher Interest Rates Would Hurt Our
Profitability."
Of the Bank's total loan portfolio at December 31, 1998, $31.4 million or
89.7% have fixed interest rates. Our fixed-rate loans help our profitability if
interest rates are stable or declining, since these loans have yields that
exceed our cost of funds. However, if interest rates increase, we would have to
pay more on our deposits and new borrowings, which would adversely affect our
interest rate spread. We attempt to minimize our risk to increasing interest
rates as follows:
o Originating primarily fixed-rate mortgages with terms of 10 to 20
years;
o Originating three- to five-year balloon mortgages;
o Increasing our originations of consumer loans;
o Using fixed-rate, long-term borrowings to fund a portion of our
fixed-rate assets;
o Increasing the amount of deposits in transaction accounts; and
o Purchasing short-term adjustable-rate securities.
At December 31, 1998, our total loan portfolio includes (a) fixed-rate
mortgages with terms of 10 to 20 years amounting to $23.1 million or 66.0% of
the portfolio, (b) three- to five-year balloon mortgages amounting to $1.6
million or 4.6% of the portfolio, and (c) consumer loans amounting to $2.6
million or 7.5% of the portfolio. These loans totalled $27.3 million or 78.0% of
the total loan portfolio at December 31, 1998. Our consumer loans typically have
higher interest rates than our real estate loans.
FHLB advances with original maturities in excess of five years were $3.2
million or 7.8% of total assets at December 31, 1998. We expect to increase our
long-term FHLB advances in the current interest rate environment. Deposits in
transaction accounts were $6.5 million or 15.8% of total deposits at December
31, 1998. Our transaction accounts generally have lower rates than our
certificates of deposit and are considered a more stable source of funds than
certificates of deposit.
The Bank's adjustable-rate securities at December 31, 1998 consisted of
$2.8 million of mortgage-backed securities and a $1.0 million investment in a
mutual fund which invests in adjustable-rate mortgages.
30
<PAGE>
In addition, the Bank had $3.6 million of adjustable-rate mortgages at
December 31, 1998, representing 10.3% of the total loan portfolio and 8.8% of
total assets. However, the Bank has not originated any new adjustable-rate
mortgages in the last several years, as the borrowers in our market area prefer
fixed-rate mortgages in the current interest rate environment.
Changes in Financial Condition
Assets. The Bank's total assets increased by $7.8 million or 23.4% to $41.1
million at December 31, 1998 from $33.3 million at December 31, 1997. The
increase was primarily due to a $10.9 million or 46.6% increase in the net loan
portfolio, as one- to four-family residential loans and consumer loans
significantly increased. The net loan portfolio amounted to $34.2 million or
83.2% of total assets at December 31, 1998.
Mortgage-backed securities amounted to $2.9 million or 7.1% of total assets
at December 31, 1998, compared to $4.2 million at December 31, 1997. All of the
Bank's mortgage-backed securities are guaranteed by the Government National
Mortgage Association ("GNMA"). Mortgage-backed securities increase the quality
of the Bank's assets by virtue of the guarantees that support them. In addition,
mortgage-backed securities require fewer personnel and overhead costs than
individual residential mortgage loans, are more liquid than individual mortgage
loans and may be used to collateralize borrowings or other obligations of the
Bank. However, mortgage-backed securities typically yield less than individual
residential mortgage loans.
Non-accruing loans totalled $202,000 and $176,000 at December 31, 1998 and
1997, respectively, or .58% and .75% of the total loan portfolio at such dates.
All of the non-accruing loans at December 31, 1998 and 1997 consisted of one- to
four-family residential loans. The Bank had no real estate owned or troubled
debt restructurings at such dates. At December 31, 1998, the Bank's allowance
for loan losses amounted to $170,000 or .49% of the total loan portfolio and
84.2% of total non-accruing loans. See "Business of Florida Parishes Bank--Asset
Quality."
Cash and cash equivalents, which include interest-earning deposits in other
institutions, amounted to $2.4 million or 5.7% of total assets at December 31,
1998, compared to $4.2 million at December 31, 1997. The decline as of December
31, 1998 was due to the Bank using cash and cash equivalents to fund increased
loan originations in 1998. The Bank's regulatory liquidity ratio amounted to
7.0% at December 31, 1998. The Bank expects that the net conversion proceeds to
be received by the Bank will initially increase the Bank's regulatory liquidity
ratio.
Deposits. The Bank's deposits increased by $4.8 million or 16.3% in 1998
over 1997. The increase was due to increases in each type of deposit account,
with the largest dollar increase occurring in certificates of deposit, which
increased $2.4 million or 9.4%. Total transaction accounts were $6.5 million or
19.0% of total deposits at December 31, 1998, compared to $4.1 million or 13.9%
of total deposits at December 31, 1997. At December 31, 1998, $19.7 million or
71.5% of the total certificates of deposit mature in one year or less, and $4.7
million or 17.2% of the total certificates of deposit had balances of $100,000
or more. The Bank believes that it can adjust the interest rates offered on
certificates of deposit to retain such funds to the extent desired and that it
has adequate resources to fund withdrawals.
Total Equity. The Bank's total equity increased by $232,000 or 6.9% in 1998
and amounted to $3.6 million or 8.7% of total assets at December 31, 1998. The
increase was due to $236,000 of net income, which was partially offset by a
small unrealized loss on securities available for sale, net of applicable
deferred income tax. The unrealized loss is deducted from total equity in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." FPB
Financial's total consolidated stockholders' equity will be significantly higher
upon consummation of the conversion than the Bank's current equity. See "Pro
Forma Data."
31
<PAGE>
Results of Operations
Net Income. The Bank's net income increased by $22,000 or 10.2% in 1998
over 1997. The increase in 1998 was primarily due to a $220,000 or 25.5%
increase in net interest income, which was partially offset by increases of
$139,000 or 26.5% in total noninterest expense and $75,000 in the provision for
loan losses.
The Bank's net interest income is determined by its average interest rate
spread (i.e., the difference between the average yields earned on its
interest-earning assets and the average rates paid on its deposits and
borrowings), the relative amounts of interest-earning assets and
interest-bearing liabilities, and the degree of mismatch in the maturity and
repricing characteristics of its interest-earning assets and interest-bearing
liabilities.
The higher net interest income in 1998 was primarily due to a favorable
interest rate environment, which enabled the Bank to significantly increase its
loan portfolio and its average interest rate spread. As market interest rates
declined, the average yields on most categories of interest-earning assets
declined, as did the average rates paid on deposits and borrowings. The decline
in interest rates increased the demand for fixed-rate mortgages in 1998, which
resulted in a $7.5 million increase in the average loan portfolio. The increase
in the loan portfolio exceeded the combined increase of $3.8 million in average
deposits and $1.7 million in average borrowings.
Because we anticipate that it will take time to prudently deploy the new
capital raised in the conversion, We expect our return on equity will initially
be below the industry average after the conversion. See "Risk Factors-- We
Anticipate a Low Return on Our Equity." The increase in net income shown under
"Pro Forma Data" as a result of the investment of the net conversion proceeds is
not necessarily indicative of future results of operations.
32
<PAGE>
Average Balances, Net Interest Income and Yields Earned and Rates Paid. The
following table presents for the periods indicated the total dollar amount of
interest income from the Bank's average interest-earning assets and the
resultant yields, as well as the interest expense on average interest-bearing
liabilities, expressed both in dollars and rates, and the net interest margin.
All average balances are based on monthly balances. The Bank does not believe
that the monthly averages differ significantly from what the daily averages
would be.
<TABLE>
<CAPTION>
1998 1997
--------------------------- ---------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ------ ------- -------- ------
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(2) ................ $28,771 $2,270 7.89% $21,260 $1,710 8.04%
Mortgage-backed securities ......... 3,555 238 6.68 4,666 316 6.77
Investment securities(3) ........... 1,302 74 5.70 442 26 5.88
Interest-earning deposits .......... 2,848 172 6.05 4,052 231 5.70
------- ------ ---- ------- ------ ----
Total interest-earning assets .... 36,476 2,754 7.55 30,420 2,283 7.50
------ ---- ------ ----
Noninterest-earning assets ........... 510 413
------- -------
Total assets ..................... $36,986 $30,833
======= =======
Interest-bearing liabilities:
Deposits(4) ........................ $31,032 1,564 5.04 $27,235 1,416 5.20
FHLB advances ...................... 1,819 107 5.88 77 4 5.19
------- ------ ---- ------- ------ ----
Total interest-bearing
liabilities .................... 32,851 1,671 5.09 27,312 1,420 5.20
------ ---- ------ ----
Noninterest-bearing liabilities ...... 318 215
------- -------
Total liabilities ................ 33,169 27,527
Retained earnings .................... 3,487 3,234
------- -------
Total liabilities and
retained earnings .............. $36,656 $30,761
======= =======
Net interest income; average
interest rate spread ............... $1,083 2.46% $ 863 2.30%
====== ==== ======= ====
Net interest margin(5) ............... 2.97% 2.84%
==== ====
Average interest-earning assets
to average interest-bearing
liabilities ........................ 111.03% 111.38%
====== ======
</TABLE>
- ----------
(1) At December 31, 1998, the weighted average yields earned and rates paid
were as follows: loans receivable, 7.27%; mortgage-backed securities,
6.97%; investment securities, 5.52%; other interest-earning assets, 5.07%,
total interest-earning assets, 7.09%; deposits, 4.87%; FHLB advances,
5.38%; total interest-bearing liabilities, 4.91%; and average interest rate
spread, 2.18%.
(2) Includes non-accruing loans.
(3) Includes FHLB stock.
(4) Includes noninterest-bearing checking accounts.
(5) Equals net interest income divided by average interest-earning assets.
33
<PAGE>
Rate/Volume Analysis. The following table shows the extent to which changes
in interest rates and changes in volume of interest-related assets and
liabilities affected the Bank's interest income and expense during the periods
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (i) changes in
volume (change in volume multiplied by prior year rate), and (ii) changes in
rate (change in rate multiplied by prior year volume). The combined effect of
changes in both rate and volume has been allocated proportionately to the change
due to rate and the change due to volume.
<TABLE>
<CAPTION>
Year Ended December 31,
1998 vs. 1997
-----------------------------
Increase(Decrease)
Due to Total
----------------- Increase
Rate Volume (Decrease)
---- ------ ----------
(In Thousands)
<S> <C> <C> <C>
Interest-earning assets:
Loans receivable ............................ $(32) $ 592 $ 560
Mortgage-backed securities .................. (4) (74) (78)
Investment securities(1) .................... -- 48 48
Interest-earning deposits ................... 15 (74) (59)
---- ----- -----
Total interest-earning assets ............. (21) 492 471
---- ----- -----
Interest-bearing liabilities:
Deposits .................................... (42) 190 148
FHLB advances ............................... 1 102 103
---- ----- -----
Total interest-bearing liabilities ........ (41) 292 251
---- ----- -----
Increase in net interest income ................ $ 20 $ 200 $ 220
==== ===== =====
</TABLE>
- ----------
(1) Includes FHLB stock.
Interest Income. Interest and fees on loans increased by $560,000 or 32.7%
in 1998 over 1997. The increase was due to an increase in the average loan
portfolio of $7.5 million or 35.3% in 1998. The increase in the average balance
was primarily due to increases in one- to four-family residential loans. The
increase in the average loan portfolio resulted from an increase in loan
personnel, increased advertising and favorable market conditions for the
fixed-rate loans offered by the Bank. The decline in interest rates in 1998
increased the demand for fixed-rate mortgages. The lower interest rates,
however, also resulted in a decline in the average loan yield to 7.89% in 1998
from 8.04% in 1997. The lower yield was more than offset by the increase in the
average balance.
Interest on mortgage-backed securities decreased by $78,000 or 24.7% in
1998 from 1997. The decrease was due to a decline of $1.1 million or 23.8% in
the average balance and, to a lesser extent, a decline in the average yield to
6.68% in 1998 from 6.77% in 1997. Mortgage-backed securities have declined in
recent years due to normal repayments and prepayments. The Bank did not purchase
any mortgage-backed securities in 1998 or 1997. The Bank expects its
mortgage-backed securities portfolio to continue to decline, as the Bank is
emphasizing the origination of loans.
Interest and dividends on investment securities, which consist of FHLB
stock and a mutual fund at December 31, 1998, increased by $48,000 or 184.6% in
1998 over 1997. The mutual fund invests in adjustable-rate mortgages. The
increase was due to an increase of $860,000 or 194.6% in the average balance, as
the Bank invested
34
<PAGE>
$1.0 million in the mutual fund in late 1997. The higher average balance in 1998
was partially offset by a decline in the average yield to 5.70% in 1998 from
5.88% in 1997.
Interest on interest-earning deposits in other institutions decreased by
$59,000 or 25.5% in 1998 from 1997. The decrease was due to a decline of $1.2
million or 29.7% in the average balance in 1998, as the Bank used a portion of
its excess liquidity to fund increased loan originations. The lower average
balance was partially offset by an increase in the average yield to 6.05% in
1998 from 5.70% in 1997.
Total interest income increased by $471,000 or 20.6% in 1998 over 1997. The
increase was primarily due to an increase in the average loan portfolio. In
addition, while the average yields on loans, mortgage-backed securities and
interest-earning deposits each decreased in 1998, the average yield on total
interest-earning assets actually increased slightly in 1998 to 7.55% from 7.50%
in 1997. The higher overall yield was due to the significant increase in the
average loan portfolio, as the average yield on loans continues to be
significantly higher than the yields on other interest-earning assets.
Interest Expense. Interest on deposits increased by $148,000 or 10.5% in
1998 over 1997. The increase was due to a $3.8 million or 13.9% increase in
average deposits in 1998, which was partially offset by a decline in the average
rate paid to 5.04% in 1998 from 5.20% in 1997. The average balance of each type
of deposit, including transaction accounts and certificates of deposit,
increased in 1998, and the average rate paid on each type of deposit decreased
in 1998 from 1997. While transaction accounts increased in 1998, certificates of
deposit continued to represent over 80% of total deposits at December 31, 1998.
At December 31, 1998, $19.7 million or 71.5% of the Bank's total certificates of
deposit are due in one year or less. Based upon historical experience, the Bank
expects to retain a significant portion of these deposits. The Bank began
offering noninterest-bearing checking accounts in 1998, which amounted to
$710,000 or 2.1% of total deposits at December 31, 1998.
The Bank began more actively using FHLB advances in 1998. These borrowings
totalled $3.2 million at December 31, 1998 compared to $400,000 at December 31,
1997. The Bank increased its FHLB advances in 1998 both to fund increased loan
demand and to help minimize its interest rate risk. All of the FHLB advances are
fixed-rate, long-term borrowings with original maturities in excess of seven
years on a weighted average basis. The Bank believes that the term of its FHLB
advances approximates the average life of many of its fixed-rate loans, and the
Bank expects to further increase its long-term FHLB advances in the prevailing
interest rate environment. Interest on FHLB advances was $107,000 in 1998
compared to $4,000 in 1997.
Total interest expenses increased by $251,000 or 17.7% in 1998 over 1997,
as the average balance of total interest-bearing liabilities increased by $5.5
million or 20.3% in 1998. The higher average balance was partially offset by a
decline in the average rate paid to 5.09% in 1998 from 5.20% in 1997.
Net Interest Income. Net interest income increased by $220,000 or 25.5% in
1998 over 1997, primarily due to an increase in net average interest-earning
assets of $517,000 or 16.6% in 1998 over 1997. In addition, the average interest
rate spread increased to 2.46% in 1998 from 2.30% in 1997. The increased spread
was due to an increase in the average yield on interest-earning assets and a
decrease in the average rate paid on interest-bearing liabilities.
Provision for Loan Losses. The Bank's provisions for loan losses were
$81,000 in 1998 and $6,000 in 1997. The allowance for loan losses amounted to
$170,000 at December 31, 1998, representing .49% of the total loan portfolio and
84.2% of total non-accruing loans at such date. See "Business of Florida
Parishes Bank - Asset Quality." The higher provision in 1998 was due to an $11.5
million or 48.7% increase in the total loan portfolio in 1998. While most of the
increase in the loan portfolio was one- to four-family residential loans, the
Bank also increased its automobile loans and unsecured consumer loans in 1998.
35
<PAGE>
Noninterest Income. The Bank foreclosed on a one- to four-family
residential loan in 1998 and sold the property for an $11,000 gain. There were
no sales of real estate owned in 1997, and the Bank had no real estate owned at
December 31, 1998 or 1997.
The Bank earns insurance commissions on the sale of credit life and
mortgage life insurance. The Bank acts as an agent for two different insurance
companies. Insurance commissions were $5,100 in 1998 and $2,500 in 1997.
Service charges on deposits increased to $2,200 in 1998 from $500 in 1997,
primarily due to an increase in transaction accounts.
Other miscellaneous income increased by $500 or 36.3% in 1998 over 1997.
Total noninterest income increased by $15,800 in 1998 over 1997, primarily
due to the gain on sale of real estate owned and the increase in insurance
commissions.
Noninterest Expense. Compensation and benefits increased by $55,000 or
17.9% in 1998 over 1997. The primary reason for the increase was the hiring of
additional staff, including a compliance officer and a loan officer. We
anticipate hiring additional staff in 1999, which will further increase our
costs. To a lesser extent, the increase in 1998 was also due to normal salary
increases and to several staff members reaching their one-year anniversary and
becoming eligible to participate in the Bank's incentive bonus plan. These
factors were partially offset by a $15,000 decline in group insurance premiums.
For periods subsequent to the conversion, the shares of common stock to be
purchased by the ESOP and the Recognition Plan will result in additional
compensation expense being recognized over periods of 13 and five years,
respectively. Based on the assumptions set forth under "Pro Forma Data," the
increased compensation expense after taxes is estimated to be $15,000 per year
for the ESOP and $19,000 per year for the Recognition Plan at the maximum of the
offering range. However, the amount for the ESOP may vary significantly
depending upon the impact of SOP 93-6. See "Risk Factors - Our Employee Stock
Benefit Plans Will Increase Our Costs." In addition, the exercise of
compensatory or non-qualified stock options in the future would result in
additional compensation expense for federal income tax purposes (but not for
financial statement purposes) equal to the difference between the aggregate
market value of our common stock received and the aggregate exercise price.
Occupancy and equipment expense increased by $20,000 or 54.1% in 1998 over
1997, primarily due to the renovation of the second floor of the Bank's office
building for additional office space and to the purchase of additional
equipment.
Data processing expense increased by $17,400 or 46.5% in 1998 over 1997,
primarily due to the costs of introducing a new checkcard, which allows checking
account customers to access their funds when making a purchase without having to
write a check. To a lesser extent, some new software was purchased and expensed
in 1998.
Advertising expense increased by $11,300 or 65.2% in 1998 over 1997, as the
Bank advertised various lending and deposit products and its new checkcards.
Deposit insurance premiums increased by $4,300 or 32.0% in 1998 over 1997.
The increase in 1998 was due to higher deposits and to a credit received in the
first quarter of 1997.
Other noninterest expense, which includes examination fees, professional
fees, office supplies, postage and other miscellaneous expenses, increased by
$31,000 or 27.7% in 1998 over 1997. This expense is likely to increase following
the conversion due to (1) increased legal and accounting fees as a result of
being a public company and preparing and filing various public reports, (2) fees
to be paid to FPB Financial's transfer agent and registrar, and (3) other
miscellaneous costs associated with being a public company.
36
<PAGE>
Total noninterest expense increased by $139,000 or 26.5% in 1998 over 1997,
due to increases in each category of noninterest expense.
Federal Income Tax Expense. The federal income tax expense was essentially
unchanged in 1998 from 1997. Pre-tax income increased by $22,000 or 6.6% in 1998
from 1997, which was offset by a decline in the effective tax rate to 34.2% in
1998 from 36.4% in 1997. For additional information, see Note 9 of Notes to
Financial Statements.
Liquidity and Capital Resources
The Bank is required under applicable federal regulations to maintain
specified levels of "liquid" investments in qualifying types of U.S. Government,
federal agency and other investments having maturities of five years or less.
Current OTS regulations require that a savings institution maintain liquid
assets of not less than 4% of its average daily balance of net withdrawable
deposit accounts and borrowings payable in one year or less. At December 31,
1998, the Bank's liquidity was 7.0% or $1.0 million in excess of the minimum OTS
requirement.
Cash was generated by the Bank's operating activities in 1998 and 1997
primarily as a result of net income in each period. The adjustments to reconcile
net income to net cash provided by operations during the periods presented
consisted primarily of the provisions for loan losses, the provisions for
depreciation, the FHLB stock dividends, and increases or decreases in various
receivable and payable accounts. The primary investing activities of the Bank
are the origination of loans, which are primarily funded with the proceeds from
repayments and prepayments on existing loans and mortgage-backed securities.
Investing activities used net cash in 1998 and 1997, primarily due to increases
in the net loan portfolio and, in 1997, the purchase of a $1.0 million
investment security. The primary financing activities consist of deposits and
FHLB advances. Financing activities provided net cash in 1998 and 1997 due to
increases in both deposits and FHLB advances. Total cash and cash equivalents
decreased by $1.9 million in 1998 and increased by $1.6 million in 1997. Total
cash and cash equivalents amounted to $2.4 million at December 31, 1998.
At December 31, 1998, the Bank had outstanding commitments to originate
$300,000 of one- to four-family residential loans, $250,000 of commercial real
estate loans and $737,000 of undisbursed construction loans. In addition, as of
December 31, 1998, the total amount of certificates of deposit which were
scheduled to mature in the following 12 months was $19.7 million. The Bank
believes that it has adequate resources to fund all of its commitments and that
it can adjust the rate on certificates of deposit to retain deposits in changed
interest rate environments. If the Bank requires funds beyond its internal
funding capabilities, advances from the FHLB of Dallas are available as an
additional source of funds.
The Bank is required to maintain regulatory capital sufficient to meet
tangible, core and risk-based capital ratios of at least 1.5%, 3.0% and 8.0%,
respectively. At December 31, 1998, the Bank exceeded each of its capital
requirements, with tangible, core and risk-based capital ratios of 8.71%, 8.71%
and 19.50%, respectively. See "The Bank Meets All of Its Regulatory Capital
Requirements," "Regulation - The Bank - Regulatory Capital Requirements" and
Note 13 of Notes to Financial Statements.
Assuming the sale of common stock at the midpoint of the offering range,
FPB Financial's ratio of equity to assets would be 14.2% on a pro forma basis at
December 31, 1998. See "The Bank Meets All of Its Regulatory Capital
Requirements." Both FPB Financial and the Bank will be well-capitalized upon
consummation of the conversion. We anticipate that the net conversion proceeds
contributed to the Bank will initially increase the Bank's liquidity.
37
<PAGE>
Impact of Inflation and Changing Prices
The financial statements and related financial data presented herein have
been prepared in accordance with generally accepted accounting principles, which
generally require the measurement of financial position and operating results in
terms of historical dollars, without considering changes in relative purchasing
power over time due to inflation. Unlike most industrial companies, virtually
all of the Bank's assets and liabilities are monetary in nature. As a result,
interest rates generally have a more significant impact on the Bank's
performance than does the effect of inflation. Interest rates do not necessarily
move in the same direction or in the same magnitude as the prices of goods and
services, since such prices are affected by inflation to a larger extent than
interest rates.
The Year 2000
General. The Year 2000 issue confronting us, as well as our suppliers,
customers, customers' suppliers and competitors, centers on the inability of
many computer systems to recognize the Year 2000. Many existing computer
programs and systems originally were programmed with six digit dates that
provided only two digits to identify the calendar year in the date field. With
the impending new millennium, these programs and computers will recognize "00"
as the year 1900 rather than the year 2000.
Risks. Like most financial service providers, we may be significantly
affected by the Year 2000 issue due to our dependence on technology and
date-sensitive data. Computer software, hardware and other equipment, both
within and outside the Bank's direct control and third parties with whom the
Bank electronically or operationally interfaces are likely to be affected. If
computer systems are not modified in order to be able to identify the Year 2000,
many computer applications could fail or create erroneous results. As a result,
many calculations which rely on date field information, such as interest,
payment or due dates and other operating functions, could generate results which
are significantly misstated. In this event, the Bank may be unable to process
transactions, prepare statements or engage in similar normal business
activities. If all transactions were required to be handled manually due to
computer or other failures, we would need to hire additional personnel which
could significantly increase our expenses.
In the event any of our local utility companies were unable to provide
electricity or other needed services, our operations would be disrupted. We are
unable to provide any assurances as to the Year 2000 readiness of the utility
companies. In addition, while we believe the testing described below was done in
accordance with applicable regulatory guidelines, we are unable to provide any
assurances that the testing took into account all problems that may develop on
or after January 1, 2000.
We believe we have taken appropriate steps with respect to matters that are
within our control in order to become ready for the Year 2000 in a timely
manner. However, we are unable to provide any assurances that we have foreseen
all problems that may develop on or after January 1, 2000 or that we have taken
all actions that may be considered necessary in hindsight. In addition, the
readiness of all third parties, including customers and suppliers, is inherently
uncertain and cannot be guaranteed by us.
The Bank's Testing Has Been Substantially Completed. The Bank has reviewed
its computer and data processing issues relating to the Year 2000 and has
developed a written Year 2000 Contingency and Testing Plan. The Bank's data
processing and items processing are handled by two independent third party data
centers. During 1998, the Bank tested its loan origination, loan servicing,
savings deposits, savings withdrawal and general ledger activities for Year 2000
compliance. All teller terminals and general ledger posting terminals were
tested, and different tests were conducted with the Bank's service providers and
software vendors. The Bank's service providers and software vendors have been
designated by a federal regulatory agency as Year 2000 compliant. Based on the
results of the testing to date, management believes that issues related to the
Year 2000 will not have a material adverse effect on FPB Financial's liquidity,
capital resources or consolidated results of operations. The Bank explored
during 1998 the steps involved in switching its data processing and items
processing to different service providers in the event its current providers
were unable to become Year 2000 compliant in a timely manner.
38
<PAGE>
Based on the results of the testing to date, the Bank does not believe that a
switch to new service providers will be necessary.
The Bank still needs to complete testing with the FHLB of Dallas and with
its correspondent bank. The Bank currently estimates the total cost of becoming
Year 2000 compliant to be less than $15,000, of which approximately $5,000 has
been incurred as of December 31, 1998.
Status of Borrowers. Since the Bank's loans are primarily secured by
residential properties, the Bank does not anticipate any significant Year 2000
issues with respect to its borrowers.
Contingency Line of Credit. The Bank has obtained a $500,000 Year 2000 line
of credit from the FHLB of Dallas that can be used for liquidity purposes if
other sources of funds are not available when needed. This line of credit was
obtained in anticipation of higher than normal savings withdrawals in late 1999.
The Bank can also obtain short-term FHLB advances if necessary.
Recent Accounting Standards
For a discussion of recently published accounting standards, none of which
are expected to have a material effect on FPB Financial, see Note 15 of Notes to
Financial Statements.
BUSINESS OF FPB FINANCIAL CORP.
FPB Financial Corp. is a Louisiana corporation organized in February 1999
by the Bank for the purpose of becoming a unitary savings and loan holding
company of the Bank. We will purchase all of the capital stock of the Bank to be
issued in the conversion in exchange for 50% of the net conversion proceeds and
will retain the remaining 50% of the net proceeds as our initial capitalization.
Immediately following the conversion, our only significant assets will be the
capital stock of the Bank, our loan to the ESOP, and the remainder of the net
conversion proceeds retained by us. The business and management of FPB Financial
will initially primarily consist of the business and management of the Bank.
BUSINESS OF FLORIDA PARISHES BANK
Lending Activities
General. At December 31, 1998, the Bank's net loan portfolio totalled $34.2
million, representing approximately 83.2% of the Bank's $41.1 million of total
assets at that date. The principal lending activity of the Bank is the
origination of one- to four-family residential loans and consumer loans. At
December 31, 1998, conventional first mortgage, one- to four-family residential
loans (excluding construction loans) amounted to $30.2 million or 86.2% of the
total loan portfolio and consumer loans amounted to $2.6 million or 7.5% of the
total loan portfolio, in each case before net items. To a lesser extent, the
Bank originates construction loans, commercial real estate loans and land loans.
At December 31, 1998, construction loans amounted to $1.1 million or 3.2% of the
total loan portfolio, commercial real estate loans totalled $650,000 or 1.9% of
the total loan portfolio, and land loans amounted to $421,000 or 1.2% of the
total loan portfolio, in each case before net items.
The types of loans that the Bank may originate are subject to federal and
state laws and regulations. Interest rates charged by the Bank on loans are
affected principally by the demand for such loans and the supply of money
available for lending purposes and the rates offered by its competitors. These
factors are, in turn, affected by general and economic conditions, the monetary
policy of the federal government, including the Federal Reserve Board,
legislative and tax policies, and governmental budgetary matters.
39
<PAGE>
A savings institution generally may not make loans to one borrower and
related entities in an amount which exceeds the greater of (i) 15% of its
unimpaired capital and surplus, although loans in an amount equal to an
additional 10% of unimpaired capital and surplus may be made to a borrower if
the loans are fully secured by readily marketable securities, and (ii) $500,000.
At December 31, 1998, the Bank's limit on loans-to-one borrower was $535,000 and
its five largest loans or groups of loans-to-one borrower, including related
entities, aggregated $510,000, $289,000, $264,000, $247,000 and $233,000. All of
the Bank's five largest loans or groups of loans were performing in accordance
with their terms at December 31, 1998.
Loan Portfolio Composition. The following table shows the composition of
the Bank's loan portfolio by type of loan at the dates indicated.
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------
1998 1997
-------------------------- --------------------------
Amount % Amount %
---------- ---------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Real estate loans:
One- to four-family residential .............. $30,199 86.2% $21,720 92.2%
Construction(1) .............................. 1,132 3.2 250 1.1
Commercial real estate ....................... 650 1.9 540 2.3
Land ......................................... 421 1.2 157 .6
-------- --- ---------- ------
Total real estate loans .................... 32,402 92.5 22,667 96.2
------- ---- -------- ----
Consumer loans:
Loans secured by one- to four-family
residential properties .................... 1,109 3.2 237 1.0
Loans secured by savings accounts ............ 467 1.3 422 1.8
Second mortgages ............................. 473 1.4 162 .7
Automobile ................................... 378 1.1 35 .2
Unsecured .................................... 150 .4 30 .1
Other ........................................ 53 .1 7 .0
--------- --- ---------- --------
Total consumer loans ....................... 2,630 7.5 893 3.8
------- --- -------- -------
Total loans .............................. 35,032 100.0% 23,560 100.0%
===== =====
Less:
Loans in process ............................. 737 162
Deferred (cost) fees and discounts ........... (27) 17
Allowance for loan losses .................... 170 89
-------- ----------
Total loans receivable, net ................ $34,152 $ 23,292
====== =======
</TABLE>
- ----------
(1) Consists solely of one- to four-family residential construction loans.
Origination of Loans. The lending activities of the Bank are subject to the
written underwriting standards and loan origination procedures established by
the Bank's Board of Directors and management. Loan originations are obtained
through a variety of sources, including referrals from real estate brokers,
builders and existing customers. Written loan applications are taken by lending
personnel, and the loan department supervises the procurement of credit reports,
appraisals and other documentation involved with a loan. Property valuations are
performed by independent outside appraisers approved by the Bank's Board of
Directors.
Under the Bank's real estate lending policy, a title insurance policy must
be obtained for each real estate loan for $25,000 or more. The Bank also
requires fire and extended coverage casualty insurance, in order to protect the
properties securing its real estate loans. Borrowers must also obtain flood
insurance policies when the property is in a flood hazard area as designated by
the Department of Housing and Urban Development. The Bank does not require
borrowers to advance funds to an escrow account for the payment of real estate
taxes or hazard insurance
40
<PAGE>
premiums. The Bank generally obtains the financial statements of the borrower if
the requested loan exceeds $25,000 and an assignment of life insurance if the
requested loan exceeds $150,000.
The Bank's loan approval process is intended to assess the borrower's
ability to repay the loan, the viability of the loan and the adequacy of the
value of the property that will secure the loan. The Bank's Loan Officer, its
Senior Vice President and its President may individually approve secured loans
up to $25,000, $80,000 and $100,000, respectively, and unsecured loans up to
$10,000, $40,000 and $50,00, respectively. All loans exceeding $100,000 and
those secured by real estate outside the Bank's market area must be approved by
the Board of Directors' loan committee.
The following table shows total loans originated and repaid during the
periods indicated. No loans were purchased or sold during the periods shown.
Year Ended December 31,
------------------------------
1998 1997 1996
-------- ------- -------
(In Thousands)
Loan originations(1):
One- to four-family residential ............ $ 14,258 $ 5,863 $ 4,655
Construction(2) ............................ 948 330 --
Commercial real estate ..................... 193 196 --
Land ....................................... 285 41 --
Consumer ................................... 3,068 941 149
-------- ------- -------
Total loans originated .................. 18,752 7,371 4,804
Loan principal reductions .................... (7,280) (4,060) (3,568)
Increase (decrease) due to
other items, net(3) ........................ (613) (23) (13)
-------- ------- -------
Net increase in loan portfolio ............... $ 10,859 $ 3,288 $ 1,223
======== ======= =======
- ----------
(1) Includes loans refinanced by existing borrowers of the Bank.
(2) Consists solely of one- to four-family residential construction loans.
(3) Other items, net include the effects relating to loans in process, deferred
loan origination fees or costs, and the allowance for loan losses.
Although federal laws and regulations permit federally chartered savings
institutions, such as the Bank, to originate and purchase loans secured by real
estate located throughout the United States, the Bank's present lending is done
primarily within its primary market area, which consists of Tangipahoa Parish in
Louisiana. Subject to the Bank's loans-to-one borrower limitation, the Bank is
permitted to invest without limitation in residential mortgage loans and up to
400% of its capital in loans secured by non-residential or commercial real
estate. The Bank may also invest in secured and unsecured consumer loans in an
amount not exceeding 35% of the Bank's total assets. This 35% limitation may be
exceeded for certain types of consumer loans, such as home equity and property
improvement loans secured by residential real property. In addition, the Bank
may invest up to 10% of its total assets in secured and unsecured loans for
commercial, corporate, business or agricultural purposes. At December 31, 1998,
the Bank was well within each of the above lending limits.
One- to Four-Family Residential Real Estate Loans. The primary real estate
lending activity of the Bank is the origination of loans secured by first
mortgage liens on one- to four-family residences. At December 31,
41
<PAGE>
1998, $30.2 million or 86.2% of the Bank's total loan portfolio, before net
items, consisted of conventional first mortgage, one- to four-family residential
loans (excluding construction loans).
The loan-to-value ratio, maturity and other provisions of the loans made by
the Bank generally have reflected the policy of making less than the maximum
loan permissible under applicable regulations, in accordance with sound lending
practices, market conditions and underwriting standards established by the Bank.
The Bank's lending policies on one- to four-family residential mortgage loans
generally limit the maximum loan-to-value ratio to 80% of the lesser of the
appraised value or purchase price of the property. The one- to four-family
residential loans which have a loan-to-value ratio in excess of 80% bear a
higher interest rate but do not require private mortgage insurance. Residential
mortgage loans are amortized on a monthly basis with principal and interest due
each month. The loans generally include "due-on-sale" clauses.
The residential mortgages originated by the Bank primarily consist of
fixed-rate loans maturing in 10, 15 or 20 years. The Bank also offers balloon
mortgages that mature in three to five years, with principal amortized over 10
to 15 years. In addition, the Bank began offering fixed-rate, 30-year mortgages
in 1998. Of the $14.3 million of one- to four-family residential loans
originated in 1998, $11.6 million or 81.2% consisted of fixed-rate loans
maturing within 10 to 20 years. Of the total residential loan portfolio of $30.2
million at December 31, 1998, $24.9 million or 82.3% consisted of fixed-rate
loans with an original maturity of 10 to 20 years.
The Bank has the authority to originate and purchase mortgage loans which
provide for periodic interest rate adjustments subject to certain limitations.
The Bank offers ARMs on which the interest rate adjusts every one, three or
seven years based upon the one-year T-bill index plus a specified margin.
However, because the Bank does not offer teaser rates, the Bank is generally not
competitive in its market area in the origination of ARMs. In addition, with the
decline in mortgage rates in recent years, borrowers generally prefer fixed-rate
mortgages in the Bank's market area. The Bank has not originated any ARMs in the
last two years. At December 31, 1998, one- to four-family residential ARMs
represented $3.6 million or 10.3% of the total loan portfolio, before net items.
Construction Loans. At December 31, 1998, $1.1 million or 3.2% of the
Bank's total loan portfolio, before net items, consisted of loans for the
construction of single-family residences. Construction loans are being actively
marketed, and the origination of construction loans increased to $948,000 in
1998 from $330,000 in 1997. If a borrower uses an independent contractor to
construct the residence, the Bank will generally originate both the construction
loan and the permanent loan at one closing. In this event, the loan is treated
as a one- to four-family residential loan from the date of origination.
Otherwise, the Bank will originate only an interim construction loan for a
period of six to nine months. All of the construction loans bear a fixed
interest rate. The funds are disbursed as various phases of the construction are
completed. At December 31, 1998, the Bank had one spec construction loan for
$87,000.
Construction lending is generally considered to involve a higher degree of
risk of loss than long-term financing on improved, owner-occupied real estate
because of the uncertainties of construction, including the possibility of costs
exceeding the initial estimates and the need to obtain a tenant or purchaser if
the property will not be owner-occupied. The Bank generally attempts to mitigate
the risks associated with construction lending by, among other things, lending
primarily in its market area, using conservative underwriting guidelines, and
closely monitoring the construction process.
Commercial Real Estate Loans. The Bank's commercial real estate loan
portfolio primarily consists of loans secured by professional offices, churches
and multi-family residences located within the Bank's primary market area.
Commercial real estate loans amounted to $650,000 or 1.9% of the total loan
portfolio at December 31, 1998. The largest commercial real estate loan at
December 31, 1998 was a $135,000 loan secured by an apartment building. This
loan has a three-year term and is amortized over three years. The average
balance of the 11 commercial real estate loans at December 31, 1998 was
approximately $59,000.
42
<PAGE>
Of the 11 commercial real estate loans, seven had fixed interest rates,
were fully amortizing over an original term to maturity of three to 15 years,
and had an aggregate principal balance of $516,000 at December 31, 1998. Three
loans had adjustable interest rates and an aggregate principal balance of
$78,000 at December 31, 1998. The remaining loan was a fixed-rate balloon
mortgage with a balance of $56,000 at that date. As part of its commitment to
loan quality, the Bank's senior management reviews each nonresidential loan
prior to approval by the Board of Directors. All loans are based on the
appraised value of the secured property, and commercial real estate loans are
generally not made in amounts in excess of 80% of the appraised value of the
secured property. All appraisals are performed by an independent appraiser
designated by the Bank and are reviewed by management. In originating
nonresidential loans, the Bank considers the quality of the property, the credit
of the borrower, the historical and projected cash flow of the project, the
location of the real estate and the quality of the property management.
Commercial real estate lending is generally considered to involve a higher
degree of risk than one- to four-family residential lending. Such lending
typically involves large loan balances concentrated in a single borrower or
groups of related borrowers for rental or business properties. In addition, the
payment experience on loans secured by income-producing properties is typically
dependent on the success of the operation of the related project and thus is
typically affected by adverse conditions in the real estate market and in the
economy. The Bank generally attempts to mitigate the risks associated with
commercial real estate lending by, among other things, lending primarily in its
market area and using low loan-to-value ratios in the underwriting process.
Land Loans. As of December 31, 1998, the Bank's land loans are secured by
vacant lots which are generally expected to be used for residential purposes.
These loans are generally three- to five-year balloon mortgages, with principal
amortized over 10 to 15 years. These loans bear a fixed interest rate. At
December 31, 1998, the Bank's land loans amounted to $421,000 or 1.2% of the
total loan portfolio. The average balance of the 19 land loans at December 1998
was approximately $22,000.
Land development and acquisition loans involve significant additional risks
when compared with loans on existing residential properties. These loans may
involve larger loan balances to single borrowers, and the payment experience may
be dependent on the successful development of the land and the sale of the lots.
These risks can be significantly impacted by supply and demand conditions.
Consumer Loans. Subject to restrictions contained in applicable federal
laws and regulations, the Bank is authorized to make loans for a wide variety of
personal or consumer purposes. At December 31, 1998, $2.6 million or 7.5% of the
Bank's total loan portfolio consisted of consumer loans.
The Bank originates consumer loans in order to provide a full range of
financial services to its customers and because such loans generally have
shorter terms and higher interest rates than residential mortgage loans. The
consumer loans offered by the Bank include short-term loans secured by one- to
four-family residences and loans secured by deposit accounts in the Bank, second
mortgages, automobile loans, unsecured loans and other miscellaneous loans.
The consumer loans secured by one- to four-family residential properties
are generally three- to five-year balloon, first lien mortgages, with principal
amortized over 10 to 15 years. These loans are not for the purpose of purchasing
the house, and the loan proceeds can be used for any purpose. These loans are
more likely to have a loan-to-value ratio of up to 90%. These consumer loans
secured by residential property amounted to $1.1 million or 3.2% of the total
loan portfolio at December 31, 1998, compared to $237,000 at December 31, 1997.
The Bank offers loans secured by deposit accounts in the Bank, which loans
amounted to $467,000 or 1.3% of the Bank's total loan portfolio at December 31,
1998. Such loans are originated for up to 95% of the account balance, with a
hold placed on the account restricting the withdrawal of the account balance.
The interest rate on the loan is equal to the interest rate paid on the account
plus 2%. These loans mature on or before the maturity date of the underlying
certificate of deposit.
43
<PAGE>
The Bank offers second mortgages secured by one-to four-family residences,
even on properties where the first mortgage is held by another lender. The
amount of the second mortgage, when combined with the amount of the first
mortgage, is limited to 90% of the appraised value of the property. Second
mortgages amounted to $473,000 or 1.4% of the total loan portfolio at December
31, 1998, compared to $162,000 at December 31, 1997.
The Bank offers automobile loans on both new and used vehicles, with most
of the loans secured by new vehicles. The automobile loans have fixed interest
rates and terms of up to five years for new vehicles and 42 months for used
vehicles. Automobile loans amounted to $378,000 or 1.1% of the total loan
portfolio at December 31, 1998, compared to $35,000 at December 31, 1997.
The unsecured loans originated by the Bank are generally for $10,000 or
less and have a maximum term of 36 months. These loans bear a fixed interest
rate and require monthly payments of principal and interest. Unsecured loans
amounted to $150,000 or .4% of the total loan portfolio at December 31, 1998.
Other consumer loans primarily consist of small boats and overdrafts. These
loans amounted to $53,000 or .1% of the total loan portfolio at December 31,
1998. The Bank originates these loans only to a limited extent.
Consumer loans generally have shorter terms and higher interest rates than
mortgage loans but generally involve more credit risk than mortgage loans
because of the type and nature of the collateral and, in certain cases, the
absence of collateral. In addition, consumer lending collections are dependent
on the borrower's continuing financial stability, and thus are more likely to be
adversely affected by job loss, divorce, illness and personal bankruptcy. In
many cases, any repossessed collateral for a defaulted consumer loan will not
provide an adequate source of repayment of the outstanding loan balance because
of improper repair and maintenance of the underlying security. The remaining
deficiency often does not warrant further substantial collection efforts against
the borrower. The Bank believes that the generally higher yields earned on
consumer loans compensate for the increased credit risk associated with such
loans and that consumer loans are important to its efforts to increase rate
sensitivity, shorten the average maturity of its loan portfolio and provide a
full range of services to its customers.
Loan Origination and Other Fees. In addition to interest earned on loans,
the Bank receives loan origination fees or "points" for originating loans. Loan
points are a percentage of the principal amount of the mortgage loan and are
charged to the borrower in connection with the origination of the loan.
In accordance with SFAS No. 91, which deals with the accounting for
non-refundable fees and costs associated with originating or acquiring loans,
the Bank's loan origination fees and certain related direct loan origination
costs are offset, and the resulting net amount is deferred and amortized as
interest income over the contractual life of the related loans as an adjustment
to the yield of such loans. At December 31, 1998, the Bank had $27,000 of
deferred costs which will be expensed over the contractual maturities of the
related loans.
44
<PAGE>
Contractual Maturities. The following table shows the scheduled contractual
maturities of the Bank's loans as of December 31, 1998, before giving effect to
net items. Demand loans, loans having no stated schedule of repayments and no
stated maturity, and overdrafts are reported as due in one year or less. The
amounts shown below reflect normal principal amortization but do not take into
account loan prepayments.
<TABLE>
<CAPTION>
One- to Commercial
four-family Construction Real Estate Land Consumer
residential Loans Mortgages Loans Loans Total
------------ -------------- ----------- ----- --------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Amounts due in:
One year or less ...................... $ 1,415 $1,132 $ 62 $163 $ 915 $ 3,687
After one year through two years ...... 1,521 -- 68 179 986 2,754
After two years through three years ... 1,635 -- 73 79 681 2,468
After three years through five years .. 3,579 -- 155 -- 48 3,782
After five years through ten years .... 9,312 -- 233 -- -- 9,545
After ten years through fifteen years . 11,551 -- 18 -- -- 11,569
After fifteen years ................... 1,186 -- 41 -- -- 1,227
------ ----- --- --- ----- ------
Total(1) ............................ $30,199 $1,132 $650 $421 $2,630 $35,032
====== ===== === === ===== ======
</TABLE>
- ------
(1) Gross of loans in process, deferred loan origination (costs) fees and
discounts, and the allowance for loan losses.
The following table shows the dollar amount of all loans, before net items,
due after one year from December 31, 1998 as shown in the preceding table, which
have fixed interest rates or which have floating or adjustable interest rates.
Floating or
Fixed-Rate Adjustable-Rate Total
---------- --------------- -------
(In Thousands)
One- to four-family residential ......... $25,375 $3,409 $28,784
Commercial real estate mortgages ........ 511 77 588
Land .................................... 258 -- 258
Consumer ................................ 1,715 - 1,715
------- -------- --------
Total ................................. $27,859 $3,486 $31,345
====== ===== ======
Scheduled contractual maturities of loans do not necessarily reflect the
actual expected term of the Bank's portfolio. The average life of mortgage loans
is substantially less than their average contractual terms because of
prepayments. The average life of mortgage loans tends to increase when current
mortgage loans rates are higher than rates on existing mortgage loans and,
conversely, decrease when rates on existing mortgage loans are lower than
current mortgage loan rates (due to refinancing of adjustable-rate and
fixed-rate loans at lower rates). Under the latter circumstance, the weighted
average yield on loans decreases as higher yielding loans are repaid or
refinanced at lower rates.
45
<PAGE>
Asset Quality
General. The Bank mails delinquent notices to borrowers when a borrower
fails to make a required payment within 10 days of the date due. Additional
notices begin when a loan becomes 20 days past due. Late charges are generally
imposed following the 10th day after a payment is due on mortgage loans and
after 10 days on consumer loans. In most cases, deficiencies are cured promptly.
If a delinquency extends beyond 30 days, the loan and payment history is
reviewed and efforts are made to collect the loan. While the Bank generally
prefers to work with borrowers to resolve such problems, the Bank institutes
foreclosure or other collection proceedings when necessary to minimize any
potential loss. Before foreclosure proceedings start, the Bank determines
whether an environmental study needs to be conducted first.
Loans are placed on non-accrual status when management believes the
probability of collection of interest is insufficient to warrant further
accrual. When a loan is placed on non-accrual status, previously accrued but
unpaid interest is deducted from interest income. As a matter of policy, the
Bank discontinues the accrual of interest income when the loan becomes 90 days
past due as to principal or interest. Specific reserves are established when a
consumer loan becomes 120 days past due.
Real estate acquired by the Bank as a result of foreclosure or by
deed-in-lieu of foreclosure and loans deemed to be in-substance foreclosed under
generally accepted accounting principles are classified as real estate owned
until sold. The Bank had no real estate owned at December 31, 1998 or 1997.
Delinquent Loans. The following table sets forth information concerning
delinquent loans at December 31, 1998, in dollar amount and as a percentage of
the Bank's total loan portfolio. The dollar amounts shown equal the total
outstanding principal balances of the related loans, rather than the actual
payment amounts which are past due. At December 31, 1998, the Bank had no
consumer loans, construction loans or land loans which were delinquent 30 or
more days.
<TABLE>
<CAPTION>
One- to Four-Family Commercial
Residential Real Estate Total
------------------- ---------------- --------------
Amount % Amount % Amount %
------ --- ------ --- ------ ---
(Dollars in Thousands)
Loans delinquent for:
<S> <C> <C> <C> <C> <C> <C>
30 - 59 days ................. $ 112 .32% $ 7 .02% $ 119 .34%
60 - 89 days ................. 31 .09 -- -- 31 .09
90 days and over ............. 202 .58 -- -- 202 .58
----- --- ----- ---- ----- ----
Total delinquent loans ..... $ 345 .99% $ 7 .02% $ 352 1.01%
===== ==== ===== ==== ===== ====
</TABLE>
46
<PAGE>
Non-Performing Assets. The following table shows the Bank's non-performing
assets at the dates indicated. The Bank did not have any accruing loans 90 days
or more delinquent or troubled debt restructurings at the dates shown.
December 31,
------------
1998 1997
---- ----
(Dollars in Thousands)
Non-accruing loans:
One- to four-family residential ........................... $202 $176
Consumer .................................................. -- --
---- ----
Total non-accruing loans ............................... 202 176
Real estate owned ........................................... -- --
---- ----
Total non-performing assets ............................ $202 $176
==== ====
Total non-performing loans as a percentage of
total loans ............................................. .58% .75%
==== ====
Total non-performing assets as a percentage of
total assets ............................................ .49% .53%
==== ====
The $202,000 of non-accruing loans at December 31, 1998 consisted of seven
one- to four-family residential loans, of which the largest loan was for
$64,000. All of the residential properties securing these loans are located in
either Tangipahoa or Livingston Parish.
If the $202,000 of non-accruing loans at December 31, 1998 had been current
in accordance with their terms during 1998, the gross interest income on such
loans would have been approximately $16,000. A total of $14,000 of interest
income on these non-accruing loans was actually recorded in 1998.
Classified Assets. Federal regulations require that each insured savings
institution classify its assets on a regular basis. In addition, in connection
with examinations of insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them. There are three
classifications for problem assets: "substandard," "doubtful" and "loss."
Substandard assets have one or more defined weaknesses and are characterized by
the distinct possibility that the insured institution will sustain some loss if
the deficiencies are not corrected. Doubtful assets have the weaknesses of
substandard assets with the additional characteristic that the weaknesses make
collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable, and there is a higher possibility of loss.
An asset classified loss is considered uncollectible and of such little value
that continuance as an asset of the institution is not warranted. Another
category designated "special mention" also must be established and maintained
for assets which do not currently expose an insured institution to a sufficient
degree of risk to warrant classification as substandard, doubtful or loss.
Assets classified as substandard or doubtful require the institution to
establish general allowances for loan losses. If an asset or portion thereof is
classified loss, the insured institution must either establish specific
allowances for loan losses in the amount of 100% of the portion of the asset
classified loss, or charge-off such amount. General loss allowances established
to cover possible losses related to assets classified substandard or doubtful
may be included in determining an institution's regulatory capital, while
specific valuation allowances for loan losses do not qualify as regulatory
capital. Federal examiners may disagree with an insured institution's
classifications and amounts reserved.
All loans for $200,000 or more are reviewed annually under the Bank's asset
classification policy, and other loans are reviewed based on delinquency
reports. The Bank's total classified assets at December 31, 1998 (excluding loss
assets specifically reserved for) amounted to $443,000, all of which was
classified as substandard. The largest classified asset at December 31, 1998
consisted of a $78,000 adjustable-rate residential loan. The remaining $365,000
of substandard assets at December 31, 1998 consisted of 17 residential mortgage
loans totaling $358,000 and a $7,000 multi-family residential loan.
47
<PAGE>
Allowance for Loan Losses. At December 31, 1998, the Bank's allowance for
loan losses amounted to $170,000 or .49% of the total loan portfolio. The Bank's
loan portfolio consists primarily of residential mortgage loans and, to a lesser
extent, commercial real estate loans, land loans and consumer loans. The loan
loss allowance is maintained by management at a level considered adequate to
cover probable losses that are currently anticipated based on prior loan loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral, general economic conditions, and other factors and
estimates which are subject to change over time. The Bank significantly
increased its allowance for loan losses in 1998 by incurring an $81,000
provision for loan losses, compared to a $6,000 provision for 1997. The higher
provision in 1998 was due to an $11.5 million or 48.7% increase in the total
loan portfolio in 1998. Most of the increase in the loan portfolio in 1998 was
due to increased originations of one- to four-family residential loans, but
there were also increases in construction, commercial real estate, land and
consumer loans. A portion of the allowance for loan losses in 1998 was allocated
to construction, commercial real estate and land loans for the first time in
light of the increases in these types of loans. In addition, the allowance
allocated to residential and consumer loans was increased because of the growth
in these loan categories. While management believes that it determines the size
of the allowance based on the best information available at the time, the
allowance will need to be adjusted as circumstances change and assumptions are
updated. Future adjustments to the allowance could significantly affect net
income.
The following table shows changes in the Bank's allowance for loan losses
during the periods indicated.
Year Ended December 31,
-----------------------
1998 1997
------- -------
(Dollars in Thousands)
Total loans outstanding at end of period .............. $35,032 $23,560
======= =======
Average loans outstanding ............................. $28,771 $21,260
======= =======
Balance at beginning of period ........................ $ 89 $ 83
Charge-offs ........................................... -- --
Recoveries ............................................ -- --
------- -------
Net charge-offs (recoveries) .......................... -- --
Provision for loan losses ............................. 81 6
------- -------
Balance at end of period .............................. $ 170 $ 89
======= =======
Allowance for loan losses as a percent of
total loans outstanding ............................. .49% .38%
======= =======
Ratio of net charge-offs (recoveries) to
average loans outstanding ........................... -- % --%
======= =======
48
<PAGE>
The following table shows how the Bank's allowance for loan losses is
allocated by type of loan at each of the dates indicated.
December 31,
-------------------------------------------
1998 1997
-------------------- --------------------
Loan Loan
Category Category
Amount as a % Amount as a %
of of Total of of Total
Allowance Loans Allowance Loans
--------- ----- --------- -----
(Dollars in Thousands)
One- to four-family residential .... $ 100 86.2% $ 79 92.2%
Construction ....................... 20 3.2 -- 1.1
Commercial real estate ............. 15 1.9 -- 2.3
Land ............................... 10 1.2 -- .6
Consumer ........................... 25 7.5 10 3.8
------- ----- ------ -----
Total .............................. $ 170 100.0% $ 89 100.0%
======= ===== ====== =====
Mortgage-Backed Securities
Mortgage-backed securities represent a participation interest in a pool of
one- to four-family or multi-family mortgages. The mortgage originators use
intermediaries (generally U.S. Government agencies and government-sponsored
enterprises) to pool and repackage the participation interests in the form of
securities, with investors such as the Bank receiving the principal and interest
payments on the mortgages. Such U.S. Government agencies and
government-sponsored enterprises, which guarantee the payment of principal and
interest to investors.
Mortgage-backed securities are typically issued with stated principal
amounts, and the securities are backed by pools of mortgages that have loans
with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages, i.e., fixed-rate or adjustable-rate, as well as
prepayment risk, are passed on to the certificate holder. The life of a
mortgage-backed pass-through security thus approximates the life of the
underlying mortgages.
The Bank's mortgage-backed securities consist entirely of GNMA securities.
The GNMA is a government agency within the Department of Housing and Urban
Development which is intended to help finance government-assisted housing
programs. GNMA securities are backed by loans insured by the Federal Housing
Administration ("FHA") or guaranteed by the Veterans Administration ("VA"), and
the timely payment of principal and interest on GNMA securities are guaranteed
by the GNMA and backed by the full faith and credit of the U.S. Government.
At December 31, 1998, the Bank's mortgage-backed securities amounted to
$2.9 million, which represented 7.1% of the Bank's $41.1 million of total assets
at that date. All of the Bank's $2.9 million of mortgage-backed securities at
December 31, 1998 are accounted for as held to maturity, and $2.8 million had
adjustable interest rates. The Bank's mortgage-backed securities at December 31,
1997 amounted to $4.2 million. The Bank did not purchase any mortgage-backed
securities in either 1998 or 1997. For information regarding the maturities of
the Bank's mortgage-backed securities, see Note 3 of Notes to Financial
Statements.
Mortgage-backed securities generally yield less than the loans which
underlie such securities because of their payment guarantees or credit
enhancements which offer nominal credit risk. In addition, mortgage-backed
49
<PAGE>
securities are more liquid than individual mortgage loans and may be used to
collateralize borrowings or other obligations of the Bank.
The following table shows the activity in the Bank's mortgage-backed
securities portfolio during the periods indicated.
At or For the Year
Ended
December 31,
-------------------
1998 1997
------- -------
(Dollars in Thousands)
Mortgage-backed securities at
beginning of period (cost) .......................... $ 4,184 $ 5,096
Purchases ............................................. -- --
Repayments ............................................ (1,251) (905)
Premium amortization .................................. (9) (7)
------- -------
Mortgage-backed securities at end
of period (cost) .................................... $ 2,924 $ 4,184
======= =======
Mortgaged-backed securities at end
of period (fair value) .............................. $ 2,941 $ 4,271
======= =======
Weighted average yield at end of period ............... 6.61% 6.98%
======= =======
Investment Securities
The Bank has authority to invest in various types of liquid assets,
including United States Treasury obligations, securities of various federal
agencies and of state and municipal governments, certificates of deposit at
federally-insured banks and savings institutions, certain bankers' acceptances
and federal funds. Each purchase of an investment security is approved by the
Board of Directors.
At December 31, 1998 and 1997, the Bank's investment securities consisted
solely of a $1.0 million investment in a mutual fund which invests in
adjustable-rate mortgages. This investment security is accounted for as
available for sale at December 31, 1998. The fair market value of the investment
security was $993,000 at December 31, 1998 and $1,000,000 at December 31, 1997.
The investment security has a weighted average yield of 5.55% and a
maturity of one year or less at December 31, 1998.
Sources of Funds
General. Deposits are the primary source of the Bank's funds for lending
and other investment purposes. In addition to deposits, the Bank derives funds
primarily from principal and interest payments on loans and mortgage-backed
securities. Loan repayments are a relatively stable source of funds, while
deposit inflows and outflows are significantly influenced by general interest
rates and money market conditions. Borrowings are also used on a short-term
basis to compensate for reductions in the availability of funds from other
sources and may be used on a longer-term basis for general business purposes.
Deposits. The Bank's deposits are attracted principally from within its
primary market area. Deposit account terms vary, with the principal differences
being the minimum balance required, the time periods the funds must remain on
deposit and the interest rate.
50
<PAGE>
The Bank's deposits are obtained primarily from residents of Tangipahoa
Parish and, to a lesser extent, Livingston and St. Tammany Parishes. Management
of the Bank estimates that less than 1% of the Bank's deposits are obtained from
customers residing outside of Louisiana. The Bank does not pay fees to brokers
to solicit funds for deposit with the Bank or actively solicit negotiable-rate
certificates of deposit with balances of $100,000 or more.
Interest rates paid, maturity terms, service fees and withdrawal penalties
are established by the Bank on a periodic basis. Management determines the rates
and terms based on rates paid by competitors, the Bank's needs for funds or
liquidity, growth goals and federal and state regulations.
The following table shows the amount of deposits at the Bank by types of
deposit at the dates indicated.
December 31,
------------------------------------
1998 1997
---------------- ----------------
Amount % Amount %
------- ------ ------- ------
(Dollars in Thousands)
Certificate accounts:
3.01% - 4.00% ........................ $ 502 1.5% $ -- --%
4.01% -5.00% ......................... 7,104 20.8 3,137 10.7
5.01% - 6.00% ........................ 18,190 53.3 20,285 69.2
6.01% - 7.00% ........................ 1,800 5.2 1,793 6.1
------- ------ ------- ------
Total certificate accounts ......... 27,596 80.8 25,215 86.0
------- ------ ------- ------
Transaction accounts:
Passbook accounts .................... 1,090 3.2 965 3.3
Money market accounts ................ 3,453 10.1 2,560 8.7
NOW accounts(1) ...................... 1,926 5.7 555 1.9
------- ------ ------- ------
Total transaction accounts ........ 6,469 19.0 4,080 13.9
------- ------ ------- ------
Accrued interest payable ............... 75 .2 41 .1
------- ------ ------- ------
Total deposits ......................... $34,140 100.0% $29,336 100.0%
======= ====== ======= ======
- --------
(1) Includes noninterest-bearing checking accounts, which amounted to $710,000
at December 31, 1998, compared to $0 at December 31, 1997.
51
<PAGE>
The following table shows the average balance of each type of deposit and
the average rate paid on each type of deposit for the periods indicated.
Year Ended December 31,
--------------------------------
1998 1997
-------------- --------------
Average Average
Average Rate Average Rate
Balance Paid Balance Paid
------- ---- ------- ----
(Dollars in Thousands)
Passbook savings accounts ................. $ 998 2.22% $ 896 2.39%
Demand and NOW accounts(1) ................ 941 2.06 259 3.02
Money market deposit accounts ............. 2,849 3.74 2,581 3.91
Certificates of deposit ................... 26,244 5.40 23,499 5.47
------- ---- ------- ----
Total interest-bearing
deposits(2) ....................... $31,032 5.04% $27,235 5.20%
======= ==== ======= ====
- ----------
(1) Includes noninterest-bearing checking accounts.
(2) Excludes accrued interest payable.
The following table shows the activity in the Bank's deposits during the
periods indicated.
Year Ended
December 31,
-------------------------
1998 1997
---- ----
(In Thousands)
Net increase before interest credited(1) ...... $3,623 $ 3,134
Interest credited ............................. 1,146 1,038
----- ------
Net increase in deposits(2) ................... $4,769 $ 4,172
===== ======
- ----------
(1) The information provided is net of deposits and withdrawals because the
gross amount of deposits and withdrawals is not readily available.
(2) Excludes accrued interest payable on deposits.
The Bank attempts to control the flow of deposits by pricing its accounts
to remain generally competitive with other financial institutions in its market
area. The Bank actively competes with other institutions on a rate basis, and
the Bank has frequently taken a position of price leadership in its market area.
52
<PAGE>
The following table shows the interest rate and maturity information for
the Bank's certificates of deposit at December 31, 1998.
<TABLE>
<CAPTION>
Maturity Date
---------------------------------------------------------------
One Year Over 1 Over 2 Over
or Less to 2 Years to 3 Years 3 Years Total
-------- ------------ ------------ --------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C>
3.01% - 4.00% .......... $ 502 $ -- $ -- $ -- $ 502
4.01% - 5.00% .......... 6,259 845 -- -- 7,104
5.01% - 6.00% .......... 11,939 4,479 778 994 18,190
6.01% - 7.00% .......... 1,034 531 -- 235 1,800
------ ----- --- ----- ------
Total ................. $19,734 $5,855 $778 $1,229 $27,596
====== ===== === ===== ======
</TABLE>
The following table shows the maturities of the Bank's certificates of
deposit having principal amounts of $100,000 or more at December 31, 1998.
Certificates of deposit maturing
in quarter ending: Amount
- -------------------------------- --------------
(In Thousands)
March 31, 1999 ...................................... $1,326
June 30, 1999 ....................................... 1,144
September 30, 1999 .................................. 1,471
December 31, 1999 ................................... 105
After December 31, 1999 ............................ 693
------
Total certificates of deposit with
balances of $100,000 or more ...................... $4,739
======
Borrowings. The Bank may obtain advances from the FHLB of Dallas upon the
security of the common stock it owns in that bank and certain of its residential
mortgage loans and mortgage-backed securities, provided certain standards
related to creditworthiness have been met. Such advances are made pursuant to
several credit programs, each of which has its own interest rate and range of
maturities. Such advances are generally available to meet seasonal and other
withdrawals of deposit accounts and to permit increased lending. See "Regulation
- - The Bank - Federal Home Loan Bank System."
As of December 31, 1998, the Bank was permitted to borrow up to an
aggregate total of $14.4 million from the FHLB of Dallas. The Bank had $3.2
million of FHLB advances outstanding at December 31, 1998, compared to $400,000
at December 31, 1997.
53
<PAGE>
The following table shows certain information regarding the borrowings of
the Bank at or for the dates indicated:
At or for the Year Ended
December 31,
-------------------------
1998 1997
---- ----
(Dollars in Thousands)
FHLB advances:
Average balance outstanding ...................... $1,819 $ 66
Maximum amount outstanding at any
month-end during the period ................... $3,200 $ 400
Balance outstanding at end of period ............. $3,200 $ 400
Average interest rate during the period .......... 5.88% 6.11%
Weighted average interest rate at end of period .. 5.69% 6.16%
No Subsidiaries
At December 31, 1998, the Bank had no subsidiaries.
Total Employees
The Bank had nine full-time employees and two part-time employees at
December 31, 1998. None of these employees are represented by a collective
bargaining agent, and the Bank believes that it enjoys good relations with its
personnel.
Our Market Area
The Bank's primary market area for lending and deposits is Tangipahoa
Parish, which is located in southeast Louisiana. To a lesser extent, the Bank
serves customers in the adjacent parishes of Livingston and St. Tammany. The
Bank's market area can be characterized as a combination of rural and suburban
areas. Tangipahoa Parish maintains a large commuter population with residents
commuting to jobs in the New Orleans and Baton Rouge metropolitan areas. The
parish's population increased from approximately 86,000 in 1990 to 95,000 in
1997, representing an annual growth rate of 1.6%. The increased demand for
housing resulting from the population growth has had a positive impact on real
estate values in Tangipahoa Parish in recent years.
Educational facilities are three of the four largest employers in
Tangipahoa Parish, including Southeastern Louisiana University. The second
largest employer is North Oaks Medical Center. Median household and per capita
income levels in Tangipahoa Parish ($20,276 and $10,108, respectively, in 1997)
are lower than the comparative medians for Louisiana and the United States,
which is indicative of the market area's more rural nature that provides for a
lower cost of living than the more heavily populated markets within the state.
The unemployment rate in Tangipahoa Parish was 9.2% in June 1998. This rate is
higher than the comparative measures for Louisiana and the United States, which
tends to be a characteristic of rural markets in general as the result of
seasonal agricultural employment fluctuations.
Competition
The Bank faces significant competition both in attracting deposits and in
making loans. Its most direct competition for deposits has come historically
from commercial banks, credit unions and other savings institutions located in
its primary market area, including many large financial institutions which have
greater financial and marketing resources available to them. In addition, the
Bank faces significant competition for investors' funds from
54
<PAGE>
short-term money market securities, mutual funds and other corporate and
government securities. The Bank does not rely upon any individual group or
entity for a material portion of its deposits. The Bank's ability to attract and
retain deposits depends on its ability to generally provide a rate of return,
liquidity and risk comparable to that offered by competing investment
opportunities.
The Bank's competition for real estate loans comes principally from
mortgage banking companies, commercial banks, other savings institutions and
credit unions. The Bank competes for loan originations primarily through the
interest rates and loan fees it charges, and the efficiency and quality of
services it provides borrowers. Factors which affect competition include general
and local economic conditions, current interest rate levels and volatility in
the mortgage markets. Competition may increase as a result of the continuing
reduction of restrictions on the interstate operations of financial institutions
and the anticipated slowing of refinancing activity.
Properties
At December 31, 1998, Florida Parishes conducted its business from its
headquarters and sole office at 300 West Morris Street, Hammond, Louisiana
70403. The Bank owns the building and land at this site. The estimated net book
value of the electronic data processing and other office equipment owned by
Florida Parishes was $43,000 at December 31, 1998.
No Material Legal Proceedings
The Bank is involved in routine legal proceedings occurring in the ordinary
course of business which, in the aggregate, are believed by management to be
immaterial to the financial condition and results of operations of the Bank.
REGULATION
The following discussion of certain laws and regulations which are
applicable to FPB Financial and Florida Parishes Bank, as well as descriptions
of laws and regulations contained elsewhere herein, summarizes the aspects of
such laws and regulations which are deemed to be material to FPB Financial and
the Bank. However, the summary does not purport to be complete and is qualified
in its entirety by reference to applicable laws and regulations.
FPB Financial
Holding Company Acquisitions. Upon consummation of the conversion, FPB
Financial will become a savings and loan holding company within the meaning of
the Home Owners' Loan Act, as amended ("HOLA"), and will be required to register
with the OTS. Federal law generally prohibits a savings and loan holding
company, without prior OTS approval, from acquiring the ownership or control of
any other savings institution or savings and loan holding company, or all, or
substantially all, of the assets or more than 5% of the voting shares thereof.
These provisions also prohibit, among other things, any director or officer of a
savings and loan holding company, or any individual who owns or controls more
than 25% of the voting shares of such holding company, from acquiring control of
any savings institution not a subsidiary of such savings and loan holding
company, unless the acquisition is approved by the OTS.
Holding Company Activities. FPB Financial will operate as a unitary savings
and loan holding company. Generally, there are limited restrictions on the
activities of a unitary savings and loan holding company and its non-savings
institution subsidiaries. However, if the OTS determines that there is
reasonable cause to believe that the continuation by a savings and loan holding
company of an activity constitutes a serious risk to the financial safety,
soundness or stability of its subsidiary savings institution, the OTS may impose
such restrictions as deemed necessary to address such risk. These restrictions
include limiting (1) the payment of dividends by the savings
55
<PAGE>
institution; (2) transactions between the savings institution and its
affiliates; and (3) any activities of the savings institution that might create
a serious risk that the liabilities of the holding company and its affiliates
may be imposed on the savings institution. If the savings institution subsidiary
of a unitary savings and loan holding company fails to meet the qualified thrift
lender test, as discussed under "- The Bank - Qualified Thrift Lender Test,"
then such holding company also shall become subject to the activities
restrictions applicable to multiple savings and loan holding companies and,
unless the savings institution requalifies as a QTL within one year thereafter,
shall register as, and become subject to the restrictions applicable to, a bank
holding company. See "--The Bank - Qualified Thrift Lender Test."
Every savings institution subsidiary of a savings and loan holding company
is required to give the OTS at least 30 days' advance notice of any proposed
dividends to be made on its guarantee, permanent or other non-withdrawable
stock, or else such dividend will be invalid. See "- The Bank - Capital
Distributions."
Restrictions on Transactions With Affiliates. Transactions between a
savings institution and its "affiliates" are subject to quantitative and
qualitative restrictions under Sections 23A and 23B of the Federal Reserve Act
and OTS regulations. Affiliates of a savings institution include, among other
entities, the savings institution's holding company and companies that are
controlled by or under common control with the savings institution.
In general, the extent to which a savings institution or its subsidiaries
may engage in certain "covered transactions" with affiliates is limited to an
amount equal to 10% of the institution's capital and surplus, in the case of
covered transactions with any one affiliate, and to an amount equal to 20% of
such capital and surplus, in the case of covered transactions with all
affiliates. In addition, a savings institution and its subsidiaries may engage
in covered transactions and certain other transactions only on terms and under
circumstances that are substantially the same, or at least as favorable to the
savings institution or its subsidiary, as those prevailing at the time for
comparable transactions with nonaffiliated companies. A "covered transaction" is
defined to include a loan or extension of credit to an affiliate; a purchase of
investment securities issued by an affiliate; a purchase of assets from an
affiliate, with certain exceptions; the acceptance of securities issued by an
affiliate as collateral for a loan or extension of credit to any party; or the
issuance of a guarantee, acceptance or letter of credit on behalf of an
affiliate.
In addition, a savings institution may not (1) make a loan or extension of
credit to an affiliate unless the affiliate is engaged only in activities
permissible for bank holding companies; (2) purchase or invest in securities of
an affiliate other than shares of a subsidiary; (3) purchase a low-quality asset
from an affiliate; or (4) engage in covered transactions and certain other
transactions between a savings institution or its subsidiaries and an affiliate
except on terms and conditions that are consistent with safe and sound banking
practices. With certain exceptions, each loan or extension of credit by a
savings institution to an affiliate must be secured by collateral with a market
value ranging from 100% to 130% (depending on the type of collateral) of the
amount of the loan or extension of credit.
OTS regulations generally exclude all non-bank and non-savings institution
subsidiaries of savings institutions from treatment as affiliates, except to the
extent that the OTS or the Federal Reserve Board decides to treat such
subsidiaries as affiliates. OTS regulations also provide that certain classes of
savings institutions may be required to give the OTS prior notice of affiliate
transactions.
Federal Securities Laws. FPB Financial has filed with the SEC a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), for the registration of the Common Stock to be issued
pursuant to the conversion. Upon consummation of the conversion, FPB Financial
intends to register its common stock with the SEC under Section 12(g) of the
Exchange Act. FPB Financial will then be subject to the proxy and tender offer
rules, insider trading reporting requirements and restrictions, and certain
other requirements under the Exchange Act. Pursuant to OTS regulations and the
Plan of Conversion, FPB Financial has agreed to maintain such registration for a
minimum of three years following the conversion.
56
<PAGE>
The registration under the Securities Act of the shares of common stock to
be issued in the conversion does not cover the resale of such shares. Shares of
common stock purchased by persons who are not affiliates of FPB Financial may be
sold without registration. Shares purchased by an affiliate of FPB Financial
will be subject to the resale restrictions of Rule 144 under the Securities Act.
If FPB Financial meets the current public information requirements of Rule 144
under the Securities Act, each affiliate of FPB Financial who complies with the
other conditions of Rule 144 would be able to sell in the public market, without
registration, a number of shares not to exceed, in any three-month period, the
greater of (i) 1% of the outstanding shares of FPB Financial or (ii) the average
weekly volume of trading in such shares during the preceding four calendar
weeks.
The Bank
General. As part of the conversion, the Bank will convert from a federally
chartered mutual savings bank to a federally chartered stock savings bank. The
OTS will be the Bank's chartering authority and primary federal regulator. The
OTS has extensive authority over the operations of federally chartered savings
institutions. As part of this authority, federally chartered savings
institutions are required to file periodic reports with the OTS and are subject
to periodic examinations by the OTS and the FDIC. The Bank also is subject to
regulation and examination by the FDIC and to requirements established by the
Federal Reserve Board. The investment and lending authority of savings
institutions are prescribed by federal laws and regulations, and such
institutions are prohibited from engaging in any activities not permitted by
such laws and regulations. Such regulation and supervision is primarily intended
for the protection of depositors and the Savings Association Insurance Fund.
The OTS' enforcement authority over all savings institutions and their
holding companies includes, among other things, the ability to assess civil
money penalties, to issue cease and desist or removal orders and to initiate
injunctive actions. In general, these enforcement actions may be initiated for
violations of laws and regulations and unsafe or unsound practices. Other
actions or inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with the OTS.
Insurance of Accounts. The deposits of the Bank are insured to the maximum
extent permitted by the SAIF, which is administered by the FDIC, and are backed
by the full faith and credit of the U.S. Government. As insurer, the FDIC is
authorized to conduct examinations of, and to require reporting by, FDIC-insured
institutions. It also may prohibit any FDIC-insured institution from engaging in
any activity the FDIC determines by regulation or order to pose a serious threat
to the FDIC. The FDIC also has the authority to initiate enforcement actions
against savings institutions, after giving the OTS an opportunity to take such
action.
SAIF-insured institutions are assigned to one of three capital groups which
are based solely on the level of an institution's capital--"well capitalized,"
"adequately capitalized," and "undercapitalized." These capital levels are
defined in the same manner as under the prompt corrective action system
discussed below. These three groups are then divided into three subgroups which
reflect varying levels of supervisory concern, from those which are considered
to be healthy to those which are considered to be of substantial supervisory
concern. The matrix so created results in nine assessment risk classifications,
with rates ranging prior to September 30, 1996 from .23% for well capitalized,
healthy institutions to .31% for undercapitalized institutions with substantial
supervisory concerns. The insurance premiums for the Bank for 1995 and the first
nine months of 1996 were .23% (per annum) of insured deposits.
Both the SAIF and the Bank Insurance Fund ("BIF") are required by law to
maintain a reserve ratio of 1.25% of insured deposits. The BIF achieved a fully
funded status first, and effective January 1, 1996 the FDIC substantially
reduced the average deposit insurance premium paid by BIF-insured banks. The
deposit insurance premiums for BIF member institutions were reduced to zero
basis points (subject to a $2,000 minimum) for institutions in the lowest risk
category, as compared to 23 basis points for SAIF members in the lowest risk
category.
57
<PAGE>
On September 30, 1996, new legislation required all SAIF member
institutions to pay a one-time special assessment to recapitalize the SAIF, with
the aggregate amount to be sufficient to bring the reserve ratio to 1.25% of
insured deposits. The legislation also provided for the elimination of the
premium differential between SAIF-insured and BIF-insured institutions and for
the merger of the BIF and the SAIF, with the merger being conditioned upon the
prior elimination of the thrift charter.
Beginning January 1, 1997, effective SAIF rates generally range from zero
basis points to 27 basis points. From 1997 through 1999, SAIF members will pay
6.4 basis points to fund the Financing Corporation, while BIF member
institutions will pay approximately 1.3 basis points. The Bank's insurance
premiums, which had amounted to 23 basis points, were thus reduced to 6.4 basis
points effective January 1, 1997. Based on the Bank's assessable deposits in
1997 and 1998, the premium reduction resulted in a pre-tax cost savings of
approximately $43,000 in 1997 and $50,000 in 1998 for the Bank.
The FDIC may terminate the deposit insurance of any insured depository
institution, including the Bank, if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance temporarily during the hearing
process for the permanent termination of insurance, if the institution has no
tangible capital. If insurance of accounts is terminated, the accounts at the
institution at the time of the termination, less subsequent withdrawals, shall
continue to be insured for a period of six months to two years, as determined by
the FDIC. Management is aware of no existing circumstances which would result in
termination of the Bank's deposit insurance.
Regulatory Capital Requirements. Federally insured savings institutions are
required to maintain minimum levels of regulatory capital. The OTS has
established capital standards applicable to all savings institutions. These
standards generally must be as stringent as the comparable capital requirements
imposed on national banks. The OTS also is authorized to impose capital
requirements in excess of these standards on individual institutions on a
case-by-case basis.
Current OTS capital standards require savings institutions to satisfy three
different capital requirements. Under these standards, savings institutions must
maintain "tangible" capital equal to at least 1.5% of adjusted total assets,
"core" capital equal to at least 3.0% of adjusted total assets and "total"
capital (a combination of core and "supplementary" capital) equal to at least
8.0% of "risk-weighted" assets. Core capital generally consists of common
stockholders' equity (including retained earnings). Tangible capital generally
equals core capital minus intangible assets, with only a limited exception for
purchased mortgage servicing rights. The Bank had no intangible assets at
December 31, 1998. Both core and tangible capital are further reduced by an
amount equal to a savings institution's debt and equity investments in
subsidiaries engaged in activities not permissible to national banks (other than
subsidiaries engaged in activities undertaken as agent for customers or in
mortgage banking activities and subsidiary depository institutions or their
holding companies). These adjustments do not affect the Bank's regulatory
capital.
In determining compliance with the risk-based capital requirement, a
savings institution is allowed to include both core capital and supplementary
capital in its total capital, provided that the amount of supplementary capital
included does not exceed the savings institution's core capital. Supplementary
capital generally consists of general allowances for loan losses up to a maximum
of 1.25% of risk-weighted assets, together with certain other items. In
determining the required amount of risk-based capital, total assets, including
certain off-balance sheet items, are multiplied by a risk weight based on the
risks inherent in the type of assets. The risk weights range from 0% for cash
and securities issued by the U.S. Government or unconditionally backed by the
full faith and credit of the U.S. Government to 100% for loans (other than
qualifying residential loans weighted at 80%) and repossessed assets.
In August 1993, the OTS adopted a final rule incorporating an interest-rate
risk component into the risk-based capital regulation. Under the rule, an
institution with greater than "normal" interest rate risk will be subject to a
deduction of its interest rate risk component from total capital for purposes of
calculating its risk-based capital.
58
<PAGE>
As a result, such an institution will be required to maintain additional capital
in order to comply with the risk-based capital requirement. An institution has
greater than "normal" interest rate risk if it would suffer a loss of net
portfolio value exceeding 2.0% of the estimated market value of its assets in
the event of a 200 basis point increase or decrease in interest rates. The
interest rate risk component will be calculated, on a quarterly basis, as
one-half of the difference between an institution's measured interest rate risk
and 2.0% multiplied by the market value of its assets. The rule also authorizes
the OTS to waive or defer an institution's interest rate risk component on a
case-by-case basis. The final rule was originally effective as of January 1,
1994, subject however to a two quarter "lag" time between the reporting date of
the data used to calculate an institution's interest rate risk and the effective
date of each quarter's interest rate risk component. However, in October 1994
the OTS indicated that it would waive the capital deductions for institutions
with greater than "normal" risk until the OTS published an appeals process. On
August 21, 1995, the OTS established (1) an appeals process to handle "requests
for adjustments" to the interest rate risk component and (2) a process by which
"well-capitalized" institutions may obtain authorization to use their own
interest rate risk model to determine their interest rate risk component. The
OTS also indicated that it would continue to delay the implementation of the
capital deduction for interest rate risk pending the testing of the appeals
process.
Savings institutions must value securities available for sale at amortized
cost for regulatory capital purposes. This means that in computing regulatory
capital, savings institutions should add back any unrealized losses and deduct
any unrealized gains, net of income taxes, on debt securities reported as a
separate component of GAAP capital.
At December 31, 1998, the Bank exceeded all of its regulatory capital
requirements, with tangible, core and risk-based capital ratios of 8.71%, 8.71%
and 19.50%, respectively. The following table sets forth the Bank's compliance
with each of the above-described capital requirements as of December 31, 1998.
Tangible Core Risk-Based
Capital Capital(1) Capital (2)
-------- ---------- -----------
(Dollars in Thousands)
Capital under GAAP ............................ $3,570 $3,570 $ 3,570
Additional capital items:
Unrealized loss on securities available
for sale, net of taxes .................. 5 5 5
General valuation allowances(3) ............ -- -- 170
Less equity investment ........................ -- -- (15)
----- ----- -----
Regulatory capital ............................ 3,575 3,575 3,730
Minimum required regulatory capital(4) ........ 615 1,230 1,530
------ ----- -----
Excess regulatory capital ..................... $2,960 $2,345 $ 2,200
====== ====== =======
Regulatory capital as a percentage ............ 8.71% 8.71% 19.50%
Minimum capital required as a
percentage(4) .............................. 1.50% 3.00% 8.00%
------ ------ -------
Regulatory capital as a percentage
in excess of requirements .................... 7.21% 5.71% 11.50%
===== ===== =====
(Footnotes on next page)
59
<PAGE>
- ----------
(1) Does not reflect the 4.0% requirement to be met in order for an institution
to be "adequately capitalized." See "- Prompt Corrective Action."
(2) Does not reflect the interest-rate risk component in the risk-based capital
requirement, the effective date of which has been postponed as discussed
above.
(3) General valuation allowances are only used in the calculation of risk-based
capital. Such allowances are limited to 1.25% of risk-weighted assets.
(4) Tangible and core capital are computed as a percentage of adjusted total
assets of $41.1 million. Risk-based capital is computed as a percentage of
adjusted risk-weighted assets of $19.1 million.
Any savings institution that fails any of the capital requirements is
subject to possible enforcement actions by the OTS or the FDIC. Such actions
could include a capital directive, a cease and desist order, civil money
penalties, the establishment of restrictions on the institution's operations,
termination of federal deposit insurance and the appointment of a conservator or
receiver. The OTS' capital regulation provides that such actions, through
enforcement proceedings or otherwise, could require one or more of a variety of
corrective actions.
Prompt Corrective Action. The following table shows the amount of capital
associated with the different capital categories set forth in the prompt
corrective action regulations.
<TABLE>
<CAPTION>
Total Tier 1 Tier 1
Capital Category Risk-Based Capital Risk-Based Capital Leverage Capital
---------------- ------------------ ------------------ -----------------
<S> <C> <C> <C>
Well capitalized .................. 10% or more 6% or more 5% or more
Adequately capitalized ............ 8% or more 4% or more 4% or more
Undercapitalized .................. Less than 8% Less than 4% Less than 4%
Significantly undercapitalized .... Less than 6% Less than 3% Less than 3%
</TABLE>
In addition, an institution is "critically undercapitalized" if it has a
ratio of tangible equity to total assets that is equal to or less than 2.0%.
Under specified circumstances, a federal banking agency may reclassify a well
capitalized institution as adequately capitalized and may require an adequately
capitalized institution or an undercapitalized institution to comply with
supervisory actions as if it were in the next lower category (except that the
FDIC may not reclassify a significantly undercapitalized institution as
critically undercapitalized).
An institution generally must file a written capital restoration plan which
meets specified requirements within 45 days of the date that the institution
receives notice or is deemed to have notice that it is undercapitalized,
significantly undercapitalized or critically undercapitalized. A federal banking
agency must provide the institution with written notice of approval or
disapproval within 60 days after receiving a capital restoration plan, subject
to extensions by the agency. An institution which is required to submit a
capital restoration plan must concurrently submit a performance guaranty by each
company that controls the institution. In addition, undercapitalized
institutions are subject to various regulatory restrictions, and the appropriate
federal banking agency also may take any number of discretionary supervisory
actions.
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<PAGE>
At December 31, 1998, the Bank was deemed a well capitalized institution
for purposes of the above regulations and as such is not subject to the above
mentioned restrictions.
Safety and Soundness Guidelines. The OTS and the other federal banking
agencies have established guidelines for safety and soundness, addressing
operational and managerial standards, as well as compensation matters for
insured financial institutions. Institutions failing to meet these standards are
required to submit compliance plans to their appropriate federal regulators. The
OTS and the other agencies have also established guidelines regarding asset
quality and earnings standards for insured institutions. The Bank believes that
it is in compliance with these guidelines and standards.
Liquidity Requirements. All savings institutions are required to maintain
an average daily balance of liquid assets equal to a certain percentage of the
sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings institutions. At the present time, the required minimum
liquid asset ratio is 4%. At December 31, 1998, the Bank's liquidity ratio was
7.0%.
Capital Distributions. OTS regulations govern capital distributions by
savings institutions, which include cash dividends, stock repurchases, cash-out
mergers and other transactions charged to the capital account of a savings
institution to make capital distributions. Generally, the regulation creates a
safe harbor for specified levels of capital distributions from institutions
meeting at least their minimum capital requirements, so long as such
institutions notify the OTS and receive no objection to the distribution from
the OTS. Savings institutions and distributions that do not qualify for the safe
harbor are required to obtain prior OTS approval before making any capital
distributions.
Generally, a savings institution that before and after the proposed
distribution meets or exceeds its fully phased-in capital requirements (Tier 1
institutions) may make capital distributions during any calendar year equal to
the higher of (a) 100% of net income for the calendar year-to-date plus 50% of
its "surplus capital ratio" at the beginning of the calendar year or (b) 75% of
net income over the most recent four-quarter period. The "surplus capital ratio"
is defined to mean the percentage by which the institution's tangible, core or
risk-based capital ratio exceeds its tangible, core or risk-based capital
requirement. Failure to meet minimum capital requirements will result in further
restrictions on capital distributions, including possible prohibition without
explicit OTS approval. See "- Regulatory Capital Requirements."
In order to make distributions under these safe harbors, Tier 1 and Tier 2
institutions must submit 30 days written notice to the OTS prior to making the
distribution. The OTS may object to the distribution during that 30- day period
based on safety and soundness concerns. In addition, a Tier 1 institution deemed
to be in need of more than normal supervision by the OTS may be downgraded to a
Tier 2 or Tier 3 institution as a result of such a determination. At December
31, 1998, the Bank was a Tier 1 institution for purposes of this regulation.
Community Reinvestment Act and the Fair Lending Laws. Savings institutions
have a responsibility under the Community Reinvestment Act of 1977 ("CRA") and
related regulations of the OTS to help meet the credit needs of their
communities, including low- and moderate-income neighborhoods. In addition, the
Equal Credit Opportunity Act and the Fair Housing Act (together, the "Fair
Lending Laws") prohibit lenders from discriminating in their lending practices
on the basis of characteristics specified in those statutes. An institution's
failure to comply with the provisions of CRA could, at a minimum, result in
regulatory restrictions on its activities. Failure to comply with the Fair
Lending Laws could result in enforcement actions by the OTS, as well as other
federal regulatory agencies and the Department of Justice.
61
<PAGE>
Qualified Thrift Lender Test. All savings institutions are required to meet
a qualified thrift lender or QTL test to avoid certain restrictions on their
operations. A savings institution can comply with the QTL test by either
qualifying as a domestic building and loan association as defined in the Code or
meeting the second prong of the QTL test set forth in the HOLA. A savings
institution that does not meet the QTL test must either convert to a bank
charter or comply with the following restrictions on its operations: (1) the
institution may not engage in any new activity or make any new investment,
unless such activity or investment is permissible for a national bank; (2) the
branching powers of the institution shall be restricted to those of a national
bank; (3) the institution shall not be eligible to obtain any new advances from
its FHLB, other than special liquidity advances with the approval of the OTS;
and (4) payment of dividends by the institution shall be subject to the rules
regarding payment of dividends by a national bank. Upon the expiration of three
years from the date the savings institution ceases to be a QTL, it must cease
any activity and not retain any investment not permissible for a national bank
and immediately repay any outstanding FHLB advances (subject to safety and
soundness considerations).
Currently, the prong of the QTL test that is not based on the Code requires
that 65% of an institution's "portfolio assets" (as defined) consist of certain
housing and consumer-related assets on a monthly average basis in nine out of
every 12 months. Assets that qualify without limit for inclusion as part of the
65% requirement include loans made to purchase, refinance, construct, improve or
repair domestic residential housing; home equity loans; most mortgage-backed
securities; stock issued by the FHLB of Dallas; and direct or indirect
obligations of the FDIC. In addition, the following assets, among others, may be
included in meeting the test subject to an overall limit of 20% of the savings
institution's portfolio assets: 50% of residential mortgage loans originated and
sold within 90 days of origination; 100% of consumer loans (limited to 10% of
total portfolio assets); and stock issued by the FHLMC or the FNMA. Portfolio
assets consist of total assets minus the sum of (1) goodwill and other
intangible assets, (2) property used by the savings institution to conduct its
business, and (3) liquid assets up to 20% of the institution's total assets. At
December 31, 1998, the qualified thrift investments of the Bank were
approximately 94.3% of its portfolio assets.
Federal Home Loan Bank System. The Bank is a member of the FHLB of Dallas,
which is one of 12 regional FHLBs that administers the home financing credit
function of savings institutions. Each FHLB serves as a reserve or central bank
for its members within its assigned region. It is funded primarily from proceeds
derived from the sale of consolidated obligations of the FHLB System. It makes
loans to members (i.e., advances) in accordance with policies and procedures
established by the Board of Directors of the FHLB. At December 31, 1998, the
Bank had $3.2 million of FHLB advances. See Note 8 of Notes to Financial
Statements.
As a member, the Bank is required to purchase and maintain stock in the
FHLB of Dallas in an amount equal to at least 1% of its aggregate unpaid
residential mortgage loans or similar obligations at the beginning of each year.
At December 31, 1998, the Bank had $316,000 in FHLB stock, which was in
compliance with this requirement.
The FHLBs are required to provide funds for the resolution of troubled
savings institutions and to contribute to affordable housing programs through
direct loans or interest subsidies on advances targeted for community investment
and low- and moderate-income housing projects. These contributions have
adversely affected the level of FHLB dividends paid in the past and could do so
in the future. These contributions also could have an adverse effect on the
value of FHLB stock in the future. The dividend yield on the Bank's FHLB stock
was 5.94% in both 1998 and 1997.
Federal Reserve System. The Federal Reserve Board requires all depository
institutions to maintain reserves against their transaction accounts (primarily
NOW and Super NOW checking accounts) and non-personal time deposits. As of
December 31, 1998, no reserves were required to be maintained on the first $4.7
million of transaction accounts, reserves of 3% were required to be maintained
against the next $47.8 million of net transaction accounts, and a reserve of 10%
against all remaining net transaction accounts. The above dollar amounts and
percentages are subject to periodic adjustment by the Federal Reserve Board.
Because required reserves must be
62
<PAGE>
maintained in the form of vault cash or a noninterest-bearing account at a
Federal Reserve Bank, the effect of this reserve requirement is to reduce an
institution's earning assets.
Thrift Charter. Congress has been considering legislation in various forms
that would require savings institutions, such as the Bank, to convert their
charters to national or state bank charters. Recent legislation required the
Treasury Department to prepare for Congress a comprehensive study on the
development of a common charter for savings institutions and commercial banks.
The Bank cannot determine whether, or in what form, such legislation may
eventually be enacted and there can be no assurance that any legislation that is
enacted would not adversely affect the Bank and its parent holding company. See
also "Risk Factors - Our Operations Are Subject to Regulatory and Legislative
Changes" for a discussion of pending legislation.
TAXATION
Federal Taxation
General. FPB Financial and the Bank are subject to the corporate tax
provisions of the Code, and the Bank is subject to certain additional provisions
which apply to thrift and other types of financial institutions. The following
discussion of federal taxation is intended only to summarize certain pertinent
federal income tax matters relevant to the taxation of FPB Financial and the
Bank and is not a comprehensive discussion of the tax rules applicable to FPB
Financial and the Bank.
Fiscal Year. FPB Financial and the Bank will file federal income tax
returns on the basis of a calendar year ending on December 31, and it is
expected that separate returns will be filed for 1999 and 2000.
Bad Debt Reserves. In August 1997, legislation was enacted that repealed
the reserve method of accounting (including the percentage of taxable income
method) previously used by many savings institutions to calculate their bad debt
reserve for federal income tax purposes. Savings institutions with $500 million
or less in assets may, however, continue to use the experience method. The Bank
must recapture that portion of its reserve which exceeds the amount that could
have been taken under the experience method for post-1987 tax years. At December
31, 1995, the Bank's post-1987 excess reserves amounted to approximately
$154,000. The recapture will occur over a six-year period, commencing January 1,
1998. The legislation also requires savings institutions to account for bad
debts for federal income tax purposes on the same basis as commercial banks for
tax years beginning after December 31, 1995. This change in accounting method
and recapture of excess bad debt reserves is adequately provided for in the
Bank's deferred tax liability.
At December 31, 1998, the federal income tax reserves of the Bank included
$503,000 for which no federal income tax has been provided. Because of these
federal income tax reserves and the liquidation account to be established for
the benefit of certain depositors of the Bank in connection with the Conversion,
the retained earnings of the Bank are substantially restricted.
Distributions. If the Bank were to distribute cash or property to its
stockholders, and the distribution was treated as being from its accumulated bad
debt reserves, the distribution would cause the Bank to have additional taxable
income. A distribution is from accumulated bad debt reserves if (a) the reserves
exceed the amount that would have been accumulated on the basis of actual loss
experience, and (b) the distribution is a "non-qualified distribution." A
distribution with respect to stock is a non-qualified distribution to the extent
that, for federal income tax purposes, (1) it is in redemption of shares, (2) it
is pursuant to a liquidation of the institution, or (3) in the case of a current
distribution, together with all other such distributions during the taxable
year, it exceeds the institution's current and post-1951 accumulated earnings
and profits. The amount of additional taxable income created by a non-qualified
distribution is an amount that when reduced by the tax attributable to it is
equal to the amount of the distribution.
63
<PAGE>
Minimum Tax. The Code imposes an alternative minimum tax at a rate of 20%.
The alternative minimum tax generally applies to a base of regular taxable
income plus certain tax preferences ("alternative minimum taxable income" or
"AMTI") and is payable to the extent such AMTI is in excess of an exemption
amount. Tax preference items include (a) depreciation and (b) 75% of the excess
(if any) of (1) adjusted current earnings as defined in the Code, over (2) AMTI
(determined without regard to this preference and prior to reduction by net
operating losses).
Capital Gains and Corporate Dividends-Received Deduction. Corporate net
capital gains are taxed at a maximum rate of 35%. Corporations which own 20% or
more of the stock of a corporation distributing a dividend may deduct 80% of the
dividends received. Corporations which own less than 20% of the stock of a
corporation distributing a dividend may deduct 70% of the dividends received.
However, a corporation that receives dividends from a member of the same
affiliated group of corporations may deduct 100% of the dividends received.
Other Matters. Federal legislation is introduced from time to time that
would limit the ability of individuals to deduct interest paid on mortgage
loans. Individuals are currently not permitted to deduct interest on consumer
loans. Significant increases in tax rates or further restrictions on the
deductibility of mortgage interest could adversely affect the Bank.
The Bank's federal income tax returns for the tax years ended 1998, 1997
and 1996 are open under the statute of limitations and are subject to review by
the IRS. The Bank has not been audited by the IRS during the last five years.
State Taxation
FPB Financial is subject to the Louisiana Corporation Income Tax based on
its Louisiana taxable income. The Corporation Income Tax applies at graduated
rates from 4% upon the first $25,000 of Louisiana taxable income to 8% on all
Louisiana taxable income in excess of $200,000. For these purposes, "Louisiana
taxable income" means net income which is earned by FPB Financial within or
derived from sources within the State of Louisiana, after adjustments permitted
under Louisiana law, including a federal income tax deduction. In addition, the
Bank will be subject to the Louisiana Shares Tax which is imposed on the
assessed value of a company's stock. The formula for deriving the assessed value
is to calculate 15% of the sum of (a) 20% of a company's capitalized earnings,
plus (b) 80% of FPB Financial's taxable stockholders' equity, and to subtract
from that figure 50% of FPB Financial's real and personal property assessment.
Various items may also be subtracted in calculating a company's capitalized
earnings. The Bank believes that the Louisiana Shares Tax, which applies at
rates up to 16% on the assessed value of its stock, will not result in a
material tax liability following the conversion.
64
<PAGE>
MANAGEMENT
Management of FPB Financial
Our Board of Directors is divided into three classes, each of which
contains approximately one-third of the Board. Our directors will be elected by
stockholders for staggered three-year terms, or until their successors are
elected and qualified. No director is related to any other director or executive
officer of FPB Financial or the Bank by first cousin or closer. The following
table sets forth certain information regarding our directors, all of whom are
also directors of the Bank.
<TABLE>
<CAPTION>
Position with the Bank and Director of Year
Principal Occupation During the the Bank Term
Name Age(1) Past Five Years Since Expires
- ----------------- ------ ---------------------------------------------- ----------- ---------
<S> <C> <C> <C> <C>
G. Wayne Allen 47 Director; Senior Vice President and 1997 2000
Secretary of the Bank since April 1997;
from November 1996 to April 1997, Branch
Manager and Loan Officer of Hancock
Bank in Hammond, La.; prior thereto, Main
Office Manager and Loan Officer of
Community State Bank in Hammond, La.
Fritz W. Anderson, II 36 Director; President and Chief Executive 1987 2002
Officer of the Bank since April 1997; prior
thereto, Vice President of Lending and
Investments at the Bank
Bill W. Bowden 71 Chairman of the Board; retired since May 1975 2001
1997; prior thereto, a real estate broker with
Re/Max Realty Group in Hammond, La.
Dan R. Durham 68 Director; retired since 1996; formerly 1977 2002
President of Dixie Motors, an automobile
and recreational vehicle dealer in
Hammond, and Baton Rouge, La.
Wilbert H. Hutchinson 72 Director; retired since 1990; formerly a 1977 2001
grocery store owner
Richard S. Inge 71 Director; retired since 1987 1977 2002
John L. McGee 79 Director; retired since March 1997; prior 1961 2000
thereto, President and Chief Executive
Officer of the Bank
</TABLE>
- ----------
(1) Age as of December 31, 1998.
65
<PAGE>
Directors of FPB Financial initially will not be compensated by us but will
serve with and be compensated by the Bank. It is not anticipated that separate
compensation will be paid to our directors until such time as such persons
devote significant time to the separate management of our affairs, which is not
expected to occur until we become actively engaged in additional businesses
other than holding the stock of the Bank. We may determine that such
compensation is appropriate in the future.
Our executive officers are elected annually and hold office until their
respective successors have been elected and qualified or until death,
resignation or removal by the Board of Directors.
Management of the Bank
The directors and executive officers of the Bank are the same as our
directors and executive officers. Information concerning the names, ages,
principal occupations during the past five years and term of office of the
directors and executive officers of the Bank is set forth under "- Management of
FPB Financial." The Bank's mutual charter requires the Board of Directors to be
elected each year. Following the conversion, the Bank's stock charter will
require the Board of Directors to be divided into three classes as nearly equal
in number as possible. The members of each class will be elected for a term of
three years or until their successors are elected and qualified, with one class
of directors elected annually.
Board Meetings and Committees
Regular meetings of the Board of Directors of the Bank are held once a
month and special meetings of the Board of Directors of the Bank are held from
time-to-time as needed. There were 21 meetings of the Board of Directors of the
Bank held during 1998. No director attended fewer than 75% of the total number
of meetings of the Board of Directors of the Bank held during 1998 and the total
number of meetings held by all committees of the Board on which the director
served during such year.
The Board of Directors does not have any separate executive, audit,
compensation or nominating committees.
Directors' Compensation
Each director of the Bank receives $600 for each regular meeting of the
Board of Directors. Directors are paid for excused absences from meetings.
Executive Compensation
The following table shows the compensation paid by the Bank to its
President and Chief Executive Officer during the periods indicated. No executive
officer of the Bank received total compensation in excess of $100,000 during
1998.
<TABLE>
<CAPTION>
Annual Compensation
---------------------------------------------
Name and Principal All Other
Position Year Salary(1) Bonus Other(2) Compensation
- ---------------------------------- --------- -------------- ----------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Fritz W. Anderson, II, 1998 $53,460 $17,285 $ -- $ -
President and Chief 1997 49,710 13,125 -- -
Executive Officer 1996 34,207 3,480 -- -
</TABLE>
(Footnotes on next page)
66
<PAGE>
- ----------
(1) Includes directors' fees of $7,200 in each of 1998, 1997 and 1996.
(2) Annual compensation does not include amounts attributable to other
miscellaneous benefits received by Mr. Anderson. The costs to the Bank of
providing such benefits during 1998 did not exceed 10% of the total salary
and bonus paid to or accrued for the benefit of such individual executive
officer.
Employment Agreements
In connection with the conversion, FPB Financial and the Bank (the
"Employers") intend to enter into employment agreements with each of Messrs.
Anderson and Allen. The Employers have agreed to employ the executives for a
term of three years, in each case in their current respective positions. The
agreements provide that Messrs. Anderson and Allen will initially be paid their
current salary levels of $47,500 and $52,800, respectively. The executives'
compensation and expenses shall be paid by FPB Financial and the Bank in the
same proportion as the time and services actually expended by the executives on
behalf of each respective Employer. The employment agreements will be reviewed
annually. The term of the executives' employment agreements shall be extended
each year for a successive additional one-year period upon the approval of the
Employers' Boards of Directors, unless either party elects, not less than 30
days prior to the annual anniversary date, not to extend the employment term.
Each of the employment agreements shall be terminable with or without cause
by the Employers. The executives shall have no right to compensation or other
benefits pursuant to the employment agreements for any period after voluntary
termination or termination by the Employers for cause, disability or retirement.
The agreements provide for certain benefits in the event of the executive's
death. In the event that (1) either executive terminates his employment because
the Employers either fail to comply with any material provision of the
employment agreement or change the executive's title or duties or (2) the
employment agreement is terminated by the Employers other than for cause,
disability, retirement or death or by the executive as a result of certain
adverse actions which are taken with respect to the executive's employment
following a change in control of FPB Financial, as defined, then the executive
will be entitled to a cash severance amount equal to three times his average
annual compensation for the last five calendar years (or such shorter period
that he has worked with the Bank), plus the continuation of certain
miscellaneous fringe benefits, subject to reduction pursuant to Section 280G of
the Code as set forth below in the event of a change in control.
A change in control is generally defined in the employment agreements to
include any change in control of FPB Financial required to be reported under the
federal securities laws, as well as (1) the acquisition by any person of 20% or
more of FPB Financial's outstanding voting securities and (2) a change in a
majority of the directors of FPB Financial during any three-year period without
the approval of at least two-thirds of the persons who were directors of FPB
Financial at the beginning of such period.
Each employment agreement provides that, in the event any of the payments
to be made thereunder or otherwise upon termination of employment are deemed to
constitute "parachute payments" within the meaning of Section 280G of the Code,
then such payments and benefits shall be reduced by the minimum necessary to
result in the payments not exceeding three times the recipient's average annual
compensation from the Employers which was includable in the recipient's gross
income during the most recent five taxable years (the "Section 280G Limit"). As
a result, none of the severance payments will be subject to a 20% excise tax,
and the Employers will be able to deduct such payments as compensation expense
for federal income tax purposes. If a change in control was to occur in 1999
subsequent to consummation of the Conversion, the Section 280G Limit would be
approximately $151,000 for Mr. Anderson and $188,000 for Mr. Allen.
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<PAGE>
Although the above-described employment agreements could increase the cost
of any acquisition of control of us, we do not believe that the terms thereof
would have a significant anti-takeover effect. We may determine to enter into
similar employment agreements with other officers in the future.
New Stock Benefit Plans
Employee Stock Ownership Plan. We have established the ESOP for our
employees to become effective upon the conversion. Our full-time employees who
have been credited with at least 1,000 hours of service during a 12-month period
and who have attained age 21 are eligible to participate in the ESOP.
As part of the conversion, in order to fund the purchase of up to 8% of the
common stock sold in the offering, we anticipate that the ESOP will borrow funds
from us. It is anticipated that such loan will equal 100% of the aggregate
purchase price of the common stock acquired by the ESOP. The loan to the ESOP
will be repaid principally from our contributions to the ESOP over a period of
13 years, and the collateral for the loan will be the common stock purchased by
the ESOP. The interest rate for the ESOP loan is expected to be a fixed rate of
7.75%. We may, in any plan year, make additional discretionary contributions for
the benefit of plan participants in either cash or shares of common stock, which
may be acquired through the purchase of outstanding shares in the market or from
individual stockholders, upon the original issuance of additional shares by FPB
Financial or upon the sale of treasury shares by us. Such purchases, if made,
would be funded through additional borrowings by the ESOP or additional
contributions from us. The timing, amount and manner of future contributions to
the ESOP will be affected by various factors, including prevailing regulatory
policies, the requirements of applicable laws and regulations and market
conditions.
Shares purchased by the ESOP with the loan proceeds will be held in a
suspense account and released to participants on a pro rata basis as debt
service payments are made. Shares released from the ESOP will be allocated to
each eligible participant's ESOP account based on the ratio of each such
participant's base compensation to the total base compensation of all eligible
ESOP participants. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount we might otherwise have contributed to the
ESOP. Upon the completion of three years of service, the account balances of
participants within the ESOP will become 20% vested and will continue to vest at
the rate of 20% for each additional year of service completed by the
participant, such that a participant will become 100% vested upon the completion
of seven years of service. Credit is given for years of service with the Bank
prior to adoption of the ESOP. In the case of a "change in control," as defined,
however, participants will become immediately fully vested in their account
balances. Benefits may be payable upon retirement or separation from service.
Our contributions to the ESOP are not fixed, so benefits payable under the ESOP
cannot be estimated.
Messrs. Anderson and Bowden and a local attorney will serve as trustees of
the ESOP. Under the ESOP, the trustees must generally vote all allocated shares
held in the ESOP in accordance with the instructions of the participating
employees, and unallocated shares will generally be voted in the same ratio on
any matter as those allocated shares for which instructions are given, in each
case subject to the requirements of applicable law and the fiduciary duties of
the trustees.
See "Risk Factors - Our Employee Stock Benefit Plans Will Increase Our
Costs" for a discussion of SOP 93-6, which requires that the compensation
expense recorded by employers for leveraged ESOPs be based on the fair value of
the ESOP shares.
Generally accepted accounting principles require that any third party
borrowing by the ESOP be reflected as a liability on our statement of financial
condition. Since the ESOP is borrowing from us, the loan will not be treated as
a liability but rather will be excluded from stockholders' equity. If the ESOP
purchases newly issued shares from us, total stockholders' equity would neither
increase nor decrease, but per share stockholders' equity and per share net
earnings would decrease as the newly issued shares are allocated to the ESOP
participants.
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<PAGE>
The ESOP will be subject to the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the regulations of the
IRS and the Department of Labor thereunder.
Stock Option Plan. Following consummation of the conversion, we intend to
adopt a stock option plan, which will be designed to attract and retain
qualified personnel in key positions, provide directors, officers and key
employees with a proprietary interest in us as an incentive to contribute to our
success and reward key employees for outstanding performance. The stock option
plan will provide for the grant of incentive stock options intended to comply
with the requirements of Section 422 of the Code ("incentive stock options"),
non-incentive or compensatory stock options and stock appreciation rights
(collectively "Awards"). Awards may be granted to our directors and key
employees. The stock option plan will be administered and interpreted by a
committee of the Board of Directors ("Committee"). Unless sooner terminated, the
stock option plan shall continue in effect for a period of 10 years from the
date the stock option plan is adopted by the Board of Directors.
Under the stock option plan, the Committee will determine which directors,
officers and key employees will be granted Awards, whether options will be
incentive or compensatory options, the number of shares subject to each Award,
the exercise price of each option, whether options may be exercised by
delivering other shares of common stock and when such options become
exercisable. The per share exercise price of an incentive stock option must at
least equal the fair market value of a share of common stock on the date the
option is granted (110% of fair market value in the case of incentive stock
options granted to employees who are 5% stockholders).
At a meeting of our stockholders following the conversion, which under
applicable OTS regulations may be held no earlier than six months after the
completion of the conversion, we intend to present the stock option plan to
stockholders for approval and to reserve an amount equal to 10% of the shares of
common stock sold in the conversion (39,100 shares or 44,965 shares based on the
maximum and 15% above the maximum of the offering range, respectively), for
issuance under the stock option plan. OTS regulations provide that, in the event
such plan is implemented within one year following the conversion, no individual
officer or employee of the Bank may receive more than 25% of the options granted
under the stock option plan and non-employee directors may not receive more than
5% individually, or 30% in the aggregate of the options granted under the stock
option plan. OTS regulations also provide that the exercise price of any options
granted under any such plan must be at least equal to the fair market value of
the common stock as of the date of grant. Each stock option or portion thereof
will be exercisable at any time on or after it vests and will be exercisable
until 10 years after its date of grant or for periods of up to five years
following the death, disability or other termination of the optionee's
employment or service as a director. However, failure to exercise incentive
stock options within three months after the date on which the optionee's
employment terminates may result in the loss of incentive stock option
treatment.
At the time an Award is granted pursuant to the stock option plan, the
recipient will not be required to make any payment in consideration for such
grant. With respect to incentive or compensatory stock options, the optionee
will be required to pay the applicable exercise price at the time of exercise in
order to receive the underlying shares of common stock. The shares reserved for
issuance under the stock option plan may be authorized but previously unissued
shares, treasury shares, or shares purchased by us on the open market or from
private sources. In the event of a stock split, reverse stock split or stock
dividend, the number of shares of common stock under the stock option plan, the
number of shares to which any Award relates and the exercise price per share
under any option or stock appreciation right shall be adjusted to reflect such
increase or decrease in the total number of shares of common stock outstanding.
If we declare a special cash dividend or return of capital following the
implementation of the stock option plan in an amount per share which exceeds 10%
of the fair market value of a share of common stock as of the date of
declaration, the per share exercise price of all previously granted options
which remain unexercised as of the date of such declaration shall, subject to
certain limitations, be proportionately adjusted to give effect to the special
cash dividend or return of capital as of the date of payment of such special
cash dividend or return of capital.
Under current provisions of the Code, the federal income tax treatment of
incentive stock options and compensatory stock options is different. As regards
incentive stock options, an optionee who meets certain holding
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period requirements will not recognize income at the time the option is granted
or at the time the option is exercised, and a federal income tax deduction
generally will not be available to us at any time as a result of such grant or
exercise. With respect to compensatory stock options, the difference between the
fair market value on the date of exercise and the option exercise price
generally will be treated as compensation income upon exercise, and we will be
entitled to a deduction in the amount of income so recognized by the optionee.
Upon the exercise of a stock appreciation right, the holder will realize income
for federal income tax purposes equal to the amount received by him, whether in
cash, shares of stock or both, and we will be entitled to a deduction for
federal income tax purposes in the same amount.
Recognition Plan. Following consummation of the conversion, we intend to
adopt a Recognition Plan for our directors, officers and employees. The
objective of the Recognition Plan will be to enable us to provide directors,
officers and employees with a proprietary interest in us as an incentive to
contribute to our success. We intend to present the Recognition Plan to our
stockholders for their approval at a meeting of stockholders which, pursuant to
applicable OTS regulations, may be held no earlier than six months subsequent to
completion of the conversion.
The Recognition Plan will be administered by a committee of our Board of
Directors, which will have the responsibility to invest all funds contributed to
the trust created for the Recognition Plan (the "Trust"). We will contribute
sufficient funds to the Trust so that the Trust can purchase, following the
receipt of stockholder approval, a number of shares equal to an aggregate of 4%
of the common stock sold in the conversion (15,640 shares or 17,986 shares based
on the maximum and 15% above the maximum of the offering range, respectively).
Shares of common stock granted pursuant to the Recognition Plan generally will
be in the form of restricted stock vesting at a rate to be determined by our
Board of Directors or a committee thereof. For accounting purposes, compensation
expense in the amount of the fair market value of the common stock at the date
of the grant to the recipient will be recognized pro rata over the period during
which the shares are payable. A recipient will be entitled to all voting and
other stockholder rights, except that the shares, while restricted, may not be
sold, pledged or otherwise disposed of and are required to be held in the Trust.
Under the terms of the Recognition Plan, recipients of awards will be entitled
to instruct the trustees of the Recognition Plan as to how the underlying shares
should be voted, and the trustees will be entitled to vote all unallocated
shares in their discretion. If a recipient's employment is terminated as a
result of death or disability, all restrictions will expire and all allocated
shares will become unrestricted. We can terminate the Recognition Plan at any
time, and if we do so, any shares not allocated will revert to us. Recipients of
grants under the Recognition Plan will not be required to make any payment at
the time of grant or when the underlying shares of common stock become vested,
other than payment of withholding taxes.
Indebtedness of Management
In the ordinary course of business, the Bank makes loans available to its
directors, officers and employees. Such loans are made in the ordinary course of
business on the same terms, including interest rates and collateral, as
comparable loans to other borrowers. It is the belief of management that these
loans neither involve more than the normal risk of collectibility nor present
other unfavorable features. At December 31, 1998, the Bank had eight loans
outstanding to directors and executive officers of the Bank, or members of their
immediate families. These loans totalled approximately $746,000 or 20.9% of the
Bank's total equity at December 31, 1998.
THE CONVERSION
The Board of Directors of FPB Financial and the Bank have approved the Plan
of Conversion, as has the OTS, subject to approval by the members of the Bank
entitled to vote on the matter and the satisfaction of certain other conditions.
OTS approval, however, does not constitute a recommendation or endorsement of
the Plan by such agency.
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General
On December 8, 1998, the Board of Directors of the Bank unanimously adopted
the Plan, pursuant to which the Bank will be converted from a federally
chartered mutual savings bank to a federally chartered stock savings bank to be
known as "Florida Parishes Bank," and we will offer and sell our common stock.
All of the common stock of the Bank following the conversion will be held by FPB
Financial, which is incorporated under Louisiana law. The Plan has been approved
by the OTS, subject to, among other things, approval of the Plan by the members
of the Bank. A special meeting has been called for this purpose to be held on
June __, 1999.
In adopting the Plan, the Board of Directors of the Bank determined that
the conversion was advisable and in the best interests of its members and the
Bank. The Board further determined that the interests of certain depositors in
the net worth of the Bank would be equitably provided for and that the
conversion would not have any adverse impact on the reserves and net worth of
the Bank.
We have received approval from the OTS to become a savings and loan holding
company and to acquire all of the common stock of the Bank to be issued in
connection with the conversion. We plan to retain 50% of the net proceeds from
the sale of the common stock, and to use the remaining proceeds to purchase all
of the then to be issued and outstanding capital stock of the Bank. Based on the
minimum and maximum of the offering range, we intend to use approximately
$231,200 and $312,800, respectively, of the net proceeds retained by us to loan
funds to the ESOP to enable the ESOP to purchase up to 8% of the common stock.
The conversion will be effected only upon completion of the sale of all of the
shares of common stock to be issued pursuant to the Plan.
The Plan provides generally that, in connection with the conversion, we
will offer shares of common stock for sale in the Subscription Offering to the
Bank's Eligible Account Holders, ESOP, Supplemental Eligible Account Holders,
Other Members, and officers, directors and employees of the Bank. In addition,
subject to the prior rights of holders of subscription rights, we may elect to
offer the shares of common stock not subscribed for in the Subscription
Offering, if any, for sale in a Community Offering commencing prior to or upon
completion of the Subscription Offering. See "- Subscription Offering and
Subscription Rights" and "- Community Offering." We have the right to accept or
reject, in whole or in part, any orders to purchase shares of common stock
received in the Community Offering.
The aggregate price of the shares of common stock to be issued in the
conversion will be within the offering range, which was determined based upon an
independent appraisal of the estimated pro forma market value of the common
stock. The offering range is currently $2,890,000 to $3,910,000. All shares of
common stock to be issued and sold in the conversion will be sold at the same
price. The independent appraisal will be affirmed or, if necessary, updated at
the completion of the offering. The appraisal has been performed by Ferguson, a
consulting firm experienced in the valuation and appraisal of savings
institutions. See "- How We Determined the Price Per Share and the Offering
Range" for more information as to how the estimated pro forma market value of
the common stock was determined.
The following discussion of the conversion summarizes the material aspects
of the Plan of Conversion. The summary is qualified in its entirety by reference
to the provisions of the Plan. A copy of the Plan is available for inspection at
the office of the Bank and at the offices of the OTS. The Plan is also filed as
an exhibit to the Registration Statement of which this document is a part,
copies of which may be obtained from the SEC. See "Additional Information."
Purposes of Conversion
As a mutual savings bank, the Bank does not have stockholders and has no
authority to issue capital stock. By converting to the capital stock form of
organization, the Bank will be structured in the form used by commercial banks,
most business entities and a growing number of savings institutions. The
conversion will result in an
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increase in the capital base of the Bank and FPB Financial, which will support
the operations of the Bank and FPB Financial.
The conversion will permit the Bank's customers and possibly other members
of the local community and of the general public to become equity owners and to
share in our future. The conversion will also provide additional funds for
lending and investment activities, facilitate future access to the capital
markets, enhance our ability to diversify and expand into other markets, and
enable the Bank to compete more effectively with other financial institutions.
The holding company form of organization will provide additional
flexibility to diversify our business activities through existing or newly
formed subsidiaries, or through acquisition of or mergers with other financial
institutions, as well as other companies. Although there are no current
arrangements, understandings or agreements regarding any such opportunities, we
will be in a position after the conversion, subject to regulatory limitations
and our financial position, to take advantage of any such opportunities that may
arise.
After completion of the conversion, the unissued common and preferred stock
authorized by our Articles of Incorporation will permit us, subject to market
conditions and applicable regulatory approvals, to raise additional equity
capital through further sales of securities, and to issue securities in
connection with possible acquisitions. At the present time, we have no plans
with respect to additional offerings of securities, other than the possible
issuance of additional shares to the Recognition Plan or upon exercise of stock
options. Following the conversion, we will also be able to use stock-related
incentive programs to attract and retain executive and other personnel for
itself and its subsidiaries. See "Management - New Stock Benefit Plans."
Effects of Conversion
General. Prior to the conversion, each depositor in the Bank has both a
deposit account in the institution and a pro rata ownership interest in the net
worth of the Bank based upon the balance in his account, which interest may only
be realized in the event of a liquidation of the Bank. However, this ownership
interest is tied to the depositor's account and has no tangible market value
separate from such deposit account. Any person who opens a deposit account
obtains a pro rata ownership interest in the net worth of the Bank without any
additional payment beyond the amount of the deposit. A depositor who reduces or
closes his account receives a portion or all of the balance in the account but
nothing for his ownership interest in the net worth of the Bank, which is lost
to the extent that the balance in the account is reduced.
Consequently, the depositors of the Bank normally have no way to realize
the value of their ownership interest, which has realizable value only in the
unlikely event that the Bank is liquidated. In such event, the depositors of
record at that time, as owners, would share pro rata in any residual surplus and
reserves of the Bank after other claims, including claims of depositors to the
amount of their deposits, are paid.
When the Bank converts to stock form, permanent nonwithdrawable capital
stock will be created to represent the ownership of the net worth of the Bank,
and the Bank will become a wholly owned subsidiary of FPB Financial. The common
stock of the Bank and FPB Financial is separate and apart from deposit accounts
of the Bank and cannot be and is not insured by the FDIC or any other
governmental agency. Certificates are issued to evidence ownership of the
permanent stock of the Bank and FPB Financial. The stock certificates are
transferable, and therefore the stock may be sold or traded if a purchaser is
available with no effect on any account the seller may hold in the Bank.
Continuity. While the conversion is being accomplished, the normal business
of the Bank of accepting deposits and making loans will continue without
interruption. The Bank will continue to be subject to regulation by the OTS and
the FDIC. After the conversion, the Bank will continue to provide services for
depositors and borrowers under current policies by its present management and
staff.
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The directors and officers of the Bank at the time of the conversion will
continue to serve as directors and officers of the Bank after the conversion.
The directors and officers of FPB Financial consist of individuals currently
serving as directors and officers of the Bank, and they will retain their
positions in the Bank after the conversion.
Effect on Deposit Accounts. Under the Plan, each depositor in the Bank at
the time of the conversion will automatically continue as a depositor after the
conversion, and each such deposit account will remain the same with respect to
deposit balance, interest rate and other terms, except to the extent that funds
in the account are withdrawn to purchase the common stock and except with
respect to voting and liquidation rights. Each such account will be insured by
the FDIC to the same extent as before the conversion. Depositors will continue
to hold their existing certificates, passbooks and other evidences of their
accounts.
Effect on Loans. No loan outstanding from the Bank will be affected by the
conversion, and the amount, interest rate, maturity and security for each loan
will remain as they were contractually fixed prior to the conversion.
Effect on Voting Rights of Members. At present, all depositors and certain
borrowers of the Bank are members of, and have voting rights in, the Bank as to
all matters requiring membership action. Upon completion of the conversion,
depositors and borrowers will cease to be members and will no longer be entitled
to vote at meetings of the Bank. Upon completion of the conversion, all voting
rights in the Bank will be vested in FPB Financial as the sole stockholder of
the Bank. Exclusive voting rights with respect to FPB Financial will be vested
in the holders of common stock. Depositors of and borrowers from the Bank will
not have voting rights in us after the conversion, except to the extent that
they become stockholders of us.
Tax Effects. Consummation of the conversion is subject to our prior receipt
of rulings or opinions with regard to federal and Louisiana income taxation
which indicate that the conversion will not be taxable for federal or Louisiana
income tax purposes to us or the Bank's Eligible Account Holders or Supplemental
Eligible Account Holders, except as discussed below. We have received favorable
opinions regarding the federal and Louisiana income tax consequences of the
Conversion. See "- Tax Aspects."
Effect on Liquidation Rights. If the Bank were to liquidate, all claims of
the Bank's creditors (including those of depositors, to the extent of their
deposit balances) would be paid first. Thereafter, if there were any assets
remaining, members of the Bank would receive such remaining assets, pro rata,
based upon the deposit balances in their deposit accounts at the Bank
immediately prior to liquidation. In the unlikely event that the Bank were to
liquidate after the conversion, all claims of creditors (including those of
depositors, to the extent of their deposit balances) would also be paid first,
followed by distribution of the "liquidation account" to certain depositors (see
"--Liquidation Rights of Certain Depositors"), with any assets remaining
thereafter distributed to us as the holder of the Bank's capital stock. Pursuant
to the rules and regulations of the OTS, a post-conversion merger,
consolidation, sale of bulk assets or similar combination or transaction with
another insured savings institution would not be considered a liquidation and,
in such a transaction, the liquidation account would be required to be assumed
by the surviving institution.
How We Determined the Price Per Share and the Offering Range
The Plan of Conversion requires that the purchase price of the common stock
must be based on the appraised pro forma market value of the common stock, as
determined on the basis of an independent valuation. The Bank has retained
Ferguson to make such valuation. For its services in making such appraisal and
assistance in preparing a business plan, Ferguson's fees and out-of-pocket
expenses are estimated to be $22,000. The Bank has agreed to indemnify Ferguson
and any employees of Ferguson who act for or on behalf of Ferguson in connection
with the appraisal and the business plan against any and all loss, cost, damage,
claim, liability or expense of any kind (including claims under federal and
state securities laws) arising out of any misstatement or untrue statement of a
material fact or an omission to state a material fact in the information
supplied by the Bank to Ferguson, unless Ferguson is determined to be negligent
or otherwise at fault.
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An appraisal has been made by Ferguson in reliance upon the information
contained in this document, including the Financial Statements. Ferguson also
considered the following factors, among others:
o the present and projected operating results and financial condition of
FPB Financial and the Bank and the economic and demographic conditions
in the Bank's existing marketing area;
o certain historical, financial and other information relating to the
Bank;
o a comparative evaluation of the operating and financial statistics of
the Bank with those of other similarly situated publicly traded
savings institutions located in Louisiana and other regions of the
United States;
o the aggregate size of the offering of the Common Stock;
o the impact of the Conversion on the Bank's net worth and earnings
potential;
o the proposed dividend policy of FPB Financial and the Bank; and
o the trading market for securities of comparable institutions and
general conditions in the market for such securities.
In its review of the appraisal provided by Ferguson, the Board of Directors
reviewed the methodologies and the appropriateness of the assumptions used by
Ferguson in addition to the factors enumerated above, and the Board of Directors
believes that such assumptions were reasonable. The projected operating results
reviewed by Ferguson covered periods through December 31, 2001. The financial
projections assume (1) a flat interest rate environment based on interest rates
prevailing in February 1999, (2) the Bank's lending and investment activities
continue to emphasize the origination of one- to four-family residential loans
and consumer loans, (3) gradual asset growth funded primarily by
interest-bearing deposits and borrowings, and (4) the net conversion proceeds
retained by us are primarily invested in short-term investment securities.
In determining the amount of the appraisal, Ferguson reviewed the Bank's
price/earnings ("P/E"), price/book ("P/B") and price/assets ("P/A") ratios on a
pro forma basis giving effect to the net conversion proceeds to the comparable
ratios for a peer group consisting of 12 savings institution holding companies.
The peer group included companies with assets below $110 million, non-performing
assets below 1.0% of total assets, loans receivable equal to at least 50% of
total assets, equity equal to more than 10% of assets but less than 20% of
assets, price/earnings ratios equal to or less than 35, and positive core
earnings for the most recent 12 months. Seven of the resulting peer group
members are located in the Midwest region, two are located in the Southeast
region, and one is located in each of the Mid-Atlantic, Southwest and Northwest
regions of the country. At the midpoint of the appraisal, the Bank's pro forma
P/E and P/A ratios as of or for the year ended December 31, 1998 were 9.8x and
7.8%, respectively, compared to ratios for the peer group of 20.1x and 14.8%,
respectively. Also at the midpoint of the appraisal, the Bank's pro forma P/B
ratio at December 31, 1998 was 54.8%, compared to 79.4% for recently completed
conversions listed on major stock exchanges
On the basis of the foregoing, Ferguson gave us an opinion, dated March 8,
1999, that the estimated pro forma market value of the common stock ranged from
a minimum of $2,890,000 to a maximum of $3,910,000, with a midpoint of
$3,400,000. We determined that the common stock should be sold at $10.00 per
share, resulting in a range of 289,000 to 391,000 shares of common stock being
offered. The offering range may be amended with the approval of the OTS, if
required, or if necessitated by subsequent developments in our financial
condition or market conditions generally, or to fill the order of the ESOP. In
the event the offering range is updated to amend the value of the Bank below
$2,890,000 or above $4,496,500 (the maximum of the offering range, as adjusted
by 15%), the new appraisal will be filed with the SEC by post-effective
amendment.
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In the event we receive orders for common stock in excess of $3,910,000
(the maximum of the offering range) and up to $4,496,500 (the maximum of the
offering range, as adjusted by 15%), we may be required by the OTS to accept all
such orders. No assurances, however, can be made that we will receive orders for
common stock in excess of the maximum of the offering range or that, if such
orders are received, that all such orders will be accepted because the final
valuation and number of shares to be issued are subject to the receipt of an
updated appraisal from Ferguson which reflects the increase in the valuation and
the approval of such increase by the OTS. In addition, an increase in the number
of shares above 391,000 shares will first be used, if necessary, to fill the
order of the ESOP. There is no obligation or understanding on the part of
management to take and/or pay for any shares in order to complete the
conversion.
Ferguson's valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing such shares.
Ferguson did not independently verify the Financial Statements and other
information provided by the Bank, nor did Ferguson value independently the
assets or liabilities of the Bank. The valuation considers the Bank as a going
concern and should not be considered as an indication of the liquidation value
of the Bank. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons purchasing
common stock in the conversion will thereafter be able to sell such shares at
prices at or above the initial purchase price of $10.00 per share.
Prior to completion of the conversion, the maximum of the offering range
may be increased up to 15% and the number of shares of common stock may be
increased to up to 449,650 shares to reflect changes in market and financial
conditions or to fill the order of the ESOP, without the resolicitation of
subscribers. See "- Limitations on Common Stock Purchases" as to the method of
distribution and allocation of additional shares that may be issued in the event
of an increase in the offering range to fill unfilled orders in the Subscription
Offering.
No sale of shares of common stock in the conversion may be consummated
unless Ferguson first confirms that nothing of a material nature has occurred
which, taking into account all relevant factors, would cause it to conclude that
the Purchase Price is materially incompatible with the estimate of the pro forma
market value of a share of common stock upon consummation of the conversion. If
such is not the case, a new offering range may be set and a new Subscription and
Community Offering may be held or such other action may be taken as we determine
and the OTS may permit or require.
Depending upon market or financial conditions following the commencement of
the Subscription Offering, the total number of shares of common stock may be
increased or decreased without a resolicitation of subscribers, provided that
the aggregate gross proceeds are not below the minimum or more than 15% above
the maximum of the offering range. In the event market or financial conditions
change so as to cause the aggregate Purchase Price of the shares to be below the
minimum of the offering range or more than 15% above the maximum of such range,
purchasers will be resolicited. In any resolicitation, purchasers will be
permitted to continue, modify or rescind their orders. If no election is made by
a purchaser prior to the expiration of the resolicitation offering, the
purchaser's order will be rescinded and any funds paid will be promptly refunded
with interest at the Bank's passbook rate of interest, and withdrawal
authorizations will be cancelled. Any change in the offering range must be
approved by the OTS. If the number of shares of common stock issued in the
conversion is increased due to an increase of up to 15% in the offering range to
reflect changes in market or financial conditions or to fill the order of the
ESOP, persons who subscribed for the maximum number of shares will be given the
opportunity to subscribe for the adjusted maximum number of shares. See "-
Limitations on Common Stock Purchases."
An increase in the number of shares of common stock as a result of an
increase in the estimated pro forma market value would decrease both a
subscriber's ownership interest and our pro forma net income and stockholders'
equity on a per share basis while increasing pro forma net income and
stockholders' equity on an aggregate basis. A decrease in the number of shares
of common stock would increase both a subscriber's ownership interest and our
pro forma net income and stockholders' equity on a per share basis while
decreasing pro forma net income and
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stockholders' equity on an aggregate basis. See "Risk Factors - Possible
Increase in the Offering Range Would Be Dilutive" and "Pro Forma Data."
The appraisal report of Ferguson has been filed as an exhibit to our
Registration Statement and the Bank's Application for Conversion, of which this
prospectus is a part, and is available for inspection in the manner set forth
under "Additional Information."
Subscription Offering and Subscription Rights
In accordance with the Plan of Conversion, rights to subscribe for the
purchase of common stock have been granted under the Plan of Conversion to the
following persons in the following order of descending priority: (1) Eligible
Account Holders, (2) the ESOP, (3) Supplemental Eligible Account Holders, (4)
Other Members, and (5) directors, officers and employees of the Bank. All
subscriptions received will be subject to the availability of common stock after
satisfaction of all subscriptions of all persons having prior rights in the
Subscription Offering and to the maximum and minimum purchase limitations set
forth in the Plan of Conversion and as described below under "- Limitations on
Common Stock Purchases."
Priority 1: Eligible Account Holders. Each Eligible Account Holder will
receive, without payment therefor, first priority, nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of (a)
$100,000 of common stock, (b) one-tenth of one percent (0.10%) of the total
offering of shares of common stock or (c) 15 times the product (rounded down to
the next whole number) obtained by multiplying the total number of shares of
common stock to be issued by a fraction, of which the numerator is the amount of
the Eligible Account Holder's qualifying deposit and the denominator of which is
the total amount of qualifying deposits of all Eligible Account Holders, in each
case as of the close of business on September 30, 1997 (the "Eligibility Record
Date"), subject to the overall purchase limitations. See "- Limitations on
Common Stock Purchases."
If there are not sufficient shares available to satisfy all subscriptions,
shares first will be allocated among subscribing Eligible Account Holders so as
to permit each such Eligible Account Holder, to the extent possible, to purchase
a number of shares sufficient to make his total allocation equal to the lesser
of the number of shares subscribed for or 100 shares. Thereafter, any shares
remaining after each subscribing Eligible Account Holder has been allocated the
lesser of the number of shares subscribed for or 100 shares will be allocated
among the subscribing Eligible Account Holders whose subscriptions remain
unfilled in the proportion that the amounts of their respective eligible
deposits bear to the total amount of eligible deposits of all subscribing
Eligible Account Holders whose subscriptions remain unfilled, provided that no
fractional shares shall be issued. Subscription Rights of Eligible Account
Holders will be subordinated to the priority rights of Tax-Qualified Employee
Stock Benefit Plans to purchase shares in excess of the maximum of the offering
range.
To ensure proper allocation of stock, each Eligible Account Holder must
list on his subscription order form all accounts in which he has an ownership
interest. Failure to list an account could result in fewer shares being
allocated than if all accounts had been disclosed. The subscription rights of
Eligible Account Holders who are also directors or officers of the Bank or their
associates will be subordinated to the subscription rights of other Eligible
Account Holders to the extent attributable to increased deposits in the year
preceding September 30, 1997.
Priority 2: Employee Stock Ownership Plan. The ESOP will receive, without
payment therefor, second priority, nontransferable subscription rights to
purchase, in the aggregate, up to 10% of the common stock, including any
increase in the number of shares of common stock after the date hereof as a
result of an increase of up to 15% in the maximum of the offering range. The
ESOP intends to purchase 8% of the shares of common stock, or 23,120 shares and
31,280 shares based on the minimum and maximum of the offering range,
respectively. Subscriptions by the ESOP will not be aggregated with shares of
common stock purchased directly by or which are otherwise attributable to any
other participants in the Subscription and Community Offerings, including
subscriptions of any of the Bank's directors, officers, employees or associates
thereof. In the event that the total
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number of shares offered in the conversion is increased to an amount greater
than the number of shares representing the maximum of the offering range
("Maximum Shares"), the ESOP will have a priority right to purchase any such
shares exceeding the Maximum Shares up to an aggregate of 10% of the common
stock. See " - Limitations on Common Stock Purchases" and "Risk Factors -
Possible Increase in the Offering Range Would Be Dilutive."
Priority 3: Supplemental Eligible Account Holders. To the extent that there
are sufficient shares remaining after satisfaction of subscriptions by Eligible
Account Holders and the ESOP, each Supplemental Eligible Account Holder will
receive, without payment therefor, third priority, nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of (a)
$100,000 of common stock, (b) one-tenth of one percent (0.10%) of the total
offering of shares of common stock or (c) 15 times the product (rounded down to
the next whole number) obtained by multiplying the total number of shares of
common stock to be issued by a fraction, of which the numerator is the amount of
the Supplemental Eligible Account Holder's qualifying deposit and the
denominator of which is the total amount of qualifying deposits of all
Supplemental Eligible Account Holders, in each case as of the close of business
on March 31, 1999 (the "Supplemental Eligibility Record Date"), subject to the
overall purchase limitations. See "- Limitations on Common Stock Purchases."
If there are not sufficient shares available to satisfy all subscriptions
of all Supplemental Eligible Account Holders, available shares first will be
allocated among subscribing Supplemental Eligible Account Holders so as to
permit each such Supplemental Eligible Account Holder, to the extent possible,
to purchase a number of shares sufficient to make his total allocation equal to
the lesser of the number of shares subscribed for or 100 shares. Thereafter, any
shares remaining available will be allocated among the Supplemental Eligible
Account Holders whose subscriptions remain unfilled in the proportion that the
amounts of their respective eligible deposits bear to the total amount of
eligible deposits of all subscribing Supplemental Eligible Account Holders whose
subscriptions remain unfilled, provided that no fractional shares shall be
issued.
Priority 4: Other Members. To the extent that there are sufficient shares
remaining after satisfaction of subscriptions by Eligible Account Holders, the
ESOP and Supplemental Eligible Account Holders, each Other Member will receive,
without payment therefor, fourth priority, nontransferable subscription rights
to subscribe for common stock in the Subscription Offering up to the greater of
(a) $100,000 of common stock or (b) one-tenth of one percent (0.10%) of the
total offering of shares of common stock, subject to the overall purchase
limitations. See "- Limitations on Common Stock Purchases."
In the event the Other Members subscribe for a number of shares which, when
added to the shares subscribed for by Eligible Account Holders, the ESOP and
Supplemental Eligible Account Holders, is in excess of the total number of
shares of common stock offered in the conversion, available shares first will be
allocated so as to permit each subscribing Other Member, to the extent possible,
to purchase a number of shares sufficient to make his total allocation equal to
the lesser of the number of shares subscribed for or 100 shares. Thereafter, any
remaining shares will be allocated among such subscribing Other Members on a pro
rata basis in the same proportion as each Other Member's subscription bears to
the total subscriptions of all subscribing Other Members, provided that no
fractional shares shall be issued.
Priority 5: Directors, Officers and Employees. To the extent that there are
sufficient shares remaining after satisfaction of all subscriptions by Eligible
Account Holders, the ESOP, Supplemental Eligible Account Holders and Other
Members, then directors, officers and employees of the Bank will receive,
without payment therefor, fifth priority, nontransferable subscription rights to
subscribe for, in this category, an aggregate of up to 25% of the shares of
common stock offered in the Subscription Offering. The ability of directors,
officers and employees to purchase common stock under this category is in
addition to rights which are otherwise available to them under the Plan as they
may fall within higher priority categories, and the Plan generally allows such
persons to purchase in the aggregate up to 35% of common stock sold in the
conversion. See "- Limitations on Common Stock Purchases."
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In the event of an oversubscription in this category, subscription rights
will be allocated among the individual directors, officers and employees on a
point system basis, whereby such individuals will receive subscription rights in
the proportion that the number of points assigned to each of them bears to the
total points assigned to all directors, officers and employees, provided that no
fractional shares shall be issued. One point will be assigned for each year of
service with the Bank, one point for each salary increment of $5,000 per annum
and five points for each office presently held in the Bank, including
directorships. For information as to the number of shares proposed to be
purchased by the directors and executive officers, see "Proposed Management
Purchases."
Expiration Date for the Subscription Offering. The Subscription Offering
will expire at 12:00 noon, central time, on June __, 1999 (the "Expiration
Date"), unless extended for up to 45 days or for such additional periods by us
as may be approved by the OTS. The Subscription Offering may not be extended
beyond June __, 2001. Subscription rights which have not been exercised prior to
the Expiration Date (unless extended) will become void.
We will not execute orders until at least the minimum number of shares of
common stock (289,000 shares) have been subscribed for or otherwise sold. If all
shares have not been subscribed for or sold within 45 days after the Expiration
Date, unless such period is extended with the consent of the OTS, all funds
delivered to the Bank pursuant to the Subscription Offering will be returned
promptly to the subscribers with interest and all withdrawal authorizations will
be cancelled. If an extension beyond the 45-day period following the Expiration
Date is granted, we will notify subscribers of the extension of time and of any
rights of subscribers to modify or rescind their subscriptions.
Community Offering
To the extent that shares remain available for purchase after satisfaction
of all subscriptions of Eligible Account Holders, the ESOP, Supplemental
Eligible Account Holders, Other Members and directors, officers and employees of
the Bank, we may elect to offer such shares either prior to or upon completion
of the Subscription Offering to certain members of the general public, with
preference given to natural persons residing in Tangipahoa Parish, Louisiana
(such natural persons referred to as "Preferred Subscribers"). Such persons may
purchase up to the greater of (a) $100,000 or 10,000 shares of common stock, or
(b) one-tenth of one percent (0.10%) of the total offering of shares of common
stock, subject to the maximum purchase limitations. See "- Limitations on Common
Stock Purchases." This amount may be increased at our sole discretion to up to
5% or decreased to as low as 1% of the total offering of shares in the
Subscription Offering. The opportunity to subscribe for shares of common stock
in the Community Offering category is subject to our right, in our sole
discretion, to accept or reject any such orders in whole or in part either at
the time of receipt of an order or as soon as practicable following the
Expiration Date.
If there are not sufficient shares available to fill the orders of
Preferred Subscribers after completion of the Subscription and Community
Offerings, such stock will be allocated first to each Preferred Subscriber whose
order is accepted by us, in an amount equal to the lesser of 100 shares or the
number of shares subscribed for by each such Preferred Subscriber, if possible.
Thereafter, unallocated shares will be allocated among the Preferred Subscribers
whose accepted orders remain unsatisfied in the same proportion that the
unfilled subscription of each (up to 2% of the total offering) bears to the
total unfilled subscriptions of all Preferred Subscribers whose accepted orders
remain unsatisfied, provided that no fractional shares shall be issued. Orders
for common stock in the Community Offering will first be filled to a maximum of
2% of the total number of shares of common stock sold in the conversion and
thereafter any remaining shares shall be allocated on an equal number of shares
basis per order until all orders have been filled. If there are any shares
remaining, shares will be allocated to other members of the general public who
subscribe in the Community Offering applying the same allocation described above
for Preferred Subscribers.
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Syndicated Community Offering
The Plan of Conversion provides that, if necessary, all shares of common
stock not purchased in the Subscription and Community Offerings, if any, may be
offered for sale to the general public in a Syndicated Community Offering
through selected dealers managed by Trident Securities acting as our agent in
the sale of the common stock. We have the right to reject orders, in whole or in
part, in our sole discretion in the Syndicated Community Offering. Neither
Trident Securities nor any registered broker-dealer shall have any obligation to
take or purchase any shares of common stock in the Syndicated Community
Offering; however, Trident Securities has agreed to use its best efforts in the
sale of shares in the Syndicated Community Offering. Common stock sold in the
Syndicated Community Offering will be sold at a purchase price per share which
is the same price as all other shares being offered in the conversion. No person
will be permitted to subscribe in the Syndicated Community Offering for shares
of common stock with an aggregate purchase price of more than $100,000.
It is estimated that the selected dealers will receive a negotiated
commission based on the amount of common stock sold by the selected dealer,
payable by us. During the Syndicated Community Offering, selected dealers may
only solicit indications of interest from their customers to place orders with
us as of a certain date (the "Order Date") for the purchase of shares of common
stock. When and if we and Trident Securities believe that enough indications and
orders have been received in the offering to consummate the conversion, Trident
Securities will request, as of the Order Date, selected dealers to submit orders
to purchase shares for which they have received indications of interest from
their customers. Selected dealers will send confirmations of the orders to such
customers on the next business day after the Order Date. Selected dealers will
debit the accounts of their customers on a date which will be three business
days from the Order Date ("Debit Date"). Customers who authorize selected
dealers to debit their brokerage accounts are required to have the funds for
payment in their account on but not before the Debit Date. On the next business
day following the Debit Date, select dealers will remit funds to the account
that we will establish for each selected dealer. After payment has been received
by us from selected dealers, funds will earn interest at the Bank's passbook
savings rate until the consummation of the conversion. In the event the
conversion is not consummated as described above, funds will be returned
promptly with interest to the selected dealers, who, in turn, will promptly
credit their customers' brokerage account.
The Syndicated Community Offering may close at any time after the
Expiration Date at our discretion, but in no case later than ________, 1999,
unless further extended with the consent of the OTS. The offering may not be
extended beyond June __, 2001.
Persons Who Cannot Exercise Subscription Rights
We will make reasonable efforts to comply with the securities laws of all
states in the United States in which persons entitled to subscribe for stock
pursuant to the Plan reside. However, we are not required to offer stock in the
Subscription Offering to any person who resides in a foreign country or resides
in a state of the United States with respect to which: (1) the number of persons
otherwise eligible to subscribe for shares under the Plan who reside in such
jurisdiction is small; (2) the granting of subscription rights or the offer or
sale of shares of common stock to such persons would require any of FPB
Financial and the Bank or our officers, directors or employees, under the laws
of such jurisdiction, to register as a broker, dealer, salesman or selling agent
or to register or otherwise qualify its securities for sale in such jurisdiction
or to qualify as a foreign corporation or file a consent to service of process
in such jurisdiction; and (3) such registration, qualification or filing in our
judgment would be impracticable or unduly burdensome for reasons of costs or
otherwise. Where the number of persons eligible to subscribe for shares in one
state is small, we will base our decision as to whether or not to offer the
common stock in such state on a number of factors, including but not limited to
the size of accounts held by account holders in the state, the cost of
registering or qualifying the shares or the need to register FPB Financial, its
officers, directors or employees as brokers, dealers or salesmen.
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Limitations on Common Stock Purchases
The Plan includes the following limitations on the number of shares of
common stock which may be purchased in the conversion:
(1) No fewer than 25 shares of common stock may be purchased, to the
extent such shares are available;
(2) Each Eligible Account Holder may subscribe for and purchase in the
Subscription Offering up to the greater of (a) $100,000 or 10,000 shares of
common stock, (b) one-tenth of one percent (0.10 %) of the total offering
of shares of common stock or (c) 15 times the product (rounded down to the
next whole number) obtained by multiplying the total number of shares of
common stock to be issued by a fraction, of which the numerator is the
amount of the qualifying deposit of the Eligible Account Holder and the
denominator is the total amount of qualifying deposits of all Eligible
Account Holders, in each case as of the close of business on the
Eligibility Record Date, with clauses (a) and (b) above subject to the
overall limitation in clause (6) below;
(3) The ESOP may purchase in the aggregate up to 10% of the shares of
common stock, including any additional shares issued in the event of an
increase in the offering range, although at this time it intends to
purchase only 8% of such shares;
(4) Each Supplemental Eligible Account Holder may subscribe for and
purchase in the Subscription Offering up to the greater of (a) $100,000 or
10,000 shares of common stock, (b) one-tenth of one percent (0.10%) of the
total offering of shares of common stock or (c) 15 times the product
(rounded down to the next whole number) obtained by multiplying the total
number of shares of common stock to be issued by a fraction, of which the
numerator is the amount of the qualifying deposit of the Supplemental
Eligible Account Holder and the denominator is the total amount of
qualifying deposits of all Supplemental Eligible Account Holders, in each
case as of the close of business on the Supplemental Eligibility Record
Date, with clauses (a) and (b) above subject to the overall limitation in
clause (6) below;
(5) Each Other Member or any person purchasing shares of common stock
in the Community Offering may subscribe for and purchase in the
Subscription Offering or Community Offering, as the case may be, up to the
greater of (i) $100,000 or 10,000 shares of Common Stock or (ii) one-tenth
of one percent (0.10%) of the total offering of shares of Common Stock,
subject to the overall limitation in clause (6) below;
(6) Except for the ESOP and certain Eligible Account Holders and
Supplemental Eligible Account Holders whose subscription rights are based
upon the amount of their deposits, the maximum number of shares of common
stock subscribed for or purchased in all categories of the conversion by
any person, together with associates of and groups of persons acting in
concert with such persons, shall not exceed $150,000 or 15,000 shares of
common stock issued in the conversion, or 3.8% at the maximum of the
offering range; and
(7) No more than 25% of the total number of shares offered for sale in
the Subscription Offering may be purchased by directors and officers of the
Bank in the fourth priority category in the Subscription Offering. No more
than 35% of the total number of shares offered for sale in the conversion
may be purchased by directors and officers of the Bank and their associates
in the aggregate, excluding purchases by the ESOP.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the members of
the Bank, the individual amount permitted to be subscribed for may be increased
up to a maximum of 5% of the number of shares sold in the conversion and both
the individual and the
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overall purchase limitations may be decreased to a minimum of 1% of the number
of shares sold in the conversion at our sole discretion. If such amount is
increased, subscribers for the maximum amount will be, and certain other large
subscribers in our sole discretion may be, given the opportunity to increase
their subscriptions up to the then applicable limit.
In the event of an increase in the total number of shares of common stock
offered in the conversion due to an increase in the offering range of up to 15%
(the "Adjusted Maximum"), the additional shares will be allocated in the
following order of priority in accordance with the Plan: (1) to fill the ESOP's
subscription of 8% of the Adjusted Maximum number of shares; (2) in the event
that there is an oversubscription by Eligible Account Holders, to fill
unfulfilled subscriptions of Eligible Account Holders, inclusive of the Adjusted
Maximum; (3) in the event that there is an oversubscription by Supplemental
Eligible Account Holders, to fill unfulfilled subscriptions of Supplemental
Eligible Account Holders, inclusive of the Adjusted Maximum; (4) in the event
that there is an oversubscription by Other Members, to fill unfulfilled
subscriptions of Other Members, inclusive of the Adjusted Maximum; (5) in the
event there is an oversubscription by our directors, officers and employees, to
fill unfulfilled subscriptions of directors, officers and employees, inclusive
of the Adjusted Maximum; and (6) to fill unfulfilled subscriptions in the
Community Offering to the extent possible, inclusive of the Adjusted Maximum.
The term "associate" of a person is defined to mean (1) any corporation or
other organization (other than FPB Financial and the Bank or a majority-owned
subsidiary of the Bank) of which such person is a director, officer or partner
or is directly or indirectly the beneficial owner of 10% or more of any class of
equity securities; (2) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, provided, however, that such term shall not
include any tax-qualified employee stock benefit plan of FPB Financial and the
Bank in which such person has a substantial beneficial interest or serves as a
trustee or in a similar fiduciary capacity; and (3) any relative or spouse of
such person, or any relative of such spouse, who either has the same home as
such person or who is a director or officer of us or any of our subsidiaries.
The term "acting in concert" is defined to mean (1) knowing participation
in a joint activity or interdependent conscious parallel action towards a common
goal whether or not pursuant to an express agreement, or (2) a combination or
pooling of voting or other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written or otherwise. We may presume that certain
persons are acting in concert based upon, among other things, joint account
relationships, common addresses on the Bank's records and the fact that such
persons have filed joint Schedules 13D or 13G with the SEC with respect to other
companies.
Marketing Arrangements
We have engaged Trident as a financial advisor and marketing agent in
connection with the offering of the Common Stock, and Trident has agreed to use
its best efforts to solicit subscriptions and purchase orders for shares of
common stock in the conversion. Trident is a member of the National Association
of Securities Dealers, Inc. ("NASD") and an SEC-registered broker-dealer.
Trident is headquartered in Raleigh, North Carolina, and its telephone number is
(919) 781-8900. Trident will provide various services including, but not limited
to, (1) training and educating the Bank's directors, officers and employees
regarding the mechanics and regulatory requirements of the stock sales process;
(2) providing its employees to staff the Stock Information Center to assist the
Bank's customers and internal stock purchasers and to keep records of orders for
shares of common stock; and (3) targeting our sales efforts, including assisting
in the preparation of marketing materials.
Based upon negotiations with us concerning fee structure, Trident will
receive a fee of $70,000 payable upon consummation of the conversion. In the
event that a selected dealers agreement is entered into in connection with a
Syndicated Community Offering, the Bank will pay to such selected dealers a fee
at the commission rate to be agreed upon by Trident and us, for shares sold by
an NASD member firm pursuant to a selected dealers agreement. Fees to Trident
and to any other broker-dealer may be deemed to be underwriting fees, and
Trident and
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such broker-dealers may be deemed to be underwriters. Trident will also be
reimbursed for its reasonable legal fees and out-of-pocket expenses in an amount
not to exceed $30,000, of which $10,000 has been paid to date. We have agreed to
indemnify Trident and each person, if any, who controls Trident against all
losses, claims, damages or liabilities, joint or several, and all legal and
other expenses reasonably incurred by them in connection with certain claims
that may arise as a result of the conversion, including liabilities under the
Securities Act, except those that are due to Trident's willful misconduct or
gross negligence.
Our directors and executive officers may participate in the solicitation of
offers to purchase common stock by mailing written materials to members of the
Bank and other prospective investors, responding to inquiries of prospective
investors, and performing ministerial or clerical work. In each jurisdiction in
which the securities laws require that the offer and/or sale of the common stock
be made through a broker-dealer registered in such jurisdiction, all written
materials will be mailed under cover of a letter from Trident. Other employees
of the Bank may participate in the offering in ministerial capacities or
providing clerical work in effecting a sales transaction. Such other employees
have been instructed not to solicit offers to purchase common stock or provide
advice regarding the purchase of common stock. Questions of prospective
purchasers will be directed to executive officers or registered representatives.
We will rely on Rule 3a4-1 under the Exchange Act, and sales of common stock
will be conducted within the requirements of Rule 3a4-1, so as to permit
officers, directors and employees to participate in the sale of common stock. We
will not compensate our officers, directors or employees in connection with
their participation by the payment of commissions or other remuneration based
either directly or indirectly on the transactions in the common stock.
Procedure for Purchasing Shares in the Subscription and Community Offerings
To ensure that each purchaser receives a prospectus at least 48 hours
before the Expiration Date (unless extended) in accordance with Rule 15c2-8 of
the Exchange Act, no prospectus will be mailed any later than five days prior to
such date or hand delivered any later than two days prior to such date.
Execution of the order form will confirm receipt or delivery in accordance with
Rule 15c2-8. Order forms will only be distributed with a prospectus.
To purchase shares in the Subscription and Community Offerings, an executed
order form with the required payment for each share subscribed for, or with
appropriate authorization for withdrawal from a deposit account at the Bank
(which may be given by completing the appropriate blanks in the order form),
must be received by the Bank by noon, central time, on the Expiration Date
(unless extended). In addition, we will require a prospective purchaser to
execute a certification in the form required by applicable OTS regulations in
connection with any sale of common stock. Order forms which are not received by
such time or are executed defectively or are received without full payment (or
appropriate withdrawal instructions) are not required to be accepted. Copies of
order forms, order forms unaccompanied by an executed certification form,
payments from other private third parties and wire transfers are also not
required to be accepted. We have the right to waive or permit the correction of
incomplete or improperly executed forms, but do not represent that we will do
so. Once received, an executed order form may not be modified, amended or
rescinded without our consent, unless the conversion has not been completed
within 45 days after the end of the Subscription Offering, unless such period
has been extended.
In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are properly identified as to their stock
purchase priority, depositors as of the close of business on the Eligibility
Record Date (September 30, 1997) or the Supplemental Eligibility Record Date
(March 31, 1999) and depositors and borrowers as of the close of business on the
Voting Record Date (________, 1999) must list all accounts on the stock order
form giving all names in each account and the account numbers. Failure to list
all of your accounts may result in fewer shares being allocated to you than if
all of your accounts had been disclosed.
Payment for subscriptions may be made (1) in cash if delivered in person at
the main office of the Bank, (2) by check or money order, or (3) by
authorization of withdrawal from deposit accounts maintained with the
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Bank. Interest will be paid on payments made by cash, check or money order at
the Bank's passbook rate of interest from the date payment is received until
completion or termination of the conversion. If payment is made by authorization
of withdrawal from deposit accounts, the funds authorized to be withdrawn from a
deposit account will continue to accrue interest at the contractual rates until
completion or termination of the conversion, but a hold will be placed on such
funds, thereby making them unavailable to the depositor until completion or
termination of the conversion.
If a subscriber authorizes the Bank to withdraw the amount of the purchase
price from his deposit account, the Bank will do so as of the effective date of
the conversion. The Bank will waive any applicable penalties for early
withdrawal from certificate accounts. If the remaining balance in a certificate
account is reduced below the applicable minimum balance requirement at the time
that the funds actually are transferred under the authorization, the certificate
will be cancelled at the time of the withdrawal, without penalty, and the
remaining balance will earn interest at the passbook rate.
The ESOP will not be required to pay for the shares subscribed for at the
time it subscribes. Instead, the ESOP may pay for the shares of common stock
subscribed for by it at the Purchase Price upon consummation of the Subscription
and Community Offerings, provided that there is a valid loan commitment in force
from the time of its subscription until such time. The loan commitment may be
from an unrelated financial institution or FPB Financial to lend to the ESOP, at
the completion of the conversion, the aggregate Purchase Price of the shares for
which the ESOP subscribed.
Owners of self-directed individual retirement accounts ("IRAs") may use the
assets of such IRAs to purchase shares of common stock in the Subscription and
Community Offerings, provided that such IRAs are not maintained at the Bank.
Persons with IRAs maintained at the Bank must have their accounts transferred to
an unaffiliated institution or broker to purchase shares of common stock in the
Subscription and Community Offerings. In addition, ERISA provisions and IRS
regulations require that officers, directors and 10% stockholders who use
self-directed IRA funds to purchase shares of common stock in the Subscription
and Community Offerings make such purchases for the exclusive benefit of the
IRAs. Any interested parties wishing to use IRA funds for stock purchases are
advised to contact the Stock Information Center for additional information and
allow sufficient time for the account to be transferred as required.
Certificates representing shares of common stock purchased will be mailed
to purchasers at the last address of such persons appearing on the records of
the Bank, or to such other address as may be specified in properly completed
order forms, as soon as practicable following consummation of the conversion.
Any certificates returned as undeliverable will be disposed of in accordance
with applicable law.
Restrictions on Transfer of Subscription Rights and Shares
Pursuant to the rules and regulations of the OTS, no person with
subscription rights may transfer or enter into any agreement or understanding to
transfer the legal or beneficial ownership of the subscription rights issued
under the Plan or the shares of common stock to be issued upon their exercise.
You may exercise your subscription rights only for your own account. If you
exercise your subscription rights, you will be required to certify that you are
purchasing shares solely for your own account and that you have no agreement or
understanding regarding the sale or transfer of such shares. Federal regulations
also prohibit any person from offering or making an announcement of an offer or
intent to make an offer to purchase such subscription rights or shares of common
stock prior to the completion of the conversion.
We will pursue any and all legal and equitable remedies in the event we
become aware of the transfer of subscription rights and will not honor orders
known by us to involve the transfer of such rights.
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Liquidation Rights of Certain Depositors
In the unlikely event of a complete liquidation of the Bank in its present
mutual form, each depositor of the Bank would receive his pro rata share of any
assets of the Bank remaining after payment of claims of all creditors (including
the claims of all depositors to the withdrawal value of their accounts). Each
depositor's pro rata share of such remaining assets would be in the same
proportion as the value of his deposit account was to the total value of all
deposit accounts in the Bank at the time of liquidation. After the conversion,
each depositor, in the event of a complete liquidation of the Bank, would have a
claim as a creditor of the same general priority as the claims of all other
general creditors of the Bank. However, except as described below, his claim
would be solely in the amount of the balance in his deposit account plus accrued
interest. He would not have an interest in the value or assets of the Bank above
that amount.
The Plan provides for the establishment, upon the completion of the
conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the Bank's net worth as of the date of its latest statement of financial
condition contained in the final prospectus utilized in the conversion. As of
the date of this prospectus, the initial balance of the liquidation account
would be approximately $___ million. Each Eligible Account Holder and
Supplemental Eligible Account Holder, if he were to continue to maintain his
deposit account at the Bank, would be entitled, upon a complete liquidation of
the Bank after the conversion, to an interest in the liquidation account prior
to any payment to FPB Financial as the sole stockholder of the Bank. Each
Eligible Account Holder and Supplemental Eligible Account Holder would have an
initial interest in such liquidation account for each deposit account, including
passbook accounts, NOW accounts, money market deposit accounts, and certificates
of deposit, held in the Bank at the close of business on September 30, 1997 or
March 31, 1999, as the case may be. Each Eligible Account Holder and
Supplemental Eligible Account Holder will have a pro rata interest in the total
liquidation account for each of his deposit accounts based on the proportion
that the balance of each such deposit account on the September 30, 1997
eligibility record date (or the March 31, 1999 supplemental eligibility record
date, as the case may be) bore to the balance of all deposit accounts in the
Bank on such dates.
If, however, on any December 31 annual closing date of the Bank, commencing
December 31, 1999, the amount in any deposit account is less than the amount in
such deposit account on September 30, 1997 or March 31, 1999, as the case may
be, or any other annual closing date, then the interest in the liquidation
account relating to such deposit account would be reduced by the proportion of
any such reduction, and such interest will cease to exist if such deposit
account is closed. In addition, no interest in the liquidation account would
ever be increased despite any subsequent increase in the related deposit
account. Any assets remaining after the claims of general creditors (including
the claims of all depositors to the withdrawal value of their accounts) and the
above liquidation rights of Eligible Account Holders and Supplemental Eligible
Account Holders are satisfied would be distributed to FPB Financial as the sole
stockholder of the Bank.
Tax Aspects
Consummation of the Conversion is expressly conditioned upon prior receipt
of either a ruling or an opinion of counsel with respect to federal tax laws,
and either a ruling or an opinion with respect to Louisiana tax laws, to the
effect that consummation of the transactions contemplated hereby will not result
in a taxable reorganization under the provisions of the applicable codes or
otherwise result in any adverse tax consequences to us or to account holders
receiving subscription rights, except to the extent, if any, that subscription
rights are deemed to have fair market value on the date such rights are issued.
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., has issued an
opinion to us to the effect that, for federal income tax purposes: (1) the
Bank's change in form from mutual to stock ownership will constitute a
reorganization under Section 368(a)(1)(F) of the Code and we will not recognize
any gain or loss as a result of the conversion; (2) no gain or loss will be
recognized by us upon the purchase of the Bank's capital stock by FPB Financial;
(3) no gain or loss will be recognized by Eligible Account Holders and
Supplemental Eligible Account
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Holders upon the issuance to them of deposit accounts in the Bank in its stock
form plus their interests in the liquidation account in exchange for their
deposit accounts in the mutual Bank; (4) assuming the non-transferable
subscription rights to purchase Common Stock have no value, the tax basis of the
depositors' deposit accounts in the Bank immediately after the conversion will
be the same as the basis of their deposit accounts immediately prior to the
conversion; (5) assuming the non-transferable subscription rights to purchase
common stock have no value, the tax basis of each Eligible Account Holder's and
Supplemental Eligible Account Holder's interest in the liquidation account will
be zero; and (6) the tax basis to the stockholders of the common stock purchased
in the conversion will be the amount paid therefor, and the holding period for
the shares of common stock purchased by such persons will begin on the date of
consummation of the conversion if purchased through the exercise of subscription
rights and on the day after the date of purchase if purchased in the Community
Offering. Murphy, Whalen & Boussard, New Orleans, Louisiana, has also rendered
an opinion to the effect that the foregoing tax effects of the conversion under
Louisiana law are substantially the same as they are under federal law.
In the opinion of Ferguson, the subscription rights do not have any value,
based on the fact that such rights are acquired by the recipients without cost,
are nontransferable and of short duration, and afford the recipients the right
only to purchase the common stock at a price equal to its estimated fair market
value, which will be the same price as the Purchase Price for the unsubscribed
shares of common stock. If the subscription rights granted to eligible
subscribers are deemed to have an ascertainable value, receipt of such rights
would be taxable probably only to those eligible subscribers who exercise the
subscription rights (either as a capital gain or ordinary income) in an amount
equal to such value, and we could recognize gain on such distribution. Eligible
subscribers are encouraged to consult with their own tax advisor as to the tax
consequences in the event that such subscription rights are deemed to have an
ascertainable value.
Unlike private rulings, an opinion is not binding on the IRS, and the IRS
could disagree with conclusions reached therein. In the event of such
disagreement, there can be no assurance that the IRS would not prevail in a
judicial or administrative proceeding.
Delivery of Certificates
Certificates representing common stock issued in the conversion will be
mailed by our transfer agent to the persons entitled thereto at the addresses of
such persons appearing on the stock order form as soon as practicable following
consummation of the conversion. Any certificates returned as undeliverable will
be held by us until claimed by persons legally entitled thereto or otherwise
disposed of in accordance with applicable law. Until certificates for common
stock are available and delivered to subscribers, such subscribers may not be
able to sell the shares of common stock for which they have subscribed, even
though trading of the common stock may have commenced.
Required Approvals
Various approvals of the OTS are required in order to consummate the
Conversion. The OTS has approved the Plan of Conversion, subject to approval by
the Bank's members and other standard conditions. The OTS has also approved our
holding company application, subject to certain standard conditions.
We are required to make certain filings with state securities regulatory
authorities in connection with the issuance of common stock in the conversion.
Certain Restrictions on Purchase or Transfer of Shares After the Conversion
All shares of common stock purchased in connection with the conversion by
any of our directors or executive officers will be subject to a restriction that
the shares not be sold for a period of one year following the conversion, except
in the event of the death of such director or executive officer or pursuant to a
merger or similar transaction approved by the OTS. Each certificate for
restricted shares will bear a legend giving notice of this
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restriction on transfer, and appropriate stop-transfer instructions will be
issued to our transfer agent. Any shares of common stock issued at a later date
within this one year period as a stock dividend, stock split or otherwise with
respect to such restricted stock will be subject to the same restrictions. Our
directors and executive officers will also be subject to the insider trading
rules promulgated pursuant to the Exchange Act as long as the common stock is
registered pursuant to Section 12(g) of the Exchange Act.
Purchases of our common stock by our directors, executive officers and
their associates during the three-year period following completion of the
conversion may be made only through a broker or dealer registered with the SEC,
except with the prior written approval of the OTS. This restriction does not
apply, however, to negotiated transactions involving more than 1% of our
outstanding common stock or to certain purchases of stock pursuant to an
employee stock benefit plan, such as the ESOP, or by any non-tax-qualified
employee stock benefit plan, such as the Recognition Plan.
Pursuant to OTS regulations, we will generally be prohibited from
repurchasing any shares of the common stock within one year following
consummation of the conversion. During the second and third years following
consummation of the conversion, we may not repurchase any shares of our common
stock other than pursuant to (1) an offer to all stockholders on a pro rata
basis which is approved by the OTS; (2) the repurchase of qualifying shares of a
director, if any; (3) purchases in the open market by a tax-qualified or
non-tax-qualified employee stock benefit plan in an amount reasonable and
appropriate to fund the plan; or (4) purchases that are part of an open-market
stock repurchase program not involving more than 5% of its outstanding capital
stock during a 12-month period, if the repurchases do not cause the Bank to
become undercapitalized and the Bank provides to the Regional Director of the
OTS no later than 10 days prior to the commencement of a repurchase program
written notice containing a full description of the program to be undertaken and
such program is not disapproved by the Regional Director. The OTS may permit
stock repurchases in excess of such amounts prior to the third anniversary of
the conversion if exceptional circumstances are shown to exist.
RESTRICTIONS ON ACQUISITION OF FPB FINANCIAL
AND FLORIDA PARISHES BANK
General
As described below, certain provisions in our Articles of Incorporation and
Bylaws and in our proposed benefit plans, together with provisions of Louisiana
corporate law and OTS regulations, may have anti-takeover effects. In addition,
regulatory restrictions may make it difficult for persons or companies to
acquire control of us.
Restrictions in FPB Financial's Articles of Incorporation and Bylaws
General. A number of provisions of our Articles of Incorporation and Bylaws
deal with matters of corporate governance and certain rights of stockholders.
The following discussion of our Articles of Incorporation and Bylaws summarizes
the material provisions which might be deemed to have a potential
"anti-takeover" effect. These provisions may have the effect of discouraging a
future takeover attempt which is not approved by the Board of Directors but
which individual stockholders may deem to be in their best interests or in which
stockholders may receive a substantial premium for their shares over then
current market prices. As a result, stockholders who might desire to participate
in such a transaction may not have an opportunity to do so. Such provisions will
also render the removal of our current Board of Directors or management more
difficult. The following description of certain of the provisions of our
Articles of Incorporation and Bylaws is necessarily general and reference should
be made in each case to such Articles of Incorporation and Bylaws, which are
incorporated herein by reference. See "Additional Information" as to how to
obtain a copy of these documents.
Limitation on Voting Rights. Article 10.A of our Articles of Incorporation
provides that no person shall directly or indirectly offer to acquire or acquire
the beneficial ownership of (1) more than 10% of the issued and
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outstanding shares of any class of an equity security of FPB Financial, or (2)
any securities convertible into, or exercisable for, any of our equity
securities if, assuming conversion or exercise by such person of all securities
of which such person is the beneficial owner which are convertible into, or
exercisable for, such equity securities (but of no securities convertible into,
or exercisable for, such equity securities of which such person is not the
beneficial owner), such person would be the beneficial owner of more than 10% of
any class of an equity security of FPB Financial. The term "person" is broadly
defined to prevent circumvention of this restriction.
The foregoing restrictions do not apply to (1) any offer with a view toward
public resale made exclusively to us by underwriters or a selling group acting
on our behalf, (2) any tax-qualified employee benefit plan or arrangement
established by us and any trustee of such a plan or arrangement, or (3) any
other offer or acquisition approved in advance by the affirmative vote of
two-thirds of our entire Board of Directors. In the event that shares are
acquired in violation of Article 10.A, all shares beneficially owned by any
person in excess of 10% shall be considered "Excess Shares" and shall not be
counted as shares entitled to vote and shall not be voted by any person or
counted as voting shares in connection with any matters submitted to
stockholders for a vote, and our Board of Directors may cause such Excess Shares
to be transferred to an independent trustee for sale on the open market or
otherwise, with the expenses of such trustee to be paid out of the proceeds of
sale.
Board of Directors. Article 6.B of our Articles of Incorporation contains
provisions relating to the Board of Directors and provides, among other things,
that the Board of Directors shall be divided into three classes as nearly equal
in number as possible, with the term of office of one class expiring each year.
See "Management--Management of FPB Financial." The classified Board is intended
to provide for continuity of the Board of Directors and to make it more
difficult and time consuming for a stockholder group to fully use its voting
power to gain control of the Board of Directors without the consent of our
incumbent Board of Directors. Cumulative voting in the election of directors is
not permitted.
Directors may be removed without cause at a duly constituted meeting of
stockholders called expressly for that purpose upon the vote of the holders of
at least 80% of the total votes eligible to be cast by stockholders, and with
cause by the affirmative vote of a majority of the total votes eligible to be
cast by stockholders. Cause for removal shall exist only if the director whose
removal is proposed has been either declared of unsound mind by an order of a
court of competent jurisdiction, convicted of a felony or of an offense
punishable by imprisonment for a term of more than one year by a court of
competent jurisdiction, or deemed liable by a court of competent jurisdiction
for gross negligence or misconduct in the performance of such director's duties
to FPB Financial. Any vacancy occurring in the Board of Directors for any reason
(including an increase in the number of authorized directors) may be filled by
the affirmative vote of a majority of the remaining directors, whether or not a
quorum of the Board of Directors is present, and a director appointed to fill a
vacancy shall serve until the expiration of the term to which he was appointed.
Article 6.F of our Articles of Incorporation governs nominations for
election to the Board, and requires all nominations for election to the Board of
Directors other than those made by the Board to be made by a stockholder
eligible to vote at an annual meeting of stockholders who has complied with the
notice provisions in that section. Written notice of a stockholder nomination
must be delivered to, or mailed to and received at, our principal executive
offices not later than 120 days prior to the anniversary date of the initial
mailing of proxy materials by us in connection with the immediately preceding
annual meeting of our stockholders, provided that, with respect to the first
scheduled annual meeting following completion of the conversion, notice must be
received no later than the close of business on Monday, November 1, 1999. Each
such notice shall set forth the following:
(a) the name, age, business address and residence address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated;
(b) the principal occupation or employment of the stockholder submitting
the notice and of each person being nominated;
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(c) the class and number of shares of our stock beneficially owned by the
stockholder submitting the notice, by any person who is acting in concert with
or who is an affiliate or associate of such stockholder (as such terms are
defined in our Articles of Incorporation), by any person who is a member of any
group with such stockholder with respect to our stock or who is known by such
stockholder to be supporting such nominee(s) on the date the notice is given to
us, by each person being nominated, and by each person who is in control of, is
controlled by or is under common control with any of the foregoing persons (if
any of the foregoing persons is a partnership, corporation, limited liability
company, association or trust, information must be provided regarding the name
and address of, and the class and number of shares of our stock which are
beneficially owned by, each partner in such partnership, each director,
executive officer and stockholder in such corporation, each member in such
limited liability company or association, and each trustee and beneficiary of
such trust, and in each case each person controlling such entity and each
partner, director, executive officer, stockholder, member or trustee of any
entity which is ultimately in control of such partnership, corporation, limited
liability company, association or trust);
(d) a representation that the stockholder is a holder of record of our
stock entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the notice;
(e) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder;
(f) such other information regarding the stockholder submitting the notice,
each nominee proposed by such stockholder and any other person covered by clause
(c) of this paragraph as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the SEC; and
(g) the consent of each nominee to serve as a director of FPB Financial if
so elected.
Article 8.A of our Articles of Incorporation provides that a director or
officer of FPB Financial will not be personally liable for monetary damages for
any action taken, or any failure to take any action, as a director or officer
except to the extent that by law a director's or officer's liability for
monetary damages may not be limited. This provision does not eliminate or limit
the liability of our directors and officers for (a) any breach of the director's
or officer's duty of loyalty to us or our stockholders, (b) any acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) any unlawful dividend, stock repurchase or other
distribution, payment or return of assets to stockholders, or (d) any
transaction from which the director or officer derived an improper personal
benefit. This provision may preclude stockholder derivative actions and may be
construed to preclude other third-party claims against the directors and
officers.
Our Articles of Incorporation also provide that we shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, including actions
by or in the right of FPB Financial, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of FPB Financial, or is or was serving at our request
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise. Such indemnification is furnished to
the full extent provided by law against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding. The indemnification
provisions also permit us to pay reasonable expenses in advance of the final
disposition of any action, suit or proceeding as authorized by our Board of
Directors, provided that the indemnified person undertakes to repay us if it is
ultimately determined that such person was not entitled to indemnification.
The rights of indemnification provided in our Articles of Incorporation are
not exclusive of any other rights which may be available under our Bylaws, any
insurance or other agreement, by vote of stockholders or directors (regardless
of whether directors authorizing such indemnification are beneficiaries thereof)
or otherwise. In
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addition, the Articles of Incorporation authorize us to maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of FPB
Financial, whether or not we would have the power to provide indemnification to
such person. By action of the Board of Directors, we may create and fund a trust
fund or other fund or form of self-insurance arrangement of any nature, and may
enter into agreements with our officers, directors, employees and agents for the
purpose of securing or insuring in any manner our obligation to indemnify or
advance expenses provided for in the provisions in our Articles of Incorporation
and Bylaws regarding indemnification. These provisions are designed to reduce,
in appropriate cases, the risks incident to serving as a director, officer,
employee or agent and to enable us to attract and retain the best personnel
available.
The provisions regarding director elections and other provisions in the
Articles of Incorporation and Bylaws are generally designed to protect our
ability of our Board of Directors to negotiate with the proponent of an
unfriendly or unsolicited proposal to take over or restructure us by making it
more difficult and time-consuming to change majority control of the Board,
whether by proxy contest or otherwise. The effect of these provisions will be to
generally require at least two (and possibly three) annual stockholders'
meetings, instead of one, to effect a change in control of our Board of
Directors even if holders of a majority of our capital stock believed that a
change in the composition of the Board of Directors was desirable. Because a
majority of the directors at any given time will have prior experience as
directors, these requirements will help to ensure continuity and stability of
our management and policies and facilitate long-range planning for our business.
The provisions relating to removal of directors and filling of vacancies are
consistent with and supportive of a classified board of directors.
The procedures regarding stockholder nominations will provide our Board of
Directors with sufficient time and information to evaluate a stockholder nominee
to the Board and other relevant information, such as existing stockholder
support for the nominee. The proposed procedures, however, will provide
incumbent directors advance notice of a dissident slate of nominees for
directors, and will make it easier for the Board to solicit proxies in
opposition to such nominees. This may make it easier for the incumbent directors
to retain their status as directors, even when certain stockholders view the
stockholder nominations as in the best interests of FPB Financial or our
stockholders.
Authorized Shares. Article 4 of our Articles of Incorporation authorizes
the issuance of 7,000,000 shares of stock, of which 2,000,000 shares shall be
shares of serial preferred stock, and 5,000,000 shall be common stock. The
shares of common stock and preferred stock were authorized in an amount greater
than that to be issued in the conversion to provide us with as much flexibility
as possible to effect, among other transactions, financings, acquisitions, stock
dividends, stock splits and employee stock options. However, these additional
authorized shares may also be used by the Board of Directors consistent with its
fiduciary duty to deter future attempts to gain control of us. The Board of
Directors also has sole authority to determine the terms of any one or more
series of preferred stock, including voting rights, conversion rates, and
liquidation preferences. As a result of the ability to fix voting rights for a
series of preferred stock, the Board has the power, to the extent consistent
with its fiduciary duty, to issue a series of preferred stock to persons
friendly to management in order to attempt to block a post-tender offer merger
or other transaction by which a third party seeks control, and thereby assist
management to retain its position. We currently have no plans for the issuance
of additional shares, other than the issuance of additional shares pursuant to
stock benefit plans.
Special Meetings of Stockholders and Stockholder Proposals. Article 9.B of
our Articles of Incorporation provides that special meetings of our stockholders
may only be called by (1) the President, (2) a majority of the Board of
Directors, and (3) by persons who beneficially own an aggregate of at least 50%
of the outstanding voting shares, except as may otherwise be provided by law.
The Articles of Incorporation also provide that any action permitted to be taken
at a meeting of stockholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, is given by the holders of all
outstanding shares entitled to vote and filed with our Secretary.
Article 9.D of our Articles of Incorporation provides that only such
business as shall have been properly brought before an annual meeting of
stockholders shall be conducted at the annual meeting. In order to be properly
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brought before an annual meeting following completion of the conversion,
business must be (a) brought before the meeting by or at the direction of the
Board of Directors or (b) otherwise properly brought before the meeting by a
stockholder who has given timely and complete notice thereof in writing to us.
For stockholder proposals to be included in our proxy materials, the stockholder
must comply with all the timing and informational requirements of Rule 14a-8 of
the Exchange Act. With respect to stockholder proposals to be considered at the
annual meeting of stockholders but not included in our proxy materials, the
stockholder's notice must be delivered to or mailed and received at our
principal executive offices not later than 120 days prior to the anniversary
date of the initial mailing of our proxy materials in connection with the
immediately preceding annual meeting; provided, however, that with respect to
the first scheduled annual meeting following completion of the conversion, such
written notice must be received by us not later than the close of business on
Monday, November 1, 1999. A stockholder's notice shall set forth as to each
matter the stockholder proposes to bring before the annual meeting the
following:
(a) a description of the proposal desired to be brought before the annual
meeting;
(b) the name and address, as they appear on our books, of the stockholder
proposing such business, and, to the extent known, any other stockholders known
by such stockholder to be supporting such proposal;
(c) the class and number of shares of FPB Financial which are beneficially
owned by the stockholder submitting the notice, by any person who is acting in
concert with or who is an affiliate or associate of such stockholder (as such
terms are defined in our Articles of Incorporation), by any person who is a
member of any group with such stockholder with respect to our stock or who is
known by such stockholder to be supporting such proposal on the date the notice
is given to us and by each person who is in control of, is controlled by or is
under common control with any of the foregoing persons (if any of the foregoing
persons is a partnership, corporation, limited liability company, association or
trust, information must be provided regarding the name and address of, and the
class and number of shares of our stock which are beneficially owned by, each
partner in such partnership, each director, executive officer and stockholder in
such corporation, each member in such limited liability company or association,
and each trustee and beneficiary of such trust, and in each case each person
controlling such entity and each partner, director, executive officer,
stockholder, member or trustee of any entity which is ultimately in control of
such partnership, corporation, limited liability company, association or trust);
(d) the identification of any person retained or to be compensated by the
stockholder submitting the proposal, or any person acting on his or her behalf,
to make solicitations or recommendations to stockholders for the purpose of
assisting in the passage of such proposal and a brief description of the terms
of such employment, retainer or arrangement for compensation; and
(e) any material interest of the stockholder in such business.
The procedures regarding stockholder proposals are designed to provide the
Board with sufficient time and information to evaluate a stockholder proposal
and other relevant information, such as existing stockholder support for the
proposal. The proposed procedures, however, will give incumbent directors
advance notice of a stockholder proposal. This may make it easier for the
incumbent directors to defeat a stockholder proposal, even when certain
stockholders view such proposal as in the best interests of FPB Financial or its
stockholders.
Amendment of Articles of Incorporation and Bylaws. Article 11 of our
Articles of Incorporation generally provides that any amendment of the Articles
of Incorporation must be first approved by a majority of our Board of Directors
and then by the holders of at least 75% of our shares entitled to vote in an
election of directors ("Voting Shares"), except that if the amendment is
approved by at least two-thirds of our Board of Directors, the amendment shall
only need stockholder approval if required by the Louisiana Business Corporation
Law ("BCL") and then only by the affirmative vote of the holders of a majority
of the Voting Shares.
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Our Bylaws may be amended by a majority of the Board of Directors or by the
affirmative vote of a majority of the Voting Shares, except that the affirmative
vote of at least 75% of the Voting Shares shall be required to amend, adopt,
alter, change or repeal any provision inconsistent with certain specified
provisions of the Bylaws.
Louisiana Corporate Law
In addition to the provisions contained in our Articles of Incorporation,
the BCL includes certain provisions applicable to Louisiana corporations, such
as us, which may be deemed to have an anti-takeover effect. Such provisions
include (1) rights of stockholders to receive the fair value of their shares of
stock following a control transaction from a controlling person or group and (2)
requirements relating to certain business combinations.
The BCL provides that any person who acquires "control shares" will be able
to vote such shares only if the right to vote is approved by the affirmative
vote of at least a majority of both (1) all the votes entitled to be cast by
stockholders and (2) all the votes entitled to be cast by stockholders excluding
"interested shares." "Control shares" is defined to include shares that would
entitle the holder thereof, assuming the shares had full voting rights, to
exercise voting power within any of the following ranges: (a) 20% or more but
less than one-third of all voting power; (b) one-third or more but less than a
majority of all voting power; or (c) a majority or more of all voting power. Any
acquisition that would result in the ownership of control shares in a higher
range would require an additional vote of stockholders. "Interested shares"
includes control shares and any shares held by an officer or employee director
of the corporation. If the control shares are provided full voting rights, all
stockholders have dissenters' rights entitling them to receive the "fair cash
value" of their shares, which shall not be less than the highest price paid per
share to acquire the control shares.
The BCL defines a "Business Combination" generally to include (a) any
merger, consolidation or share exchange of the corporation with an "Interested
Shareholder" or affiliate thereof, (b) any sale, lease, transfer or other
disposition, other than in the ordinary course of business, of assets equal to
10% or more of the market value of the corporation's outstanding stock or of the
corporation's net worth to any Interested Shareholder or affiliate thereof in
any 12-month period, (c) the issuance or transfer by the corporation of equity
securities of the corporation with an aggregate market value of 5% or more of
the total market value of the corporation's outstanding stock to any Interested
Shareholder or affiliate thereof, except in certain circumstances, (d) the
adoption of any plan or proposal for the liquidation or dissolution of the
corporation in which anything other than cash will be received by an Interested
Shareholder or affiliate thereof, or (e) any reclassification of the
corporation's stock or merger which increases by 5% or more the ownership
interest of the Interested Shareholder or any affiliate thereof. "Interested
Shareholder" includes any person who beneficially owns, directly or indirectly,
10% or more of the corporation's outstanding voting stock, or any affiliate
thereof who had such beneficial ownership during the preceding two years,
excluding in each case the corporation, its subsidiaries and their benefit
plans.
Under the BCL, a Business Combination must be approved by any vote
otherwise required by law or the articles of incorporation, and by the
affirmative vote of at least each of the following: (1) 80% of the total
outstanding voting stock of the corporation; and (2) two-thirds of the
outstanding voting stock held by persons other than the Interested Shareholder.
However, the supermajority vote requirement shall not be applicable if the
Business Combination meets certain minimum price requirements and other
procedural safeguards, or if the transaction is approved by the Board of
Directors prior to the time that the Interested Shareholder first became an
Interested Shareholder.
The BCL authorizes the board of directors of Louisiana business
corporations to create and issue (whether or not in connection with the issuance
of any of its shares or other securities) rights and options granting to the
holders thereof (1) the right to convert shares or obligations into shares of
any class, or (2) the right or option to purchase shares of any class, in each
case upon such terms and conditions as we may deem expedient.
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Anti-Takeover Effects of the Articles of Incorporation and Bylaws and Management
Remuneration Adopted in the Conversion
The foregoing provisions of our Articles of Incorporation and Bylaws and
Louisiana law could have the effect of discouraging an acquisition of us or
stock purchases in furtherance of an acquisition, and could accordingly, under
certain circumstances, discourage transactions which might otherwise have a
favorable effect on the price of our common stock.
In addition, the proposed employment agreements with our executive officers
and certain provisions in our proposed stock benefit plans provide for
accelerated benefits to participants in the event of a change in control of us.
See "Management - Employment Agreements" and "- New Stock Benefit Plans." The
foregoing provisions and limitations may make it more costly for companies or
persons to acquire control of us.
Our Board of Directors believes that the provisions described above are
prudent and will reduce vulnerability to takeover attempts and certain other
transactions that are not negotiated with and approved by our Board of
Directors. The Board of Directors believes that these provisions are in the best
interests of FPB Financial and our future stockholders. In the Board of
Directors' judgment, the Board of Directors is in the best position to determine
our true value and to negotiate more effectively for what may be in the best
interests of our stockholders. Accordingly, the Board of Directors believes that
it is in the best interests of FPB Financial and our future stockholders to
encourage potential acquirors to negotiate directly with the Board of Directors
and that these provisions will encourage such negotiations and discourage
hostile takeover attempts. It is also the Board of Directors' view that these
provisions should not discourage persons from proposing a merger or other
transaction at prices reflective of our true value and where the transaction is
in the best interests of all stockholders.
Despite the Board of Directors' belief as to the benefits to our
stockholders of the foregoing provisions, these provisions also may have the
effect of discouraging a future takeover attempt in which stockholders might
receive a substantial premium for their shares over then current market prices
and may tend to perpetuate existing management. As a result, stockholders who
might desire to participate in such a transaction may not have an opportunity to
do so. The Board of Directors, however, has concluded that the potential
benefits of these provisions outweigh their possible disadvantages.
We are not aware of any effort that might be made to acquire control of us.
Regulatory Restrictions
The Change in Bank Control Act provides that no person, acting directly or
indirectly or through or in concert with one or more other persons, may acquire
control of a savings institution unless the OTS has been given at least 60 days'
prior written notice. The HOLA provides that no company may acquire "control" of
a savings institution without the prior approval of the OTS. Any company that
acquires such control becomes a savings and loan holding company subject to
registration, examination and regulation by the OTS. Pursuant to federal
regulations, control of a savings institution is conclusively deemed to have
been acquired by, among other things, the acquisition of more than 25% of any
class of voting stock of the institution or the ability to control the election
of a majority of the directors of an institution. Moreover, control is presumed
to have been acquired, subject to rebuttal, upon the acquisition of more than
10% of any class of voting stock, or of more than 25% of any class of stock, of
a savings institution where certain enumerated "control factors" are also
present in the acquisition. The OTS may prohibit an acquisition if (1) it would
result in a monopoly or substantially lessen competition, (2) the financial
condition of the acquiring person might jeopardize the financial stability of
the institution, or (3) the competence, experience or integrity of the acquiring
person indicates that it would not be in the interest of the depositors or of
the public to permit the acquisition of control by such person. The foregoing
restrictions do not apply to the acquisition of a savings institution's capital
stock by one or more tax-qualified employee stock benefit plans, provided that
the plan or plans do not have beneficial ownership in the aggregate of more than
25% of any class of equity security of the savings institution.
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For three years following the conversion, OTS regulations prohibit any
person from acquiring, either directly or indirectly, or making an offer to
acquire more than 10% of the stock of any converted savings institution or its
holding company, without the prior written approval of the OTS, except for (1)
any offer with a view toward public resale made exclusively to the institution
or its holding company or to underwriters or a selling group acting on its
behalf, (2) offers that if consummated would not result in the acquisition by
such person during the preceding 12-month period of more than 1% of such stock,
(3) offers in the aggregate for up to 24.9% by our ESOP or other tax-qualified
plans, and (4) an offer to acquire or acquisition of beneficial ownership of
more than 10% of the common stock of the savings institution or its holding
company by a corporation whose ownership is or will be substantially the same as
the ownership of the savings institution, provided that the offer or acquisition
is made more than one year following the date of completion of the conversion.
Such prohibition also is applicable to the acquisition of the common stock. In
the event that any person, directly or indirectly, violates this regulation, the
securities beneficially owned by such person in excess of 10% shall not be
counted as shares entitled to vote and shall not be voted by any person or
counted as voting shares in connection with any matters submitted to a vote of
stockholders. The definition of beneficial ownership for this regulation extends
to persons holding revocable or irrevocable proxies for the stock of an
institution or its holding company under circumstances that give rise to a
conclusive or rebuttable determination of control under OTS regulations.
In addition to the foregoing, the Plan prohibits any person, prior to the
completion of the conversion, from offering, or making an announcement of an
intent to make an offer, to purchase subscription rights for common stock. See
"The Conversion - Restrictions on Transfer of Subscription Rights and Shares."
DESCRIPTION OF CAPITAL STOCK OF FPB FINANCIAL
General
We are authorized to issue 7,000,000 shares of capital stock, of which
5,000,000 are shares of common stock, par value $.01 per share and 2,000,000 are
shares of preferred stock, par value $.01 per share. We currently expect to
issue up to a maximum of 391,000 shares of common stock and no shares of
preferred stock in the conversion. Each share of our common stock issued in the
conversion will have the same relative rights as, and will be identical in all
respects with, each other share of common stock issued in the conversion. Upon
payment of the Purchase Price for the common stock in accordance with the Plan
of Conversion, all such stock will be duly authorized, fully paid and
nonassessable based on the laws and regulations in effect as of the date of
consummation of the conversion.
The common stock of FPB Financial will represent nonwithdrawable capital,
will not be an account of an insurable type, and will not be insured by the
FDIC.
Common Stock
Dividends. We can pay dividends if, as and when declared by our Board of
Directors, subject to compliance with limitations which are imposed by law. See
"We Intend to Pay Quarterly Cash Dividends." The holders of our common stock
will be entitled to receive and share equally in such dividends as may be
declared by our Board of Directors out of funds legally available therefor. If
we issue preferred stock, the holders thereof may have a priority over the
holders of the common stock with respect to dividends.
Voting Rights. Upon completion of the conversion, the holders of common
stock will possess exclusive voting rights in FPB Financial. They will elect our
Board of Directors and act on such other matters as are required to be presented
to them under Louisiana law or our Articles of Incorporation or as are otherwise
presented to them by the Board of Directors. Except as discussed in
"Restrictions on Acquisition of FPB Financial and the Bank," each holder of
common stock will be entitled to one vote per share and will not have any right
to cumulate votes in the election of directors. If we issue preferred stock,
holders of the preferred stock may also possess voting rights.
93
<PAGE>
Liquidation. In the event of any liquidation, dissolution or winding up of
the Bank, FPB Financial, as the sole holder of the Bank's capital stock, would
be entitled to receive, after payment or provision for payment of all debts and
liabilities of the Bank (including all deposit accounts and accrued interest
thereon) and after distribution of the balance in the special liquidation
account to Eligible Account Holders and Supplemental Eligible Account Holders
(see "The Conversion - Liquidation Rights of Certain Depositors"), all assets of
the Bank available for distribution. In the event of any liquidation,
dissolution or winding up of FPB Financial, the holders of our common stock
would be entitled to receive, after payment or provision for payment of all its
debts and liabilities, all of our assets available for distribution. If
preferred stock is issued, the holders thereof may have a priority over the
holders of the common stock in the event of liquidation or dissolution.
Preemptive Rights. Holders of our common stock will not be entitled to
preemptive rights with respect to any shares which may be issued in the future.
The common stock is not subject to any required redemption.
Preferred Stock
None of our authorized shares of preferred stock will be issued in the
conversion. Such stock may be issued with such preferences and designations as
our Board of Directors may from time to time determine. The Board of Directors
can, without stockholder approval, issue preferred stock with voting, dividend,
liquidation and conversion rights which could dilute the voting strength of the
holders of the common stock and may assist management in impeding an unfriendly
takeover or attempted change in control.
EXPERTS
The financial statements of the Bank as of December 31, 1998 and 1997 and
for each of the years ended December 31, 1998 and 1997 included in this
prospectus have been included herein in reliance upon the report of Murphy,
Whalen & Broussard, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
Ferguson has consented to the publication herein of the summary of its
report to us setting forth its opinion as to the estimated pro forma market
value of the common stock to be outstanding upon completion of the conversion
and its opinion with respect to subscription rights.
LEGAL AND TAX OPINIONS
The legality of the common stock and the federal income tax consequences of
the Conversion will be passed upon for us by Elias, Matz, Tiernan & Herrick
L.L.P., Washington, D.C., our special counsel. The Louisiana income tax
consequences of the conversion will be passed upon for us by Murphy, Whalen &
Broussard, New Orleans, Louisiana. Certain legal matters will be passed upon for
Trident by Luse Lehman Gorman Pomerenk & Schick, P.C.
ADDITIONAL INFORMATION
We have filed with the SEC a Registration Statement under the Securities
Act with respect to the common stock offered hereby. As permitted by the rules
and regulations of the SEC, this prospectus does not contain all the information
set forth in the Registration Statement. Such information, including the
appraisal report which is an exhibit to the Registration Statement, can be
examined without charge at the public reference facilities of the SEC located at
450 Fifth Street, N.W., Washington, D.C. 20549, and copies of such material can
be obtained from the SEC at prescribed rates. In addition, the SEC maintains a
web site that contains registration statements and other reports regarding
registrants that file electronically with the SEC (such as FPB Financial). The
address of the SEC's
94
<PAGE>
web site is http://www.sec.gov. The statements contained in this prospectus as
to the contents of any contract or other document filed as an exhibit to the
Registration Statement summarize the provisions of such contracts or other
documents which are deemed to be material. However, such summary is, of
necessity, a brief description of the provisions and is not necessarily
complete; each such statement is qualified by reference to such contract or
document.
The Bank has filed an Application for Conversion with the OTS with respect
to the conversion. This prospectus omits certain information contained in that
application. The application may be examined at the principal office of the OTS,
1700 G Street, N.W., Washington, D.C. 20552 and at the Midwest Regional Office
of the OTS located at 122 W. John Carpenter Freeway, Suite 600, Irving, Texas
75039-2010.
In connection with the conversion, we will register our common stock with
the SEC under Section 12(g) of the Exchange Act, and, upon such registration,
FPB Financial and the holders of our stock will become subject to the proxy and
tender offer rules, insider trading reporting requirements and restrictions on
stock purchases and sales by directors, officers and greater than 10%
stockholders, and certain other requirements of the Exchange Act. Under the
Plan, we have undertaken that we will not terminate such registration for a
period of at least three years following the conversion.
95
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
Page
----
<S> <C>
Independent Auditor's Report............................................................. F-1
Statements of Financial Condition as of December 31, 1998 and 1997 (audited)............. F-2
Statements of Income and Comprehensive Income for the years ended
December 31, 1998 and 1997 (audited)........................................... F-3
Statements of Changes in Equity for the years ended December 31, 1998
and 1997 (audited)............................................................. F-5
Statements of Cash Flows for the years ended December 31, 1998 and
1997 (audited).................................................................. F-6
Notes to Financial Statements............................................................ F-8
</TABLE>
All financial statement schedules are omitted because the required
information either is not applicable or is shown in the financial statements or
in the notes thereto.
FPB Financial Corp. was incorporated in February 1999. Its current
capitalization is $1,000, and it has engaged in only minimal activities to date;
accordingly, the financial statements of FPB Financial have been omitted because
of their immateriality.
96
<PAGE>
[Murphy Whalen letterhead]
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Florida Parishes Bank (formerly Florida Parishes Homestead Association)
We have audited the accompanying statements of financial condition of
Florida Parishes Homestead Association as of December 31, 1998 and 1997 and the
related statements of income and comprehensive income, changes in equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Association'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 Florida Parishes Homestead
Association at December 31, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ Murphy, Whalen & Broussard, L.L.C.
--------------------------------------
MURPHY, WHALEN & BROUSSARD, L.L.C.
March 4, 1999
F-1
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
STATEMENTS OF FINANCIAL CONDITION
AS OF DECEMBER 31, 1998 AND 1997
1998 1997
---- ----
ASSETS
- ------
Cash and cash equivalents:
Cash and non-interest earning deposits .... $ 446,684 $ 185,418
Interest-earning deposits in other
depository institutions .................. 1,904,021 4,050,545
------------ ------------
TOTAL CASH AND CASH EQUIVALENTS .... 2,350,705 4,235,963
Investment securities (Available for
Sale-Note 2) .............................. 992,994 1,000,000
Mortgage-backed securities (Held to
Maturity-Note 3) .......................... 2,924,100 4,184,068
Federal Home Loan Bank stock (at cost) ..... 316,300 298,300
Loans receivable (Note 4) .................. 35,032,552 23,560,745
Less:
Loans in process ......................... (737,569) (162,000)
Allowance for loan losses ................ (170,000) (89,236)
Net deferred loan costs (fees) ........... 26,689 (17,280)
------------ ------------
Loans receivable, net .................. 34,151,672 23,292,229
Accrued interest receivable (Note 5) ....... 64,139 56,540
Premises and equipment, net (Note 6) ....... 204,005 168,641
Prepaid expenses and other assets .......... 54,446 24,685
------------ ------------
TOTAL ASSETS ....................... $ 41,058,361 $ 33,260,426
============ ============
LIABILITIES AND EQUITY
- ----------------------
Deposits (Note 7)
Non-interest bearing demand ............... $ 709,739 $ --
Interest bearing .......................... 33,354,904 29,295,327
------------ ------------
Total deposits .......................... 34,064,643 29,295,327
Interest payable on deposits ............... 74,860 41,039
Advances from Federal Home
Loan Bank (Note 8) ........................ 3,200,000 400,000
Accrued expenses and other liabilities ..... 94,106 54,629
Federal income tax payable ................. 48,771 81,041
Deferred income taxes ...................... 5,827 49,759
------------ ------------
TOTAL LIABILITIES .................. 37,488,207 29,921,795
------------ ------------
EQUITY:
Retained Earnings ........................ 3,574,778 3,338,631
Accumulated other comprehensive
income (loss) ............................. (4,624) --
------------ ------------
TOTAL EQUITY ....................... 3,570,154 3,338,631
------------ ------------
TOTAL LIABILITIES AND EQUITY ....... $ 41,058,361 $ 33,260,426
============ ============
See accompanying notes to financial statements.
F-2
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
STATEMENTS OF INCOME & COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
---- ----
Interest Income:
Mortgage loans & fees ......................... $ 2,212,187 $ 1,684,826
Loans on deposits ............................. 32,324 14,026
Consumer loans ................................ 25,258 10,702
FHLB stock and other investment
securities ................................... 74,163 25,593
Mortgage-backed securities .................... 237,562 315,597
Demand deposits ............................... 172,377 231,536
----------- -----------
Total interest income ................... 2,753,871 2,282,280
----------- -----------
Interest Expense:
Deposits ...................................... 1,564,560 1,416,116
Federal Home Loan Bank advances ............... 106,923 3,908
----------- -----------
Total interest expense .................. 1,671,483 1,420,024
----------- -----------
Net interest income ..................... 1,082,388 862,256
Provision for loan losses (Note 4) .............. 80,764 6,000
----------- -----------
Net interest income after provision
for loan losses ........................ 1,001,624 856,256
----------- -----------
Noninterest Income:
Gain on foreclosed real estate sold ........... 10,982 --
Insurance commissions ......................... 5,089 2,507
Service charges on deposits ................... 2,211 483
Other ......................................... 1,909 1,401
----------- -----------
Total noninterest income ................ 20,191 4,391
----------- -----------
Noninterest Expense:
Compensation and employee benefits ............ 360,301 305,521
Occupancy and equipment ....................... 56,580 36,728
Data processing ............................... 54,932 37,495
Advertising ................................... 28,581 17,301
Federal insurance expense ..................... 17,915 13,570
Other ......................................... 144,496 113,168
----------- -----------
Total noninterest expense ............... 662,805 523,783
----------- -----------
Income before income taxes .............. 359,010 336,864
Income tax expense (Note 8) ..................... 122,863 122,601
----------- -----------
Net income .............................. 236,147 214,263
Other comprehensive income (loss):
Unrealized gain (loss) on investment
securities available for sale, net of
($2,382) deferred tax expense (benefit) ....... (4,624) --
----------- -----------
Comprehensive income .................... $ 231,523 $ 214,263
=========== ===========
See accompanying notes to financial statements.
F-3
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
STATEMENTS OF CHANGES IN EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
Accumulated
Other
Comprehensive
Income Retained Total
(Loss) Earnings Equity
------ -------- ------
Balances at January 1, 1997 ........ $ -- $ 3,124,368 $ 3,124,368
Net Income 1997 .................... 214,263 214,263
----------- ----------- -----------
Balances at December 31, 1997 ...... $ -- $ 3,338,631 $ 3,338,631
Net Income 1998 .................... -- 236,147 236,147
Unrealized gain (loss) on investment
securities available-for-sale ..... (4,624) -- (4,624)
----------- ----------- -----------
Balances at December 31, 1998 ...... $ (4,624) $ 3,574,778 $ 3,570,154
=========== =========== ===========
See accompanying notes to financial statements.
F-4
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
---- ----
Cash Flows from operating activities:
Net income .................................... $ 236,147 $ 214,263
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ................................ 31,609 18,011
Provision for loan losses ................... 80,764 6,000
Deferred tax (credit) provision ............. (41,550) 6,959
Stock dividends on Federal Home Loan
Bank stock ................................. (18,000) (16,900)
Assets abandoned ............................ 191 --
Premium amortization on mortgage-backed
and other securities - net ................. 9,080 6,943
Gain on foreclosed real estate sold ......... (10,982) --
(Increase) decrease in accrued interest
receivable ................................. (7,599) 6,038
Increase in prepaid expenses and other assets (3,852) (2,507)
Decrease in income tax paid in advance ...... -- 31,710
Increase in interest payable on deposits .... 33,821 13,585
Increase in accrued expenses and other
liabilities ................................ 39,477 16,116
(Decrease) increase in federal income
tax payable ................................ (32,270) 81,041
Increase in deferred loan origination and
commitment fees (costs) .................... (43,969) 10,271
------------ ------------
Total adjustments ......................... 36,720 177,267
------------ ------------
Net cash provided by operating activities . 272,867 391,530
------------ ------------
Cash flows from investing activities:
Net (increase) in first mortgage loans ........ (10,306,023) (2,797,444)
Net (increase) in consumer loans receivable ... (582,733) (507,183)
Improvements to premises ...................... (8,428) --
Purchase of equipment and/or software ......... (58,736) (10,217)
Purchase of investment securities ............. -- (1,000,000)
Principal payments from mortgage-backed
securities ................................... 1,250,888 904,952
Proceeds from sale of foreclosed real estate .. 3,500 --
------------ ------------
Net cash (used in) investing activities ... (9,701,532) (3,409,892)
------------ ------------
Cash flows from financing activities:
Net increase in deposits ...................... 4,769,316 4,171,808
Advances from Federal Home Loan Bank .......... 2,800,000 400,000
Deferred charges - stock conversion ........... (25,909) --
------------ ------------
Net cash provided by financing activities . 7,543,407 4,571,808
------------ ------------
Net (decrease) increase in cash and
cash equivalents ............................. (1,885,258) 1,553,446
Cash and cash equivalents - beginning of year .. 4,235,963 2,682,517
------------ ------------
Cash and cash equivalents - end of year ........ $ 2,350,705 $ 4,235,963
============ ============
See accompanying notes to financial statements.
F-5
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Nature of Operations
--------------------
Florida Parishes Homestead Association provides a variety of deposit
products and a mixture of fixed and adjustable rate mortgages, primarily
first mortgages on single family residences, and various types of
consumer loans. It operates from a single location in Hammond, Louisiana,
and all of its mortgages are secured by properties located in Tangipahoa
Parish and the surrounding areas. Its depositors are also primarily
residents of Tangipahoa Parish and the surrounding areas.
Cash and Cash Equivalents
-------------------------
For purposes of the statements of cash flows, the Association considers
all highly liquid debt instruments with original maturities when
purchased of three months or less to be cash equivalents.
Investment Securities
---------------------
Investment securities in the form of a mutual fund which invests in
adjustable rate mortgages is classified as available for sale and is
consequently carried at fair market value. Realized gains and losses on
the sale of investment securities are determined using the weighted
average method. Unrealized gains and losses are recognized as other
comprehensive income or loss.
Mortgage-Backed Securities
--------------------------
Mortgage-backed securities are carried at cost, adjusted for premiums and
discounts using a method that approximates level yield. Management
intends, and has the ability, to hold such investments to maturity, and
has consequently classified them as "held-to-maturity".
Loans Receivable
----------------
Loans receivable are stated at unpaid principal balances, adjusted by the
allowance for loan losses and net deferred loan origination fees and
costs.
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 Association's
past loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to pay, the
estimated value of any underlying collateral, and current economic
conditions. Because of uncertainties inherent in the estimation process,
management's estimate of credit losses inherent in the loan portfolio and
the related allowance may change in the near term.
F-6
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 1 SIGNIFICANT ACCOUNTING POLICIES (Continued)
-------------------------------
Loans Receivable (Continued)
----------------
Impaired loans are being accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No.114, Accounting by Creditors
for Impairment of a Loan, as amended by Statement No. 118, Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosure.
The statements generally require impaired loans to be measured on the
present value of expected future cash flows discounted at the loan's
effective interest rate, or as an expedient, at the loan's observable
market price or the fair value of the collateral if the loan is
collateral dependent. A loan is impaired when it is probable the creditor
will be unable to collect all contractual principal and interest payments
due in accordance with the terms of the loan agreement.
The Association discontinues the accrual of interest income when a loan
becomes 90 days past due as to principal or interest. At that time,
uncollected interest previously recorded is reversed. If the delinquent
interest is subsequently collected, it is credited to income in the
period collected. Interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due.
Foreclosed Real Estate
----------------------
Real estate properties acquired through, or in lieu of, loan foreclosure
are initially recorded at the lower of the related loan balance or fair
value less estimated cost to sell at the date of foreclosure. Valuations
are periodically performed by management, and an allowance for losses
will be established to reduce the net carrying value to net realizable
value if necessary. Costs related to improvement of the property are
capitalized, whereas costs related to holding the property are charged to
operations.
Premises & Equipment
--------------------
Premises and equipment are carried at cost, less accumulated
depreciation. Depreciation is provided on all property and equipment,
except land, using straight-line and accelerated methods over the
estimated useful lives of the assets as follows:
Building 15 - 40 years
Furniture, Fixtures, and Equipment 3 - 10 years
Loan Origination and Commitment Fees and Related Costs
------------------------------------------------------
Loan origination and commitment fees, as well as certain direct
origination costs, are deferred and amortized as a yield adjustment over
the lives of the related loans using the level yield method. Amortization
of net deferred loan fees or costs is discontinued when a loan is placed
on nonaccrual status.
F-7
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 1 SIGNIFICANT ACCOUNTING POLICIES (Continued)
------------------------------
Income Taxes
------------
The Association uses the asset-and-liability method of accounting for
income taxes. Under the asset-and-liability method, deferred income taxes
are recognized for the tax consequences of "temporary differences" by
applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities.
The Association is exempt from Louisiana income tax.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Material estimates that are particularly susceptible to significant
change relate to the determination of the allowance for losses on loans
and the valuation of real estate acquired in connection with foreclosures
or in satisfaction of loans. In connection with the determination of the
allowance for losses on loans and foreclosed real estate, management
obtains independent appraisals for significant properties.
Advertising Costs
-----------------
Advertising costs are charged to operations as incurred.
Comprehensive Income
--------------------
The Association adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 130 Reporting of Comprehensive Income
effective January 1, 1998. Comprehensive income is defined as the change
in equity of a business enterprise during a period from transactions and
other events and circumstances from nonowner sources. Consequently,
unrealized gains or losses on investment securities available for sale
are now reported below net income on the face of the statement of income
and comprehensive income. Previously, such unrealized gains and losses
were reported directly in a separate component of equity.
Reclassifications
-----------------
Certain amounts in 1997 have been reclassified to conform with the 1998
presentation.
F-8
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 2 INVESTMENT SECURITIES (AVAILABLE FOR SALE)
------------------------------------------
The amortized cost and estimated market values of investment securities
are as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---- ----- ------ -----
Securities Available -
For Sale
December 31, 1998
-----------------
Mutual Fund:
Adjustable Rate
Mortgage Portfolio .... $1,000,000 $ -- $ 7,006 $ 992,994
========== ============ =========== ==========
December 31, 1997
-----------------
Mutual Fund:
Adjustable Rate
Mortgage Portfolio .... $1,000,000 $ -- $ -- $1,000,000
========== ============ =========== ==========
Note 3 MORTGAGE-BACKED SECURITIES (HELD TO MATURITY)
---------------------------------------------
All mortgage-backed securities are GNMA participation certificates. The
carrying values and estimated market values are summarized below:
December 31,
---------------------------------
1998 1997
---- ----
Principal Balance .................... $ 2,901,640 $ 4,152,528
Unamortized Premiums ................. 24,631 34,635
Unamortized Discounts ................ (2,171) (3,095)
----------- -----------
Carrying Value ....................... 2,924,100 4,184,068
Gross Unrealized Gains ............... 17,224 86,761
----------- -----------
Estimated Market Value ............... $ 2,941,324 $ 4,270,829
=========== ===========
The following is a summary of maturities of mortgage-backed securities as
of December 31, 1998:
Amortized Fair
Cost Value
---- -----
Due in one year or less .................. $ 61,192 $ 70,387
Due from one to five years ............... 270,264 272,248
Due from five to ten years ............... 387,747 388,449
Due after ten years ...................... 2,204,897 2,210,240
---------- ----------
$2,924,100 $2,941,324
========== ==========
F-9
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 3 MORTGAGE-BACKED SECURITIES (HELD TO MATURITY) (Continued)
---------------------------------------------
The amortized cost and fair value of mortgage-backed securities are
presented by contractual maturity in the preceding tables. Expected
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations without call or prepayment
penalties.
One of the adjustable rate GNMA participation certificates with a
carrying value of $292,730 and a market value of $293,845 as of December
31, 1998 is pledged to secure a local public entity's deposits in excess
of $100,000.
Note 4 LOANS RECEIVABLE
----------------
Loans receivable at December 31 are summarized as follows:
1998 1997
---- ----
Permanent First Mortgage Loans:
Secured by one-to-four family residences ..... $30,199,479 $21,720,361
Construction (1) ............................. 1,132,322 250,000
Commercial real estate ....................... 649,736 539,991
Land ......................................... 421,460 156,969
----------- -----------
Total Permanent First Mortgage Loans ...... 32,402,997 22,667,321
----------- -----------
Consumer Loans:
Secured by first mortgage on
one-to-four family residences ............... $ 1,109,268 $ 236,709
Loans secured by savings ..................... 466,538 422,009
Second mortgages and home equity loans ....... 473,151 162,440
Automobile ................................... 377,702 34,797
Unsecured .................................... 149,818 29,684
Other ........................................ 53,078 7,785
----------- -----------
Total Consumer Loans ........................... 2,629,555 893,424
----------- -----------
Total Loans ............................... $35,032,552 $23,560,745
=========== ===========
The permanent first mortgage loans at December 31 consist of both fixed
and adjustable rate mortgages as follows:
1998 1997
---- ----
Fixed rate ......................... $28,785,970 $17,208,557
Adjustable rate .................... 3,617,027 5,458,764
----------- -----------
$32,402,997 $22,667,321
=========== ===========
- ----------
(1) Consists solely of one-to-four family residential construction loans.
F-10
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 4 LOANS RECEIVABLE (Continued)
----------------
The weighted average interest rate on permanent first mortgage loans at
December 31, 1998 and 1997 was 7.23% and 7.71% respectively.
Activity in the allowance for loan losses is summarized as follows for
the years ended December 31:
1998 1997
---- ----
Balance at Beginning of Year ............... $ 89,236 $ 83,236
Provision Charged to Income ................ 80,764 6,000
-------- --------
Balance at End of Year ..................... $170,000 $ 89,236
======== ========
Loans on nonaccrual status totaled $201,817 and $176,324 at December 31,
1998 and 1997, respectively.
The Association is not committed to lend additional funds to debtors
whose loans are on nonaccrual status, or loans which have been modified
in troubled debt restructurings, at December 31, 1998.
Loans receivable includes activity and account balances for the years
ended December 31, 1998 and 1997 to directors, executive officers, and
their immediate families as follows:
Year Ended December 31,
--------------------------
1998 1997
---- ----
Balance - Beginning of Year ................ $ 929,635 $ 783,476
Additional Borrowings ...................... 210,727 169,787
New Executive Officer ...................... -- 31,081
Loan Repayments ............................ (394,455) (54,709)
--------- ---------
Balance - End of Year ....................... $ 745,907 $ 929,635
========= =========
Weighted Average Interest Rate @ 12/31 ....... 7.07% 7.28%
========= =========
Related party loans are primarily first mortgage real estate loans.
Note 5 ACCRUED INTEREST RECEIVABLE
---------------------------
Accrued interest receivable at December 31 is summarized as follows:
1998 1997
---- ----
Loans receivable ........................... $35,446 $31,303
Mortgage-backed securities ................. 28,693 25,237
------- -------
$64,139 $56,540
======= =======
F-11
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 6 PREMISES AND EQUIPMENT
----------------------
Premises and equipment at December 31 are summarized as follows:
1998 1997
---- ----
Cost:
Land ..................................... $ 67,651 $ 67,651
Building ................................. 319,278 310,849
Furniture, fixtures and equipment ........ 185,527 133,151
--------- ---------
572,456 511,651
Less: Accumulated depreciation ............. (368,451) (343,010)
--------- ---------
$ 204,005 $ 168,641
========= =========
Note 7 DEPOSITS
--------
Deposits at December 31 are summarized as follows:
1998 1997
-------------------- --------------------
Amount % Amount %
------ ---- ------ ----
Passbook savings -
Year end interest rate
of 2.00% in 1998
and 2.25% in 1997 ............... $ 1,090,325 3.20 $ 965,181 3.29
----------- ------ ----------- ------
Money market accounts -
Regular -
Year end interest rates
of 3.00% in 1998 and
3.60% in 1997 .................. 1,738,109 5.10 1,704,175 5.82
Super -
Year end interest rates
of 4.00% in 1998 and
4.88% in 1997 .................. 1,714,397 5.04 855,908 2.92
----------- ------ ----------- ------
3,452,506 10.14 2,560,083 8.74
----------- ------ ----------- ------
Checking accounts -
Interest-bearing now
Accounts -
Year end interest rates
of 2.50% in 1998 and
3.00% in 1997 ................. 1,074,396 3.15 555,197 1.90
Interest-max accounts -
Year end interest rates
of 4.00% in 1998 and
3.00% in 1998 .................. 142,135 .42 -- --
Non-interest bearing
accounts ....................... 709,739 2.08 -- --
----------- ------ ----------- ------
1,926,270 5.65 555,197 1.90
----------- ------ ----------- ------
Certificates of deposit -
Year end weighted
average interest rates
5.37% in 1998 and 5.51% in 1997 . 27,595,542 81.01 25,214,866 86.07
----------- ------ ----------- ------
TOTAL .................... $34,064,643 100.00 $29,295,327 100.00
=========== ====== =========== ======
F-12
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 7 DEPOSITS (Continued)
--------
The weighted average interest rate on all deposit accounts at December
31, 1998 and December 31, 1997 was 4.87% and 5.23% respectively.
The aggregate amount of jumbo certificates of deposit with a minimum
balance of $100,000 was $4,739,184 and $4,026,420 at December 31, 1998
and 1997 respectively. Deposits in excess of $100,000 are not federally
insured.
At December 31, 1998, scheduled maturities of certificates of deposit are
as follows:
1999 ............ $ 19,733,661
2000 ............ 5,854,801
2001 ............ 778,154
2002 ............ 425,208
2003 ............ 610,416
After 2003 ...... 193,302
------------
TOTAL ........... $ 27,595,542
============
The Association held deposits of $1,263,501 and $993,285 for related
parties at December 31, 1998 and 1997, respectively.
Note 8 BORROWINGS
----------
At December 31, 1998 the Association had advances payable to the Federal
Home Loan Bank of Dallas totaling $3,200,000 at fixed interest rates
ranging from 4.96% to 6.34%. Maturities are as follows:
Year Ending 12/31/2004 ................... $ 200,000
Year Ending 12/31/2005 ................... 1,400,000
Year Ending 12/31/2006 ................... 1,600,000
-----------
TOTAL ............................... $ 3,200,000
===========
Note 9 FEDERAL INCOME TAXES
--------------------
Deferred federal income taxes result from temporary differences in the
financial statement carrying amounts and tax bases of accrued interest on
deposits, Federal Home Loan Bank stock and the allowance for loan losses.
Income tax for the years ended December 31 is summarized as follows:
1998 1997
---- ----
Current ............................... $ 164,413 $ 115,642
Deferred (Benefit) .................... (41,550) 6,959
--------- ---------
$ 122,863 $ 122,601
========= =========
F-13
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 9 FEDERAL INCOME TAXES (Continued)
--------------------
The components of the net deferred tax liability at December 31, are as
follows:
1998 1997
---- ----
Total of all deferred tax
liabilities ............................... $(47,908) $(63,712)
Total of all deferred tax assets ........... 42,081 13,953
-------- --------
Net deferred tax liability ............. $ (5,827) $(49,759)
======== ========
The provision for federal income taxes differs from that computed at the
statutory 34% corporate tax rate, as follows:
Years Ended December 31,
--------------------------------------------
1998 1997
------------------ --------------------
Effective Effective
Rate Rate
Amount % Amount %
------ ----- ------ -----
Tax at statutory rate ..... $122,063 34.00 $144,534 34.00
Other ..................... 800 .22 8,067 2.39
-------- ----- -------- -----
$122,863 34.22 $122,601 36.39
======== ===== ======== =====
Retained earnings at December 31, 1998 and 1997 include $502,945 for
which no deferred federal income tax liability has been recognized. This
amount represents an allocation of income to bad-debt deductions for tax
purposes only for years prior to 1988. Reduction of amounts so allocated
for purposes other than tax bad-debt losses would create income for tax
purposes only, which would be subject to the then-current corporate
income tax rate.
F-14
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 10 SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
1998 1997
---- ----
Cash paid during the year for:
Interest ................................. $ 1,637,662 $ 1,406,439
Income taxes ............................. 196,683 25,950
Supplemental schedule of noncash
investing and financing activities:
Real estate acquired in settlement
of loans and leases ................... 22,687 --
Loans to facilitate the sale of
real estate owned ..................... 31,500 --
Increase in unrealized gain (loss)
on securities available for sale ...... (7,006) --
Increase (decrease) in deferred
tax effect on unrealized gain
(loss) on securities available
for sale .............................. 2,382 --
Note 11 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
-------------------------------------------------
In the normal course of business, various commitments and contingent
liabilities are outstanding, such as commitments to extend credit and
undisbursed lines of credit which are not reflected on the Association's
financial statements. Management does not anticipate any material loss
as a result of these transactions. Commitments to extend credit totaled
approximately $550,000 and $1,473,600 at December 31, 1998 and 1997,
respectively and undisbursed lines of credit totaled $225,000 at
December 31, 1998 in addition to undisbursed construction loans in
process reflected on the face of the balance sheet in the amount of
$737,569 and $162,000 at December 31, 1998 and 1997, respectively.
The Association is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing needs
of its customers. These financial instruments consist of commitments to
extend credit and undisbursed lines of credit. These instruments
involve, to varying degrees, elements of credit and interest rate risk
in excess of the amounts recognized in the Association's balance sheet.
The Association's exposure to credit loss in the event of nonperformance
by the other party to these financial instruments for commitments to
extend credit and undisbursed lines of credit is represented by the
contractual notional amount of those instruments. The Association uses
the same credit policies making commitments as it does for on-balance
sheet instruments.
F-15
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 12 REGULATORY MATTERS
------------------
The Association is subject to various regulatory capital requirements
administered by its primary federal regulator, the Office of Thrift
Supervision (OTS). Failure to meet the minimum regulatory capital
requirements can initiate certain mandatory, and possible additional
discretionary actions by regulators, that if undertaken, could have a
direct material effect on the Association and the financial statements.
Under the regulatory capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Association must meet
specific capital guidelines involving quantitative measures of the
Association's assets, liabilities, and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Association's
capital amounts and classification under the prompt corrective action
guidelines are also subject to qualitative judgements by the regulators
about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Association to maintain minimum amounts and ratios
of: total risk-based capital and Tier I capital to risk-weighted assets
(as defined in the regulations), Tier I capital to adjusted total assets
(as defined), tangible capital to adjusted total assets (as defined),
and tangible equity to adjusted total assets (as defined). As of
December 31, 1998 the Association meets all of the capital requirements
to which it is subject and is deemed to be well capitalized.
The actual and required capital amounts and ratios applicable to the
Association are presented in the table below, including a reconciliation
of capital under generally accepted accounting principles ("GAAP") to
such amounts reported for regulatory purposes.
To be Well
Capitalized
Minimum for Prompt
for Capital Corrective
Adequacy Action
Actual Purposes Provisions
-------------- ------------- --------------
Ratio Amount Ratio Amount Ratio Amount
----- ------ ----- ------ ----- ------
(Dollars in Thousands)
December 31, 1998
Total equity, and ratio
to total assets ......... 8.7% $ 3,570
==== =======
Unrealized losses on
securities available
for sale ................ 5
-------
Tangible capital, and
ratio to adjusted
total assets ............ 8.7% $ 3,575 1.5% $ 616
==== ======= ==== ======
Tier 1 (core) capital,
and ratio to adjusted
total assets ............ 8.7% $ 3,575 3.0% $ 1,232 5.0% $2,053
==== ======= ==== ======= ==== ======
Tier 1 (core) capital,
and ratio to risk-
weighted assets ........ 18.7% $ 3,575 6.0% $2,464
==== ==== ======
Allowance for loan
losses ................. 170
Equity investment ....... (15)
-------
Total risk-based
capital, and ratio
to risk-weighted
assets ................. 19.5% $ 3,730 8.0% $ 1,530 10.0% $1,912
==== ======= ==== ======= ==== ======
Total assets ............ $41,058
=======
Adjusted total assets ... $41,063
=======
Risk-weighted assets .... $19,124
=======
F-16
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 12 REGULATORY MATTERS (Continued)
------------------
To be Well
Capitalized
Minimum for Prompt
for Capital Corrective
Adequacy Action
Actual Purposes Provisions
-------------- -------------- ----------------
Ratio Amount Ratio Amount Ratio Amount
----- ------ ----- ------ ----- ------
(Dollars in Thousands)
December 31, 1997
Total equity, and ratio
to total assets ...... 10.0% $ 3,338
===== =======
Tangible capital, and
ratio to adjusted
total assets ......... 10.0% $ 3,338 1.5% $ 499
===== ======= === =======
Tier 1 (core) capital,
and ratio to adjusted
total assets ......... 10.0% $ 3,338 3.0% $ 998 5.0% $ 1,663
==== ======= === ======= === =======
Tier 1 (core) capital,
and ratio to risk-
weighted assets ...... 23.5% $ 3,338 6.0% $ 1,996
==== === =======
Allowance for loan
losses ............... 89
Equity investment ..... (15)
-------
Total risk-based
capital, and ratio
to risk-weighted
assets ............... 24.0% $ 3,412 8.0% $ 1,138 10.0% $ 1,422
==== ======= === ======= ==== =======
Total assets .......... $33,260
=======
Adjusted total assets . $33,260
=======
Risk-weighted assets .. $14,220
=======
Note 13 ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------------
The following disclosure is made in accordance with the requirements of
SFAS No. 107, Disclosures About Fair Value of Financial Instruments.
Financial instruments are defined as cash and contractual rights and
obligations that require settlement, directly or indirectly, in cash. In
cases where quoted market prices are not available, fair values have
been estimated using the present value of future cash flows or other
valuation techniques. The results of these techniques are highly
sensitive to the assumptions used, such as those concerning appropriate
discount rates and estimates of future cash flows, which require
considerable judgement. Accordingly, estimates presented herein are not
necessarily indicative of the amounts the Association could realize in a
current settlement of the underlying financial instruments. SFAS No. 107
excludes certain financial instruments and all nonfinancial instruments
from its disclosure requirements. These disclosures should not be
interpreted as representing an aggregate measure of the underlying value
of the Association.
F-17
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 13 ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
---------------------------------------------
The estimated fair value of financial instruments were as follows:
As of December 31,
--------------------------------------
1998 1997
------------------ -----------------
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- -------
(In Thousands)
Financial Assets:
Cash and non-interest
earning deposits .............. $ 447 $ 447 $ 185 $ 185
Interest-earning deposits in
other depository institutions . 1,904 1,904 4,050 4,050
Investment securities ........... 3,917 3,934 5,184 5,271
Loans receivable, net ........... 34,152 34,246 23,292 23,988
FHLB stock ...................... 316 316 298 298
Other assets .................... 15 15 15 15
------- ------- ------- -------
$40,751 $40,862 $33,024 $33,807
======= ======= ======= =======
Financial Liabilities:
Deposits ........................ $34,065 $34,301 $29,295 $29,408
Advances from FHLB .............. 3,200 3,125 400 404
Interest payable on deposits .... 75 75 41 41
Other liabilities ............... 83 83 98 98
------- ------- ------- -------
$37,423 $37,584 $29,834 $29,951
======= ======= ======= =======
The following significant methods and assumptions were used by the
Association in estimating the fair value of financial instruments.
Cash and short-term investments
-------------------------------
The carrying value of highly liquid instruments, such as cash on hand
and amounts due from depository institutions, and interest-earning
deposits in other institutions, provides a reasonable estimate of their
fair value.
Investment securities
---------------------
Fair value estimates for investment securities are based on quoted
market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments. The carrying amount of accrued interest on securities
approximates its fair value.
Loans receivable, net
---------------------
The fair values for loans are estimated through discounted cash flow
analysis, using current rates at which loans with similar terms would be
made to borrowers of similar credit quality. Appropriate adjustments are
made to reflect probable credit losses. The carrying amount of accrued
interest on loans approximated its fair value.
F-18
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 13 ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
---------------------------------------------
Federal Home Loan Bank Stock (FHLB)
-----------------------------------
The value of Federal Home Loan Bank stock is set by the FHLB at $100 per
share.
Deposits
--------
SFAS No. 107 specifies that the fair value of deposit liabilities with
no defined maturity is the amount payable on demand at the reporting
date, i.e., their carrying or book value. These deposits, which include
interest and non-interest bearing checking, passbook, and money market
accounts, represented approximately 19% and 14% of total deposits at
December 31, 1998 and 1997, respectively. The fair value of fixed-rate
certificates of deposit is estimated using a discounted cash flow
calculation that applies interest rates currently offered on
certificates of similar remaining maturities to a schedule of aggregate
expected cash flows on time deposits.
The carrying amount of accrued interest payable on deposits approximates
its fair value.
Advances from Federal Home Loan Bank
------------------------------------
The fair value of fixed rate borrowings are estimated using discounted
cash flows, based on current incremental borrowing rates for similar
types of borrowing arrangements.
Off-balance-sheet instruments
-----------------------------
Off-balance-sheet financial instruments include commitments to extend
credit and undisbursed lines of credit. The fair value of such
instruments is estimated using fees currently charged for similar
arrangements in the marketplace, adjusted for changes in terms and
credit risk as appropriate. The estimated fair value for these
instruments was not significant at December 31, 1998 and 1997. The
contract or notional amounts of the Association's financial instruments
with off-balance-sheet risk are disclosed in Note 11.
Note 14 ADOPTION OF PLAN OF CONVERSION
------------------------------
On December 8, 1998, the Board of Directors of Florida Parishes
Homestead Association adopted a Plan of Conversion ("the plan"), which
proposes the conversion of the Association from a Louisiana-chartered
mutual savings and loan association to a federally-chartered stock
savings bank to be known as "Florida Parishes Bank" (the "Bank", in its
mutual or stock form, as the sense of the reference requires) and the
concurrent issuance of its capital stock to FPB Financial Corp. ("the
newly formed Holding Company"). As an interim step in the conversion,
the Association first converted to a federally-chartered mutual savings
bank known as "Florida Parishes Bank", effective February 23, 1999, in
advance of the common stock offering.
F-19
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 14 ADOPTION OF PLAN OF CONVERSION (Continued)
------------------------------
The Plan provides that non-transferable subscription rights to purchase
Common Stock of FPB Financial Corp. will be offered first to Eligible
Account Holders of record as of the close of business on September 30,
1997; then to a Tax-Qualified Employee Stock Ownership Plan; then to
Supplemental Eligible Account Holders of record as of the close of
business on March 31,1999; then to Other Members which include other
depositors as of a date to be specified and persons who were borrowers
as of both February 23, 1999 and the voting record date whose loans are
secured by real estate; and then to directors, officers and employees of
the Bank. Shares of Common Stock remaining unsold after the Subscription
Offering, if any, will be offered for sale to the public though a
Community Offering, as determined by the Boards of Directors of the
Holding Company and the Bank in their sole discretion. The common stock
will be offered at a price to be determined by the Board of Directors
based upon an appraisal to be made by an independent appraisal firm. The
exact number of shares to be offered will be determined by the Board of
Directors in conjunction with the determination of the price at which
shares will be sold. The costs of issuing the common stock will be
deferred and deducted from the sale proceeds. The Bank had incurred
$25,909 issuance costs as of December 31, 1998. If the conversion is not
completed, deferred costs will be charged to operations.
In accordance with OTS Regulations, at the time that the Bank converts
from a mutual savings bank to a stock savings bank, the Bank will
establish a liquidation account with an initial balance equal to the
Bank's total equity as of the date of the latest balance sheet appearing
in the prospectus. The liquidation account will be maintained for the
benefit of eligible holders who continue to maintain their accounts at
the Bank after the Conversion. The liquidation account will be reduced
annually to the extent that the eligible account holders have reduced
their qualifying deposits. Subsequent increases will not restore an
eligible account holder's interest in the liquidation account. In the
event of a complete liquidation of the Bank, and only in such event,
each account holder will be entitled to receive a distribution from the
liquidation account in an amount proportionate to the adjusted
qualifying account balances then held. The Bank may not pay dividends or
repurchase its common stock if such dividends or repurchases would
reduce its equity below applicable regulatory capital requirements or
the required liquidation account amount.
Under current OTS regulations, limitations have been imposed on all
"capital distributions" by savings institutions, including cash
dividends, stock repurchases and other transactions charged to the
capital account. The regulation establishes a three-tiered system of
restrictions, with the greatest flexibility afforded to savings
institutions which are both well- capitalized and given favorable
qualitative examination ratings by the OTS. Generally, such an
institution which has "capital" in excess of its fully- phased-in
regulatory capital requirements may, after notifying the OTS, make
capital distributions in any year equal to the higher of (i) net income
for the year-to-date plus 50% of its "surplus capital ratio" at the
beginning of the calendar year or (ii) 75% of net income over the most
recent four quarter period. Other savings institutions would be subject
to more stringent procedural and substantive requirements, the most
restrictive being a requirement for prior OTS approval of any capital
distribution. OTS regulations also restrict stock repurchases during the
first three years following the conversion unless certain criteria are
satisfied.
F-20
<PAGE>
FLORIDA PARISHES HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 15 NEW ACCOUNTING STANDARDS
------------------------
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings
per Share, is effective for interim and annual periods ending after
December 31, 1997. This statement specifies new computation,
presentation, and disclosure standards relative to earnings per share
data for entities with publicly held common stock. The Bank is presently
a mutual savings bank and earnings per share disclosures are not
applicable. However, the provisions of the statement will be adopted and
applied upon conversion of the Bank as outlined in Note 14 above.
Statement of Financial Accounting Standards ("SFAS") No. 129, Disclosure
of Information about Capital Structure, is effective for financial
statements for periods ending after December 15, 1997. This statement
establishes standards for disclosure of information about an entity's
capital structure. The Association's capital structure as it is
presently constituted is presented in conformity with the provisions of
this pronouncement.
Statement of Financial Accounting Standards ("SFAS") No. 131,
Disclosures about Segments of an Enterprise and Related Information, is
effective for fiscal years beginning after December 15, 1997. This
statement requires that public business enterprises report certain
information about operating segments in complete sets of financial
statements of the enterprise and in condensed financial statements of
interim periods issued to shareholders. It also requires the enterprise
to report certain information about its products and services, the
geographic areas in which it operates, and its major customers. Since
the Association currently has only one operating segment, management
believes that the Association's financial statements as presented are in
conformity with this pronouncement.
Statement of Financial Accounting Standards ("SFAS") No. 132, Employers'
Disclosures about Pensions and Other Postretirement Benefits, is
effective for fiscal years beginning after December 15, 1997. This
statement requires that employers' make certain disclosures about
pension and other postretirement benefit plans. The Association
presently has no pension or other postretirement benefit plans, and,
therefore, such disclosures would not apply.
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting
for Derivative Instruments and Hedging Activities, is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999. Early
application of the provisions of this statement is encouraged, but it
shall not be applied retroactively to financial statements of prior
periods. This statement establishes additional accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial condition and measure those instruments at fair
value. The Association does not currently have any financial instruments
that meet the Standard's definition of a derivative. Consequently, the
provisions of this pronouncement will not materially affect the
financial condition or the results of operations of the Association.
Early adoption of the provisions of this statement is not anticipated,
and presently, management is not contemplating any transfers of
securities classified as held-to-maturity to the available-for-sale or
trading categories nor any transfers of available-for-sale securities to
the trading category.
F-21
<PAGE>
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information that is different. If the
laws of your state or other jurisdiction prohibit us from offering our common
stock to you, then this prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of our common stock. Neither the delivery of
this prospectus nor any sale hereunder shall imply that there has been no change
in our affairs since any of the dates as of which information is furnished
herein or since the date hereof.
Our Table of Contents is located on the inside of the front cover page of this
document.
Until ___________, 1999 or 90 days after commencement of the Syndicated
Community Offering, if any, whichever is later, all dealers effecting
transactions in our common stock may be required to deliver a prospectus. This
is in addition to the obligation of dealers to deliver a prospectus when acting
as underwriters and _________, 1999 with respect to any unsold allotments or
subscriptions.
391,000 Shares
(Anticipated Maximum)
(Subject to Increase to Up to 449,650 Shares)
FPB Financial Corp.
(Proposed Holding Company for
Florida Parishes Bank)
---------------------
PROSPECTUS
---------------------
COMMON STOCK
Trident Securities
__________, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
In accordance with the Business Corporation Law of the State of Louisiana,
Article 8 of the Corporation's Articles of Incorporation provides as follows:
Article 8. Indemnification, etc. of Officers, Directors, Employees and Agents.
A. Personal Liability of Directors and Officers. A director or officer of
the Corporation shall not be personally liable for monetary damages for any
action taken, or any failure to take any action, as a director or officer except
to the extent that by law a director's or officer's liability for monetary
damages may not be limited.
B. Indemnification. The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, including actions by or in the right of
the Corporation, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under Louisiana law.
C. Advancement of Expenses. Reasonable expenses incurred by an officer,
director, employee or agent of the Corporation in defending an action, suit or
proceeding described in Section B of this Article 8 may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding if authorized by the board of directors (without regard to whether
participating members thereof are parties to such action, suit or proceeding),
upon receipt of an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that the person is not entitled to
be indemnified by the Corporation.
D. Other Rights. The indemnification and advancement of expenses provided
by or pursuant to this Article 8 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any bylaw, insurance or other agreement, vote of stockholders or
directors (regardless of whether directors authorizing such indemnification are
beneficiaries thereof) or otherwise, both as to actions in their official
capacity and as to actions in another capacity while holding an office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
E. Insurance. The Corporation shall have the power to purchase and maintain
insurance or other similar arrangement on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture or other enterprise, against any
liability asserted against or incurred by him in any such capacity, or arising
out of his status as such, whether or not the
II-1
<PAGE>
Corporation would have the power to indemnify him against such liability under
the provisions of this Article 8.
F. Security Fund; Indemnity Agreements. By action of the Board of Directors
(notwithstanding their interest in the transaction), the Corporation may create
and fund a trust fund or other fund or form of self-insurance arrangement of any
nature, and may enter into agreements with its officers, directors, employees
and agents for the purpose of securing or insuring in any manner its obligation
to indemnify or advance expenses provided for in this Article 8.
G. Modification. The duties of the Corporation to indemnify and to advance
expenses to any person as provided in this Article 8 shall be in the nature of a
contract between the Corporation and each such person, and no amendment or
repeal of any provision of this Article 8, and no amendment or termination of
any trust or other fund or form of self-insurance arrangement created pursuant
to Section F of this Article 8, shall alter to the detriment of such person the
right of such person to the advance of expenses or indemnification related to a
claim based on an act or failure to act which took place prior to such
amendment, repeal or termination.
H. Proceedings Initiated by Indemnified Persons. Notwithstanding any other
provision of this Article 8, the Corporation shall not indemnify a director,
officer, employee or agent for any liability incurred in an action, suit or
proceeding initiated (which shall not be deemed to include counter-claims or
affirmative defenses) or participated in as an intervenor or amicus curiae by
the person seeking indemnification unless such initiation of or participation in
the action, suit or proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
II-2
<PAGE>
Item 25. Other Expenses of Issuance and Distribution.
SEC filing fees............................................. $ 1,250
OTS filing fees............................................. 8,400
Printing, postage and mailing .............................. 55,000
Legal fees and expenses..................................... 82,500
Blue Sky filing fees and expenses........................... 7,500
Accounting fees and expenses................................ 37,000
Trident Securities:
Underwriting fees........................................ 70,000
Out-of-pocket expenses, including legal fees............. 30,000
Appraiser's fees and expenses, including business plan...... 23,500
Conversion agent fees and expenses.......................... 7,500
Transfer agent and stock certificates....................... 5,000
Miscellaneous............................................... 32,350
--------
Total.................................................. $360,000
========
Item 26. Recent Sales of Unregistered Securities
The only securities sold by the Registrant to date consist of 100 shares of
common stock issued on March 9, 1999, to its sole incorporator, Florida Parishes
Bank, for $10.00 per share, which shares will be cancelled upon consummation of
the Conversion. Because the shares were sold to only one entity and were sold
only to facilitate the incorporation of the Registrant, the sale was exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2) thereof.
Item 27. Exhibits
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
(a) List of Exhibits (filed herewith unless otherwise noted)
1.1 Engagement Letter dated November 24, 1998 with Trident Securities
1.2 Form of Agency Agreement with Trident Securities
2.1 Plan of Conversion
3.1 Articles of Incorporation of FPB Financial Corp.
3.2 Bylaws of FPB Financial Corp.
4.1 Form of Stock Certificate of FPB Financial Corp.
5.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding legality of
securities
8.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding federal income
tax consequences
8.2 Opinion of Murphy, Whalen & Broussard regarding Louisiana income tax
consequences
8.3 Opinion of Ferguson & Company regarding subscription rights
10.1 Form of Employment Agreement between FPB Financial Corp., Florida Parishes
Bank and Fritz W. Anderson, II
10.2 Form of Employment Agreement between FPB Financial Corp., Florida Parishes
Bank and G. Wayne Allen
II-3
<PAGE>
23.1 Consent of Murphy, Whalen & Broussard
23.2 Consent of Ferguson & Company
23.3 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibits 5.1
and 8.1)
24.1 Power of Attorney (included in the Signature Page to this Registration
Statement)
27.1 Financial Data Schedule
99.1 Proxy Statement and form of proxy for solicitation of members of Florida
Parishes Bank
99.2* Appraisal Report of Ferguson & Company
99.3 Stock Order Form
99.4 Marketing Materials
- ----------
* To be filed by amendment.
(b) Financial Statement Schedules
All schedules have been omitted as not applicable or not required under the
rules of Regulation S-X.
Item 28. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of the
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424 (b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes to furnish stock certificates
to or in accordance with the instructions of the respective purchasers of the
common stock, so as to make delivery to each purchaser promptly following the
closing under the Plan of Conversion.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, 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 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 of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the city of Hammond,
State of Louisiana, on March 9, 1999.
FPB FINANCIAL. CORP.
By: /s/ Fritz W. Anderson, II
-----------------------------------------
Fritz W. Anderson, II
President and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby makes, constitutes and appoints Fritz W. Anderson, II his true and lawful
attorney, with full power to sign for each person and in such person's name and
capacity indicated below, and with full power of substitution, any and all
amendments to this registration statement, hereby ratifying and confirming such
person's signature as it may be signed by said attorney to any and all
amendments.
Name Title Date
/s/ G. Wayne Allen Director, Senior Vice March 9, 1999
- -------------------------
G. Wayne Allen President and Secretary
/s/ Fritz W. Anderson, II Director, President and March 9, 1999
- -------------------------
Fritz W. Anderson, II Chief Executive Officer
(principal financial and
accounting officer)
/s/ Bill W. Bowden Chairman of the Board March 9, 1999
- -------------------------
Bill W. Bowden
/s/ Dan R. Durham Director March 9, 1999
- -------------------------
Dan R. Durham
/s/ Wilbert H. Hutchinson Director March 9, 1999
- -------------------------
Wilbert H. Hutchinson
/s/ Richard S. Inge Director March 9, 1999
- -------------------------
Richard S. Inge
/s/ John L. McGee Director March 9, 1999
- -------------------------
John L. McGee
<PAGE>
EXHIBIT INDEX
1.1 Engagement Letter dated November 24, 1998 with Trident Securities
1.2 Form of Agency Agreement with Trident Securities
2.1 Plan of Conversion
3.1 Articles of Incorporation of FPB Financial Corp.
3.2 Bylaws of FPB Financial Corp.
4.1 Form of Stock Certificate of FPB Financial Corp.
5.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding legality of
securities
8.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding federal
income tax consequences
8.2 Opinion of Murphy, Whalen & Broussard regarding Louisiana income tax
consequences
8.3 Opinion of Ferguson & Company regarding subscription rights
10.1 Form of Employment Agreement between FPB Financial Corp., Florida
Parishes Bank and Fritz W. Anderson, II
10.2 Form of Employment Agreement between FPB Financial Corp., Florida
Parishes Bank and G. Wayne Allen
23.1 Consent of Murphy, Whalen & Broussard
23.2 Consent of Ferguson & Company
23.3 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibits
5.1 and 8.1)
24.1 Power of Attorney (included in the Signature Page to this Registration
Statement)
27.1 Financial Data Schedule
99.1 Proxy Statement and form of proxy for solicitation of members of
Florida Parishes Bank
99.2* Appraisal Report of Ferguson & Company
99.3 Stock Order Form
99.4 Marketing Materials
- ----------
* To be filed by amendment.
Exhibit 1.1
Engagement Letter dated November 24, 1998 with Trident Securities
<PAGE>
November 24, 1998
Board of Directors
Florida Parishes Homestead Association
300 West Morris Avenue
Hammond, Louisiana 70401
RE: Conversion Stock Marketing Services
Gentlemen:
This letter sets forth the terms of the proposed engagement between Trident
Securities, Inc. ("Trident") and Florida Parishes Homestead Association,
Hammond, Louisiana (the "Association") concerning our investment banking
services in connection with the conversion of the Association from a mutual to a
capital stock form of organization.
Trident is prepared to assist the Association in connection with the offering of
shares of common stock of its to-be-formed stock holding company ("Holding
Company") during the subscription offering and community offering as such terms
will be defined in the Association's Plan of Conversion. The specific terms of
the services contemplated hereunder shall be set forth in a definitive sales
agency agreement (the "Agreement") between Trident, the Holding Company and the
Association to be executed on the date the prospectus is declared effective by
the appropriate regulatory authorities. The price of the shares during the
subscription offering and community offering will be the price established by
the Holding Company's and the Association's Board of Directors, based upon an
independent appraisal as approved by the appropriate regulatory authorities,
provided such price is mutually acceptable to Trident, the Holding Company and
the Association.
In connection with the subscription offering and community offering, Trident
will act as financial advisor and exercise its best efforts to assist the
Holding Company in the sale of its common stock during the subscription offering
and community offering. Additionally, Trident may enter into agreements with
other National Association of Securities Dealers, Inc. ("NASD") member firms to
act as selected dealers, assisting in the sale of the common stock. Trident, the
Holding Company and the Association will determine the selected dealers to
assist the Holding Company and the Association during the community offering. At
the appropriate time, Trident in conjunction with its counsel, will conduct an
examination of the relevant documents and records of the Holding Company and the
Association as Trident deems necessary and appropriate. The Holding Company and
the Association will make all documents, records and other information deemed
necessary by Trident or its counsel available to them upon request.
For its services hereunder, Trident will receive the following compensation and
reimbursement from the Holding Company:
1. A management fee in the amount of $70,000.
<PAGE>
Board of Directors
November 24, 1998
Page 2
2. For stock sold by other NASD member firms under selected
dealer's agreements, the commission shall not exceed a fee to
be agreed upon jointly by Trident, the Holding Company and the
Association to reflect market requirements at the time of the
stock allocation in a Syndicated Community Offering.
3. The foregoing fees and commissions are to be payable to
Trident at closing as defined in the Agreement to be entered
into between the Association, the Holding Company and Trident.
4. Trident shall be reimbursed for allocable expenses incurred by
it, including legal fees, whether or not the Agreement is
consummated. Trident's out-of-pocket and legal expenses will
not exceed $30,000. The Association will forward to Trident a
check in the amount of $10,000 as an advance payment to defray
the allocable expenses of Trident.
It further is understood that the Holding Company and the Association will pay
all other expenses of the conversion including but not limited to its attorneys'
fees, NASD filing fees, and filing and registration fees and fees of either
Trident's attorneys or the attorneys relating to any required state securities
law filings, telephone charges, air freight, rental equipment, supplies,
transfer agent charges, fees relating to auditing and accounting and costs of
printing all documents necessary in connection with the foregoing.
For purposes of Trident's obligation to file certain documents and to make
certain representations to the NASD in connection with the conversion, the
Association warrants that: (a) the Association has not privately placed any
securities within the last 18 months; (b) there have been no material dealings
within the last 12 months between the Association and any NASD member or any
person related to or associated with any such member; (c) none of the officers
or directors of the Association has any affiliation with the NASD; (d) except as
contemplated by this engagement letter with Trident, the Association has no
financial or management consulting contracts outstanding with any other person;
(e) the Association has not granted Trident a right of first refusal with
respect to the underwriting of any future offering of the Association stock; and
(f) there has been no intermediary between Trident, the Holding Company and the
Association in connection with the public offering of the Holding Company's
shares, and no person is being compensated in any manner for providing such
service.
The Association agrees to indemnify and hold harmless Trident and each person,
if any, who controls the firm against all losses, claims, damages or
liabilities, joint or several and all legal or other expenses reasonably
incurred by them in connection with the investigation or defense thereof
(collectively, "Losses"), to which they may become subject under securities laws
or under the common law, that arise out of or are based upon the conversion or
the engagement hereunder of Trident except to the extent such losses are the
result of the gross negligence or willful misconduct of Trident. If the
foregoing indemnification is unavailable for any reason, the Association agrees
to contribute to such Losses in the proportion that its financial interest in
the
<PAGE>
Board of Directors
November 24, 1998
Page 3
conversion bears to that of the indemnified parties. If the agreement is entered
into with respect to the common stock to be issued in the conversion, the
Agreement will provide for indemnification, which will be in addition to any
rights that Trident or any other indemnified party may have at common law or
otherwise. The indemnification provision of this paragraph will be superseded by
the indemnification provisions of the Agreement entered into by the Association,
the Holding Company and Trident.
This letter is merely a statement of intent and is not a binding legal agreement
except as to paragraph (4) above with regard to the obligation to reimburse
Trident for allocable expenses to be incurred prior to the execution of the
Agreement and the indemnity described in the preceding paragraph. While Trident
and the Association agree in principle to the contents hereof and propose to
proceed promptly, and in good faith, to work out the arrangements with respect
to the proposed offering, any legal obligations between Trident, the Holding
Company and the Association shall be only as set forth in a duly executed
Agreement. Such Agreement shall be in form and content satisfactory to Trident,
the Holding Company and the Association, as well as their counsel, and Trident's
obligations thereunder shall be subject to, among other things, there being in
Trident's opinion no material adverse change in the condition or obligations of
the Association or no market conditions which might render the sale of the
shares by the Holding Company hereby contemplated inadvisable.
Please acknowledge your agreement to the foregoing by signing below and
returning to Trident one copy of this letter along with the advance payment of
$10,000. This proposal is open for your acceptance for a period of thirty (30)
days from the date hereof.
Yours very truly,
TRIDENT SECURITIES, INC.
By: /s/ R. Lee Burrows, Jr.
----------------------------
R. Lee Burrows, Jr.
Managing Director
Agreed and accepted to this 2nd day
of December, 1998
FLORIDA PARISHES HOMESTEAD ASSOCIATION
By: /s/ Fritz W. Anderson, II
-------------------------
Fritz W. Anderson, II
President and CEO
RLB:cs
Exhibit 1.2
Form of Agency Agreement with Trident Securities
<PAGE>
FPB Financial Corp.
(Proposed Holding Company for Florida Parishes Bank)
Up to _______ Shares of Common Stock
(Par Value $.01 Per Share)
$10.00 Per Share
AGENCY AGREEMENT
May __, 1999
Trident Securities
4601 Six Forks Road, Suite 400
Raleigh, North Carolina 27609
Dear Sirs:
FPB Financial Corp. ("Company"), a Louisiana corporation, and Florida
Parishes Bank ("Bank"), a federally chartered savings bank, hereby confirm as of
the date above their respective agreements with Trident Securities ("Trident"),
a broker-dealer registered with the Securities and Exchange Commission
("Commission") and a member of the National Association of Securities Dealers,
Inc. ("NASD"), as follows:
1. Introduction. The Bank intends to convert from a federally chartered
mutual savings bank to a federally chartered stock savings bank as a
wholly-owned subsidiary of the Company (together with the Offerings (as defined
below) and the issuance of shares of common stock of the Bank to the Company,
the "Conversion") pursuant to a plan of conversion adopted by the Bank's Board
of Directors on _____________ ("Plan"). In accordance with the Plan, the Company
is offering up to _______ shares ("Shares") of its common stock, par value $.01
per share ("Common Stock"), pursuant to nontransferable subscription rights in a
subscription offering ("Subscription Offering"), in order of priority, to (i)
the Bank's Eligible Account Holders (as defined in the Plan), (ii) the Company's
Employee Stock Ownership Plan ("ESOP"), (iii) the Bank's Supplemental Eligible
Account Holders (as defined in the Plan), (iv) the Bank's Other Members (as
defined in the Plan), and (v) directors, officers and employees of the Bank. Any
Shares not sold in the Subscription Offering will be offered to the general
public in a community offering, with preference being given to natural persons
residing in Tangipahoa Parish, Louisiana ("Community Offering"). The Community
Offering may commence any time during the Subscription Offering or after the
expiration of the Subscription Offering. The Subscription Offering and the
Community Offering are collectively referred to as the "Offerings." Purchases of
Shares in the Offerings are subject to certain limitations and restrictions as
described in the Plan.
<PAGE>
Trident Securities
Page 2
Trident has advised the Company and the Bank that it intends to utilize
its best efforts to assist the Company and the Bank with the sale of the Shares
in the Subscription Offering and any Community Offering.
2. Representations and Warranties.
(a) The Company and the Bank jointly and severally represent and
warrant to Trident that:
(i) The Company has filed with the Commission a registration statement,
including exhibits and an amendment or amendments thereto, on Form SB-2 (No.
333-_____), including a Prospectus, for the registration of the Shares under the
Securities Act of 1933, as amended ("Securities Act"); and such registration
statement has been declared effective under the Securities Act and no stop order
has been issued with respect thereto and no proceedings therefor have been
initiated or, to the Company's best knowledge, threatened by the Commission.
Except as the context may otherwise require, such registration statement, as
amended or supplemented, on file with the Commission at the time it became
effective, including the prospectus, financial statements, schedules, exhibits
and all other documents filed as part thereof, as amended and supplemented, is
herein called the "Registration Statement," and the prospectus, as amended or
supplemented, on file with the Commission at the time the Registration Statement
became effective is herein called the "Prospectus," except that if any
prospectus filed by the Company with the Commission pursuant to Rule 424(b) of
the general rules and regulations of the Commission under the Securities Act
(together with the published policies and actions of the Commission thereunder,
the "Securities Act Regulations") differs from the form of prospectus on file at
the time the Registration Statement became effective, the term "Prospectus"
shall refer to the Rule 424(b) prospectus from and after the time it is filed
with the Commission and shall include any amendments or supplements thereto from
and after their dates of effectiveness or use, respectively.
(ii) The Bank has filed an Application for Conversion on Form AC,
including exhibits (as amended or supplemented, the "Form AC" or the "Conversion
Application") with the Office of Thrift Supervision ("OTS") under the Home
Owners' Loan Act, as amended ("HOLA"), and the rules and regulations, including
published policies and actions, of the OTS thereunder ("OTS Regulations"), which
has been approved by the OTS, and the Prospectus and the proxy statement for the
solicitation of proxies from members for the special meeting to approve the Plan
("Proxy Statement") included as part of the Conversion Application have been
approved for use by the OTS. No order has been issued by the OTS preventing or
suspending the use of the Prospectus or the Proxy Statement and no action by or
before the OTS revoking such approvals is pending or, to the Bank's best
knowledge, threatened. The Company has filed with the OTS an application on Form
H-e(1)-S ("Holding Company Application") promulgated under the savings and loan
holding company provisions of the HOLA and the regulations promulgated
thereunder, and has received approval of its acquisition of the Bank from the
OTS.
<PAGE>
Trident Securities
Page 3
(iii) As of the date hereof, (i) the Registration Statement and the
Prospectus comply as to form in all material respects with the Securities Act
and the Securities Act Regulations, (ii) the Registration Statement does not
contain an untrue statement of a material fact or 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, and (iii)
the Prospectus does not contain any untrue statement of a material fact or omit
to state any 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. (Representations or warranties in this subsection shall
not apply to statements or omissions made in reliance upon and in conformity
with written information furnished to the Company or the Bank by or on behalf of
Trident relating to Trident expressly for use in the Registration Statement or
Prospectus.).
(iv) The Company has been duly incorporated as a Louisiana corporation
and the Bank has been duly organized as a mutual savings bank under the laws of
the United States, and each is validly existing and in good standing under the
laws of Louisiana and the United States, respectively, with full power and
authority to own their property and conduct their business as described in the
Registration Statement and Prospectus; the Bank is a member in good standing of
the Federal Home Loan Bank of Dallas; and the deposit accounts of the Bank are
insured by the Federal Deposit Insurance Corporation ("FDIC") up to the
applicable legal limits. Each of the Company and the Bank are duly qualified to
do business as a foreign corporation in each jurisdiction in which its ownership
of property or the conduct of its business requires such qualification, unless
the failure to be so qualified in one or more of such jurisdictions would not
have a material adverse effect on the financial condition, operations, business,
properties or assets of the Company and the Bank, taken as a whole.
(v) The Bank has good, marketable and insurable title to all assets
material to its business and to those assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or restrictions,
except for liens for taxes not yet due, except as described in the Prospectus
and except as to those which do not in the aggregate have a material adverse
effect upon the financial condition, operations, business, properties or assets
of the Bank; and any leases and subleases material to the financial condition,
operations, business, assets or properties of the Bank, under which it holds
properties, including any described in the Prospectus, are in full force and
effect as described therein.
(vi) The Bank has no direct or indirect subsidiaries.
(vii) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
all necessary actions on the part of each of the Company and the Bank, and this
Agreement is a valid and binding obligation of each of the Company and the Bank,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or similar laws relating to or affecting the
<PAGE>
Trident Securities
Page 4
enforcement of creditors' rights generally or the rights of creditors of insured
financial institutions and their holding companies, the accounts of whose
subsidiaries are insured by the FDIC, (ii) general equity principles, regardless
of whether such enforceability is considered in a proceeding in equity or at
law, or (iii) laws relating to the safety and soundness of insured depository
institutions and their affiliates, and except to the extent that the provisions
of Sections 8 and 9 hereof may be unenforceable as against public policy or by
applicable law, including without limitation Sections 23A and 23B of the Federal
Reserve Act, as amended ("Sections 23A and 23B").
(viii) Except as referred to in the Prospectus, there is no litigation
or governmental proceeding pending or, to the best knowledge of the Company or
the Bank, threatened against or involving the Company or the Bank, or any of
their respective assets which individually or in the aggregate would have a
material adverse effect on the financial condition, results of operations,
business, assets or properties of the Company or the Bank, taken as a whole.
(For purposes of this representation, any litigation or governmental proceeding
is not considered "threatened" unless the potential litigant or governmental
authority had manifested to the management of the Company or the Bank, or to
their counsel, a present intention to initiate such litigation or proceeding.).
(ix) The Company and the Bank have received the opinions of (a) Elias,
Matz, Tiernan & Herrick L.L.P. with respect to the federal income tax
consequences of the Conversion, to the effect that the Conversion will
constitute a tax-free reorganization under the Internal Revenue Code of 1986, as
amended, and (b) Murphy, Whalen & Broussard with respect to the Louisiana income
tax consequences of the Conversion, to the effect that the Conversion will not
be a taxable transaction for the Bank or the Company under the laws of
Louisiana; and the facts and representations made by the Company and the Bank
and relied upon in rendering such opinions are accurate and complete, and
neither the Company nor the Bank have taken any action inconsistent therewith.
(x) Neither the Company nor the Bank is in violation of any rule or
regulation of the OTS or the FDIC that could reasonably be expected to result in
any enforcement action against the Company or the Bank, or their officers or
directors.
(xi) Ferguson & Company ("Ferguson"), the firm that prepared the
independent appraisal dated as of March 8, 1999, is independent with respect to
the Company and the Bank within the meaning of the OTS Regulations. The Company
and the Bank believe Ferguson to be experienced and expert in rendering
appraisals of thrift institutions, and nothing has come to the attention of the
Company and the Bank which has caused them to believe that the appraisal by
Ferguson was not prepared in accordance with the requirements of the OTS
Regulations.
(xii) Murphy, Whalen & Broussard, the firm that certified the audited
financial statements of the Bank filed as part of the Registration Statement and
the Conversion Application,
<PAGE>
Trident Securities
Page 5
is independent with respect to the Company and the Bank as required by the
Securities Act, the Securities Act Regulations, the Code of Professional Ethics
of the American Institute of Certified Public Accountants, and Title 12 of the
Code of Federal Regulations Parts 563c and 571, and nothing has come to the
attention of the Company and the Bank which has caused them to believe that such
firm is not independent within the meaning of such provisions.
(xiii) The financial statements and related notes which are included in
the Registration Statement and the Prospectus fairly present the financial
condition, income, equity and cash flows of the Bank at the respective dates
thereof and for the respective periods covered thereby and comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act Regulations and the OTS Regulations. Such financial statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved, except as set
forth therein or in the notes thereto, and such financial statements are
consistent with financial statements and other reports filed by the Bank with
the OTS, except as GAAP may otherwise require. The financial tables in the
Prospectus accurately present the information purported to be shown thereby at
the respective dates thereof and for the respective periods covered thereby.
(xiv) There has been no material adverse change in the financial
condition, operations, business, assets or properties of the Company and the
Bank, taken as a whole, since the latest date as of which such condition is set
forth in the Prospectus, except as disclosed therein; and the capitalization,
assets, properties and business of each of the Company and the Bank conform in
all material aspects to the descriptions thereof contained in the Prospectus.
Neither the Company nor the Bank has any material liabilities of any kind,
contingent or otherwise, except as disclosed in the Prospectus.
(xv) There has been no breach or default (or the occurrence of any
event which, with notice or lapse of time or both, would constitute a default)
under, or creation or imposition of any lien, charge or other encumbrance upon
any of the properties or assets of the Company or the Bank pursuant to any of
the terms, provisions or conditions of, any agreement, contract, indenture,
bond, debenture, note, instrument or obligation to which the Company or the Bank
is a party or by which any of them or any of their respective assets or
properties may be bound or is subject, or violation of any governmental license
or permit or any enforceable published law, administrative regulation or order
or court order, writ, injunction or decree, which breach, default, lien, charge,
encumbrance or violation would have a material adverse effect on the financial
condition, operations, business, assets or properties of the Company and the
Bank, taken as a whole; all agreements which are material to the financial
condition, results of operations or business of the Company and the Bank, taken
as a whole, are in full force and effect, and no party to any such agreement has
instituted or, to the best knowledge of the Company and the Bank, threatened any
action or proceeding wherein the Company or the Bank would be alleged to be in
default thereunder.
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Page 6
(xvi) Neither the Company nor the Bank is in violation of its
respective charter, articles of incorporation or bylaws. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby do not conflict with or result in a breach of the charter, articles of
incorporation or bylaws of the Company or the Bank (in either mutual or stock
form) or constitute a material breach of or default (or an event which, with
notice or lapse of time or both, would constitute a default) under, give rise to
any right of termination, cancellation or acceleration contained in, or result
in the creation or imposition of any lien, charge or other encumbrance upon any
of the properties or assets of the Company or the Bank pursuant to any of the
terms, provisions or conditions of, any material agreement, contract, indenture,
bond, debenture, note, instrument or obligation to which the Company or the Bank
is a party (other than the establishment of a liquidation account pursuant to
the Plan) or violate any governmental license or permit or any law,
administrative regulation or order or court order, writ, injunction or decree
(subject to the satisfaction of certain conditions imposed by the OTS in
connection with its approval of the Conversion Application and the Holding
Company Application), which breach, default, lien, charge, encumbrance or
violation would have a material adverse effect on the financial condition,
operations or business of the Company and the Bank, taken as a whole.
(xvii) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, except as otherwise may be
indicated or contemplated therein, neither the Company nor the Bank has issued
any securities which will remain issued at the Closing Date or incurred any
liability or obligation, direct or contingent, or borrowed money, except
borrowings or liabilities in the ordinary course of business, or entered into
any other transaction not in the ordinary course of business and not consistent
with prior practices, which is material in light of the business of the Company
and the Bank, taken as a whole.
(xviii) The issuance and the sale of the Shares have been duly
authorized by all necessary action of the Company and approved by the OTS and,
when issued and paid for in accordance with the terms of the Plan, the Shares
shall be validly issued, fully paid and nonassessable and shall conform in all
material respects to the description thereof contained in the Prospectus; the
issuance of the Shares is not subject to preemptive rights, except for
subscription rights to the Shares granted pursuant to the Plan; and good title
to the Shares will be transferred by the Company upon issuance thereof against
payment therefor, free and clear of all claims, encumbrances, security interests
and liens against the Company whatsoever. The issuance and sale of the capital
stock of the Bank to the Company has been duly authorized by all necessary
action of the Bank and the Company and the OTS (subject to the satisfaction of
various conditions imposed by the OTS in connection with its approval of the
Conversion Application, and imposed by the OTS in connection with its approval
of the Holding Company Application), and such capital stock, when issued in
accordance with the terms of the Plan, will be fully paid and nonassessable.
(xix) No approval of any regulatory or supervisory or other public
authority is required to be obtained by the Company or the Bank in connection
with the execution and delivery of this Agreement or the issuance of the Shares,
except such approvals as have been obtained and except
<PAGE>
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Page 7
for the declaration of effectiveness of any required post-effective amendment by
the Commission and approval thereof by the OTS, the issuance of the Bank's Stock
Charter by the OTS and as may be required under the "blue sky" or securities
laws of various jurisdictions.
(xx) All contracts and other documents required to be filed as exhibits
to the Registration Statement, the Conversion Application or the Holding Company
Application have been filed with the Commission or the OTS or both, as the case
may be.
(xxi) The Company and the Bank have timely filed all required federal,
state and local tax returns, and no deficiency has been asserted with respect to
such returns by any taxing authorities, and the Company and the Bank have paid
all taxes that have become due and, to the best knowledge of the Company and the
Bank, have made adequate reserves for accrued tax liabilities, except where any
failure to make such filings, payments and reserves, or the assertion of such a
deficiency, would not have a material adverse effect on the financial condition
or results of operations of the Company and the Bank, taken as a whole.
(xxii) All of the loans represented as assets of the Bank as of the
most recent date for which financial condition data is included in the
Prospectus meet or are exempt from all requirements of federal, state or local
law pertaining to lending, including without limitation truth in lending
(including the requirements of Regulation Z and 12 C.F.R. Part 226 and Section
563.99), real estate settlement procedures, consumer credit protection, equal
credit opportunity and all disclosure laws applicable to such loans, except for
violations which, if asserted, would not have a material adverse effect on the
Company and the Bank, taken as a whole.
(xxiii) The records of Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members (as those terms are defined in the Plan)
delivered to Trident by the Bank or its agent in connection with the Conversion
are accurate, reliable and complete in all material respects.
(xxiv) Neither the Company nor the Bank has made any payment of funds
of the Company or the Bank prohibited by law, and no funds of the Company or the
Bank have been set aside to be used for any payment prohibited by law.
(xxv) To the best knowledge of the Company and the Bank, the Company
and the Bank are in compliance with all laws, rules and regulations relating to
environmental protection and neither the Company nor the Bank is subject to
liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or any similar law, except for violations
which, if asserted, would not have a material adverse effect on the Company and
the Bank, taken as a whole. There are no actions, suits, regulatory
investigations or other proceedings pending or, to the best knowledge of the
Company or the Bank, threatened against the Company or the Bank relating to
environmental protection. To the best knowledge of the Company and the Bank, no
disposal, release or discharge of hazardous or toxic substances, pollutants or
<PAGE>
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Page 8
contaminants, including petroleum and gas products, as any of such terms may be
defined under federal, state or local law, has been caused by the Company or the
Bank or, to the best knowledge of the Company and the Bank, or except as already
disclosed in the Prospectus, has occurred on, in or at any of the facilities or
properties owned or leased by the Company or the Bank or in which the Company or
the Bank has a security interest, except such disposal, release or discharge
which would not have a material adverse effect on the financial condition,
operations, business, assets or properties of the Company, the Bank or the
subsidiary, taken as a whole.
(xxvi) All books and records of the Company and the Bank delivered to
Trident by the Bank and the Company or their representatives in connection with
Trident's due diligence examination of the Company and the Bank were, on the
dates on which they or any amendments or supplements thereto, as applicable,
were delivered, accurate and complete in all material respects.
(b) Trident represents and warrants to the Company and the Bank that:
(i) Trident is registered as a broker-dealer with the Commission and no
withdrawal of its registration is pending or, to the best knowledge of Trident,
threatened; and Trident is in good standing with the Commission and the NASD.
(ii) Trident is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with full corporate power
and authority to provide the services to be furnished to the Company and the
Bank hereunder.
(iii) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
all necessary action on the part of Trident, and this Agreement is a legal,
valid and binding obligation of Trident, enforceable in accordance with its
terms (except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally or the rights of creditors of
registered broker-dealers the accounts of whom may be protected by the
Securities Investor Protection Corporation or by general equity principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law, and except to the extent that the provisions of Sections 8 and
9 hereof may be unenforceable as against public policy).
(iv) Trident and, to Trident's best knowledge, each of its employees,
agents and representatives who shall perform any of the services required
hereunder to be performed by Trident, is duly authorized and has all licenses,
approvals and permits necessary to perform such services. Trident is a
registered selling agent in each jurisdiction, other than Hawaii and South
Dakota, and no withdrawal of its registration is pending or, to the best
knowledge of Trident, threatened; and Trident will remain registered in such
jurisdictions in which the Company is
<PAGE>
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Page 9
relying on such registration for the sale of the Shares, and will remain so
registered until the Conversion is consummated or terminated.
(v) The execution and delivery of this Agreement by Trident, the
fulfillment of the terms set forth herein and the consummation of the
transactions contemplated hereby shall not violate or conflict with the charter
or bylaws of Trident or violate, conflict with or constitute a breach of, or
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, any material agreement, indenture or other
instrument by which Trident is bound or under any governmental license or permit
or any law, administrative regulation, authorization, approval or order or court
decree, injunction or order.
(vi) All funds received by Trident to purchase Common Stock will be
handled in accordance with Rule 15c2-4 under the Securities Exchange Act of
1934, as amended ("Exchange Act").
(vii) No action or proceeding against Trident before the Commission,
the NASD, any state securities commission, or any state or federal court is
pending or, to Trident's best knowledge, threatened concerning Trident's
activities as a broker-dealer.
(viii) No action, suit, charge or proceeding is pending or, to the best
knowledge of Trident, threatened against Trident which, if determined adversely
to Trident, would have a material adverse effect on Trident's ability to perform
its obligations under this Agreement.
3. Engagement of Trident; Sale and Delivery of the Shares. On the basis
of the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company and the Bank hereby engage Trident
as their agent to utilize its best efforts to assist the Company with the
Company's sale of the Shares in the Offerings, and Trident hereby accepts such
engagement. The engagement of Trident hereunder shall terminate (a) forty-five
(45) days after the Subscription and Community Offering closes, unless the
Company and the Bank, with the approval of the OTS, are permitted to extend such
period of time, or (b) upon consummation of the Conversion, whichever date shall
first occur.
In the event the Company is unable to sell a minimum of _______ Shares
(or such lesser amount as the OTS may permit) within the period herein provided
(including any permitted extensions), this Agreement shall terminate, and the
Company and the Bank shall refund promptly to any persons who have subscribed
for any of the Shares the full amount which they may have received from such
persons, together with interest as provided in the Prospectus, and no party to
this Agreement shall have any obligation to the other party hereunder, except as
set forth in Sections 6, 8, 9 and 11(d) hereof. Appropriate arrangements for
placing the funds received from subscriptions for Shares in special
interest-bearing accounts with the Bank until all Shares are sold and paid for
will be made prior to the commencement of the Subscription and Community
<PAGE>
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Page 10
Offering, with provision for prompt refund to the purchasers as set forth above,
or for delivery to the Company if all Shares are sold.
If all conditions precedent to the consummation of the Conversion are
satisfied, including the sale of all Shares required by the Plan to be sold, the
Company agrees to issue or have issued such Shares and to release for delivery
certificates to subscribers thereof for such Shares on or as soon as possible
following the Closing Date against payment to the Company by any means
authorized pursuant to the Prospectus, at the principal office of the Company or
at such other place as shall be agreed upon between the parties hereto. The date
upon which the Company shall release or deliver the Shares sold in the
Offerings, in accordance with the terms hereof, is herein called the "Closing
Date."
Trident agrees either (a) upon receipt of an executed order form of a
subscriber to forward the offering price of the Common Stock ordered on or
before twelve noon on the next business day following receipt or execution of an
order form by Trident to the Bank for deposit in a segregated account or (b) to
solicit indications of interest in which event (i) Trident will subsequently
contact any potential subscriber indicating interest to confirm the interest and
give instructions to execute and return an order form or to receive
authorization to execute the order form on the subscriber's behalf, (ii) Trident
will mail acknowledgements of receipt of orders to each subscriber confirming
interest on the business day following such confirmation, (iii) Trident will
debit accounts of such subscribers on the third business day ("debit date")
following receipt of the confirmation referred to in (i), and (iv) Trident will
forward completed order forms together with such funds to the Bank on or before
twelve noon on the next business day following the debit date for deposit in a
segregated account. Trident acknowledges that if the procedure in (b) is
adopted, subscribers' funds are not required to be in their accounts until the
debit date.
Trident shall receive the following compensation and expense
reimbursement for its services hereunder:
(a) A management fee of $70,000, to be paid to Trident in
next-day funds on the Closing Date.
(b) In the event of a Syndicated Community Offering (as
defined in the Plan), a commission to be agreed upon jointly by
Trident, the Company and the Bank for Shares sold by other member firms
of the NASD through a selected dealers arrangement in the Syndicated
Community Offering. Such commission shall reflect market requirements
at the time of the allocation of Shares in the Syndicated Offering, and
shall be paid to Trident in next-day funds on the Closing Date.
(c) Reimbursement for reasonable out-of-pocket allocable
expenses, including but not limited to travel, food, lodging and legal
fees, incurred by it whether or not the Offerings are successfully
completed; provided, however, that reimbursable legal fees and
<PAGE>
Trident Securities
Page 11
out-of-pocket expenses will not exceed $30,000, and, provided further,
that neither the Company nor the Bank shall reimburse Trident for any
of the foregoing expenses accrued after Trident shall have notified the
Company or the Bank of its election to terminate this Agreement
pursuant to Section 11 hereof or after such time as the Company or the
Bank shall have given notice in accordance with Section 12 hereof that
Trident is in breach of this Agreement or that the Company and the Bank
are terminating this Agreement pursuant to Section 11 hereof. Full
reimbursement of Trident shall be made in next-day funds on the Closing
Date or, if the Conversion is not completed and is terminated for any
reason, within ten (10) business days of receipt by the Company of a
written request detailing allocable expenses from Trident for
reimbursement of such expenses. Trident acknowledges receipt of a
$10,000 advance payment from the Bank, which shall be credited against
the total reimbursement due Trident hereunder. In the event this
Agreement is terminated pursuant to Section 11 hereof, Trident shall be
reimbursed only for its actual allocable expenses.
(d) Reimbursement for any expenses of the Company and the Bank
set forth in Section 6 hereof to the extent paid by Trident on behalf
of the Company and the Bank. Full reimbursement shall be made in
next-day funds on the Closing Date or, if the Conversion is not
completed and is terminated for any reason, within ten (10) business
days of receipt by the Company and the Bank of a written request for
such reimbursement detailing such reimbursements.
Notwithstanding the limitations on reimbursement of Trident for its
allocable expenses provided in subsection (b) above and notwithstanding any
reimbursement of Trident pursuant to subsection (c) above, in the event that a
resolicitation or other event causes the Offerings to be extended beyond their
original expiration date, the parties agree to renegotiate in good faith the
limit on legal fees and out-of-pocket expenses set forth in subparagraph (c)
above; provided, however, that the failure to renegotiate shall not result in a
termination of this Agreement.
4. Offering. Subject to the provisions of Section 7 hereof, Trident is
assisting the Company on a best efforts basis in offering a minimum of ______
and a maximum of _______ Shares, subject to adjustment up to _______ Shares
(except as the OTS may permit the number of Shares to be decreased or increased)
in the Offerings. The Shares are to be offered to the public at the price set
forth on the cover page of the Prospectus and the first page of this Agreement.
5. Further Agreements. The Company and the Bank jointly and severally
covenant and agree that:
(a) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus and through and including the
Closing Date, except as otherwise may be indicated or contemplated therein,
neither the Company nor the Bank will issue any securities which will remain
issued at the Closing Date or incur any liability or obligation,
<PAGE>
Trident Securities
Page 12
direct or contingent, or borrow money, except borrowings or liabilities in the
ordinary course of business, or enter into any other transaction not in the
ordinary course of business and consistent with prior practices, which is
material in light of the financial condition, operations, business, properties
or assets of the Company and the Bank, taken as a whole.
(b) If any Shares required to be sold remain unsubscribed following
completion of the Subscription Offering and the Community Offering, the Company
(i) will, if deemed necessary, promptly file with the Commission a
post-effective amendment to such Registration Statement relating to the results
of the Subscription and the Community Offerings, any additional information with
respect to the proposed plan of distribution and any revised pricing information
or (ii) if no such post-effective amendment is required, will file with, or mail
for filing to, the Commission a prospectus or prospectus supplement containing
information relating to the results of the Subscription and Community Offerings
and pricing information pursuant to Rule 424(c) of the Securities Act
Regulations, in either case in a form reasonably acceptable to the Company and
Trident.
(c) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company shall be within the range as set forth
in the Prospectus under the caption "Our Capitalization," and no Common Stock of
the Company shall be outstanding immediately prior to the Closing Date (other
than shares of Common Stock issued in connection with the initial capitalization
of the Company, which shares will be canceled upon consummation of the
Conversion); and the certificates representing the Common Stock will conform in
all material respects with the requirements of applicable laws and OTS
Regulations.
(d) At all times subsequent to the date of the Prospectus through and
including the Closing Date, (i) the Registration Statement and the Prospectus
will comply as to form in all material respects with the Securities Act and the
Securities Act Regulations, (ii) the Registration Statement will not contain any
untrue statement of a material fact or 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, and (iii) the
Prospectus will not contain any untrue statement of a material fact or omit to
state any 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 agreements in this subsection shall not apply to statements
or omissions made in reliance upon and in conformity with written information
furnished to the Company or the Bank relating to Trident by or on behalf of
Trident expressly for use in the Registration Statement or Prospectus.).
(e) Upon amendment of the Bank's charter and bylaws as provided in the
OTS Regulations and completion of the sale and issuance of the Shares by the
Company as contemplated by the Prospectus, (i) the Bank will be converted
pursuant to the Plan to a federally chartered capital stock savings bank with
full power and authority to own its property and conduct its business as
described in the Prospectus, (ii) all of the authorized and outstanding capital
stock of
<PAGE>
Trident Securities
Page 13
the Bank will be owned of record and beneficially by the Company, and (iii) the
Company will have no direct subsidiaries other than the Bank.
(f) The Company shall deliver to Trident, from time to time, such
number of copies of the Prospectus as Trident reasonably may request. The
Company authorizes Trident to use the Prospectus in any lawful manner in
connection with the offer and sale of the Shares.
(g) The Company will notify Trident immediately, and confirm the notice
in writing, (i) when any post-effective amendment to the Registration Statement
becomes effective or any supplement to the Prospectus has been filed, (ii) of
the issuance by the Commission of any stop order relating to the Registration
Statement or of the initiation or the threat of any proceedings for that
purpose, (iii) of the receipt of any notice with respect to the suspension of
the qualification of the Shares for offering or sale in any jurisdiction, and
(iv) of the receipt of any comments from the staff of the Commission relating to
the Registration Statement. If the Commission enters a stop order relating to
the Registration Statement at any time, the Company will make every reasonable
effort to obtain the lifting of such order at the earliest possible moment.
(h) During the time when a prospectus is required to be delivered under
the Securities Act, the Company will comply with all requirements imposed upon
it by the Securities Act and by the Securities Act Regulations to permit the
continuance of offers and sales of or dealings in the Shares in accordance with
the provisions hereof and the Prospectus. If during the period when the
Prospectus is required to be delivered in connection with the offer and sale of
the Shares any event relating to or affecting the Company and the Bank, taken as
a whole, shall occur as a result of which it is necessary, in the reasonable
opinion of counsel for Trident, to amend or supplement the Prospectus in order
to make the Prospectus not false or misleading in light of the circumstances
existing at the time it is delivered to a purchaser of the Shares, the Company
forthwith shall prepare and furnish to Trident a reasonable number of copies of
an amendment or amendments or of a supplement or supplements to the Prospectus
(in form and substance reasonably satisfactory to counsel for Trident) which
shall amend or supplement the Prospectus so that, as amended or supplemented,
the Prospectus shall not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances existing at the time the Prospectus is delivered to a
purchaser of the Shares, not misleading. The Company will not file or use any
amendment or supplement to the Registration Statement or the Prospectus unless
Trident has been first furnished a copy or if Trident shall reasonably object
after having been furnished such copy. For the purposes of this subsection, the
Company and the Bank shall furnish such information with respect to themselves
as Trident from time to time may reasonably request.
(i) The Company and the Bank will take all reasonably necessary action
as may be required to qualify or register the Shares for offer and sale by the
Company under the securities or blue sky laws of such jurisdictions as Trident
and the Company or its counsel may agree upon; provided, however, that the
Company shall not be required to offer or sell Shares in any
<PAGE>
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Page 14
jurisdiction in which the Company would be required to file any consent to
service of process in such jurisdiction, to qualify as a foreign corporation to
do business under the laws of any such jurisdiction, or to register its
directors or officers as brokers, dealers, salesmen or agents therein. In each
jurisdiction where such qualification or registration shall be effected, the
Company, unless Trident agrees that such action is not necessary or advisable in
connection with the distribution of the Shares, shall file and make such
statements or reports as are, or reasonably may be, required by the laws of such
jurisdiction.
(j) Appropriate entries will be made in the financial records of the
Bank to establish a liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders (as those terms are defined in
the Plan) in accordance with the OTS Regulations.
(k) The Company will file a registration statement for the Common Stock
under the Exchange Act prior to completion of the Offerings pursuant to the
Plan. The Company shall maintain the effectiveness of such registration for a
minimum period of three years or for such shorter period as may be permitted by
law.
(l) The Company will make generally available to its security holders
as soon as practicable, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the Securities Act Regulations) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date (as defined in said Rule 158) of the Registration
Statement.
(m) For a period of three (3) years from the date of this Agreement,
the Company will furnish to Trident (i) as soon as publicly available after the
end of each fiscal year, a copy of its annual report to shareholders for such
year; (ii) as soon as publicly available, a copy of each report or definitive
proxy statement of the Company filed with the Commission under the Exchange Act
or mailed to shareholders; and (iii) from time to time, such other public
information concerning the Company as Trident may reasonably request.
(n) The Company shall use the net proceeds from the sale of the Shares
in the manner set forth in the Prospectus.
(o) The Company shall not deliver the Shares until each and every
condition set forth in Section 7 hereof has been satisfied, unless such
condition is waived in writing by Trident.
(p) The Company and the Bank shall assist Trident, if necessary, in
connection with the allocation of the Shares pursuant to the Plan in the event
of an oversubscription for the Shares and shall provide Trident with any
necessary information to assist the Company and the Bank in the allocation of
the Shares ("Allocation Instructions") in such event, and, to the best knowledge
<PAGE>
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Page 15
of the Company and the Bank, such information shall be accurate and reliable in
all material respects.
(q) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by Trident in order for Trident to
comply with the NASD's "Interpretation Relating to Free-Riding and Withholding."
(r) At the Closing Date, the Company and the Bank will have completed
the conditions precedent to, and shall have conducted the Conversion in all
material respects in accordance with, the Plan, OTS Regulations and all other
applicable laws, regulations, published decisions and orders, including all
terms, conditions, requirements and provisions precedent imposed by the OTS.
(s) The Company shall use its best efforts to list the Shares on the
Nasdaq quotation system to be effective on or prior to the Closing Date, as
required by the OTS Regulations.
6. Payment of Expenses. Subject to Section 3(c) hereof, whether or not
the Conversion is consummated, the Company and the Bank shall pay the following
expenses: (a) all regulatory filing fees, including but not limited to those
payable to the Commission, OTS, "blue sky" authorities and the NASD (including
fees payable to the NASD for Trident's filing pursuant to the NASD Corporate
Finance Rule), (b) all stock issue and transfer taxes which may be payable with
respect to the sale of the Shares, (c) attorneys' fees incurred by the Company
and the Bank, (d) attorneys' fees relating to any required "blue sky" laws
research and filings, (e) telephone charges, (f) air freight, (g) rental
equipment, (h) supplies, (i) transfer agent and registrar fees and expenses, (j)
auditing and accounting fees and expenses, (k) costs of printing and mailing all
documents necessary in connection with the Conversion, and (l) slide production
expenses in connection with any community investor meetings to be held by
Trident.
7. Conditions of Trident's Obligations. Except as may be waived in
writing by Trident, the obligations of Trident as provided herein shall be
subject to the accuracy of the representations and warranties contained in
Section 2 hereof as of the date hereof and as of the Closing Date, to the
performance by the Company and the Bank of their obligations hereunder, and to
the following conditions:
(a) At the Closing Date, Trident shall receive the favorable opinion of
Elias, Matz, Tiernan & Herrick L.L.P., counsel for the Company and the Bank,
dated the Closing Date, addressed to Trident, in form and substance reasonably
satisfactory to counsel for Trident and stating that:
(i) the Company has been incorporated and is validly existing
as a corporation under the laws of the State of Louisiana, and its
Articles of Incorporation and Bylaws comply in all materials respects
with Louisiana law;
<PAGE>
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(ii) the Company has full power and authority to own, lease
and operate its properties and to conduct its business as described in
the Prospectus;
(iii) the Company is not in violation of its Articles of
Incorporation or, to such counsel's Actual Knowledge, its bylaws;
(iv) the Bank is validly existing as a mutual savings bank
under the laws of the United States, with full power and authority to
own its properties and conduct its business as described in the
Prospectus; and, to such counsel's Actual Knowledge, the Bank has
obtained all federal banking licenses, permits and authorizations
currently required for the conduct of its business as described in the
Prospectus, all of which are in full force and effect, except where the
failure to obtain such licenses, permits or authorizations would not
have a material adverse effect on the Bank;
(v) the Bank is a member of the Federal Home Loan Bank of
Dallas, and the deposit accounts of the Bank are insured by the FDIC up
to the applicable legal limits; and no action or proceeding to suspend
or revoke such membership or insurance coverage is pending or, to such
counsel's Actual Knowledge, threatened;
(vi) the activities of the Bank as described in the Prospectus
are permitted under the HOLA and OTS Regulations;
(vii) to such counsel's Actual Knowledge, the Bank has no
direct or indirect subsidiary corporations;
(viii) upon consummation of the Conversion, the Company will
have authorized, issued and outstanding Common Stock within the range
set forth in the Prospectus, and the description of the Common Stock in
the Prospectus is accurate in all material respects;
(ix) the Plan complies in all material respects with the HOLA
and the OTS Regulations and has been duly and validly adopted by the
Boards of Directors of the Company and the Bank; to such counsel's
Actual Knowledge, the requisite number of votes of the members of the
Bank have been cast in favor of the Plan to approve it under the terms
of the Plan and applicable law; and, to such counsel's Actual
Knowledge, no person has sought to obtain regulatory or judicial review
of the final action of the OTS in approving the Plan;
(x) the issuance and sale of the Shares have been duly and
validly authorized by all necessary corporate action on the part of the
Company and the Bank; the Shares, upon receipt of consideration and
issuance in accordance with the terms of the Plan and this Agreement,
will be validly issued, fully paid, nonassessable and, except as
disclosed in the Prospectus, free of preemptive rights, and good title
thereto shall be transferred by
<PAGE>
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the Company free and clear of all claims, encumbrances, security
interests and liens created by the Company;
(xi) the certificates for the Common Stock are in due and
proper form and comply in all material respects with applicable
Louisiana law and OTS Regulations;
(xii) the issuance and sale of the capital stock of the Bank
to the Company have been duly authorized by all necessary corporate
action of the Bank and have received the approval of the OTS, and such
capital stock, upon receipt of payment and issuance in accordance with
the terms of the Plan, will be validly issued, fully paid and
nonassessable and good title thereto shall be transferred by the Bank
free and clear of all claims, encumbrances, security interests and
liens created by the Bank;
(xiii) subject to the satisfaction of the conditions to the
OTS approval of the Conversion Application, and to the OTS approval of
the Holding Company Application, no further approval, authorization,
consent or other order of any federal regulatory agency is required in
connection with the execution and delivery of this Agreement, the
issuance and sale of the Shares and the consummation of the Conversion,
except with respect to the issuance of the Bank's Stock Charter by the
OTS, and except as may be required under the "blue sky" securities laws
of various jurisdictions and the regulations of the NASD (as to which
no opinion need be rendered);
(xiv) the execution and delivery of this Agreement and the
consummation of the Conversion have been duly and validly authorized by
all necessary corporate action on the part of each of the Company and
the Bank; and this Agreement is a legal, valid and binding obligation
of each of the Company and the Bank, enforceable in accordance with its
terms, except as the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship or other laws relating to or affecting the enforcement
of creditors' rights generally or the rights of creditors of depository
institutions whose accounts are insured by the FDIC or savings and loan
holding companies the accounts of whose subsidiaries are insured by the
FDIC; (ii) general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law; or
(iii) laws relating to the safety and soundness of insured depository
institutions and their affiliates, and except to the extent that the
provisions of Sections 8 and 9 hereof may be unenforceable as against
public policy or applicable law, including but not limited to Sections
23A and 23B;
(xv) except as set forth in the Prospectus, there are no legal
or governmental proceedings pending or, to such counsel's Actual
Knowledge, threatened against or involving the assets of the Company or
the Bank which would have a material adverse effect on the Company and
the Bank, taken as a whole (provided that for this purpose such counsel
need not regard any litigation or governmental procedure to be
"threatened" unless
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the potential litigant or government authority has manifested to the
management of the Company or the Bank, or to such counsel, a present
intention to initiate such litigation or proceeding);
(xvi) the statements in the Prospectus under the captions "We
Intend to Pay Quarterly Cash Dividends," "Regulation," "Taxation," "
Restrictions on Acquisition of FPB Financial and Florida Parishes
Bank," "Description of Capital Stock of FPB Financial," and "The
Conversion," insofar as they are, or refer to, statements of law or
legal conclusions (excluding financial or statistical data or stock
valuation information included therein, as to which an opinion need not
be expressed), have been prepared or reviewed by such counsel and are
accurate and complete in all material respects;
(xvii) the Form AC has been approved by the OTS, and the
Prospectus and the Proxy Statement have been authorized for use by the
OTS; the OTS has approved the Holding Company Application; the
Registration Statement has been declared effective by the Commission;
the Common Stock is subject to an effective registration statement
filed under the Exchange Act; and no proceedings are pending by or
before the Commission or the OTS seeking to revoke or rescind the
orders declaring the Registration Statement or the registration
statement under the Exchange Act effective or approving the Conversion
Application or, to such counsel's Actual Knowledge, are contemplated or
threatened (provided that for this purpose such counsel need not regard
any such proceeding to be "threatened" unless the government authority
has manifested to the management of the Company or the Bank, or to such
counsel, a present intention to initiate such litigation or
proceeding);
(xviii) the execution, delivery and fulfillment of the terms
of this Agreement and the consummation of the Conversion by the Company
and the Bank (A) do not conflict with or result in a breach of the
charter, articles of incorporation or bylaws of the Company or the Bank
(in either mutual or stock form), or (B) to such counsel's Actual
Knowledge, in any material respect, violate, conflict with or
constitute a breach of, or default (or an event which, with notice or
lapse of time or both, would constitute a default) under (I) any
material agreement, indenture or other instrument filed as an exhibit
to the Registration Statement or (II) any published federal banking law
or regulation (subject to the satisfaction of certain post-Conversion
conditions imposed by the OTS in connection with its approval of the
Conversion Application and the Holding Company Application), except
where such violation, conflict, breach or default would not have a
material adverse effect on the financial condition, operations,
business, assets or properties of the Company and the Bank, taken as a
whole;
(xix) to such counsel's Actual Knowledge, there has been no
breach of any provision of the Company's or the Bank's charter or
articles of incorporation, as the case may be, or bylaws; to such
counsel's Actual Knowledge, there has been no breach or
<PAGE>
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default (or the occurrence of any event which, with notice or lapse of
time or both, would constitute a default) by the Company or the Bank
under any agreement, contract, indenture, bond, debenture, note,
instrument or obligation to which the Company or the Bank is a party or
by which any of them or any of their respective assets or properties
may be bound, which breach or default in any case would have a material
adverse effect on the financial condition, operations, business, assets
or properties of the Company and the Bank, taken as a whole;
(xx) at the time the Conversion Application was approved by
the OTS and at the time the Registration Statement was declared
effective by the Commission, the Conversion Application and the
Registration Statement (including the Prospectus and the Proxy
Statement contained therein), complied as to form in all material
respects with the requirements of the Securities Act, the HOLA, the
Securities Act Regulations and the OTS Regulations, as the case may be
(except as to information provided in writing by Trident with respect
to Trident included therein and financial statements, notes to
financial statements, financial tables, pro forma and other financial
and statistical data and stock valuation information included therein,
as to which no opinion need be rendered); to such counsel's Actual
Knowledge, all documents and exhibits required to be filed with the
Conversion Application and the Registration Statement have been so
filed; and the descriptions in the Conversion Application and the
Registration Statement of such documents and exhibits are accurate and
complete in all material respects;
(xxi) upon the effectiveness of the Bank's stock charter and
bylaws in accordance with applicable regulations and completion of the
sale by the Company of the Shares as contemplated by the Prospectus and
the Plan, (i) the Bank will be converted to a permanent capital stock
savings bank under federal law with full power and authority to own its
property and conduct its business as described in the Prospectus, and
(ii) all of the outstanding capital stock of the Bank will be owned of
record and, to such counsel's Actual Knowledge, beneficially by the
Company, free and clear of all liens, charges, encumbrances and
restrictions; and
(xxii) except with respect to certain post-Conversion reports
or other materials required to be filed by the Company and the Bank and
any other actions required to be performed after the Closing Date, to
such counsel's Actual Knowledge, the Company and the Bank have
satisfied, in all material respects, all the conditions of approval of
the Conversion Application and the Holding Company Application
contained in the final approval letters of the OTS.
In rendering such opinion, such counsel may rely as to matters
of fact on certificates of executive officers and directors of the
Company and the Bank and
<PAGE>
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Page 20
certificates of public officials delivered pursuant hereto. Such
counsel may assume that any agreement is the valid and binding
obligation of any parties to such agreement other than the Company and
the Bank. Such opinion shall be governed by, and interpreted in
accordance with, the Legal Opinion Accord ("Accord") of the American
Bar Association Section of Business Law (1991), and, as a consequence,
references in such opinion to such counsel's "Actual Knowledge" shall
be as such term is defined in the Accord (or knowledge based on
certificates). The opinion of Elias, Matz, Tiernan & Herrick L.L.P.
shall be limited to matters governed by federal banking and securities
laws and regulations and the State of Louisiana Business Corporation
Law. For purposes of such opinion, no proceeding shall be deemed to be
pending, no order or stop order shall be deemed to be issued, and no
action shall be deemed to be instituted unless, in each case, a
director or executive officer of the Company or the Bank, or its
counsel, shall have received a copy of such proceeding, order, stop
order or action. Such opinion may be limited to statutes, regulations
and judicial interpretations and to facts as they exist as of the date
of such opinions. In rendering such opinion, such counsel need assume
no obligation to revise or supplement it should such statutes,
regulations and judicial interpretations be changed by legislative or
regulatory action, judicial decision or otherwise. Such counsel need
express no view, opinion or belief with respect to whether any proposed
or pending legislation, if enacted, or any proposed or pending
regulations or policy statements issued by any regulatory agency,
whether or not promulgated pursuant to any such legislation, would
affect the validity of the execution and delivery by the Company and
the Bank of this Agreement or the issuance of the Shares.
(b) At the Closing Date, Trident shall receive the letter of
Elias, Matz, Tiernan & Herrick L.L.P., counsel for the Company and the
Bank, dated the Closing Date, addressed to Trident, in form and
substance reasonably satisfactory to counsel for Trident and to the
effect that: (i) based on such counsel's participation in conferences
with representatives of the Company and the Bank, their counsel, the
independent appraiser, the independent certified public accountants for
the Company and the Bank, Trident and its counsel, review of various
documents and applicable law (including the requirements of Form SB-2
and the character of the Registration Statement contemplated thereby)
and the experience such counsel has gained in its practice under the
Securities Act, nothing has come to such counsel's attention that would
lead it to believe that (i) the Registration Statement (except as to
information regarding Trident contained therein and except as to the
financial statements, notes to financial statements, financial tables,
pro forma and other financial and statistical data and stock valuation
information contained therein, as to which such counsel need express no
view), at the time it became effective and at the time any
post-effective amendment thereto became effective, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were
<PAGE>
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Page 21
made, not misleading, and (ii) the Prospectus (except as to information
regarding Trident contained therein and except as to financial
statements, notes to financial statements, financial tables, pro forma
and other financial and statistical data and stock valuation
information contained therein as to which such counsel need express no
view), as of its date and as of the Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. In issuing such letter,
such counsel may indicate that it has not confirmed the accuracy or
completeness of or otherwise verified the factual information contained
in the Registration Statement or the Prospectus, that it does not
assume any responsibility for the accuracy or completeness thereof, and
that it is relying as to factual matters on certificates of officers
and other factual representations by the Company and the Bank.
(c) Counsel for Trident shall have been furnished such
documents as they reasonably may require for the purpose of enabling
them to review or pass upon the sale of the Shares as herein
contemplated and related proceedings, and for the purpose of evidencing
the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained, including
but not limited to, resolutions of the Board of Directors of the
Company and the Bank regarding the authorization of this Agreement and
the transactions contemplated hereby.
(d) Prior to and at the Closing Date, in the reasonable
opinion of Trident, (i) there shall have been no material adverse
change in the financial condition, business, operations, assets or
properties of the Company and the Bank, taken as a whole, since the
latest date as of which such condition is set forth in the Prospectus,
except as referred to or contemplated therein; (ii) there shall have
been no transaction entered into by the Company or the Bank after the
latest date as of which the financial condition of the Company or the
Bank is set forth in the Prospectus other than transactions referred to
or contemplated therein, transactions in the ordinary course of
business, and transactions which are not material to the Company and
the Bank, taken as a whole; (iii) none of the Company or the Bank shall
have received from the OTS or the Commission any directive (oral or
written) to make any change in the method of conducting their
respective businesses which is material to the business of the Company
and the Bank, taken as a whole, with which they have not complied; (iv)
no action, suit or proceeding, at law or in equity or before or by any
federal or state commission, board or other administrative agency,
shall be pending or threatened against the Company or the Bank or
affecting any of their respective assets, wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
business, operations, financial condition or income of the Company and
the Bank, taken as a whole; and (v) the Shares shall have been
qualified or
<PAGE>
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Page 22
registered for offering and sale by the Company under the securities or
"blue sky" laws of such jurisdictions as Trident and the Company shall
have agreed upon.
(e) At the Closing Date, Trident shall receive a certificate
of the principal executive officer and the principal financial officer
of each of the Company and the Bank, dated the Closing Date, to the
effect that: (i) he has examined the Prospectus and, to the best
knowledge of such officer, the Prospectus does not contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading with respect to the Company
or the Bank; (ii) no event has occurred since the date of the
Prospectus which should have been set forth in an amendment or
supplement to the Prospectus which has not been so set forth, including
specifically, but without limitation, any material adverse change in
the business, financial condition, operations, assets or properties of
the Company or the Bank and, the conditions set forth in clauses (ii)
through (iv) inclusive of subsection (d) of this Section 7 have been
satisfied; (iii) no order has been issued by the Commission or the OTS
to suspend the Offerings or the effectiveness of the Prospectus, and,
to the best knowledge of such officer, no action for such purposes has
been instituted or threatened by the Commission or the OTS; (iv) to the
best knowledge of such officer, no person has sought to obtain review
of the final actions of the OTS approving the Plan; and (v) all of the
representations and warranties contained in Section 2 of this Agreement
are true and correct, with the same force and effect as though
expressly made on the Closing Date.
(f) At the Closing Date, Trident shall, if it has not already
received, receive, among other documents, (i) copies of the letters
from the OTS authorizing the use of the Prospectus and the Proxy
Statement, (ii) a copy of the order of the Commission declaring the
Registration Statement effective; (iii) a copy of the certificate from
the OTS evidencing the corporate existence of the Bank; (iv) a copy of
the certificate from the FDIC evidencing the insured status of the
Bank, (v) a copy of the letter from the appropriate Louisiana authority
evidencing the incorporation (and, if generally available from such
authority, good standing) of the Company; and (vi) a copy of the
Company's articles of incorporation certified by the appropriate
Louisiana governmental agency.
(g) As soon as available after the Closing Date, Trident shall
receive a certified copy of the Bank's Stock Charter as executed by the
OTS.
(h) Concurrently with the execution of this Agreement, Trident
acknowledges receipt of a letter from Murphy, Whalen & Broussard,
independent certified public accountants, addressed to Trident, in
substance and form reasonably satisfactory to counsel
<PAGE>
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for Trident, with respect to the financial statements of the Bank and
certain financial information contained in the Prospectus.
(i) At the Closing Date, Trident shall receive a letter in
form and substance reasonably satisfactory to counsel for Trident from
Murphy, Whalen & Broussard, independent certified public accountants,
dated the Closing Date and addressed to Trident, confirming the
statements made by them in the letter delivered by them pursuant to the
preceding subsection as of a specified date not more than five (5)
business days prior to the Closing Date.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are, in the reasonable
opinion of Trident and its counsel, satisfactory to Trident and its counsel. Any
certificates signed by an officer or director of the Company or the Bank
prepared for Trident's reliance and delivered to Trident or to counsel for
Trident that specifically references the Agreement shall be deemed a
representation and warranty by the Company and the Bank to Trident as to the
statements made therein. If any condition to Trident's obligations hereunder to
be fulfilled prior to or at the Closing Date is not so fulfilled, Trident may
terminate this Agreement or, if Trident so elects, may waive in writing any such
conditions which have not been fulfilled, or may extend the time of their
fulfillment.
8. Indemnification.
(a) The Company and the Bank jointly and severally agree to indemnify
and hold harmless Trident, its officers, directors and employees and each
person, if any, who controls Trident within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act:
(i) Against any and all loss, liability, claim, damage and
expense whatsoever and shall further promptly reimburse such
persons for any legal or other expenses reasonably incurred by
each or any of them in investigating, preparing to defend or
defending against any action, proceeding or claim (whether
commenced or threatened) (A) arising out of or based upon any
breach of any representation or warranty of the Company or the
Bank contained in this Agreement, (B) arising out of or based
upon the failure of the Company or the Bank to fulfill any
covenant or obligation set forth in this Agreement, (C)
arising out of or based upon any untrue or alleged untrue
statement of a material fact or the omission or alleged
omission of a material fact required to be stated or necessary
to make the statements, in light of the circumstances under
which they were made, not misleading in (i) the Registration
Statement or the Prospectus or (ii) any application (including
the Form AC) or other document or communication (in this
Section 8 collectively called
<PAGE>
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"Application") prepared or executed by or on behalf of the
Company or the Bank and based upon written information
furnished by or on behalf of the Company or the Bank, filed in
any jurisdiction to register or qualify the Shares under the
securities laws thereof or filed with the OTS or Commission
with respect to the offering of the Shares, unless such
statement or omission was made in reliance upon and in
conformity with information furnished in writing to the
Company or the Bank with respect to Trident by or on behalf of
Trident expressly for use in the Prospectus or any amendment
or supplement thereof or in any Application, as the case may
be, or (D) arising out of or based upon the engagement of
Trident under this Agreement. In no event, however, shall the
Company and the Bank be liable to Trident under this Section
8(a) if the loss, liability, claim, damage or expense is found
in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have principally and directly
resulted from Trident's gross negligence or willful
misconduct. This indemnity shall be in addition to any
liability that the Company or the Bank may otherwise have to
Trident;
(ii) Against any and all loss, liability, claim, damage and
expense whatsoever to the extent that the aggregate amount
paid in settlement of any litigation, investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any untrue
statement or omission referred to in subsection (i) of this
Section 8(a), or any alleged untrue statement or omission
referenced in such subsection, if such settlement is effected
with the prior written consent of the Company and the Bank;
and
(iii) Against any and all loss, liability, claim, damage and
expense whatsoever arising out or based upon (A) any
Allocation Instructions (as defined in Section 5(p) hereof) or
(B) any records of Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members (as those terms are
defined in the Plan) delivered to Trident by the Bank or its
agents for use during the Conversion.
(b) Trident agrees to indemnify and hold harmless the Company and the
Bank, their respective officers, directors and employees and each person, if
any, who controls the Company and the Bank within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, to the same extent as
the foregoing indemnity from the Company and the Bank to Trident, but only with
respect to (A) statements or omissions, if any, made in the Prospectus or any
amendment or supplement thereof, in any Application or to a purchaser of the
Shares in reliance upon, and in conformity with, information furnished in
writing to the Company or the Bank with respect to Trident by or on behalf of
Trident expressly for use in the Prospectus or any amendment or supplement
thereof or in any Application, (B) any breach of any representation or warranty
by Trident contained in this Agreement, or (C) any liability of the Company or
the Bank
<PAGE>
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Page 25
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) to have principally and directly resulted from gross negligence
or willful misconduct of Trident. This indemnity shall be in addition to any
liability that Trident may have to the Company or the Bank otherwise.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of any action, proceeding or claim (whether commenced or threatened),
such indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under this Section 8, notify the indemnifying party of
such action, proceeding or claim; but the omission so as to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 8. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so as to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than the reasonable cost of investigation except as otherwise
provided herein. In the event the indemnifying party elects to assume the
defense of any such action and retain counsel acceptable to the indemnified
party, the indemnified party may retain additional counsel, but shall bear the
fees and expenses of such counsel unless (i) the indemnifying party shall have
specifically authorized the indemnified party to retain such counsel or (ii) the
parties to such suit include such indemnifying party and the indemnified party,
and such indemnified party shall have been advised by counsel that one or more
material legal defenses may be available to the indemnified party which may not
be available to the indemnifying party, in which case the indemnifying party
shall not be entitled to assume the defense of such suit notwithstanding the
indemnifying party's obligation to bear the fees and expenses of such counsel.
In no event shall the indemnifying parties be liable for the fees and expenses
of more than one separate firm of attorneys (and any special counsel that said
firm may retain) for all indemnified parties in connection with any one action,
proceeding, claim or suit or separate but similar or related actions,
proceedings or claims in the same jurisdiction arising out of the same general
allegations or circumstances. An indemnifying party against whom indemnity may
be sought shall not be liable to indemnify an indemnified party under this
Section 8 if any settlement of any such action is effected without such
indemnifying party's consent.
(d) To the extent applicable, this Section 8 is subject to and limited
by public policy and the provisions of applicable law, including but not limited
to, Sections 23A and 23B.
9. Contribution. (a) In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 8 above is for any reason
<PAGE>
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held to be unavailable to Trident, the Company and/or the Bank other than in
accordance with its terms, the Company and the Bank or Trident shall contribute
to the aggregate losses, liabilities, claims, damages, and expenses of the
nature contemplated by said indemnity agreement incurred by the Company and the
Bank or Trident (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Bank, on the one hand, and Trident, on
the other, from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above, but also the relative fault of the Company or the Bank, on the one hand,
and Trident, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Bank, on the one hand, and Trident, on the other, shall be
deemed to be in the same proportion as the total net proceeds from the
Conversion received by the Company and the Bank bear to the total fees received
by Trident under this Agreement. The relative fault of the Company or the Bank,
on the one hand, and Trident, on the other, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Bank or by Trident and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(b) The Company and the Bank and Trident agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by the indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, Trident shall not be required
to contribute any amount in excess of the amount by which fees owed Trident
pursuant to this Agreement exceeds the amount of any damages which Trident has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
(c) To the extent applicable, this Section 9 is subject to and limited
by public policy and the provisions of applicable law, including but not limited
to Sections 23A and 23B.
10. Survival of Agreements, Representations and Warranties, and
Indemnities. The respective indemnities of the Company and the Bank and Trident
and the representation and
<PAGE>
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warranties of the Company and the Bank and of Trident set forth in or made
pursuant to this Agreement shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of Trident or the Company or the Bank or any controlling person or
indemnified party referred to in Section 8 hereof, and shall survive any
termination or consummation of this Agreement and/or the issuance of the Shares,
and any legal representative of Trident, the Company, the Bank and any such
controlling persons shall be entitled to the benefit of the respective
agreements, indemnities, warranties and representations.
11. Termination. Trident may terminate this Agreement by giving the
notice indicated below in this Section at any time after this Agreement becomes
effective as follows:
(a) If any domestic or international event or act or occurrence has
materially disrupted the United States securities markets such as to make it, in
Trident's reasonable opinion, impracticable to proceed with the offering of the
Shares; or if trading on the New York Stock Exchange shall have been suspended;
or if the United States shall have become involved in a war or major
hostilities; or if a general banking moratorium has been declared by a state or
federal authority which has a material adverse effect on the Bank or the
Conversion; or if a moratorium in foreign exchange trading by major
international banks or persons has been declared; or if there shall have been a
material adverse change in the capitalization, condition or business of the
Company and the Bank, taken as a whole, or if the Bank shall have sustained a
material or substantial loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act, whether or not said loss
shall have been insured; or if there shall have been a material change in the
condition or prospects of the Company and the Bank, taken as a whole.
(b) Any party hereto may terminate this Agreement by giving notice
pursuant to Section 12 hereof of a material breach of this Agreement by the
other party at any time after this Agreement becomes effective.
(c) If this Agreement is terminated as provided in this Section 11, the
party terminating this Agreement shall notify the non-terminating party promptly
by telephone or telegram, confirmed by letter.
(d) If this Agreement is terminated by Trident for any of the reasons
set forth in subsection (a) above, the Company and the Bank shall pay Trident
the full amount, if any, payable pursuant to Sections 3(c), 3(d), 6, 8(a) and 9
of this Agreement.
(e) The Bank may terminate the Conversion in accordance with the terms
of the Plan. Such termination shall be without liability to any party, except
that the Company and the Bank shall be required to fulfill their obligations
pursuant to Sections 3(c), 3(d), 6, 8(a) and 9 of this Agreement.
<PAGE>
Trident Securities
Page 28
12. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to Trident shall be
mailed, delivered or telegraphed and confirmed to Trident Securities, 4601 Six
Forks Road, Suite 400, Raleigh, North Carolina 27609, Attention: Mr. R. Lee
Burrows, Jr. (with a copy to Luse Lehman Gorman Pomerenk & Schick, P.C., 5335
Wisconsin Avenue, N.W., Suite 400, Washington, D.C. 20015, Attention: Alan
Schick, Esquire) and if sent to the Company or the Bank, shall be mailed,
delivered or telegraphed and confirmed to Florida Parishes Bank, 300 West Morris
Street, Hammond, Louisiana, 70403, Attention: Fritz W. Anderson, II (with a copy
to Elias, Matz, Tiernan & Herrick L.L.P., 734 15th Street, N.W., 12th Floor,
Washington, D.C. 20005, Attention: Gerald F. Heupel, Jr., Esquire).
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, Trident, the Company, the Bank and the controlling and
other persons referred to in Section 8 hereof, and their respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
14. Partial Invalidity. In the event that any term, provision or
covenant of this Agreement or the application thereof to any circumstance or
situation shall be invalid or unenforceable, in whole or in part, the remainder
of this Agreement and the application of such term, provision or covenant to any
other circumstance or situation shall not be affected thereby, and each term,
provision or covenant of this Agreement shall be valid and enforceable to the
full extent permitted by law. If, however, any term, provision or covenant of
this Agreement is declared invalid as unenforceable by a court of competent
jurisdiction, then the parties hereto shall in good faith amend this agreement
to include an alternative provision that accomplishes a similar result.
15. Construction. Unless preempted by federal law, this Agreement shall
be governed by and construed in accordance with the substantive laws of North
Carolina.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
17. Amendment. This Agreement may be amended only by a subsequent
writing signed by all parties hereto.
* * *
[signature page follows]
<PAGE>
Trident Securities
Page 29
Please acknowledge your agreement to the foregoing by signing below and
returning to the Company one copy of this letter.
FPB FINANCIAL CORP.
By: _______________________________________
Fritz W. Anderson, II
President and Chief Executive Officer
FLORIDA PARISHES BANK
By: _______________________________________
Fritz W. Anderson, II
President and Chief Executive Officer
Agreed to and accepted as of the date first written above:
TRIDENT SECURITIES
By: ____________________________
Name: R. Lee Burrows, Jr.
Title: Managing Director
Exhibit 2.1
Plan Of Conversion
<PAGE>
PLAN OF CONVERSION
OF
FLORIDA PARISHES HOMESTEAD
ASSOCIATION
<PAGE>
TABLE OF CONTENTS
Section
Number Page
- ------ ----
1. Introduction.......................................................... 2
2. Definitions........................................................... 3
3. General Procedure for the Conversion.................................. 7
4. Total Number of Shares and Purchase Price of Conversion Stock......... 9
5. Subscription Rights of Eligible Account Holders ...................... 10
6. Subscription Rights of Tax-Qualified Employee Stock Benefit Plans..... 10
7. Subscription Rights of Supplemental Eligible Account Holders.......... 11
8. Subscription Rights of Other Members.................................. 12
9. Subscription Rights of Directors, Officers and Employees.............. 12
10. Community Offering, Syndicated Community Offering and Other Offerings. 13
11. Limitations on Subscriptions and Purchases of Conversion Stock........ 14
12. Timing of Subscription Offering, Manner of Exercising Subscription
Rights and Order Forms............................................. 16
13. Payment for Conversion Stock.......................................... 18
14. Account Holders in Nonqualified States or Foreign Countries........... 19
15. Voting Rights of Stockholders......................................... 19
16. Liquidation Account................................................... 19
17. Transfer of Deposit Accounts.......................................... 21
18. Requirements Following Conversion for Registration,
Market Making and Stock Exchange Listing........................... 21
19. Directors and Officers of the Bank.................................... 21
20. Requirements for Stock Purchases by Directors and Officers Following
the Conversion...................................................... 21
21. Restrictions on Transfer of Stock..................................... 22
22. Restrictions on Acquisition of Stock of the Holding Company........... 22
23. Adoption of Federal Stock Charter and Bylaws.......................... 23
24. Tax Rulings or Opinions............................................... 23
25. Stock Compensation Plans and Employment Agreements.................... 23
26. Dividend and Repurchase Restrictions on Stock......................... 24
27. Payment of Fees to Brokers............................................ 24
28. Effective Date........................................................ 24
29. Amendment or Termination of the Plan.................................. 25
30. Interpretation of the Plan............................................ 25
1
<PAGE>
PLAN OF CONVERSION
OF
FLORIDA PARISHES HOMESTEAD ASSOCIATION
1. INTRODUCTION.
For purposes of this section, all capitalized terms have the meanings
ascribed to them in Section 2.
The Board of Directors of Florida Parishes Homestead Association,
Hammond, Louisiana (the "Association") believes that a conversion of the
Association to stock form pursuant to this Plan of Conversion is in the best
interests of the Association, as well as in the best interests of the
Association's depositors, employees, customers and the communities historically
served by the Association. The Conversion will result in the Association being
wholly owned by a stock holding company. In addition, the Conversion will result
in the raising of additional capital which will provide the Association, through
the holding company structure, greater organizational and operational
flexibility.
In order to reduce the number of regulatory agencies having
jurisdiction over the Association and thus the amount of assessment and
examination fees paid by the Association, prior to completion of the Conversion
the Association will first convert from a Louisiana-chartered mutual savings
association to a federally chartered mutual savings bank to be known as "Florida
Parishes Bank" (the "Bank") (the "Charter Conversion"). On November 24, 1998,
the Board of Directors of the Association adopted a Plan of Charter Conversion,
which provides for the Charter Conversion, and an application seeking regulatory
approval of the Charter Conversion is currently pending. All references herein
to the Bank include the Association as its predecessor as well as the Bank in
either its mutual or stock form, as the sense of the reference requires.
Following consummation of the Charter Conversion, the Bank will convert
from a federally chartered mutual savings bank to a federally chartered stock
savings bank and will concurrently issue all of its capital stock to FPB
Financial Corp. (the "Holding Company"), which transactions are provided for in
this Plan of Conversion. In the event the Charter Conversion is not consummated
as expected, then the Association will amend this Plan to make such changes as
may be deemed necessary or appropriate.
This Plan provides that non-transferable subscription rights to
purchase Conversion Stock will be offered first to Eligible Account Holders of
record as of the Eligibility Record Date, then to Tax-Qualified Employee Stock
Benefit Plans, then to Supplemental Eligible Account Holders, if applicable,
then to Other Members, and then to Directors, Officers and Employees. Shares of
Conversion Stock remaining unsold after the Subscription Offering, if any, will
be offered for sale to the public through a Community Offering and/or Syndicated
Community Offering, as determined by the Boards of Directors of the Holding
Company and the Bank in their sole discretion.
2
<PAGE>
The Conversion is intended to provide a larger capital base to support
the Bank's lending and investment activities, possible diversification into
other related financial services activities and future growth through possible
branch acquisitions. In addition, the Conversion is intended to further enhance
the Bank's capabilities to serve the borrowing and other financial needs of the
communities it serves. The use of the Holding Company will provide greater
organizational flexibility and possible diversification.
In adopting this Plan of the Conversion, the Board of Directors of the
Association determined that the Conversion was advisable and in the best
interests of its Members and the Association and further determined that the
interests of certain holders of its Deposit Accounts in the net worth of the
Association would be equitably provided for and that the Conversion would not
have any adverse impact on the reserves and net worth of the Association. This
Plan of Conversion was adopted by the Board of Directors of the Association on
December 8, 1998.
This Plan is subject to the approval of the Office of Thrift
Supervision ("OTS") and must be adopted by a majority of the total number of
votes eligible to be cast by Voting Members of the Bank at a Special Meeting to
be called for that purpose.
Each holder of a Deposit Account in the Association prior to the
Conversion will continue to hold an account with an identical balance in the
converted Bank. In addition, the converted Bank will succeed to all of the
rights, interests, duties, and obligations of the present Association, including
all rights and interests in and to its assets and properties, whether real,
personal or mixed.
After the Conversion, the Bank will be regulated by the OTS, as its
chartering authority and primary federal regulator, and by the FDIC, which will
insure the Bank's deposits. After the Conversion, the Holding Company will be
regulated by the OTS. In addition, the Bank will continue to be a member of the
Federal Home Loan Bank System and all of its insured savings deposits will
continue to be insured by the FDIC up to the maximum provided by law.
2. DEFINITIONS.
As used in this Plan, the terms set forth below have the following
meaning:
2.1 Actual Purchase Price means the price per share at which the
Conversion Stock is ultimately sold by the Holding Company to Participants in
the Subscription Offering and Persons in the Community Offering and/or
Syndicated Community Offering in accordance with the terms hereof. The Actual
Purchase Price will be equal to or less than the Maximum Purchase Price.
2.2 Affiliate means a Person who, directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified.
2.3 Associate, when used to indicate a relationship between Persons,
means (i) a corporation or organization (other than the Bank, a majority-owned
subsidiary of the Bank or the
3
<PAGE>
Holding Company) of which such Person is a director, officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, provided, however, that such term shall not
include any Tax-Qualified Employee Stock Benefit Plan of the Holding Company or
the Bank in which such Person has a substantial beneficial interest or serves as
a trustee or in a similar fiduciary capacity, and (iii) any relative or spouse
of such Person, or any relative of such spouse, who has the same legal residence
as such Person or who is a director or officer of the Bank or the Holding
Company or any of the subsidiaries of the Holding Company or the Bank.
2.4 Association means Florida Parishes Homestead Association in its
mutual form.
2.5 Bank means Florida Parishes Bank in its mutual form or stock form,
as the sense of the reference requires. Upon consummation of the Charter
Conversion, the Bank shall be deemed to be the successor to the Association for
all intents and purposes.
2.6 BIF means the Bank Insurance Fund or any successor thereto.
2.7 Code means the Internal Revenue Code of 1986, as amended.
2.8 Community Offering means the offering for sale by the Holding
Company of any shares of Conversion Stock not subscribed for in the Subscription
Offering to such Persons within or without the State of Louisiana as may be
selected by the Holding Company and the Bank within their sole discretion and to
whom a copy of the Prospectus is delivered by or behalf of the Holding Company.
2.9 Control (including the terms "controlling," "controlled by," and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
2.10 Conversion means (i) the adoption of a federal stock charter by
the Bank to authorize the issuance of shares of capital stock and otherwise to
conform to the requirements of a federal stock savings bank chartered under the
Home Owners' Loan Act and applicable regulations, (ii) the issuance of
Conversion Stock by the Holding Company as provided herein, and (iii) the
purchase by the Holding Company of all of the capital stock of the Bank to be
issued by the Bank in connection with its conversion from mutual to stock form.
2.11 Conversion Stock means the common stock of the Holding Company to
be issued and sold pursuant to the Plan of the Conversion, which stock cannot
and will not be insured by the FDIC or by either the SAIF or the BIF, each as
administered by the FDIC.
4
<PAGE>
2.12 Deposit Account means savings and demand accounts, including
passbook accounts, money market deposit accounts and negotiable order of
withdrawal accounts, and certificates of deposit and other authorized accounts
of the Bank held by a Member.
2.13 Director, Officer and Employee means the terms as applied
respectively to any person who is a director, officer or employee of the Bank or
any subsidiary thereof.
2.14 Eligible Account Holder means any Person holding a Qualifying
Deposit at the close of business on the Eligibility Record Date for purposes of
determining Subscription Rights and establishing subaccount balances in the
liquidation account to be established pursuant to Section 16 hereof.
2.15 Eligibility Record Date means the date for determining Qualifying
Deposits of Eligible Account Holders and is the close of business on September
30, 1997.
2.16 Estimated Price Range means the range of the estimated aggregate
pro forma market value of the total number of shares of Conversion Stock to be
issued in the Conversion, as determined by the Independent Appraiser in
accordance with Section 4 hereof.
2.17 FDIC means the Federal Deposit Insurance Corporation or any
successor thereto.
2.18 Holding Company means the corporation to be organized under the
laws of the State of Louisiana to hold all of the capital stock of the Bank.
2.19 Independent Appraiser means the independent investment banking or
financial consulting firm retained by the Bank to prepare an appraisal of the
estimated pro forma market value of Conversion Stock.
2.20 Maximum Purchase Price means the price per share to be paid
initially by Participants for shares of Conversion Stock subscribed for in the
Subscription Offering and by Persons for shares of Conversion Stock ordered in
the Community Offering and/or Syndicated Community Offering.
2.21 Member means any Person qualifying as a member of the Bank in
accordance with its mutual charter and bylaws and applicable federal laws.
2.22 Officer means the chairman of the board of directors, president,
vice-president, secretary, treasurer or principal financial officer, comptroller
or principal accounting officer and any other person performing similar
functions with respect to any organization whether incorporated or
unincorporated.
2.23 Order Form means the form or forms to be provided by the Holding
Company, containing all such terms and provisions as set forth in Section 12
hereof, to a Participant or other
5
<PAGE>
Person by which Conversion Stock may be ordered in the Subscription Offering,
the Community Offering and/or the Syndicated Community Offering.
2.24 Other Member means a Voting Member who is not an Eligible Account
Holder or Supplemental Eligible Account Holder.
2.25 OTS means the Office of Thrift Supervision or any successor
thereto.
2.26 Participant means any Eligible Account Holder, Tax-Qualified
Employee Stock Benefit Plan, Supplemental Eligible Account Holder, Other Member
or Director, Officer and Employee.
2.27 Person means an individual, a corporation, a limited liability
company, a partnership, a limited liability partnership, an association, a joint
stock company, a trust, an unincorporated organization or a government or any
political subdivision thereof or any other organization. All holders of a joint
Deposit Account shall be deemed to be a single Person for purposes of the
subscription rights created by such joint account.
2.28 Plan and Plan of Conversion mean this Plan of Conversion as
adopted by the Board of Directors of the Association and any amendment hereto
approved as provided herein.
2.29 Prospectus means the one or more documents to be used in offering
Conversion Stock in the Subscription Offering and, to the extent applicable,
Community Offering and Syndicated Community Offering and for providing
information to Participants and other Persons in connection with such offerings.
2.30 Qualifying Deposit means the aggregate balance of all Deposit
Accounts in the Bank of (i) an Eligible Account Holder at the close of business
on the Eligibility Record Date, provided such aggregate balance is not less than
$50, and (ii) a Supplemental Eligible Account Holder at the close of business on
the Supplemental Eligibility Record Date, if applicable, provided such aggregate
balance is not less than $50.
2.31 SAIF means the Savings Association Insurance Fund or any successor
thereto.
2.32 SEC means the Securities and Exchange Commission.
2.33 Special Meeting means the Special Meeting of Members of the Bank
to be called for the purpose of submitting this Plan to the Voting Members for
their approval, including any adjournments of such meeting.
2.34 Subscription Offering means the offering of shares of Conversion
Stock through Subscription Rights to Participants pursuant to this Plan of the
Conversion.
6
<PAGE>
2.35 Subscription Rights means non-transferable rights to subscribe for
Conversion Stock granted to Participants pursuant to the terms of this Plan.
2.36 Supplemental Eligible Account Holder, if applicable, means any
Person, except Directors and Officers of the Bank and their Associates, holding
a Qualifying Deposit at the close of business on the Supplemental Eligibility
Record Date.
2.37 Supplemental Eligibility Record Date means the date for
determining Qualifying Deposits of Supplemental Eligible Account Holders and
shall be required if the Eligibility Record Date is more than 15 months prior to
the date of the latest amendment to the Application for Conversion filed prior
to approval of such application by the OTS. If applicable, the Supplemental
Eligibility Record Date shall be the last day of the calendar quarter preceding
the OTS' approval of the Application for Conversion submitted by the Bank
pursuant to this Plan of the Conversion.
2.38 Syndicated Community Offering means the offering for sale by a
syndicate of broker-dealers to the general public of shares of Conversion Stock
not purchased in the Subscription Offering and the Community Offering.
2.39 Tax-Qualified Employee Stock Benefit Plan means any defined
benefit plan or defined contribution plan, such as an employee stock ownership
plan, stock bonus plan, profit-sharing plan or other plan, which is established
for the benefit of the employees of the Holding Company and/or the Bank and
which, with its related trust, meets the requirements to be "qualified" under
Section 401 of the Code as from time to time in effect. A "Non-Tax-Qualified
Employee Stock Benefit Plan" is any defined benefit plan or defined contribution
stock benefit plan which is not so qualified.
2.40 Voting Member means a Person who at the close of business on the
Voting Record Date is entitled to vote as a Member of the Bank in accordance
with its mutual articles of incorporation and bylaws.
2.41 Voting Record Date means the date for determining the eligibility
of Members to vote at the Special Meeting.
3. GENERAL PROCEDURE FOR THE CONVERSION.
(a) An Application for Conversion, including the Plan, will be
submitted, together with all requisite material, to the OTS for approval. The
Association also will cause notice of the adoption of the Plan by the Board of
Directors of the Association to be given by publication in a newspaper having
general circulation in each community in which an office of the Association is
located and will cause copies of the Plan to be made available at each office of
the Association for inspection by Members. The Bank will again cause to be
published, in accordance with the requirements of applicable regulations of the
OTS, a notice of the filing with the OTS of an
7
<PAGE>
application to convert from mutual to stock form and will post the notice of the
filing of its Application for Conversion in each of its offices.
(b) Promptly following approval of the Bank's Application for
Conversion by the OTS, this Plan will be submitted to the Members for their
consideration and approval at the Special Meeting. The Bank shall mail to all
Members as of the Voting Record Date, at their last known address appearing on
the records of the Bank, a form of proxy together with, at the Bank's option, a
proxy statement in either long or summary form describing the Plan which will be
submitted to a vote of the Voting Members at the Special Meeting. The Holding
Company shall also mail to all Participants a Prospectus and Order Form for the
purchase of Conversion Stock, in each case subject to the provisions of Section
14 hereof. In addition, all Participants will receive, or be given the
opportunity to request by either returning a postage prepaid card which will be
distributed with the proxy statement or letter or sending another written
communication, a copy of the articles of incorporation and bylaws of the Holding
Company. The Bank may not use previously-executed general proxies from its
Members to approve the Plan. If the Plan is approved by the affirmative vote of
a majority of the total number of votes eligible to be cast by Voting Members at
the Special Meeting, the Bank shall take all other necessary organizational
steps pursuant to applicable laws and regulations to amend its charter and
bylaws to authorize the issuance of its capital stock to the Holding Company at
the time the Conversion of the Bank to stock form is consummated.
(c) As soon as practicable after the adoption of the Plan by the Board
of Directors of the Association, the Association shall cause the Holding Company
to be incorporated under Louisiana law and the Board of Directors of the Holding
Company shall adopt the Plan by at least a two-thirds vote. The Holding Company
shall submit or cause to be submitted an Application H-(e)1 or H-(e)1-S to the
OTS for approval of the acquisition of the Bank and a Registration Statement to
the SEC to register Conversion Stock under the Securities Act of 1933, as
amended, and shall further register Conversion Stock under any applicable state
securities laws. Upon registration and after the receipt of all required
regulatory approvals, the Conversion Stock shall be first offered for sale in a
Subscription Offering to Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans, Supplemental Eligible Account Holders, if any, and to Other
Members and to Directors, Officers and Employees. It is anticipated that any
shares of Conversion Stock remaining unsold after the Subscription Offering will
be sold through a Community Offering and/or a Syndicated Community Offering. The
purchase price per share for Conversion Stock shall be a uniform price
determined in accordance with Section 4 hereof. The Holding Company shall
purchase all of the capital stock of the Bank with an amount of the net proceeds
received by the Holding Company from the sale of Conversion Stock as shall be
determined by the Boards of Directors of the Holding Company and the Bank and as
shall be approved by the OTS.
(d) The Holding Company and the Association (or the Bank) may retain
and pay for the services of financial and other advisors and investment bankers
to assist in connection with any or all aspects of the Conversion, including in
connection with the Subscription Offering, Community Offering and/or any
Syndicated Community Offering, the payment of fees to brokers and investment
8
<PAGE>
bankers for assisting Persons in completing and/or submitting Order Forms. All
fees, expenses, retainers and similar items shall be reasonable.
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK.
(a) The aggregate price at which all shares of Conversion Stock shall
be sold shall be based on a pro forma valuation of the aggregate market value of
Conversion Stock prepared by the Independent Appraiser. The valuation shall be
based on financial information relating to the Holding Company and the Bank,
economic and financial conditions, a comparison of the Holding Company and the
Bank with selected publicly-held financial institutions and holding companies
and with comparable financial institutions and holding companies and such other
factors as the Independent Appraiser may deem to be important. The valuation
shall be stated in terms of an Estimated Price Range, the maximum of which shall
generally be no more than 15% above the average of the minimum and maximum of
such price range and the minimum of which shall generally be no more than 15%
below such average. The valuation shall be updated during the Conversion as
market and financial conditions warrant and as may be required by the OTS.
(b) Based upon the independent valuation, the Boards of Directors of
the Holding Company and the Bank shall fix the Maximum Purchase Price and the
number (or range) of shares of Conversion Stock to be offered in the
Subscription Offering, Community Offering and/or Syndicated Community Offering.
The Actual Purchase Price and the total number of shares of Conversion Stock to
be issued in the Subscription Offering, Community Offering and/or Syndicated
Community Offering shall be determined by the Boards of Directors of the Holding
Company and the Bank upon conclusion of such offerings in consultation with the
Independent Appraiser and any financial advisor or investment banker retained by
the Association (or the Bank) in connection with such offerings.
(c) Subject to the approval of the OTS, the Estimated Price Range may
be increased or decreased to reflect market, financial and economic conditions
prior to completion of the Conversion or to fill the order of the ESOP, and
under such circumstances the Holding Company may increase or decrease the total
number of shares of Conversion Stock to be issued in the Conversion to reflect
any such change. Notwithstanding anything to the contrary contained in this Plan
and subject to any required approval of the OTS, no resolicitation of
subscribers shall be required and subscribers shall not be permitted to modify
or cancel their subscriptions unless the gross proceeds from the sale of
Conversion Stock issued in the Conversion are less than the minimum or more than
15% above the maximum of the Estimated Price Range set forth in the Prospectus.
In the event of an increase in the total number of shares offered in the
Conversion due to an increase in the Estimated Price Range, the priority of
share allocation shall be as set forth in this Plan.
9
<PAGE>
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.
(a) Each Eligible Account Holder shall receive, without payment,
Subscription Rights to purchase up to the greater of (i) $100,000 of Conversion
Stock (or such maximum purchase limitation as may be established for the
Community Offering and/or Syndicated Community Offering), (ii) one-tenth of 1%
of the total offering of shares of Conversion Stock in the Subscription
Offering, and (iii) 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Conversion Stock offered
in the Subscription Offering by a fraction, of which the numerator is the amount
of the Qualifying Deposits of the Eligible Account Holder and the denominator is
the total amount of all Qualifying Deposits of all Eligible Account Holders, in
each case subject to Sections 11 and 14 hereof.
(b) In the event of an oversubscription for shares of Conversion Stock
pursuant to Section 5(a), shares shall first be allocated among subscribing
Eligible Account Holders so as to permit each such Eligible Account Holder, to
the extent possible, to purchase a number of shares which will make his or her
total allocation equal to the lesser of the number of shares subscribed for or
100 shares. Any available shares remaining after each subscribing Eligible
Account Holder has been allocated the lesser of the number of shares subscribed
for or 100 shares shall be allocated among the subscribing Eligible Account
Holders in the proportion which the Qualifying Deposit of each such subscribing
Eligible Account Holder bears to the total Qualifying Deposits of all such
subscribing Eligible Account Holders, provided that no fractional shares shall
be issued. Subscription Rights of Eligible Account Holders shall be subordinated
to the priority rights of Tax-Qualified Employee Stock Benefit Plans of the
Holding Company and the Bank to purchase shares in excess of the Maximum Shares,
as defined in Section 6 below. The Subscription Rights of Eligible Account
Holders who are also Directors or Officers of the Bank and their Associates
shall be subordinated to those of other Eligible Account Holders to the extent
that they are attributable to increased deposits during the one-year period
preceding the Eligibility Record Date.
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS.
Tax-Qualified Employee Stock Benefit Plans of the Holding Company and
the Bank shall receive, without payment, Subscription Rights to purchase in the
aggregate up to 10% of the Conversion Stock, including any shares of Conversion
Stock to be issued in the Conversion as a result of an increase in the Estimated
Price Range after commencement of the Subscription Offering and prior to
completion of the Conversion. The subscription rights granted to Tax-Qualified
Employee Stock Benefit Plans shall be subject to the availability of shares of
Conversion Stock after taking into account the shares of Conversion Stock
purchased by Eligible Account Holders, provided, however, that in the event that
the total number of shares offered in the Conversion is increased to an amount
greater than the number of shares representing the maximum of the Estimated
Price Range as set forth in the Prospectus ("Maximum Shares"), the Tax-Qualified
Employee Stock Benefit Plans shall have a priority right to purchase any such
shares exceeding the Maximum Shares up to an aggregate of 10% of the Conversion
Stock. Shares of Conversion Stock
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purchased by any individual participant ("Plan Participant") in a Tax-Qualified
Employee Stock Benefit Plan using funds therein pursuant to the exercise of
subscription rights granted to such Participant in his individual capacity as a
Participant and/or purchases by such Plan Participant in the Community Offering
shall not be deemed to be purchases by a Tax-Qualified Employee Stock Benefit
Plan for purposes of calculating the maximum amount of Conversion Stock that
Tax-Qualified Employee Stock Benefit Plans may purchase pursuant to the first
sentence of this Section 6 if the individual Plan Participant controls or
directs the investment authority with respect to such account or subaccount.
Consistent with applicable laws and regulations and policies and practices of
the OTS, Tax-Qualified Employee Stock Benefit Plans may use funds contributed by
the Holding Company and/or borrowed from an independent financial institution to
exercise such Subscription Rights, and the Holding Company and the Bank may,
after completion of the Conversion, make scheduled discretionary contributions
thereto, provided that such contributions do not cause the Holding Company or
the Bank to fail to meet any applicable regulatory capital requirements.
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS
(a) In the event that the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Application for
Conversion filed prior to OTS approval, then, and only in that event, a
Supplemental Eligibility Record Date shall be set and each Supplemental Eligible
Account Holder shall receive, without payment, Subscription Rights to purchase
up to the greater of (i) $100,000 of Conversion Stock (or such maximum purchase
limitation as may be established for the Community Offering and/or Syndicated
Community Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering, and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Conversion
Stock offered in the Subscription Offering by a fraction, of which the numerator
is the amount of the Qualifying Deposits of the Supplemental Eligible Account
Holder and the denominator is the total amount of all Qualifying Deposits of all
Supplemental Eligible Account Holders, in each case subject to Sections 11 and
14 hereof and to the availability of shares of Common Stock for purchase after
taking into account the shares of Conversion Stock purchased by Eligible Account
Holders and Tax-Qualified Employee Stock Benefit Plans through the exercise of
Subscription Rights under Sections 5 and 6 hereof.
(b) In the event of an oversubscription for shares of Conversion Stock
pursuant to Section 7(a), available shares shall be allocated among subscribing
Supplemental Eligible Accounts so as to permit each such Supplemental Eligible
Account Holder, to the extent possible, to purchase a number of shares which
will make his or her total allocation (including the number of shares, if any,
allocated in accordance with Section 5(a)) equal to the lesser of the number of
shares subscribed for or 100 shares. Any available shares remaining after each
subscribing Supplemental Eligible Account Holder has been allocated the lesser
of the number of shares subscribed for or 100 shares shall be allocated among
the subscribing Supplemental Eligible Account Holders whose orders are unfilled
in the proportion which the Qualifying Deposit of each such subscribing
Supplemental Eligible
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Account Holder bears to the total Qualifying Deposits of all such subscribing
Supplemental Eligible Account Holders, provided that no fractional shares shall
be issued.
8. SUBSCRIPTION RIGHTS OF OTHER MEMBERS.
(a) Each Other Member shall receive, without payment, Subscription
Rights to purchase up to the greater of (i) $100,000 of Conversion Stock (or
such maximum purchase limitation as may be established for the Community
Offering and/or Syndicated Community Offering) and (ii) one-tenth of 1% of the
total offering of shares in the Subscription Offering, in each case subject to
Sections 11 and 14 hereof and the availability of shares of Conversion Stock for
purchase after taking into account the shares of Conversion Stock purchased by
Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans and
Supplemental Eligible Account Holders, if any, through the exercise of
Subscription Rights under Sections 5, 6 and 7 hereof.
(b) If, pursuant to this Section 8, Other Members subscribe for a
number of shares of Conversion Stock in excess of the total number of shares of
Conversion Stock remaining, available shares shall be allocated so as to permit
each such Other Member, to the extent possible, to purchase a number of shares
which will make his or her total allocation equal to the lesser of the number of
shares subscribed for or 100 shares. Any remaining shares shall be allocated
among subscribing Other Members whose orders are unfilled on a pro rata basis in
the same proportion as each such Other Member's subscription bears to the total
subscriptions of all such subscribing Other Members, provided that no fractional
shares shall be issued.
9. SUBSCRIPTION RIGHTS OF DIRECTORS, OFFICERS AND EMPLOYEES.
(a) To the extent that there are sufficient shares remaining after
satisfaction of all subscriptions under the above categories, Directors,
Officers and Employees of the Bank shall receive, without payment, Subscription
Rights to purchase in this category, in the aggregate, up to 25% of the shares
of Conversion Stock offered in the Subscription Offering.
(b) In the event of oversubscription pursuant to Section 9(a),
Subscription Rights for the purchase of such shares shall be allocated among the
individual Directors, Officers and Employees of the Bank on a point system
basis, whereby a point will be assigned for each year of employment and for each
salary increment of $5,000 per annum and five points for each office held in the
Bank, including a directorship. If any such Director, Officer or Employee does
not subscribe for his or her full allocation of shares, any shares not
subscribed for may be purchased by other Directors, Officers and Employees in
proportion to their respective subscriptions, provided that no fractional shares
shall be issued.
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10. COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING AND OTHER OFFERINGS.
(a) If less than the total number of shares of Conversion Stock are
sold in the Subscription Offering, it is anticipated that all remaining shares
of Conversion Stock shall, if practicable, be sold in a Community Offering
and/or a Syndicated Community Offering. Subject to the requirements set forth
herein, the manner in which the Conversion Stock is sold in the Community
Offering and/or the Syndicated Community Offering shall achieve the widest
possible distribution of such stock.
(b) In the event of a Community Offering, all shares of Conversion
Stock which are not subscribed for in the Subscription Offering shall be offered
for sale by means of a direct community marketing program, which may provide for
the use of brokers, dealers or investment banking firms experienced in the sale
of financial institution securities. Any available shares in excess of those not
subscribed for in the Subscription Offering will be available for purchase by
members of the general public to whom a Prospectus is delivered by the Holding
Company or on its behalf with preference given to natural persons residing in
parishes in Louisiana in which the Bank has a branch office ("Preferred
Subscribers"). A Prospectus and Order Form shall be furnished to such Persons as
the Holding Company and the Bank may select in connection with the Community
Offering, and each order for Conversion Stock in the Community Offering shall be
subject to the absolute right of the Holding Company and the Bank to accept or
reject any such order in whole or in part either at the time of receipt of an
order or as soon as practicable following completion of the Community Offering.
Available shares will be allocated first to each Preferred Subscriber whose
order is accepted in an amount equal to the lesser of 100 shares or the number
of shares subscribed for by each such person, if possible. Thereafter,
unallocated shares shall be allocated among Preferred Subscribers whose accepted
orders remain unsatisfied in the same proportion that the unfilled order of each
(up to 2% of the total offering) bears to the total unfilled orders of all
Preferred Subscribers whose accepted orders remain unsatisfied, provided that no
fractional shares shall be issued. Thereafter, any remaining shares shall be
allocated among Preferred Subscribers whose accepted orders remain unsatisfied
on an equal number of shares basis per order until all orders have been filled.
If there are any shares remaining after all accepted orders by Preferred
Subscribers have been satisfied, such remaining shares shall be allocated to
other members of the general public who purchase shares in the Community
Offering, applying the same allocation described above for Preferred
Subscribers.
(c) The amount of Conversion Stock that any Person may purchase in the
Community Offering shall not exceed the greater of (i) $100,000 or (ii)
one-tenth of 1% of the total offering of shares in the Subscription Offering,
provided, however, that this amount may be increased to up to 5% of the total
offering of shares in the Subscription Offering, subject to any required
regulatory approval but without the further approval of Members; provided,
however, that orders for Conversion Stock in the Community Offering shall first
be filled to a maximum of 2% of the total number of shares of Conversion Stock
sold in the Conversion and thereafter any remaining shares shall be allocated on
an equal number of shares basis per order until all orders have been filled. The
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Holding Company and the Bank may commence the Community Offering concurrently
with, at any time during, or as soon as practicable after the end of, the
Subscription Offering, and the Community Offering must be completed within 45
days after the completion of the Subscription Offering, unless extended by the
Holding Company and the Bank with any required regulatory approval.
(d) Subject to such terms, conditions and procedures as may be
determined by the Holding Company and the Bank, all shares of Conversion Stock
not subscribed for in the Subscription Offering or ordered in the Community
Offering may be sold by a syndicate of broker-dealers to the general public in a
Syndicated Community Offering. Each order for Conversion Stock in the Syndicated
Community Offering shall be subject to the absolute right of the Holding Company
and the Bank to accept or reject any such order in whole or in part either at
the time of receipt of an order or as soon as practicable after completion of
the Syndicated Community Offering. The amount of Conversion Stock that any
Person may purchase in the Syndicated Community Offering shall not exceed
$100,000, provided, however, that this amount may be increased to up to 5% of
the total offering of shares in the Subscription Offering, subject to any
required regulatory approval but without the further approval of Members;
provided further that orders for Conversion Stock in the Syndicated Community
Offering shall first be filled to a maximum of 2% of the total number of shares
of Conversion Stock sold in the Conversion and thereafter any remaining shares
shall be allocated on an equal number of shares basis per order until all orders
have been filled. The Holding Company and the Bank may commence the Syndicated
Community Offering concurrently with, at any time during, or as soon as
practicable after the end of, the Subscription Offering and/or Community
Offering, and the Syndicated Community Offering must be completed within 45 days
after the completion of the Subscription Offering, unless extended by the
Holding Company and the Bank with any required regulatory approval.
(e) If for any reason a Syndicated Community Offering of shares of
Conversion Stock not sold in the Subscription Offering and the Community
Offering cannot be effected, or in the event that any insignificant residue of
shares of Conversion Stock is not sold in the Subscription Offering, Community
Offering or Syndicated Community Offering, the Holding Company and the Bank
shall use their best efforts to obtain other purchasers for such shares in such
manner and upon such conditions as may be satisfactory to the OTS.
11. LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF CONVERSION STOCK.
(a) The maximum number of shares of Conversion Stock which may be
purchased in the Conversion by Tax-Qualified Employee Stock Benefit Plans shall
not exceed 10% of the total number of shares of Conversion Stock sold in the
Conversion, including any shares which may be issued in the event of an increase
in the maximum of the Estimated Price Range to reflect changes in market,
financial and economic conditions after commencement of the Subscription
Offering and prior to completion of the Conversion; provided, however, that
purchases of Conversion Stock which are made by a Plan Participant pursuant to
the exercise of subscription rights granted to such Plan Participant in his
individual capacity as a Participant or purchases by a Plan Participant in the
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Community Offering using the funds thereof held in Tax-Qualified Employee Stock
Benefit Plans shall not be deemed to be purchases by a Tax-Qualified Employee
Stock Benefit Plan for purposes of this Section 11(a).
(b) Except in the case of Tax-Qualified Employee Stock Benefit Plans in
the aggregate as set forth in Section 11(a) hereof, and certain Eligible Account
Holders and Supplemental Eligible Account Holders, if any, as set forth in
Sections 5(a)(iii) and 7(a)(iii) hereof, and in addition to the other
restrictions and limitations set forth herein, the maximum amount of Conversion
Stock which any Person together with any Associate or group of Persons acting in
concert may, directly or indirectly, subscribe for or purchase in the Conversion
(including without limitation the Subscription Offering, Community Offering
and/or Syndicated Community Offering) shall not exceed $150,000 of Conversion
Stock. Notwithstanding any other provision contained in this Plan to the
contrary, in no event shall any Person (excluding Tax-Qualified Employee Stock
Benefit Plans but including any Eligible Account Holders and Supplemental
Eligible Account Holders covered by Sections 5(a)(iii) and 7(a)(iii) hereof as
well as any Associate or group of Persons acting in concert) subscribe for or
purchase, directly or indirectly, in the Conversion more than 5% of the total
number of shares of Conversion Stock sold in the Conversion. The Holding Company
and the Bank may presume that certain persons are acting in concert based upon,
among other things, joint account relationships, common addresses and the fact
that such persons have filed joint Schedule 13Ds or 13Gs with the SEC with
respect to other companies.
(c) The number of shares of Conversion Stock which Directors and
Officers and their Associates may purchase in the aggregate in the Conversion
shall not exceed 35% of the total number of shares of Conversion Stock sold in
the Conversion, including any shares which may be issued in the event of an
increase in the maximum of the Estimated Price Range to reflect changes in
market, financial and economic conditions after commencement of the Subscription
Offering and prior to completion of the Conversion.
(d) No Person may purchase fewer than 25 shares of Conversion Stock in
the Conversion, to the extent such shares are available; provided, however, that
if the Actual Purchase Price is greater than $20.00 per share, such minimum
number of shares shall be adjusted so that the aggregate Actual Purchase Price
for such minimum shares will not exceed $500.00.
(e) For purposes of the foregoing limitations and the determination of
Subscription Rights, (i) Directors, Officers and Employees shall not be deemed
to be Associates or a group acting in concert solely as a result of their
capacities as such, (ii) shares purchased by Tax-Qualified Employee Stock
Benefit Plans shall not be attributable to the individual trustees or
beneficiaries of any such plan for purposes of determining compliance with the
limitations set forth in Section 11(b) or Section 11(c) hereof, except as set
forth below, and (iii) shares purchased by a Tax-Qualified Employee Stock
Benefit Plan pursuant to instructions of an individual in an account in such
plan in which the individual has the right to direct the investment, including
any plan of the Bank qualified under Section 401(k) of the Code, shall be
aggregated and included in that individual's purchases and not attributed to the
Tax-Qualified Employee Stock Benefit Plan.
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(f) Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the Members of
the Bank, the Holding Company and the Bank may increase or decrease any of the
individual or aggregate purchase limitations set forth herein to a percentage
which does not exceed 5% of the total offering of shares in the Subscription
Offering whether prior to, during or after the Subscription Offering, Community
Offering and/or Syndicated Community Offering. In the event that an individual
purchase limitation is increased after commencement of the Subscription Offering
or any other offering, the Holding Company and the Bank shall permit any Person
who subscribed for the maximum number of shares of Conversion Stock to purchase
an additional number of shares, so that such Person shall be permitted to
subscribe for the then maximum number of shares permitted to be subscribed for
by such Person, subject to the rights and preferences of any Person who has
priority Subscription Rights. In the event that any of the individual or
aggregate purchase limitations are decreased after commencement of the
Subscription Offering or any other offering, the orders of any Person who
subscribed for more than the new purchase limitation shall be decreased by the
minimum amount necessary so that such Person shall be in compliance with the
then maximum number of shares permitted to be subscribed for by such Person.
(g) The Holding Company and the Bank shall have the right to take all
such action as they may, in their sole discretion, deem necessary, appropriate
or advisable in order to monitor and enforce the terms, conditions, limitations
and restrictions contained in this Section 11 and elsewhere in this Plan and the
terms, conditions and representations contained in the Order Form, including,
but not limited to, the absolute right (subject only to any necessary regulatory
approvals or concurrences) to reject, limit or revoke acceptance of any
subscription or order and to delay, terminate or refuse to consummate any sale
of Conversion Stock which they believe might violate, or is designed to, or is
any part of a plan to, evade or circumvent such terms, conditions, limitations,
restrictions and representations. Any such action shall be final, conclusive and
binding on all Persons, and the Holding Company and the Bank and their
respective Boards shall be free from any liability to any Person on account of
any such action.
12. TIMING OF SUBSCRIPTION OFFERING, MANNER OF EXERCISING SUBSCRIPTION
RIGHTS AND ORDER FORMS.
(a) The Subscription Offering may be commenced concurrently with or at
any time after the mailing to Voting Members of the proxy statement to be used
in connection with the Special Meeting. The Subscription Offering may be closed
before the Special Meeting, provided that the offer and sale of Conversion Stock
shall be conditioned upon the approval of the Plan by the Voting Members at the
Special Meeting.
(b) The exact timing of the commencement of the Subscription Offering
shall be determined by the Holding Company and the Bank in consultation with the
Independent Appraiser and any financial or advisory or investment banking firm
retained by them in connection with the Conversion. The Holding Company and the
Bank may consider a number of factors, including, but not limited to, their
current and projected future earnings, local and national economic conditions,
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and the prevailing market for stocks in general and stocks of financial
institutions in particular. The Holding Company and the Bank shall have the
right to withdraw, terminate, suspend, delay, revoke or modify any such
Subscription Offering, at any time and from time to time, as they in their sole
discretion may determine, without liability to any Person, subject to compliance
with applicable securities laws and any necessary regulatory approval or
concurrence.
(c) The Holding Company and the Bank shall, promptly after the SEC has
declared the Prospectus effective and all required regulatory approvals have
been obtained, distribute the Prospectus, together with Order Forms for the
purchase of Conversion Stock, to all Participants for the purpose of enabling
them to exercise their respective Subscription Rights, subject to Section 14
hereof.
(d) A single Order Form for all Deposit Accounts maintained with the
Bank by an Eligible Account Holder and any Supplemental Eligible Account Holder
may be furnished irrespective of the number of Deposit Accounts maintained with
the Bank on the Eligibility Record Date and Supplemental Eligibility Record
Date, respectively.
(e) The recipient of an Order Form shall have no less than 20 days and
no more than 45 days from the date of mailing of the Order Form (with the exact
termination date to be set forth on the Order Form) to properly complete and
execute the Order Form and deliver it to the Bank. The Holding Company and the
Bank may extend such period by such amount of time as they determine is
appropriate. Failure of any Participant to deliver a properly executed Order
Form to the Bank, along with payment (or authorization for payment by
withdrawal) for the shares of Conversion Stock subscribed for, within the time
limits prescribed, shall be deemed a waiver and release by such Person of any
rights to subscribe for shares of Conversion Stock. Each Participant shall be
required to confirm to the Holding Company and the Bank by executing an Order
Form that such Person has fully complied with all of the terms, conditions,
limitations and restrictions in the Plan.
(f) The Holding Company and the Bank shall have the absolute right, in
their sole discretion and without liability to any Participant or other Person,
to reject any Order Form, including, but not limited to, any Order Form that is:
(i) improperly completed or executed; (ii) not timely received; (iii) not
accompanied by the proper payment (or authorization of withdrawal for payment)
or, in the case of institutional investors in the Community Offering, not
accompanied by an irrevocable order together with a legally binding commitment
to pay the full amount of the purchase price prior to 48 hours before the
completion of the Conversion; or (iv) submitted by a Person whose
representations the Holding Company and the Bank believe to be false or who they
otherwise believe, either alone, or acting in concert with others, is violating,
evading or circumventing, or intends to violate, evade or circumvent, the terms
and conditions of the Plan. The Holding Company and the Bank may, but will not
be required to, waive any irregularity on any Order Form or may require the
submission of corrected Order Forms or the remittance of full payment for shares
of Conversion Stock by such date as they may specify. The interpretation of the
Holding Company and the Bank of the terms and conditions of the Order Forms
shall be final and conclusive.
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13. PAYMENT FOR CONVERSION STOCK.
(a) Payment for shares of Conversion Stock subscribed for by
Participants in the Subscription Offering and payment for shares of Conversion
Stock ordered by Persons in the Community Offering shall be equal to the Maximum
Purchase Price per share multiplied by the number of shares which are being
subscribed for or ordered, respectively. Such payment may be made in cash, if
delivered in person, or by check or money order at the time the Order Form is
delivered to the Bank. The Bank may also elect to receive payment for shares of
Conversion Stock by wire transfer. In addition, the Holding Company and the Bank
may elect to provide Participants and/or other Persons who have a Deposit
Account with the Bank the opportunity to pay for shares of Conversion Stock by
authorizing the Bank to withdraw from such Deposit Account an amount equal to
the aggregate Maximum Purchase Price of such shares. If the Actual Purchase
Price is less than the Maximum Purchase Price, the Bank shall refund the
difference to all Participants and other Persons, unless the Holding Company and
the Bank choose to provide Participants and other Persons the opportunity on the
Order Form to elect to have such difference applied to the purchase of
additional whole shares of Conversion Stock.
(b) Consistent with applicable laws and regulations and policies and
practices of the OTS, payment for shares of Conversion Stock subscribed for by
Tax-Qualified Employee Stock Benefit Plans may be made with funds contributed by
the Holding Company and/or funds obtained pursuant to a loan from an unrelated
financial institution pursuant to a loan commitment which is in force from the
time that any such plan submits an Order Form until the closing of the
transactions contemplated hereby.
(c) If a Participant or other Person authorizes the Bank to withdraw
the amount of the Maximum Purchase Price from his or her Deposit Account, the
Bank shall have the right to make such withdrawal or to freeze funds equal to
the aggregate Maximum Purchase Price upon receipt of the Order Form.
Notwithstanding any regulatory provisions regarding penalties for early
withdrawals from certificate accounts, the Bank may allow payment by means of
withdrawal from certificate accounts without the assessment of such penalties.
In the case of an early withdrawal of only a portion of such account, the
certificate evidencing such account shall be cancelled if any applicable minimum
balance requirement ceases to be met. In such case, the remaining balance will
earn interest at the regular passbook rate. However, where any applicable
minimum balance is maintained in such certificate account, the rate of return on
the balance of the certificate account shall remain the same as prior to such
early withdrawal. This waiver of the early withdrawal penalty applies only to
withdrawals made in connection with the purchase of Conversion Stock and is
entirely within the discretion of the Holding Company and the Bank.
(d) The Bank shall pay interest, at not less than the passbook rate,
for all amounts paid in cash, by check or money order to purchase shares of
Conversion Stock in the Subscription Offering and the Community Offering from
the date payment is received until the date the Conversion is completed or
terminated.
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(e) The Bank shall not knowingly loan funds or otherwise extend credit
to any Participant or other Person to purchase Conversion Stock.
(f) Each share of Conversion Stock shall be non-assessable upon payment
in full of the Actual Purchase Price.
14. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES.
The Holding Company and the Bank shall make reasonable efforts to
comply with the securities laws of all jurisdictions in the United States in
which Participants reside. However, no Participant will be offered or receive
any Conversion Stock under the Plan if such Participant resides in a foreign
country or resides in a jurisdiction of the United States with respect to which
all of the following apply: (a) there are few Participants otherwise eligible to
subscribe for shares under this Plan who reside in such jurisdiction; (b) the
granting of Subscription Rights or the offer or sale of shares of Conversion
Stock to such Participants would require the Holding Company or the Bank or
their respective Directors and Officers, under the laws of such jurisdiction, to
register as a broker-dealer, salesman or selling agent or to register or
otherwise qualify Conversion Stock for sale in such jurisdiction, or the Holding
Company or the Bank would be required to qualify as a foreign corporation or
file a consent to service of process in such jurisdiction; and (c) such
registration, qualification or filing, in the judgment of the Holding Company
and the Bank, would be impracticable or unduly burdensome for reasons of cost or
otherwise.
15. VOTING RIGHTS OF STOCKHOLDERS.
Following consummation of the Conversion, voting rights with respect to
the Bank shall be held and exercised exclusively by the Holding Company as
holder of all of the Bank's outstanding voting capital stock, and voting rights
with respect to the Holding Company shall be held and exercised exclusively by
the holders of the Holding Company's voting capital stock.
16. LIQUIDATION ACCOUNT.
(a) At the time of the Conversion, the Bank shall establish a
liquidation account in an amount equal to the Bank's net worth as reflected in
its latest statement of financial condition contained in the final Prospectus
utilized in the Conversion. The function of the liquidation account will be to
preserve the rights of certain holders of Deposit Accounts in the Bank who
maintain such accounts in the Bank following the Conversion to a priority to
distributions in the unlikely event of a liquidation of the Bank subsequent to
the Conversion.
(b) The liquidation account shall be maintained for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders, if any, who
maintain their Deposit Accounts in the Bank after the Conversion. Each such
account holder will, with respect to each Deposit Account held, have a related
inchoate interest in a portion of the liquidation account balance, which
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interest will be referred to in this Section 16 as the "subaccount balance." All
Deposit Accounts having the same social security number will be aggregated for
purposes of determining the initial subaccount balance with respect to such
Deposit Accounts, except as provided in Section 16(d) hereof.
(c) In the event of a complete liquidation of the Bank subsequent to
the Conversion (and only in such event), each Eligible Account Holder and
Supplemental Eligible Account Holder, if any, shall be entitled to receive a
liquidation distribution from the liquidation account in the amount of the then
current subaccount balances for Deposit Accounts then held (adjusted as
described below) before any liquidation distribution may be made with respect to
the capital stock of the Bank. No merger, consolidation, sale of bulk assets or
similar combination transaction with another SAIF-insured institution in which
the Bank is not the surviving entity shall be considered a complete liquidation
for this purpose. In any such transaction, the liquidation account shall be
assumed by the surviving entity.
(d) The initial subaccount balance for a Deposit Account held by an
Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall
be determined by multiplying the opening balance in the liquidation account by a
fraction, of which the numerator is the amount of the Qualifying Deposits of
such account holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders and, if applicable, Supplemental
Eligible Account Holders. For Deposit Accounts in existence at both the
Eligibility Record Date and the Supplemental Eligibility Record Date, if
applicable, separate initial subaccount balances shall be determined on the
basis of the Qualifying Deposits in such Deposit Accounts on each such record
date. Initial subaccount balances shall not be increased, and shall be subject
to downward adjustment as provided below.
(e) If the aggregate deposit balance in the Deposit Account(s) of any
Eligible Account Holder or Supplemental Eligible Account Holder at the close of
business on any December 31 annual closing date, commencing December 31, 1999,
is less than the lesser of (a) the aggregate deposit balance in such Deposit
Account(s) at the close of business on any other annual closing date subsequent
to such record dates or (b) the aggregate deposit balance in such Deposit
Account(s) as of the Eligibility Record Date or the Supplemental Eligibility
Record Date, if any, the subaccount balance for such Deposit Account(s) shall be
adjusted by reducing such subaccount balance in an amount proportionate to the
reduction in such deposit balance. In the event of such a downward adjustment,
the subaccount balance shall not be subsequently increased, notwithstanding any
increase in the deposit balance of the related Deposit Account(s). The
subaccount balance of an Eligible Account Holder or Supplemental Eligible
Account Holder, if any, will be reduced to zero if the Account Holder ceases to
maintain a Deposit Account at the Bank that has the same social security number
as appeared on his or her Deposit Account(s) at the Eligibility Record Date or,
if applicable, the Supplemental Eligibility Record Date.
(f) Subsequent to the Conversion, the Bank may not pay cash dividends
generally on deposit accounts and/or capital stock of the Bank, or repurchase
any of the capital stock of the Bank,
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if such dividend or repurchase would reduce the Bank's regulatory capital below
the aggregate amount of the then current subaccount balances for Deposit
Accounts then held; otherwise, the existence of the liquidation account shall
not operate to restrict the use or application of any of the net worth accounts
of the Bank.
(g) For purposes of this Section 16, a Deposit Account includes a
predecessor or successor account which is held only by an account holder with
the same social security number.
17. TRANSFER OF DEPOSIT ACCOUNTS.
Each Deposit Account in the Bank at the time of the consummation of the
Conversion shall become, without further action by the holder, a Deposit Account
in the Bank equivalent in withdrawable amount to the withdrawal value (as
adjusted to give effect to any withdrawal made for the purchase of Conversion
Stock), and subject to the same terms and conditions (except as to voting and
liquidation rights) as such Deposit Account in the Bank immediately preceding
consummation of the Conversion. Holders of Deposit Accounts in the Bank shall
not, as such holders, have any voting rights.
18. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION, MARKET MAKING AND
STOCK EXCHANGE LISTING.
In connection with the Conversion, the Holding Company shall register
its common stock pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended, and shall undertake not to deregister such stock for a period of
three years thereafter. The Holding Company also shall use its best efforts to
(i) encourage and assist a market maker to establish and maintain a market for
its common stock; and (ii) list its common stock on a national or regional
securities exchange or to have quotations for its common stock disseminated on
the Nasdaq System.
19. DIRECTORS AND OFFICERS OF THE BANK.
Each person serving as a Director or Officer of the Bank at the time of
the Conversion shall continue to serve as a Director or Officer of the Bank for
the balance of the term for which the person was elected prior to the
Conversion, and until a successor is elected and qualified.
20. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING
THE CONVERSION.
For a period of three years following the Conversion, the Directors and
Officers of the Holding Company and the Bank and their Associates may not
purchase, without the prior written approval of the OTS, the common stock of the
Holding Company except from a broker-dealer registered with the Securities and
Exchange Commission. This prohibition shall not apply, however, to (i) a
negotiated transaction arrived at by direct negotiation between buyer and seller
and involving more than 1% of the outstanding common stock of the Holding
Company, and (ii) purchases of stock
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made by and held by any Tax-Qualified Employee Stock Benefit Plan (and purchases
of stock made by and held by any Non-Tax Qualified Employee Stock Benefit Plan
following the receipt of stockholder approval of such plan) that may be
attributable to individual Officers or Directors.
The foregoing restriction on purchases of common stock of the Holding
Company shall be in addition to any restrictions that may be imposed by federal
and state securities laws.
21. RESTRICTIONS ON TRANSFER OF STOCK.
All shares of Conversion Stock which are purchased by Persons other
than Directors and Officers shall be transferable without restriction, except in
connection with a transaction proscribed by Section 22 of this Plan. Shares of
Conversion Stock purchased by Directors and Officers of the Holding Company and
the Bank on original issue from the Holding Company (by subscription or
otherwise) shall be subject to the restriction that such shares shall not be
sold or otherwise disposed of for value for a period of one year following the
date of purchase, except for any disposition of such shares following the death
of the original purchaser or pursuant to any merger or similar transaction
approved by the OTS. The shares of Conversion Stock issued by the Holding
Company to Directors and Officers shall bear the following legend giving
appropriate notice of such one-year restriction:
"The shares of stock evidenced by this Certificate are
restricted as to transfer for a period of one year from the date of
this Certificate pursuant to Part 563b of the Rules and Regulations of
the Office of Thrift Supervision. These shares may not be transferred
during such one-year period without a legal opinion of counsel for the
Company that said transfer is permissible under the provisions of
applicable law and regulation. This restrictive legend shall be deemed
null and void after one year from the date of this Certificate."
In addition, the Holding Company shall give appropriate instructions to
the transfer agent for its common stock with respect to the applicable
restrictions relating to the transfer of restricted stock. Any shares issued at
a later date as a stock dividend, stock split or otherwise with respect to any
such restricted stock shall be subject to the same holding period restrictions
as may then be applicable to such restricted stock.
The foregoing restriction on transfer shall be in addition to any
restrictions on transfer that may be imposed by federal and state securities
laws.
22. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY.
Upon consummation of the Conversion, the articles of incorporation of
the Holding Company shall prohibit any Person together with Associates or group
of Persons acting in concert from offering to acquire or acquiring, directly or
indirectly, beneficial ownership of more than 10%
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<PAGE>
of any class of equity securities of the Holding Company, or of securities
convertible into more than 10% of any such class. The articles of incorporation
of the Holding Company also shall provide that all equity securities
beneficially owned by any Person in excess of 10% of any class of equity
securities shall be considered "excess shares," and that excess shares shall not
be counted as shares entitled to vote and shall not be voted by any Person or
counted as voting shares in connection with any matters submitted to the
stockholders for a vote. The foregoing restrictions shall not apply to (i) any
offer with a view toward public resale made exclusively to the Holding Company
by underwriters or a selling group acting on its behalf, (ii) the purchase of
shares by a Tax-Qualified Employee Stock Benefit Plan established for the
benefit of the employees of the Holding Company and its subsidiaries which is
exempt from approval requirements under the provisions of Section
574.3(c)(1)(vi) of the Regulations Applicable to all Savings Associations or any
successor thereto, and (iii) any offer or acquisition approved in advance by the
affirmative vote of two-thirds of the entire Board of Directors of the Holding
Company. Directors, Officers or Employees of the Holding Company or the Bank or
any subsidiary thereof shall not be deemed to be Associates or a group acting in
concert with respect to their individual acquisitions of any class of equity
securities of the Holding Company solely as a result of their capacities as
such.
23. ADOPTION OF FEDERAL STOCK CHARTER AND BYLAWS.
As part of the Conversion, the Bank shall take all appropriate steps to
adopt a new federal charter and bylaws to read in the form prescribed and
authorized for a federally chartered savings bank in stock form.
24. TAX RULINGS OR OPINIONS.
Consummation of the Conversion is expressly conditioned upon prior
receipt by the Bank of either a ruling or an opinion of counsel with respect to
federal tax laws, and either a ruling or an opinion with respect to Louisiana
tax laws, to the effect that consummation of the transactions contemplated
hereby will not result in a taxable reorganization under the provisions of the
applicable codes or otherwise result in any adverse tax consequences to the
Holding Company, the Bank and its account holders receiving Subscription Rights
before or after the Conversion, except in each case to the extent, if any, that
Subscription Rights are deemed to have fair market value on the date such rights
are issued.
25. STOCK COMPENSATION PLANS AND EMPLOYMENT AGREEMENTS.
(a) The Holding Company and the Bank are authorized to adopt
Tax-Qualified Employee Stock Benefit Plans in connection with or subsequent to
the Conversion, including without limitation an employee stock ownership plan.
Subsequent to the Conversion, the Holding Company and the Bank are authorized to
adopt Non-Tax Qualified Employee Stock Benefit Plans, including without
limitation, stock option plans and restricted stock plans, provided however
that, with respect to any such plan implemented during the one-year period
subsequent to the date of consummation of the Conversion, any such plan: (i)
shall be disclosed in the proxy solicitation materials for the Special
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Meeting of Members and in the Prospectus; (ii) in the case of stock option
plans, shall have a total number of shares of common stock for which options may
be granted of not more than 10% of the amount of shares issued in the
Conversion; (iii) in the case of management or employee stock benefit plans,
shall have a total number of shares of common stock of not more than 4% of the
amount of shares issued in the Conversion; (iv) shall be submitted for approval
by the holders of the common stock of the Holding Company no earlier than six
months following consummation of the Conversion; and (v) shall comply with all
other applicable requirements of the OTS.
(b) The Holding Company and the Bank are authorized to enter into
employment agreements with their executive officers.
26. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK.
(a) Following consummation of the Conversion, any repurchases of shares
of capital stock by the Holding Company shall be made in accordance with then
applicable laws and regulations.
(b) The Bank may not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause the regulatory
capital of the Bank to be reduced below the amount required for the liquidation
account. Any dividend declared or paid on, or repurchase of, the Bank's capital
stock shall be made in compliance with Section 563.134 of the Regulations
Applicable to all Savings Associations, or any successor thereto.
27. PAYMENT OF FEES TO BROKERS.
The Holding Company and the Bank may elect to offer to pay fees on a
per share basis to securities brokers who assist Persons in determining to
purchase shares in the Subscription Offering, Community Offering and/or
Syndicated Community Offering.
28. EFFECTIVE DATE.
The effective date of the Conversion shall be the date of the closing
of the sale of all shares of Conversion Stock. The closing of the sale of all
shares of Conversion Stock sold in the Subscription Offering, Community Offering
and/or Syndicated Community Offering shall occur simultaneously and shall be
conditioned upon the prior receipt of all requisite regulatory and other
approvals.
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29. AMENDMENT OR TERMINATION OF THE PLAN.
If deemed necessary or desirable by the Boards of Directors of the
Holding Company and the Association (or the Bank), this Plan may be
substantively amended, as a result of comments from regulatory authorities or
otherwise, at any time prior to the solicitation of proxies from Members to vote
on the Plan and at any time thereafter with the concurrence of the OTS. Any
amendment to this Plan made after approval by the Members with the concurrence
of the OTS shall not necessitate further approval by the Members unless
otherwise required by the OTS. This Plan shall terminate if the sale of all
shares of Conversion Stock is not completed within 24 months from the date of
the Special Meeting (subject to extension by the OTS). Prior to the Special
Meeting, this Plan may be terminated by the Boards of Directors of the Holding
Company and the Association (or the Bank) without approval of the OTS; after the
Special Meeting, the Boards of Directors may terminate this Plan only with the
approval of the OTS.
30. INTERPRETATION OF THE PLAN.
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of each of the Boards of Directors of the
Holding Company and the Association (or the Bank) shall be final, subject to the
authority of the OTS.
25
Exhibit 3.1
Articles of Incorporation of FPB Financial Corp.
<PAGE>
ARTICLES OF INCORPORATION
OF
FPB FINANCIAL CORP.
Article 1. Name. The name of the corporation is FPB Financial Corp.
(hereinafter referred to as the "Corporation").
Article 2. Nature of Business. The purpose of the Corporation is to
engage in any lawful act or activity for which a corporation may be formed under
the Louisiana Business Corporation Law, as amended (the "BCL"). The Corporation
is incorporated under the provisions of the BCL.
Article 3. Duration. The term of the existence of the Corporation shall
be perpetual.
Article 4. Capital Stock.
A. Authorized Amount. The total number of shares of capital stock which
the Corporation has authority to issue is 7,000,000, of which 2,000,000 shall be
serial preferred stock, par value $.01 per share (hereinafter the "Preferred
Stock"), and 5,000,000 shall be common stock, par value $.01 per share
(hereinafter the "Common Stock"). Except to the extent required by governing
law, rule or regulation, the shares of capital stock may be issued from time to
time by the Board of Directors without further approval of stockholders. The
Corporation shall have the authority to purchase its capital stock out of funds
lawfully available therefor.
B. Common Stock. Except as provided in this Article 4 (or in any
resolution or resolutions adopted by the Board of Directors pursuant hereto),
the exclusive voting power shall be vested in the Common Stock, with each holder
thereof being entitled to one vote for each share of such Common Stock standing
in the holder's name on the books of the Corporation, except as provided in
Article 10. Subject to any rights and preferences of any class of stock having
preference over the Common Stock, holders of Common Stock shall be entitled to
such dividends as may be declared by the Board of Directors out of funds
lawfully available therefor. Upon any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, holders of
Common Stock shall be entitled to receive pro rata the remaining assets of the
Corporation after the holders of any class of stock having preference over the
Common Stock have been paid in full any sums to which they may be entitled.
C. Authority of Board to Fix Terms of Preferred Stock. The Board of
Directors shall have the full authority permitted by law to divide the
authorized and unissued shares of Preferred Stock into series and to fix by
resolution full, limited, multiple or fractional, or no voting rights, and such
designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights, and other special or relative rights
of the Preferred Stock or any series thereof that may be desired.
Article 5. Incorporator. The name and mailing address of the sole
incorporator is as follows:
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Number and
Class of
Shares
Name Address Subscribed For
- -------------------------- ------------------------- ----------------
Florida Parishes Homestead 300 West Morris Street 100 shares of
Association Hammond, Louisiana 70401 Common Stock
Article 6. Directors. The business and affairs of the Corporation shall
be managed by or under the direction of a Board of Directors.
A. Number. Except as otherwise increased from time to time by the
exercise of the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
additional directors, the number of directors of the Corporation shall be no
less than five and no more than 15, as specified in the Corporation's Bylaws, as
may be amended from time to time.
B. Classification and Term. The Board of Directors, other than those
who may be elected by the holders of any class or series of stock having
preference over the Common Stock as to dividends or upon liquidation, shall be
divided into three classes as nearly equal in number as possible, with one class
to be elected annually. At each annual meeting of stockholders, the directors
elected to succeed those in the class whose terms are expiring shall be elected
for a term of office to expire at the third succeeding annual meeting of
stockholders and when their respective successors are elected and qualified.
Notwithstanding the foregoing, and except as otherwise required by law, whenever
the holders of any one or more series of Preferred Stock shall have the right,
voting separately as a class, to elect one or more directors of the Corporation,
the terms of the director or directors elected by such holders shall expire at
the next succeeding annual meeting of stockholders and vacancies created with
respect to any directorship of the directors so elected may be filled in the
manner specified by the terms of such Preferred Stock.
C. No Cumulative Voting. Stockholders of the Corporation shall not be
permitted to cumulate their votes for the election of directors.
D. Vacancies. Except as otherwise fixed pursuant to the provisions of
Article 4 hereof relating to the rights of the holders of any class or series of
stock having preference over the Common Stock as to dividends or upon
liquidation to elect directors, any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
directors, shall be filled by a majority vote of the directors then in office,
whether or not a quorum is present, or by a sole remaining director, and any
director so chosen shall serve until the term of the class to which he was
appointed shall expire and until his successor is elected and qualified. When
the number of directors is changed, the Board of Directors shall determine the
class or classes
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to which the increased or decreased number of directors shall be apportioned,
provided that no decrease in the number of directors shall shorten the term of
any incumbent director.
E. Removal. Subject to the rights of any class or series of stock
having preference over the Common Stock as to dividends or upon liquidation to
elect directors, any director (including persons elected by directors to fill
vacancies in the Board of Directors) may be removed from office without cause by
an affirmative vote of not less than 80% of the total votes eligible to be cast
by stockholders at a duly constituted meeting of stockholders called expressly
for such purpose and may be removed from office with cause by an affirmative
vote of not less than a majority of the total votes eligible to be cast by
stockholders. Cause for removal shall exist only if the director whose removal
is proposed has been either declared of unsound mind by an order of a court of
competent jurisdiction, convicted of a felony or of an offense punishable by
imprisonment for a term of more than one year by a court of competent
jurisdiction, or deemed liable by a court of competent jurisdiction for gross
negligence or misconduct in the performance of such director's duties to the
Corporation. At least 30 days prior to such meeting of stockholders, written
notice shall be sent to the director whose removal will be considered at the
meeting.
F. Nominations of Directors. Nominations of candidates for election as
directors at any annual meeting of stockholders may be made (a) by, or at the
direction of, a majority of the Board of Directors or (b) by any stockholder
entitled to vote at such annual meeting. Only persons nominated in accordance
with the procedures set forth in this Article 6.F shall be eligible for election
as directors at an annual meeting. Ballots bearing the names of all the persons
who have been nominated for election as directors at an annual meeting in
accordance with the procedures set forth in this Article 6.F shall be provided
for use at the annual meeting.
Nominations, other than those made by or at the direction of the Board
of Directors, shall be made pursuant to timely notice in writing to the
Secretary of the Corporation as set forth in this Article 6.F. To be timely, a
stockholder's notice shall be delivered to, or mailed and received at, the
principal executive offices of the Corporation not later than 120 days prior to
the anniversary date of the initial mailing of proxy materials by the
Corporation in connection with the immediately preceding annual meeting of
stockholders of the Corporation; provided, however, that with respect to the
first scheduled annual meeting following the completion of the conversion of
Florida Parishes Homestead Association, Hammond, Louisiana or any successor
thereto (the "Association") from the mutual form to the stock form (which
meeting is expected to be held in April 2000), notice by the stockholder must be
so delivered or received no later than the close of business on Monday, November
1, 1999. Such stockholder's notice shall set forth (a) the name, age, business
address and residence address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) the principal
occupation or employment of the stockholder submitting the notice and of each
person being nominated; (c) the class and number of shares of Corporation stock
which are Beneficially Owned (as defined in Article 9.A(e) hereof) by the
stockholder submitting the notice, by any Person who is Acting in Concert with
or who is an Affiliate or Associate of such stockholder (as such capitalized
terms are defined in Article 9.A hereof), by any Person who is a member of any
group with such stockholder with respect to the Corporation stock
3
<PAGE>
or who is known by such stockholder to be supporting such nominee(s) on the date
the notice is given to the Corporation, by each person being nominated, and by
each Person who is in control of, is controlled by or is under common control
with any of the foregoing Persons (if any of the foregoing Persons is a
partnership, corporation, limited liability company, association or trust,
information shall be provided regarding the name and address of, and the class
of number of shares of Corporation stock which are Beneficially Owned by, each
partner in such partnership, each director, executive officer and stockholder in
such corporation, each member in such limited liability company or association,
and each trustee and beneficiary of such trust, and in each case each Person
controlling such entity and each partner, director, executive officer,
stockholder, member or trustee of any entity which is ultimately in control of
such partnership, corporation, limited liability company, association or trust);
(d) a representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (e) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (f) such other information regarding the stockholder submitting
the notice, each nominee proposed by such stockholder and any other Person
covered by clause (c) of this paragraph as would be required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and Exchange
Commission; and (g) the consent of each nominee to serve as a director of the
Corporation if so elected. At the request of the Board of Directors, any person
nominated by, or at the direction of, the Board for election as a director at an
annual meeting shall furnish to the Secretary of the Corporation that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee.
The Board of Directors may reject any nomination by a stockholder not
timely made in accordance with the requirements of this Article 6.F. If the
Board of Directors, or a designated committee thereof or other authorized
individual, determines that the information provided in a stockholder's notice
does not satisfy the informational requirements of this Article 6.F in any
material respect, the Secretary of the Corporation or a duly authorized
representative of the Corporation shall promptly notify such stockholder of the
deficiency in the notice. The stockholder shall have an opportunity to cure the
deficiency by providing additional information to the Secretary within such
period of time, not to exceed five days from the date such deficiency notice is
given to the stockholder, as the Board of Directors or such committee or other
authorized individual shall reasonably determine. If the deficiency is not cured
within such period, or if the Board of Directors or such committee or other
authorized individual reasonably determines that the additional information
provided by the stockholder, together with information previously provided, does
not satisfy the requirements of this Article 6.F in any material respect, then
the Board of Directors may reject such stockholder's nomination. The Secretary
of the Corporation or a duly authorized representative of the Corporation shall
notify a stockholder in writing whether his nomination has been made in
accordance with the time and informational requirements of this Article 6.F.
Notwithstanding the procedures set forth in this paragraph, if neither the Board
of Directors nor such committee or other authorized individual makes a
determination as to the validity of any nominations by a stockholder, the
presiding officer of the annual meeting shall determine and declare at the
4
<PAGE>
annual meeting whether the nomination was made in accordance with the terms of
this Article 6.F. If the presiding officer determines that a nomination was made
in accordance with the terms of this Article 6.F, he shall so declare at the
annual meeting and ballots shall be provided for use at the meeting with respect
to such nominee. If the presiding officer determines that a nomination was not
made in accordance with the terms of this Article 6.F, he shall so declare at
the annual meeting and the defective nomination shall be disregarded.
Notwithstanding the foregoing, and except as otherwise required by law,
whenever the holders of any one or more series of Preferred Stock shall have the
right, voting separately as a class, to elect one or more directors of the
Corporation, the provisions of this Article 6.F shall not apply with respect to
the director or directors elected by such holders of Preferred Stock.
G. Discharge of Duties. In discharging the duties of their respective
positions, the Board of Directors, committees of the Board of Directors and
individual directors shall, in considering the best interests of the
Corporation, consider the effects of any action upon the employees of the
Corporation and its subsidiaries, the depositors and borrowers of any insured
institution subsidiary, the communities in which offices or other establishments
of the Corporation or any subsidiary are located and all other pertinent
factors.
Article 7. Preemptive Rights. No holder of the capital stock of the
Corporation shall be entitled as such, as a matter of right, to subscribe for or
purchase any part of any new or additional issue of stock of any class
whatsoever of the Corporation, or of securities convertible into stock of any
class whatsoever, whether now or hereafter authorized, or whether issued for
cash or other consideration or by way of a dividend.
Article 8. Indemnification, etc. of Officers, Directors, Employees and
Agents.
A. Personal Liability of Directors and Officers. A director or officer
of the Corporation shall not be personally liable for monetary damages for any
action taken, or any failure to take any action, as a director or officer except
to the extent that by law a director's or officer's liability for monetary
damages may not be limited.
B. Indemnification. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, including actions by or in the right of
the Corporation, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under Louisiana law.
5
<PAGE>
C. Advancement of Expenses. Reasonable expenses incurred by an officer,
director, employee or agent of the Corporation in defending an action, suit or
proceeding described in Section B of this Article 8 may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding if authorized by the board of directors (without regard to whether
participating members thereof are parties to such action, suit or proceeding),
upon receipt of an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that the person is not entitled to
be indemnified by the Corporation.
D. Other Rights. The indemnification and advancement of expenses
provided by or pursuant to this Article 8 shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any bylaw, insurance or other agreement, vote of
stockholders or directors (regardless of whether directors authorizing such
indemnification are beneficiaries thereof) or otherwise, both as to actions in
their official capacity and as to actions in another capacity while holding an
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.
E. Insurance. The Corporation shall have the power to purchase and
maintain insurance or another similar arrangement on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture or other enterprise,
against any liability asserted against or incurred by him in any such capacity,
or arising out of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the provisions of this
Article 8.
F. Security Fund; Indemnity Agreements. By action of the Board of
Directors (notwithstanding their interest in the transaction), the Corporation
may create and fund a trust fund or other fund or form of self-insurance
arrangement of any nature, and may enter into agreements with its officers,
directors, employees and agents for the purpose of securing or insuring in any
manner its obligation to indemnify or advance expenses provided for in this
Article 8.
G. Modification. The duties of the Corporation to indemnify and to
advance expenses to any person as provided in this Article 8 shall be in the
nature of a contract between the Corporation and each such person, and no
amendment or repeal of any provision of this Article 8, and no amendment or
termination of any trust or other fund or form of self-insurance arrangement
created pursuant to Section F of this Article 8, shall alter to the detriment of
such person the right of such person to the advance of expenses or
indemnification related to a claim based on an act or failure to act which took
place prior to such amendment, repeal or termination.
H. Proceedings Initiated by Indemnified Persons. Notwithstanding any
other provision of this Article 8, the Corporation shall not indemnify a
director, officer, employee or agent for any liability incurred in an action,
suit or proceeding initiated (which shall not be deemed to include
counter-claims or affirmative defenses) or participated in as an intervenor or
amicus curiae
6
<PAGE>
by the person seeking indemnification unless such initiation of or participation
in the action, suit or proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
Article 9. Meetings of Stockholders and Stockholder Proposals
A. Definitions.
(a) Acquire. The term "Acquire" includes every type of
acquisition, whether effected by purchase, exchange, operation of law or
otherwise.
(b) Acting in Concert. The term "Acting in Concert" means (a)
knowing participation in a joint activity or conscious parallel action towards a
common goal whether or not pursuant to an express agreement, or (b) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise.
(c) Affiliate. An "Affiliate" of, or a Person "affiliated
with," a specified Person, means a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
(d) Associate. The term "Associate" used to indicate a
relationship with any Person means:
(i) Any corporation, partnership, limited liability
company or other organization (other than the Corporation or a
Subsidiary of the Corporation), or any subsidiary or parent
thereof, of which such Person is a director, officer, partner
or member or is, directly or indirectly, the Beneficial Owner
of 10% or more of any class of equity securities;
(ii) Any trust or other estate in which such Person
has a 10% or greater beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity,
provided, however, such term shall not include any employee
stock benefit plan of the Corporation or a Subsidiary of the
Corporation in which such Person has a 10% or greater
beneficial interest or serves as a trustee or in a similar
fiduciary capacity;
(iii) Any relative or spouse of such Person (or any
relative of such spouse) who has the same home as such Person
or who is a director or officer of the Corporation or a
Subsidiary of the Corporation (or any subsidiary or parent
thereof); or
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(iv) Any investment company registered under the
Investment Company Act of 1940 for which such Person or any
Affiliate or Associate of such Person serves as investment
advisor.
(e) Beneficial Owner (including Beneficially Owned). A Person
shall be considered the "Beneficial Owner" of any shares of stock (whether or
not owned of record):
(i) With respect to which such Person or any
Affiliate or Associate of such Person directly or indirectly
has or shares (A) voting power, including the power to vote or
to direct the voting of such shares of stock, and/or (B)
investment power, including the power to dispose of or to
direct the disposition of such shares of stock;
(ii) Which such Person or any Affiliate or Associate
of such Person has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, and/or (B) the right to
vote pursuant to any agreement, arrangement or understanding
(whether such right is exercisable immediately or only after
the passage of time); or
(iii) Which are Beneficially Owned within the meaning
of (i) or (ii) of this Article 9.A(e) by any other Person with
which such first-mentioned Person or any of its Affiliates or
Associates either (A) has any agreement, arrangement or
understanding, written or oral, with respect to acquiring,
holding, voting or disposing of any shares of stock of the
Corporation or any Subsidiary of the Corporation or acquiring,
holding or disposing of all or substantially all, or any
Substantial Part, of the assets or business of the Corporation
or a Subsidiary of the Corporation, or (B) is Acting in
Concert. For the purpose only of determining whether a Person
is the Beneficial Owner of a percentage specified in this
Article 9 of the outstanding Voting Shares, such shares shall
be deemed to include any Voting Shares which may be issuable
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants, options or otherwise and which are deemed to be
Beneficially Owned by such Person pursuant to the foregoing
provisions of this Article 9.A(e), but shall not include any
other Voting Shares which may be issuable in such manner.
(f) Offer. The term "Offer" shall mean every offer to buy or
acquire, solicitation of an offer to sell, tender offer or request or invitation
for tender of, a security or interest in a security for value; provided that the
term "Offer" shall not include (i) inquiries directed solely to the management
of the Corporation and not intended to be communicated to stockholders which are
designed to elicit an indication of management's receptivity to the basic
structure of a potential acquisition with respect to the amount of cash and or
securities, manner of acquisition and formula for determining price, or (ii)
non-binding expressions of understanding or letters of intent with the
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<PAGE>
management of the Corporation regarding the basic structure of a potential
acquisition with respect to the amount of cash and or securities, manner of
acquisition and formula for determining price.
(g) Person. The term "Person" shall mean any individual,
partnership, corporation, limited liability company, association, trust, group
or other entity. When two or more Persons act as a partnership, limited
partnership, limited liability company, syndicate, association or other group
for the purpose of acquiring, holding or disposing of shares of stock, such
partnership, syndicate, associate or group shall be deemed a "Person."
(h) Substantial Part. The term "Substantial Part" as used with
reference to the assets of the Corporation or of any Subsidiary means assets
having a value of more than 10% of the total consolidated assets of the
Corporation and its Subsidiaries as of the end of the Corporation's most recent
fiscal year ending prior to the time the determination is being made.
(i) Subsidiary. "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the Person in question.
(j) Voting Shares. "Voting Shares" shall mean shares of the
Corporation entitled to vote generally in an election of directors.
(k) Certain Determinations With Respect to Article 9. A
majority of the directors shall have the power to determine for the purposes of
this Article 9, on the basis of information known to them and acting in good
faith: (A) the number of Voting Shares of which any Person is the Beneficial
Owner, (B) whether a Person is an Affiliate or Associate of another, (C) whether
a Person has an agreement, arrangement or understanding with another as to the
matters referred to in the definition of "Beneficial Owner" as hereinabove
defined, and (D) such other matters with respect to which a determination is
required under this Article 9.
(l) Directors, Officers or Employees. Directors, officers or
employees of the Corporation or any Subsidiary thereof shall not be deemed to be
a group with respect to their individual acquisitions of any class of equity
securities of the Corporation solely as a result of their capacities as such.
B. Special Meetings of Stockholders. Except as otherwise required by
law and subject to the rights of the holders of any class or series of Preferred
Stock, special meetings of the stockholders of the Corporation may be called
only by (i) the Board of Directors pursuant to a resolution approved by the
affirmative vote of a majority of the directors then in office, (ii) the
President, or (iii) by Persons who Beneficially Own an aggregate of at least 50%
of the outstanding Voting Shares.
C. Action Without a Meeting. Any action permitted to be taken by the
stockholders at a meeting may be taken without a meeting if consent in writing
setting forth the action so taken
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shall be signed by all of the stockholders who would be entitled to vote at a
meeting for such purpose and filed with the Secretary of the Corporation as part
of the corporate records.
D. Stockholder Proposals. At an annual meeting of stockholders, only
such new business shall be conducted, and only such proposals shall be acted
upon, as shall have been brought before the annual meeting by, or at the
direction of, (a) the Board of Directors or (b) any stockholder of the
Corporation who complies with all the requirements set forth in this Article
9.D.
Proposals, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Article 9.D. For stockholder proposals
to be included in the Corporation's proxy materials, the stockholder must comply
with all the timing and informational requirements of Rule 14a-8 of the Exchange
Act (or any successor regulation). With respect to stockholder proposals to be
considered at the annual meeting of stockholders but not included in the
Corporation's proxy materials, the stockholder notice shall be delivered to, or
mailed and received at, the principal executive offices of the Corporation not
later than 120 days prior to the anniversary date of the initial mailing of
proxy materials by the Corporation in connection with the immediately preceding
annual meeting of stockholders of the Corporation; provided, however, that with
respect to the first scheduled annual meeting following the completion of the
conversion of the Association from the mutual form to the stock form (which
meeting is expected to be held in April 2000), notice by the stockholder must be
so delivered or received no later than the close of business on Monday, November
1, 1999. Such stockholder's notice shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a description of the
proposal desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business and, to the extent known, any other stockholders known by such
stockholder to be supporting such proposal, (c) the class and number of shares
of the Corporation's capital stock which are Beneficially Owned by the
stockholder submitting the notice, by any Person who is Acting in Concert with
or who is an Affiliate or Associate of such stockholder, by any Person who is a
member of any group with such stockholder with respect to the Corporation stock
or who is known by such stockholder to be supporting such proposal on the date
the notice is given to the Corporation, and by each Person who is in control of,
is controlled by or is under common control with any of the foregoing Persons
(if any of the foregoing Persons is a partnership, corporation, limited
liability company, association or trust, information shall be provided regarding
the name and address of, and the class and number of shares of Corporation stock
which are Beneficially Owned by, each partner in such partnership, each
director, executive officer and stockholder in such corporation, each member in
such limited liability company or association, and each trustee and beneficiary
of such trust, and in each case each Person controlling such entity and each
partner, director, executive officer, stockholder, member or trustee of any
entity which is ultimately in control of such partnership, corporation, limited
liability company, association or trust), (d) the identification of any person
retained or to be compensated by the stockholder submitting the proposal, or any
person acting on his or her behalf, to make solicitations or recommendations to
stockholders for the purpose of assisting in the passage of such
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<PAGE>
proposal and a brief description of the terms of such employment, retainer or
arrangement for compensation, and (e) any material interest of the stockholder
in such business.
The Board of Directors may reject any stockholder proposal not timely
made in accordance with the terms of this Article 9.D. If the Board of
Directors, or a designated committee thereof or other authorized individual,
determines that the information provided in a stockholder's notice does not
satisfy the information requirements of this Article 9.D in any material
respect, the Secretary of the Corporation or a duly authorized representative of
the Corporation shall promptly notify such stockholder of the deficiency in the
notice. The stockholder shall have an opportunity to cure the deficiency by
providing additional information to the Secretary within such period of time not
to exceed five days from the date such deficiency notice is given to the
stockholder as the Board of Directors or such committee or other authorized
individual shall reasonably determine. If the deficiency is not cured within
such period, or if the Board of Directors or such committee or other authorized
individual determines that the additional information provided by the
stockholder, together with information previously provided, does not satisfy the
requirements of this Article 9.D in any material respect, then the Board of
Directors may reject such stockholder's proposal. The Secretary of the
Corporation or a duly authorized representative of the Corporation shall notify
a stockholder in writing whether his proposal has been made in accordance with
the time and informational requirements of this Article 9.D. Notwithstanding the
procedures set forth in this paragraph, if neither the Board of Directors nor
such committee or other authorized individual makes a determination as to the
validity of any stockholder proposal, the presiding officer of the annual
meeting shall determine and declare at the annual meeting whether the
stockholder proposal was made in accordance with the terms of this Article 9.D.
If the presiding officer determines that a stockholder proposal was made in
accordance with the terms of this Article 9.D, he shall so declare at the annual
meeting and ballots shall be provided for use at the meeting with respect to any
such proposal. If the presiding officer determines that a stockholder proposal
was not made in accordance with the terms of this Article 9.D, he shall so
declare at the annual meeting and any such proposal shall not be acted upon at
the annual meeting.
This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but in connection with such reports, no
new business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.
Article 10. Restrictions on Offers and Acquisitions of the Corporation's
Equity Securities.
A. Restrictions. The definitions and other provisions set forth in
Article 9.A are also applicable to this Article 10. Except as set forth in
Article 10.B, no Person shall directly or indirectly Offer to Acquire or Acquire
the Beneficial Ownership of (i) more than 10% of the issued and outstanding
shares of any class of an equity security of the Corporation, or (ii) any
securities convertible into, or exercisable for, any equity securities of the
Corporation if, assuming conversion or exercise by such Person of all securities
of which such Person is the Beneficial Owner which are
11
<PAGE>
convertible into, or exercisable for, such equity securities (but of no
securities convertible into, or exercisable for, such equity securities of which
such Person is not the Beneficial Owner), such Person would be the Beneficial
Owner of more than 10% of any class of an equity security of the Corporation.
B. Exclusions. The foregoing restrictions shall not apply to (i) any
Offer with a view toward public resale made exclusively to the Corporation by
underwriters or a selling group acting on its behalf, (ii) any employee benefit
plan or arrangement established by the Corporation or the Association and any
trustee of such a plan or arrangement, and (iii) any other Offer or acquisition
approved in advance by the affirmative vote of two-thirds of the Corporation's
entire Board of Directors.
C. Remedies. In the event that shares are acquired in violation of this
Article 10, all shares Beneficially Owned by any Person in excess of 10% shall
be considered "Excess Shares" and (i) shall not be counted as shares entitled to
vote and shall not be voted by any Person or counted as Voting Shares in
connection with any matters submitted to stockholders for a vote, (ii) the
Corporation is authorized to refuse to recognize a transfer or attempted
transfer of any shares of the Corporation's equity securities to any Person who
is the Beneficial Owner, or as the result of such transfer would become the
Beneficial Owner, of Excess Shares, and (iii) the Board of Directors may cause
such Excess Shares to be transferred to an independent trustee for sale on the
open market or otherwise, with the expenses of such trustee to be paid out of
the proceeds of the sale.
For purposes of ensuring compliance with Article 10.A, in the event any
partnership, corporation, limited liability company, association or trust is
deemed to Beneficially Own more than 5% of any class of the Corporation's stock,
either by itself or together with one or more other Persons who is an Affiliate
of or Acting in Concert with such entity or who is a member of any group with
such entity with respect to the Corporation's stock, then the Corporation shall
be entitled upon written request to such entity to receive information regarding
the name and address of, and the class and number of shares of Corporation stock
which are Beneficially Owned by, each partner in such partnership, each
director, executive officer and stockholder in such corporation, each member in
such limited liability company or association, and each trustee and beneficiary
of such trust, and in each case each Person controlling such entity and each
partner, director, executive officer, stockholder, member or trustee of any
entity which is ultimately in control of such partnership, corporation, limited
liability company, association or trust.
E. Severability. In the event any provision (or portion thereof) of
this Article 10 shall be found to be invalid, prohibited or unenforceable for
any reason, the remaining provisions (or portions thereof) of this Article 10
shall remain in full force and effect, and shall be construed as if such
invalid, prohibited or unenforceable provision had been stricken herefrom or
otherwise rendered inapplicable, it being the intent of this Corporation and its
stockholders that each such remaining provision (or portion thereof) of this
Article 10 remain, to the fullest extent permitted by law, applicable and
enforceable as to all stockholders.
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Article 11. Amendment of Articles and Bylaws.
A. Articles. The Corporation reserves the right to amend, alter, change
or repeal any provision contained in these Articles of Incorporation, in the
manner now or hereafter prescribed by law, and all rights conferred upon
stockholders herein are granted subject to this reservation. No amendment,
addition, alteration, change or repeal of these Articles of Incorporation shall
be made unless it is first approved by the Board of Directors of the Corporation
pursuant to a resolution adopted by the affirmative vote of a majority of the
directors then in office, and thereafter is approved by the holders of at least
75% of the Voting Shares (as defined in Article 9 hereof and after giving effect
to Article 10.C hereof), voting together as a single class, as well as such
additional vote of the Preferred Stock as may be required by the provisions of
any series thereof. Notwithstanding the preceding sentence, any amendment to
these Articles of Incorporation recommended for adoption by at least two-thirds
of the entire Board of Directors (including any vacancies) shall, to the extent
the Business Corporation Law of the State of Louisiana requires stockholder
approval of such amendment, require the affirmative vote of a majority of the
Voting Shares (as defined in Article 9 hereof and after giving effect to Article
10.C hereof), voting together as a single class, as well as such additional vote
of the Preferred Stock as may be required by the provisions of any series
thereof.
B. Bylaws. The Board of Directors, to the extent permitted by law, or
stockholders may adopt, alter, amend or repeal the Bylaws of the Corporation.
Such action by the Board of Directors shall require the affirmative vote of a
majority of the directors then in office at any regular or special meeting of
the Board of Directors. Such action by the stockholders shall require the
affirmative vote of the holders of a majority of the Voting Shares of the
Corporation (as defined on Article 9 hereof and after giving effect to Article
10.C hereof), voting together as a single class, as well as such additional vote
of the Preferred Stock as may be required by the provisions of any series
thereof, provided that the affirmative vote of the holders of at least 75% of
the Voting Shares of the Corporation (as defined in Article 9 hereof and after
giving effect to Article 10.C hereof), voting together as a single class, as
well as such additional vote of the Preferred Stock as may be required by the
provisions of any series thereof, shall be required to amend, adopt, alter,
change or repeal any provision inconsistent with Sections 4.1, 4.2, 4.3 and 4.4
of the Bylaws and Articles VIII and XII of the Bylaws.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the Louisiana Business
Corporation Law, as amended, through
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these Articles of Incorporation, has caused these Articles of Incorporation to
be signed by its President and Chief Executive Officer, who hereby declares and
certifies that the facts herein stated are true and who has hereunto set his
hand this 18th day of February 1999.
ATTEST (SEAL) FLORIDA PARISHES HOMESTEAD ASSOCIATION
/s/ Wayne Allen By: /s/ Fritz W. Anderson II
- ------------------------- -------------------------------------
G. Wayne Allen, Secretary Fritz W. Anderson II, President
and Chief Executive Officer
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ACKNOWLEDGMENT
STATE OF LOUISIANA
TANGIPAHOA PARISH
On this 18th day of February 1999, before me appeared Fritz W. Anderson
II, to me personally known, who, being by me duly sworn, did say that he is the
President and Chief Executive Officer of Florida Parishes Homestead Association
(the sole incorporator of FPB Financial Corp.), that the seal affixed to the
above and foregoing instrument is the corporate seal of said Association and
that the instrument was signed and sealed on behalf of the Association by
authority of its Board of Directors; and said Fritz W. Anderson II acknowledged
the instrument to be the free act and deed of the Association.
SWORN TO AND SUBSCRIBED before me this 18th day of February 1999.
/s/ Pat Falcone
-----------------
NOTARY PUBLIC
15
Exhibit 3.2
Bylaws of FPB Financial Corp.
<PAGE>
BYLAWS
OF
FPB FINANCIAL CORP.
ARTICLE I. OFFICES
1.1 Registered Office and Registered Agent. The registered office of
FPB Financial Corp. (the "Corporation") shall be located in the State of
Louisiana at such place as may be fixed from time to time by the Board of
Directors upon filing of such notices as may be required by law, and the
registered agent shall have a business office identical with such registered
office.
1.2 Other Offices. The Corporation may have other offices within or
outside the State of Louisiana at such place or places as the Board of Directors
may from time to time determine.
ARTICLE II. STOCKHOLDERS' MEETINGS
2.1 Meeting Place. All meetings of the stockholders shall be held at
the principal place of business of the Corporation, or at such other place
within or without the State of Louisiana as shall be determined from time to
time by the Board of Directors, and the place at which any such meeting shall be
held shall be stated in the notice of the meeting.
2.2 Annual Meeting Time. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the fourth Wednesday
of April at the hour of 10:00 a.m., if not a legal holiday, and if a legal
holiday, then on the day following, at the same hour, or at such other date and
time as may be determined by the Board of Directors and stated in the notice of
such meeting.
2.3 Organization and Conduct. Each meeting of the stockholders shall be
presided over by the President, or if the President is not present, by such
other person as the directors may determine. The Secretary, or in her absence a
temporary Secretary, shall act as secretary of each meeting of the stockholders.
In the absence of the Secretary and any temporary Secretary, the chairman of the
meeting may appoint any person present to act as secretary of the meeting. The
chairman of any meeting of the stockholders, unless prescribed by law or
regulation or unless the Board of Directors has otherwise determined, shall
determine the order of the business and the procedure at the meeting, including
such regulation of the manner of voting and the conduct of discussions as shall
be deemed appropriate by him in his sole discretion.
2.4 Notice.
(a) Notice of the time and place of the annual meeting of
stockholders shall be given by delivering personally or by mailing a written or
printed notice of the same, at least 10 days and not more than 60 days prior to
the meeting, to each stockholder of record entitled to vote at such meeting.
When any stockholders' meeting, either annual or special, is adjourned for 30
days or
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more, or if a new record date is fixed for an adjourned meeting of stockholders,
notice of the adjourned meeting shall be given as in the case of an original
meeting. It shall not be necessary to give any notice of the time and place of
any meeting adjourned for less than 30 days or of the business to be transacted
thereat (unless a new record date is fixed therefor), other than an announcement
at the meeting at which such adjournment is taken.
(b) At least 15 days and not more than 60 days prior to the
meeting, a written or printed notice of each special meeting of stockholders,
stating the place, day and hour of such meeting, and the purpose or purposes for
which the meeting is called, shall be either delivered personally or mailed to
each stockholder of record entitled to vote at such meeting.
2.5 Voting Record. At least five days before each meeting of
stockholders, a complete record of the stockholders entitled to vote at such
meeting, or any adjournment thereof, shall be made, arranged in alphabetical
order, with the number and class of shares held by each stockholder, which
record shall be kept on file at the registered office of the Corporation and
shall be subject to inspection by any stockholder at any time during usual
business hours. The record shall be kept open at the time and place of such
meeting for the inspection by any stockholder.
2.6 Quorum. Except as otherwise required by law or the Corporation's
Articles of Incorporation or these Bylaws:
(a) A quorum at any annual or special meeting of stockholders
shall consist of stockholders representing, either in person or by proxy, a
majority of the outstanding capital stock of the Corporation entitled to vote at
such meeting.
(b) The votes of a majority in interest of those present at
any properly called meeting or adjourned meeting of stockholders, at which a
quorum as defined above is present, shall be sufficient to transact business.
2.7 Voting of Shares.
(a) Except as otherwise provided in these Bylaws or to the
extent that voting rights of the shares of any class or classes are limited or
denied by the Articles of Incorporation, each stockholder, on each matter
submitted to a vote at a meeting of stockholders, shall have one vote for each
share of stock registered in his name on the books of the Corporation.
(b) Directors are to be elected by a plurality of votes cast
by the shares entitled to vote in the election at a meeting at which a quorum is
present. Stockholders shall not be permitted to cumulate their votes for the
election of directors. If, at any meeting of the stockholders, due to a vacancy
or vacancies or otherwise, directors of more than one class of the Board of
Directors are to be elected, each class of directors to be elected at the
meeting shall be elected in a separate election by a plurality vote.
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2.8 Fixing of Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend, the Board
of Directors shall fix in advance a record date for such determination of
stockholders, such date to be not more than 60 days and, in case of a meeting of
stockholders, not less than 10 days prior to the date on which the particular
action requiring such determination of stockholders is to be taken.
2.9 Proxies. A stockholder may vote either in person or by proxy
executed in writing by the stockholder, or his duly authorized attorney-in-fact.
No proxy shall be valid after 11 months from the date of its execution, unless
otherwise provided in the proxy.
2.10 Voting of Shares in the Name of Two or More Persons. Where shares
are held jointly or as tenants in common by two or more persons as fiduciaries
or otherwise, if only one or more of such persons is present in person or by
proxy, all of the shares standing in the names of such persons shall be deemed
to be represented for the purpose of determining a quorum and the Corporation
shall accept as the vote of all such shares the votes cast by him or a majority
of them and if in any case such persons are equally divided upon the manner of
voting the shares held by them, the vote of such shares shall be divided equally
among such persons, without prejudice to the rights of such joint owners or the
beneficial owners thereof among themselves, unless either (a) the Corporation
receives written notice to the contrary from a nonsigning registered holder
before the proxy is voted, or (b) there shall have been filed with the Secretary
of the Corporation a copy, certified by an attorney-at-law to be correct, of the
relevant portions of the agreements under which such shares are held or the
instrument by which the trust or estate was created or the decree of court
appointing them, or of a decree of court directing the voting of such shares,
and the persons specified as having such voting power in the latest such
document so filed, and only such persons, shall be entitled to vote such shares
but only in accordance therewith.
2.11 Voting of Shares by Certain Holders. Shares standing in the name
of another corporation may be voted by an officer, agent or proxy as the bylaws
of such corporation may prescribe, or, in the absence of such provision, in
accordance with the Louisiana Business Corporation Law, as amended ("BCL").
Shares held by an administrator, executor, guardian or conservator may be voted
by him, either in person or by proxy, without a transfer of such shares into his
name. Shares standing in the name of a trustee may be voted by him, either in
person or by proxy. Shares standing in the name of a receiver may be voted by
such receiver, and shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into his name if authority
to do so is contained in an appropriate order of the court or other public
authority by which such receiver was appointed. A stockholder whose shares are
pledged shall be entitled to vote such shares until the shares have been
transferred into the name of the pledgee or nominee, and thereafter the pledgee
or nominee shall be entitled to vote the shares so transferred
2.12 Inspectors. For each meeting of stockholders, the Board of
Directors may appoint one or more inspectors of election. If for any meeting the
inspector(s) appointed by the Board of Directors shall be unable to act or the
Board of Directors shall fail to appoint any inspector, one or
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<PAGE>
more inspectors may be appointed at the meeting by the chairman thereof. Such
inspectors shall conduct the voting in each election of directors and, as
directed by the Board of Directors or the chairman of the meeting, the voting on
each matter voted on at such meeting, and after the voting shall make a
certificate of the vote taken. Inspectors need not be stockholders.
ARTICLE III. CAPITAL STOCK
3.1 Certificates. Certificates of stock shall be issued in numerical
order, and each stockholder shall be entitled to a certificate signed by the
President or a Vice President, and the Secretary or the Treasurer, and may be
sealed with the seal of the Corporation or a facsimile thereof. The signatures
of such officers may be facsimiles if the certificate is manually signed on
behalf of a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation. If an officer who has
signed or whose facsimile signature has been placed upon such certificate ceases
to be an officer before the certificate is issued, it may be issued by the
Corporation with the same effect as if the person were an officer on the date of
issue. Each certificate of stock shall state:
(a) that the Corporation is incorporated under the laws of
the State of Louisiana;
(b) the name of the person to whom issued;
(c) the number and class of shares and the designation of the
series, if any, which such certificate represents;
(d) the par value of each share represented by such
certificate, or a statement that such shares are without par value; and
(e) such other information as may be required by the BCL.
3.2 Transfers.
(a) Transfers of stock shall be made only upon the stock
transfer books of the Corporation, kept at the registered office of the
Corporation or at its principal place of business, or at the office of its
transfer agent or registrar, and before a new certificate is issued the old
certificate shall be surrendered for cancellation. The Board of Directors may,
by resolution, open a share register in any state of the United States, and may
employ an agent or agents to keep such register, and to record transfers of
shares therein.
(b) Shares of stock shall be transferred by delivery of the
certificates therefor, accompanied either by an assignment in writing on the
back of the certificate or an assignment separate from the certificate, or by a
written power of attorney to sell, assign and transfer the same,
4
<PAGE>
signed by the holder of said certificate. No shares of stock shall be
transferred on the books of the Corporation until the outstanding certificates
therefor have been surrendered to the Corporation.
3.3 Registered Owner. Registered stockholders shall be treated by the
Corporation as the holders in fact of the stock standing in their respective
names and the Corporation shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as expressly provided
below or by the laws of the State of Louisiana. The Board of Directors may adopt
by resolution a procedure whereby a stockholder of the Corporation may certify
in writing to the Corporation that all or a portion of the shares registered in
the name of such stockholder are held for the account of a specified person or
persons. The resolution shall set forth:
(a) The classification of stockholder who may certify;
(b) The purpose or purposes for which the certification may be
made;
(c) The form of certification and information to be contained
therein;
(d) If the certification is with respect to a record date or
closing of the stock transfer books, the date within which the certification
must be received by the Corporation; and
(e) Such other provisions with respect to the procedure as are
deemed necessary or desirable.
Upon receipt by the Corporation of a certification complying with the
above requirements, the persons specified in the certification shall be deemed,
for the purpose or purposes set forth in the certification, to be the holders of
record of the number of shares specified in place of the stockholder making the
certification.
3.4 Mutilated, Lost or Destroyed Certificates. In case of any
mutilation, loss or destruction of any certificate of stock, another may be
issued in its place upon receipt of proof of such mutilation, loss or
destruction. The Board of Directors may impose conditions on such issuance and
may require the giving of a satisfactory bond or indemnity to the Corporation in
such sum as they might determine, or establish such other procedures as they
deem necessary.
3.5 Fractional Shares or Scrip. The Corporation may (a) issue fractions
of a share which shall entitle the holder to exercise voting rights, to receive
dividends thereon, and to participate in any of the assets of the Corporation in
the event of liquidation; (b) arrange for the disposition of fractional
interests by those entitled thereto; (c) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such shares are
determined; or (d) issue scrip in registered or bearer form which shall entitle
the holder to receive a certificate for a full share upon the surrender of such
scrip aggregating a full share.
5
<PAGE>
3.6 Shares of Another Corporation. Shares owned by the Corporation in
another corporation, domestic or foreign, may be voted by such officer, agent or
proxy as the Board of Directors may determine or, in the absence of such
determination, by the President of the Corporation.
ARTICLE IV. BOARD OF DIRECTORS
4.1 Number and Powers. The management of all the affairs, property and
interest of the Corporation shall be vested in a Board of Directors. The Board
of Directors shall be divided into three classes as nearly equal in number as
possible. The initial Board of Directors shall consist of seven persons. The
classification and term of the directors shall be as set forth in the
Corporation's Articles of Incorporation, which provisions are incorporated
herein with the same effect as if they were set forth herein. Directors need not
be stockholders or residents of the State of Louisiana. In addition to the
powers and authorities expressly conferred upon it by these Bylaws and the
Articles of Incorporation, the Board of Directors may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by statute
or by the Articles of Incorporation or by these Bylaws directed or required to
be exercised or done by the stockholders.
4.2 Change of Number. The number of directors may at any time be
increased or decreased by a vote of a majority of the Board of Directors,
provided that no decrease shall have the effect of shortening the term of any
incumbent director except as provided in Sections 4.3 and 4.4 hereunder.
Notwithstanding anything to the contrary contained within these Bylaws, the
number of directors may not be less than 5 nor more than 15.
4.3 Vacancies. All vacancies in the Board of Directors shall be filled
in the manner provided in the Corporation's Articles of Incorporation, which
provisions are incorporated herein with the same effect as if they were set
forth herein.
4.4 Removal of Directors. Directors may be removed in the manner
provided in the Corporation's Articles of Incorporation, which provisions are
incorporated herein with the same effect as if they were set forth herein.
4.5 Regular Meetings. Regular meetings of the Board of Directors or any
committee may be held without notice at the principal place of business of the
Corporation or at such other place or places, either within or without the State
of Louisiana, as the Board of Directors or such committee, as the case may be,
may from time to time designate. The annual meeting of the Board of Directors
shall be held without notice immediately after the adjournment of the annual
meeting of stockholders.
6
<PAGE>
4.6 Special Meetings.
(a) Special meetings of the Board of Directors may be called
at any time by the President or by a majority of the authorized number of
directors, to be held at the principal place of business of the Corporation or
at such other place or places as the Board of Directors or the person or persons
calling such meeting may from time to time designate. Notice of all special
meetings of the Board of Directors shall be given to each director by five days'
service of the same by telegram, by letter, or personally. Such notice need not
specify the business to be transacted at, nor the purpose of, the meeting.
(b) Special meetings of any committee may be called at any
time by such person or persons and with such notice as shall be specified for
such committee by the Board of Directors, or in the absence of such
specification, in the manner and with the notice required for special meetings
of the Board of Directors.
4.7 Quorum. A majority of the Board of Directors shall be necessary at
all meetings to constitute a quorum for the transaction of business.
4.8 Waiver of Notice. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. A waiver of notice signed by the
director or directors, whether before or after the time stated for the meeting,
shall be equivalent to the giving of notice.
4.9 Registering Dissent. A director who is present at a meeting of the
Board of Directors at which action on a corporate matter is taken shall be
presumed to have assented to such action unless his dissent is entered in the
minutes of the meeting, or unless he files his written dissent to such action
with the person acting as the secretary of the meeting before the adjournment
thereof, or unless he delivers his dissent in writing to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
4.10 Executive, Audit and Other Committees. Standing or special
committees may be appointed from its own number by the Board of Directors from
time to time, and the Board of Directors may from time to time invest such
committees with such powers as it may see fit, subject to such conditions as may
be prescribed by the Board. An Executive Committee may be appointed by
resolution passed by a majority of the full Board of Directors. It shall have
and exercise all of the authority of the Board of Directors, except in reference
to amending the Articles of Incorporation, adopting a plan of merger or
consolidation, recommending the sale, lease or exchange or other dispositions of
all or substantially all the property and assets of the Corporation otherwise
than in the usual and regular course of business, recommending a voluntary
dissolution or a revocation thereof, or amending these Bylaws. An Audit
Committee shall be appointed by resolution passed by a majority of the full
Board of Directors, and at least a majority of the members
7
<PAGE>
of the Audit Committee shall be directors who are not also officers of the
Corporation. The Audit Committee shall recommend independent auditors to the
Board of Directors annually and shall review the Corporation's budget, the scope
and results of the audit performed by the Corporation's independent auditors and
the Corporation's system of internal control and audit with management and such
independent auditors, and such other duties as may be assigned to it by the
Board of Directors. All committees appointed by the Board of Directors shall
keep regular minutes of the transactions of their meetings and shall cause them
to be recorded in books kept for that purpose in the office of the Corporation.
The designation of any such committee, and the delegation of authority thereto,
shall not relieve the Board of Directors, or any member thereof, of any
responsibility imposed by law.
4.11 Remuneration. No stated fee shall be paid to directors, as such,
for their service, but by resolution of the Board of Directors, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of such Board; provided, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. The Board of Directors may
determine to pay members of standing or special committees a fixed sum and
expenses for attending committee meetings.
4.12 Action by Directors Without a Meeting. Any action which may be
taken at a meeting of the directors, or of a committee thereof, may be taken
without a meeting if a consent in writing, setting forth the action so taken or
to be taken, shall be signed by all of the directors, or all of the members of
the committee, as the case may be. Such consent shall have the same effect as a
unanimous vote.
4.13 Action of Directors by Communications Equipment. Any action which
may be taken at a meeting of directors, or of a committee thereof, may be taken
by means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other at the
same time.
4.14 Chairman of the Board of Directors. The Board of Directors may
elect from among its members a Chairman of the Board and a Vice Chairman of the
Board of Directors. The Chairman of the Board of Directors (or, in his absence,
the Vice Chairman of the Board, if one has been elected) shall preside at all
meetings of the Board of Directors. The Chairman of the Board (and the Vice
Chairman of the Board, if one has been elected) shall perform such other duties
as may be assigned from time to time by the Board of Directors.
4.15 Age Limitation. No person shall be eligible for election,
reelection, appointment or reappointment to the Board of Directors of the
Corporation if such person is at the time of such action more than 75 years of
age; provided, however, that this limitation shall not apply to any person
serving as a Director of the Corporation on March 9, 1999.
8
<PAGE>
ARTICLE V. OFFICERS
5.1 Designations. The officers of the Corporation shall be the Chairman
of the Board, a President, a Secretary and a Treasurer, as well as such Vice
Presidents (including Executive and Senior Vice Presidents), Assistant
Secretaries and Assistant Treasurers as the Board may designate, who shall be
elected for one year by the directors at their first meeting after the annual
meeting of stockholders, and who shall hold office until their successors are
elected and qualify. Any two or more offices may be held by the same person,
except that the offices of President and Secretary may not be held by the same
person. The Corporation may enter into employment agreements with one or more of
its officers for terms in excess of one year.
5.2 Powers and Duties. The officers of the Corporation shall have such
authority and perform such duties as the Board of Directors may from time to
time authorize or determine. In the absence of action by the Board of Directors,
the officers shall have such powers and duties as generally pertain to their
respective offices.
5.3 Delegation. In the case of absence or inability to act of any
officer of the Corporation and of any person herein authorized to act in his
place, the Board of Directors may from time to time delegate the powers or
duties of such officer to any other officer or any director or other person whom
it may select.
5.4 Vacancies. Vacancies in any office arising from any cause may be
filled by the Board of Directors at any regular or special meeting of the Board.
5.5 Other Officers. Directors may appoint such other officers and
agents as it shall deem necessary or expedient, who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
5.6 Term - Removal. The officers of the Corporation shall hold office
until their successors are chosen and qualify. Any officer or agent elected or
appointed by the Board of Directors may be removed at any time, with or without
cause, by the affirmative vote of a majority of the whole Board of Directors,
but such removal shall be without prejudice to the contract rights, if any, of
the person so removed.
5.7 Bonds. The Board of Directors may, by resolution, require any and
all of the officers to give bonds to the Corporation, with sufficient surety or
sureties, conditioned for the faithful performance of the duties of their
respective offices, and to comply with such other conditions as may from time to
time be required by the Board of Directors.
ARTICLE VI. FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Corporation shall end on the 31st day of
December of each year. The Corporation shall be subject to an annual audit as of
the end of its fiscal year by independent public
9
<PAGE>
accountants appointed by and responsible to the Board of Directors. The
appointment of such accountants shall be subject to annual ratification by the
stockholders.
ARTICLE VII. DIVIDENDS AND FINANCE
7.1 Dividends. Dividends may be declared by the Board of Directors and
paid by the Corporation out of the unreserved and unrestricted earned surplus of
the Corporation, or out of the unrestricted capital surplus of the Corporation,
subject to the conditions and limitations imposed by the laws of the State of
Louisiana. The Board of Directors may declare dividends payable to the holders
of record at the close of business on any business day not more than 60 days
prior to the date on which the dividend is paid.
7.2 Reserves. Before making any distribution of earned surplus, there
may be set aside out of the earned surplus of the Corporation such sum or sums
as the directors from time to time in their absolute discretion deem expedient
as a reserve fund to meet contingencies, or for equalizing dividends, or for
maintaining any property of the Corporation, or for any other purpose. Any
earned surplus of any year not distributed as dividends shall be deemed to have
thus been set apart until otherwise disposed of by the Board of Directors.
7.3 Depositories. The monies of the Corporation shall be deposited in
the name of the Corporation in such bank or banks or trust company or trust
companies as the Board of Directors shall designate, and shall be drawn out only
by check or other order for payment of money signed by such persons and in such
manner as may be determined by resolution of the Board of Directors.
ARTICLE VIII. PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
Directors and officers of the Corporation shall not be personally
liable for monetary damages for any action taken, or any failure to take any
action, as a director or officer to the extent set forth in the Corporation's
Articles of Incorporation, which provisions are incorporated herein with the
same effect as if they were set forth herein.
ARTICLE IX. NOTICES
Except as may otherwise be required by law, any notice to any
stockholder or director may be delivered personally or by mail. If mailed, the
notice shall be deemed to have been delivered when deposited in the United
States mail, addressed to the addressee at his last known address in the records
of the Corporation, with postage thereon prepaid.
10
<PAGE>
ARTICLE X. SEAL
The corporate seal of the Corporation shall be in such form and bear
such inscription as may be adopted by resolution of the Board of Directors, or
by usage of the officers on behalf of the Corporation.
ARTICLE XI. BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of
account and shall keep minutes and proceedings of meetings of its stockholders
and Board of Directors; and it shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar, a record
of its stockholders, giving the names and addresses of all stockholders and the
number and class of the shares held by each. Any books, records and minutes may
be in written form or any other form capable of being converted into written
form within a reasonable time.
ARTICLE XII. AMENDMENTS
These Bylaws may be altered, amended or repealed only as set forth in
the Corporation's Articles of Incorporation, which provisions are incorporated
herein with the same effect as if they were set forth herein.
11
Exhibit 4.1
Form of Stock Certificate of FPB Financial Corp.
<PAGE>
(FORM OF STOCK CERTIFICATE - FRONT SIDE)
NUMBER SHARES
COMMON STOCK CUSIP
(Par Value $.01 Per Share) See reverse for
certain definitions
FPB FINANCIAL CORP.
Incorporated Under the Laws of Louisiana
This certifies that ___________________________________ is the
registered holder of _________________ fully paid and non-assessable shares of
the Common Stock, par value $.01 per share, of FPB Financial Corp., Hammond,
Louisiana (the "Corporation").
The shares evidenced by this Certificate are transferable in person or
by a duly authorized attorney or legal representative, upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are subject to all the provisions of the Articles of Incorporation and
Bylaws of the Corporation and any and all amendments thereto.
This Certificate is not valid unless countersigned by the Transfer
Agent and registered by the Registrar.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by the facsimile signatures of its duly authorized officers and has
caused its facsimile seal to be affixed hereto.
Dated:
____________________ (SEAL) _____________________________
G. Wayne Allen Fritz W. Anderson, II
Secretary President and Chief Executive
Officer
<PAGE>
(FORM OF STOCK CERTIFICATE - BACK SIDE)
The Corporation is authorized to issue more than one class of stock,
including a class of preferred stock which may be issued in one or more series.
The Corporation will furnish to any stockholder, upon written request and
without charge, a full statement of the designations, preferences, limitations
and relative rights of the shares of each class authorized to be issued and,
with respect to the issuance of any preferred stock to be issued in series, the
relative rights and preferences between the shares of each series so far as the
rights and preferences have been fixed and determined and the authority of the
Board of Directors to fix and determine the relative rights and preferences of
subsequent series.
The Articles of Incorporation of the Corporation include a provision
which generally prohibits any person (including an individual, company or group
acting in concert) from directly or indirectly offering to acquire or acquiring
the beneficial ownership of more than 10% of any class of equity securities of
the Corporation. In the event that stock is acquired in violation of this 10%
limitation, the excess shares will no longer be counted in determining the total
number of outstanding shares for purposes of any matter involving stockholder
action and the Board of Directors of the Corporation may cause such excess
shares to be transferred to an independent trustee for sale in the open market
or otherwise, with the expenses of such sale to be paid out of the proceeds of
the sale.
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - ______________ Custodian ______________ under (Cust)
(Minor)
Uniform Gifts to Minors Act ________________________
(State)
Additional abbreviations may also be used though not in the above list.
<PAGE>
For value received, _________________________________ hereby sell,
assign and transfer
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAXPAYER IDENTIFYING NUMBER OF ASSIGNEE
[ ]
[ ]
unto ___________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF
ASSIGNEE
================================================================================
_________________________________________________________________ shares of
Common Stock represented by this Certificate, and do hereby irrevocably
constitute and appoint __________________________ as Attorney, to transfer the
said shares on the books of the within named Corporation, with full power of
substitution.
Dated _____________ __, ____
_____________________________
Signature
_____________________________
Signature
Notice: The signature(s) to this assignment must correspond with the name(s)
written upon the face of this Certificate in every particular, without
alteration or enlargement or any change whatsoever.
Exhibit 5.1
Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding
legality of securities
<PAGE>
[LETTERHEAD FOR ELIAS, MATZ, TIERNAN & HERRICK L.L.P.]
March 10, 1999
VIA EDGAR
Board of Directors
FPB Financial Corp.
300 West Morris Street
Hammond, Louisiana 70403
Gentlemen:
We have acted as special counsel to FPB Financial Corp. (the "Company")
in connection with the preparation and filing with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, of the
Registration Statement on Form SB-2 (the "Registration Statement"), relating to
the issuance of up to 449,650 shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), in connection with the conversion of
Florida Parishes Bank (the "Bank") from mutual to stock form.
In this regard, we have examined the Articles of Incorporation and
Bylaws of the Company, resolutions of the Board of Directors of the Company and
the Bank, the Plan of Conversion, and such other documents and matters of law as
we deemed appropriate for the purposes of rendering this opinion. The opinion
which we render herein is limited to federal laws and regulations and the laws
of the State of Louisiana which are in effect on the date hereof.
Based upon the foregoing, we are of the opinion as of the date hereof
that the Common Stock has been duly and validly authorized, and when issued in
accordance with the terms of the Plan of
<PAGE>
Board of Directors
March 10, 1999
Page 2
Conversion, upon receipt of the consideration required therefor, will be legally
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Company's Registration Statement and to the references to this firm under the
headings "The Conversion - Tax Aspects" and "Legal and Tax Opinions" in the
Prospectus contained in the Registration Statement.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Gerald F. Heupel, Jr.
------------------------------------
Gerald F. Heupel, Jr., a Partner
Exhibit 8.1
Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding
federal income tax consequences
<PAGE>
[LETTERHEAD FOR ELIAS, MATZ, TIERNAN & HERRICK L.L.P.]
March 10, 1999
VIA EDGAR
Board of Directors
FPB Financial Corp.
300 West Morris Street
Hammond, Louisiana 70403
Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the conversion of Florida Parishes Bank (the "Bank"), a
federally chartered mutual savings bank, to stock form (the "Conversion"). In
the Conversion, all of the Bank's to-be-issued capital stock will be acquired by
FPB Financial Corp. (the "Company"), a newly organized Louisiana-chartered
corporation. For the reasons set forth below, and based on your representations
in a letter dated March 9, 1999 ("Representation Letter"), it is our opinion
that the proposed Conversion will qualify as a reorganization within the meaning
of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the
"Code"). Our opinion also addresses certain other income tax consequences which
follow from this conclusion.
This Opinion Letter, including the opinions contained herein, is
governed by, and should be interpreted in accordance with, the Legal Opinion
Accord (the "Accord") of the American Bar Association Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and herein, and this Opinion Letter
should be read in
<PAGE>
Board of Directors
March 10, 1999
Page 2
conjunction with the Accord. Our opinions herein are limited to the Code and the
regulations promulgated thereunder (the "Subject Laws"). We express no opinion
as to other federal laws and regulations or as to laws and regulations of
Louisiana or other jurisdictions or as to factual or legal matters other than as
set forth herein.
We have reviewed the Company's Registration Statement on Form SB-2
relating to the proposed issuance of up to 449,650 shares of common stock, par
value $.01 per share ("Common Stock"), subject to adjustment by the Company in
connection with the Conversion, the Prospectus contained therein, the Articles
of Incorporation and the Bylaws of the Company, the existing mutual and proposed
stock Charter of the Bank, the Plan of Conversion of the Bank, the Bank's
Application for Conversion and such other corporate records and documents as we
have deemed relevant and necessary for the purposes of this opinion. In our
examination of documents, we have assumed, without independent verification, the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents to us as
certified, conformed or reproduced copies, and the authenticity of such
originals of such latter documents. As to matters of fact which are material to
this opinion, we have relied upon the accuracy of the factual matters set forth
in the Company's Registration Statement on Form SB-2, the Bank's Application for
Conversion and the Representation Letter.
The Bank is a federally chartered mutual savings bank which conducts
business from its office in Hammond, Louisiana. At December 31, 1998, the Bank
had total assets of approximately $41.1 million, deposits of approximately $34.1
million and equity of approximately $3.6 million. The Bank is regulated and
supervised by the Office of Thrift Supervision (the "OTS"), and its deposits are
insured by the Savings Association Insurance Fund ("SAIF"), administered by the
Federal Deposit Insurance Corporation. The Bank converted to a federal mutual
savings bank on February 23, 1999. Prior thereto, the Bank was a
Louisiana-chartered savings and loan association known as "Florida Parishes
Homestead Association." References herein to the Bank include the Association as
its predecessor.
As a mutual savings bank, the Bank has no capital stock. Each depositor
has both a deposit account in the institution and a pro rata ownership interest
in the net worth of the institution based on the balance in his or her deposit
account. This ownership interest is tied directly to the depositors' deposit
accounts, and the depositors ordinarily cannot realize the value of their
ownership, except in the unlikely event that the Bank were to be liquidated. In
such event, the depositors would share pro rata in any residual net worth after
other claims, including those of the depositors for the amount of their
deposits, are paid.
The Company is a recently formed Louisiana corporation which will
acquire all of the to-be- outstanding capital stock of the Bank upon
consummation of the Conversion and, thereby, become
<PAGE>
Board of Directors
March 10, 1999
Page 3
a unitary savings and loan holding company. The Company will purchase all of the
capital stock of the Bank with a portion of the net proceeds from the
Conversion.
On December 8, 1998, the Board of Directors of the Bank adopted a Plan
of Conversion. The purpose of the Conversion is to enable the Bank to issue and
sell shares of its capital stock to the Company and thereby enhance the equity
capital base of the Bank, which will support continuing deposit growth of the
Bank, possible diversification or opening of branch offices, and further enhance
the Bank's capabilities to serve the borrowing and other financial needs of the
communities it serves. The use of the holding company format will provide
greater organizational flexibility and possible diversification.
The Company is concurrently filing a Registration Statement on Form SB-2
to register its Common Stock under the Securities Act of 1933 pursuant to which
it will offer for sale shares of its Common Stock. The Common Stock will be
offered for sale in a Subscription Offering pursuant to subscription rights
which will not be transferable and will be issued without payment therefor. The
recipients will not be entitled to receive cash or other property in lieu of
such rights. It is anticipated that any shares of Common Stock remaining unsold
after the Subscription Offering will be sold through a Community Offering. All
shares of Common Stock will be sold at a uniform price based upon an independent
valuation.
The Conversion will be effected only upon completion of the sale of all
shares of Common Stock of the Company to be issued pursuant to the Plan of
Conversion. Management has informed us that the Company has no plan or intention
to dispose of any shares of the capital stock of the Bank, to cause the Bank to
be merged with any other corporation, or to liquidate the Bank.
The Conversion will not affect the business of the Bank. Mortgage and
other loans of the Bank will remain unchanged and retain their same
characteristics after the Conversion. Management has informed us that there is
no plan or intention for the Bank to sell or otherwise dispose of any of its
assets following the Conversion, except for dispositions in the ordinary course
of business.
Each deposit account in the Bank at the time of the consummation of the
Conversion shall become, without any action by the account holder, a deposit
account in the converted Bank equivalent in withdrawable amount, and subject to
the same terms and conditions (except as to voting and liquidation rights), as
the deposit account in the Bank immediately prior to the Conversion. In
addition, at the time of the Conversion, the Bank shall establish a liquidation
account in an amount equal to the Bank's net worth as reflected in the final
prospectus utilized in the Conversion. The liquidation account will be
maintained for the benefit of all Eligible Account Holders and Supplemental
Eligible Account Holders who maintain their deposit accounts in the Bank after
the Conversion. Each such account holder will, with respect to each deposit
account, have an inchoate interest in a portion of the liquidation account which
is the account holder's
<PAGE>
Board of Directors
March 10, 1999
Page 4
subaccount balance. An account holder's subaccount balance in the liquidation
account will be determined at the time of the Conversion and can never increase
thereafter. It will, however, be decreased to reflect subsequent withdrawals
that reduce, as of annual closing dates, the amount in each depositor's account
below the amount in the account at the time of the Conversion. In the event of a
complete liquidation of the Bank, each Eligible Account Holder and Supplemental
Eligible Account Holder will be entitled to receive a liquidation distribution
in the amount of the balance of his or her subaccount in the liquidation account
before any distribution may be made with respect to the capital stock of the
Bank.
LAW AND ANALYSIS
Section 368(a)(1)(F) of the Code provides that a mere change in the
identity, form or place of organization of one corporation, however effected, is
a reorganization. If a transaction qualifies as an "F"-type reorganization, it
will generally be nontaxable to the corporation and its shareholders under
related provisions of the Code.
In Rev. Rul. 80-105, 1980-1 C.B. 78, the Internal Revenue Service
considered the federal income tax consequences of the conversion of a federal
mutual savings and loan association to a state stock savings and loan
association. The ruling concluded that the conversion qualified as a mere change
in identity, form of place or organization within the meaning of Section
368(a)(1)(F). The rationale for this conclusion is not clearly expressed in the
ruling, but two factors are stressed. First, the changes at the corporate level
other than the place of organization and form of organization were regarded as
insubstantial. The converted association continued its business in the same
manner; it had the same savings accounts and loans. The converted association
continued its membership in the Federal Savings and Loan Insurance Corporation
(replaced subsequently by the SAIF) and remained subject to the regulations of
the Federal Home Loan Bank Board, which was replaced subsequently by the Office
of Thrift Supervision. Second, the ruling states that the ownership rights of
the depositors in the mutual company are "more nominal than real." Although the
ruling does not explain the significance of this statement, subsequent
administrative interpretations have indicated that the Internal Revenue Service
believes these nominal rights are preserved in the liquidation account that is
typically established for the depositors' benefit. This approach enables the
Internal Revenue Service to distinguish the tax treatment of conversion
transactions from the tax treatment of acquisitive transactions in which mutual
companies acquire stock companies. See Paulsen v. Com'r, 469 U.S. 131 (1985);
Rev. Rul. 69-6 1969-1 C.B. 104.
The Internal Revenue Service has extended the holding of Rev. Rul.
80-105 to transactions similar to the one contemplated by the Bank and the
Company, in which a conversion from mutual to stock form occurs simultaneously
with the creation of a holding company. See e.g. private letter
<PAGE>
Board of Directors
March 10, 1999
Page 5
rulings numbered 9140014 and 9144031. While these rulings have no precedential
value, they do indicate the current views of the Internal Revenue Service on the
issues presented. Hanover Bank v. U.S., 369 U.S. 672, 686 (1962).
In our opinion and based on your Representation Letter, the conversion
of the Bank from a federally chartered mutual savings bank to a federally
chartered stock savings bank, and the sale of its capital stock to the Company,
will constitute a reorganization within the meaning of Section 368(a)(1)(F) of
the Code because the transaction represents a mere change in the form of
organization of a single corporation. There will be no change in the Bank's
business or operations, nor in its loans and deposits, all of which will become
loans and deposits of the converted savings bank. The only significant
difference between the assets of the Bank before and after the Conversion will
be the infusion of new capital. An infusion of capital occurs in all conversion
transactions, however, and had no effect upon the Internal Revenue Service's
analysis in Rev. Rul. 80-105. The ownership rights of the depositors of the
mutual savings bank, which have nominal value, will be preserved through their
interests in the liquidation account in the converted savings bank. This account
will be substantially the same as the liquidation account described in Rev. Rul.
80-105.
Because the Bank's change in form from mutual to stock ownership will
constitute a reorganization under Section 368(a)(1)(F) of the Code, and neither
the Bank nor the Company will recognize any gain or loss as a result of the
Conversion pursuant to Section 361 of the Code and Rev. Rul. 80-105, it is also
our opinion that (1) no gain or loss will be recognized by the Bank or the
Company upon the purchase of the Bank's capital stock by the Company; (2) no
gain or loss will be recognized by Eligible Account Holders and Supplemental
Eligible Account Holders upon the issuance to them of deposit accounts in the
Bank in its stock form plus their interests in the liquidation account in
exchange for their deposit accounts in the Bank; (3) assuming the
non-transferable subscription rights to purchase Company Common Stock have no
value, the tax basis of the depositors' deposit accounts in the Bank immediately
after the Conversion will be the same as the basis of their deposit accounts
immediately prior to the Conversion; (4) assuming the non-transferable
subscription rights to purchase Company Common Stock have no value, the tax
basis of each Eligible Account Holder's and Supplemental Eligible Account
Holder's interest in the liquidation account will be zero; and (5) the tax basis
to the stockholders of the Common Stock of the Company purchased in the
Conversion will be the amount paid therefor, and the holding period for such
shares will begin on the date of consummation of the Conversion if purchased
through the exercise of subscription rights and on the date after the day of
purchase if purchased in the Community Offering.
It is further our opinion that the Eligible Account Holders and
Supplemental Eligible Account Holders will recognize gain, if any, upon the
issuance to them of withdrawable savings accounts in the Bank following the
Conversion, interests in the liquidation account and non-transferable
<PAGE>
Board of Directors
March 10, 1999
Page 6
subscription rights to purchase Company Common Stock in exchange for their
savings accounts and proprietary interests in the Bank, but only to the extent
of the value, if any, of the subscription rights.
The opinions expressed above are limited to the income tax consequences
of the Conversion under the Subject Laws. Further, our opinions are based on
research of the Code, applicable Treasury Regulations, current published
administrative decisions of the Internal Revenue Service, existing judicial
decisions as of the date hereof, and your Representation Letter. No assurance
can be given that legislative, administrative or judicial decisions or
interpretations may not be forthcoming that will significantly change the
opinions set forth herein. We express no opinions other than those stated
immediately above as our opinions. We hereby consent to the filing of this
opinion as an exhibit to the Company's Registration Statement and the Bank's
Application for Conversion.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Gerald F. Heupel, Jr.
--------------------------------------
Gerald F. Heupel, Jr., a Partner
Exhibit 8.2
Opinion of Murphy, Whalen & Broussard regarding Louisiana
income tax consequences
<PAGE>
[LETTERHEAD OF MURPHY, WHALEN & BROUSSARD, L.L.C.]
March 10, 1999
Board of Directors
Florida Parishes Bank
P. O. Box 99
Hammond, Louisiana 70404
Gentlemen:
You have requested our opinion regarding certain Louisiana state income
tax consequences of the conversion of Florida Parishes Bank (the "Bank"), a
federally chartered mutual savings bank, to stock form (the "Conversion"). In
the Conversion, all of the Bank's to-be-issued capital stock will be acquired by
FPB Financial Corp. (the "Company"), a newly organized Louisiana-chartered
corporation.
We have not reviewed all of the legal documents necessary to effectuate
the Conversion or the acquisition of the Bank's capital stock by the Company. An
inherent assumption of this opinion is that all steps required by federal and
state law and regulatory authorities will be effectuated consistent with the
information submitted to us.
BACKGROUND
We have reviewed the federal income tax opinion (the "Opinion")
prepared by the firm of Elias, Matz, Tiernan & Herrick, L.L.P. dated March 10,
1999 which was addressed and furnished to you. We have also reviewed the
representations of the managements of the Company and the Bank dated March 9,
1999 (the "Representations") and supplied to the aforementioned authors of the
Opinion. We have relied on the facts and representations statement in the
Opinion and Representations as to the manner in which the proposed transactions
will be accomplished and the federal income tax aspects of the transactions as
detailed in the Opinion. By this reference, such federal tax opinion and its
related references are incorporated herein.
LOUISIANA LAW AND ANALYSIS
Louisiana income tax statutes are included in Title 47, Sub-Title II,
Chapter 1, of the Louisiana Revised Statutes of 1950. Corporation income tax
laws are contained within part II A. therein. Individual income tax statutes are
contained within Part III therein.
<PAGE>
Board of Directors
Florida Parishes Bank
March 10, 1999
Page 2
Pursuant to Louisiana Revised Statutes (La. R.S.)47:287.501(B)(1),
building and loan associations (among others) are exempted from imposition of
any and all Louisiana income tax.
Louisiana corporate gross income and allowable deductions are defined
as federal gross income and deductions, subject to certain modifications. La.
R.S. 287.61-63. Modifications to federal taxable income are contained in La.
R.S. 287.71-86 and 287.701-785. Absent any specific modifications contained
within these sections, Louisiana corporate taxable income is equivalent to
federal taxable income. Since gains and losses realized by parties to a
reorganization, as defined by federal statutes, are not specifically identified
as modifications to federal gross income or deductions, the State of Louisiana
has effectively incorporated the corporate reorganization provisions of the
Internal Revenue Code of 1986, as amended (the "Code") with respect to parties
to a reorganization. Since gains and losses realized by corporate shareholders
in a reorganization are not specifically identified as modifications to federal
gross income or deductions, nor are there any modifications with respect to the
determination of basis or the holding period of stock received in a
reorganization, the State of Louisiana has effectively incorporated the
corporate reorganization provisions of the Code with respect to corporate
depositors and shareholders.
La. R.S. 47:290 provides that such part (Part III) is intended to
conform the Louisiana individual income tax law with the Code, except as
otherwise expressly provided. La. R.S. 47:293(1) defines Louisiana adjusted
gross income as adjusted gross income as reported for federal purposes. La.
R.S. 47:296(6) defines Louisiana taxable income as Louisiana adjusted gross
income with specific modifications listed therein. None of the modifications
listed therein relate to the Louisiana taxation of realized gains or losses in
connection with corporate reorganizations, nor the determination of basis or
the holding period of stock received in a reorganization. The State of
Louisiana has, therefore, effectively adopted the corporate reorganization
provisions of the Code to the extent these provisions affect individual
depositors and shareholders.
La. R.S. 47:162C. states that fiduciaries are subject to all the
provisions of Louisiana law that relate to individuals. Based upon the above
analysis of individuals, the same conclusions would apply with respect to
fiduciary depositors and shareholders.
La. R.S. 47:203. states that partnerships shall compute taxable income
in the same manner as in the case of individuals, with certain listed
modifications. As none of the modifications relate to reorganization
provisions of the code, and based upon the above analysis of individuals, the
same conclusions would apply with respect to depositors and shareholders which
are partnerships.
<PAGE>
Board of Directors
Florida Parishes Bank
March 10, 1999
Page 3
Title 12, Chapter 22, part X, Section 1368 of the Louisiana Revised
Statutes of 1950 states that for Louisiana income tax purposes, limited
liability companies shall be treated and taxed in the same manner as treated and
taxed for federal purposes. Therefore, regardless of corporate or partnership
federal income tax treatment, based upon the above analysis of each, the same
conclusion would apply with respect to depositors and shareholders that are
limited liability companies.
OPINIONS
In rendering our opinion herein, we have relied upon the Opinion
prepared by Elias, Matz, Tiernan & Herrick, L.L.P.
Because savings institutions are not subject to Louisiana income taxes,
no income will be recognized for Louisiana income tax purposes by Florida
Parishes Bank as a result of the Conversion and the sale of its capital stock to
the Company.
Because the Bank's change in form from mutual to stock ownership will
constitute a reorganization under Section 368(a)(1)(F) of the Code, and neither
the Bank nor the Company will recognize any gain or loss as a result of the
Conversion pursuant to Section 361 of the Code and Revenue Ruling 80- 105, it is
also our opinion that for Louisiana income tax purposes: (1) no gain or loss
will be recognized by the Bank or the Company upon the purchase of the Bank's
capital stock by the Company; (2) no gain or loss will be recognized by Eligible
Account Holders and Supplemental Eligible Account Holders upon the issuance to
them of deposit accounts in the Bank (in its stock form) plus their interest in
the liquidation account in exchange for the deposit accounts in the mutual
association; (3) assuming the non-transferable subscription rights to purchase
Company Common Stock have no value, the tax bases of the depositors' deposit
accounts in the Bank immediately after the Conversion will be the same as the
bases of their accounts immediately prior to the Conversion; (4) assuming the
non-transferable subscription rights to purchase Company Common Stock have no
value, the tax basis of each Eligible Account Holder's and Supplemental Eligible
Account Holder's interest in the liquidation account will be zero; and (5) the
tax basis to the holders of the Common Stock of the Company purchased in the
Conversion will be the amount paid therefor, and the holding period of such
shares will begin on the date of consummation of the Conversion if purchased
through the exercise of subscription rights and on the day after the date of
purchase if purchased through the Community Offering.
<PAGE>
Board of Directors
Florida Parishes Bank
March 10, 1999
Page 4
It is further our opinion that the Eligible Account Holders and
Supplemental Eligible Account Holders will recognize gain, if any, upon the
issuance to them of withdrawable savings accounts in the Bank following the
Conversion, interests in the liquidation account and non-transferable
subscription rights to purchase Company Common Stock in exchange for their
savings accounts and proprietary interests in the Bank, but only to the extent
of the value, if any, of the subscription rights.
CONCLUSIONS
This opinion sets forth our views based upon the completeness and
accuracy of the information made available to us and any assumptions of fact
that were included. Our opinion relies upon the relevant provisions of the
Internal Revenue Code, the Louisiana Revised Statutes, the regulations
thereunder, and judicial and administrative interpretations thereof, which are
subject to change or modifications by subsequent legislative, regulatory,
administrative or judicial decisions. Any such changes could be retroactive in
effect and, therefore, could affect the validity of our opinions. We undertake
no responsibility to update our opinion in the event of any such change or
modifications.
We hereby consent to the filing of this opinion as an exhibit to the
Company's Registration Statement on Form SB-2 and the Bank's Application for
Conversion, and we also consent to the references to us under the headings
"Experts", "The Conversion - Tax Aspects" and "Legal and Tax Opinions" in the
Prospectus contained in such filings.
Yours, truly,
/s/Murphy, Whalen & Broussard, L.L.C.
Murphy, Whalen & Broussard, L.L.C.
Exhibit 8.3
Opinion of Ferguson & Company regarding subscription rights
<PAGE>
[LETTERHEAD OF FERGUSON & COMPANY]
March 9, 1999
Board of Directors
Florida Parishes Bank
300 West Morris Street
Hammond, Louisiana 70404
Gentlemen:
All capitalized terms not otherwise defined in this letter have the
meanings given such terms in the Plan of Conversion adopted by the Board of
Directors of Florida Parishes Bank, Hammond, Louisiana, ("Florida Parishes" or
"Bank") on December 8, 1998.
It is our understanding that, pursuant to Office of Thrift Supervision
regulations, subscription rights are non-transferable. Persons violating such
prohibition may lose their rights to purchase stock in the Conversion and be
subject to other possible sanctions.
Because the Subscription Rights to purchase shares of Common Stock in
the Bank to be issued to the Bank's employee stock benefit plans, depositors of
the Bank, and to other members of the Bank will be acquired by such recipients,
without cost, will be non-transferable and of short duration and will afford the
recipients the right only to purchase shares of Common Stock at the same price
as will paid by members of the general public in a Community Offering, we are of
the opinion that:
(1) the Subscription Rights will have no ascertainable fair market
value and,
<PAGE>
Board of Directors
March 9, 1998
Page 2
(2) the price at which the Subscription Rights are exercisable will
not be more or less than the fair market value of the shares on
the date of exercise.
Sincerely,
Ferguson & Company
/s/Charles M. Hebert
Charles M. Hebert
Principal
Exhibit 10.1
Form of Employment Agreement between FPB Financial Corp.,
Florida Parishes Bank and Fritz W. Anderson, II
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated this ____ day of June 1999, between FPB
Financial Corp., a Louisiana corporation (the "Corporation"), Florida Parishes
Bank, a federally chartered savings bank and a wholly owned subsidiary of the
Corporation (the "Bank"), and Fritz W. Anderson, II (the "Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation and
the Bank (together the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) Average Annual Compensation. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employers or any subsidiary
thereof during the most recent five taxable years preceding the Date of
Termination (or such shorter period as the Executive was employed), including
Base Salary and bonuses under any employee benefit plans of the Employers but
excluding any compensation resulting from the exercise of stock options or the
vesting of restricted stock awards.
(b) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(c) Cause. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist
<PAGE>
order or material breach of any provision of this Agreement. For purposes of
this paragraph, no act or failure to act on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's action or omission
was in the best interest of the Employers.
(d) Change in Control of the Corporation. "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or any successor thereto, whether or not the Corporation is registered
under Exchange Act; provided that, without limitation, such a change in control
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding securities; or (ii)
during any period of three consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Corporation cease for
any reason to constitute at least a majority thereof unless the election, or the
nomination for election by stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(e) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) Date of Termination. "Date of Termination" shall mean the date
specified in the Notice of Termination.
(g) Disability. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(h) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following a
Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the
failure to elect or to re-elect or to appoint or to re-appoint the
Executive to the offices of President and Chief Executive Officer of
the Employers or a material adverse change made by the Employers in the
Executive's functions, duties or responsibilities as President and
Chief Executive Officer of the Employers;
(ii) Without the Executive's express written consent, a
material reduction by the Employers in the Executive's Base Salary as
the same may be increased from time to time or, except to the extent
permitted by Section 3(b) hereof, a
2
<PAGE>
material reduction in the package of fringe benefits provided to the
Executive, taken as a whole;
(iii) Without the Executive's express written consent, the
Employers require the Executive to work in an office which is more than
20 miles from the location of the Employers' current principal
executive office, except for required travel on business of the
Employers to an extent substantially consistent with the Executive's
present business travel obligations;
(iv) Any purported termination of the Executive's employment
for Cause, Disability or Retirement which is not effected pursuant to a
Notice of Termination satisfying the requirements of paragraph (j)
below; or
(v) The failure by the Employers to obtain the assumption of
and agreement to perform this Agreement by any successor as
contemplated in Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) Notice of Termination. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated,
(iii) specifies a Date of Termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of the Employers' termination of the Executive's employment for
Cause; and (iv) is given in the manner specified in Section 10 hereof.
(k) Retirement. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employers' retirement policies, including early
retirement, generally applicable to the Employers' salaried employees.
2. Term of Employment.
(a) The Employers hereby employ the Executive as President and Chief
Executive Officer and the Executive hereby accepts said employment and agrees to
render such services to the Employers on the terms and conditions set forth in
this Agreement. Unless extended as provided in this Section 2, this Agreement
shall terminate three (3) years after the date first above written. Prior to the
first annual anniversary of the date first above written and each annual
anniversary thereafter, the Boards of Directors of the Employers shall consider,
review (taking into account all relevant
3
<PAGE>
factors, including the Executive's performance) and, if appropriate, explicitly
approve a one-year extension of the remaining term of this Agreement. The term
of this Agreement shall continue to extend each year if the Boards of Directors
so approve such extension unless the Executive gives written notice to the
Employers of the Executive's election not to extend the term, with such notice
to be given not less than thirty (30) days prior to any such anniversary date.
If the Boards of Directors elect not to extend the term, they shall give written
notice of such decision to the Executive not less than thirty (30) days prior to
any such anniversary date. If any party gives timely notice that the term will
not be extended as of any annual anniversary date, then this Agreement shall
terminate at the conclusion of its remaining term. References herein to the term
of this Agreement shall refer both to the initial term and successive terms.
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Employers as is consistent with his title of
President and Chief Executive Officer.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of $47,500
per year ("Base Salary"), which may be increased from time to time in such
amounts as may be determined by the Boards of Directors of the Employers. In
addition to his Base Salary, the Executive shall be entitled to receive during
the term of this Agreement such bonus payments as may be determined by the
Boards of Directors of the Employers.
(b) During the term of the Agreement, the Executive shall be entitled
to participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties and responsibilities,
as fixed by the Boards of Directors of the Employers. The Employers shall not
make any changes in such plans, benefits or privileges which would adversely
affect the Executive's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of the Employers and
does not result in a proportionately greater adverse change in the rights of or
benefits to the Executive as compared with any other executive officer of the
Employers. Nothing paid to the Executive under any plan or arrangement presently
in effect or made available in the future shall be deemed to be in lieu of the
salary payable to the Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, the Executive shall be entitled
to paid annual vacation in accordance with the policies as established from time
to time by the Boards of Directors of the Employers. The Executive shall not be
entitled to receive any additional compensation from the Employers for failure
to take a vacation, nor shall the Executive be able to accumulate unused
vacation time from one year to the next, except to the extent authorized by the
Boards of Directors of the Employers.
4
<PAGE>
4. Expenses. The Employers shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of, or in connection with the business of the Employers, including,
but not by way of limitation, automobile and traveling expenses, and all
reasonable entertainment expenses (whether incurred at the Executive's
residence, while traveling or otherwise), subject to such reasonable
documentation and other limitations as may be established by the Boards of
Directors of the Employers. If such expenses are paid in the first instance by
the Executive, the Employers shall reimburse the Executive therefor.
5. Termination.
(a) The Employers shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event that (i) the Executive's employment is terminated by
the Employers for Cause, Disability or Retirement or in the event of the
Executive's death, or (ii) the Executive terminates his employment hereunder
other than for Good Reason, the Executive shall have no right pursuant to this
Agreement to compensation or other benefits for any period after the applicable
Date of Termination.
(c) In the event that (i) the Executive's employment is terminated by
the Employers for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive (a) due to a
material breach of this Agreement by the Employers, which breach has not been
cured within fifteen (15) days after a written notice of non-compliance has been
given by the Executive to the Employers, or (b) for Good Reason, then the
Employers shall, subject to the provisions of Section 6 hereof, if applicable,
(A) Pay to the Executive, in thirty-six (36) equal monthly installments
beginning with the first business day of the month following the Date of
Termination, a cash severance amount equal to three (3) times the Executive's
Average Annual Compensation over the most recent five taxable years, and
(B) Maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of employment pursuant hereto prior to the
Notice of Termination or (ii) the date of the Executive's full-time employment
by another employer (provided that the Executive is entitled under the terms of
such employment to benefits substantially similar to those described in this
subparagraph (B)), at no cost to the Executive, the Executive's continued
participation in all group insurance, life insurance, health and accident,
disability and other employee benefit plans, programs and arrangements in which
the Executive was entitled to participate immediately prior to the Date of
Termination (other than stock option plans, employee stock ownership plans,
restricted stock plans and qualified retirement plans of the Employers),
provided that in the event that the Executive's participation in any plan,
program or arrangement as provided in this subparagraph (B) is barred or
5
<PAGE>
during such period any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced, the Employers shall arrange to
provide the Executive with benefits substantially similar to those which the
Executive was entitled to receive under such plans, programs and arrangements
immediately prior to the Date of Termination.
6. Limitation of Benefits under Certain Circumstances. If the payments
and benefits pursuant to Section 5 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employers, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits pursuant to Section 5 hereof shall be reduced,
in the manner determined by the Executive, by the amount, if any, which is the
minimum necessary to result in no portion of the payments and benefits under
Section 5 being non-deductible to either of the Employers pursuant to Section
280G of the Code and subject to the excise tax imposed under Section 4999 of the
Code. The determination of any reduction in the payments and benefits to be made
pursuant to Section 5 shall be based upon the opinion of independent tax counsel
selected by the Employers and paid by the Employers. Such counsel shall be
reasonably acceptable to the Employers and the Executive; shall promptly prepare
the foregoing opinion, but in no event later than thirty (30) days from the Date
of Termination; and may use such actuaries as such counsel deems necessary or
advisable for the purpose. The Employers shall pay to the Executive the maximum
amount of payments and benefits pursuant to Section 5, as selected by the
Executive, which such opinion indicates that there is a high probability do not
result in any of such payments and benefits being non-deductible to the
Employers and subject to the imposition of the excise tax imposed under Section
4999 of the Code. Nothing contained herein shall result in a reduction of any
payments or benefits to which the Executive may be entitled upon termination of
employment under any circumstances other than as specified in this Section 6, or
a reduction in the payments and benefits specified in Section 5 below zero.
7. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
8. Withholding. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employers may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
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<PAGE>
9. Assignability. The Employers may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of
its assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the Employers
hereunder as fully as if it had been originally made a party hereto, but may not
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employers:Board of Directors
FPB Financial Corp.
300 West Morris Street
Hammond, Louisiana 70403
To the Executive: Fritz W. Anderson, II
FPB Financial Corp.
300 West Morris Street
Hammond, Louisiana 70403
11. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Boards of Directors of the Employers to sign on
its behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
12. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of
Louisiana.
13. Nature of Obligations. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employers.
14. Interpretation and Headings. This agreement shall be interpreted in
order to achieve the purposes for which it was entered into. The section
headings contained in this
7
<PAGE>
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Regulatory Actions. The following provisions shall be applicable to
the parties to the extent that they are required to be included in employment
agreements between a savings institution and its employees pursuant to Section
563.39(b) of the Regulations Applicable to all Savings Associations, 12 C.F.R.
ss.563.39(b), or any successor thereto, and shall be controlling in the event of
a conflict with any other provision of this Agreement, including without
limitation Section 5 hereof.
(a) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employers' affairs pursuant
to notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit
Insurance Act ("FDIA") (12 U.S.C. ss.ss.1818(e)(3) and 1818(g)(1)), the
Employers' obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Employers may, in their discretion: (i) pay the Executive all
or part of the compensation withheld while its obligations under this Agreement
were suspended, and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.
(b) If the Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Employers' affairs by an
order issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C.
ss.ss.1818(e)(4) and (g)(1)), all obligations of the Employers under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the Executive and the Employers as of the date of termination shall
not be affected.
(c) If the Bank is in default, as defined in Section 3(x)(1) of the
FDIA (12 U.S.C. ss.1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of the Executive and the
Employers as of the date of termination shall not be affected.
(d) All obligations under this Agreement shall be terminated pursuant
to 12 C.F.R. ss.563.39(b)(5) (except to the extent that it is determined that
continuation of the Agreement for the continued operation of the Employers is
necessary): (i) by the Director of the Office of Thrift Supervision ("OTS"), or
his/her designee, at the time the Federal Deposit Insurance Corporation ("FDIC")
enters into an agreement to provide assistance to or on behalf of the Bank under
the authority contained in Section 13(c) of the FDIA (12 U.S.C. ss.1823(c)); or
(ii) by the Director of the
8
<PAGE>
OTS, or his/her designee, at the time the Director or his/her designee approves
a supervisory merger to resolve problems related to operation of the Bank or
when the Bank is determined by the Director of the OTS to be in an unsafe or
unsound condition, but vested rights of the Executive and the Employers as of
the date of termination shall not be affected.
18. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C. ss.1828(k)) and the regulations
promulgated thereunder.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: FPB FINANCIAL CORP.
_________________________ By: _____________________________________
G. Wayne Allen, Secretary Bill W. Bowden, Chairman of the Board
Attest: FLORIDA PARISHES BANK
_________________________ By: _____________________________________
G. Wayne Allen, Secretary Bill W. Bowden, Chairman of the Board
EXECUTIVE
By: _____________________________________
Fritz W. Anderson, II
9
Exhibit 10.2
Form of Employment Agreement between FPB Financial Corp.,
Florida Parishes Bank and G. Wayne Allen
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated this ____ day of June 1999, between FPB
Financial Corp., a Louisiana corporation (the "Corporation"), Florida Parishes
Bank, a federally chartered savings bank and a wholly owned subsidiary of the
Corporation (the "Bank"), and G. Wayne Allen (the "Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation and
the Bank (together the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) Average Annual Compensation. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employers or any subsidiary
thereof during the most recent five taxable years preceding the Date of
Termination (or such shorter period as the Executive was employed), including
Base Salary and bonuses under any employee benefit plans of the Employers but
excluding any compensation resulting from the exercise of stock options or the
vesting of restricted stock awards.
(b) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(c) Cause. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist
<PAGE>
order or material breach of any provision of this Agreement. For purposes of
this paragraph, no act or failure to act on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's action or omission
was in the best interest of the Employers.
(d) Change in Control of the Corporation. "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or any successor thereto, whether or not the Corporation is registered
under Exchange Act; provided that, without limitation, such a change in control
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding securities; or (ii)
during any period of three consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Corporation cease for
any reason to constitute at least a majority thereof unless the election, or the
nomination for election by stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(e) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) Date of Termination. "Date of Termination" shall mean the date
specified in the Notice of Termination.
(g) Disability. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(h) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following a
Change in Control of the Corporation based on:
(i) Without the Executive's express written
consent, the failure to elect or to re-elect or to
appoint or to re-appoint the Executive to the offices
of Senior Vice President and Secretary of the
Employers or a material adverse change made by the
Employers in the Executive's functions, duties or
responsibilities as Senior Vice President and
Secretary of the Employers;
(ii) Without the Executive's express written
consent, a material reduction by the Employers in the
Executive's Base Salary as the same may be increased
from time to time or, except to the extent permitted
by Section 3(b) hereof,
2
<PAGE>
a material reduction in the package of fringe
benefits provided to the Executive, taken as a whole;
(iii) Without the Executive's express
written consent, the Employers require the Executive
to work in an office which is more than 20 miles from
the location of the Employers' current principal
executive office, except for required travel on
business of the Employers to an extent substantially
consistent with the Executive's present business
travel obligations;
(iv) Any purported termination of the
Executive's employment for Cause, Disability or
Retirement which is not effected pursuant to a Notice
of Termination satisfying the requirements of
paragraph (j) below; or
(v) The failure by the Employers to obtain
the assumption of and agreement to perform this
Agreement by any successor as contemplated in Section
9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) Notice of Termination. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated,
(iii) specifies a Date of Termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of the Employers' termination of the Executive's employment for
Cause; and (iv) is given in the manner specified in Section 10 hereof.
(k) Retirement. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employers' retirement policies, including early
retirement, generally applicable to the Employers' salaried employees.
2. Term of Employment.
(a) The Employers hereby employ the Executive as Senior Vice President
and Secretary and the Executive hereby accepts said employment and agrees to
render such services to the Employers on the terms and conditions set forth in
this Agreement. Unless extended as provided in this Section 2, this Agreement
shall terminate three (3) years after the date first above written. Prior to the
first annual anniversary of the date first above written and each annual
anniversary thereafter, the Boards of Directors of the Employers shall consider,
review (taking into account all relevant
3
<PAGE>
factors, including the Executive's performance) and, if appropriate, explicitly
approve a one-year extension of the remaining term of this Agreement. The term
of this Agreement shall continue to extend each year if the Boards of Directors
so approve such extension unless the Executive gives written notice to the
Employers of the Executive's election not to extend the term, with such notice
to be given not less than thirty (30) days prior to any such anniversary date.
If the Boards of Directors elect not to extend the term, they shall give written
notice of such decision to the Executive not less than thirty (30) days prior to
any such anniversary date. If any party gives timely notice that the term will
not be extended as of any annual anniversary date, then this Agreement shall
terminate at the conclusion of its remaining term. References herein to the term
of this Agreement shall refer both to the initial term and successive terms.
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Employers as is consistent with his title of Senior
Vice President and Secretary.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of $52,800
per year ("Base Salary"), which may be increased from time to time in such
amounts as may be determined by the Boards of Directors of the Employers. In
addition to his Base Salary, the Executive shall be entitled to receive during
the term of this Agreement such bonus payments as may be determined by the
Boards of Directors of the Employers.
(b) During the term of the Agreement, the Executive shall be entitled
to participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties and responsibilities,
as fixed by the Boards of Directors of the Employers. The Employers shall not
make any changes in such plans, benefits or privileges which would adversely
affect the Executive's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of the Employers and
does not result in a proportionately greater adverse change in the rights of or
benefits to the Executive as compared with any other executive officer of the
Employers. Nothing paid to the Executive under any plan or arrangement presently
in effect or made available in the future shall be deemed to be in lieu of the
salary payable to the Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, the Executive shall be entitled
to paid annual vacation in accordance with the policies as established from time
to time by the Boards of Directors of the Employers. The Executive shall not be
entitled to receive any additional compensation from the Employers for failure
to take a vacation, nor shall the Executive be able to accumulate unused
vacation time from one year to the next, except to the extent authorized by the
Boards of Directors of the Employers.
4
<PAGE>
4. Expenses. The Employers shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of, or in connection with the business of the Employers, including,
but not by way of limitation, automobile and traveling expenses, and all
reasonable entertainment expenses (whether incurred at the Executive's
residence, while traveling or otherwise), subject to such reasonable
documentation and other limitations as may be established by the Boards of
Directors of the Employers. If such expenses are paid in the first instance by
the Executive, the Employers shall reimburse the Executive therefor.
5. Termination.
(a) The Employers shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event that (i) the Executive's employment is terminated by
the Employers for Cause, Disability or Retirement or in the event of the
Executive's death, or (ii) the Executive terminates his employment hereunder
other than for Good Reason, the Executive shall have no right pursuant to this
Agreement to compensation or other benefits for any period after the applicable
Date of Termination.
(c) In the event that (i) the Executive's employment is terminated by
the Employers for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive (a) due to a
material breach of this Agreement by the Employers, which breach has not been
cured within fifteen (15) days after a written notice of non-compliance has been
given by the Executive to the Employers, or (b) for Good Reason, then the
Employers shall, subject to the provisions of Section 6 hereof, if applicable,
(A) Pay to the Executive, in thirty-six (36) equal monthly installments
beginning with the first business day of the month following the Date of
Termination, a cash severance amount equal to three (3) times the Executive's
Average Annual Compensation over the most recent five taxable years, and
(B) Maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of employment pursuant hereto prior to the
Notice of Termination or (ii) the date of the Executive's full-time employment
by another employer (provided that the Executive is entitled under the terms of
such employment to benefits substantially similar to those described in this
subparagraph (B)), at no cost to the Executive, the Executive's continued
participation in all group insurance, life insurance, health and accident,
disability and other employee benefit plans, programs and arrangements in which
the Executive was entitled to participate immediately prior to the Date of
Termination (other than stock option plans, employee stock ownership plans,
restricted stock plans and qualified retirement plans of the Employers),
provided that in the event that the Executive's participation in any plan,
program or arrangement as provided in this subparagraph (B) is barred or
5
<PAGE>
during such period any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced, the Employers shall arrange to
provide the Executive with benefits substantially similar to those which the
Executive was entitled to receive under such plans, programs and arrangements
immediately prior to the Date of Termination.
6. Limitation of Benefits under Certain Circumstances. If the payments
and benefits pursuant to Section 5 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employers, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits pursuant to Section 5 hereof shall be reduced,
in the manner determined by the Executive, by the amount, if any, which is the
minimum necessary to result in no portion of the payments and benefits under
Section 5 being non-deductible to either of the Employers pursuant to Section
280G of the Code and subject to the excise tax imposed under Section 4999 of the
Code. The determination of any reduction in the payments and benefits to be made
pursuant to Section 5 shall be based upon the opinion of independent tax counsel
selected by the Employers and paid by the Employers. Such counsel shall be
reasonably acceptable to the Employers and the Executive; shall promptly prepare
the foregoing opinion, but in no event later than thirty (30) days from the Date
of Termination; and may use such actuaries as such counsel deems necessary or
advisable for the purpose. The Employers shall pay to the Executive the maximum
amount of payments and benefits pursuant to Section 5, as selected by the
Executive, which such opinion indicates that there is a high probability do not
result in any of such payments and benefits being non-deductible to the
Employers and subject to the imposition of the excise tax imposed under Section
4999 of the Code. Nothing contained herein shall result in a reduction of any
payments or benefits to which the Executive may be entitled upon termination of
employment under any circumstances other than as specified in this Section 6, or
a reduction in the payments and benefits specified in Section 5 below zero.
7. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
8. Withholding. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employers may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
6
<PAGE>
9. Assignability. The Employers may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of
its assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the Employers
hereunder as fully as if it had been originally made a party hereto, but may not
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employers: Board of Directors
FPB Financial Corp.
300 West Morris Street
Hammond, Louisiana 70403
To the Executive: G. Wayne Allen
FPB Financial Corp.
300 West Morris Street
Hammond, Louisiana 70403
11. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Boards of Directors of the Employers to sign on
its behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
12. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of
Louisiana.
13. Nature of Obligations. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employers.
14. Interpretation and Headings. This agreement shall be interpreted in
order to achieve the purposes for which it was entered into. The section heading
contained in this
7
<PAGE>
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Regulatory Actions. The following provisions shall be applicable to
the parties to the extent that they are required to be included in employment
agreements between a savings institution and its employees pursuant to Section
563.39(b) of the Regulations Applicable to all Savings Associations, 12 C.F.R.
ss.563.39(b), or any successor thereto, and shall be controlling in the event of
a conflict with any other provision of this Agreement, including without
limitation Section 5 hereof.
(a) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employers' affairs pursuant
to notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit
Insurance Act ("FDIA") (12 U.S.C. ss.ss.1818(e)(3) and 1818(g)(1)), the
Employers' obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Employers may, in their discretion: (i) pay the Executive all
or part of the compensation withheld while its obligations under this Agreement
were suspended, and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.
(b) If the Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Employers' affairs by an
order issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C.
ss.ss.1818(e)(4) and (g)(1)), all obligations of the Employers under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the Executive and the Employers as of the date of termination shall
not be affected.
(c) If the Bank is in default, as defined in Section 3(x)(1) of the
FDIA (12 U.S.C. ss.1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of the Executive and the
Employers as of the date of termination shall not be affected.
(d) All obligations under this Agreement shall be terminated pursuant
to 12 C.F.R. ss.563.39(b)(5) (except to the extent that it is determined that
continuation of the Agreement for the continued operation of the Employers is
necessary): (i) by the Director of the Office of Thrift Supervision ("OTS"), or
his/her designee, at the time the Federal Deposit Insurance Corporation ("FDIC")
enters into an agreement to provide assistance to or on behalf of the Bank under
the authority contained in Section 13(c) of the FDIA (12 U.S.C. ss.1823(c)); or
(ii) by the Director of the OTS,
8
<PAGE>
or his/her designee, at the time the Director or his/her designee approves a
supervisory merger to resolve problems related to operation of the Bank or when
the Bank is determined by the Director of the OTS to be in an unsafe or unsound
condition, but vested rights of the Executive and the Employers as of the date
of termination shall not be affected.
18. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C. ss.1828(k)) and the regulations
promulgated thereunder.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: FPB FINANCIAL CORP.
________________________________ By: ______________________________
Fritz W. Anderson, II, President Bill W. Bowden, Chairman of
the Board
Attest: FLORIDA PARISHES BANK
________________________________ By: _______________________________
Fritz W. Anderson, II, President Bill W. Bowden, Chairman of
the Board
EXECUTIVE
By: _______________________________
G. Wayne Allen
9
Exhibit 23.1
Consent of Murphy, Whalen & Broussard
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use of our report on the financial statements
of Florida Parishes Bank (formerly Florida Parishes Homestead Association) (the
"Bank") dated March 4, 1999, in the prospectus for FPB Financial Corp. (the
"Company") constituting part of the Company's Registration Statement on Form
SB-2 and the Bank's Application for Conversion. We also consent to the reference
to us under the headings "Experts", "The Conversion - Tax Aspects" and "Legal
and Tax Opinions" in the Prospectus contained in the Form SB-2 and the
Application for Conversion.
/s/Murphy, Whalen & Broussard, L.L.C.
-------------------------------------
Murphy, Whalen & Broussard, L.L.C.
March 10, 1999
Exhibit 23.2
Consent of Ferguson & Company
<PAGE>
March 9, 1999
Board of Directors
Florida Parishes Bank
300 West Morris Street
Hammond, Louisiana 70404
Directors:
We hereby consent to the use of our firm's name in the Form AC
Application for Conversion of Florida Parishes Bank, Hammond, Louisiana, and any
amendments thereto, in the Form S-1 Registration Statement of FPB Financial
Corp. and any amendments thereto, and in the Application H- (e)1-S for FPB
Financial Corp. We also hereby consent to the inclusion of, summary of, and
references to our Appraisal Report and our opinion concerning subscription
rights in such filings including the Prospectus of FPB Financial Corp.
Sincerely,
/s/Charles M. Hebert
Charles M. Hebert
Principal
<PAGE>
Exhibit 27.1
Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1998
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 447
<INT-BEARING-DEPOSITS> 1,904
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 993
<INVESTMENTS-CARRYING> 2,924
<INVESTMENTS-MARKET> 2,941
<LOANS> 34,152
<ALLOWANCE> 170
<TOTAL-ASSETS> 41,058
<DEPOSITS> 34,140
<SHORT-TERM> 0
<LIABILITIES-OTHER> 149
<LONG-TERM> 3,200
0
0
<COMMON> 0
<OTHER-SE> 3,570
<TOTAL-LIABILITIES-AND-EQUITY> 41,058
<INTEREST-LOAN> 2,270
<INTEREST-INVEST> 312
<INTEREST-OTHER> 172
<INTEREST-TOTAL> 2,754
<INTEREST-DEPOSIT> 1,565
<INTEREST-EXPENSE> 1,671
<INTEREST-INCOME-NET> 1,082
<LOAN-LOSSES> 81
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 663
<INCOME-PRETAX> 359
<INCOME-PRE-EXTRAORDINARY> 236
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 236
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 2.97
<LOANS-NON> 202
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 241
<ALLOWANCE-OPEN> 89
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 170
<ALLOWANCE-DOMESTIC> 170
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
Exhibit 99.1
Proxy Statement and form of proxy for solicitation of members of
Florida Parishes Bank
<PAGE>
FLORIDA PARISHES BANK
300 West Morris Street
Hammond, Louisiana 70403
(504) 345-1880
NOTICE OF SPECIAL MEETING OF MEMBERS
To Be Held On June __, 1999
NOTICE IS HEREBY GIVEN that a special meeting ("Special Meeting") of the
members of Florida Parishes Bank ("Florida Parishes" or the "Bank") will be held
at the Bank's office located at 300 West Morris Street, Hammond, Louisiana 70403
on June __, 1999, at 11:00 a.m., Central Time, to consider and vote upon:
1. The approval of a Plan of Conversion ("Plan of Conversion") pursuant
to which the Bank would be converted from a federally chartered mutual
savings bank to a federally chartered stock savings bank and issue all
of its capital stock to a holding company, FPB Financial Corp., and
the transactions provided for in such Plan of Conversion, including
the adoption of a new federal stock Charter and new Bylaws of the
Bank; and
2. Such other business as may properly come before the Special Meeting or
any adjournment thereof. Except with respect to procedural matters
incident to the conduct of the meeting, management is not aware of any
other such business.
The Board of Directors has fixed ______ __, 1999 as the voting record date
for the determination of members entitled to notice of and to vote at the
Special Meeting and at any adjournment thereof. Only those members of the Bank
of record as of the close of business on that date who continue to be members on
the date of the Special Meeting will be entitled to vote at the Special Meeting
or at any such adjournment.
By Order of the Board of Directors
Fritz W. Anderson, II, President and
Chief Executive Officer
Hammond, Louisiana
_______ __, 1999
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU SIGN, DATE AND MARK THE ENCLOSED
PROXY CARD IN FAVOR OF THE ADOPTION OF THE PLAN OF CONVERSION AND RETURN IT IN
THE ENCLSOED SELF- ADDRESSED, POSTAGE-PAID ENVELOPE. THIS WILL NOT PREVENT YOU
FROM VOTING IN PERSON IF YOU ATTEND THE SPECIAL MEETING.
<PAGE>
FLORIDA PARISHES BANK
PROXY STATEMENT
SPECIAL MEETING OF MEMBERS
To Be Held On _______ __, 1999
INTRODUCTION
This Proxy Statement is being furnished to members of Florida Parishes Bank
(the "Bank") as of the close of business on ______ __, 1999 in connection with
the solicitation by the Board of Directors of the Bank of proxies to be voted at
the Special Meeting of Members of the Bank (the "Special Meeting"), and at any
adjournments thereof. The Special Meeting will be held on _________ __, 1999, at
the Bank's office located at 300 West Morris Street, Hammond, Louisiana 70403 at
11:00 a.m., Central Time. This Special Meeting is being held for the purpose of
considering and voting upon the Plan of Conversion under which the Bank would be
converted from a federally chartered mutual savings bank to a federally
chartered stock savings bank, with the concurrent sale of all of the Bank's
capital stock to FPB Financial Corp., (the "Company"), and the sale by the
Company of shares of its common stock to the public in a subscription offering
and, if necessary, in a community offering. The simultaneous conversion of the
Bank to stock form, the issuance of the Bank's capital stock to the Company, and
the offer and sale of the common stock by the Company, all pursuant to the Plan,
are referred to herein as the "Conversion." References to the Bank shall include
the Bank in either its mutual or stock form as indicated by the context.
Voting in favor of or against the Plan of Conversion includes a vote for or
against the adoption of the new federal stock Charter and Bylaws of the Bank.
Voting in favor of the Plan of Conversion will not obligate any person to
purchase common stock. A copy of the Company's prospectus accompanies this proxy
statement and is incorporated herein by reference. See "Incorporation of
Information by Reference," "How to Obtain Additional Information" and "Available
Information."
2
<PAGE>
VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL
Depositors as of the close of business on _______ __, 1999 ("Voting Record
Date"), together with mortgage loan borrowers as of the close of business on
both February 23, 1999 and the Voting Record Date, who continue to be depositors
or mortgage loan borrowers on the date of the Special Meeting or any adjournment
thereof ("Members") will be entitled to vote on the Plan of Conversion. If there
are not sufficient votes for approval of the Plan at the time of the Special
Meeting, the Special Meeting may be adjourned to permit further solicitation of
proxies.
At the Special Meeting, each depositor Member will be entitled to cast one
vote for every $100 or fraction thereof of the total withdrawal value of all of
his or her accounts in the Bank as of the Voting Record Date up to a maximum of
1,000 votes, and each borrower Member will be entitled to cast one vote in the
aggregate for all loans as a borrower in addition to the votes such Member may
be entitled to cast as a depositor, up to an aggregate maximum of 1,000 votes.
As of the Voting Record Date, the Bank had approximately ____ Members who are
entitled to cast a total of approximately ______ votes at the Special Meeting.
This proxy statement and related materials are first being mailed to
Members on or about May __, 1999.
The affirmative vote of a majority of the total outstanding votes eligible
to be cast at the Special Meeting is required for approval of the Plan of
Conversion.
PROXIES
The Board of Directors of the Bank is soliciting the proxy which
accompanies this proxy statement furnished to Members for use at the Special
Meeting and any adjournment thereof. Each proxy solicited hereby, if properly
executed, duly returned before the Special Meeting and not revoked prior to or
at the Special Meeting, will be voted at the Special Meeting in accordance with
your instructions indicated thereon. If no contrary instructions are given, the
executed proxy will be voted in favor of the Plan of Conversion. If any other
matters properly come before the Special Meeting, the persons named as proxies
will vote upon such matters according to their discretion. Except with respect
to procedural matters incident to the conduct of the meeting, no additional
matters are expected to come before the Special Meeting.
Any Member giving a proxy may revoke it at any time before it is voted by
delivering to the Secretary of the Bank either a written revocation of the
proxy, or a duly executed proxy bearing a later date, or by voting in person at
the Special Meeting. Proxies are being solicited only for use at the Special
Meeting and any and all adjournments thereof and will not be used for any other
meeting.
3
<PAGE>
Proxies may be solicited by officers, directors and employees of the Bank
personally, by telephone or further correspondence without additional
compensation.
Deposits held in a trust or other fiduciary capacity may be voted by the
trustee or other fiduciary to whom voting rights are delegated under the trust
instrument or other governing document or applicable law. In the case of
individual retirement accounts ("IRA") and Keogh trusts established at the Bank,
the beneficiary will need to direct the trustee's vote on the Plan of Conversion
by returning a completed proxy card to the Bank.
The Board of Directors urges each Member as of the close of business on
_____ __, 1999 to mark, sign, date and return the enclosed proxy card in the
enclosed postage-paid envelope as soon as possible, even if you do not intend to
purchase common stock. This will ensure that your vote will be counted.
INCORPORATION OF INFORMATION BY REFERENCE
The Company's prospectus dated ______ __, 1999 is incorporated herein by
reference. The prospectus sets forth a description of the Plan of Conversion and
the related offering of common stock by the Company under the caption "The
Conversion." Such caption also describes the effects of the Conversion on the
members of the Bank, including the tax consequences of the Conversion and the
establishment of a liquidation account for the benefit of certain depositors of
the Bank. Upon consummation of the Conversion, the Charter of the Bank will be
restated to reflect the Conversion, to provide for the issuance of capital stock
and to provide for a liquidation account.
Information regarding the Company and the Bank is set forth in the
prospectus under the captions "Summary - FPB Financial Corp" and "- Florida
Parishes Bank." The prospectus also describes the business and financial
condition of the Bank under the captions "Business of Florida Parishes Bank" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the historical financial statements of the Bank are included in
the prospectus. See also "Selected Financial Data" and "Developments Through
March 31, 1999" in the prospectus. Information regarding the use of proceeds of
the offerings conducted in connection with the Conversion, the historical
capitalization of the Bank and the pro forma capitalization of the Company, and
other pro forma data are set forth in the prospectus under the captions "How Our
Net Proceeds Will Be Used," "Our Capitalization" and "Pro Forma Data,"
respectively.
The prospectus also provides information regarding the names, ages,
business experience and compensation of the Bank's directors and executive
officers, as well as the benefit plans and proposed employment agreements. See
"Management" in the prospectus.
4
<PAGE>
REVIEW OF OTS ACTION
Any person aggrieved by a final action of the OTS which approves, with or
without conditions, or disapproves a plan of conversion may obtain review of
such action by filing in the court of appeals of the United States for the
circuit in which the principal office or residence of such person is located, or
in the United States Court of Appeals for the District of Columbia, a written
petition praying that the final action of the OTS be modified, terminated or set
aside. Such petition must be filed within 30 days after the publication of
notice of such final action in the Federal Register, or 30 days after the
mailing by the applicant of the notice to members as provided for in 12 C.F.R.
ss.563b.6(c), whichever is later. The further procedure for review is as
follows: A copy of the petition is forthwith transmitted to the OTS by the clerk
of the court and thereupon the OTS files in the court the record in proceeding,
as provided in Section 2112 of Title 28 of the United States Code. Upon the
filing of the petition, the court has jurisdiction, which upon the filing of the
record is exclusive, to affirm, modify, terminate, or set aside in whole or in
part, the final action of the OTS. Review of such proceedings is as provided in
Chapter 7 of Title 5 of the United States Code. The judgment and decree of the
court is final, except that they are subject to review by the Supreme Court upon
certiorari as provided in Section 1254 of Title 28 of the United States Code.
HOW TO OBTAIN ADDITIONAL INFORMATION
You may request in writing a copy of the Plan of Conversion from the Bank.
Any such requests should be directed to G. Wayne Allen, Secretary, Florida
Parishes Bank, 300 West Morris Street, Hammond, Louisiana 70403. So that you
have sufficient time to receive and review the requested materials, it is
recommended that any such requests be sent so that they are received by the Bank
by 4:00 p.m., central time, on _____ __, 1999.
AVAILABLE INFORMATION
The Bank has filed with the OTS an Application for Conversion pursuant to
which it will convert to stock form in accordance with the terms of the Plan.
This proxy statement and the prospectus omit certain information contained in
such application. The application may be inspected at the offices of the OTS,
1700 G Street, N.W., Washington, D.C. 20055, and at the office of the Regional
Director of the OTS located at 122 West John Carpenter Freeway, Suite 600,
Irving, Texas 75039.
The Company has filed with the SEC a registration statement on Form SB-2
(File No. 333-_____) under the Securities Act with respect to the common stock
being offered in the Conversion. This proxy statement and the prospectus do not
contain all the information set forth in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. Such information may be inspected at the public reference facilities
5
<PAGE>
maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and copies may be obtained at prescribed rates from the Public Reference
Section of the SEC at the same address. In addition, the SEC maintains a web
site that contains registration statements and other reports regarding
registrants that file electronically with the SEC (such as the Company). The
address of the SEC's web site is http://www.sec.gov. The statements contained in
the prospectus as to the contents of any contract or other document filed as an
exhibit to the registration statement are, of necessity, brief descriptions
thereof and are not necessarily complete; each such statement is qualified by
reference to such contract or document.
----------
PLEASE REMEMBER TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT YOUR IMPORTANT VOTE WILL BE COUNTED
AT THE SPECIAL MEETING.
----------
THIS PROXY STATEMENT IS NEITHER AN OFFER TO SELL NOR THE SOLICITATION OF
ANY OFFER TO BUY STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
6
<PAGE>
FLORIDA PARISHES BANK REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FLORIDA
PARISHES BANK (THE "BANK") FOR USE ONLY AT A SPECIAL MEETING OF MEMBERS TO BE
HELD ON JUNE __, 1999 AND ANY ADJOURNMENT THEREOF.
The undersigned, being a member of the Bank, hereby authorizes the Board of
Directors of the Bank or any successors in their respective positions, as proxy,
with full powers of substitution, to represent the undersigned at the Special
Meeting of Members of the Bank to be held at the Bank's main office located at
300 West Morris Street, Hammond, Louisiana 70403 on June __, 1999, at 11:00
a.m., Central Time, and at any adjournment of said meeting, and thereat to act
with respect to all votes that the undersigned would be entitled to cast, if
then personally present, as set forth below:
(1) To vote FOR or AGAINST a Plan of Conversion pursuant to which the Bank
would be converted from a federally chartered mutual savings bank to a federally
chartered stock savings bank and issue all of its capital stock to a holding
company, FPB Financial Corp., and the transactions provided for in such Plan of
Conversion, including the adoption of a new federal stock Charter and new Bylaws
for the Bank.
FOR [ ] AGAINST [ ]
(2) To vote, in its discretion, upon such other business as may properly
come before the Special Meeting or any adjournment thereof. Except with respect
to procedural matters incident to the conduct of the meeting, management is not
aware of any other such business.
This proxy, if executed, will be voted FOR adoption of the Plan of
Conversion if no choice is made herein. Please date and sign this proxy on the
reverse side and return it in the enclosed envelope.
(Continued and to be signed on other side)
7
<PAGE>
(Continued from other side)
Any Member giving a proxy may revoke it at any time before it is voted by
delivering to the Secretary of the Bank either a written revocation of the
proxy, or a duly executed proxy bearing a later date, or by voting in person at
the Special Meeting.
The undersigned hereby acknowledges receipt of a Notice of Special Meeting
of the Members of the Bank called for the ___ day of June 1999 and a proxy
statement for the Special Meeting prior to the signing of this proxy.
Date: ___________________________, 1999
--------------------------------------------
Signature
--------------------------------------------
Signature
Note: Please sign exactly your name appears
on this proxy. Only one signature is
required in the case of a joint account.
When signing in a representative capacity,
please give title.
8
Exhibit 99.3
Stock Order Form
<PAGE>
STOCK ORDER FORM
FPB FINANCIAL CORP.
Stock Information Center
300 West Morris Street
Hammond, Louisiana 70403
(504) ________________
------------------------
Expiration Date:
June ___, 1999
12:00 noon, Central Time
------------------------
IMPORTANT - PLEASE NOTE: A properly completed original stock order form must be
used to subscribe for common stock. We are not required
to accept faxes or copies of this form.
- --------------------------------------------------------------------------------
(1) Number of Shares Subscription Price (2) Total Payment Due
-------------------- ---------------------
X $10.00 =
-------------------- ---------------------
The minimum purchase is 25 shares. The maximum number of shares that any
person may purchase cannot exceed 10,000 shares, and the maximum number that
any person, together with associates of and persons acting in concert with
such person, may purchase cannot exceed 15,000 shares (subject to
adjustment).
- --------------------------------------------------------------------------------
Method of Payment
(3) [ ] Enclosed is a check or money order made payable to FPB Financial Corp.
(the "Company") in the amount of
-------------------
$
-------------------
Cash can be used only if presented in person at the office of Florida
Parishes Bank (the "Bank").
(4) [ ] The undersigned authorizes withdrawal from the following account(s)
at the Bank. There is no penalty for early withdrawal used for this
payment.
Account Number(s) Withdrawal Amount(s)
------------------------------------------------------------------
$
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Total Withdrawal Amount
--------------------
Purchaser Information
(5a) [ ] Check here if you are a director, officer or employee of the Bank or
a member of such person's immediate family.
(5b) [ ] Eligible Account Holder - Check here if you were a depositor of at
least $50.00 at the Bank on September 30, 1997.
(5c) [ ] Supplemental Eligible Account Holder - Check here if you were a
depositor of at least $50.00 at the Bank on March 31, 1999.
(5d) [ ] Other Member - Check here if you were a depositor of or mortgage loan
borrower from the Bank on __________ ___, 1999.
Enter information for all accounts that you had at the Bank as of the dates
specified above for which you checked the appropriate box.
Account Title (Names on Accounts) Account Number
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
If additional space is needed, please use the back of this order form.
<PAGE>
Stock Registration
(6) Form of stock ownership:
[ ] Individual [ ] Co-Ownership (Louisiana residents)
[ ] Joint tenants (non-Louisiana) [ ] UTMA
[ ] Fiduciary (i.e., trust, estate, etc.) [ ] Corporation or partnership
[ ] Tenants in common (non-Louisiana) [ ] Other ____________________________
(7) Name(s) in which your stock is to be registered (Please print clearly):
- --------------------------------------------------------------------------------
Name Social Security or Tax I.D.
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Street Address/City/State/Zip Code Parish of Residence
- --------------------------------------------------------------------------------
------------------- -------------------
(8) Telephone Information Daytime Phone Evening Phone
( ) ( )
------------------- -------------------
NASD or Group Affiliation
(9) [ ] Check here if you are a member of the National Association of Securities
Dealers, Inc. ("NASD"), a person associated with an NASD member, a member of the
immediate family of any such person to whose support such person contributes,
directly or indirectly, or the holder of an account in which an NASD member or
person associated with an NASD member has a beneficial interest. To comply with
conditions under which an exemption from the NASD's Interpretation With Respect
to Free-Riding and Withholding is available, you agree, if you have checked the
NASD Affiliation box, (i) not to sell, transfer or hypothecate the stock for a
period of 90 days following issuance, and (ii) to report this subscription in
writing to the applicable NASD member within one day of payment therefor.
(10) [ ] Check here, and complete the reverse side of this form, if you or any
associate (as defined on the reverse side of this Form) or persons acting in
concert with you have submitted other orders for shares in the subscription
and/or community offerings.
Acknowledgement
(11) To be effective, this fully completed stock order form must be actually
received by the Bank no later than 12:00 noon, central time, on June __, 1999,
unless extended; otherwise, this stock order form and all subscription rights
will be void. Completed stock order forms, together with the required payment or
withdrawal authorization, may be delivered to the Bank or may be mailed to the
Bank in the enclosed postage-paid envelope or to the address indicated above. Do
not mail cash.
It is understood that this stock order form will be accepted in accordance with,
and subject to, the terms and conditions of the Plan of Conversion of the Bank
described in the accompanying prospectus, receipt of which is hereby
acknowledged at least 48 hours prior to delivery of this stock order form to the
Bank.
The undersigned agrees that after receipt by the Bank, this stock order form may
not be modified, withdrawn or cancelled without the Bank's consent, and if
authorization to withdraw from the undersigned's deposit accounts at the Bank
has been given as payment for shares, the amount authorized for withdrawal shall
not otherwise be available for withdrawal by the undersigned.
Under penalty of perjury, I certify that the social security or tax ID number
and the information provided under numbers 7 and 9 of this stock order form are
true, correct and complete and that I am not subject to backup withholding
because: (i) I am exempt from backup withholding; (ii) I have not been notified
by the Internal Revenue Service ("IRS") that I am subject to backup withholding
as a result of failure to report all interest or dividends; or (iii) the IRS has
notified me that I am no longer subject to backup withholding.
- --------------------------------------------------------------------------------
(12) Signature Date Signature Date
- --------------------------------------------------------------------------------
A Signed Certification Must Accompany All Stock Order Forms (See Reverse Side).
<PAGE>
CERTIFICATION FORM
I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
("COMMON STOCK"), OF FPB FINANCIAL CORP. (THE "COMPANY"), THE PROPOSED HOLDING
COMPANY FOR FLORIDA PARISHES BANK (THE "BANK"), ARE NOT A DEPOSIT ACCOUNT, ARE
NOT FEDERALLY INSURED, AND ARE NOT GUARANTEED BY THE COMPANY, THE BANK OR THE
FEDERAL GOVERNMENT.
If anyone asserts that the shares of common stock are federally insured or
guaranteed, or are as safe as an insured deposit, I should call the Office of
Thrift Supervision, Midwest Regional Director, 112 W. John Carpenter Freeway,
Dallas, Texas 75039-2010, at (972) 281-2000.
I further certify that, before purchasing the shares of common stock of the
Company, I received a copy of the prospectus dated May __, 1999 which discloses
the nature of the shares of common stock being offered thereby and describes the
following risks involved in an investment in the common stock under the heading
"Risk Factors" beginning on page ____ of the prospectus:
1. Higher Interest Rates Would Hurt Our Profitability
2. We Anticipate a Low Return on Our Equity
3. Our Mortgage-Backed Securities Yield Less Than Our Loans
4. Our Consumer Loans Are Riskier Than Our Mortgage Loans
5. Our Commercial Real Estate Loans Are Riskier Than Our Residential
Loans
6. Our Business Is Concentrated in Tangipahoa Parish
7. There Is Strong Competition Within Tangipahoa Parish
8. Our Stock Value May Suffer from Our Ability to Impede Potential
Takeovers
9. We Intend to Remain Independent
10. Our Employee Stock Benefit Plans Will Increase Our Costs
11. Our Employee Stock Benefit Plans May Be Dilutive
12. Possible Increase in the Offering Range Would Be Dilutive
13. Our Valuation Is Not Indicative of the Future Price of Our Common
Stock
14. Our Stock Price May Decline
15. There May Be An Illiquid Market for Our Common Stock
16. There Is No Opinion or Recommendation by Our Sales Agent; Best Efforts
Offering
17. Exercise of Subscription Rights May Be Taxable
18. We Rely on Two Key Officers
19. We May Be Unable to Make Technological Advances; Consequences of Year
2000 Computer Failure
20. Our Operations Are Subject to Regulatory and Legislative Changes
21. Our Forward-Looking Statements Are Subject to Change
Signature: _____________________________
Signature: _____________________________
Date: __________________________________
<PAGE>
STOCK ORDER FORM INSTRUCTIONS AND GUIDE
STOCK OWNERSHIP GUIDE
Individual
Include the first name, middle initial, and last name of the stockholder. Avoid
the use of an initial in place of the first name. Please omit words that do not
affect ownership rights such as "Mr.," "Mrs.," Dr.," "special account," "single
person," etc.
Co-Ownership
Co-Ownership may be used to identify two or more owners under the laws of the
State of Louisiana.
Joint Tenants
For non-Louisiana residents, joint tenants with right of survivorship may be
specified to identify two or more owners. When stock is held by joint tenants
with right of survivorship, ownership is intended to pass automatically to the
surviving joint tenant(s) upon the death of any joint tenant. All parties must
agree to the transfer or sale of shares held by joint tenants.
Tenants in Common
For non-Louisiana residents, tenants in common may also be specified to identify
two or more owners. When stock is held as tenants in common, upon the death of
one co-tenant, ownership of the stock will be held by the surviving co-
tenant(s) and by the heirs of the deceased co-tenant. All parties must agree to
the transfer or sale of shares held in this form of ownership.
Uniform Transfer to Minors Act ("UTMA")
Stock may be held in the name of a custodian for a minor under the Uniform
Transfer to Minors Acts of the individual states. There may be only one
custodian and one minor designated on a stock certificate. The standard
abbreviation of custodian is "CUST," while the "Uniform Transfer to Minors Act"
is abbreviated "UTMA." Standard U.S. Postal Service state abbreviations should
be used to describe the appropriate state. For example, stock held by John P.
Jones under the Louisiana Uniform Transfer to Minors Act will be abbreviated:
JOHN P. JONES, CUST SUSAN A. JONES, UTMA, LA.
Fiduciaries
Information provided with respect to stock to be held in a fiduciary capacity
must contain the following:
* The name(s) of the fiduciary. If an individual, list the first name, middle
initial, and last name. If a corporation, list the corporate title (name).
If an individual and a corporation, list the corporation's title before the
individual.
* The fiduciary capacity, such as administrator, executor, personal
representative, conservator, trustee, committee, etc.
* A description of the document governing the fiduciary relationship, such as
a trust agreement or court order. Without a designation establishing a
fiduciary relationship, your stock may not be registered in a fiduciary
capacity.
* The date of the document governing the relationship, except that the date
of a trust created by a will need not be included in the description.
* The name of the maker, donor or testator and the name of the beneficiary.
An example of fiduciary ownership: John D. Smith, Trustee Under Agreement Dated
10-1-92 for Tom A. Smith.
<PAGE>
STOCK ORDER FORM INSTRUCTIONS
Items 1 and 2--
Fill in the number of shares that you wish to purchase and the total payment
due. The amount due is determined by multiplying the number of shares by the
subscription price of $10.00 per share. The minimum number of shares that may be
subscribed for is 25. FPB Financial Corp. has reserved the right to reject any
order received in the Community Offering, in whole or in part.
Item 3--
Payment for shares may be made in cash (only if delivered by you in person to
the Bank's offices) or by check or money order made payable to the FPB Financial
Corp. Your funds will earn interest at the Bank's passbook rate until the
conversion is completed or terminated. DO NOT MAIL CASH! Please check this box
if your method of payment is by check or money order.
Item 4--
If you wish to pay for your stock by a withdrawal from a deposit account at the
Bank, please check this box and insert the account number(s) and the amount of
your withdrawal authorization for each account. There will be no penalty
assessed for early withdrawals from certificate accounts used for stock
purchases. This form of payment may not be used if your account is an Individual
Retirement Account. Please contact the Stock Information Center for information
regarding purchase from an Individual Retirement Account.
Item 5--
a. Please check this box if you are a director, officer or employee of Florida
Parishes Bank or a member of such person's immediate family.
b. If you were a depositor on the Eligibility Record Date (September 30, 1997),
the Supplemental Eligibility Record Date (March 31, 1999) and/or the voting
record date for Other Members (________, 1999), you must list all names on the
account(s) and all account number(s) of accounts you had at those dates in order
to ensure proper identification of your purchase rights. Please check the
appropriate box(es).
c. If you were a borrower from the Bank with mortgage loan(s) outstanding on
both February 23, 1999 and ________, 1999, you must list each loan number in
order to ensure proper identification of your purchase rights.
Items 6, 7 and 8--
The stock transfer industry has developed a uniform system of stockholder
registration that we will use in the issuance of your FPB Financial Corp. common
stock. Please complete Items 6, 7 and 8 as fully and accurately as possible, and
be certain to supply the social security or tax ID number of the person who is
subscribing for shares. Failure to provide the social security or tax ID number
may result in the loss of your purchase priority. In addition, please list your
daytime and evening telephone number(s). We will need to call you if we cannot
execute your order as given. If you have any questions or concerns regarding the
registration of your stock, please consult your legal advisor. Stock ownership
must be registered in one of the ways described under "Stock Ownership Guide"
above.
Item 9--
Please check this box if you are a member of the NASD or if this item otherwise
applies to you.
Item 10--
Please check this box if you or any associate or person acting in concert with
you has submitted another order for shares and complete Item 10 below.
"Associate" is defined as: (i) any corporation or organization (other than the
Bank or a majority-owned subsidiary of the Bank) of which such person is a
director, officer or a partner or is, directly or
<PAGE>
indirectly, the beneficial owner of 10% or more of any class of equity
securities; (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as a trustee
or in a similar fiduciary capacity; provided, however, such term shall not
include FPB Financial Corp.'s or the Bank's employee benefit plans in which such
person has a substantial beneficial interest or serves as a trustee or in a
similar fiduciary capacity; and (iii) any relative or spouse of such person, or
any relative of such spouse, who either has the same home as such person or who
is a director or officer of FPB Financial Corp. or the Bank. Directors of FPB
Financial Corp. or the Bank are not treated as associates solely because of
their Board membership.
Items 11 and 12--
Please sign and date the stock order form where indicated. Review the stock
order form carefully before you sign, including the Acknowledgment. Normally,
one signature is required. An additional signature is required only when payment
is to be made by withdrawal from a deposit account that requires multiple
signatures to withdraw funds. You may mail your completed stock order form in
the envelope that has been provided, or you may deliver your stock order form to
the Bank. Your stock order form, properly completed, and payment in full (or
withdrawal authorization) must be received by the Bank no later than 12:00 noon,
central time, on June __, 1999 or it will become void. If you need further
assistance, please call the Stock Information Center at (504)_________ between
9:00 a.m. and 4:30 p.m., central time, Monday through Friday.
Items (5(b), 5(c) and 5(d)--continued
Account Title (Names on Account) Account Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Item (10)--continued
List below all other orders submitted by you or your associates (as defined
above) or by persons acting in concert with you.
Name(s) listed on other Order Form(s) Number of Shares Ordered
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 99.4
Marketing Materials
<PAGE>
FPB FINANCIAL CORP.
Proposed Holding Company for
Florida Parishes Bank
Hammond, LA
Proposed Marketing Materials
<PAGE>
Marketing Materials for
FPB Financial Corp.
Hammond, Louisiana
Table of Contents
-----------------
I. Press Release
A. Explanation
B. Schedule
C. Distribution List
D. Press Release Examples
II. Advertisements
A. Explanation
B. Schedule
C. Advertisement Examples
III. Question and Answer Brochure
A. Explanation
B. Quantity and Method of Distribution
C. Example
IV. Officer and Director Support Brochure
A. Explanation
B. Method of Distribution
C. Example
V. IRA Mailing
A. Explanation
B. Quantity and Method of Distribution
C. IRA Mailing Example
VI. Counter Cards and Lobby Posters
A. Explanation
B. Quantity
VII. Invitations
A. Explanation
B. Quantity - Method of Distribution
C. Examples
VIII. Prospect Letters
A. Explanation
B. Method of Distribution
C. Examples
<PAGE>
IX. Cover Letters for Initial Mailing
A. Explanation
B. Method of Distribution
C. Examples
X. Proxygram
A. Explanation
B. Example
<PAGE>
I. Press Releases
A. Explanation
In an effort to assure that all customers, community members and other
interested investors receive prompt accurate information in a simultaneous
manner, the Bank will forward press releases to area newspapers, radio stations,
etc. at various points during the conversion process.
Only press releases approved by conversion counsel and the OTS, if
necessary, will be forwarded for publication in any manner.
B. Schedule
1. OTS Approval of Conversion
2. Close of Stock Offering
<PAGE>
National and Local Distribution List
------------------------------------
National Thrift News Wall Street Journal
- -------------------- -------------------
212 West 35th Street World Financial Center
13th Floor 200 Liberty
New York, New York 10001 New York, NY 10004
Richard Chang
American Banker SNL Securities
- --------------- --------------
One State Street Plaza Post Office Box 2124
New York, New York 10004 Charlottesville, Virginia 22902
Michael Weinstein
Barrons Investors Business Daily
- ------- ------------------------
Dow Jones & Company 12655 Beatrice Street
Barrons Statistical Information Post Office Box 661750
200 Burnett Road Los Angeles, California 90066
Chicopee, Massachusetts 01020
New York Times
- --------------
229 West 43rd Street
New York, NY 10036
Business Wire
- -------------
212 South Tryon
Suite 1460
Charlotte, North Carolina 28281
* Press releases will be distributed to all the applicable local media.
<PAGE>
Press Release FOR IMMEDIATE RELEASE
---------------------
For More Information Contact:
Fritz W. Anderson, II
President and Chief Executive Officer
Florida Parishes Bank
(504) 345-1880
FLORIDA PARISHES BANK
CONVERSION FROM MUTUAL FORM OF ORGANIZATION
TO STOCK HOLDING COMPANY APPROVED
Fritz W. Anderson, II, President and Chief Executive Officer of Florida
Parishes Bank ("Florida Parishes" or the "Bank"), Hammond, Louisiana, announced
today that the Bank has received approval from the Office of Thrift Supervision
in Washington, D.C. to convert from the mutual form of organization to the stock
holding company form of organization. In connection with the conversion, the
Bank has formed a company, FPB Financial Corp. (the "Company"), to serve as the
holding company of the Bank.
Pursuant to a plan of conversion, the Company is offering up to 391,000
shares, subject to adjustment, of its common stock, at a price of $10.00 per
share. Certain depositors and borrowers as of specified record dates, the Bank's
Employee Stock Ownership Plan, and directors, officers and employees of the Bank
will have an opportunity to purchase stock through a subscription offering that
closes on June __, 1999. Any shares not subscribed for in the subscription
offering are expected to be offered to persons who reside in Louisiana or to
whomever else the prospectus is delivered to in a community offering, with first
preference given to natural persons who reside in Tangipahoa Parish, Louisiana.
The subscription offering and any community offering (together, the "Offering")
will be managed by Trident Securities of Raleigh, North Carolina.
<PAGE>
Prospectuses describing, among other things, the terms of the Offering were
mailed to certain customers of the Bank on May __, 1999. Certain customers will
also have the opportunity to vote on the conversion of the Bank through a proxy
solicitation that will run concurrently with the stock offering.
As a result of the conversion, the Bank will operate as a subsidiary of the
Company. According to Mr. Anderson, "Our day to day operations will not change
as a result of the conversion, and deposits will continue to be insured by the
FDIC up to the applicable legal limits."
Customers with questions concerning the conversion should call the Stock
Information Center at (504) ________________, or visit the Bank's office in
Hammond, Louisiana.
This is neither an offer to sell nor a solicitation of an offer to buy the stock
of FPB Financial Corp. The offer is made only by our prospectus. The shares of
common stock are not deposits or savings accounts and will not be insured by the
Federal Deposit Insurance Corporation or any other government agency.
<PAGE>
Press Release FOR IMMEDIATE RELEASE
---------------------
For More Information Contact:
Fritz W. Anderson, II
President and Chief Executive Officer
Florida Parishes Bank
(504) 345-1880
FPB FINANCIAL CORP. COMPLETES STOCK OFFERING
Hammond, Louisiana - (June __, 1999) Fritz W. Anderson, II, President and
Chief Executive Officer of Florida Parishes Bank ("Florida Parishes" or the
"Bank"), announced today that FPB Financial Corp. (the "Company"), the holding
company for the Bank, recently completed its stock offering on June __, 1999 in
connection with the Bank's conversion from the mutual form of organization to
the stock holding company form of organization. A total of _______ shares were
sold at $10.00 per share in connection with the stock offering, subject to final
approval of the independent appraisal by the Office of Thrift Supervision.
On June __, 1999, the Bank's Plan of Conversion will be submitted to the
voting members of the Bank for their approval at a Special Meeting of Members.
Mr. Anderson indicated that the officers and board of directors of the Bank
want to express their thanks for the response to the stock offering and that the
Bank looks forward to serving the needs of its customers and stockholders as a
community-based stock institution. The offering was managed by Trident
Securities. The stock will commence trading on the Over-the-Counter Electronic
Bulletin Board under the symbol "_____" on or about June __, 1999.
<PAGE>
II. Advertisements
A. Explanation
The intended use of the attached advertisement "A" is to notify the Bank's
customers and members of the local community that the conversion offering is
underway.
The intended use of advertisement "B" is to remind the Bank's customers of
the closing date of the subscription offering.
Trident may feel it is necessary to run more ads in order to remind
customers and community members of the close of the subscription/community
offering.
Alternatively, Trident may, depending upon the response from the customer
base, choose to run fewer ads or no ads at all.
<PAGE>
Advertisement (A)
================================================================================
This announcement is neither an offer to sell nor a solicitation of an offer to
buy these securities. The offer is made only by our prospectus. Neither the
Securities and Exchange Commission, any state securities commission, the Office
of Thrift Supervision nor the Federal Deposit Insurance Corporation has approved
or disapproved of these securities or passed upon the adequacy or accuracy of
the prospectus. Any representation to the contrary is a criminal offense.
New Issue May __, 1999
- ---------
391,000 Shares
These shares are being offered pursuant
to a Plan of Conversion whereby
Florida Parishes Bank
Hammond, Louisiana will
convert from the mutual form of organization
to the stock form of organization
and become a wholly owned subsidiary of
FPB Financial Corp.
Common Stock
---------------
Price $10.00 Per Share
---------------
TRIDENT SECURITIES
For a copy of our prospectus, call (504)________________.
================================================================================
<PAGE>
Advertisement (B)
================================================================================
FLORIDA PARISHES BANK'S CUSTOMERS
AND MEMBERS OF THE GENERAL PUBLIC
JUNE __, 1999 IS THE DEADLINE TO
ORDER STOCK OF FPB FINANCIAL CORP.
Customers of Florida Parishes Bank
have the opportunity to invest in Florida Parishes Bank
by subscribing for common stock in its proposed holding company
FPB FINANCIAL CORP.
A Prospectus relating to these securities is
available at our office or by calling our
Stock Information Center at (504)________________.
This announcement is not an offer to sell or a solicitation of an offer to
buy the stock of FPB Financial Corp. The offer is made only by our prospectus.
The shares of common stock are not deposits or savings accounts and will not be
insured by the Federal Deposit Insurance Corporation or any other government
agency.
================================================================================
<PAGE>
II. Question and Answer Brochure
A. Explanation
The Question and Answer brochure is an essential marketing piece in any
conversion. It serves to answer some of the most commonly asked questions in
"plain, everyday language". Although most of the answers are taken verbatim from
the prospectus, it saves the individual from searching for the answer to a
simple question.
B. Method of Distribution
There are four primary methods of distribution of the Question and Answer
brochure. However, regardless of the method the brochures are always accompanied
by a prospectus.
1. A Question and Answer brochure is sent out in the initial mailing to all
members of the Bank.
2. Question and Answer brochures are available at the Bank.
3. Question and Answer brochures are distributed in information packets at
community meetings.
4. Question and Answer brochures are sent out in a standard information
packet to all interested investors who phone the Stock Information Center
requesting information.
<PAGE>
QUESTIONS AND ANSWERS
REGARDING
THE PLAN OF CONVERSION
On December 8, 1998, the Board of Directors of Florida Parishes Bank
("Florida Parishes" or the "Bank") unanimously adopted the Plan of Conversion
(the "Plan of Conversion") pursuant to which the Bank will convert from mutual
to stock form and the Bank will reorganize as a wholly owned subsidiary of a new
company -- FPB Financial Corp. (the "Company").
Florida Parishes' Board of Directors has unanimously voted to convert the
Bank from its present mutual form to a stock institution, subject to approval of
the conversion by Florida Parishes' members and regulatory authorities. Complete
details on the conversion, including reasons for the conversion, are contained
in our prospectus and proxy statement. We urge you to read them carefully.
This brochure is provided to answer basic questions you might have about
the conversion. Remember, the conversion will not affect the rate on any of your
savings accounts, deposit certificates, or loans.
For complete information regarding the conversion, see the prospectus dated
May __, 1999. Copies of the prospectus may be obtained by calling the Stock
Information Center at (504) __________.
1. Q. What is a "Conversion"?
A. Conversion is a change in the legal form of organization. Following
completion of the conversion from a federal mutual savings bank to a federal
stock savings bank, Florida Parishes intends to still be known as "Florida
Parishes Bank." Florida Parishes currently operates as a federal mutual savings
bank with no shareholders. Through the conversion, Florida Parishes will form a
holding company, FPB Financial Corp., which will ultimately own all of the
outstanding stock of the Bank. FPB Financial Corp. will issue stock in the
conversion, as described below, and will be a publicly owned company.
2. Q. Why is Florida Parishes converting?
A. The stock form of ownership is used by most business corporations and
financial institutions. Florida Parishes has reached an important point in its
development with its decision to convert to the stock form of ownership. Florida
Parishes' management believes the continued diversification of the institution's
asset and deposit base and the
1
<PAGE>
establishment of new banking services should enhance long-term operating
potential. The capital raised by issuing stock will:
* Enhance the Bank's capital position.
* Facilitate future access to the capital markets.
* Provide additional funds for increased lending and investment
opportunities.
3. Q. Will the conversion have any effect on savings accounts, certificates of
deposit or loans with Florida Parishes?
A. No. The conversion will not change the amount, interest rate or
withdrawal rights of savings and checking accounts or certificates of deposit
(except to the extent such funds are used to purchase our common stock). The
rights and obligations of borrowers under their loan agreements will not be
affected.
However, upon consummation of the conversion, Florida Parishes' deposit
account holders and certain borrowers will no longer have voting rights unless
they purchase common stock in FPB Financial, and the liquidation rights of
depositors will be evidenced by an interest in a liquidation account.
4. Q. Will the conversion cause any changes in personnel or management?
A. No. The conversion will not cause any changes in our personnel or
management. The normal day-to-day operations will continue as before.
5. Q. Did the Board of Directors of Florida Parishes approve the conversion?
A. Yes. The Board of Directors unanimously adopted the Plan of Conversion
on December 8, 1998.
THE SUBSCRIPTION AND COMMUNITY OFFERING
6. Q. Who is entitled to buy FPB Financial common stock?
A. Subscription rights to buy our common stock have been granted in order
of priority to (i) depositors of the Bank as of September 30, 1997 with a $50
minimum deposit at that date (the "Eligible Account Holders"); (ii) our employee
stock ownership plan (the "ESOP"), a tax qualified employee stock benefit plan;
(iii) depositors of the Bank with $50 or more on deposit as of March 31, 1999
(the "Supplemental Eligible Account Holders"); (iv) depositors of the Bank as of
________, 1999, together with our mortgage loan borrowers as of both February
23, 1999 and _____________, 1999
2
<PAGE>
("Other Members"); and (v) directors, officers and employees of the Bank; in
each case subject to the purchase limitations set forth in the Plan of
Conversion.
Shares that are not subscribed for during the subscription offering, if
any, may be offered to the general public ("Other Subscribers") through a
community offering with preference given to natural persons who are residents of
Tangipahoa Parish, Louisiana.
7. Q. How do I subscribe for shares of stock?
A. Eligible customers wishing to exercise their subscription rights must
return the enclosed stock order form to Florida Parishes. The stock order form
must be completed and returned along with full payment or appropriate
instructions authorizing a withdrawal from a deposit account at Florida Parishes
on or prior to the close of the subscription offering, which is 12:00 noon,
central time, on June __, 1999, unless extended. Members of the public who wish
to order stock directly from Florida Parishes in any community offering should
return their stock order form and accompanying payment to Florida Parishes prior
to 12:00 noon, central time, on June __, 1999, unless extended.
8. Q. How can I pay for my subscription?
A. First, you may pay for your stock by check or money order. These funds
will earn interest at Florida Parishes' passbook rate from the day we receive
them until the completion or termination of the conversion. The passbook rate
was ____% as of May __, 1999.
Second, you may authorize us to withdraw funds from your Florida Parishes
savings account or certificate of deposit without early withdrawal penalty.
These funds will continue to earn interest at the rate in effect for your
account until completion of the conversion, at which time your funds will be
withdrawn for your purchase. Funds remaining in this account (if any) will
continue at the contractual rate unless the withdrawal reduces the account
balance below the applicable minimum, in which case you will receive interest at
our passbook rate. A hold will be placed on your account for the amount you
specify for stock payment. You will not have access to these funds from the day
we receive your order until the completion or termination of the conversion.
If you want to use Individual Retirement Account deposits held at Florida
Parishes to purchase stock, call our Stock Information Center at (504)
________________ for assistance. There will be no early withdrawal or IRS
penalties incurred by these transactions.
3
<PAGE>
9. Q. When must I place my order for shares of stock?
A. To exercise subscription rights in the subscription offering, a stock
order form must be received by Florida Parishes with full payment for all shares
subscribed for not later than 12:00 noon, central time, on June __, 1999.
Non-customers desiring to order shares through any community offering must
order shares before the close of the community offering, which will be at 12:00
noon, central time, on June __, 1999, unless extended.
10. Q. How many shares of stock are being offered?
A. FPB Financial Corp. is offering a minimum of 289,000 shares and a
maximum of 391,000 shares (subject to adjustment) of common stock at a price of
$10.00 per share. The actual number of shares will be dependent upon the
independent appraiser's final determination of the consolidated pro forma market
value of the common stock issued in the conversion.
11. Q. What is the minimum and maximum number of shares that I can purchase
during the offering period?
A. The minimum number of shares that may be purchased is 25 shares. No
stock order form will be accepted for less than $250.00. The maximum number of
shares may not exceed 10,000 shares for any individual or 15,000 shares for
their associates or any group acting in concert as defined in Florida Parishes'
Plan of Conversion.
12. Q. How was it determined that between 289,000 shares and 391,000 shares of
stock would be issued at $10.00 per share?
A. The share range was determined through an appraisal of Florida Parishes
by Ferguson & Company, an independent appraisal firm specializing in the thrift
industry.
13. Q. Must I pay a commission on the stock for which I subscribe?
A. No. You will not pay a commission on stock purchased in the subscription
offering or any community offering. Conversion expenses, including commissions,
will be deducted from the proceeds of the offering upon completion of the
conversion.
14. Q. Will I receive interest on funds I submit for stock purchases?
A. Yes. Florida Parishes will pay its current passbook rate from the date
funds are received (with a completed stock order form) during the offerings
until completion of the conversion. That rate was ____% as of May __, 1999.
4
<PAGE>
15. Q. If I have misplaced my stock order form, what should I do?
A. Florida Parishes will mail you another order form or you may obtain one
from our main office. If you need assistance in obtaining or completing a stock
order form, a Florida Parishes employee or a Trident Securities representative
will be happy to help you.
16. Q. Will there be any dividends paid on the stock?
A. The Company currently intends to pay a cash dividend at an annual rate
of approximately 2% of the purchase price of $10.00 per share , or $0.20 per
share. The payment of cash dividends on our common stock will be subject to the
requirements of applicable law and the determination by our Board of Directors
that our net income, capital and financial condition, banking industry trends
and general economic conditions justify the payment of dividends. In addition,
from time to time in an effort to manage capital to a reasonable level, our
Board may determine if it is prudent to pay periodic special cash dividends.
Periodic special cash dividends, if paid, may be paid in addition to, or in lieu
of, regular cash dividends. Like all possible dividends, there can be no
assurance that periodic special cash dividends will be paid or, that, if paid,
will continue to be paid.
17. Q. How much stock do the directors and officers of Florida Parishes intend
to purchase through the subscription offering?
A. Directors and executive officers intend to purchase approximately
$320,000 (9.4% at the midpoint of the offering) of the stock to be offered in
the conversion. The purchase price paid by directors and officers will be the
same as that paid by customers and the general public.
18. Q. Are the subscription rights transferable to another party?
A. No. Pursuant to federal regulations, subscription rights granted to
Eligible Account Holders, Supplemental Eligible Account Holders, Other Members
and directors, officers and employees may be exercised only by the person(s) to
whom they are granted. Any person found to be transferring subscription rights
will be subject to the forfeiture of such rights.
19. Q. I closed my account several months ago. Someone told me that I am still
eligible to buy stock. Is that true?
A. If you were an account holder on the Eligibility Record Date (September
30, 1997) or the Supplemental Eligibility Record Date (March 31, 1999), you are
entitled to
5
<PAGE>
purchase stock without regard to whether you continued to hold your Florida
Parishes account.
20. Q. May I obtain a loan from Florida Parishes using stock as collateral to
pay for my shares?
A. No. Federal regulations do not allow Florida Parishes to make loans for
this purpose, but other financial institutions could make a loan for this
purpose.
21. Q. Will the FDIC (Federal Deposit Insurance Corporation) insure the shares
of stock?
A. No. The shares are not and may not be insured by the FDIC. However, the
Savings Association Insurance Fund of the FDIC will continue to insure savings
accounts and certificates of deposit up to the applicable limits allowed by law.
22. Q. Will there be a market for the stock following the conversion?
A. We have not publicly issued our stock before, and due to the relatively
small size of the offering, it is unlikely that an active and liquid trading
market will develop or be maintained. We anticipate that quotations will be
available through the Over-the-Counter Electronic Bulletin Board. We will
request Trident Securities to undertake to match offers to buy and offers to
sell our common stock, and Trident Securities intends to make a market in our
common stock. However, purchasers of common stock should have a long-term
investment intent and recognize that the absence of an active and liquid trading
market may make it difficult to sell our common stock and may have an adverse
effect on the price.
23. Q. Can I purchase stock using funds in a Florida Parishes IRA account?
A. If you have an IRA at Florida Parishes, you will need to transfer the
account to an independent trustee authorized to hold self-directed IRA accounts.
Please call the Stock Information Center for the necessary forms. Because it
takes several days to process the necessary IRA forms, it is necessary that any
request to transfer your account be received by June __, 1999 to accommodate
your order.
ABOUT VOTING "FOR" THE PLAN OF CONVERSION
24. Q. Am I eligible to vote at the special meeting of members to be held to
consider the Plan of Conversion?
A. At the special meeting of members to be held on June __, 1999, you are
eligible to vote if you are one of the "Voting Members," who are holders of
Florida Parishes' deposit accounts as of the close of business on ________,
1999, together with our
6
<PAGE>
mortgage loan borrowers as of both February 23, 1999 and _____________, 1999
(the "Voting Record Date") for the special meeting. However, any Voting Members
who cease to be depositors or borrowers prior to the date of the special meeting
are no longer members and will not be entitled to vote at the special meeting.
If you are a Voting Member, you should have received a proxy statement and proxy
card with which to vote.
25. Q. How many votes do I have as a Voting Member?
A. Each account holder as of the close of business on ________, 1999 is
entitled to one vote for each $100, or fraction thereof, on deposit in such
account. Each borrower who holds eligible borrowings as of both February 23,
1999 and _______________, 1999 is entitled to cast one vote in addition to the
number of votes, if any, he or she is entitled to vote as an account holder. No
member may cast more than 1,000 votes.
26. Q. If I vote "against" the Plan of Conversion and it is approved, will I be
prohibited from buying stock during the subscription offering?
A. No. Voting against the Plan of Conversion in no way restricts you from
purchasing stock in either the subscription offering or any community offering.
27. Q. What happens if Florida Parishes does not get enough votes to approve
the Plan of Conversion?
A. Florida Parishes' conversion would not take place and Florida Parishes
Bank would remain a mutual savings bank.
28. Q. As a qualifying depositor or borrower of Florida Parishes, am I required
to vote?
A. No. However, failure to return your proxy card will have the same effect
as a vote "Against" the Plan of Conversion.
29. Q. What is a proxy card?
A. A proxy card gives you the ability to vote without attending the special
meeting in person. You may attend the meeting and vote in person, even if you
have returned your proxy card, if you choose to do so. However, if you are
unable to attend, you still are represented by proxy.
30. Q. How does the conversion affect me?
A. The conversion is intended, among other things, to assist Florida
Parishes in maintaining and expanding its services to our customers and
community. By
7
<PAGE>
purchasing stock, you will also have the opportunity to invest in FPB Financial
Corp., the holding company that will own all of the stock of the Bank. However,
there is no obligation to purchase stock; the purchase of stock is strictly
optional.
31. Q. How can I get further information concerning the stock offering?
A. You may call the Stock Information Center at (504) ________________ for
further information or a copy of our prospectus, stock order form , proxy
statement and proxy card.
This information does not constitute an offer to sell or a solicitation of
an offer to buy FPB Financial Corp. common stock. Offers to buy or to sell may
be made only by the prospectus. If you are considering purchasing stock, you
should read our prospectus prior to making an investment decision. Copies of the
prospectus may be obtained by calling the Stock Information Center at (504)
________________.
The shares of FPB Financial Corp. common stock being offered are not
savings or deposit accounts and are not insured by the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation or any other
governmental agency.
8
<PAGE>
IV. Officer and Director Support Brochure
A. Explanation
An officer and director brochure merely highlights in brochure form the
purchase commitments shown in the prospectus.
B. Quantity
An officer and director brochure is proposed to be sent out in the initial
mailing to all customers of the Bank along with the prospectus.
<PAGE>
DIRECTOR AND EXECUTIVE OFFICER
PURCHASE COMMITMENT
The following table sets forth, for each of FPB Financial's directors and
executive officers (and their associates) and for all of the directors and
executive officers as a group, the proposed purchases of common stock, assuming
sufficient shares are available to satisfy their subscriptions. The amounts
include shares that may be purchased through individual retirement accounts.
Number of
Name and Title Shares Amount Percent(1)
---------------- -------- -------- ----------
G. Wayne Allen, Senior Vice
President and Secretary 2,000 $ 20,000 .6%
Fritz W. Anderson, II, President
and Chief Executive Officer 8,000 80,000 2.4
Bill W. Bowden, Chairman of the Board 2,000 20,000 .6
Dan R. Durham, Director 3,000 30,000 .9
Wilbert H. Hutchinson, Director 5,000 50,000 1.5
Richard S. Inge, Director 10,000 100,000 2.9
John L. McGee, Director 2,000 20,000 .6
------- -------- -----
All directors and executive officers
as a group (seven persons) 32,000 $320,000 9.4%
====== ======= ====
- ----------
(1) Based upon the midpoint of the offering range.
In addition, our Employee Stock Ownership Plan currently intends to
purchase 8% of the common stock issued in the conversion for the benefit of
officers and employees. Stock options and stock grants may also be granted in
the future to directors, officers and employees upon the receipt of stockholder
approval of FPB Financial's proposed stock benefit plans. See "Management - New
Stock Benefit Plans" in the prospectus for a description of these plans.
<PAGE>
V. IRA Mailing
A. Explanation
A special IRA mailing is proposed to be sent to all IRA customers of the
Bank in order to alert the customers that funds held in an IRA can be used
to purchase stock. Since this transaction is not as simple as designating
funds from a certificate of deposit like a normal stock purchase, this
letter informs the customer that this process is slightly more detailed and
involves a personal visit to the Bank.
B. Quantity
One IRA letter is proposed to be mailed to each IRA customer of the Bank.
These letters would be mailed following OTS approval of the conversion
after each customer has received the initial mailing containing a proxy
statement and a prospectus.
C. Example - See following page.
<PAGE>
Florida Parishes Bank Letterhead
May __, 1999
Dear Individual Retirement Account Participant:
As you know, Florida Parishes Bank ("Florida Parishes" or the "Bank") is in
the process of converting from the mutual form of organization to the stock form
of organization and has formed FPB Financial Corp. (the "Company") to own all of
the stock of the Bank. Through the conversion, certain current and former
customers have the opportunity to purchase shares of common stock of the Company
in a subscription offering. The Company currently is offering up to 391,000
shares, subject to adjustment, of the Company at a price of $10.00 per share.
As the holder of an individual retirement account ("IRA") at the Bank, you
have an opportunity to become a stockholder in the Company using some or all of
the funds being held in your IRA. If you desire to purchase shares of common
stock of the Company through your IRA, the Bank can assist you in self-directing
those funds. This process can be done without an early withdrawal penalty and
generally without a negative tax consequence to your retirement account.
If you are interested in receiving more information on self-directing your
IRA, please contact our Stock Information Center at (504) _________. Because it
may take several days to process the necessary IRA forms, any request to
transfer the account should be made by June __, 1999 to accommodate your
interest.
Sincerely,
Fritz W. Anderson, II
President and Chief Executive Officer
This letter is neither an offer to sell nor a solicitation of an offer to buy
FPB Financial Corp. common stock. The offer is made only by the Company's
prospectus, which was recently mailed to you. The shares of FPB Financial Corp.
common stock are not deposits or savings accounts and will not be insured by the
---
Federal Deposit Insurance Corporation or any other governmental agency.
<PAGE>
VI. Counter Cards and Lobby Posters
A. Explanation
Counter cards and lobby posters serve two purposes: (1) As a notice to the
Bank's customers and members of the local community that the stock sale is
underway, and (2) to remind the customers of the end of the subscription
offering. Trident has learned in the past that many people forget the
deadline for subscribing and therefore we suggest the use of these simple
reminders.
B. Quantity
Approximately 2 - 3 Counter cards will be used at teller windows and on
customer service representatives' desk.
Approximately 1 - 2 Lobby posters will be used at the office of the Bank
C. Example
<PAGE>
C. POSTER
OR
COUNTER CARD
FPB Financial Corp.
Proposed Holding Company for
Florida Parishes Bank
"STOCK OFFERING MATERIALS
AVAILABLE HERE"
Subscription Offering Ends
June __, 1999
<PAGE>
VII. Invitations
A. Explanation
In order to educate the public about the stock offering, Trident suggests
holding several community meetings in various locations. In an effort to
target a group of interested investors, Trident requests that each Director
of the Bank submit a list of friends that he would like to invite to a
community meeting.
Prospectuses are given to each prospect at the community meeting.
B. Quantity and Method of Distribution
Each Director submits a list of their prospects. An invitation is mailed to
each director's prospect.
<PAGE>
The Directors, Officers & Employees
of
Florida Parishes Bank
cordially invite you
to attend a brief presentation
regarding the stock offering of
FPB Financial Corp.
Please join us at
Place
Address
on
Date
at Time
for hors d'oeuvres
R.S.V.P.
(504) ________________
<PAGE>
VIII. Prospect Letters
A. Explanation
Once the application for conversion has been approved by the OTS, Trident
will send out a series of three letters to the targeted prospects. These
letters are used to help facilitate the marketing effort to this group. All
prospects will receive a prospectus as soon as they are available.
B. Method of Distribution
Each Director submits his list of prospects. Each prospect is sent the
series of three letters, all during the subscription and community
offering.
C. Examples
1. Introductory letter
2. A. Thank you letter
or
B. Sorry you were unable to attend letter
3. Final reminder letter
<PAGE>
Example 1
(Introductory Letter)
(Florida Parishes Bank Letterhead)
May __, 1999
Name
Address
City, State, Zip
Dear Name:
You have probably read recently in the newspaper that Florida Parishes Bank
("Florida Parishes" or the "Bank") will soon be converting from mutual to stock
form. This conversion is the biggest step in the history of the Bank in that it
allows customers, employee benefit plans, community members, employees, officers
and directors the opportunity to subscribe for stock in our new holding company
- - FPB Financial Corp. (the "Company").
I have enclosed a prospectus and a stock order form that will allow you to
subscribe for shares and possibly become a charter stockholder of the Company
should you so desire. In addition, we will be holding several presentations for
friends of the Bank in order to review the conversion and the merits of becoming
a charter stockholder of the Company. You will receive an invitation shortly.
I hope that if you have any questions you will feel free to call me or the
Bank's Stock Information Center at (504) ________________. I look forward to
seeing you at our presentation.
Sincerely,
Fritz W. Anderson, II
President and CEO
The shares of common stock offered in the conversion are not deposits or savings
accounts and are not insured by the Federal Deposit Insurance Corporation, the
Savings Association Insurance Fund or any other governmental agency.
This is not an offer to sell or a solicitation of an offer to buy stock. The
offer will be made only by our prospectus.
<PAGE>
Example 2A
(Thank You Letter)
(Florida Parishes Bank Letterhead)
May __, 1999
Name
Address
City, State, Zip
Dear Name:
On behalf of the Board of Directors and management of Florida Parishes
Bank, I would like to thank you for attending our recent presentation regarding
the stock offering by FPB Financial Corp. We are enthusiastic about the stock
offering and look forward to completing the subscription and community offerings
on June __, 1999.
I hope that you will join me in being a charter stockholder, and once again
thank you for your interest.
Sincerely,
Fritz W. Anderson, II
President and Chief Executive Officer
The shares of common stock offered in the conversion are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation, the
Savings Association Insurance Fund or any other governmental agency.
This is not an offer to sell or a solicitation of an offer to buy stock. The
offer will be made only by our prospectus.
<PAGE>
Example 2B
(Sorry You Were Unable to Attend)
(Florida Parishes Bank Letterhead)
May __, 1999
Name
Address
City, State, Zip
Dear Name:
I am sorry you were unable to attend our recent presentation regarding
Florida Parishes Bank's conversion from the mutual form of organization to the
stock holding company form of organization. The Board of Directors and
management are committed to building long-term stockholder value, and as a group
we are investing over $320,000 of our own funds in FPB Financial Corp. We are
enthusiastic about the stock offering and look forward to completing the
subscription and community offerings on June __, 1999.
We have established a Stock Information Center to answer any questions
regarding the stock offering. Should you require any assistance between now and
June __, 1999, I encourage you either to stop by Florida Parishes Bank or to
call our Stock Information Center at (504) ---------------- .
I hope you will join me in becoming a charter stockholder of FPB Financial
Corp.
Sincerely,
Fritz W. Anderson, II
President and Chief Executive Officer
The shares of common stock offered in the conversion are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation, the
Savings Association Insurance Fund or any other governmental agency.
This is not an offer to sell or a solicitation of an offer to buy stock. The
offer will be made only by our prospectus.
<PAGE>
Example 3
(Final Reminder Letter)
(Florida Parishes Bank Letterhead)
June __, 1999
Name
Address
City, State, Zip
Dear Name:
Just a quick note to remind you that the deadline is quickly approaching
for purchasing stock in FPB Financial Corp., the proposed holding company for
Florida Parishes Bank. I hope you will join me in becoming a charter stockholder
in Louisiana's newest publicly owned financial institution holding company.
The deadline for subscribing for shares to become a stockholder is June __,
1999. If you have any questions, I hope you will call our Stock Information
Center at (504) _________.
Once again, I look forward to having you join me as a stockholder of FPB
Financial Corp.
Sincerely,
Fritz W. Anderson, II
President and Chief Executive Officer
The shares of common stock offered in the conversion are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation, the
Savings Association Insurance Fund or any other governmental agency.
This is not an offer to sell or a solicitation of an offer to buy stock. The
offer will be made only by our prospectus.
<PAGE>
IX. Cover Letters for Initial Mailing
A. Explanation
These cover letters are used as an introduction for the offering and proxy
materials mailed to potential investors.
B. Method of Distribution
Appropriate Cover Letters will be sent out in the initial mailing.
B. Examples
<PAGE>
(Florida Parishes Bank Letterhead)
May __, 1999
Dear Valued Customer:
Florida Parishes Bank is pleased to announce that it has received
regulatory approval to proceed with our plan to convert from the mutual form of
organization to the stock holding company form of organization. This stock
conversion is the most significant event in our history in that it allows
customers, community members, directors, officers and employees an opportunity
to own stock in FPB Financial Corp., the proposed stock holding company for
Florida Parishes Bank.
We want to assure you that the conversion will not affect the terms,
balances, interest rates or existing FDIC insurance coverage on deposits at
Florida Parishes, or the terms or conditions of any loans to existing borrowers
under their individual contractual arrangements with Florida Parishes. Let us
also assure you that the conversion will not result in any changes in our
management, personnel or Board of Directors.
As one of our valued members, you have the opportunity to invest in our
future by purchasing stock in FPB Financial Corp. during the subscription
offering, without paying a sales commission.
If you decide to exercise your subscription rights to purchase shares, you
must return the properly completed stock order form together with full payment
for the subscribed shares so that it is received by Florida Parishes no later
than 12:00 noon, central time, on June __, 1999.
Enclosed is a proxy card. Your Board of Directors solicits your vote "FOR"
our Plan of Conversion. A vote in favor of the Plan does not obligate you to
purchase stock. Please sign and return your proxy card promptly; your vote is
important to us.
We have also enclosed a prospectus and a proxy statement which fully
describes Florida Parishes, our management, board and financial strength and the
Plan of Conversion. Please review it carefully before you vote or invest. For
your convenience, we have established a Stock Information Center. If you have
any questions, please call the Stock Information Center collect at (504)
________________.
We look forward to continuing to provide quality financial services to you
in the future.
Sincerely,
Fritz W. Anderson, II
President
Enclosures
This does not constitute an offer to sell, or the solicitation of an offer to
buy, shares of FPB Financial Corp. common stock offered in the conversion. Such
offer and solicitation is made only by means of the prospectus. There shall be
no sale of stock in any state in which any offer, solicitation of an offer or
sale of stock would be unlawful.
THE STOCK IS NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
(Florida Parishes Bank Letterhead)
May __, 1999
Dear Friend:
Florida Parishes Bank is pleased to announce that it has received
regulatory approval to proceed with our plan to convert from a mutual form of
organization to the stock holding company form of organization. This stock
conversion is the most significant event in our history in that it allows
customers, community members, directors, officers and employees an opportunity
to own stock in FPB Financial Corp., the proposed stock holding company for
Florida Parishes Bank.
We want to assure you that the conversion will not affect the terms,
balances, interest rates or existing FDIC insurance coverage on deposits at
Florida Parishes, or the terms or conditions of any loans to existing borrowers
under their individual contractual arrangements with Florida Parishes. Let us
also assure you that the conversion will not result in any changes in our
management, personnel or Board of Directors.
Our records indicate that you were a depositor of Florida Parishes on
either September 30, 1997 or March 31, 1999 but that you were not a member on
________, 1999. Therefore, under applicable law, you are entitled to subscribe
for common stock in the subscription offering but are not able to vote on the
Plan of Conversion. Orders submitted by you and others in the subscription
offering are contingent upon the approval of the Plan of Conversion at a special
meeting of members to be held on June __, 1999 and upon receipt of all required
regulatory approvals.
If you decide to exercise your subscription rights to purchase shares, you
must return the properly completed stock order form together with full payment
for the subscribed shares so that it is received by Florida Parishes no later
than 12:00 noon, central time, on June __, 1999.
Enclosed is a prospectus which fully describes Florida Parishes, our
management, board and financial strength. Please review it carefully before you
invest. For your convenience, we have established a Stock Information Center. If
you have any questions, please call the Stock Information Center collect at
(504) ________________.
We look forward to continuing to provide quality financial services to you
in the future.
Sincerely,
Fritz W. Anderson, II
President
Enclosures
This does not constitute an offer to sell, or the solicitation of an offer to
buy, shares of FPB Financial Corp. common stock offered in the conversion. Such
offer and solicitation is made only by means of the prospectus. There shall be
no sale of stock in any state in which any offer, solicitation of an offer or
sale of stock would be unlawful.
THE STOCK IS NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
TRIDENT SECURITIES, INC.
4601 SIX FORKS ROAD, SUITE 400
RALEIGH, NORTH CAROLINA 27609
TELEPHONE (919) 781-8900
FACSIMILE (919) 787-1670
May __, 1999
To Members and Certain Former Members of
Florida Parishes Bank
-------------------------------------
At the request of FPB Financial Corp. and Florida Parishes Bank, we have
enclosed a prospectus and a stock order form for your use should you decide to
subscribe for shares of common stock of Florida Parishes Bancorp, Inc. being
issued in connection with the conversion of Florida Parishes Bank from the
mutual form of organization to the stock holding company structure, which
includes the formation of FPB Financial Corp. as the new holding company for
Florida Parishes Bank.
If you decide to exercise your subscription rights to purchase shares, you
must return the properly completed stock order form together with full payment
for the subscribed shares (or appropriate instructions authorizing withdrawal in
such amount from your authorized deposit account(s) at Florida Parishes) so that
it is received no later than noon, central time, on June __, 1999.
FPB Financial Corp. has asked us to forward these documents to you in view
of certain requirements of the securities laws in your state. If you have any
questions, you may contact the Stock Information Center at (504)
________________.
Very truly yours,
Trident Securities, Inc.
This document does not constitute an offer to sell, or the solicitation of an
offer to buy, shares of FPB Financial Corp. common stock offered in the
conversion, nor does it constitute the solicitation of a proxy in connection
with the conversion. Such offers and solicitations of proxies are made only by
means of the prospectus and proxy statement, respectively. There shall be no
sale of stock in any state in which any offer, solicitation of an offer or sale
of stock would be unlawful.
THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.
<PAGE>
Subscription Rights
Special Notice
Any transfer of, or attempt to transfer, a subscription right to any other
person is illegal and subject to civil fines and/or penalties and even criminal
fines and/or penalties. Florida Parishes Bank intends to prosecute vigorously
any transfer of, or attempt to transfer, subscription rights that comes to its
attention.
If you are (or have been) contacted by anyone offering to give you money to
buy stock in exchange for transferring the stock to them later or to share in
any way the proceeds upon the sale of the stock, or to transfer your
subscription rights in any other way, please call us immediately at (504)
________________.
<PAGE>
(Florida Parishes Bank Letterhead)
May __, 1999
Dear Voting Member:
Florida Parishes Bank is pleased to announce that it has received
regulatory approval to proceed with our plan to convert from the mutual form of
organization to the stock holding company form of organization. This stock
conversion is a significant event for us.
We want to assure you that the conversion will not affect the terms,
balances, interest rates or existing FDIC insurance coverage on deposits at
Florida Parishes, or the terms or conditions of any loans to existing borrowers
under their individual contractual arrangements with Florida Parishes. Let us
also assure you that the conversion will not result in any changes in our
management, personnel or Board of Directors.
Enclosed is a proxy card. Your Board of Directors solicits your vote "FOR"
our Plan of Conversion. Please sign and return your proxy card promptly; your
vote is important to us.
We have also enclosed a prospectus for your information and a proxy
statement which fully describes Florida Parishes, our management, board and
financial strength and the Plan of Conversion. Please review it carefully before
you vote. If you have any questions, please call collect at (504)
________________.
Although you may vote on the conversion, FPB Financial Corp. (the
"Company") is unfortunately unable to either offer or sell its common stock to
you (i) because the number of eligible subscribers in your state makes
registration or qualification of the common stock or the filing of a consent to
service of process under the securities laws of your state impracticable, for
reasons of cost or otherwise; (ii) because the number of eligible subscribers in
your state makes registration or qualification of the Company, Florida Parishes
or our officers, directors, employees and persons acting on our behalf as
broker-dealers or salesmen in your state impracticable, for reasons of cost or
otherwise, or (iii) because you reside in a foreign country. Accordingly,
neither this letter nor the enclosed materials should be considered an offer to
sell or a solicitation of an offer to buy the Company's common stock.
We look forward to continuing to provide quality financial services to you
in the future.
Sincerely,
Fritz W. Anderson, II
President
Enclosures
This does not constitute an offer to sell, or the solicitation of an offer
to buy, shares of FPB Financial Corp. common stock offered in the conversion.
There shall be no sale of stock in any state in which any offer, solicitation of
an offer or sale of stock would be unlawful.
<PAGE>
IX. Proxygram
A. Explanation
A proxygram is used when the majority of votes needed to adopt the Plan of
Conversion is still outstanding. The proxygram is mailed to those "target
vote" depositors who have not previously returned their signed proxy.
The target vote depositors are determined by the conversion agent.
<PAGE>
B. Example
- --------------------------------------------------------------------------------
P R O X Y G R A M
FLORIDA PARISHES BANK
YOUR VOTE ON OUR PLAN OF CONVERSION HAS NOT BEEN RECEIVED.
YOUR VOTE IS VERY IMPORTANT, PARTICULARLY SINCE FAILURE TO VOTE IS EQUIVALENT TO
VOTING AGAINST THE PLAN.
VOTING FOR THE CONVERSION WILL NOT AFFECT THE INSURANCE OF YOUR ACCOUNT. IT WILL
CONTINUE TO BE INSURED UP TO $100,000 BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION.
YOU MAY PURCHASE STOCK IF YOU WISH, BUT VOTING DOES NOT OBLIGATE YOU TO BUY
STOCK.
PLEASE ACT PROMPTLY! SIGN THE ENCLOSED PROXY CARD AND MAIL, OR DELIVER, THE
PROXY CARD TO FLORIDA PARISHES BANK TODAY. PLEASE VOTE ALL PROXY CARDS RECEIVED.
WE RECOMMEND THAT YOU VOTE "FOR" THE PLAN OF CONVERSION. THANK YOU.
THE BOARD OF DIRECTORS AND MANAGEMENT OF
FLORIDA PARISHES BANK
- -------------------------------------------------------------------------------
IF YOU RECENTLY MAILED THE PROXY, PLEASE ACCEPT OUR THANKS AND DISREGARD
THIS REQUEST.
FOR FURTHER INFORMATION CALL (504) ________________.
